GA Code § 16-8-15 (2021)
2021 Georgia Code|Title 16 - Crimes and Offenses|Chapter 8 - Offenses Involving Theft|Article 1 - Theft|§ 16-8-15. Conversion of Payments for Real Property Improvements

  Any architect, landscape architect, engineer, contractor, subcontractor, or other person who with intent to defraud shall use the proceeds of any payment made to him on account of improving certain real property for any other purpose than to pay for labor or service performed on or materials furnished by his order for this specific improvement while any amount for which he may be or become liable for such labor, services, or materials remains unpaid commits a felony and, upon conviction thereof, shall be punished by imprisonment for not less than one year nor more than five years or upon the recommendation of the jury or in the discretion of the trial judge, punished for a misdemeanor, provided that, in addition to the above sanctions, where a corporation's agent acts within the scope of his office or employment and on behalf of the corporation and with intent to defraud uses such proceeds for purposes other than for property improvements or where a corporation's board of directors or managerial official, the latter acting within the scope of his employment and on behalf of the corporation recklessly tolerates or, with intent to defraud, authorizes, requests, or commands the use of such proceeds for purposes other than for property improvements, the corporation commits a felony and, upon conviction thereof, shall be punished by a fine of not less than $1,000.00 nor more than $5,000.00.   A failure to pay for material or labor furnished for such property improvements shall be prima-facie evidence of intent to defraud.    (Ga. L. 1941, p. 480, § 1; Code 1933, § 26-1808.1, enacted by Ga. L. 1976, p. 1456, § 1; Ga. L. 1982, p. 3, § 16.)   Law reviews.   - For article surveying developments in Georgia constitutional law from mid-1980 through mid-1981, see 33 Mercer L. Rev. 51 (1981). For annual survey of construction law, see 57 Mercer L. Rev. 79 (2005).   JUDICIAL DECISIONS   Editor's notes.   - In light of the similarity of the statutory provisions, annotations decided under former Code 1933, § 26-2812 are included in the annotations for this Code section.   Constitutionality of presumption.    - Whether presumption of O.C.G.A. § 16-8-15 that failure to pay for material or labor is prima facie evidence of intent to defraud is constitutionally invalid depends upon whether jury in particular case, after instructions, interpreted presumption as burden-shifting or conclusive rather than permissive only. State v. Hudson, 247 Ga. 36, 273 S.E.2d 616 (1981).    Purpose of former Code 1933, § 26-2812 was to make penal the conversion of funds delivered for the purpose of applying to labor and material cost with a provision that there would be a conversion when such funds were otherwise used while there remained any unpaid labor or material cost.(decided under former Code 1933, § 26-2812) Davis v. State, 122 Ga. App. 311, 176 S.E.2d 660 (1970);.    Former Code 1933, § 26-2812 created a form of larceny after trust. Davis v. State, 122 Ga. App. 311, 176 S.E.2d 660 (1970) (decided under former Code 1933, § 26-2812).    General principles with regard to larceny after trust are regarded as applicable and pertinent to and controlling in cases involving former Code 1933, § 26-2812. Davis v. State, 122 Ga. App. 311, 176 S.E.2d 660 (1970) (decided under former Code 1933, § 26-2812).   O.C.G.A.    § 16-8-15 refers to lawfully obtained funds or property. - O.C.G.A. § 16-8-15 refers to theft by conversion of payments for property improvements, which refers to lawfully obtaining funds or other property of another rather than falsely obtaining same. Hancock v. State, 158 Ga. App. 829, 282 S.E.2d 401 (1981).    Any trust responsibility arising from O.C.G.A. § 16-8-15 at time and by virtue of misconduct. Murphy & Robinson Inv. Co. v. Cross, 666 F.2d 873 (5th Cir. 1982).   Constructive trust not imposed.   - Georgia law does not impose a constructive trust in favor of a subcontractor on funds paid by an owner to a contractor when the subcontractor has not filed a lien, but when the owner has paid the contractor in full during the time the subcontractor could have filed a lien. Wachovia Bank v. American Bldg. Consultants, Inc., 138 Bankr. 1015 (Bankr. N.D. Ga. 1992).    O.C.G.A. § 16-8-15 is a criminal statute and considered alone, it is insufficient to create a constructive trust. Pettigrew v. Southern Aluminum Finishing Co. (In re Amarlite Architectural Prods., Inc.), 178 Bankr. 904 (Bankr. N.D. Ga. 1995).    O.C.G.A. § 16-8-15 does not alone provide authority for the creation of a constructive trust and it could not provide the basis for a civil action by a subcontractor against a contractor for conversion of funds. Doyle Dickerson Co. v. Durden, 218 Ga. App. 426, 461 S.E.2d 902 (1995).   Civil liability for damages.    - Plaintiff failed to plead a claim to recover damages for conversion under O.C.G.A. § 51-10-6 based on a violation of two criminal statutes - theft by conversion of payments for property improvements and theft by taking - as the plaintiff did not allege any of the necessary elements to establish the violations and did not allege that the defendant was charged with or found guilty of a violation of those statutes. Vanbenschoten v. Turner (In re Turner), Bankr. (Bankr. S.D. Ga. Mar. 31, 2017).    Although O.C.G.A. § 51-10-6 expressly provided for a civil recovery for thefts, under Georgia case law, that statute could not be used to establish a civil remedy for the specific crime of theft by conversion. Nor had O.C.G.A. § 51-1-6 been used to create a civil remedy for violations of the theft by conversion statute. Thomas Concrete of Ga., Inc. v. Osbourne (In re Osbourne), Bankr. (Bankr. N.D. Ga. Aug. 24, 2017).   Must have claim against alleged converted funds.    - Appellate court erred, in part, by denying a bank's motion for summary judgment as to a counterclaim for conversion against a general contractor because the appellate court did not consider whether the general contractor had any right to assert a counterclaim against the bank for conversion of funds due to the subcontractors. Vinings Bank v. Brasfield & Gorrie, LLC, 297 Ga. 468, 774 S.E.2d 701 (2015).   Prosecution did not violate bankruptcy discharge injunction.   - Continuation of criminal prosecution was not solely to collect a debt in violation of a discharge order in a Chapter 7 debtor's case as the debtor provided no evidence to support a finding that the prosecution was brought in bad faith, and the alleged crime, theft by conversion in violation of Georgia law, was more than a failure to pay a debt. Further, it was the state that decided to continue the prosecution by conducting the state's own investigation, obtaining a warrant, and submitting evidence to the grand jury. Buckley v. Patel (In re Buckley), Bankr. (Bankr. N.D. Ga. Feb. 13, 2015).   Nondischargeability for willful conversion of payments on real property not established.   - Consent judgment entered against the debtor with respect to funds for a construction project did not establish nondischargeability for willful conversion of payments for real property improvements because the consent judgment did not establish a constructive trust in favor of the creditor for the debtor's willful conversion under state laws as there was no evidence the debtor was guilty of a violation of a criminal statute and there was no civil action to remedy the harm from the particular criminal law violation. Pioneer Constr., Inc. v. May (In re May), 518 Bankr. 99 (Bankr. S.D. Ga. 2014).   Entrustment not established.    - Defendant's conviction was reversed where the evidence did not establish that defendant was entrusted with funds for the specific purpose (house construction) set forth in the indictment so as to enable a rational trier of fact to find defendant guilty beyond a reasonable doubt. Teston v. State, 194 Ga. App. 324, 390 S.E.2d 437 (1990).   Specific intent.    - O.C.G.A. § 16-8-15 requires not only the general intent required in all criminal statutes, but also a specific intent to defraud. Thompson v. State, 233 Ga. App. 792, 505 S.E.2d 535 (1998).    Defendant's refusal to pay for material furnished for property improvements due to defendant's belief that contractor owed defendant money did not establish a specific intent to defraud; defendant could therefore not be convicted under O.C.G.A. § 16-8-15. Thompson v. State, 233 Ga. App. 792, 505 S.E.2d 535 (1998).   Venue.    - In theft by conversion cases, where allegedly converted property is money, two options are available to state regarding venue: first, state can proceed in county where accused received the money; second, state can produce evidence tracing funds disbursed in one county (where case is being prosecuted) back to account or other source in origin county, showing further that the funds were not disbursed in accordance with contract provisions governing use of funds. Stowe v. State, 163 Ga. App. 535, 295 S.E.2d 209 (1982).    In prosecution for theft by conversion of a portion of an account, funds properly spent were not "subject of the theft," but only those funds alleged to have been spent unlawfully; thus, for venue purposes, burden was upon state to produce evidence that appellant exercised control over allegedly converted funds in county where case was prosecuted. Stowe v. State, 163 Ga. App. 535, 295 S.E.2d 209 (1982).    Venue in the county in which defendant building contractor's agent received a check from the defendant's customer was sufficiently established by defendant's admission that defendant received payments from no customer and had designated the agent as the person to receive the check. Queen v. State, 210 Ga. App. 588, 436 S.E.2d 714 (1993).   Theft by taking conviction in lieu of conversion of construction payments.    - Trial court did not err in not applying the principle of lenity to find defendant guilty of charges of conversion of payments for real property improvements, which carried a lighter sentence than the conviction defendant received on charges of theft by taking, since the facts did not support a conviction for conversion of payments for real property improvements since the state did not present any evidence on the required element that any bill for labor or materials remained unpaid. McMahon v. State, 258 Ga. App. 512, 574 S.E.2d 548 (2002).    Cited in Lingold v. State, 162 Ga. App. 486, 292 S.E.2d 193 (1982); Farmer v. Dillard, 171 Ga. App. 321, 319 S.E.2d 515 (1984); Hudson v. State, 198 Ga. App. 360, 401 S.E.2d 571 (1991); Chen v. Tai, 232 Ga. App. 595, 502 S.E.2d 531 (1998); Davis v. State, 322 Ga. App. 826, 747 S.E.2d 19 (2013).   RESEARCH REFERENCES   Am. Jur. 2d.   - 26 Am. Jur. 2d, Embezzlement, §§ 4, 11, 28.   C.J.S.   - 29A C.J.S., Embezzlement, §§ 26, 32, 33. C.J.S., False Pretenses, § 33.   ALR.    - Distinction between larceny and embezzlement, 146 A.L.R. 532.   Nature of property or rights other than tangible chattels which may be subject of conversion, 44 A.L.R.2d 927.   What constitutes "loss from theft" within provisions of Internal Revenue Code concerning deduction of losses arising from theft, 62 A.L.R.2d 572.   Validity and construction of statute providing criminal penalties for failure of contractor who has received payment from owner to pay laborers or materialmen, 78 A.L.R.3d 563.   Embezzlement, larceny, false pretenses, or allied criminal fraud by a partner, 82 A.L.R.3d 822.   What constitutes tax-deductible theft loss under 26 USCS § 165, 98 A.L.R. Fed. 229.