Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts

Exercise 14

FACTS On February 10, 1991, defendant Kelm secured a loan for $6,000 from Ms. Joan Williams. Kelm told Williams that the loan was to finance a real estate transaction. Five days later, Ms. Williams received a check drawn by Kelm in the amount of $6,000 from Kelm's attorney. Although the check was dated February 15, 1991, Kelm claims that she delivered the check to her attorney on February 10, 1991. The following week, Ms. Williams learned the check was uncollectible. Subsequently, Williams received assurances from Kelm but was unsuccessful in her efforts to obtain money from the drawee's bank. When Williams deposited the check, it was returned with a notation that it should not be presented again and that no account was on file. Bank records show that the account was closed on March 8, 1991, and that it had negative balances since February 10, 1991. Following a jury trial, Kelm was found guilty of issuing a bad check. Kelm appeals, asserting that an intent to defraud is an element of the statutory offense of issuing a bad check and that the statutory provision exempts postdated checks.
DECISION The jury verdict is affirmed.
OPINION Bilder, J. The principal issue on appeal is whether an intent to defraud the victim is an element of N.J.S.A. 2C:21-5 (issuing a bad check). Defendant contends that the issuance of a postdated check cannot be found to be a violation of the criminal statute and that proof of an intent to defraud is required for a conviction. In support of that defendant relies heavily on a predecessor bad check statute, N.J.S.A. 2A: 111-15, and case law interpreting that former law.
N.J.S.A. 2C:21-5, in pertinent part, reads as follows:
A person who issues or passes a check or similar sight order for the payment of money, knowing that it will not be honored by the drawee, commits an offense ***. For the purposes of this section as well as in any prosecution for theft committed by means of a bad check, an issuer is presumed to know that the check or money order (other than a postdated check or order) would not be paid, if:
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(b) Payment was refused by the drawee for lack of funds, upon presentation within 30 days after issue, and the issuer failed to make good within 10 days after receiving notice of that refusal or after notice has been sent to the issuer's last known address. Notice of refusal may be given to the issuer orally or in writing in any reasonable manner by that person.
Defendant's reliance on N.J.S.A. 2A:111-15 (the old bad check statute) is misplaced. The need to show that the check was drawn ''with intent to defraud'' was specifically set forth in the statute. N.J.S.A. 2C:21-5 does not contain any such requirement, merely knowledge at the time the check is issued or passed that it will not be honored by the drawee. Cases involving the requirement of an intent to defraud under the old statute are irrelevant.
Defendant's contention that the statute's reference to a postdated check exempts such checks from its operation is similarly without merit. This provision merely excludes postdated checks from the statutory presumption of knowledge that the check will not be paid. When the instrument is postdated the presumption is inapplicable; the state must show that the drawer knew at the time the postdated check was drawn that it would not be honored on the later date when presented. In his charge the trial judge instructed the jury as follows:
The State must prove the following elements beyond a reasonable doubt in order to convict the defendant under this [bad check] count. The State must prove that the defendant knowingly issued or passed the check for the payment of money and, two that the defendant knew at the time that she issued or passed the check that it would not be honored by the drawee. Two things must occur at the same time: the defendant knowingly passed the check for the payment of the money and knew at the time she gave the check over to Mrs. Williams that it would not be honored by the bank.
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There is some argument that has been made that the testimony allows you and compels you to infer that there was a postdated check situation. It is for you to determine when this particular check was issued; was it issued on the fifteenth, the date it was dated, or was it issued on the tenth? You should examine the evidence carefully to determine whether or not you can make such an inference. If you do come to the conclusion that the check was issued on the tenth, that is, that it is a postdated check, then the element that the defendant knew that it would not be honored by the bank requires proof, again beyond a reasonable doubt, that the defendant knew at the time the check was issued that it would not be honored in the future on the fifteenth. *** Now, the state is not required to prove under the statute that there was any intent to defraud; the state need only prove that the defendant knew that the check would not be honored in the future. We are satisfied the jury was correctly instructed by this charge.
INTERPRETATION Under the New Jersey statute the offense of issuing a bad check requires mere knowledge at the time the check is issued or passed that the check will not be honored by the drawee.
CRITICAL THINKING QUESTION What elements do you believe are essential to a bad check law? Explain.