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Theft by Receiving by Returning Merchandise

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This wikilog article is a draft, it was not published yet.

by: M rees • January 29, 2011 • no comments

Prosecutors now routinely charge Theft I when someone goes to a store, takes an item off the shelf, and makes a fraudulent return of merchandise at the customer service counter. They indict this as a Theft I, alleging that the defendant "sold" the stolen merchandise, without reference to the value of the item. ORS 164.055(1)(c). My clients are always surprised to find out they are charged with a felony and complain that taking a $10.00 item should be Theft III. This makes sense. The obvious argument is that the client did not steal the batteries, but merely used them to perpetrate a ruse, and the actual property stolen was the $10 he received in the fraudulent return. You might read State v. Rocha, 233 Ore. App. 1 (2009), and conclude that the court of appeals sees it otherwise.

Mr. Rocha's attorney argued that returning a mixer for cash after taking it from the shelf inside the store was not selling stolen property because the property was not "stolen property" at the time the defendant exchanged it for cash. The Court of Appeals affirmed, because the mixer was indeed stolen:

"[W]e readily conclude that defendant committed theft of the mixer when he removed it from the shelf. That is not to say that a shopper who removes an item from a store shelf for closer inspection or who carries it around in the store as the shopper decides whether or not to purchase it has committed theft. Instead, defendant's movement of the mixer in this case constitutes theft because it coincided with a thieving intent. . . . [W]hen defendant took the mixer from the shelf, he planned to assert ownership of it to the store in order to obtain a gift card in the value of the mixer. Defendant's intent to deprive the store of the value of the mixer, even if he did not intend to deprive the store of the mixer itself, suffices to establish the requisite intent for theft. Id. at 7-8"

Ryan Scott proposes a proportionality argument that you should use, remembering to put your client's name on it and changing his office address to yours.

But there is also an argument that a Rocha theft is not a Theft I. Notice that in Rocha, the defendant did not dispute that the exchange constituted "selling." 233 Ore. App. at 4. When the court of appeals mentions an argument that neither party raised, it means that someone at the court thought of it, and might have taken it seriously if someone had raised it.

If you go looking at the statutes to figure out why selling an item constitutes Theft by Receiving, and also Theft I, you will be reminded that criminal laws were drafted in the days before rubber erasers or moveable type, therefore the bizarre tangle of cross-references was impossible to fix. The word "sell" or "sale" does not appear in the definition of Theft by Receiving.

"(1) A person commits theft by receiving if the person receives, retains, conceals or disposes of property of another knowing or having good reason to know that the property was the subject of theft." * * * * "(3) 'Receiving' means acquiring possession, control or title, or lending on the security of the property."

ORS 164.095. Selling stolen property is Theft I by dint of ORS 164.055:

"(1) A person commits the crime of theft in the first degree if, by means other than extortion, the person commits theft as defined in ORS 164.015 and:" * * * * "(c) The theft is theft by receiving committed by buying, selling, borrowing or lending on the security of the property[.]"

"Selling" is nowhere explicitly made an element of Theft by Receiving. What if ORS 164.055 defined Theft I as "theft by receiving committed by photographing the property"? Does that make it possible to commit Theft by Receiving by photographing the property? Not likely. Unless "selling" is made an element of Theft by Receiving somewhere else, this usage in ORS 164.055 is inoperative.

"Selling" the property, although not named in the definition of Theft by Receiving, is arguably one way of "disposing" of property. So, if you sell stolen property, you are disposing of it, which constitutes Theft by Receiving. You are also committing Theft by Receiving by selling the property, which makes it Theft I.

Notice that "receiving" is explicitly defined as "acquiring possession, control or title, or lending on the security of the property," without reference to "buying," although "buying" is listed as one of the ways to commit Theft I when you commit Theft by Receiving. It is not explicit, but we can, again, puzzle out that "buying" is also "receiving" because it involves "acquiring possession, control or title." The upshot is that you can receive (but not by buying or lending on the security of), retain, conceal, dispose (but not by selling or borrowing on the security of), the property and be guilty of Theft by Receiving, but not Theft I.

I think I have figured out what the law-drafting trolls were trying to do, but when my client's conduct is prohibited by one of the prongs of Theft I by Receiving that requires too much puzzling and inferring, it is time to complain that the law is vague, vague as applied, and not applicable. For vagueness challenges, see Ryan Scott's demurrers.

In the case of the client who is accused of "selling" a pack of batteries at the customer service desk, I think the likely winner is that the law does not apply at all. The 1971 enactment of the Oregon Criminal Code included Theft by Receiving exactly as it stands today. The only amendment since then was the 2009 insertion of some defenses not relevant here. Or. Laws 2009 c.811 sec. 9. The commentary to the 1971 criminal code says that ORS 164.095 was derived from the Model Penal Code sec. 223.6(1):

"1) Receiving. A person is guilty of theft if he purposely receives, retains, or disposes of movable property of another knowing that it has been stolen, or believing that it has probably been stolen, unless the property is received, retained, or disposed with purpose to restore it to the owner. 'Receiving' means acquiring possession, control or title, or lending on the security of the property."

American Law Institute Model Penal Code (1962).

The theft provision of the Model Penal Code consolidates as "theft" the separate common law offenses of larceny, embezzlement, false pretenses, larceny by trick, blackmail, extortion, and receiving stolen property. A defendant accused of one of the common law theft-like offenses would often be acquitted when the court decided he had really committed one of the other offenses, and the Model Penal Code sought to end that. All the different forms of theft were made to constitute a single offense, theft, with the different common law offenses subsumed into four theories of theft. Theft by receiving encompassed the common law offense of receiving stolen property. See LaFave, Substantive Criminal Law, 2d Ed., Sec. 19.8(d). It no longer mattered whether someone caught with stolen property was the person who took it, or the person who bought it from the original thief.

The distinction between felony and misdemeanor theft encoded in ORS 164.055 also derives from the Model Penal Code.

(a) Theft constitutes a felony of the third degree if . . . in the case of theft by receiving stolen property, if the receiver is in the business of buying or selling stolen property.

Model Penal Code Sec. 223.1. The Oregon version, ORS 164.055(1)(c), remains the same since the 1971 overhaul. It is similar to the Model Penal Code, but dispenses with the need to prove that the receiver was in the business of buying or selling stolen property. Oregon prosecutors need only prove that the person actually bought or sold, or borrowed or loaned on the security of the property. In enacting a version of Model Penal Code felony theft, the intent of the legislature is clear. ORS 164.055 punishes buyers and sellers of property in the ordinary sense. The law is intended to punish the fences, the people who facilitate a trade in stolen goods, the pawnbroker, or the boiler room dealer who rewards the street urchins who do the taking. The word "sell" in this section should not be stretched to encompass all acts that have trivial similarities to the selling of stolen property. There is no way to be "in the business" of returning items to the customer service desk. The deletion of the "in the business" language simplifies the proof, but doesn't change the meaning of "buying" and "selling." Ironically, by carving out this felony from the pie of consolidated misdemeanor thefts, the legislature has in part defeated theft consolidation.

Strictly construing the word "selling" in ORS 164.055, we can't stretch it to fit a fraudulent return. If you were to stop someone leaving the returns counter at Rite-Aid, and ask him if he just sold something, he would say, "No, I just returned something." The guy behind the counter would agree. If it turns out the customer pilfered a $10 pack of batteries before returning it, the transaction is still a return, or a sham return, not a sale. The return of merchandise is more like the adjustment or rescission of a prior sale, or the settlement of a warranty claim. The store has a policy of voiding sales under certain circumstances, with limitations, such as giving only store credit, or charging a restocking fee. This is not a simple trade of fungible goods for money. Only items actually bought from the store within a limited time can be offered for an adjustment at the customer service counter.

You should argue that your client committing Theft by Deception. ORS 164.085. There are several ways to commit theft by deception, but I think the appropriate one is under subsection (1)(d):

"(1) A person, who obtains property of another thereby, commits theft by deception when, with intent to defraud, the person:" * * * * "(d) Sells or otherwise transfers or encumbers property, failing to disclose a lien, adverse claim or other legal impediment to the enjoyment of the property, whether such impediment is or is not valid, or is or is not a matter of official record[.]"

ORS 164.085. This section, also extant since the 1971 criminal code revision, covers not only sales, but other transfers. The idea is that the prosecution need not exactly characterize the transfer, whether it is a sale, a pledge, a lease, a bailment, a gift, or some other transfer we can't quite name. Unlike ORS 164.055(1)(c), which specifies four types of transfers and has no catch-all term, ORS 164.085(1)(d) is expansive. The word "transfer" can easily cover a return of merchandise.

Theft by Deception involves the failure to disclose some adverse claim to the enjoyment of the property, such as the store's own claim to the property. Theft by Deception is designed to punish tricksters who take property by deceiving someone. In this case, the person deceives the clerk into thinking he bought the property and is returning it. What he steals is the money. If he steals less than $1000 in cash, it is a misdemeanor.

What you are trying to do is convince the court of almost exactly the same thing that Mr. Rocha claimed, except your argument hinges on the fact that the transaction was not a sale, but an "otherwise transfer". This argument was not addressed in Rocha because no one raised it.