Court Opinion

ID: 4144258
Source: CourtListenerOpinion
Date Created: 2017-02-18 03:43:03.797005+00
Date Added: 2024-06-11T14:35:25.370577
License: Public Domain

Hon. H. E. Wassell    Opinion No. O-2135
Director              Re : Whether facts set forth constitute
Agent’s,License and   violation of theft, theft by bailee, or
Investigation         embezzlement statutes.
Board of Insurance
Commissioners
Austin, Texas
Dear Sir:
           This is to acknowledge your request for our opinion
whether under a state of facts submitted by you, a criminal
prosecution may be maintained as a violation of Article 1410,
Penal Code, defining theft; or Artiole 1534, defining embessle-
ment j or Article 1429, defining.conversion by bailee.
         -We take the liberty to restate the fact,ssubmitted by
you, substituting for the names ,used:
         “A Texas life insurance company on June 19, 1926, had
    as its president, one P, with S as secretary and A as one
    of its insurance agents. A’s nephew, N, died on May 23,
    1936. Soon.thereafter P laid a scheme with A whereby A
    was to make ap lication with the above company for a policy
    in the sum of Bl,OOC.OO payable to himself, A, and predate
    the application and the company would re-date the policy
    and issue it. This was done on June 1ii, 1936, and the pol-
    icy was on that.date issued by P’ and S, both signing same
    as president and~secretary respectively in the presence of
    .A,the agent and beneficiary. The application was signed
    ‘N, applicant, by A, agent I and the application was pre-
    dated as of February~20, 1436 0
         On June 18, 1936, the proof of death was executed by
    the beneficiary and claimant and on June 19th a check in
    the sum of $l,OoO.CO was issued to the beneficiary, A, and
     aid the same “day. Immediately after B received the
     l,OOO.OO he gave the money to,S in the presence of P, all
    ii
    in keeping with the exact scheme.
         “The $l,OOO.OO was paid out of the mortuary fund. This
    scheme was laid in this manner so that the State Insu.rance
    Department would find allythe papers in order in checking
    claims against that fund, which, unde.rthe law is for pay-
    ment of bona fide claims only under the company’s bona fide
    policies.
                                                                     -   .

Hon. H. E. Wassell, page 2   (o-2135)

          "The president and secretary, of course, were author-
     ized to pay out of the mortuary fund legitimate claims,
     and this $l,OOO.OO was paid out of that fund to the author-
     ized agent of the company. The said agent then gave the
     money to the above official, with whom the agent did not
     have a fiduciary relationship as individual, and the said
     officials appropriated same to their own use."
          The whole purpose and intent of the scheme outlined by
you was to fraudulently take $l,OOO.OO from the mortuary fund
with the intent to appropriate it to the use and benefit of the
taker, or those acting together with him. The method of obtain-
ing the money from the mortuary fund was to issue a pre-dated
policy on the life of a person then dead, and on proof of death,
to unlawfully take the money from said fund.
          We quote the several articles of the Penal Code you re-
ferred to:
     NIArticle1410.   'Theft' defined.
          "'Theft' is the fraudulent taking of corporeal personal
     property belonging to another from his possession, or from
     the possession of some person holding the same for him, with-
     out his consent, with intent to deprive the owner of the
     value of the same, and to appropriate it to the use or bene-
     fit of the person taking."
     e,Qticle 1534, Embezzlemegf;.
          "If any officer, agent, clerk, employe, or attorney at
     law or in fact, of any incorporated company or institution,
     or any clerk, agent, attorney at law or in fact, servant or
     employe of any private person, copartnership or joint stock
     association, or any consignee or bailee of money or property,
     shall embezzle, fraudulently misapply or convert to his own
     use, without the consent of his principal or employer, any
     money or proper~tyof such principal or employer which may
     have come into his possession or be under his care by virtue
     of such office, agency OT employment, he shall be punished
     in the same manner as if he had committed a theft of such
     money or property."
     "Article 1429.   Conversion bv a bailee.
          'IAnyperson having possession of personal property of
     another by virtue of a contract of hiring or borrowing, or
     other bailment, who shall without the consent of the owner,
     fraudulently convert such property to his own use with in-
     tent to deprive the owner of the value of the same, shall
     be guilty of theft, and shall be punished as for theft of
     like property."
Hon. H. E. Wassell, page 3   (o-2135)

          In connection with Article 1410,~~supra,we, direct your
attention to the language of Article 1413:
          “The taking must be-wrongful, so that if the property
     came into the possession of the person accused of theft by
     lawful means, the subsequent,appropriation of it is not
     the~ft but if the taking, though’originally lawful.,was ob-
     taineb by any ~falsepretext or with any intent to d;ep;;ve
     the owner of the value ther$of; and appropriate the      -
     erty to the use and benefit of the,person taking, and the
     same is so appropriated, ,the off,enseof theft is com@ete.‘V
           Thus, we note three distinct.and’possible crimes, i.e.,
theft, embezzlement and theft bjrbailee. Article 1413, usually
denominated theft by false pretext, is to be considered along
with hrticle 1410, supra, and if the offense comes within either
article, it is nevertheless theft, the indictment being the same.
Taylor v. .State, 25 ‘Tex.Cr.R.~96 7 S.?i. 861; Riggs v. State,
125' Tex.Cr.R. 647, 70 S.W. (2d) lb4. Many cases and textwriters
recognize the difficulty of making a proper practical applica-
tion of the theoretica,ldistincti.onsbetween these related of-
f enses. Texas Jurisprudence says: “As a matter.of fact) i.tis
apparent that the embezzlement, theft, swindling an-lother stnt-
utes denouncing related offenses,over?ap each other to a ccnsid-
erable extent.” (16 Tex.Jur. 329).
           .The money in the mortuary.fund was the property of the
insurance company. The wrongful,taking .in any off::iize may prop-
‘erly be.charged by anyallegation in the indictment to have been
from the company. See Modica v. State, 94 .Tex.Cr.A..4C3 251
S.W. 1049; Osborne v. State, 93 Tex. Crim. 54 245 S.W. 938;
Houghton v . State, 116 Tex. Crim. 70, 32 s.w.t2d) 837; Sauls v.
State, 131.Tex.C..R.180, 97 S.W.(2d) 195, and many others.
          We first conclude that theft by bailee or conversion
as denounced by Arti.cle1429, supra, does not apply in this case.
It has been said.that for an offense to come within the purview
of this statute, the fraudulent intent arises subsequent to ob-
taining the property. See Price v. State, .49 Tex.Cr.R. 131, 91
S.W. 571. Whil~ethe Price case.was overruled on this point in
Uvarez v. State, 109 Tex. Crim. 62, 2 SiW.(2d) 849, thclatter
case is authority that there must be a distinct bailment of hir-
ing, borrowing or other bailment,. By “other bailment” the court
says is ‘meant: “that personal property, whose title is to re-
main in the owner, is delivered to another for some purpose, with
the understanding, express or implied,:that the acceptance by
such other is for the. carrying out of :such purpose.” In the in-
stant case,,the fraudulent intent i-sevident from the inception
of the scheme;. and prior ,to the removal of the money from the
mortuary funds. owe,are,unable,~top~erceive~a bailment, as that
Hon. H. E. Wassell, page 4   (O-2135)

has been defined by the courts. We quote the language of Judge
Lattimore in the case of Brown v. State, 99 Tex. Crim. 441, 270
S.W. 179:
          “The relation of bailee as involved in our statute on
     theft by bailee is constituted where one obtains the prop-
     erty of another with the intent to use it for his own bene-
     fit and then to return it (or its equivalent in value) .I1
     (Parenthetical insertion ours.1
          In determining whether the case is one of embezzlement
or theft, we encounter greater difficulty. Various distinctions
have been drawn and the authorities are not uniform. We have
read many cases, but do not find any case, either in Texas or
other jurisdictions, covering an exact fact situation to the one
now under oonsideration.
         We note the following excerpts from Texas Jurisprud-
ence:
         “While embezzlement is akin to larceny or theft, the
    offenses are distinct, and a conviction for one cannot be
    had under an indictment for the other. But the same act
    may constitute both theft and embezzlement, or both theft
    under Article 1413 of the .Penal Code and conversion by
    bailee; and the fact that, .under the evidence, the defend-
    ant might have been prosecuted and convicted of oneof them
    does not prevent his prosecution end conviction of the
    other, . . , Ordinarily, to constitu.te, theft the fraudu-
    lent intent, which is an essential element of both theft
    and embezzlement, must ‘existwhen the property is taken,
    while in embezzlement or conversion by a bailee, the in-
    tent may be formed after possession of the property has
    been obtained, . . .I! (See 41 Tex.Jur. 17, et seq., ix
    10, 11; 16 Tex.Jur. 32V;et seq., i 7,8,10. Brown v. -State,
    VV Tex.Cr.B. 441, 270 S.W. 179; Connor v. State, 135’Tex.
    Cr.R,.429, 111 S.W. (2d) 723; Landis v. State, 85 Tex. Crim.
381, 214 S.W. 827.)
          In considering the proper charge in the case before us,
we think the provisions of particle4747, Revised Civil Statutes,
to be most pertinent:
          ‘IAnydfrectar, member of a committee, an officer, or
     any clerk of a home company, who is charged with the duty
     of handling~OS:investing its funds, shall not deposit or
     invest such %nds, except in the corporate name of such com-
     pany; shall not borrow the funds of such company; shall not
     be interested in any way ,in any loan, pledge, security or
     property of such company, except as stookholderj shall not
     take or receive to his own use any fee, brokerage, commis-
     sion, gift or other consideration for, or on account of, a
-

    Hon. R. E. Wassell, page 5   (o-2135)

         loan made by or on behalf of such company."
              From the above statute, it appears doubtful whether
    such a fiduciary relationship is existent as is essential under
    the construction placed by our courts to constitute embezzlement.
    In this connection, we point out that the money was really taken
    by A, with the assent and connivance of P and S at their insti-
    gation, suggestion and with such actual assistance as to make
    them guilty as principals under the statutes (Arts. 65 to 69 in-
    clusive, Penal Code), and the construction placed thereon by the
    Court of Criminal Appeals. See Smith v. State 89 Tex. Crim. 319
    230 S.W. 410; Asher v. State, 128 Tex. Crim. 388, 81 S.W.(2d) 681:
    Smith v. State 102 Tex. Crim. 139, 277 S.W. 666; notes on p* 86,
    Vol. 1, Vernonis Annotated Penal Code.
              In our attempted application of the facts to the law,
    we have reached the conclusion that a successful prosecution may
    be carried on for theft under the provisions of Articles 1410 and
    1413 of the Penal Code.
              In the recent case of Lovine v. State, 136 Tex. Crim.
32, 122 S.W. (2d) 1069, the following quotation from 17 Ruling
    Case Law 13 is given approval:
              "If a person with a preconceived design to appropriate
         property to his own use, obtains possession of it by means
         of fraud or trickery, the taking under such circumstances
         amounts to larceny, because in such cases the fraud viti-
         ates the transaction, and the owner is still deemed to re-
         tain a constructive possession of the property, and the
         conversion of it is a sufficient trespass, or, as is some-
         times said, the fraud or trick practiced on the owner is
         equivalent to a trespass."
              As we view it, a constructive theft may be shown under
    the authority of De Blanc v. State, 118 Tex. Crim. 628 37 S.W.(2d)
    1024; Contreras v. State, 1.18Tex.Cr.R. 626, 39 S.W.(?'d)62;
    Sherman v. State, 124 Tex. Crim. 273 62 S.W.(2d) 146; Conner v.
    State, ;33 Tex. Crim. 429, 111 S.W.(zd) 723; Davenport v. State,
    127 Tex. Crim. 552, 78 S.W.(2d) 605; and that the details of the
    scheme would be admissible to show the fraudulent intent at the
    time of the taking.
    APPROVED JUN 19, ii940                 Yours very truly
    Js/ Gerald C. Mann                     ATTORNEY GENERAL OF TEXAS
    ATTORNEY GENERAL OF TEXAS              By /s/ Benjamin Woodall
                                           Benjamin Woodall, Assistant
    APPROVED: OPINION COMMITTEE
    BY:       BWB, CHAIRMAN
    BW:GOtwb