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District Court of Appeal, Third District, California.

The PEOPLE of the State of California, Plaintiff and Respondent, v. Frank YRIGOYEN, Defendant and Appellant.

Cr. 2500.

Decided: November 24, 1954

J. Everett Barr, Yreka, for appellant. Edmund G. Brown, Atty. Gen., by Doris H. Maier, Deputy Atty. Gen., for respondent.

Appellant was convicted of a violation of Penal Code section 476a—issuing a check without sufficient funds or credit and with intent to defraud. He now appeals from the order denying his motion for a new trial and from the judgment.

Appellant's present counsel (who did not represent him at the trial) admits the making and nonpayment of the check, but contends that the evidence was insufficient to sustain the jury's implied finding of fraudulent intent; that the court erred in rejecting certain proffered testimony; and that the district attorney was guilty of misconduct in his argument to the jury. In the original opinion of this court we held that such contentions were without merit and affirmed the judgment. 271 P.2d 569. Thereafter a petition for rehearing was filed wherein counsel noted that it was not until he was in the course of preparation of said petition that he observed for the first time that there had been a failure to instruct on the element of circumstantial evidence. For this reason the petition was granted and time allowed each party within which to file a supplemental memorandum on the question so raised. After further examination of the record, in light of the question now posed, we conclude that the judgment of conviction must be reversed.

A summary of the evidence which, in the main, is not in conflict, shows that on September 30, 1950, defendant issued a check to the complaining witness, Pierre Mendiboure, in the sum of $1,000 as part payment on the purchase of certain cattle. The check was drawn on appellant's commercial account in a Healdsburg bank and was paid when presented. On October 5th appellant agreed to resell the cattle to one Lucas, the manager of a ranch near Healdsburg. Both Lucas and defendant testified that on that day they went to the Healdsburg bank and gave to the manager a check drawn by Lucas in favor of defendant in the sum of $8,000 with instructions that it subsequently was to be deposited to appellant's account for the purpose of covering a final check to be given to Mendiboure. This check was held in the bank undeposited until October 10th. Appellant's bookkeeper testified that on that date he went to the bank with a second check in the sum of $5,566 given him by Lucas in payment of the balance due appellant for the cattle purchased by Lucas; and that he then deposited both checks to appellant's account. In the interim and on Saturday, October 7th, appellant took delivery of the cattle from Mendiboure and gave him a final payment check for the sum of $11,260 drawn on appellant's account in the Healdsburg bank. Mendiboure testified that he had held the check for three days, or until the following Monday, October 10th, when he forwarded it to the Lassen Credit Corporation in payment of money owing that corporation. It is this check which forms the basis of the present complaint. When it was presented for payment at the bank on October 14th, one week after it was drawn, it was dishonored due to insufficient funds. The bank manager testified that in the normal course of business it would probably take two or three days for a check given in Susanville to clear the bank in Healdsburg. In the main this insufficiency was caused by the prior presentation of two other checks which appellant had drawn in favor of the Modoc Auction Yards which totaled more than $10,000. Appellant's bank statement was introduced in evidence and it appeared that the only time during the month of October when there were sufficient funds in appellant's account to pay his check to Mendiboure was on the 10th when, after deposit of both the Lucas checks, the balance in the account amounted to $13,572.30. The record shows that the information charging appellant with felonious issuing of the Mendiboure check was not filed until more than two and a half years after the check had been dishonored and that in the meantime appellant had paid Mendiboure $3,000 to apply against the amount appellant owed him and had delivered to him the pink slips from a number of motor vehicles which, however, for some unexplained reason Mendiboure did not attempt to capitalize. The foregoing testimony concerning the arrangements made at the bank when the first Lucas check was given to the bank manager was introduced by appellant after the People had rested.

Section 476a of the Penal Code provides that any person who wilfully with intent to defraud delivers any check for the payment of money, knowing at the time that he has not sufficient funds in or credit with the bank on which the check is drawn for the payment thereof on presentation is punishable by imprisonment in the county jail or in the state prison. The essentials of proof, therefore, are: The issuance of the check with knowledge that it is issued without funds or credit in the bank to meet it and with fraudulent intent. When the People had introduced evidence that appellant had issued his check without a sufficient balance to cover it and without having credit with the bank, that he had obtained the cattle of Mendiboure by delivering that check to him, and that the check had been dishonored, a prima facie case against appellant had been made out, for the element of fraudulent intent could be inferred from that evidence. The discussions at the bank between appellant, Lucas and the bank manager regarding the use of the Lucas check to meet the anticipated draft in favor of Mendiboure did not amount to an arrangement of credit with the bank within the meaning of the statute, for the statute expressly defines credit as therein used as meaning an arrangement or understanding with the bank for the payment of the check. Of course, whether the jury would draw the inference of fraud was for the jury to decide after the case was submitted to them and their conclusion upon the issue of fraudulent intent would be based not only upon the evidence we have related as being introduced by the People, but also upon whatever additional pertinent evidence might be received bearing on the issue.

Appellant sought to meet the State's case not by proof that he had not drawn the check without funds or credit or that it had not been dishonored when presented, but by showing that when he issued the check he had not done so with the requisite fraudulent intent; and he argues here that he conclusively proved the absence of such intent by the testimony he introduced. That testimony was most persuasive. It consists of the testimony of himself, Lucas and his bookkeeper about the conversation with the bank manager concerning the holding of the first Lucas check by the bank manager until the bookkeeper came in with the second Lucas check and deposited both. The action on the part of the bank manager was exactly in accordance with the arrangements which appellant and Lucas testified they made with the bank. The effect of this testimony is not lessened by that of the bank manager that he could not so long after the transactions took place remember that conversation nor how he had handled the checks. He said it could well have been as testified to by appellant's witnesses.

In support of the judgment, respondent argues that since the defendant did not admit a ‘specific intent to defraud * * * that element of the offense would necessarily have to be established by indirect evidence’, and since each element of the offense charged was established by direct evidence ‘with the exception of the element concerned with a specific mental state’ the evidence was not entirely circumstantial and therefore it was not error for the trial court to fail to instruct on that element of the case. Numerous cases arr cited by respondent in support of such contention; however, we find nothing therein to take the present case out of the rule enunciated in People v. Bender, 27 Cal.2d 164, 175, 163 P.2d 8, 15, relied upon by defendant.

Whether the evidence concerning the element of the intent to defraud be termed indirect, as does the prosecution, or circumstantial, as does the defendant, nevertheless the fact remains that the record contains no direct evidence as to that element of the crime charged.

The precise question here raised was directly in issue in the Bender case. There the Supreme Court, quoting from 8 Cal.Jur. 371, sec. 405, stated:

‘* * * ‘that, to justify a conviction, the facts or circumstances must not only be entirely consistent with the theory of guilt but must be inconsistent with any other rational conclusion.’'

The court then added that:

‘It cannot be too strongly emphasized that such quoted statement enunciates a most important rule governing the use of circumstantial evidence. In unequivocal language it should be declared to the jury in every criminal case wherein circumstantial evidence is received.’

The court also quoted with approval from the case of People v. Warren, 16 Cal.2d 103, 116–117, 104 P.2d 1024, wherein it was held that,

“‘It is the duty of a court in criminal cases to give, of its own motion, instructions on the general principles of law pertinent to such cases, where they are not proposed or presented in writing by the parties themselves.”’

And in respect to the particular rule now invoked by defendant herein, the court reiterated with approval the further comment in People v. Hatchett, 63 Cal.App.2d 144, 155, 146 P.2d 469, that,

“Neither the statement in an instruction that the guilt of the defendant must be established beyond a reasonable doubt, nor the statement that as between two opposing reasonable inferences the one which is consistent with innocence must be preferred to the one tending to show guilt, satisfies the right of the defendant to have the jury instructed that where circumstantial evidence is relied upon by the People it must be irreconcilable with the theory of innocence in order to furnish a sound basis for conviction.”

Since the case must be reversed for the reasons hereinbefore stated, it becomes unnecessary to discuss further the additional contentions made by defendant.

The judgment and order are reversed.

PEEK, Justice.

VAN DYKE, P. J., and SCHOTTKY, J., concur.