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State v. Pierson

Superior Court of Delaware, New Castle County

January 30, 1952

State
v.
Pierson

[46 Del. 559] H. Albert Young, Atty. Gen., and Louis J. Finger, Deputy Atty. Gen., for the State.

Robert C. Barab, of Wilmington, for defendant.

[46 Del. 560] HERRMANN, Judge.

Count I of the Indictment charges that the defendant received money 'in connection with a contract * * * for the sale of land * * * and for the construction of a house thereon and did thereafter * * * pay out, use and appropriate the said money prior to paying any of the money so received to satisfy lawful claims of any persons * * * for labor and/or materials contemplated in the aforesaid contract * * *.'

This Count is based upon 1935 Code 3652, as amended by 44 Delaware Laws, Chapter 163 [1]. The question for decision is whether the Count states an offense under the Statute. Count I of the Indictment alleges misappropriation of funds

Page 560

The Count may not be upheld unless it is clear from the language of the Statute that, in enacting this Law, the Legislature intended to cover the offense of fraudulent misappropriation of money by a contractor who has either incurred no claims for labor or materials or who has paid all such claims.

The meaning, purpose and scope of this Statute has been heretofore considered. In State v. Tabasso Homes, Inc., et al., 3 Terry 110, 28 A.2d 248, 253, this Court stated that the Statute here involved may be considered to be a corollary or supplement to the Mechanics Lien Law and that the objects and purposes of the Statute are (1) to protect the owner against the claims of sub-contractors where the owner has made payment to the general contractor; and (2) to give sub-contractors protection against misappropriation of funds by general contractors [2]. Recognizing that an implied agency exists between a contractor and an owner with respect to persons furnishing labor and material, the Court said: 'It is this fact of agency of the contractor for the owner that furnishes much of the purpose and reason of the present statute. When an owner contracts for the erection of a building all sub-contractors, laborers or materialmen engaged in such building operation can, as we have seen, obtain direct liens against the property. For the prevention of these liens all funds paid to the contractor on account of the erection of the building may be said to constitute trust funds for the payment of claims that could materialize into liens. The [46 Del. 562] statute has for its object both the protection of the owner whose property, by reason of the implied agency of the contractor, may be made liable for sub-contracts, labor or material furnished for the building, and to give additional protection to the sub-contractors, laborers or materialmen engaged upon the building.' See also Maull v. Stokes, Del.Ch., 68 A.2d 200.

There is no ambiguity in the Statute. The legislative intent is clear. This Statute was designed to protect the owner against a dishonest contractor, but only to the extent of protecting him against double liability on claims of sub-contractors,

Page 561

laborers or materialmen. The Statute must be given effect according to its plain and obvious meaning, and its application must be limited to cases clearly within the statutory language used. The Court may not, under the guise of interpretation, extend a criminal statute to cover offenses which are not specifically set forth in the law and which are not clearly within the intendment of the Legislature. It is clear that this Statute has not been violated unless there are unpaid claims for labor and materials which should have been paid by the contractor out of the moneys misappropriated by him.

Accordingly, the facts set forth in Count I of the Indictment do not constitute an offense under the Statute upon which that Count is based. ...


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