Court Opinion

ID: 9724534
Source: CourtListenerOpinion
Date Created: 2023-08-26 11:00:29.340947+00
Date Added: 2024-06-11T18:25:02.154340
License: Public Domain

ARDAIZ, J., Concurring and Dissenting.
I concur with the majority as to count I which charges petitioner with misappropriation of county funds arising out of the Taylor transaction. Because the majority does not separately address this count, I briefly set forth the relevant facts.
Doug Wilson, the public works director for the County of Tulare (County), testified that the Tulare County Board of Supervisors (Board) authorized $6,000 to fund a construction project at the comer of Rose Lane and Morton Avenue. The money was authorized to acquire a right-of-way and to pay expenses involved in cleanup work to be done on Rose Lane. Wilson testified that the agenda item presented to the Board made no mention of an expenditure for installation of curbs or gutters. The rights-of-way were to be purchased from Griffin and Taylor. The County subsequently authorized the purchase of only Taylor’s and not Griffin’s right-of-way. Thus, the check petitioner delivered to Taylor was from the County and the check delivered to Griffin was from the City of Tulare (City).
Petitioner represented to both Taylor and Griffin that an easement across their property would be exchanged for the installation of the curbs and gutters. In fact, the county check Taylor signed and returned to petitioner greatly exceeded the cost of the improvement. Both Griffin and Taylor testified petitioner never told them that funds from their checks would be used to improve other property nor did they ever agree to such a deal.
Petitioner delivered the checks to Griffin and Taylor. After the checks had been endorsed and returned to petitioner, he turned them over to Manuel Rodriguez, the contractor who installed the curbs and gutters on Morton Avenue.
Based on the foregoing, the evidence was sufficient to conclude that petitioner violated Penal Code section 424 (herein section 424), subdivision 1, as to count I. As the majority correctly notes, petitioner was charged with responsibility for county funds in his capacity as a county supervisor. The evidence presented at the preliminary hearing indicates that the Board authorized the funds to be used for cleanup and for purchase of rights-of-way, not for the installation of curbs and gutters along Morton Avenue. Moreover, although the Board authorization called for a fee interest, it received only an easement from Taylor. Petitioner caused the funds to be used for installation of curbs and gutters, a purpose not authorized by the *892Board. Moreover, as the majority correctly concluded, the endorsement and immediate redelivery of the warrant to petitioner by Taylor did not convert the money from public to private funds.
Although I concur in the result as to counts II through VII, I cannot subscribe to the majority’s analysis. Under the majority opinion, petitioner is apparently chargeable under section 424, subdivision 1, because he was a public official who misappropriated public funds. The majority opinion concludes that any time a public official gains control of any public funds based on a misrepresentation as to the proposed purpose of those funds, he can be charged with violating section 424, subdivision 1. The weakness in this position is that it fails to consider the statutory requirement that the public official or “other person” be “charged with” responsibility for those funds.
People v. Wall (1980) 114 Cal.App.3d 15 [170 Cal.Rptr. 522], on which the majority relies, does not support its conclusion: there the duties of the defendant in his position as a public employee included the responsibility for the funds that were subsequently misappropriated.
In Wall, the defendant was employed by the City and County of San Francisco as a parking meter collector. At the beginning of each work day, the equipment necessary to collect the coins was assigned to the collector. At the end of each working day (5 p.m.) the collector returned the moneys collected along with the equipment.
The defendant in Wall was observed by a police officer between the hours of 6 and 6:15 p.m. collecting money from meters on Sutter Street. At that time, the defendant was not assigned to collect money on Sutter Street. He was convicted of violating sections 504, 424, subdivision 1, and 425.
On appeal, the defendant argued in relevant part that section 424 was inapplicable because the section applied only “if the public moneys misappropriated came into the possession of the ‘officer’ in the officer’s ‘official capacity’.” (Id. at p. 20.) The defendant argued that because he was not acting in his official capacity when he collected the money, he could not be convicted under section 424. (Ibid.)
The court rejected this argument concluding that there was no requirement under section 424 that the funds come into the defendant’s possession in his official capacity. (Id. at p. 21.) Rather, the court concluded: “section 424, subdivision 1 . . . [was] intended to punish those charged with the receipt and transfer of moneys belonging to the state or a subdivision *893thereof and who misappropriate such moneys when there is a nexus between the moneys they are charged with and the moneys misappropriated. ” (Id. at p. 22, italics added.)
The court concluded that the requisite nexus existed stating: “Appellant was a parking meter collector charged with the receipt and transfer of parking meter moneys, moneys belonging to the City and County of San Francisco and it was parking meter moneys that he misappropriated, using the very instrumentalities of his occupation to gain possession thereof.” (Ibid.)
Thus, in Wall, the defendant’s duties as a collector included the responsibility for the funds collected from city and county parking meters. Although the defendant was not acting in his official capacity when he collected the money, his duties as a collector charged him with responsibility for the parking meter funds. The funds that he misappropriated were funds taken from the parking meters. Clearly there was a nexus between the funds he misappropriated and the funds with which he was charged.
Concededly, petitioner in the present case might have utilized his position as a county supervisor to acquire city funds. However, unlike Wall, petitioner, as a county supervisor, was not charged with responsibility for city funds. The funds petitioner allegedly misappropriated were city funds. Thus, the requisite nexus between the funds he allegedly misappropriated and the funds with which he was charged in his position as a county official simply does not exist.
That petitioner was not charged with responsibility for city funds does not preclude prosecuting him for violation of section 424, subdivision 1. In my view, however, the majority opinion’s somewhat tortured construction of the section is unnecessary. I conclude that under the facts of this case, petitioner could be prosecuted as an aider and abettor in the development and implementation of a plan to misappropriate city funds.
In People v. Little (1940) 41 Cal.App.2d 797, two defendants, Richards and Little, were charged with violating section 424, subdivision 1. Richards pleaded guilty and Little was convicted after a jury trial.
Richards was employed as a bookkeeper and collector for the city-owned and -operated water system. She embezzled a large amount of the funds she collected. Little, although not a city employee, “aided and abetted and advised and encouraged Mrs. Richards in her criminal acts.” (Id. at p. 805.)
On appeal, defendant Little argued that he could not be found guilty of violating section 424, subdivision 1, because he was not “. . . ‘charged with *894the receipt, safekeeping, transfer or disbursement of public moneys.’ ” (Ibid.) The court rejected this argument relying on Penal Code section 31 which provides in relevant part: “All persons concerned in the commission of a crime, whether it be felony or misdemeanor, and whether they directly commit the act constituting the offense, or aid or abet in its commission, or, not being present, have advised and encouraged its commission, . . . are principals in any crime so committed.” Because Little had aided and abetted Richards in the commission of the crime, the court held he could be convicted of violating section 424, subdivision 1.
Similarly, here, although petitioner was not a city official, there is evidence that would support a reasonable inference that he aided and abetted other city officials in the misappropriation of city funds. Gene Klatt, city engineer for the City of Porterville, testified that he was first contacted about the Morton Avenue project by either petitioner or Mr. Huffaker, the city manager of Porterville. Petitioner had apparently developed a plan whereby city moneys would be used to improve county property. Mr. Klatt was aware of and subsequently met with petitioner several times to discuss the plans for the Morton Avenue project.
Mr. Klatt prepared the agenda item regarding the project that was presented to the city council and approved on August 12, 1984. The city contribution, which was $23,250, was designated for “the construction of Morton Avenue on the south side, between the curb return and approximately Sunrise Market.” The agenda item indicated that five properties were involved and included estimated costs which had been provided by petitioner.
When asked why the agenda item did not indicate that the funds would be used for county purposes, Mr. Klatt testified: “To the best of my recollection, the city would not have expended city funds in a county area for either improvement or acquisition of right of way. The city council, to the best of my knowledge, was aware of the fact that a proposal had been put forth by Mr. Webb that for a payment of twenty-three thousand two hundred fifty dollars, which is the city share, the south side of Morton would be improved, and the city would have either fee title or use existing county easement title for that roadway.
“Q. ... Are you telling us that the city could not use city money to improve county roadway, is that it?
“A. They could have, but that was not their normal policy to do so.
*895“Q. But are you telling us that in approving this agenda item, this twenty-three thousand dollars was going to be used to improve county roadway despite the fact that it was city money?
“A. The payment of the twenty-three thousand dollars could be shown to be cost effective over five parcels. The agreement, if you will, or the proposal, which would perhaps be a better term, was for that amount of money the street would be completed. Which would encompass greater than the five parcels. But that the amount of money was reasonable if you considered cost of acquisition of property; it was also reasonable if you considered no acquisition costs, and just straight improvement costs.”
When asked how the plan was to be implemented, Klatt testified: “. . . He [petitioner] would personally meet with the property owners along the street, explain to them what his proposal was, that the city would release money to the property owners, who would, in turn, give it back to Mr. Webb. Mr. Webb would secure the contractors and hire the individuals required to do the work. Mr. Webb would also contact the county for the pave-out, if that was what was required.
“Q. Was there any indication that Mr. Webb was going to ask the property owners to contribute any excess monies, that might have been over and above the cost of improvements in front of their properties, to the balance of the Morton Avenue project?
“A. I have no specific knowledge of what Mr. Webb related to the property owners.
“Q. Well, I’m talking about the plan. I know you don’t know that. Was there any plan in that regard?
“A. The entire twenty-three two fifty would come back to the contractors through Mr. Webb for the rest of the improvements.
“Q. Would that be through the process of informing the property owners that the improvement cost offset the right-of-way cost?
“A. I would assume so, yes.”
Under cross-examination Mr. Klatt was asked:
“Q. Now, in your experience as an engineer for the city, if this was a city project, and the city was doing the project, would this project have cost more if private contractors were not used?
*896“A. Typically, yes. ^
“Q. And to what degree? Can you give some percentage of how much percentagewise this might be more?
“A. Between fifteen and thirty percent more.
“Q. So, by using private contractors, as Mr. Webb suggested, having private individuals, there was going to be a considerable savings to this project?
“A. Yes.”
Klatt was further asked on cross-examination:
“And the twenty-three thousand two hundred fifty dollars that was paid by the city, it was—was it your understanding, and Mr. Huffaker’s understanding, that these funds would be turned over to Mr. Webb and Mr. Webb would then deliver those funds to the property owners, who in turn would endorse those funds back to him for payment to Mr. Rodriguez?
“A. Yes. Mr. Rodriguez was one of the contractors.
“Q. And that was the—was that the plan from the very instance?
“A. Yes.”
And further,
“Q. Was there any intent, as far as you’re concerned, by the city to pay these people, these five property owners, this twenty-three thousand two hundred fifty dollars for their own use, without the rest of the people on the south side of the street being considered?
“A. The city was not going to deal directly with any of the property owners, or make any promises to any of the property owners. The money was being delivered to Mr. Webb to secure the improvements.
“Q. On the entire south side?
“A. Yes.
“Q. And if Mr. Webb had only improved those five parcels of the parties that the checks were made out to, that would not have been in accord with the agreement, is that correct?
*897“A. That is correct. ” (Italics added.)
Mr. Klatt was questioned also about whether other city officials or city council members were aware that the funds approved would also be used for county purposes. He testified: “Q. Did you personally make Mr. Huffaker aware that there would be any use for this money other than what is proposed here in the agenda item?
“A. Yes.
“Q. Was anyone else present when you did that?
“A. To my recollection, the entire city staff, at the Monday morning staff meeting. Which would have been Mr. William McGuire, Director of Community and Financial Services, Dick Mock[,] Director of Parks, Dan Prizznick, Field Services Coordinator, Jerry Mainord, the fire chief, Mr. Smith, the police chief at that time. Planning director, which would have been Dan Whatley. There may have been others, but I can’t remember the names right at the moment.
“Q. Okay. So all of these people you’ve told us about were made aware by you at the Monday meeting that this money was going to be used for other than what was contemplated here, is that what you’re telling us?
“A. They were told what the money was for, yes. The item was discussed.
“Q. Okay. What were they told the money was for?
“A. For the completion of street improvements along the south side of Morton from approximately Patsy to the Sunrise Market.
“Q. Now, did that area you’ve referred to include more than the five property owners that you’ve referred to in this document, this agenda document?
“A. Yes.” (Italics added.)
Based on the foregoing, I conclude that the evidence was sufficient to support a reasonable inference that petitioner aided and abetted other city officials in the misappropriation of city funds. The above cited evidence indicates that petitioner, aware that county funds were not available, hatched a scheme whereby city moneys would be used to improve county property. He apparently presented this plan to both Mr. Huffaker and Mr. *898Klatt. Mr. Klatt was aware when he prepared the agenda item that the funds were intended to be used for improvements on properties not listed on the agenda item. His stated purpose for not disclosing this to the city council was that “the city would not have expended city funds in a county area for either improvement or acquisition of right of way.” Although Mr. Klatt was aware that the funds were to be used for other than the improvement of city property, he seeks to justify this on the grounds of cost efficiency: the entire street could be improved for what it would have cost to improve the five city properties. In essence, the plan and the justification are as aged and infirm now as they have always been—the end does not justify the means.
Moreover, there is ample evidence that petitioner was not only aware that the purpose for which he used the funds was not the purpose intended by the city council, but with full knowledge initiated the actions of Mr. Klatt. (People v. Beeman (1984) 35 Cal.3d 547 [199 Cal.Rptr. 60, 674 P.2d 1318].) First, there is evidence that petitioner actually developed the plan whereby city funds would be used to improve county property. He met several times with Mr. Klatt to discuss the plan to use city funds for county improvements. Additionally, petitioner made misrepresentations to the property owners as to the use of the moneys he collected from them. A reasonable inference that can be drawn from petitioner’s attempt to conceal the real use for the money is that he knew the city council had not authorized his intended use.
As the majority notes, the preliminary hearing transcripts suggest that petitioner was “the instigator and the dominant figure in the plan whereby moneys belonging to the City were misappropriated.” Although petitioner might have been the “dominant figure” he apparently did not act alone in the effort to misappropriate city funds. The evidence at the preliminary hearing suggests that at least Mr. Klatt (and perhaps other city officers) was aware that city funds were to be used to improve county property and that the issuance of the checks to the five city property owners was simply a means of having the disbursement from the city appear to be a legitimate city expense. In fact, it was not the intention of petitioner or Mr. Klatt that the property owners be compensated for anything, but rather the plan was merely a subterfuge by which city money was used to improve county property.
Because the evidence indicates that at least one city official charged with the responsibility for city funds was involved in the plan to misappropriate city funds along with petitioner, I conclude that petitioner could be held for a violation of section 424, subdivision 1, on the theory that he aided and abetted or conspired with city officials to misappropriate city funds.
*899However, I respectfully dissent from the majority’s holding that the “unusual circumstances” surrounding the purchase of the South Main Street property constitute a violation of section 424, subdivision 1.
In order to establish a violation of section 424, subdivision 1, it must be demonstrated that a public official or “other person” charged with responsibility for public funds, misappropriated the funds to his personal benefit or the benefit of others. This section applies not only where the officer or other person has possession of public funds, but also where he has the duty of controlling public funds. (People v. Qui Mei Lee (1975) 48 Cal.App.3d 516, 523 [122 Cal.Rptr. 43].)
In the present case, the majority concludes that because petitioner caused Ruddock to ask $50,000 for the property he somehow acquired control of county funds and subsequently misappropriated them. Unquestionably, the Board was fully aware of the $50,000 price of the property and of the size of the parcel. Evidently, the focus of the majority’s scrutiny is in the Board’s lack of awareness that the price had been raised at petitioner’s instigation. It is clear, however, that the money appropriated for the property in issue was, in fact, paid for title to that property. In no sense was the money spent for any purpose other than that which was authorized by the Board. That, after payment, the money ultimately may have been put to a purpose the Board was not aware of is, appropriately, a matter of concern; however, I fail to see how petitioner’s conduct constituted a violation of section 424. Although the transaction ultimately inured indirectly to his benefit or profit, I do not agree that by causing Ruddock to ask $50,000 for the property which could have otherwise been purchased for $45,000 he acquired control of “the extra $4,351.91 of County funds. . . .”
The majority apparently is concerned that petitioner’s conduct resulted in his indirectly receiving a benefit or profit from the transaction. Although petitioner did exercise control of the additional moneys when he received them on release from escrow, at that time they had ceased to be county funds and constituted a profit from the sale. Because petitioner did not exercise control of county funds to his benefit, I cannot agree that there was probable cause to believe petitioner violated section 424, subdivision 1.
That is not to say, however, that petitioner’s conduct is not chargeable as a criminal offense. Government Code section 1090 provides in relevant part that county officers “shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members.” Willful violation of this statute “is punishable by a fine of not more than one thousand dollars ($1,000), or by imprisonment in the state prison, and is forever disqualified from holding any office in this state.”
*900(Gov. Code, § 1097.) “The purpose of the prohibition [in Government Code section 1097] is to prevent a situation where a public official would stand to gain or lose something with respect to the making of a contract over which in his official capacity he could exercise some influence.” (People v. Vallerga (1977) 67 Cal.App.3d 847, 868, fn. 5 [136 Cal.Rptr. 429].)
“A public officer may not make an unauthorized profit out of the particular public business which has been entrusted to his care.” (Terry v. Bender (1956) 143 Cal.App.2d 198, 211 [300 P.2d 119].)
“The public officer’s interest need not be a direct one, since the purpose of the statutes is also to remove all indirect influence of an interested officer as well as to discourage deliberate dishonesty. . . .
“ ‘. . . He has an interest the moment he places himself in a situation “where his personal interest will conflict with the faithful performance of his duty as trustee.” [Citations.]’ ” (Id. at pp. 206-207.)
In the present case, petitioner apparently induced Ruddock to ask $50,000 for the property which he would have been willing to sell to the County for $45,000. Petitioner’s purpose was to create a profit from the sale in order to cover his costs for the expenses incurred in the lot split and the original purchase. In so doing, petitioner acquired a financial interest in the sales contract between Ruddock and the County. Because petitioner had a financial interest in the contract, he arguably violated Government Code section 1090. I cannot indulge in the attempt to convert what is logically a conflict of interest into a violation of section 424 simply because that is the allegation lodged.
I conclude with the reminder that this is a government by the people and for the people. The people, therefore, have a right to know what government does. To serve this end, the business of government is conducted in the light of day and not in the shadows. Not only is scrutiny by the public not a bad thing, it is the duty of public officials not to circumvent that public review.
Petitioner’s application for review by the Supreme Court was denied September 15, 1988.