Court Opinion

ID: 3406822
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:22:31.045146+00
Date Added: 2024-06-11T13:47:24.777235
License: Public Domain

Where A and B have had a business transaction and A advances money to B thereunder for a specific purpose, and B openly and in good faith retains the money under a claim, growing out of this same transaction, that A owes him more than the sum retained, the retention of the money by B is not larceny after trust, and it is immaterial whether the claim is well founded. The question is whether B's claim was made in good faith. Staples v. Johnson, 25 App. D.C. 155 (6); People v.
LaPique, 120 Cal. 25 (52 P. 40); State v. Barnett,  98 S.C. 422 (82 S.E. 795); 20 C. J. 436, § 21.
       DECIDED FEBRUARY 10, 1940. REHEARING DENIED MARCH 23, 1940.
The defendant was charged on September 22, 1938, in the criminal court of Fulton County with larceny after trust and was convicted. His certiorari was overruled and he excepted.
It appears from the evidence and the defendant's statement that the defendant had been in business in Atlanta for twenty or twenty five years; that he operates the McJenkin Insurance and Realty Company, and is engaged in the business of writing fire insurance; that he also operates the Residence Construction Company, a corporation which does a building business; that about the first of April, 1938, the prosecutor, Arnold, answered an advertisement of Residence Construction Company which he said he saw in a newspaper; that he took up with the defendant the question of buying a lot and building a house thereon, and of getting a loan from the Federal Housing Administration; that the prosecutor told the defendant he wanted to buy a lot from Mrs. Gilley in Atlanta on which to build a house, and that he had discussed this matter with her, but she wanted $250 for the lot which he thought was too much, and since the defendant was a friend of Mrs. Gilley he wanted him to see if he could buy the lot for less. "However, [the prosecutor said] do not let the matter stand in the way and let's start building as quickly as possible. . . Mr. McJenkin informed me that he had talked with the FHA people about the location, and they stated the location was O K. He stated that there would be no charge on his part for blue prints or any preliminary work; that he made his commission out of building the house. I had a reason to believe this to be true because other contractors had made me the same proposition. After this $10 check was put up I gave him a check in the amount of $10 for the appraisal fee which he stated the FHA charged to appraise the property, and that should the loan not go through this money also would be returned to me." These checks were cashed and were in two amounts of money with which the defendant was charged as having fraudulently converted to his own use. The negotiations seem to have been begun on April 1, 1938, and on April 2, 1938, the defendant gave the prosecutor the following receipt: "Received of Mr. Luke Arnold the sum of ten  no/100 (10.00) dollars as earnest money and part payment of purchase-price of property, as described in the within copy of original proposition. Said earnest money is to remain with J. E. McJenkin, agent, during the term of said property, *Page 323 
and it is subject to acceptance by the owner of said property, and it is to be returned to purchaser in the event proposition is declined. This 2nd day of April, 1938. J. E. McJenkin, agent." Then, on April 4, 1938, the written contract of sale was entered into and recited in part as follows: "The undersigned hereby agrees to buy through J. E. McJenkin, agent for Mrs. J. M. Gilley, the following described property: . . It is understood and agreed that should either party hereto default in the faithful performance of this contract, the party defaulting shall immediately pay the agent's commission; otherwise, the seller, upon acceptance of the above proposition, and in consideration of services rendered, will pay said commission. It is expressly understood and agreed between the parties hereto that this contract as signed by them constitutes the sole and entire agreement between them and no modifications of this contract, written or verbal, shall be binding upon either party, unless in writing, signed by each of them, and attached hereto. Special stipulations. No commissions to be paid by seller. Luke Arnold, purchaser. The above proposition is hereby accepted, this 6th day of April, 1938. Mrs. J. M. Gilley, owner."
Arnold, the prosecutor, received from McJenkin the following letter which was dated May 26, 1938: "Replying to your letter of May 23rd, wish to say we have not as yet received the $10 refund from the FHA but will be pleased to forward same to you as early as it is received. In reference to the $10 deposit in connection with purchase of lot, you will recall you were to get a release from the owner of this lot in order for me to make this refund." On July 21, 1938, the prosecutor wrote the defendant that Mrs. Gilley had informed him that she had executed and mailed to the defendant the release referred to in his letter, and the prosecutor asked for a payment of the $20 in September, 1938. The prosecutor turned the matter over to an attorney and the attorney wrote the defendant the following letter on September 1, 1938: "On April 4, 1938, Mr. Luke Arnold signed a check made to you in the amount of $10. On the face of this check in the left-hand corner is the following reading `This amount is to apply on sale of two lots on Rice Street.' Three days later, on April 7, 1938, Mr. Luke Arnold signed another check made to you in the amount of $10. Down in the left-hand corner on the face of the check reads *Page 324 
as follows: `For appraisal on property for FHA loan.' Mr. Arnold states to me that he has mailed you several letters requesting the payment or return to him of his money. I respectfully direct your attention to the laws of the State of Georgia as well as the Federal laws (pertaining to the FHA), governing the conversion of Mr. Arnold's money to your own benefit and use. Mr. Arnold instructed me to take whatever steps I saw fit in this matter and to do so at once. My motto is always give a man one chance after the matter has been turned over to me, but in doing this I will expect you to let me hear from you immediately upon receipt of this letter. Mr. Arnold seems to be perturbed about it and thinks you have not treated him right." The defendant answered this letter on September 2, 1938, as follows: "Replying to your letter of September 1, I beg to say that I likewise hold check No. 191 in the amount of $12.50 covering the first item referred to in your letter, transmitting the money to the proper destination and $2.50 extra for photographs of Mr. Arnold's lot which amount was advanced against his account. I also desire to call your attention to an agreement I had with Mr. Arnold to the effect that in the event I should not build his home, he should pay me $15 for making the plans and specifications and doing other preliminary work in connection with his application for the FHA loan. Mr. Arnold seems to be very much excited over the little claim of a refund from me, but he seems to be entirely absent-minded about the claim I have against him for services rendered. I am not the least concerned or worried about your threats, but if Mr. Arnold wants to do the fair and square thing about his matter he will have no difficulty in getting a proper adjustment from me. He seems to entirely overlook the actual cash that I paid out in excess of the amount he turned over to me for the FHA loan to say nothing of the charges for services rendered. It certainly was no fault of mine that Mr. Arnold could not go forward with the construction of the dwelling; however, I am ready and willing to do the fair and honorable thing by Mr. Arnold and, of course, feel that I have a right to expect the same thing from him. If you or Mr. Arnold would care to discuss the matter with me further you may advise."
In his statement to the jury the defendant said: "During the course of my dealings on the lot it was understood that I was to build a house for Mr. Arnold on the lot. I told him there would *Page 325 
be considerable trouble to me in arranging the purchase of the lot. He agreed that on account of the fact that he was to pay me $10 or $15 for my trouble in handling the details in the purchase of the lot. I also told him that it was the custom of my company to require a $15 deposit for blue prints or drawings which I would have to make for the house he proposed to build on the lot. He and I agreed in case I built the house that the $15 would be credited on the cost price. Mr. Arnold said he was not in position to put up this money at that time but asked me to go ahead and make the drawings, which I did and which have been submitted here are the drawings I made. I spent several days and nights making them. It is worth anybody's $30 to make these drawings, and an architect would have charged him more than that for them. Mr. Arnold placed with me two checks, one was for deposit on the purchase of the lot. This $10 was to remain with me and was to be returned to Mr. Arnold in case the owner did not accept the contract. The owned did accept the contract and signed it. The other check was to be placed with the FHA as an appraisal fee. After I received these checks I found that they required certain pictures to be made. I deposited the $10 check in the account of the Residence Construction Company and drew a check on the residence company for the sum of $12.50, $2.50 more than Mr. Arnold had deposited with me and I paid this $12.50 to the FHA through their agent here. I also drew the specifications in detail for the house, the same specifications exhibited here. I submitted the plans to the FHA and made several trips over there and while they stated that the drawings were inadequate and deficient, the real reason they turned down the loan was because of the fact that the location was not eligible for mortgage insurance purposes. I did write Mr. Arnold a letter stating that I would return the check to him as soon as I received it from the FHA, but I thought the check would be made payable to Mr. Arnold. I expected to return that check to him at which time I expected him to pay me for my services in handling the details in the purchase of the lot and also for my work on the drawings. He actually owes me $36.15 less the $20 deposited with me. I certainly never had any intention of stealing anything from Mr. Arnold and I did not steal anything from him. He actually owes me an amount of money and I owe him a lesser amount. Sometime after the loan *Page 326 
had been turned down, I saw Mr. Arnold at Buckhead and he spoke to me about the $20 he had put up with me. I told him I had received the money back but that he owed me the difference between the $20 and $36.15. He then remarked that `there is not much difference, so just forget it.' I thought that would end the matter and decided to drop any further claims against him rather than press a claim against him for that amount he owed me."
Mr. Wharton, in discussing larceny, says: "Where property is taken under a claim of right, if this claim be bona fide and fair, the court should direct an acquittal." 2 Wharton's Criminal Law, 1345, § 1121. In his statement to the jury the defendant said: "I certainly never had any intention of stealing anything from Mr. Arnold and I did not steal anything from him. He actually owes me an amount of money and I owe him a lesser amount." Continuing, Mr. Wharton says: "Taking in order to force the payment of a debt may be larceny when the intention is to deprive the owner permanently of his property in case the debt is not paid. It is otherwise when the taking is in pursuance of an honest claim of title. Nor, when the object is not to defraud, but to obtain a just settlement, can there be held to be such a fraudulent intent as will sustain a conviction." 2 Wharton's Criminal Law, 1346, § 1122. Thus, if the money was retained with the object not to defraud the prosecutor but to obtain a just settlement of mutual debts, it should not be held to be such a fraudulent intent as will sustain a conviction. Where, at the time of the alleged conversion, the defendant stated, and other evidence tended to show, that he was holding the money in order to obtain a just settlement between himself and the prosecutor about matters that all grew out of the same transaction, it should be made to appear by plain and convincing evidence that the claim was not bona fide, for if the claim was bona fide, even though the defendant may have been mistaken in his opinion, he should not be convicted.
It is not fit that disputes of bona fide and fair claims of right should be settled in a manner to bring a man's liberty into jeopardy, but the civil courts rather than the criminal courts should be used. There is a manifest impropriety under the penal system of *Page 327 
Georgia of trying, in the criminal courts, a question of property, which it is the intention of the legislature to relieve from the incidents of imprisonment. The failure to return the money in this case must have been wrongful and fraudulent, and, in order to have been a criminal conversion, must have been done with a positive intent to defraud. Georgia Railroad v.Cubbedge, 75 Ga. 321, 324. If the defendant retained the money in a bona fide effort to obtain a just settlement of the debt under an open and bona fide claim that the prosecutor owed him more than the sum retained, he is not guilty of larceny after trust, and it is immaterial whether his claim is well founded; that is, that he would prevail in a civil action. The question is whether the claim was made in good faith. The fact that at the time of the taking of property a person had the hope or expectation of replacing it, as where a cashier takes the money of a bank for the purpose of speculation and expects to return it, can not be admitted as an excuse before the law as being an act not done with intent to defraud, for when he takes the money which has been intrusted to him he deprives the owner of his dominion over it, knowing that he has no legal right to do so (and every man is presumed to know the law), and a guilty intent is necessarily inferred from the voluntary commission of such an act, the inevitable effect of which is to deprive the true owner of his property. But where money is intrusted to a person for a specific purpose, and he in good faith retains the money in order to obtain a just settlement of matters involved in the same transaction, and believing he has a right so to do, he is not guilty of larceny after trust, for, theoretically, if the prosecutor would give back to the defendant his property, the defendant would give back to the prosecutor his property; in other words, there would only be a retention in good faith pending a just settlement of debts, and not a fraudulent conversion which is a necessary element in larceny after trust. Spalding v. People, 172 Ill. 40 (49 N.E. 993, 999); Snell v.State, 50 Ga. 219; Etheridge v. State, 78 Ga. 340;Almand v. State, 110 Ga. 883, 886 (36 S.E. 215, 78 Am. St. R. 140).
"While in criminal cases the question of intent is one entirely for the jury, yet, where, from all the facts and circumstances in the case, an intent to defraud is not reasonably deducible, there can be no conviction of an offense of which an intent to defraud is necessarily *Page 328 
an essential element." Wood v. State, 11 Ga. App. 242
(74 S.E. 1100). Applying the facts in the instant case to the principle of law above stated, we do not think the State carried the burden of showing by plain and convincing evidence that the defendant's claim was not made in good faith. His conviction was not authorized and a new trial should have been granted.
Judgment reversed. Broyles, C. J., and Guerry, J., concur.