Opinion
Nos. 2005-334, 2005-335, 2005-336, December Term, 2006
July 20, 2007
On Appeal from District Court of Vermont, Unit No 1, Windham Circuit.
William H. Sorrell, Attorney General, David Tartter, Assistant Attorney General, and Sara R. Parsowith (On the Brief), Montpelier, for Plaintiff-Appellant.
Matthew F. Valerio, Defender General, and Anna Saxman, Deputy Defender General, Montpelier, for Defendants-Appellees.
Present: REIBER, C.J., DOOLEY, JOHNSON, SKOGLUND and BURGESS, JJ.
¶ 1. The State appeals the district court's grant of motions to dismiss by defendants Victoria Willard-Freckleton, Calista Tanner, and Kara Orfanidis in three unrelated but factually similar cases. The three defendants were accused of stealing cash receipts from their employers. All three cases raise the question of whether an employee who steals property placed under her care, but remaining in her employer's constructive possession, violates the embezzlement statute, 13 V.S.A. § 2531. The trial court, following State v. Ward, 151 Vt. 448, 562 A.2d 1040 (1989), ruled that employees who take money already held in the constructive possession of their employers could not be guilty of embezzlement because there was no conversion of the money while in the legal possession of the employee. Id. at 450-51, 562 A.2d at 1041-42. Instead, according to Ward, taking such money would be a trespass by the employee against the employer's constructive possession, constituting a larceny. Id. We reverse and, in so doing, overrule Ward.
¶ 2. The trial court dismissed the charges against the three defendants pursuant to Vermont Rule of Criminal Procedure 12(d). When reviewing the grant of a Rule 12(d) motion to dismiss, we employ the same standard as the trial court and view the evidence in the light most favorable to the State, excluding modifying evidence, to determine whether the evidence can fairly and reasonably establish guilt beyond a reasonable doubt. State v. Hutchins, 2005 VT 47, § 6, 178 Vt. 551, 878 A.2d 241 (mem.).
I. The Facts A. State v. Willard-Freckleton
¶ 3. Victoria Willard-Freckleton was manager of a Dunkin' Donuts in Brattleboro. As part of her job, she was responsible for making bank deposits of daily sales proceeds. A company audit revealed that the bank deposits did not match the daily sales records for thirteen days between February 10 and March 19, 2005, for a total discrepancy of $5,850. On March 26, after being questioned by Dunkin' Donuts management about the discrepancies and denying any knowledge, Willard-Freckleton left the store with proceeds for March 25 and 26 totaling $4,402. Willard-Freckleton had not deposited any of that money when the police questioned her on March 30, 2005. In that interview, Willard-Freckleton admitted to shorting the deposits entrusted to her and confirmed the amounts taken. She later returned the March 25 and 26 proceeds, minus nearly $700 that she had already spent.
B. State v. Tanner
¶ 4. Calista Tanner worked at the Rockingham branch of Halliday's Flower Shop. On February 19, 2005, she traveled to Halliday's Bellows Falls branch where she helped transfer the day's proceeds from the store's cash register into manila envelopes. Tanner then brought those envelopes back to Rockingham for storage in that shop's cooler. While alone in the shop, Tanner removed cash from the envelopes before placing them in the cooler. After being questioned by police, Tanner admitted taking approximately $420 from the envelopes for personal use. Tanner also admitted deleting approximately ten to twelve transactions from the Rockingham shop's register and taking the corresponding cash, approximately $200 to $300. In total, Tanner admitted to stealing between $600 and $800 from her employer.
C. State v. Orfanidis
¶ 5. On seven separate occasions in January and February 2005, Kara Orfanidis stole money from the cash register of her employer, a Fleming Oil gas station in Bellows Falls. On each occasion, the cash-out amount from her register was $35 to $140 less than the receipts. The discrepancies totaled $935.31. On the last occasion, Orfanidis took money from the register and abruptly left during her shift, locking the door behind her in the middle of the afternoon. Orfanidis later admitted taking money from the register.
II. The Law
¶ 6. The State charged all three defendants with embezzlement under 13 V.S.A. § 2531. That statute provides:
[A] clerk, agent, bailee for hire, officer or servant . . . who embezzles or fraudulently converts to his own use, or takes or secretes with intent to embezzle or fraudulently convert to his own use, money or other property which comes into his possession or is under his care by virtue of such employment, notwithstanding he may have an interest in such money or property, shall be guilty of embezzlement. . . .
13 V.S.A. § 2531. We have, to date, understood embezzlement and larceny to be mutually exclusive; embezzlement applying only when an accused, in lawful possession of property on behalf of the intended owner, converts that property to his own use before passing it to the owner's possession. In preempting legal possession by the owner, there is no trespass against that possession to complete the theft, and without a trespass there is no larceny. Thus, in State v. Ward this Court overturned an embezzlement conviction where an employee removed money from a cash drawer. 151 Vt. at 451, 562 A.2d at 1042. We said that a cashier had lawful possession of money accepted from a customer but lost any possessory interest once the money was placed in the cash drawer, at which time constructive possession passed to the store owner. Id. at 450, 562 A.2d at 1041-42 (citing State v. Rathburn, 140 Vt. 382, 386, 442 A.2d 452, 454 (1981) (affirming larceny conviction of employee who stole from cash register)). Under this reasoning, an employee who accepts money from a customer and converts it to her own use before putting it in the register commits embezzlement, whereas an employee who removes money from the register commits larceny. Id. In Ward we distinguished the control exercised by the defendant cashier over the money in the cash drawer as mere custody, rather than possession, and, lacking possession, "it was legally impossible for defendant to commit embezzlement." Id. at 451, 562 A.2d at 1042.
¶ 7. Here the State does not allege embezzlement of monies in the legal possession of the employees. Rather, in each of these three cases the State charged the defendant with taking money that "came into her care" by virtue of her employment. The State argues that the statute not only outlaws traditional embezzlement by an employee of "property which comes into his possession," but also expressly extends embezzlement to apply to an employee who wrongfully "takes . . . money or other property which comes . . . under his care by virtue of such employment." The State contends that Ward erred in focusing solely on possession without considering the statute's alternative language covering an employee's theft of property "under his care." The State maintains that Ward's requirement of lawful possession by the thief in every embezzlement case renders the "under his care" phrase nugatory, a result contrary to standard statutory construction. See Holton v. Dep't of Employment Training, 2005 VT 42, ¶ 21, 178 Vt. 147, 878 A.2d 1051 ("Our rules of statutory construction require us to consider the statute as a whole, giving effect to a statute's every word, sentence, and clause, when possible.").
¶ 8. Ward's holding is not without support from outside authorities, even in a few jurisdictions with similar statutes. See, e.g., State v. Weaver, 607 S.E.2d 599, 605 (N.C. 2005) (maintaining distinction between larceny and embezzlement based on lawful possession). These decisions focus not so much on the wording of the applicable statutes, but rather on earlier common law and English statutes. Under the common law, larceny required a trespass in the taking, i.e., a taking from someone else's lawful possession. 3 W. LaFave, Substantive Criminal Law § 19.6(a), at 99 (2d ed. 2003). Thus, one already in lawful possession of another's property who converted the property to his or her own use could not be guilty of larceny. Id. Early English embezzlement statutes were intended to close that loophole. Id. One of these statutes, passed in 1799, applied only to servants who converted property that they had taken into their possession on behalf of their employers. 39 Geo. 3, c. 85 (1799). The statute did not refer to mere custody or care of another's property and was accordingly interpreted to apply only when no trespass had occurred. See, e.g., Regina v. Reed, 6 Cox's Crim. Cases 284, 289-90 (Ct. Crim. App. 1854) (concluding crime was not embezzlement, but larceny, where coal delivery was in constructive possession of employer at time of its theft by employee). The elements laid out in this embezzlement statute were repeated in early American laws and to this day are recognized as the general elements of embezzlement. See LaFave, supra, § 19.6, at 99 (defining embezzlement generally as the fraudulent conversion of the property of another by one who is already in lawful possession, but also recognizing that, as a statutory crime, definitions vary by jurisdiction). However, in determining the legislative intent behind Vermont's statute, its particular wording is of foremost importance.
Rulings to this effect in other states that had similar statutes have been superseded by newer statutes that consolidate most theft crimes. See Aabel v. State, 126 N.W. 316, 319 (Neb. 1910), superseded by statute, Neb. Rev. Stat. § 28-510; People v. Burr, 41 How. Pr. 293 (N.Y.Sup.Ct. 1871), superseded by statute, N.Y. Penal Law § 155.05 (defining larceny to include embezzlement); State v. Smith, 1986 WL 5315, at *3 (Tenn.Crim.App. May 7, 1986), superseded by statute, Tenn. Code Ann. § 39-14-101 (consolidating theft crimes); State v. Smith, 98 P.2d 647, 648-49 (Wash. 1939), superseded by statute, Wash. Rev. Code § 9A.56.020(1)(a), as recognized in State v. Linehan, 56 P.3d 542, 546-47 (Wash. 2002) (holding that, under current statute, embezzlement is merely an alternate definition of theft, not an alternate means of committing the crime).
See, e.g., Nolan v. State, 131 A.2d 851, 858-60 (Md. 1957) (finding embezzlement statute copied "almost verbatim" from England's law should be interpreted similarly so that money taken from cash drawer was a trespass and therefore larceny, not embezzlement), superseded by statute, Md. Code Ann., Criminal Law § 7-102 (consolidating theft crimes).
¶ 9. Unlike the early English statutes, 13 V.S.A. § 2531 includes the phrase "under his care," which encompasses more than takings that occur while the defendant is in legal possession. Other jurisdictions have long interpreted statutes with similar phrases to extend embezzlement to property in the defendant's custody. See, e.g., Henry v. United States, 273 F. 330, 334 (D.C. Cir. 1921) ("The phrase 'under his care' will cover property merely in his custody, and therefore, under such a statute, it is immaterial whether he receives possession of the property from a third person or from his master; for in either case the property is under his care, and if he converts it he is guilty of embezzlement."); see also LaFave, supra, § 19.6(e)(1), at 108 (noting that statutes using the phrase "in his possession or under his care" apply "without regard to the subtle distinction between custody and possession"); id. n. 49 (collecting cases). Courts have understood these embezzlement-by-employee statutes as criminalizing the breach of trust by workers who steal property that is in their care by virtue of their employment. Henry, 273 F. at 339; Grin v. Shine, 187 U.S. 181, 196 (1902) (applying California law). We agree with those courts that construe statutes similar to our § 2531 as "contain[ing] no limitations as to the manner of the property coming into the agent's possession or under his control," Lockie, 253 P. at 620, and now join them.
Accord Gill v. People, 339 P.2d 1000, 1003, 1005 (Colo. 1959); State v. Lockie, 253 P. 618, 620 (Idaho 1927); State v. Konviser, 259 P.2d 785, 787 (N.M. 1953); State v. Crescenzo, 332 A.2d 421, 427 (R.I. 1975); State v. Fraley, 76 S.E. 134, 136-137 (W.Va. 1912).
¶ 10. Though generally bound by the principles of stare decisis to follow past precedent, we are not "slavish adherents" to this doctrine, O'Connor v. City of Rutland, 172 Vt. 570, 570, 772 A.2d 551, 552 (2001) (mem.), and will overrule prior case law "when it is determined that an earlier decision is simply wrong." Wilk v. Wilk, 173 Vt. 343, 347, 795 A.2d 1191, 1194 (2002) (quotations and ellipses omitted). Meaning should be given, where possible, to all parts of a statute. Holton, 2005 VT 42, ¶ 21. Ward's application of ancient distinctions between common law larceny and statutory embezzlement as originally enacted in England did not reach the issue we address today. We now avoid the needless perpetuation of technicalities rendered obsolete by the Legislature's adoption of § 2531 and give meaning to the phrase "under his care" in that section to extend embezzlement to all cases in which employees convert their employers' property that is within their custody or control by virtue of their employment.
Review of the state's information in Ward reveals that the defendant was charged, as here, with embezzling monies "under his care." However, the matter of today's statutory interpretation was neither raised nor resolved in the Court's decision.
III. Applying the Law
¶ 11. This broader understanding of the reach of the embezzlement statute is more than an academic exercise because it carries real consequences in light of the varying penalties for embezzlement and larceny. At the time of the alleged thefts in all three cases, theft of property worth less than $500 was a misdemeanor petit larceny punishable by up to one year in prison and a fine of up to $500, and theft of property valued at over $500 was a felony grand larceny punishable by up to ten years in prison and a fine of up to $1,000. 13 V.S.A. § 2501, 2502. In contrast, embezzlement is always a felony, regardless of the value of the money or property involved, punishable by up to ten years in prison and a fine of up to $500. Id. § 1 (defining felonies as all crimes punishable by more than two years in prison), 2531. Thus, an employee's theft of an employer's property in her custody worth less than $500 is only misdemeanor larceny but is also now punishable as felony embezzlement.
These statutes were amended in 2006 to raise the dividing line between petit and grand larceny to $900 and increase the potential fine amounts. 2005, No. 156 (Adj. Sess.), § 3, 4. However, the applicable law is that which was in effect at the time of the violation. 1 V.S.A. § 214(b)(3).
¶ 12. In all three cases before us, the evidence supports a prima facie case of grand larceny under the then-applicable law, or embezzlement. In all three cases defendants admitted to taking at least some amount of money from the possession of their employers and in all three cases there is evidence to suggest the amount exceeded $500. The evidence would also support a finding that defendants acted with intent to deprive their employers of the money. The evidence further supports embezzlement because defendants came into custody of the property they stole by virtue of their employment. Having determined that the evidence is sufficient to make a prima facie case for either embezzlement or grand larceny, we look to see whether we can apply our decision retroactively to these defendants.
¶ 13. A change in our interpretation of the law is given effect to any case on direct review, State v. Shattuck, 141 Vt. 523, 529, 450 A.2d 1122, 1125 (1982), unless the decision establishes a new rule of law and retroactive application would be inequitable. Am. Trucking Ass'n v. Conway, 152 Vt. 363, 378, 566 A.2d 1323, 1332 (1989); see also State v. Gibney, 2005 VT 3, § 5, 177 Vt. 633, 869 A.2d 118 (mem.) ("A change in the law applies to a case that is on direct appeal, absent extraordinary circumstances."). Because the evidence in all three cases also supports a charge of grand larceny, with a potential punishment slightly more severe than embezzlement (higher maximum fine), retroactive application of our new broadened interpretation of embezzlement to defendants is not inequitable and is therefore appropriate for these cases. We need not reach the question of whether embezzlement of property in the custody of an employee with a value too small to support a charge of grand larceny that is now on direct review would be subject to retroactive application of this holding.
Nor does retroactive application violate the Due Process Clause as explained in Rogers v. Tennessee, 532 U.S. 451 (2001). Unlike the Ex Post Facto Clause with respect to legislative amendments, the Due Process Clause only prohibits retroactive application of law that violates "core due process concepts of notice, foreseeability, and, in particular, the right to fair warning as those concepts bear on the constitutionality of attaching criminal penalties to what previously had been innocent conduct." Id. at 459. As the conduct in this case was already criminal, due process concerns are reduced. See United States v. Harriss, 347 U.S. 612, 617 (1954) ("The underlying principle is that no man shall be held criminally responsible for conduct which he could not reasonably understand to be proscribed."); Proctor v. Cockrell, 283 F.3d 726, 732 (5th Cir. 2002) ("[T]he Due Process Clause prohibits retroactive application of judicial decisions that make previously innocent conduct criminal. . . .").
Reversed and remanded.