Friday, July 29, 2016

Notes: KRS 514.070 Theft by failure to make required disposition of property.

 KRS 514.070(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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 Blanton v. Commonwealth 562 SW 2d 90 (Ky App, 1978) - New Trial

" . . . . the failure to pay claims for labor and material out of amounts received from the owner constitutes a misdemeanor under KRS 376.990(2) only if the contractor fails to pay sums which he knows to be due and owing. No criminal liability may be imposed for failure to pay an amount which is disputed in good faith by the contractor. Moreover, to commit the felony of theft by failure to make required disposition of property under KRS 514.070, a contractor must not only know that an amount is due and owing for labor and material, but he must also know that he has a legal obligation to make payment out of the proceeds received from the owner and must intentionally deal with proceeds as his own."
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Commonwealth v. Jeter 590 SW 2d 346 (Ky App, 1979)

["K.R.S. 514.070 does not proscribe the type of transaction whereby a seller accepts money for the purchase of merchandise and then refuses to deliver the property as promised."]
"The basic thrust of this statute [KRS 514.070] 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 employee's wages to a pension fund, or a bank employee's failure to properly credit funds deposited for the account of a customer. Brickey, Kentucky Criminal Law, § 14.08."
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Commonwealth v. Perry, 219 S.W.3d at 720 (Ky 2007)
"The sole issue in this certification of the law sought by the Commonwealth is whether the offense of Theft by Failure to Make Required Disposition of Property (KRS 514.070) covers a situation in which the victim gives money to the defendant with the agreement that the defendant will purchase merchandise from a third party source and give it to the victim, and then the defendant fails to purchase the item or return the money. We hold that it does."
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Taylor v. Commonwealth, 799 SW 2d 818 (Ky 1990) - Conviction affirmed
 In the context here presented, the only substantial difference between the elements of KRS 304.9-400 and those of KRS 514.070 is that conviction under the insurance code would lie if the agent converts the funds to his own use or illegally withholds them, whereas conviction under the penal code would properly ensue if he intentionally deals with the proceeds as his own and fails to make the required disposition. Taylor could be acquitted of theft and convicted of the lesser offense only if he had withheld the premiums but had not intentionally dealt with them as his own. Appellant's avowal of an intention and ability to pay, termed a denial of criminal intent, does not, even if believed, exculpate him under KRS 514.070.
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Butts v. Commonwealth, 581 SW 2d 565 (Ky 1979) - agent of a corporation is liable for crimes he commits for the benefit of corporation
Butts contends that his motions for directed verdicts of acquittal on these charges should have been granted because there was no evidence that he dealt with customers' property, which Sentry held under an obligation to repay, as his own. Rather, he maintains that he obtained the property as Sentry's agent and that he disposed of the property for the benefit of Sentry and not himself. We do not agree with this contention.

An agent of a corporation is liable for crimes he commits for the benefit of or in the name of a corporation "to the same extent as if the conduct were performed in his own name or behalf." KRS 502.060 (Emphasis added). The purpose of this section of the Penal Code is to prevent an individual from hiding behind a corporation to avoid criminal liability for his conduct. KRS 502.060 Commentary (1971). The evidence is uncontradicted that Sentry intentionally dealt with customers' property as its own. Butts was the agent of Sentry who executed these illegal conversions. By operation of statute Butts is responsible for converting the property.

Tom Fox, J. D.
Southern Specialty Law Publishing Company
Louisville, Kentucky

A division of Accountable Kentucky Incorporated
a Kentucky Non-profit corporation

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This is not legal advice and I am not a lawyer.

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