Case Name: STATE OF NORTH CAROLINA v. JEFFERSON D. JOHNSON, III
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1994-01-28
Citations: 335 N.C. 509
Docket Number: No. 5PA93
Parties: STATE OF NORTH CAROLINA v. JEFFERSON D. JOHNSON, III
Judges: Chief Justice Exum did not participate in the consideration or decision of this case.
Reporter: North Carolina Reports
Volume: 335
Pages: 509–518

Head Matter:
STATE OF NORTH CAROLINA v. JEFFERSON D. JOHNSON, III
No. 5PA93
(Filed 28 January 1994)
Embezzlement § 4 (NCI4th)— attorney’s settlement of case without client’s knowledge — lawful possession of draft — forgery of client’s signature — money deposited in attorney’s personal account
The evidence was sufficient to show that defendant attorney came into possession of a draft lawfully so far as his client was concerned and to support defendant’s conviction of embezzlement where it tended to show that defendant represented his client on a claim for damages incurred in an automobile accident; defendant told the tortfeasor’s insurer that his client would accept the insurer’s offer of $20,000 in full payment of her claim, but the client was not advised of the offer; the insurer delivered a draft for $20,000 to defendant with instructions to hold the draft until the client signed the release; the client’s signature was forged on both the release and the draft, and the proceeds of the draft were deposited in defendant’s personal account; and the client did not receive anything on her claim. Even if defendant may have been guilty of obtaining property by a false pretense as to the insurer when he obtained the draft by a misrepresentation to the insurer that the client would accept the settlement offer, defendant was in possession of the draft as the client’s agent, the client owned an interest in the draft in that she could ratify her agent’s actions and be entitled to the draft, and so far as the client was concerned, defendant was in lawful possession of the draft in which she had a legal interest.
Am Jur 2d, Embezzlement § 15.
Justice FRYE concurring.
Justice WHICHARD dissenting.
Justice PARKER joins in this dissenting opinion.
Chief Justice EXUM did not participate in the consideration or decision of this case.
On discretionary review pursuant to N.C.G.S. § 7A-31 of a decision of the Court of Appeals, 108 N.C. App. 550, 424 S.E.2d 165 (1993), reversing a judgment entered by Ross, J., at the 23 May 1991 Criminal Session of Superior Court, Sampson County. Heard in the Supreme Court 11 October 1993.
The defendant was tried for embezzlement. The evidence showed that the defendant, an attorney, represented Ms. Lillie Joyce McCoy on a claim for damages incurred in an automobile accident. State Farm Mutual Insurance Company, which was the liability coverage carrier for the vehicle that collided with Ms. McCoy’s vehicle, offered to settle the case by paying Ms. McCoy $20,000. The defendant, or someone in his office, told the adjuster for State Farm that Ms. McCoy would accept this sum in full payment of her claim. In fact, Ms. McCoy was not advised of the offer from State Farm.
State Farm delivered a draft for $20,000 to defendant with instructions to hold the draft until Ms. McCoy signed the release, at which time the release was to be returned to State Farm. Ms. McCoy’s signature was forged on the draft and it was deposited in the defendant’s personal account. Ms. McCoy did not receive anything on her claim. Ms. McCoy’s signature was forged on the release, which was delivered to State Farm.
The jury found the defendant guilty as charged. The court imposed a prison sentence which was suspended and the defendant was placed on probation for five years. The Court of Appeals held it was error not to dismiss the charge at the end of the evidence and reversed. We granted the State’s petition for discretionary review.
Michael F. Easley, Attorney General, by Charles M. Hensey, Special Deputy Attorney General, for the State appellant.
Tharrington, Smith & Hargrove, by Roger W. Smith and Douglas E. Kingsbery, for defendant-appellee.

Opinion:
WEBB, Justice.
The defendant argues, and the Court of Appeals agreed, that there was not sufficient evidence to convict the defendant of embezzlement because the evidence did not show the defendant came into possession of the draft lawfully. This is an element which must be proved in order to convict a person of embezzlement. State v. Speckman, 326 N.C. 576, 391 S.E.2d 165 (1990); State v. Griffin, 239 N.C. 41, 79 S.E.2d 230 (1953).
We believe the evidence showed the defendant came into possession of the draft lawfully so far as Ms. McCoy was concerned and that he wrongfully converted it to his own use. The defendant was the agent of Ms. McCoy with authority to negotiate the settlement of her claim. If he obtained the draft by a misrepresentation to State Farm that Ms. McCoy would accept the offer of settlement, he may have been guilty of obtaining property by a false pretense as to State Farm, but he was still the agent of Ms. McCoy and in possession of the draft as her agent. At that point, Ms. McCoy had the right to ratify the act of her agent and accept the draft. McCrillis v. Enterprises, 270 N.C. 637, 155 S.E.2d 281 (1967). The defendant so far had not committed any fraudulent act toward Ms. McCoy. She owned an interest in the draft in that she could, by accepting State Farm's offer, be entitled to the draft. The defendant, so far as Ms. McCoy was concerned, was in lawful possession of the draft in which she had a legal interest. When he converted it to his own use he was guilty of embezzlement. We believe that the relationship between the principal and agent governs as to whether the possession of the property was lawfully gained. Lawful possession does not depend on the relation between the agent and a third party.
The defendant says that because he received the draft from State Farm with instructions to hold it until Ms. McCoy signed the release he was acting as an agent for State Farm, holding the draft in escrow for State Farm until the release was signed. He says the title to the draft remained in State Farm and did not pass to Ms. McCoy. For this reason, he could not have em bezzled the draft from Ms. McCoy. Whatever the relationship between the defendant and State Farm as to title to the draft, Ms. McCoy had sufficient property interest in the draft so that the defendant could have embezzled it from her.
For the reasons stated in this opinion, we reverse the Court of Appeals and remand for remand to Superior Court, Sampson County for the reinstatement of the sentence.
REVERSED AND REMANDED.
Chief Justice Exum did not participate in the consideration or decision of this case.