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State v. Gerald Nelson
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MAINE SUPREME JUDICIAL COURT					Reporter of Decisions
Decision:	1998 ME 183
Docket:	Ken-97-387
Submitted
on Briefs:	June 29, 1998
Decided:	July 23, 1998

Panel:WATHEN, C.J., and ROBERTS, CLIFFORD, RUDMAN, DANA, and SAUFLEY, JJ.



STATE OF MAINE v. GERALD NELSON, JR.

ROBERTS, J.

	[¶1]  Gerald Nelson, Jr., appeals from the judgment entered in the
Superior Court (Kennebec County, Alexander, J.) following his conviction of
theft.  On appeal he contends, inter alia, that the evidence is insufficient to
support his conviction.  Because the evidence is insufficient, we vacate the
judgment.  
I.
	[¶2]  Jeffrey Aalberg, Vernon Westcott, John Eaton, and Donald
Hewson owned property in Maine.  Between 1991 and 1994, they separately
entered into contracts{1} with Nelson whereby they agreed to sell timber to
Nelson.  Nelson paid Westcott for some of the timber that he harvested from
Westcott's property.  He did not, however, make any payments to Aalberg,
Eaton, and Hewson.  Nelson admits that he did not pay Eaton and that he
stopped making payments to Westcott.  He claims that he and Westcott
amended their original contract and that Westcott agreed to give him the
timber.  He also contends that Hewson did not receive the payment sent to
him and that Aalberg refused to accept payment.  
	[¶3]  In November 1995 Nelson was indicted, inter alia, for theft by
unauthorized taking (Class B) in violation of 17-A M.R.S.A. § 353 (1983).{2}  At
trial the State argued that Nelson had committed theft by unauthorized
taking as well as theft by misapplication of property in violation of 17-A
M.R.S.A. § 358(1) (1983).{3}  The jury convicted Nelson of theft and this
appeal followed.  
II.
	[¶4]  A verdict will be upheld if, based on the evidence assessed most
favorably to the State, a jury rationally could have found beyond a reasonable
doubt the elements of the offense charged.  State v. Garrett, 1998 ME 7,
¶ 3, 704 A.2d 393, 394.  Nelson contends that although he might be liable
to the landowners for civil damages, his conduct does not constitute either
theft by unauthorized taking or theft by misapplication of property.  We
agree.  
	[¶5]  To prove that a defendant has committed the crime of theft by
unauthorized taking in violation of 17-A M.R.S.A. § 353, the State must
demonstrate that the accused (1) obtained or exercised unauthorized
control over (2) the property of another (3) with the intent to deprive the
owner of that property.  State v. Duval, 666 A.2d 496, 498 (Me. 1995). 
Assuming arguendo that Nelson exercised unauthorized control over the
timber, the State has failed to prove that he exercised control over the
property of another.  17-A M.R.S.A. § 352(4) (1983) provides that
	'Property of another' includes property in which any
person or government other than the actor has an interest
which the actor is not privileged to infringe ....  Property in
the possession of the actor shall not be deemed property of
another who has only a security interest therein, even if legal
title is in the creditor pursuant to a conditional sales contract
or other security agreement.  
(Emphasis added.)  A "security interest" is "an interest in personal property
or fixtures that secures payment or performance of an obligation.  The
retention or reservation of title by a seller of goods notwithstanding
shipment or delivery to the buyer (section 2-401) is limited in effect to a
reservation of a 'security interest.'"  11 M.R.S.A. § 1-201(37) (1995)
(emphasis added).  Because the agreements between Nelson and the
landowners were in effect conditional sales contracts, the timber was not
the "property of another" within the meaning of section 353.  Nelson's
retention of the timber without compensating the landowners, therefore,
does not constitute a theft by unauthorized taking.  See 17-A M.R.S.A. § 352
comment (1975) ("[An] action inconsistent with a security agreement
should be treated as something different from ordinary theft.").  
	[¶6]  The evidence also does not support a finding that Nelson
committed a theft by misapplication of property in violation of 17-A M.R.S.A.
§ 358(1).  That section "lies close to the border between criminality and
mere civil failure to perform a contractual obligation."  17-A M.R.S.A.
§ 358(1) comment (1975).  In State v. Marcotte, 418 A.2d 1118 (Me. 1980),
we elaborated on how a court should determine on which side of the border
a particular infraction lies.  The defendant in Marcotte was a retailer who
failed to make sales tax payments to the state tax assessor and who was
subsequently indicted for theft by misapplication of property.  Id. at 1119. 
We held that Marcotte's failure to make monthly payments to the state tax
assessor did not constitute theft by misapplication of property.  Id. at 1120-
21.  In doing so, we considered the significance of the statutory phrase
"from that property or its proceeds or from his own property to be reserved
in an equivalent or agreed amount" and acknowledged the difficulty in
"formulating a test by which to distinguish criminal conduct from more
traditional debtor-creditor relationships which do not merit the imposition
of criminal sanctions."  Id.  We concluded that criminal liability should be
limited to "those situations where a kind of trust or fiduciary obligation
required an equivalent amount to be reserved" and held that "if there exists
no agreement or legal obligation to make payment from property obtained or
its proceeds or from property to be reserved in equivalent amount, there
can be no criminal liability" pursuant to section 358(1).  Id. at 1121.  
	[¶7]  We again grappled with the application of section 358(1) in
State v. Pleasant Hill Health Facility, Inc., 496 A.2d 306 (Me. 1985).  The
defendant in Pleasant Hill, a corporation that operated a nursing home,
received from the state monthly social security checks on behalf of
approximately ninety-five percent of its patients.  Id. at 307.  Each check
included both the amount owed to the nursing home for room and board and
a sum for the patient's personal use.  Id.  Pleasant Hill did not always
immediately pay into the patients' individual accounts and sometimes used
the funds to pay corporate expenses before a like amount was transferred to
the patients' accounts.  Id.  We affirmed Pleasant Hill's conviction and
explained that "[b]y administering social security checks in their entirety on
behalf of its patients, the corporation agreed implicitly to separate the
patients' personal needs funds from those allotted to defray the costs of
room and board and to hold the patients' money in trust."  Id. at 308.  
	[¶8]  Contrary to the State's assertions, the facts of Pleasant Hill are
inapposite to the present matter.  The contracts entered into between
Nelson and the landowners did not provide that he act as their agent or that
he hold the proceeds from the sale of the timber in trust for them. 
Although Nelson is legally obligated to compensate the landowners for the
timber, his failure to do so does not constitute theft by misapplication of
property.  Because we conclude that Nelson's conviction must be set aside,
we need not address his other contentions.  
	The entry is:
				Judgment vacated.

Attorneys for State: Andrew Ketterer, Attorney General Leanne Robin, Asst. Atty. Gen. 6 State House Station Augusta, ME 04333-0006 Attorneys for defendant: Sumner H. Lipman, Esq. Walter F. MacKee, Esq. Lipman & Katz, P.A. P O Box 1051 Augusta, ME 04332-1051
FOOTNOTES******************************** {1}. The contracts contained the following provision: "All timber included in this agreement shall remain the property of the seller until paid for in full." {2}. 17-A M.R.S.A. § 353(1) (1983) provides: A person is guilty of theft if he obtains or exercises unauthorized control over the property of another with intent to deprive him thereof. {3}. 17-A M.R.S.A. § 358(1) (1983) provides: A person is guilty of theft if he obtains property from anyone or personal services from an employee upon agreement, or subject to a known legal obligation, to make a specified payment or other disposition to a 3rd person or to a fund administered by himself, whether from that property or its proceeds or from his own property to be reserved in an equivalent or agreed amount, if he intentionally or recklessly fails to make the required payment or disposition and deals with the property obtained or withheld as his own.