Delano Compton, etc. v. Commonwealth

COURT OF APPEALS OF VIRGINIA
Present: Judges Benton, Elder and Annunziata
Argued at Salem, Virginia
DELANO COMPTON, S/K/A
WILLIAM LUTHER DELANO COMPTON
OPINION BY
v. Record No. 1119-95-3 JUDGE ROSEMARIE ANNUNZIATA
JULY 30, 1996
COMMONWEALTH OF VIRGINIA
FROM THE CIRCUIT COURT OF SMYTH COUNTY
Charles H. Smith, Jr., Judge
Thomas R. Scott (Street, Street, Street,
Scott & Bowman, on brief), for appellant.
Steven A. Witmer, Assistant Attorney General
(James S. Gilmore, III, Attorney General, on
brief), for appellee.
Following a bench trial, appellant, William Luther Delano
Compton, was convicted of fraudulent conversion of property in
violation of Code § 18.2-115, sentenced to three years
imprisonment, all of which was suspended, and placed on three
years probation. Appellant contends that his signature did not
appear on the lease agreement and, therefore, the evidence is
insufficient to support his conviction. We disagree and affirm.
I.
When considering the sufficiency of the evidence on appeal
in a criminal case, this Court views the evidence in a light most
favorable to the Commonwealth, granting to it all reasonable
inferences fairly deducible therefrom. Higginbotham v.
Commonwealth, 216 Va. 349, 352, 218 S.E.2d 534, 537 (1975). On
review, this Court does not substitute its own judgment for that
of the trier of fact. Cable v. Commonwealth, 243 Va. 236, 239,
415 S.E.2d 218, 220 (1992). The trial court's judgment will not
be set aside unless it appears that the judgment is plainly wrong
or without supporting evidence. Code § 8.01-680; Josephs v.
Commonwealth, 10 Va. App. 87, 99, 390 S.E.2d 491, 497 (1990) (en
banc) (quoting Martin v. Commonwealth, 4 Va. App. 438, 443, 358
S.E.2d 415, 418 (1987)).
Timberland Log and Lumber, Inc., d/b/a/ Timberland of
Saltville, Timberland Log and Lumber ("Timberland"), and Compton
Logging, Inc. ("Compton Logging"), entered a lease agreement in
which Timberland agreed to lease to Compton Logging a sawmill and
certain related equipment. The lease provided, inter alia, that
(1) Timberland would continue to own the leased equipment until
the lease terms had been fully complied with; and (2) Compton
Logging would not sell or otherwise part with possession or
control of the equipment without Timberland's written consent.
The court found, and appellant conceded at trial, that
appellant acted as Compton Logging's agent. Timberland's former
secretary and treasurer, Ralph Williams, testified that appellant
negotiated the terms of the lease on behalf of Compton Logging.
Williams' testimony was corroborated by Timberland's former
president, Vencil Minton. Williams further testified that the
lease embodied the terms of the agreement reached with appellant,
that appellant was present when the lease was signed, and that
appellant directed that the lease be signed on behalf of Compton
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Logging.
After Compton Logging fell behind in its lease payments,
Williams brought the arrearages to appellant's attention.
Appellant assured him "something would be done." Upon his return
to the sawmill, however, Williams found it abandoned and some of
the leased items, including a bulldozer and a loader, were later
found missing. During his investigation of the case, Officer
Danny Waddell of the Smyth County Sheriff's Office took a
statement from appellant. Appellant stated that both the
bulldozer and the loader had been sold or traded to an equipment
company in West Virginia. He further stated, "I traded these
pieces of equipment about October or November of last year."
With respect to certain trailers and trucks leased to Compton
Logging, appellant stated, "They were junk when I bought or
leased them." Williams denied that Timberland had given
permission to sell the bulldozer and loader. Moreover, no
evidence of written consent to sell the equipment as required by
the terms of the lease was presented.
II.
Code § 18.2-115 provides in part:
Whenever any person is in possession of
any personal property, including motor
vehicles or farm products, in any capacity,
the title or ownership of which he has agreed
in writing shall be or remain in another, or
on which he has given a lien, and such person
so in possession shall fraudulently sell,
pledge, pawn or remove such property from the
premises where it has been agreed that it
shall remain, and refuse to disclose the
location thereof, or otherwise dispose of the
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property or fraudulently remove the same from
the Commonwealth, without the written consent
of the owner or lienor or the person in whom
the title is, or, if such writing be a deed
of trust, without the written consent of the
trustee or beneficiary in such deed of trust,
he shall be deemed guilty of the larceny
thereof.
Appellant does not dispute that sufficient evidence supports the
trial court's finding that he fraudulently sold the equipment in
question. However, appellant contends that because the evidence
fails to establish that he signed the lease agreement as required
under Code § 18.2-115, his conviction must be reversed. We
disagree with appellant's reasoning and affirm the trial court on
the following grounds.
It is well settled that where a corporation's business
"involves a violation of the law, the correct rule is that all
who participate in it are liable." Crall v. Commonwealth, 103
Va. 855, 859, 49 S.E. 638, 640 (1905); Hays v. Commonwealth, 55
S.W. 425, 426 (Ky. 1900) ("It is evident that a corporation, if
in fact it engaged in [illegal conduct] through its agent or
servant, would be liable to indictment and conviction . . . and
likewise the agent so violating the law might be indicted and
punished"); City of Wyandotte v. Corrigan, 10 P. 99, 102 (Kan.
1886) ("It is immaterial [with respect to criminal liability]
whether appellant was acting for himself or for the company").
Accordingly, corporate agents may not use the corporate entity to
shield themselves from criminal liability for their own acts.
See Bourgeois v. Commonwealth, 217 Va. 268, 274, 227 S.E.2d 714,
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718 (1976) ("[A]n officer cannot avoid criminal responsibility
for an illegal act on the ground that it was done . . . through
the instrumentality of the corporation which he controls and
dominates and which he has employed for that purpose); United
States v. Sherpix, Inc., 512 F.2d 1361, 1372 (D.C. Cir. 1975);
State v. Childers, 415 S.E.2d 460, 465-66 (W. Va. 1992); State v.
Lang, 417 S.E.2d 808, 809-10 (N.C. Ct. App.), review denied, 421
S.E.2d 158 (N.C. 1992); State v. Seufert, 271 S.E.2d 756, 759
(N.C. Ct. App. 1980), review denied, 276 S.E.2d 289 (1981); State
v. Louchheim, 244 S.E.2d 195, 203-04 (N.C. Ct. App. 1978), aff'd,
250 S.E.2d 630 (N.C.), cert. denied, 444 U.S. 836 (1979); see
generally 1 Kathleen F. Brickey, Corporate Criminal Liability
§§ 5:01-5:02 (2d ed. 1991); 1 Wayne R. LaFave & Austin W. Scott,
Jr., Substantive Criminal Law § 3.10 (1986); 18B Am. Jur. 2d
Corporations § 1893 (1985); 19 C.J.S. Corporations §§ 551-552
(1990).
"`[A] corporation obviously acts, and can act, only by and
through its member agents[,] and it is their conduct which
criminal law must deter and those agents who in fact[] are
culpable.'" Childers, 415 S.E.2d at 465 (quoting Miller v.
State, 732 P.2d 1054, 1059 (Wyo. 1987)). "No doctrine of agency
law would permit corporate agents to immunize themselves from
criminal responsibility for their own acts by the simple
expedient of incorporating." 1 Brickey, supra, § 5:02, at 152
(citing State v. Cooley, 206 S.W. 182 (Tenn. 1918)). "If the
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individual personally engaged in the criminal conduct or directed
or permitted its commission, it is no defense that the offense
was performed on behalf of the enterprise." 1 LaFave & Scott,
supra, § 3.10, at 361; see also Bourgeois, 217 Va. at 274, 227
S.E.2d at 718; Lang, 417 S.E.2d at 810 (rejecting defendant's
contention that principles concerning liability extend only to
corporate share-holders); Crall, 103 Va. at 859, 49 S.E. at 640;
1 Brickey, supra, §§ 5:01, 5:02, at 148-53; 1 LaFave & Scott,
supra, § 3.10, at 361; Childers, 415 S.E.2d at 466; Seufert, 271
S.E.2d at 759.
Here, the evidence established that appellant exercised
significant control over Compton Logging and either directed its
acts or personally and directly engaged in acts which violated
Code § 18.2-115. Appellant alone dealt with the Timberland
officers in negotiating the lease. Appellant directed the lease
to be signed on behalf of Compton Logging. Appellant admitted to
Officer Waddell that he leased the missing trailers and trucks.
Appellant gave assurances to the Timberland officers that the
late lease payments would be made. And, appellant admitted to
Officer Waddell that he traded the bulldozer and loader to the
West Virginia equipment company. The evidence proved that
appellant sold the equipment in contravention of that lease and
that he was aware the lease terms required written consent from
Timberland before the equipment could be sold. Although the
evidence was in dispute as to whether appellant had obtained such
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consent, that dispute was resolved by the trier of fact against
appellant.
In short, although appellant's signature does not appear on
the lease, each element necessary to the commission of the crime
was committed either personally by appellant or by the
corporation at appellant's direction. 1
Accordingly, appellant's conviction is affirmed.
Affirmed.
1
The dissent's focus on appellant's failure to
personally sign the lease ignores other material evidence in the
case which established that the corporate lease was signed solely
at appellant's direction. The dissent fails to address the
applicability of established principles in Virginia law, under
which liability is imputed to an agent for criminal corporate
acts performed at the agent's direction and in his stead.
The dissent reasons that, because Code § 18.2-118 excludes
the requirement of an agreement by the accused in writing,
appellant should have been prosecuted under that section and, by
extension, a conviction under Code § 18.2-115 is necessarily
precluded. The reliance placed on Code § 18.2-118 is misplaced.
First, Code
§ 18.2-115 addresses the offense at issue here, and appellant was
properly prosecuted under it; appellant's conviction arose from a
violation of the rights of a secured creditor. See Bain v.
Commonwealth, 215 Va. 89, 93, 205 S.E.2d 641, 644 (1974) (the
offense contemplated by this section arises when a debtor
deprives "a secured creditor of his collateral by appropriating
it to the debtors' own use"). Second, the dissent fails to
recognize that, notwithstanding the absence of an agreement
signed by the accused, prosecution under Code § 18.2-118 also
requires an analysis premised on Virginia's corporate agent
liability principles. Under the facts of this case, the "person"
in which the terms of the lease place possession or control of
the equipment, was the corporation, not appellant. See Code §§
18.2-118(a) and (b).
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Benton, J., dissenting.
William Luther Delano Compton was convicted of violating
Code § 18.2-115, which reads in pertinent part as follows:
Whenever any person is in possession of
any personal property, including motor
vehicles or farm products, in any capacity,
the title or ownership of which he has agreed
in writing shall be or remain in another, or
on which he has given a lien, and such person
so in possession shall fraudulently sell,
pledge, pawn or remove such property from the
premises where it has been agreed that it
shall remain, and refuse to disclose the
location thereof, or otherwise dispose of the
property or fraudulently remove the same from
the Commonwealth, without the written consent
of the owner or lienor or the person in whom
the title is, or, if such writing be a deed
of trust, without the written consent of the
trustee or beneficiary in such deed of trust,
he shall be deemed guilty of the larceny
thereof.
Id. (emphasis added).
To prove a violation of the statute, the Commonwealth had to
prove that Compton "agreed in writing" that title to the property
was to remain with Timberland or that Compton "ha[d] given a
lien" on the equipment to Timberland. The evidence proved
neither.
The evidence proved Compton Logging, Inc., a Virginia
Corporation, entered into a written lease agreement with
Timberland. Pursuant to the agreement, Compton Logging, Inc.
leased a sawmill and various equipment and other property. Under
the agreement, Compton Logging, Inc. had "the right to sell or
trade equipment . . . [upon] prior written approval of
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[Timberland] and such approval [could] not be unreasonably
withheld." The agreement further stated that "[u]ntil all of the
terms of this lease are complied with each item of leased
equipment shall be at all times the sole, exclusive property of
[Timberland]." The agreement did not "prohibit the use of the
equipment by any manager or managing agent retained by [Compton
Logging, Inc.] to manage the premises in which the equipment
shall be located." The agreement was signed on behalf of Compton
Logging, Inc. by "Margaret R. Compton, by M.R. Scott, her
attorney-in-fact." Under the signature line was the designation,
"President/Vice President." The corporate seal of Compton
Logging, Inc. was attested by "Mary R. Scott," the corporation's
secretary.
The evidence proved that Margaret R. Compton, the
"President/Vice President," was Compton's wife. No evidence in
this record proved that Compton was an employee, officer, or
director of Compton Logging, Inc. In addition, no evidence
proved that Compton had the authority to sign the lease, direct
that the lease be signed, or approve the execution of the lease.
More significant, however, the evidence undisputably proved that
Compton did not sign the lease agreement, any writing concerning
the title or ownership of the equipment, or any lien regarding
the equipment.
Furthermore, no evidence proved that any person that signed
the lease fraudulently sold, pledged, pawned or removed the
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equipment. Indeed, no evidence proved that the corporation
engaged in a criminal act.
Acknowledging that "[Compton's] signature does not appear on
the lease," the majority nonetheless concludes that "each element
necessary to the commission of the crime was committed either
directly by [Compton] or by the corporation at [Compton's]
direction." The majority's exhaustive discussion of criminal
liability of corporate agents fails to explain the basis for
imposing liability under Code § 18.2-115 when Compton,
personally, had not agreed by any writing, an essential element
proscribed by the statute, to do the act that the statute
specifies.
The legislature has specifically addressed Compton's conduct
in Code § 18.2-118. That statute reads in pertinent part as
follows:
(a) Whenever any person is in possession or
control of any personal property, by virtue
of or subject to a written lease of such
property, except property described in
§ 18.2-117, and such person so in possession
or control shall, with intent to defraud,
sell, secrete, or destroy the property, or
dispose of the property for his own use, or
fraudulently remove the same from the
Commonwealth without the written consent of
the lessor thereof, or fail to return such
property to the lessor thereof within ten
days after expiration of the lease or rental
period for such property stated in such
written lease, he shall be deemed guilty of
the larceny thereof.
(b) The fact that such person signs the lease
or rental agreement with a name other than
his own, or fails to return such property to
the lessor thereof within ten days after the
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giving of written notice to such person that
the lease or rental period for such property
has expired, shall be prima facie evidence of
intent to defraud. For purposes of this
section, notice mailed by certified mail and
addressed to such person at the address of
the lessee stated in the lease, shall be
sufficient giving of written notice under
this section.
(c) The venue of prosecution under this
section shall be the county or city in which
such property was leased or in which such
accused person last had a legal residence.
Simply put, the Commonwealth prosecuted Compton under the wrong
statute. The majority's decision sanctions and compounds the
error.
For these reasons, I dissent and would reverse the
conviction.
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