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State v. Stewart

Supreme Court of Vermont

September 1, 2017

State of Vermont
Diane E. Stewart

         On Appeal from Superior Court, Chittenden Unit, Criminal Division James R. Crucitti, J.

          David Tartter, Deputy State's Attorney, Montpelier, for Plaintiff-Appellee.

          Matthew F. Valerio, Defender General, and Dawn Matthews, Appellate Defender, Montpelier, for Defendant-Appellant.

          PRESENT: Reiber, C.J., Skoglund, Robinson and Eaton, JJ., and Dooley, J. (Ret.), Specially Assigned.

          ROBINSON, J.

         ¶ 1. This case requires us to consider whether a bank is entitled to restitution as a "direct victim" of a crime when it incurred financial harm by reimbursing an accountholder for funds it had previously drawn from the account to pay a check that turned out to be forged. Defendant, who was convicted of embezzling from her former employer, appeals the trial court's restitution order that required her to pay the bank the amount that she had embezzled, arguing that the bank is not a direct victim of the crime and therefore is not entitled to restitution. We affirm.

         ¶ 2. The relevant facts are as follows. From December 2014 to July 2015, defendant was a secretary at a law firm. In June 2015, she took two checks from the law firm, made each payable to herself in the amount of $2500, forged an authorized signer's signature, and deposited them in her TD Bank account. In July, defendant's employer discovered that she had stolen the two checks and reported the incident to the police. The employer also filed a claim with its bank, People's United (the bank), and the bank reimbursed the employer's account for the funds it had cleared through the employer's account pursuant to the forged checks. The bank reported that it had no insurance to cover this loss.

         ¶ 3. Defendant was arraigned on two counts of felony embezzlement in August 2015. In October, she entered a plea agreement with the State and pleaded guilty to one count of embezzlement; the State dismissed the other count. The court placed defendant on probation and deferred her sentence for three years.

         ¶ 4. At the restitution hearing, the bank sought restitution in the amount of $5000 to cover the loss it incurred as a result of these events.[1] In its written decision, the court concluded that defendant must pay restitution to the bank. The court distinguished the bank from an insurer that could not receive restitution because the bank was "not in the business of taking payments in order to cover for the loss of others." It concluded that the bank was entitled to receive restitution because it "incurred a material loss as a direct victim." Defendant appealed.

         ¶ 5. The only issue on appeal is whether the bank in this case is a "victim" under Vermont's restitution statute. We review without deference the trial court's interpretation of the term "victim" as used in Vermont's restitution statute. See State v. Gorton, 2014 VT 1, ¶ 8, 195 Vt. 460, 90 A.3d 901. Citing to our prior precedent, defendant contends that the bank is not entitled to restitution because it is not a "direct victim" of the crime. She argues that the bank only incurred harm due to its relationship with her employer, and thus the harm was an indirect consequence of defendant's actions. She also argues that the bank cannot receive restitution because it has alternative civil remedies.

         ¶ 6. We conclude that the bank was a direct victim and affirm the trial court's restitution order. Even though Vermont's restitution statute defines "victim" narrowly, in this case, as a result of its own legal obligations relative to the forged checks, the bank was harmed financially as a direct result of defendant's crime. The cases relied upon by defendant do not persuade us otherwise, as the bank here was harmed as a direct result of defendant's crime, and the bank is not an insurer. The availability of civil remedies to the bank likewise does not undercut the applicability of the restitution statute.

         ¶ 7. We note at the outset that our restitution statute is drawn narrowly. Pursuant to 13 V.S.A. § 7043(a)(1), the trial court is to consider restitution "in every case in which a victim of a crime . . . has suffered a material loss." Section 5301(4) defines victim as "a person who sustains physical, emotional, or financial injury or death as a direct result of the commission or attempted commission of a crime." "The Legislature's use of the words 'direct result' indicates that it intended to provide restitution only to direct victims of crime." State v. Thomas, 2010 VT 107, ¶ 17, 189 Vt. 106, 14 A.3d 961. Thus, Vermont's restitution statute "has a narrow definition of victim" as compared to other states' statutes. Id.

         ¶ 8. Even with this narrow definition, as a result of its own legal obligations, the bank in this case was directly harmed by defendant's crime. A bank may not charge a customer's account for a check that is not properly payable, and because a forged check is not properly payable, the bank is therefore obligated to reimburse the account if it pays out a forged check. See 9A V.S.A. § 4-401(a); J. Walter Thompson, U.S.A., Inc. v. First BankAmericano, 518 F.3d 128, 132 (2d Cir. 2008) ("In most cases, a drawee/payor bank is strictly liable for charging its customer's account for a forged or altered check pursuant to Section 4-401"); Braden Furniture Co., Inc. v. Union State Bank, 109 So.3d 625, 630 (Ala. 2012) (explaining that under the UCC, "if a drawee bank debits a drawer's account for an improperly payable item, the drawee bank is obligated to recredit the drawer's account"); Monreal v. Fleet Bank, 735 N.E.2d 880, 881-82 (N.Y. 2000) (citing § 4-401 for proposition that "[a] check bearing a forgery of the customer's signature is an 'item' not 'properly payable and therefore may not be charged against the customer's account"). Even though the money to pay the forged check was initially drawn from the employer's account, defendant effectively stole from the bank and not the employer because of the bank's obligation to reimburse the employer for the money paid pursuant to forged checks.

         ¶ 9. In that respect, State v. Thomas, relied upon by defendant, is readily distinguishable. 2010 VT 107, 189 Vt. 106, 14 A.3d 961. In that case, the defendant was convicted of aggravated assault. The victim sought treatment at a hospital, and the trial court ordered the defendant to pay restitution to the hospital for an outstanding bill that the victim did not pay. We reversed the trial court's order, noting that the restitution statute defined "victim" narrowly and concluding that the hospital's financial injury was only an "indirect result" of the defendant's crime. Id. ¶ 17. Therefore, the hospital was not a direct victim and could not receive restitution. Id. In Thomas, the hospital's harm was indirect because it was the result of the victim's failure to pay an outstanding bill, and not directly because of the defendant's actions. Unlike the hospital in ...

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