Opinion ID: 1411993
Heading Depth: 1
Heading Rank: 2

Heading: history and elements of the law of embezzlement

Text: The crime of embezzlement developed as, and continues to be, an important statutory counterpart to the common law crime of larceny. At common law, if an employee acquired his employer's property by trespass, meaning that the employee took the property against his employer's will with the intent to steal it, the employee was guilty of larceny, a felony. [1] 2 Joel Prentiss Bishop, New Commentaries on The Criminal Law Upon a New System of Legal Exposition §§ 799, 803 (Chicago, T.H. Flood & Co., 8th ed. 1892) [hereinafter 2 Bishop, New Commentaries (1892)]; see also 2 William Oldnall Russell, A Treatise on Crimes and Indictable Misdemeanors 102 (Philadelphia, P.H. Nicklin & T. Johnson, 3d ed. 1836) [hereinafter 2 Russell, Treatise on Crimes ]. If an employee lawfully came into possession of his employer's property during the course of employment, but later took that property for his own personal benefit, the employee was guilty of the common law offense of breach of trust, a misdemeanor. [2] 2 Bishop, New Commentaries §§ 799, 803 (1892); see also State v. Braden, 2 Tenn. 466, 467-68, 2 Overt. 68, 69-70 (1805); Jerome Hall, Theft, Law and Society 34-40 (2d ed.1952) [hereinafter Hall, Theft ]. This distinction, based upon the premise that there could be no larceny without trespass, generated a multitude of cases before the English courts. See, e.g., Regina v. Creed, 174 Eng. Rep. 714 (1843); Rex v. Hart, 172 Eng. Rep. 1166 (1833); Cartwright v. Green, 168 Eng. Rep. 574 (1803); The King v. Pear, 168 Eng. Rep. 208 (1780); see also 2 Russell, Treatise on Crimes 104 (If, therefore, there be no trespass in taking goods, there can be no felony in carrying them away.). Notwithstanding early statutory attempts to eliminate this disparity in specific cases [3] , difficult questions, similar to the question sub judice, continued to arise regarding the relationship of parties to each other and to the stolen property. The first modern embezzlement statute was enacted in England by Parliament in 1799. An Act to protect masters against embezzlements by their clerks or servants, 1799, 39 Geo. 3, c. 85 (Eng.); see also Hall, Theft 38-39. The purpose of the Act was to ensure uniform results in similar cases by extending the common law of larceny to most circumstances in which the defendant initially came to possess the stolen property without trespass. Wm. L. Clark, Jr., Hand-Book of Criminal Law 307-08 (Francis B. Tiffany ed., 2d ed. 1902)(At common law, to constitute larceny, it is also necessary that the property be taken from the owner's possession by trespass, with intent to deprive him of his ownership; and therefore that crime is not committed by a bailee or other person who, after lawfully obtaining possession from the owner in good faith, appropriates it to his own use. It was to meet these cases that the embezzlement statutes were enacted.); 2 Bishop, New Commentaries § 800 (1892) (It was to make punishable misappropriations without trespass that the embezzlement statutes were passed.). Although subsequent enactments of the English embezzlement statute expanded the class of persons deemed to be capable of embezzlement and the class of things capable of being embezzled, see An Act to make better Provision for the Punishment of Frauds committed by Trustees, Bankers, and other Persons intrusted with Property, 1857, 6 Geo. 4, c. 94 (Eng.); An Act for more effectually preventing the Embezzlement of Securities for Money and other Effects, left or deposited for safe Custody, or other special Purpose, in the Hands of Bankers, Merchants, Brokers, Attorn[ey]s or other Agents, 1812, 52 Geo. 3, c. 63 (Eng.), no subsequent enactment vitiated the distinction that the embezzlement statute criminalized non-trespassory takings and larceny remained the proper action in all other cases. Embezzlement remained a purely statutory offense, specifically tailored to criminalize as felonies acts which common law larceny did not govern. In post-colonial North Carolina, the new state's common law and statutory traditions can be traced to its origin in English law. Because North Carolina's legal system was still in its infancy when North Carolina became the twelfth state on 21 November 1789, it is not surprising that the British common law crime of larceny and statutory crime of embezzlement were discussed by this Court in one of its first reported decisions, State v. Higgins, 1 N.C. 36, 1 Mart. 62 (1792) (vacating judgment of guilt under 21 Hen. 8, c. 7 because defendant was not a servant under that statute and because the acts charged, which did not include felonious taking, did not constitute larceny at common law). As North Carolina's legal system matured, the first statute criminalizing embezzlement was enacted during the 1871-1872 session of the General Assembly. That legislation, titled An Act to Define and Punish the Crime of Embezzlement, stated: If any officer, agent, clerk or servant of any corporation, or any clerk, agent or servant of any person or co-partnership, (except apprentices and other persons under the age of sixteen years,) shall embezzle or fraudulently convert to his own use or shall take, make away with or secrete, with intent to embezzle or fraudulently convert to his own use any money, goods, or other chattels, bank note, check or order for the payment of money ... which shall have come into his possession or under his care by virtue of such office or employment, he shall be deemed guilty of felony, and upon conviction thereof, shall be punished as in cases of larceny. Act of Feb. 8, 1872, ch. 145, 1871-72 N.C. Sess. Laws 223, 223-24 (emphasis added). Minor substantive revisions to the statute have been made over the last 130 years, most notably those expanding the class of individuals who are capable of committing the offense of embezzlement. Act of Feb. 25, 1889, ch. 226, 1889 N.C. Sess. Laws 237 (adding consignees); Act of Feb. 28, 1891, ch. 188, 1891 N.C. Sess. Laws 164 (including public officer[s], clerk[s] of the superior or other court, sheriff[s] or other person[s] or officer[s] exercising a public trust or holding public office); Act of Feb. 6, 1897, ch. 31, 1897 N.C. Sess. Laws 83 (extending the statute to guardians, administrators, and executors who misappropriate funds); Act of Mar. 21, 1931, ch. 158, 1931 N.C. Sess. Laws 221 (further extending the statute to trustees who embezzle from their beneficiaries); Act of Jan. 24, 1939, ch. 1, 1939 N.C. Sess. Laws 25 (incorporating any receiver and any other fiduciary under the statutory scheme); Act of Feb. 17, 1941, ch. 31, 1941 N.C. Sess. Laws 41 (adding bailees to the list of individuals subject to the statute); Act of June 20, 1967, ch. 819, 1967 N.C. Sess. Laws 1044 (broadening the statutory scope to cover embezzlement from any unincorporated association or organization); see also State v. Ross, 272 N.C. 67, 69-72, 157 S.E.2d 712, 713-15 (1967) (discussing and interpreting the 1939-1967 expansions in the embezzlement law); State v. Whitehurst, 212 N.C. 300, 302-303, 193 S.E. 657, 659 (1937) (detailing the evolution of the embezzlement statute from 1872 through 1937); George P. Fletcher, The Metamorphosis of Larceny, 89 Harv. L.Rev. 469, 471 (1976) (Embezzlement has grown from an offense applicable to selected relationships of trust to a general offense applicable to everyone who has been entrusted with property.... (footnotes omitted)). As a result, N.C.G.S. § 14-90, the current statute defining embezzlement, now states: If any person exercising a public trust or holding a public office, or any guardian, administrator, executor, trustee, or any receiver, or any other fiduciary, or any officer or agent of a corporation, or any agent, consignee, clerk, bailee or servant, except persons under the age of 16 years, of any person, shall embezzle or fraudulently or knowingly and willfully misapply or convert to his own use, or shall take, make away with or secrete, with intent to embezzle or fraudulently or knowingly and willfully misapply or convert to his own use any money, goods or other chattels, bank note, check or order for the payment of money ... belonging to any other person or corporation, unincorporated association or organization which shall have come into his possession or under his care, he shall be guilty of a felony. N.C.G.S. § 14-90 (2003) (emphasis added). Over the past century, this Court has examined embezzlement and its place in our jurisprudence on several occasions. For example, in a 1903 decision, this Court noted that the general aim of embezzlement statutes in both England and North Carolina was to punish the misappropriation of property rightfully in the possession of the alleged wrongdoer, who, though civilly liable for a conversion, could not be convicted of larceny, because there was no taking from the owner's possession by an act of trespass. State v. McDonald, 133 N.C. 680, 683, 45 S.E. 582, 583 (1903) (emphasis added). More recently in State v. Griffin, 239 N.C. 41, 79 S.E.2d 230 (1953), this Court distinguished embezzlement from larceny, stating: While there is similarity in some respects between larceny and embezzlement, they are distinct offenses. Larceny is a common law offense not defined by statute; while embezzlement is a criminal offense created by statute to cover fraudulent acts which did not contain all the elements of larceny. Generally speaking, to constitute larceny there must be a wrongful taking and carrying away of the personal property of another without his consent, and this must be done with felonious intent.... The embezzlement statute makes criminal the fraudulent conversion of personal property by one occupying some position of trust or some fiduciary relationship as specified in the statute. The person accused must have been entrusted with and received into his possession lawfully the personal property of another, and thereafter with felonious intent must have fraudulently converted the property to his own use. Trespass is not a necessary element. In embezzlement the possession of the property is acquired lawfully by virtue of the fiduciary relationship and thereafter the felonious intent and fraudulent conversion enter in to make the act of appropriation a crime (citations omitted). [4] Id. at 44-45, 79 S.E.2d at 232-33 (emphasis added); see also State v. Speckman, 326 N.C. 576, 391 S.E.2d 165 (1990) (discussing and applying Griffin ); State v. Whitley, 208 N.C. 661, 663, 182 S.E. 338, 340 (1935)(holding that the simple fact that the accused is an employee of the victim does not transform the crime from larceny to embezzlement, as the key distinction between the two crimes is lawful possession). Historically, since the General Assembly codified the criminal offense of embezzlement in North Carolina, the criminal act has hinged on a defendant's misappropriation of property in his/her lawful possession or care due to employment or fiduciary capacity. As in English common law, misappropriation by trespass supports the offense of larceny, not embezzlement, in North Carolina. Griffin, 239 N.C. at 44-45, 79 S.E.2d at 232-33. Therefore, North Carolina courts have remained respectful of the separate and distinct nature of these crimes and restrained in their application of N.C.G.S. § 14-90. For the reasons discussed below, we decline to adapt N.C.G.S. § 14-90 to the facts sub judice.