Nolan v. State
131 A.2d 851 (1957) 213 Md. 298 (1957)
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Rule of Law:
If an employee fraudulently converts money after it has been placed in the employer's possession (such as in a cash drawer or safe), the crime is larceny. If the employee converts the money before it comes into the employer's possession, the crime is embezzlement.
Facts:
- John S. Nolan was the manager of the Silver Spring office of Federal Discount Corporation, Inc. (Federal), and was responsible for all office operations.
- Mary V. Biggs, an employee hired on Nolan's recommendation and with whom he was romantically involved, had duties that included receiving customer payments and preparing daily report sheets.
- Customer payments were collected during the day and placed in a cash drawer provided by Federal.
- At the end of each day, Biggs would balance the cash drawer, and the drawer containing the money was then placed in Federal's safe.
- Nolan devised and directed a scheme where, after the cash drawer was balanced, he would take a portion of the cash.
- Under Nolan's instruction, Biggs would then alter the daily report sheets and rerun adding machine tapes to show a lower total, concealing the theft.
- Nolan used the stolen money for personal expenses, including buying watches, Cadillac automobiles, and a mink coat for Biggs.
- After Nolan and Biggs quit their jobs, an audit revealed a shortage of $2,592.94 during the period in question.
Procedural Posture:
- John S. Nolan and Mary V. Biggs were jointly indicted by a grand jury on one count of Embezzlement and one count of Larceny After Trust.
- The State abandoned the Larceny After Trust count during the trial.
- The case was tried before a jury in the state's court of first instance.
- The jury returned a verdict finding Nolan guilty of embezzlement.
- The trial court entered a judgment and sentence based on the jury's verdict.
- Nolan, as appellant, appealed the judgment to the Court of Appeals of Maryland, the state's highest court.
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Issue:
Does an employee who takes money from his employer's cash drawer, after it has been received from customers and placed in the drawer, commit the statutory crime of embezzlement?
Opinions:
Majority - Corrins, J.
No. When an employee takes money that has already been placed into the employer's constructive possession, such as a cash drawer, the crime is larceny, not embezzlement. The court reasoned that embezzlement statutes were created to criminalize conversions of property by an employee before the property has come into the employer's possession. Citing English common law, which Maryland's statute was based on, the court held that once customer payments were placed in Federal's cash drawer and balanced, they were constructively in Federal's possession. Taking the money from the drawer at that point constituted a trespass against the employer's possession, which is the essence of larceny. The court analogized the cash drawer to a till in a shop, where money taken by a shopman 'animo furandi' (with intent to steal) is larceny.
Concurring - Prescott, J.
Concurs in the judgment to remand the case, but disagrees with the majority's reasoning, arguing that the defendant's actions did constitute embezzlement. Judge Prescott criticized the majority's holding as re-establishing 'tenuous niceties' and 'hair-splitting distinctions' between larceny and embezzlement that can allow a palpably guilty person to escape justice on a technicality. He argued for a simple application of the Maryland embezzlement statute, which was met by the facts of the case. Citing Justice Holmes' opinion in Commonwealth v. Ryan, he asserted that an employee who has complete control over an office and its cash register does not transfer possession to the employer by merely placing funds in the drawer, and thus a subsequent taking should be considered embezzlement. He feared the majority's decision would 'unnecessarily embarrass many future prosecutions.'
Analysis:
This decision reaffirms the strict common-law distinction between larceny and embezzlement, hinging on the element of possession. By defining the placement of money into a company cash drawer as the moment the employer gains constructive possession, the court solidifies the boundary between the two crimes. The case serves as a critical lesson for prosecutors on the importance of pleading in the alternative, by charging a defendant with both larceny and embezzlement to prevent an acquittal on the technicality that the wrong crime was charged. The strong concurring opinion highlights the ongoing tension in criminal law between maintaining historical legal distinctions and achieving practical justice.
