Court Opinion

ID: 9624641
Source: CourtListenerOpinion
Date Created: 2023-08-22 07:12:25.644065+00
Date Added: 2024-06-11T18:05:51.944130
License: Public Domain

McQUADE, Justice
(dissenting).
The majority opinion affirms the conviction of the crime of embezzlement despite the fact that the State failed to prove all of the essential elements of that crime. The information charged appellant with the crime of embezzling cash. It was therefore necessary that the State prove beyond a reasonable doubt that appellant had some fiduciary obligation with respect to the cash received from the sale of gasoline.1 If such a fiduciary obligation exist*743ed at all, it must be found from the facts constituting the relationship between the Trimble Oil Company and appellant.
The State asserted, and the majority opinion concludes without analysis of the facts constituting that relationship, that appellant was an agent of the Trimble Oil Company with respect to the cash. Yet upon analysis of the only evidence adduced at trial concerning the “oral arrangement” between the Trimble Oil Company and appellant, all of which evidence consisted of the testimony of Mr. Trimble, the very individual who created the relationship, it appears that appellant had no obligation whatsoever to deposit specific funds in the Trimble Oil Company account. Mr. Trimble testified on cross-examination as follows:
“Q Now, to make certain as the customer paid him for the gas, paid Mr. Compton, was he obligated to send all of that money to you?
“A You mean from the customer, no he would deduct his commission.
“Q He was authorized to deduct his commission. As he operated the station, how he operated the till was of no concern to you, is this correct. You didn’t expect him to send you the specific money the customer gave him on over to you, is this correct?
“A No, he didn’t have to.
“Q If, a customer came in and he made a sale during the day and there was money in the till, Mr. Compton, could do as he pleased with this money, is this correct?
“A Over and above what he sends to us.
“Q Well, he owed you, he was suppose to pay you, but you didn’t care how he got the money, is this correct?
“A No.
“Q If he had gotten the money from his father, or other sources and sent it [to] you we would not be here today would we?
“A Apparently not.
“Q What I am getting at is, that he was not under any obligation to send this specific money that the customer gave him to you?
“A That’s correct.”
The conclusion that appellant had no obligation to deposit specific funds is plainly one of fact. The existence of such an obligation as a factual component of the relationship is essential to the conclusion of law that appellant had some fiduciary obligation with respect to the cash he is charged with embezzling.2 The existence of a legal fiduciary obligation is in turn essential to the further conclusion of law that appellant was an agent with regard to the cash.3
The duty of this Court is to apply the law to facts as they exist in the record. The majority opinion ignores the uncontrovertible fact established by the testimony in this case that appellant had no duty as part of his relationship to the Trim*744ble Oil Company to deposit specific funds. The majority opinion dismisses this testimony as incompetent in that, it is said, parties may not be permitted artificially to agree among themselves what is or is not an agency relationship. This line of reasoning is specious, for it ignores the distinction between questions of fact and conclusions of law based upon specific facts. Whether a statement constitutes a conclusion of law or a conclusion of fact depends upon its relationship to the legal issues involved.
In the present case, the legal issue is whether or not appellant was an agent of the Trimble Oil Company in relation to the cash received from customers. This question of law subsumes the subordinate issue as to whether or not appellant had any fiduciary obligation with respect to the cash. In relation to these two issues, the statement by Mr. Trimble that appellant had no duty to deposit specific funds is one of fact. As a principal Mr. Trimble was competent to make that statement of fact, and this Court cannot remove it from the record by calling it a conclusion of law. Of course, it is hornbook law that when an agency exists it does so irrespective of the label parties may apply to it, but there nonetheless must always be^ a residual foundation of facts to support the conclusion of law that an agency does exist.4 In this case, the duty to deposit specific funds is one of those residual facts. Without that fact there can be no fiduciary obligation, and without a fiduciary obligation there can be no agency. Without an agency there can be no crime of embezzlement in this case.
The proper characterization of the relationship between appellant and the Trimble Oil Company with respect to the cash received from customers is that of debtor and creditor. Upon the sale of gasoline, appellant incurred a debt to the oil company in the amount of its wholesale cost and one cent per gallon of gasoline sold as rental. The arrangement for the deposit of cash from any source in the Trimble Oil account was simply the means Mr. Trimble chose for the prompt payment of that debt. The failure of a debtor to pay his creditor the amounts due in the precise manner and at the precise times prescribed by the creditor does not constitute the crime of embezzlement. The creditor has civil remedies for such defaults. Under the reasoning of the majority, however, a failure by a consignee to pay his consignor the cost of goods sold in the manner prescribed by the consignor would constitute a crime, for that relationship could often be legally identical to the relationship in this case between appellant and Trimble Oil Company.5
The majority rely upon a number of cases 6 in an effort to characterize appellant as an agent for embezzlement purposes. It should be noted that five of these cases dealt with persons engaged in the business of soliciting and collecting accounts receivable and the sixth dealt with an attorney hired to collect an account receivable. In the Holdren and Lawrence cases, the respective courts acknowledged that the respective defendants were not agents in the strict legal sense but then went on to find agency in the “popular” sense. In fact, the Lawrence Court stated *745that the defendant could “substitute his obligation for the monies collected.” 7 The Courts went on nonetheless to find an agency in order to remedy what the Montana Court characterized as a “vicious evil.”8 This type of construction of criminal statutes appears unwise.
Moreover, the basic distinction between all of the collection agency cases and the case at bar is that the entire purpose of the collection business is to collect money owed on accounts receivable with which the collector had no previous contact. Appellant, on the other hand, was set up by the Trimble Oil Company as an independent manager of the gasoline station. With an eye upon the law of taxation and torts, the oil company expressly disclaimed that appellant was their employee. He was an independent lessee of the station premises; he could hire and fire his own employees at will; he could sell gasoline at any price he chose so long as the oil company was paid its wholesale cost; he could commingle cash sales receipts with his own funds and could even have paid his own helpers out of those receipts. This degree of independence is inconsistent with the assertion of an agency relation with respect to the cash, and it appears that the existence of agency or not is to turn upon convenience of the oil company.
Far more pertinent is the case of Kelley v. People.9 The Colorado Supreme Court’s review of the evidence disclosed that “Kelley was not an employee for the collection of funds nor was he obligated to segregate and hold in trust specific funds for the Company * * There
“H. B. Hill, the controlling partner of the [oil] Company, testified that he did not care where Kelley’s payments [for gasoline] came from, and that he was not concerned with the source of the payments. He made no requirement that receipts from the sale of the gasoline be set aside and held in trust for the Company. His only concern was that he be paid the wholesale price of the gasoline sold.”
Moreover, “Mr. Hill testified that Kelley could sell the gasoline at any price he wished, as long as the Company was paid the wholesale price from some source.” 10
On this state of the record, the Colorado Court concluded as follows:
“ * * * The evidence conclusively establishes that the money received by Kelley in the operation of the station was not the property of the Company, nor was Kelley acting as the agent of the Company when he received the money for the sale of the gasoline. No money collected by Kelley in the operation of the station became the Company’s property until it was actually transferred to the Company by Kelley in payment of his obligation. The arrangement between Kelley and the Company was clearly such that the relationship between them was that of debtor and creditor.” 11
Thus, the embezzlement conviction was reversed.
The majority purports to avoid the thrust of this case by pointing out that the Colorado attorney general did not disagree with Kelley’s position. Notwithstanding that lack of disagreement, the Kelley decision is a well-reasoned analysis of the nature of the relationship between the oil company and the gasoline station manager with respect to cash sales receipts. That relationship was nearly identical to the relationship in the case at bar. For that reason, and precisely because the attorney general could not disagree, the Kelley decision is more persuasive than those cases relied upon by the majority. Indeed, the State in the present case failed both in its brief and oral argument to suggest a single *746ground of distinction between the Kelley case and the case at bar.
Furthermore, the Kelley Court relied upon Cottrell v. Grand Union Tea Company,12 in which a relationship between a corporation and its salesman was analyzed and found to be a debtor-creditor relationship rather than a principal-agent relationship with respect to cash collected by the salesman. The salesman deducted his own commission and expenses from the receipts; he deposited the funds in his own bank account and remitted amounts owed the company by personal check. Thus, the Court concluded:
“It seems clear that under the plan of operation actually followed, so long as the company received what it had coming, it was not concerned with the identity of the money, and that the salesman was thus the debtor and the company the creditor, nothing more. * * *. [Thus] embezzlement would not lie.” 13
Significantly enough, the Utah Court cited the Idaho case of State v. White14 as authority for this conclusion. The jury verdict against the employer for malicious prosecution was reinstated.
For these reasons, appellant’s conviction should be reversed.
SPEAR, J., concurred.

. State v. White, 46 Idaho 124 at 131-133, 266 P. 415 at 417-418 (1928); People v. Kagan, 70 Cal.Rptr. 732 at 740 (Cal.App. 1968); People v. Parker, 235 Cal.App.2d 100, 44 Cal.Rptr. 909 at 914 (1965); Mavrikis v. State, 110 Ga.App. 26, 137 *743S.E.2d 730 at 733 (1964); State v. Waters, 302 S.W.2d 34 at 37 (Mo.1957); Colella v. United States, 360 F.2d 792 at 799 (1st Cir. 1966).

. Embezzlement is a criminal breach of trust, but not every breach of trust is embezzlement, for not all breaches of trust involve duties with respect to specific property. In the present case, the fact that appellant could have commingled cash received from customers with his own funds shows that appellant had the power under the terms of his relation to the oil company to substitute his personal debt for specific property. The existence of some duty toward specific property is necessary to limit and define tbe scope of all fiduciary obligations. “A person in a fiduciary relation to another is under a duty to act for the benefit of the other as to matters within the scope of the relation,” Restatement (Second) of Trusts § 2, comment b (1957). The “scope of the relation” is a question of fact, namely, with respect to what property are duties owed. See also Scott, Abridgment of the Haw of Trusts § 2.6 (1960).

. Restatement (Second) of Agency §§ 1(1) and 13 (1957).

.Restatement (Second) of Agency § 1(1), comment b: “Agency is a legal concept which depends upon the existence of required factual elements * * *. To constitute the relation there must be an agreement * * * between the parties; if the agreement results in the factual relation between them to which are attached the legal consequence of agency, an agency exists * * *cf. Bogert, Trusts and Trustees § 22 (1965).

. See Restatement (Second) of Agency § 14 J (1957).

. State v. Holdren, 143 Mont. 103, 387 P.2d 446 (1963); State v. Lawrence, Ohio Com.Pl., 13 Ohio Op.2d 195, 168 N.E.2d 21 (1960); State v. Cochrane, 51 Idaho 521, 6 P.2d 489 (1931); Sherman v. State, 234 Miss. 775, 108 So.2d 205 (1959); Dickens v. State, 398 P.2d 1008 (Alaska 1965; State v. Johnson, 266 Minn. 187, 123 N.W.2d 183 (1963).

. Lawrence, note 6, supra, 168 N.E.2d at 26.

. Holdren, note 6, supra, 387 P.2d at 450.

. 157 Colo. 417, 402 P.2d 934 (1965).

. Id. at 935.

. Id.

. 5 Utah 2d 187, 299 P.2d 622 (1956).

. Id. at 625.

. N. 1, supra.