State v. Jones
369 N.C. 631 (2017)
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Rule of Law:
A person who knowingly withdraws funds mistakenly deposited into their bank account commits larceny because the depositor retains constructive possession of the funds, while the account holder has only mere custody. The act of withdrawing the funds constitutes a trespassory taking.
Facts:
- Keyshawn Jones, an independent contractor for WEST Motor Freight (West), requested a $1,200 payment from his maintenance account.
- A payroll processor for West, Sherry Hojecki, made a typographical error and entered '$120,000' into the payment system instead of '$1,200'.
- This error resulted in a direct deposit of $118,729.49 into Jones's State Employees’ Credit Union (SECU) account.
- The morning after the deposit, Hojecki discovered the error, informed Jones of the mistake through his agent, and requested that he not withdraw the excess funds.
- Despite the request, Jones made seven ATM cash withdrawals totaling $7,000 and an electronic transfer of $20,000.
- The following day, Jones told a bank teller the large deposit was from the sale of his part of a business.
- Jones then withdrew an additional $89,861.80 through cashier's checks and cash, nearly depleting the erroneously deposited funds.
Procedural Posture:
- Keyshawn Jones was indicted in a North Carolina trial court for three counts of larceny and three counts of possession of stolen goods.
- At trial, the court granted the State's motion to dismiss the three possession-of-stolen-goods counts.
- The trial court denied Jones's motions to dismiss the larceny charges for insufficiency of the evidence.
- A jury found Jones guilty of all three counts of larceny.
- Jones, as appellant, appealed his convictions to the North Carolina Court of Appeals, an intermediate appellate court.
- The Court of Appeals vacated Jones's convictions, concluding that he had not committed a trespassory taking.
- The State, as petitioner, sought discretionary review from the Supreme Court of North Carolina, the state's highest court, which was granted.
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Issue:
Does a person commit larceny by withdrawing funds that were mistakenly direct-deposited into their bank account, when the depositor has notified them of the error and retains the ability to reverse the transaction?
Opinions:
Majority - Martin, C.J.
Yes. A person commits larceny by withdrawing funds mistakenly deposited into their bank account because the depositor retains constructive possession, and the withdrawal constitutes a trespassory taking. Larceny requires a trespass against the owner's possession. While West no longer had actual possession of the funds after they were deposited into Jones's account, it retained constructive possession. Constructive possession exists when one has 'the intent and capability to maintain control and dominion' over property. West demonstrated this by attempting to reverse the transaction. Jones, knowing the funds were not his and that West intended to retrieve them, had only 'mere custody,' not legal possession. Therefore, Jones's act of withdrawing the money interfered with West's constructive possession, satisfying the 'taking' element of larceny.
Concurring - Newby, J.
Yes. The majority correctly applies longstanding common law larceny principles to the modern context of electronic banking. The crime of larceny is not committed upon the unintentional receipt of property, but rather upon the knowing exercise of dominion and control over it with felonious intent. Here, defendant Jones was put on notice of the mistake but proceeded to withdraw the funds for his own use, thereby trespassing on West's property rights. This is analogous to the character Old Man Potter in the film 'It's a Wonderful Life,' who committed larceny not when he unknowingly came into possession of Uncle Billy's misplaced money, but at the moment he realized whose money it was and decided to keep it.
Analysis:
This decision adapts the traditional common law crime of larceny to the realities of modern electronic banking. It clarifies that intangible property, like funds in a bank account, is subject to the doctrines of constructive possession and mere custody. By holding that a payor retains constructive possession of mistakenly transferred funds, the court prevents recipients from claiming legal title to banking errors and solidifies that knowingly appropriating such funds is theft. This precedent is significant for future cases involving mistaken electronic transfers, cybercrime, and the application of property concepts to digital assets.
