Summary
holding that when an employer issues a check to an employee for wages earned, the employer has made payment on a pre-existing debt and therefore the employer has not obtained any benefit nor has the employee suffered a detriment from the dishonored check and thus the employer cannot be convicted under Ohio's Worthless Check Act
Summary of this case from State v. CruzOpinion
No. C91-CRA-11984.5.
Decided October 28, 1991.
Thomas D. Heekin, Jr., Assistant Prosecuting Attorney, for the state.
Sirkin, Pinales, Mezibov Schwartz and Martin S. Pinales, for the defendant.
This case came on for preliminary hearing, the defendant facing felony charges. The issue is whether there is probable cause to believe that a felony was committed and, if so, that defendant committed it. The facts of this case are relatively simple and appear to be uncontroverted.
The defendant, Dennis Cote, is president of Cote Associates, Inc. On January 25, 1991, the defendant issued a $402.67 check to an employee as payment for wages earned. The check was drawn on the payroll account of Cote Associates, Inc. On February 4, 1991, the defendant reissued the check; however, this check was drawn on a different account. Both checks were dishonored and returned stamped "insufficient funds."
The defendant testified that at the time the original check was written there were sufficient funds in the payroll account, as evidenced by a January 16, 1991 order of garnishment and a March 19, 1991 order of garnishment from the Court of Common Pleas of Franklin County, Ohio. Together, these documents reveal that during the period between January 16, 1991 and March 19, 1991, $11,314.77 was seized from the corporation's bank accounts pursuant to a judgment against the corporation. The defendant further testified that it was his belief, since he had not received any indication from the bank that the corporation's general account had been seized, that he could cover the original check with a general account check.
The defendant is charged with a violation of R.C. 2913.11(A), which states: "No person, with purpose to defraud, shall issue or transfer or cause to be issued or transferred a check or other negotiable instrument, knowing that it will be dishonored." Hence, there can be no probable cause of a felony under R.C. 2913.11(A) unless the state produces sufficient evidence of three essential elements: (1) the issuance or transfer of a check, (2) a purpose to defraud, and (3) knowledge that the check would be dishonored.
Since it is unquestioned that the defendant issued the checks in question, the court need only address two issues: (1) whether the defendant possessed the requisite intent to defraud, and (2) whether the defendant knew the checks would be dishonored.
First, the court will determine whether there is a "purpose to defraud" as required by R.C. 2913.11(A) where a defendant employer issues a check which is subsequently returned "insufficient funds" to an employee as payment for wages earned, i.e., as payment for a preexisting debt. The answer is no.
R.C. 2913.01(B) defines "defraud" as follows: "`Defraud' means to knowingly obtain, by deception, some benefit for oneself or another, or to knowingly cause, by deception, some detriment to another." Where an employer issues a check to an employee in payment of a preexisting debt, i.e., wages earned, and the check is subsequently returned "insufficient funds," the employer has not obtained any benefit nor has the employee suffered any detriment. The debt still exists; hence, the employer has not gained any advantage by issuing the worthless check. Similarly, the employee has not suffered any loss since he has not parted with any additional consideration. This is not to say that the issuance of a worthless check as payment for a pre-existing debt is inherently void of any intent to defraud — it may be that the employee is induced to continue work in reliance upon the check; however, where there is no evidence of any additional fraud, as in the case at hand, the intent to defraud as required by R.C. 2913.11(A) is absent. Also, the court notes R.C. 4113.15, which requires employers to pay wages within certain limits, but that section is not invoked in this prosecution.
This court reached the same conclusion in State v. Rudd (1988), 55 Ohio Misc.2d 1, 562 N.E.2d 955. In Rudd, the defendant purchased several pieces of furniture from a local furniture store. A time-payment account was opened against which the defendant was to make regular payments. Several months later, the defendant issued a check against the account which was dishonored and returned "insufficient funds." A complaint was filed charging the defendant with a violation of R.C. 2913.11(A). Id. This court held that "[w]here a check, subsequently found to be worthless, is tendered for the payment of an antecedent or pre-existing debt, the creditor is not defrauded, since the debt still remains and the creditor is not fraudulently induced to part with property in reliance upon the check's value." Id., 55 Ohio Misc.2d at 2, 562 N.E.2d at 956-957.
Statutes analogous to R.C. 2913.11(A) have been interpreted similarly throughout many jurisdictions. See, e.g., State v. Campbell (1975), 97 Idaho 331, 543 P.2d 1171; State v. Turetsky (1963), 78 N.J. Super. 203, 188 A.2d 198; State v. Stout (1956), 142 W. Va. 182, 95 S.E.2d 639; Moore v. People (1951), 124 Colo. 197, 235 P.2d 798.
Furthermore, a preponderance of state courts have found that where intent to defraud is an essential element of the offense, the payment of a pre-existing debt with a check subsequently returned "insufficient funds" cannot constitute a violation of the statute. See Annotation, Construction and Effect of "Bad Check" Statute with Respect to Check in Payment of Pre-existing Debt (1958), 59 A.L.R.2d 1159.
The court now turns to the second issue, whether the defendant knew the checks would be dishonored as required by R.C. 2913.11(A) where, unbeknownst to him, the corporation's bank accounts had been seized. Again, the answer is no.
R.C. 2913.11(A) states: "No person, with purpose to defraud, shall issue or transfer or cause to be issued or transferred a check or other negotiable instrument, knowing that it will be dishonored." In this case, the defendant testified that at the time he wrote the checks, January 25 and February 4, 1991, he believed there were sufficient funds in the accounts. His testimony is supported by the two orders of garnishment previously mentioned. These documents reveal that during the period in question, $11,314.77 was seized from the corporation's bank accounts. The defendant further testified that he did not receive any notice from the bank indicating his accounts had been seized. Clearly, since he did not receive any notice regarding the seizure of the corporation's accounts, the defendant could not have issued the checks "knowing that [they would] be dishonored."
In view of the foregoing, it is clear that the prosecution has not shown that the defendant possessed the requisite intent to defraud or that he issued the checks with the knowledge that they would be dishonored, both of which are required to be present; therefore, there is no probable cause that defendant's conduct violated R.C. 2913.11(A).
This case is simply another in a plethora of instances where the criminal law is sought to be used to right a civil wrong. See, e.g., State v. Rudd, supra, and State v. Glenn (1990), 56 Ohio Misc.2d 1, 564 N.E.2d 1149.
No probable cause is found and the defendant is discharged.
Defendant discharged.