Request By:
Mr. T. Bruce Simpson, Jr.
Anggelis, Philpot, Gordon & Simpson
139 Market Street
Lexington, KY 40507
Opinion
Opinion By: Frederic J. Cowan, Attorney General; John S. Gillig, Director, Criminal Appellate Division; Ian Sonego, Assistant Attorney General
Re: Kentucky Equipment Rental Association
You have asked the Office of the Attorney General on behalf of the Kentucky Equipment Rental Association to render an opinion on the state of the law regarding prosecution of individuals who fail to return rental property, based upon a concern aroused by an unpublished decision of the Court of Appeals. This decision, Davidson v. Commonwealth (rendered May 18, 1990, ordered published June 8, 1990), which you indicate is being cited in an effort to get cases dismissed or to prevent action being taken, was de-published on December 19, 1990 by the Kentucky Supreme Court. This opinion will discuss the current status of the law, examine several considerations regarding prosecution of rental property cases, and discuss the statutes which could be used to prosecute such cases.
I. THE DAVIDSON CASE
First, there seems to be some confusion regarding the Davidson case. You have indicated, and members of the Kentucky Rental Equipment Association have telephoned to indicate, that the case continues to be used in different parts of the State.
The provision of law regarding use of this opinion is quite clear. Kentucky Rule of Civil Procedure (CR) 76.28(4)(c) states: "Opinions that are not to be published shall not be cited or used as authority in any other case in any court of this State." To cite an unpublished opinion is an improper practice and could result in striking a brief or pleading. Jones v. Commonwealth, Ky.App., 593 S.W.2d 869 (1979). See also , Penco, Inc. v. Detrex Chem. Ind., Inc., Ky.App., 672 S.W.2d 948 (1984); Palmore v. Jones, Ky., 774 S.W.2d 434 (1989).
II. FACTORS AFFECTING PROSECUTION
Second, as a general matter, there are several legal factors that must be considered before a prosecution under any statute for a theft of rental property can take place.
1) In a criminal case the prosecution must prove each and every element of the statutory offense beyond a reasonable doubt, and the evidence to support the charge should be available before a criminal charge is filed. The accused does not have to answer the accusation and cannot be required to present any evidence or information whatsoever, i.e., he has the right to remain silent. See Carella v. California, 491 U.S. 263, 109 S. Ct. 2419, 105 L. Ed. 2d 218 (1989).
2) A prosecutor also has a duty to refrain from initiating a criminal charge when he believes that the evidence in the case is not sufficient to make a conviction reasonably probable. See King v. Venters, Ky., 595 S.W.2d 714 (1980); Bordenkircher v. Hayes, 434 U.S. 357, 98 S. Ct. 663, 54 L. Ed. 2d 604 (1978). This problem is compounded in a rental situation because in many cases there is, at least initially, a valid rental contract allowing the accused possession and use of the property. Even though there may be a clear technical violation of the law, a jury may nonetheless choose to acquit ("jury nullification"), and this is a factor that the prosecutor must take into account in deciding whether to initiate charges.
3) The purpose of a criminal prosecution is to punish the wrong-doer. A criminal prosecution does not guarantee that stolen property will be recovered or returned to the owner or that restitution will be paid. Therefore, if the owner of a rental store seeks the recovery of the property rather than to punish the thief, the owner should pursue a civil lawsuit. The prosecuting witness (owner) has no authority to drop a criminal charge nor any authority to plea bargain with the accused for the purpose of securing the return of stolen property. In certain cases an on-going prosecution may hinder the return of the property (for example, if the accused flees the jurisdiction to avoid trial).
4) Neither the defendant's reputation as a criminal nor prior criminal convictions are admissible in a criminal trial to prove that the defendant committed a crime or that the defendant has a criminal disposition. The fact that the defendant has previously been convicted of felony theft or any other crime, or has failed on prior occasions to return rental property in a timely fashion and/or to return it in good condition, does not prove that the defendant subsequently committed a theft or other crime, unless this establishes a "pattern of conduct" which may be admissible for limited purposes. See Lawson, The Kentucky Evidence Law Handbook , Section 2.20.
5) There is a strong historical presumption in the law against the use of criminal actions (which are taken on behalf of the people of the Commonwealth, not an individual) as any form of leverage in the collection of a debt. For example, the Commentary to KRS 514.070, theft by failure to make required disposition, states: "It is not the purpose of this statute to impose a criminal sanction on the relationship of debtor and creditor." It was this theory which was applied in the unpublished decision of Davidson v. Commonwealth . It should also be noted that § 18 of the Kentucky Constitution provides:
The person of a debtor where there is not a strong presumption of fraud shall not be continued in prison for the benefit of creditors . . . .
None of this means that a criminal prosecution may never take place, only that the facts of each case are extremely important.
III. APPLICABLE STATUTES
Recognizing the difficulties in certain cases in proving to a jury that a theft has occurred, the legislature enacted KRS 514.020(3), which states as follows:
(3) It shall be prima facie evidence of intent to commit theft by deception when one who has leased or rented the personal property of another fails to return the personal property to its owner within ten (10) days after the lease or rental agreement has expired. It shall also be prima facie evidence of intent to commit theft by deception when one presents to the owner identification which is false, fictitious or not current as to name, address, place of employment or other items of identification for the purpose of obtaining the lease or rental agreement. Nothing herein contained shall relieve the owner from making demand for return of property so leased or rented. Notice addressed and mailed to the lessee or renter agreement shall constitute proper demand.
However, with or without such a statutory provision, the prosecutor must prove each and every element of the crime beyond a reasonable doubt. Carella v. California, supra; Francis v. Franklin, 471 U.S. 307, 105 S. Ct. 1965, 85 L. Ed. 2d 344 (1985).
There are four statutes which could arguably be used in the prosecution of theft of property following a rental contract agreement. These are:
A. Theft by Deception, KRS 514.040.
KRS 514.040 states in pertinent part:
(1) A person is guilty of theft by deception when he obtains property or services of another by deception with intent to deprive him thereof. A person deceives when he intentionally:
(a) Creates or reinforces a false impression, including false impressions as to law, value, intention or other state of mind[.]
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(3) Deception as to a person's intention to perform a promise shall not be inferred from the fact alone that he did not subsequently perform the promise.
KRS 514.010(1) defines what it means to "deprive" an owner of his property as follows:
(1) "Deprive" means:
(a) To withhold property of another permanently or for so extended a period as to appropriate a major portion of its economic value or with intent to restore only upon payment of reward or other compensation; or
(b) To dispose of the property so as to make it unlikely that the owner will recover it.
B. Theft by Unlawful Taking or Disposition, KRS 514.030
KRS 514.030, theft by unlawful taking or disposition, states in pertinent part as follows:
(1) A person is guilty of theft by unlawful taking or disposition when he unlawfully:
(a) Takes or exercises control over movable property of another with intent to deprive him thereof[.]
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(2) Theft by unlawful taking or disposition is a Class A misdemeanor or unless the value of the property is $ 100 or more, in which case it is a Class D felony.
The emphasis in this statute is upon a "taking" or "exercising control." Deception is not required, but may be present, depending upon the facts. However, KRS 514.030 requires the Commonwealth to prove the intent to steal the property. See Commonwealth v. Day, Ky., 599 S.W.2d 166 (1980).
C. Theft by Failure to Make Required Disposition, KRS 514.070.
KRS 514.070, theft by failure to make required disposition of property, states in pertinent part as follows:
(1) A person is guilty of theft by failure to make required disposition of property received when:
(a) He obtains property upon agreement or subject to a known legal obligation to make specified payment or other disposition whether from such property or its proceeds or from his own property to be reserved in equivalent amount; and
(b) He intentionally deals with the property as his own and fails to make the required payment or disposition.
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(4) Theft by failure to make required disposition of property received is a Class A misdemeanor unless the value of the property is $ 100 or more, in which case it is a Class D felony.
This statute was interpreted in Commonwealth v. Jeter, Ky. App., 590 S.W.2d 346 (1979).
The Jeter case concerned a used appliance dealer who was indicted on one count of theft by deception (KRS 514.040) and four counts of failure to make required disposition of property (KRS 514.070). Customers had paid Jeter to purchase appliances, but the appliances were either never delivered, or were, when finally delivered, delivered in an unsatisfactory condition. The theft by deception count was dismissed after trial because the element of deception was not proven. The additional counts were dismissed because the circuit court found that Jeter's conduct was not contained within the purview of KRS 514.070. The Commonwealth then brought an action for certification of the question of law "as to whether KRS 514.070 includes the course of conduct in which a seller accepts money for the purchase of merchandise and then refuses to deliver the property as promised. "
The Court was asked to "determine, for future reference, if . . . [Jeter's conduct] or similar such conduct is an indictable offense under KRS 514.070." Quoting again from the commentary to the Penal Code, the Court noted that the statute was not intended to involve a debtor-creditor relationship.
We feel that the literal language of the statute, itself, is most persuasive. A careful reading of the statute leads one to the conclusion that this statute was not enacted to penalize the type of fact pattern as is alleged in the Commonwealth's case against Jeter. The alleged actions would more properly have supported an indictment for theft by deception under KRS 514.040.
We agree with the decision of the Fayette Circuit Court and certify that KRS 514.070 does not proscribe the type of transaction whereby seller accepts money for the purchase of merchandise and then refuses to deliver the property as promised. This statute was instead enacted to penalize the misapplication of property received from another. [590 S.W.2d at 347-348]
This statute has also been interpreted in Brickey, Kentucky Criminal Law , Section 14.08:
The basic thrust of this statute is to impose penal sanctions for such conduct as a retailer's failure to pay over to the state sales taxes which have been collected, a contractor's failure to make proper application of payments in satisfaction of materialmans' liens, an employer's failure to apply withheld employees' wages to a pension fund, or a bank employee's failure to properly credit funds deposited for the account of a customer.
Theft of Services, KRS 514.060
An additional statute which may be used in certain situations is KRS 514.060 (Theft of Services). As noted in Brickey, Kentucky Criminal Law (1974), Section 14.06, although this statute normally applies to the theft of labor (as opposed to property), this statute can include the use of vehicles and other movable property. This is consistent with the definition of "services" found in KRS 514.010(9).
IV. CONCLUSION
As we have indicated to you on the phone, the Davidson case is not to be used as precedential authority in any situation and the laws of the Commonwealth of Kentucky are unaffected by it.
Finally, owners of equipment rental stores are correct in approaching the county and commonwealth's attorneys; however, each is vested with wide discretion in prosecuting criminal cases and must take into consideration the proclivities of the community on crime and punishment. As long as there is no abuse of discretion amounting to malfeasance or misfeasance, your client's option in the event of a refual to prosecute is limited to civil redress.