State v. Joy

549 A.2d 1033 (1988)

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Nature of the Case

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Facts

D was president and sole shareholder of Credit Management Services Corporation (CMS), a debt collection agency. D had exclusive control over and directed the activities of, CMS. CMS contracted with various businesses and credit institutions to collect delinquent accounts for a percentage of the amount collected. Once CMS contracted with a client, CMS was entitled to forty percent of any amount collected on a delinquent account. CMS was entitled to this percentage regardless of whether the debtor paid CMS or settled with the client directly. When CMS received a payment from a debtor, it would deposit the money into a client bank account, and within a month an invoice detailing the transaction would be sent to the client. If monies were due the client, a check would accompany the invoice. CMS was suffering financial difficulties and began transferring funds from the client bank account to his operating bank account to cover its operating expenses. D instructed his bookkeeping personnel to credit client accounts when debts were collected, but not to prepare invoices if there were insufficient funds. CMS entered into a contract with Stacey Fuel and received a check from one of Stacey's debtors in the amount of $1,920.25. CMS never forwarded any of this money to Stacey, nor did it inform Stacey that the money had been received. Stacey terminated its relationship with CMS in August 1982. Stacey received notice that CMS had filed for bankruptcy and that Stacey had been listed as a creditor of CMS. P charged D with ten counts of embezzlement relating to funds belonging to six different clients of CMS. D was convicted on this count and appealed. D's main defense was that a mere inability to pay is insufficient for embezzlement and D's intent to repay was enough to negate the intent to embezzle.