THE PEOPLE, Plaintiff and Respondent, v. LEO SHAW, Defendant and Appellant.
No. D014008
COURT OF APPEAL OF CALIFORNIA, FOURTH APPELLATE DISTRICT,
DIVISION ONE.
10 Cal. App. 4th 969; 12 Cal. Rptr. 2d 665; 1992 Cal. App. LEXIS 1256; 92 Cal. Daily
Op. Service 8837; 92 Daily Journal DAR 14555
October 27, 1992, Decided
NOT CITABLE - ORDERED NOT PUBLISHED
: Review Denied February 11, 1993 and Reporter of Decisions directed not to publish
this opn. in the Official Reports (Cal. Const., art. VI § 14; rule 976, Cal. Rules of Ct.),
Reported at 1993 Cal. LEXIS 746. Mosk, J. is the opinion the petition should be granted.
Superior Court of San Diego County, No. CR114312, Norbert Ehrenfreund, Judge.
The judgment is affirmed.
David L. Kelly, under appointment by the Court of Appeal, for Defendant and Appellant.
Daniel E. Lungren, Attorney General, George Williamson, Chief Assistant Attorney
General, Gary W. Schons, Assistant Attorney General, Rudolf Corona, Jr., and Barry J.
T. Carlton, Deputy Attorneys General, for Plaintiff and Respondent.
Opinion by Huffman, J., with Kremer, P. J., concurring. Separate concurring and
dissenting opinion by Wiener, J.
HUFFMAN, J.
[**666] Leo Shaw was found guilty at court trial of one count of embezzlement of funds
from a partnership (Pen. Code, n1 § 487, subd. 1), and was sentenced to three years'
probation, including work furlough and community service terms. On appeal, he contends
the trial court erroneously denied him his right to present evidence that he intended to
restore the embezzled funds and actually did so in a manner that, under section 512,
[*972] should constitute a defense to the charge of embezzlement. He also claims he
was improperly [***2] precluded from presenting this evidence of repayment as
circumstantial evidence that he never had the necessary specific fraudulent intent to
deprive the partnership, of which he was a member at the time that the funds were taken,
of its property.
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n1 All statutory references are to the Penal Code unless otherwise specified.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - Although we have found no authority expressly recognizing an exception to the statutory
rule that "[t]he fact that the accused intended to restore the property embezzled, is no
ground of defense" (§ 512; see, e.g., People v. Talbot (1934) 220 Cal. 3 [28 P.2d 1057]),
the plain language of the statute goes on to create such an exception. Section 512 contains
conditional language indicating that such a defense may be brought under certain
circumstances, i.e., where there was an intent to restore and where actual restoration of
property was made before criminal charges are brought.
We shall first discuss the basis of this statutory defense, together [***3] with Shaw's
circumstantial evidence argument, and then address the issue of timeliness of any
restoration made. Finding the trial court's evidentiary ruling was correct, albeit for a
different reason than the court stated, we shall affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
In 1979, Shaw entered into a partnership agreement (the agreement) with Leland
Featherman and two other persons to build and operate an office building primarily
designed for law offices. Both Shaw and Featherman were lawyers who had previously
shared office space. The partnership was named "Olive Bay Associates" and the
agreement was put into writing in 1983. From the outset, it was agreed that Shaw's role
was to manage the operation of the building, including leasing the premises, collecting
the receipts, paying the bills, and supervising the operation of the building. Under the
agreement, Shaw was not to be compensated for his management activities; his
management of the property was to be his contribution, in lieu of capital, to the
partnership. The agreement also provided that no partner was entitled to withdraw any
portion of partnership capital without express written consent of the other [***4]
partners. Shaw's partners had never given him any such consent to withdraw capital.
During the course of the partnership, there were no profits to distribute, as it operated at a
loss, and capital contributions were occasionally required to cover such losses.
[**667] Pursuant to his management duties, Shaw had control over the partnership
checking account. In 1984, Featherman learned that the loan on the property was in
default. When he inquired, Shaw told him and the other partners that [*973] Shaw had
had to put his own money into the building and then pay himself back. Although
Featherman was concerned, he was satisfied nothing improper had occurred. The partners
told Shaw that if such an event happened again, he should tell them so that they could all
contribute any necessary funds. From 1984 through 1989, at Featherman's request, he and
Shaw had a monthly meeting at which Shaw presented an accounting of income versus
expenses.
In January 1989, after Shaw failed to make his portion of a payment to buy out a former
partner (Wagner), Featherman inquired of the mortgage holder for the property and
learned the loan was in default and foreclosure proceedings were imminent. Shaw,
[***5] Featherman, and the remaining partner, Dr. Mohns, had a meeting about the
problem. Shaw told them he had loaned himself money out of the partnership funds, but
always paid it back. He claimed that the partnership actually owed him money, about $
2,122. Featherman began an investigation and took over the partnership checkbook. He
discovered many check stubs had been destroyed, and payee information was missing
from others. Shaw told Featherman he would be responsible for the missing payee
checks. Shaw admitted that he had destroyed all checks and check records for partnership
finances before 1985. For the period 1985 to 1989, Shaw had destroyed certain checks in
order to keep Featherman from finding out about them. Featherman obtained copies of
the destroyed checks, about 100 in number, representing an amount of approximately $
80,000. Shaw told Featherman he took the money because it was a compulsion over
which he had no control.
After a number of heated discussions between Shaw and Featherman early in 1989, Shaw
made a repayment of approximately $ 13,000 to the partnership. In May 1989 no further
settlement seemed to be forthcoming. Featherman filed a civil suit against [***6] Shaw
and took the matter to the police department and the State Bar. Shaw vacated the building
shortly thereafter.
Police Detective Dacy interviewed Shaw in October 1989. Shaw told him that he had
borrowed approximately $ 70,000 from the partnership, but had repaid over $ 58,000. He
explained he had been borrowing against his "capital account" with the partnership, but
had not told his partners about these loans. According to Shaw, he had been under great
stress from problems with his cash flow in his law practice and from his wife's demands
for money. By Detective Dacy's reckoning, Shaw had taken approximately $ 62,800.
A complaint was filed in municipal court on March 15, 1990, initiating the prosecution
on theft charges under section 487, subdivision 1 (according to [*974] judicial notice of
the superior court file; Evid. Code, § 459, subd. (a)). The preliminary examination took
place on June 22, 1990, and Shaw was held to answer on the charge of grand theft and the
"great taking" (over $ 25,000) enhancement pled. (§ 487, subd. 1, 490a, 12022.6, subd.
(a).) n2 The information was then filed in superior court on July 6, 1990.
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n2 At trial, the enhancement was stricken pursuant to agreement of the parties.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [***7]
In the meantime, settlement negotiations had been proceeding on Featherman's civil suit
against Shaw. According to Shaw, by January 1989 he had repaid the partnership all the
funds owed except for $ 15,000. The remaining amount was repaid in full as part of a
civil settlement effective April 3, 1990. Shaw gave up his partnership interest, which he
estimated to be worth $ 160,000. As of early 1989, the partnership equity was estimated
at $ 360,000.
Jury trial began November 9, 1990. The trial court ruled Shaw would not be allowed to
bring in evidence of repayments made of the funds taken, as such repayment was
irrelevant either as a defense to the substantive charge or with regard to whether he had
the necessary specific intent to deprive the partners of their property.
[**668] However, the court was willing to allow Shaw to make a showing that what he
had told Detective Dacy was true, concerning the repayment of $ 58,000 that he claimed
had been made. After Shaw's attorney mentioned the matter in his opening statement, the
jury was admonished that the offense of embezzlement was complete when diversion of
the funds was made, and voluntary restoration of funds did not operate as a [***8]
defense to the charge. Shaw moved for a mistrial on the grounds that he was not being
allowed to present an allowable defense, and the motion was denied.
The following day, Shaw waived jury trial on certain conditions (no state prison time)
and it was agreed that the matter would be submitted upon testimony presented and the
preliminary hearing transcript. The court agreed that Shaw could make a record at the
sentencing hearing of the evidence which he would have presented at trial if the court had
allowed the evidence of repayment to go before the jury. Testimony was taken from
Featherman. He reported to the court that he had said to Shaw in early 1989, in answer to
Shaw's claim that he had a compulsion to take the money: "I said, 'You are an attorney,
Leo, you understand that if you took the money on Friday and you got hit by a truck on
Saturday and couldn't pay it back on Monday, that that constitutes the crime of
embezzlement.' [P] And he said, 'Yes, I understand that.' "
After testimony from Detective Dacy, the matter was submitted for decision with the
reservation by defendant that he still desired to present [*975] evidence of restoration of
the funds taken pursuant [***9] to section 512, and also regarding his alleged lack of
specific intent to deprive the partnership of its property. After reviewing the law in the
area, the court found Shaw guilty beyond a reasonable doubt of count 1, with the
enhancement pursuant to section 12022.6 having been previously stricken.
At the sentencing hearing, Shaw presented evidence of repayment of the funds that had
been taken. The parties stipulated that a substantial amount of moneys had been repaid,
and Shaw presented detailed testimony about certain items which he had repaid between
1984 and 1989. As of 1986, $ 5,147.75 remained unpaid, and as of 1987, $ 8,492
remained unpaid. Shaw testified that he never told anyone about taking the funds; he
knew that to do so was a civil wrong, but believed that he had not committed any
criminal wrong. He gave testimony about his financial difficulties and claimed that his
mental state was that he had been borrowing from his own capital account at the
partnership. As of January 1989, he estimated that $ 15,000 remained unpaid of the
borrowed funds. Shaw believed he had no intent to permanently take the money. His
motion to reduce the offense to a misdemeanor was denied. [***10]
Featherman made a statement at the sentencing hearing, admitting that in his opinion all
money owing had been repaid by the civil settlement. Imposition of sentence was then
suspended, and Shaw was placed on probation subject to various terms and conditions,
including three months in local custody in a work furlough program and a community
service requirement. Shaw timely appealed the judgment.
DISCUSSION
To decide whether the trial court erred in ruling that Shaw could not put on a defense
showing his intent to restore the funds and actual restoration thereof, we are required to
analyze section 512 together with its companion section, section 513. We first consider
the extent of any defense afforded by section 512 regarding property that was timely
restored. We then assess the trial court's evidentiary ruling in light of our interpretation of
the time limitation for restoration of property that is set forth in section 512.
I
Before applying our interpretation of the limitations period of section 512 to these facts,
it is necessary to discuss the nature of any defense created by that section, as
distinguished from the references to potential mitigation of punishment in
sections [***11] 512 and 513. In its entirety, section 512 provides as follows: [*976]
[**669] "Defenses; mitigation of punishment; intent to restore property; time
"The fact that the accused intended to restore the property embezzled, is no ground of
defense or mitigation of punishment, if it has not been restored before an information has
been laid before a magistrate, or an indictment found by a grand jury, charging the
commission of the offense." (49 West's Ann. Pen. Code, § 512, p. 285 [49 West's Ann.
Pen. Code (1988 ed.) § 512, p. 285], italics added.)
Section 513 provides in its entirety as follows:
"Defenses, mitigation of punishment; restoration of property or tender before indictment
or information
"Whenever, prior to an information laid before a magistrate, or an indictment found by a
grand jury, charging the commission of embezzlement, the person accused voluntarily
and actually restores or tenders restoration of the property alleged to have been
embezzled, or any part thereof, such fact is not a ground of defense, but it authorizes the
court to mitigate punishment, in its discretion." (49 West's Ann. Pen. Code, § 512, supra,
p. 286, italics added.) n3
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n3 Sections 512 and 513 were each enacted in 1872 and amended in 1905 by the insertion
of the provision concerning an indictment found by a grand jury. No other changes have
been made to the statutory language.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [***12]
In this case, Shaw sought to make a showing of his intent to restore funds, coupled with
actual restoration, both as a defense under section 512, and as alleged circumstantial
evidence that he never had the specific fraudulent intent to deprive the partnership of its
property. As we will explain, we do not believe either theory has merit insofar as it would
attempt to negate the prosecution's showing of Shaw's fraudulent intent at the time the
appropriation of funds was made. However, we shall show that by enacting the
conditional defense language of section 512, the Legislature must have intended to create
a defense constituting an "amnesty," or window of opportunity, before criminal charges
are brought, during which a defendant may escape criminal prosecution by restoring the
property.
To begin: The plain language of section 512 states that an intent to restore embezzled
property "is no ground of defense" unless it is timely restored as explained above.
Although section 513 makes clear that mere voluntary and actual restoration (or tender)
of the property is not a ground of defense, but only a ground for mitigation of
punishment, section 512 adds a conditional type of defense [***13] based on intent, a
separate concept from the mitigation of punishment referred to in both sections. (1) As
the term "defense" is [*977] usually understood, it is a factor in determining whether a
crime has been committed, not what the punishment should be for any such crime. (See
20 Cal.Jur.3d, Criminal Law, § 2247 et seq., pp. 24-41.) By framing section 512 in the
negative, but conditionally, the Legislature evidently intended to establish that intent to
restore, coupled with timely restoration, would constitute some kind of defense to the
charge, rather than a factor in mitigation of punishment.
Basic rules of statutory construction must be applied here. " 'A cardinal rule of
construction is that ... a construction making some words surplusage is to be avoided.' " (
People v. Gilbert (1969) 1 Cal.3d 475, 480 [82 Cal.Rptr. 724, 462 P.2d 580].) In
construing a statute, the court must consider first the words of the statute itself, "giving
significance to every word, phrase, sentence and part of an act in furtherance of the
legislative purpose, if possible." ( People v. Wesley (1988) 198 Cal.App.3d 519, 522 [243
Cal.Rptr. 785].) [***14] When the statutory language of the Penal Code is reasonably
susceptible of two constructions, a court is required to adopt the construction more
favorable to the offender. ( People v. Collins (1983) 143 Cal.App.3d 742, 745 [192
Cal.Rptr. 101].) A defendant is entitled to the benefit of every reasonable doubt, "whether
it arise out of a question of fact, or as to the true interpretation of words or the
construction of language used in a statute." ( People v. Davis (1981) 29 Cal.3d 814, 828
[176 Cal.Rptr. 521, 633 P.2d 186].) Since "defense" cannot be considered [**670] to be
synonymous with "mitigation of punishment," we are required to give effect to each
portion of the statutory language.
"Embezzlement is not a common law crime. It is the result of legislative efforts to make
provision for an unreasonable gap which appeared in the law of larceny as it developed."
(Perkins, Criminal Law (3d ed. 1982) p. 351; see also People v. Talbot, supra, 220 Cal. at
pp. 14-15.) Since the Legislature created the offense of embezzlement, it was
certainly [***15] authorized to create a defense to that offense as well. (4)(See fn. 4.)
From the placement and content of section 512 (entitled "Defenses; mitigation of
punishment; intent to restore property; time"; 49 West's Ann. Pen. Code, supra, § 512, p.
285) immediately after section 511 (entitled "Defenses; claim of title; unlawful retention
of property to offset or pay demands not excused"; 49 West's Ann. Pen. Code, supra, §
511, p. 282), n4 it is reasonable to infer that more than one statutorily created defense to
embezzlement exists.
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n4 Section 511 provides as follows: "Upon any indictment for embezzlement, it is a
sufficient defense that the property was appropriated openly and avowedly, and under a
claim of title preferred in good faith, even though such claim is untenable. But this
provision does not excuse the unlawful retention of the property of another to offset or
pay demands held against him."
As our concurring and dissenting colleague correctly points out, editorial headings given
to statutes are not to be regarded as official indications of legislative intent. ( In re
Halcomb (1942) 21 Cal.2d 126, 130 [130 P.2d 384].) In interpreting section 512, we have
looked to the placement and content of that section and its surrounding sections.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [***16]
Assuming from the statutory language that some kind of defense was created by section
512, we ask what that defense would address, considering [*978] several basic rules of
embezzlement law. We begin with the definition of embezzlement found in section 503:
"Embezzlement is the fraudulent appropriation of property by a person to whom it has
been intrusted." (See § 490a [allowing the use of theft statutes for the charging of
embezzlement offenses]; § 487, subd. 1 [the grand theft section under which Shaw was
charged].) It is settled that embezzlement is considered complete on diversion of the
funds, and "it is the immediate breach of trust that makes the offense, rather than the
permanent deprivation of the owner of his property." ( People v. Talbot, supra, 220 Cal.
3, 16.) Moreover, even if a fraudulent purpose to convert to one's own use is coupled with
an intent thereafter to restore the property, the necessary intent for embezzlement may
still be present. ( People v. Jackson (1903) 138 Cal. 462, 464 [71 P. 566].) Thus, the
intent required for embezzlement may include depriving the owner [***17] of the
property either temporarily or permanently. ( at pp. 464-465; see CALJIC No. 14.07
[defining the necessary specific intent for theft by embezzlement as fraudulent
appropriation by depriving another person of property, without specifying whether the
deprivation is intended to be temporary or permanent].) n5
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n5 A distinction is sometimes recognized in the law of embezzlement between the
fraudulent conversion of personal property which can be returned more or less the same
as when it was taken (e.g., a horse and buggy; People v. Jackson, supra, 138 Cal. 462),
and on the other hand, fraudulent conversion of money, which is fungible, and thus
cannot be "returned" in kind but can only be replaced by other funds. (See LaFave &
Scott, Substantive Criminal Law (1986) § 8.6(f)(2), (3), pp. 379-381.) This seems to be a
distinction without a difference for modern legal purposes; if money is fungible and can
be replaced by identically valuable money, is it not actually replaced for all intents and
purposes?
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [***18]
Next, it is the general rule with theft offenses that it is not a defense to a prosecution that
after the theft was committed, complete or partial restitution or offer of restitution was
made to the owner of the property, or that the loss was wholly or partly recouped by any
other means. (CALJIC No. 14.46; People v. Costello (1951) 107 Cal.App.2d 514, 518
[237 P.2d 281].) From all of these rules, it seems evident that later restoration of
property, even coupled with an earlier intent to do so, cannot be used as circumstantial
evidence to attack the prosecution's showing that the original taking of the property, even
if temporary, was a "fraudulent appropriation." (§ 503.)
[**671] Even if a defense going to a lack of fraudulent intent based on section 512 is
not allowed, another form of defense seems to have been created by the [*979] express
conditional language of section 512. Although no California cases have explicitly
recognized the existence of a substantive defense based on intent to restore property, plus
timely restoration, they do make clear that sections 512 and 513 must be read together as
companion sections, to give effect to [***19] each. For example, in People v. Talbot,
supra, 220 Cal. 3, 15-16, the Supreme Court discussed the element of felonious intent
required to be shown in an embezzlement case. The court outlined the nature of a taking
that could be found criminal:
"In other words, in every case where the officers of a corporation who are necessarily
entrusted with the money and property of the concern use it, knowingly and intentionally,
for their own purposes, there is a 'fraudulent appropriation' thereof which is termed
embezzlement by the statute, and the fact that such officers intended to restore the money
or property is of no avail to them if it has not been restored before information laid or
indictment found charging them with embezzlement ( Pen. Code, sec. 512), and even if
prior to the bringing of such charges the officers voluntarily and actually restore the
property, such fact does not constitute a defense but merely authorizes the court in its
discretion to mitigate the offense (sec. 513). It would seem that the legislature here has
shown in very clear terms that it is the immediate breach of trust that makes the offense,
rather than [***20] the permanent deprivation of the owner of his property." ( People v.
Talbot, supra, 220 Cal. at pp. 15-16, italics added.)
A critical fact in People v. Talbot, supra, 220 Cal. 3, 16, was that defendant's failure to
make timely repayment of the funds taken. The court held: "The fact that this appellant
intended to repay the money taken, or was amply able to do so, is of no avail in the face
of the fact that the money was not replaced prior to indictment found." () We believe that
the Supreme Court, by reciting the terms of sections 512 and 513 in sequence and then
finding that the defendant Talbot had failed to qualify for special consideration because
he did not replace the money in a timely fashion, drew a distinction between the
provisions of these two sections and preserved the "defense" created by section 512.
Since the court based its holding in part on the fact that no timely replacement of the
money had been made, it thus impliedly suggested that the condition set forth in section
512 could have been met under other facts. ( People v. Talbot, supra, at p. 16.) [***21]
If Talbot can be factually distinguished, its authority does not preclude a holding that a
defense of intent to restore plus timely restoration of funds may be properly asserted
under appropriate facts. (See People v. McLean (1902) 135 Cal. 306, 307-308 [67 P. 770]
[where the court had earlier broadly paraphrased § 512 in this manner: "It is provided in
the code that the fact that the accused intended to restore the property is no defense,
unless the property has been [*980] restored before an information has been laid
charging the commission of the offense."].)
Other case authority also seems to assume that under sections 512 and 513, a defendant's
intent to make restoration of property at a later time than the money was taken is of no
avail as a defense, and also does not find the defendant's fraudulent intent at the time of
taking was negated by such an intent to restore, whether the property was actually
restored or not. ( People v. Baker (1923) 64 Cal.App. 336, 342-343 [221 P. 654]; People
v. Parker (1965) 235 Cal.App.2d 100, 109 [44 Cal.Rptr. 909]; [***22] People v. Colton
(1949) 92 Cal.App.2d 704, 710 [207 P.2d 890]; People v. Harris (1929) 100 Cal.App. 78,
81 [280 P. 178]; People v. Williams (1956) 145 Cal.App.2d 163, 166-167 [302 P.2d 393];
People v. Dolbeer (1963) 214 Cal.App.2d 619, 625 [29 Cal.Rptr. 573]; see 18 Cal.Jur.3d,
Criminal Law, § 1210, pp. 276-278.) The reasoning of these cases is that the offense of
embezzlement is complete when the property is diverted from the purpose for which it
was entrusted, and the appropriation can be [**672] found to have been made with the
necessary intent to defraud, even assuming a contemporaneous intent to later restore. (
People v. Dolbeer, supra, 214 Cal.App.2d at p. 625.)
New York authority, construing a statute similar to section 512 (from which § 512 was
derived at its 1872 enactment), n6 is also negative toward the concept of a substantive
defense to the crime of embezzlement being created by an intent to restore, coupled with
actual and timely restoration. In [***23] People v. Kaye, supra, 64 N.E.2d 268, 269-
270, the Court of Appeals of New York construed section 1307 of the New York Penal
Law, which was very similar to section 512. The court adopted a construction of the
statute that if property had been embezzled, intent to return it was no defense at all, but
instead only a ground for mitigation of punishment if there was an actual restoration
before the charges were brought. ( People v. Kaye, supra, at p. 269.) The court stated:
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n6 New York Penal Law former section 1307, from which California Penal Code section
512 was derived (i.e., copied almost verbatim from an 1864 New York draft penal code
that was enacted in 1881) read as follows: "The fact that the defendant intended to restore
the property stolen or embezzled, is no ground of defense, or of mitigation of
punishment, if it has not been restored before complaint to a magistrate, charging the
commission of the crime." In 1965, New York revamped its penal law and omitted
section 1307. (See McKinney's Consolidated Laws of New York, Distribution Table, art.
122, Larceny; People v. Kaye (1945) 295 N.Y. 9 [64 N.E.2d 268, 269-270].) The crime
of embezzlement is now covered by New York CLS Penal section 155.05(2)(a).
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [***24]
"We realize that the construction now approved by us leaves the statute pretty much of a
dead letter. Intent to return, with or without actual return, is no defense but the sentencing
judge may consider such facts 'in mitigation of punishment' ...." ( People v. Kaye, supra,
64 N.E.2d at p. 270.) [*981]
In People v. Kaye, supra, 64 N.E.2d 268, in reviewing the legislative history of section
1307, the court concluded there was no evident legislative intent "to change the ancient
rule that a thief may not purge himself of guilt, by giving back the plunder, before or after
arrest. The purpose of the statute, couched in the negative, was to forbid and not to
authorize, to deny a defense and not to provide one, to make it plain that once a theft had
been proven, restitution was no concern of the jury, but only a fact that the judge might
consider in fixing the penalty. So construed, section 1307 is in accord with the law in
other jurisdictions. [Citations.]" ( at p. 270.)
Inquiring into the legislative history of California Penal Code sections 512 and 513, we
find that the code commissioners who proposed the California [***25] statute made this
comment concerning section 512: "Intent to restore the property is no defense." With
respect to section 513, the commissioners remarked, "[A]ctual restoration is a ground for
mitigation of punishment." This sketchy legislative history does not answer the question
of whether intent to restore the property, plus actual restoration within a specified time,
constitutes a defense going not to the necessary fraudulent intent (§ 503), but to an
opportunity to decriminalize a taking of property where the victim was made whole
before criminal charges were brought. n7
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n7 Compare sections 1377 through 1379 where the Legislature provided a procedure for
the civil compromise and dismissal of certain misdemeanors by leave of court. (See
Hoines v. Barney's Club, Inc. (1980) 28 Cal.3d 603, 611-612 [170 Cal.Rptr. 42, 620 P.2d
628, 26 A.L.R.4th 229]; People v. Moulton (1982) 131 Cal.App.3d Supp. 10, 21-23 [182
Cal.Rptr. 761].)
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [***26]
In order to give effect to the entirety of section 512, we conclude it creates a defense to
embezzlement charges under the specified conditions. Where full restoration of the
property taken is timely made according to the intent to restore, the Legislature could,
and did, reasonably determine that a "no harm, no foul" view could be taken toward the
offense.
II
Section 512 makes clear that any defense created therein is timely only if the [**673]
embezzled property has been restored "before an information has been laid before a
magistrate, or an indictment found by a grand jury, charging the commission of the
offense." (§ 512.) This latter provision was interpreted broadly in People v. Kirwin
(1927) 87 Cal.App. 783, 785 [262 P. 803], where the court construed the term
"information" as being "intended to import the laying before a magistrate of a charge or
of 'information,' that a public offense has been committed and that it has been committed
by the person whose preliminary examination is sought." (Ibid., italics added.) In other
words, the court found the statutory time limit referred to the filing of [*982] criminal
charges before [***27] a magistrate, not the filing of the document entitled
"information" in superior court after the completion of a preliminary examination upon a
complaint. Thus, an attempt by the defendant, Kirwin, to make restoration of the
embezzled property while the complaining witness was on the stand at the preliminary
examination was found untimely. (See 2 Witkin, Cal. Criminal Law (2d ed. 1988) Crimes
Against Property, § 597, p. 673.)
Shaw relies on People v. Kirwin, supra, 87 Cal.App. 783, to argue that the restoration of
property which he made before the municipal court complaint was filed on March 15,
1990, and thereafter in the April 3, 1990, civil settlement should be considered timely for
purposes of asserting this defense, because it occurred before the June 22, 1990,
preliminary examination and the subsequent filing of the information in superior court.
His reliance on Kirwin is misplaced. The pertinent time for determining timeliness of
restoration of property is not the actual commencement of the preliminary examination,
but the time of filing of charges that will lead to the preliminary examination
proceedings. An examination [***28] of the legislative history indicates that such
restoration of property must be made before the initial filing of criminal charges.
Looking at the particular sections of the 1872 Penal Code dealing with the charging of
offenses (enacted at the same time as § 512 and 513), we find that the meaning of the
term "information," as originally defined in section 806 of the 1872 Penal Code, was "the
allegation in writing made to a magistrate n[8] that a person has been guilty of some
designated offense." In 1880, that section was amended to replace the term "information"
with "complaint," which is "the allegation in writing made to a Court or magistrate that a
person has been guilty of some designated offense." (Current § 806 retains the
"complaint" terminology but adds a good deal of modernized procedural detail.) Section
811 in its 1872 version required a magistrate to conduct an examination under oath upon
"an information" presented which alleged the commission of a public offense. Thus, the
1872 code sections use the term "information" as the initial pleading in a criminal case.
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n[8] Section 807, enacted in 1872, defines a magistrate as "an officer having power to
issue a warrant for the arrest of a person charged with a public offense." A magistrate
exercises special statutory powers that are more limited than the full scope of judicial
power that may be exercised by a court or judge. (4 Witkin, Cal. Criminal Law (2d ed.
1989) Introduction to Criminal Procedure, § 1809, pp. 2142-2143.)
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [***29]
Effective in 1880, the Legislature amended sections 888 and 949 to provide that public
offenses triable in superior court must be prosecuted either by indictment or information.
Under current section 739 (formerly [*983] § 809 of the 1880 amends.), it is the duty of
the district attorney to file an information against a defendant who has been examined
and committed as provided in section 872. (See 4 Witkin, op. cit. supra, § 2053, p. 2418.)
Thus, the term "information" was not used with reference to the proceedings conducted in
superior court until 1880, or after the enactment of sections 512 and 513.
Again, when the Legislature used the term "information" in those 1872 sections, it meant
the initial pleading in a criminal case, not the formal document filed in superior court
after a preliminary examination has resulted in an order of commitment for trial. To be
timely under section 512 and [**674] thus to be given any weight as a defense, any
restoration of funds, accompanied by the specified intent to restore, would have to be
accomplished before any criminal charges were brought and the criminal justice judicial
system became involved in the case.
Turning to the issue of whether [***30] the trial court correctly disallowed Shaw's
proffered defense, we believe for the reasons explained above that a defense of
restoration of funds, accompanied by the proper intent, may be pled and proven under
section 512 to show entitlement to an "amnesty" for the charges. However, the only
restoration of funds that has any weight in this respect is one made before "an
information has been laid before a magistrate ... charging the commission of the offense"
(§ 512) or, as we have explained, before the complaint is filed in municipal court,
initiating the prosecution. Here, some $ 15,000 remained unrestored until the civil
settlement was reached April 3, 1990, a few weeks after the complaint was filed charging
the offenses on March 15, 1990. Complete restoration was not timely made.
Although we disagree with the trial court's conclusion that no defense whatsoever is
available to show restoration of embezzled property, we find, based upon our timeliness
analysis, its ruling was correct that Shaw was not entitled to present this evidence as a
defensive, rather than a mitigating, showing. It is well established that "a ruling or
decision, itself correct in law, will not be disturbed [***31] on appeal merely because
given for a wrong reason. If right upon any theory of the law applicable to the case, it
must be sustained regardless of the considerations which may have moved the trial court
to its conclusion." ( Davey v. Southern Pacific Co. (1897) 116 Cal. 325, 329 [48 P. 117].)
This rule applies to review of rulings excluding evidence. ( at p. 330.) There was no
reversible error here.
On a proper record, we believe that Shaw's proposed theory of defense of a timely
restoration of property, accompanied by the necessary intent to [*984] restore, could be
presented to a trier of fact. The facts of his case, however, do not fully support the
claimed defense, because a significant portion of the restoration of property made was
untimely within the meaning of section 512. Because of the state of the record before us,
it would not be appropriate for us to attempt to resolve all the complexities of application
of this "amnesty" defense in the various phases of criminal proceedings. We hold only
that the plain language of section 512 must be given effect to allow this defense to be
asserted where supported by the facts.
DISPOSITION [***32]
The judgment is affirmed.
Kremer, P. J., concurred.
DISSENTBY: WIENER, J.,
DISSENT: Concurring and Dissenting.
I agree with the result reached by the majority. My approach, however, is far more
simplistic. I believe the trial court was merely following settled--and correct--precedent
in excluding evidence of Shaw's intent to restore the embezzled property. On this basis I
reject Shaw's contention that the court's evidentiary ruling constituted prejudicial error.
My disagreement with the majority centers on their interpretation of Penal Code sections
512 and 513.
Penal Code section 512 provides that "[t]he fact that the accused intended to restore the
property embezzled, is no ground of defense or mitigation of punishment, if it has not
been restored before" the commencement of the criminal charges. Largely ignoring the
language "or mitigation of punishment," the majority argue by negative implication that
the Legislature "must have intended" to create a complete defense to a charge of
embezzlement if the defendant intended to restore embezzled property and the property is
actually restored before criminal proceedings are begun. Presumably under section 513
(maj. opn., ante, p. 976), complete [***33] restoration of property unaccompanied by an
intent to restore at the time of the initial embezzlement [**675] only results in
mitigation of punishment.
Respectfully I would suggest it is far from clear the Legislature intended to create the
defense proffered by the majority. Indeed, the only reasonable interpretation of section
512 in conjunction with section 513 is that a defendant's intent to restore embezzled
property is irrelevant on the question of his or her criminal liability and even actual
restoration of the property is unavailing unless made before the commencement of
criminal proceedings. Not only is such an interpretation more reasonable, but it does not
bruise Supreme Court precedent on the subject which the majority must tenuously skirt in
reaching their conclusion. [*985]
According to the majority, there was no reason for the Legislature to include the term
"defense" in section 512 unless there was an intent to create some sort of defense. With
that premise as a starting point, they go on endeavoring to discern the nature of the
defense thus created. The problem with this approach is that reasoning by negative
implication proves too much. Because the statute provides [***34] that a simple intent to
restore "is no ground of defense or mitigation of punishment" (italics added), the same
reasoning process would yield the conclusion that an intent to restore coupled with actual
restoration was meant to mitigate the defendant's punishment. Yet acting as a defense to a
crime and mitigating the punishment for a crime are distinct concepts. A defined set of
circumstances may do either one but not both. We must therefore look to other guides in
deciding the meaning of the statute. n1
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n1 The only other basis relied on by the majority for the notion that section 512 creates a
defense to the crime of embezzlement is the use of the word "defenses" in the titles to
sections 511 and 512. (Maj. opn., ante, at p. 977.) The titles quoted appear in the West's
Annotated version of the Penal Code and are not the same titles which appear in the
Deering's version. (See § 511 ["Claim of title a ground of defense."]; § 512 ["Intent to
restore property as defense."].) If those titles are considered, the difference in phrasing
leads me to conclude that only section 511 creates a defense. In any event, I have always
understood statutory headings to be editorial comments added by the publisher of that
particular code format and not indicative in any sense of legislative intent. (See In re
Halcomb (1942) 21 Cal.2d 126, 130 [130 P.2d 384].) In this regard I note that the last
chaptered version of the statutes contains no titles. (See Stats. 1905, ch. 520, § 1, p. 682.)
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [***35]
The most persuasive guide, I believe, is to be found in the interpretive history of the
statutes which appears in the numerous cases cited in the majority opinion. They
recognize an unbroken line of authority from the Court of Appeal holding that an intent
to restore, even if coupled with actual restoration, is not a defense to the crime of
embezzlement because the fraudulent intent necessary to constitute the offense is
satisfied even where the defendant only intends to "borrow" the embezzled property
temporarily. (Maj. opn., ante, at p. 980; see, e.g., People v. Williams (1956) 145
Cal.App.2d 163, 167 [302 P.2d 393] ["An intent to return [the embezzled property] ... or
a later restoration would not affect the fact of a completed embezzlement."]; accord
People v. Harris (1929) 100 Cal.App. 78, 81 [280 P. 178]; see also People v. Braiker
(1943) 61 Cal.App.2d 406, 412 [143 P.2d 89].) The majority see fit to ignore this
authority because they profess to find no Supreme Court decision inconsistent with the
statutory interpretation they proffer. [***36] I would find such disregard of settled
precedent troubling in any event, but particularly so because I believe the Supreme Court
has expressed an interpretive rationale for these statutes which is inconsistent with the
majority's approach.
The majority opinion places appropriate focus on People v. Talbot (1934) 220 Cal. 3 [28
P.2d 1057], a case involving embezzlement charges against [*986] the president of a
major corporation. As the majority correctly recites, Talbot holds "it is the immediate
breach of trust that makes the offense, rather than the permanent deprivation of the owner
of his property." ( at p. 16.) In my view, however, they fail to appreciate the significance
of that holding. If it is the defendant's appropriation of another's property to his or her
own personal use which "makes the offense," [**676] then the defendant's intent to later
restore the property even if coupled with actual restoration cannot affect the defendant's
criminal liability. I believe this interpretation is confirmed at another point in the Talbot
opinion where the Supreme Court quotes a Georgia appellate court case as "well
express[ing]" [***37] the law in this area: " 'A [defendant] cannot take money ... which
is entrusted to him, or which comes into his possession by virtue of his office or agency,
and use it even temporarily for his personal benefit and avoid criminal responsibility by
calling it a loan.' " ( at p. 14, quoting Mangham v. State (1912) 11 Ga.App. 427 [75 S.E.
512, 516].) Where a defendant takes money and calls it a loan, he presumably intends to
restore it. If he uses it only temporarily, he presumably does restore it. The majority here
concludes that intent to restore coupled with actual restoration is a defense to a charge of
embezzlement. Talbot, in its approval of Mangham, says it is not. (See also People v.
Colton (1949) 92 Cal.App.2d 704, 710 [207 P.2d 890].)
Further support is provided by the New York Court of Appeals decision in People v.
Kaye (1945) 295 N.Y. 9 [64 N.E.2d 268], also cited in the majority opinion. The
defendant in Kaye made precisely the same argument made by Shaw in this case and the
New York high court rejected it. As the majority [***38] recognize, California's sections
512 and 513 were modeled on the New York statute, although the New York formulation
appears in a single section. Even more specifically, the Court of Appeals in Kaye referred
to the Appellate Division opinion in the case, pointing out that the dissenting justices in
that opinion cited California precedent and interpreted the New York statute "the same as
if it consisted of two distinct propositions (like the California Penal Code, § 512 and
513): one proposition denying a 'defense', the other authorizing 'mitigation of
punishment'." ( at p. 269.) Thus, in agreeing with the dissenting justices in the Appellate
Division, the New York 7 Court of Appeals recognized an interpretation of sections 512
and 513 contrary to that adopted by the majority here and endorsed it.
Practical realities also militate against the majority's suggested interpretation. A
defendant will always claim that the property was taken with an intent to restore and most
often there will be little or no evidence to disprove the claim. Thus, actual restoration will
typically result in a complete defense to the charge rather than, as section 513 directs,
only mitigation of punishment. [***39] In addition, section 514 provides that an
embezzlement is punished in [*987] the same way as a theft, depending on the value of
the property taken. The majority's interpretation creates the issue of what crime the
defendant has committed if the taking is accompanied by an intent to restore but he is
only able to restore an amount sufficient to reduce the amount of the taking from a grand
theft to a petty theft level. Under what I believe is the settled interpretation of the
embezzlement statutes, the crime (and appropriate range of punishments) is measured by
amount taken unaffected by any partial restoration.
Thus, while I concur in the result reached by the majority, I dissent from their judicial
creation of an unwarranted defense to the crime of embezzlement.