No. 93-526
IN THE SUPREME COURT OF THE STATE OF MONTANA
1994
STATE OF MONTANA,
Plaintiff and Respondent,
v.
RONALD L. KUNTZ .
APPEAL FROM: District Court of the Twentieth Judicial District,
In and for the County of Sanders,
The Honorable C. B. McNeil, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
John C. Schulte, Attorney at Law,
Missoula, Montana
For Respondent:
Hon. Joseph P. Mazurek, Attorney General,
Kathy Seeley, Assistant Attorney General,
Helena, Montana
Robert Slomski, Sanders County Attorney,
Thompson Falls, Montana
Submitted on Briefs: April 28. 1994
Decided: June 7, 1994
Filed:
Justice Terry N. Trieweiler delivered the opinion of the Court.
Defendant Ronald L. Kuntz, the managing partner of KMMC
Investments, was charged by information in the ~istrictCourt for
the ~wentieth~udicial~istrictin Sanders County with six counts
of felony theft in violation of 5 45-6-301(1), MCA (1991). The
District Court denied Kuntz's motions to dismiss and for
reconsideration, after which Kuntz pled guilty to one count of
felony theft in exchange for the State's dismissal of the remaining
five counts. Pursuant to the plea agreement, Kuntz reserved the
right to appeal the denial of his motions.
We affirm.
The issue on appeal is whether the District Court erred when
it refused to dismiss the charges against Kuntz.
For purposes of deciding Kuntzlsmotion, the following facts,
which were alleged in the charging documents, are assumed to be
true. KMMC Investments Partnership, doing business as National Log
Construction Company, was formed in 1985. Pursuant to the
partnership agreement, Kuntz was namedthe managing partner of XMMC
and was the only partner involved in the day-to-day operation of
the business until the latter part of 1991. The agreement provided
that all partnership funds would be deposited with the First State
Bank of Montana in Thompson Falls. There was never an agreement by
the partners to establish accounts at any other financial
institution.
During the summer of 1991, the other partners became
suspicious of Kuntz. They examined partnership records and
accounts and, over Kuntz's objection, requested an audit which had
been provided for in the partnership agreement.
It was eventually discovered that accounts had been
established in a Seattle bank with Kuntz and his wife, the
secretary/bookkeeper for the partnership, as authorized
signatories. By transferring funds to these accounts, Kuntz and
his wife diverted thousands of dollars af partnership funds for
their personal use.
On February 16, 1993, Kuntz was charged with six counts of
felony theft in violation of d 45-6-301(1), MCA (lggl), for
allegedly exerting unauthorized control over the partnershipfs
property. Kuntz moved to dismiss these charges on the ground that,
under existing Montana law, a partner cannot be held criminally
liable for the theft of partnership property. Kuntz cited State v.
Brown (1909), 38 Mont. 309, 315, 99 P. 954, 957, for the proposition
that because partners are co-owners of partnership property, they
cannot misappropriate what is already theirs.
On June 11, 1993, the District Court denied the motion to
dismiss, and later denied a subsequent motion for reconsideration.
Thereafter, Kuntz entered into a plea bargain agreement pursuant to
which he pled guilty to one count of felony theft in violation of
5 45-6-301(l)(c), MCA (19911, for exerting unauthorized control
over cash in excess of $300 owned by KMMC. The plea was entered in
exchange for the State's dismissal of the remaining five counts.
The court deferred imposition of sentence for three years subject
to several conditions.
The plea agreement also reserved Kuntzts right to appeal the
denial of his motions, This appeal followed.
Did the District Court err when it refused to dismiss the
charges against Kuntz?
When reviewing a District Court's conclusions of law, this
Court determines whether the court's interpretation of the law was
correct. InreMam'ageofBrownel~(Mont. 1993), 865 P.2d 307, 309, 50
St. Rep. 1714, 1715.
Kuntz contends that the required elements for felony theft
cannot be proven in this instance because, as the managing partner
of KMMC, he had actual authority to exert control over the property
in question, and therefore, cannot be held criminally liable for
the theft of partnership property. He asserts that Brown, 99 P. at
954, is the controlling law in Montana. In that case, this Court
adopted the common law rule that a partner cannot be guilty of
stealing partnership property because a partner's interest or
ownership extends to every portion of the partnership property.
Kuntz further contends that Montanals adoption of the Uniform
Partnership Act (UPA) in 1947 did not have the effect of overruling
Brown. Although there is a UPA provision, codified in Montana at
8 35-10-502(2), MCA (1991), which states that partnership property
is to be used for partnership purposes unless the partners consent
otherwise, he notes that other states have unsuccessfully attempted
to base criminal liability on this provision. See, e.g, People v. Clayton
(Colo. 1986), 728 P.2d 723; S a e v Birch (Wash. Ct. App. 1984), 675
tt .
P.2d 246; State v. Ehbury (Nev. l946), 175 P.2d 430. Furthermore,
4
although amendments were made to Montanals UPA in 1993 which make
a partnership an entity from which assets could presumably be
stolen by a partner, this change was not yet in effect at the time
charges were filed against Kuntz.
We agree that 5 35-10-502(2), MCA (1991), does not, by itself,
create or define a crime. However, we hold that Montana has,
through its criminal statutes enacted in 1973, abandonedthe common
law theory on which Kuntz relies.
The statute under which Kuntz was charged and convicted states
that a person commits the offense of theft when he purposely or
knowingly exerts unauthorized control over property of the owner
and uses, conceals, or abandons it, knowing that this will probably
deprive the owner of the property. Section 45-6-301(1)(c), MCA
(1991). Section 45-6-303 (I), MCA (lggl), further states that " [i]t
is no defense to a charge of theft of property that the offender
has an interest therein when the owner also has an interest to
which the offender is not entitled."
When this section was enacted and codified in 1973, the
Criminal. Law Commission Comments made clear that this provision
removed any doubt about the criminal liability of a "co-owner, such
as a partner . . . who exercises unauthorized control with the
purpose to permanently deprive a co-owner of his interest in the
property-:I The Commission Comments further clarify that Montana's
theft statutes are consistent with the approach taken in the Model
Penal Code which rejects the common law theory that a person with
an interest in property cannot be held liable for theft of that
property. See People V. Sobiek (Cal. 1973), 30 Cal. App. 3d 458, cert.
denied (1973), 414 U.S. 855 (American Law Institute and Model Penal
Code reject rule that a partner cannot steal from a partnership.)
Kuntz contends that the language of 5 45-6-303(1), MCA (lggl),
is inapplicable because it requires that an owner of property must
have an interest to which the offender is "not entitled." It is
his assertion that there can be no part of partnership property to
which a partner is not "entitled."
We disagree with this assertion. Even though we previously
stated that 5 35-10-502(2), MCA (1991), of Montana's UPA does not
create or define a crime, this section makes clear that a partner's
property right only extends to a partner's use of that property for
partnership purposes and that there is "no right to possess such
property for any other purpose without the consent of the other
partners.'' Therefore, even though Kuntz has an interest in KMMC's
property, he was not entitled to divert property for personal use
without the knowledge and consent of the other partners.
Kuntz urges this Court to adopt the same reasoning set forth
in our previous decision of State v Haack (1986), 220 Mont. 141, 713
.
P.2d 1001, where we held that 3 45-6-303(1), MCA (1991), did not
apply and a joint tenant of a bank account could not be charged
with theft because there is no interest to which the joint tenant
is not entitled. Unlike a joint tenancy, however, the laws
governing property rights in partnership property do establish that
a partner's entitlement to partnership property is limited.
Therefore, our reasoning in Haack does not apply in this situation.
We conclude that our decision in Brown is superseded by the
amendments to the Penal Code and Uniform Partnership Act we have
discussed, and therefore, overrule Brown. We hold that under
current Montana law a partner can be liable for theft of
partnership property.
The decision of the District Court is affirmed.
We concur:
June 7. 1994
CERTIFICATE OF SERVICE
I hereby certify that the following certified order was sent by United States mail, prepaid,
to the following named:
John C. Schulte, Esq.
111 No. Higgins, Ste. 502
Missoula, MT 59802
I-Ion. Jospeh P. Mazurek, Attorney General
Kathy Seeley, Assistant
Justice Bldg.
Helena, MT 59620
Robert Slomski
Sanders County Attorney
P.O. Box 519
Thompson Falls, MT 59873
ED SMITH
CLERK OF THE SUPREME COURT