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§708-857 - Negotiating a worthless negotiable instrument.

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     §708-857  Negotiating a worthless negotiable instrument.  (1)  A person commits the offense of negotiating a worthless negotiable instrument if that person intentionally issues or negotiates a negotiable instrument knowing that it will not be honored by the maker or drawee.      (2)  For the purpose of this section, as well as in any prosecution for theft committed by means of a worthless negotiable instrument, either of the following shall be prima facie evidence that the drawer knew that the negotiable instrument would not be honored upon presentation:     (a)   The drawer had no account with the drawee at the time the negotiable instrument was negotiated; or     (b)   Payment was refused by the drawee for lack of funds upon presentation within thirty days after date or issue, whichever is later, and the drawer failed to make good within ten days after actual receipt of a notice of dishonor, as defined in section 490:3-503.      (3)  The definitions of the following terms shall apply to this section:     (a)   "Issue" as defined in section 490:3-105;     (b)   "Negotiable instrument" as defined in section 490:3-104;     (c)   "Negotiation" as defined in section 490:3-201.      (4)  Negotiating a worthless negotiable instrument is a misdemeanor. [L 1972, c 9, pt of §1; am L 1993, c 33, §2] COMMENTARY ON §708-857   This section is concerned with the passage of worthless negotiable instruments where the actor has knowledge that the instrument will not be honored.  Originally, bad check legislation was necessitated by the common-law limitations on promissory fraud: misrepresentation of a future fact was not sufficient to establish theft by deception.  Such artificial distinctions are largely obviated by the definition of "deception" used in the Code's theft provisions.[1]  As noted in the comments to the Proposed Michigan Code,      the elimination of the promissory fraud doctrine thus eliminates the need for a bad check statute in its traditional form.  This might suggest that there is no point served in continuing a bad check statute in the Draft.  In answer, the statute can serve a useful purpose when the merchant or bank that is in fact defrauded does not wish to prosecute but the bank on which the bad check is drawn does.[2] This section, moreover, protects the prevailing system of negotiable paper in addition to those individuals involved in a given case.  Since emphasis in "bad check" cases ought to be placed upon the theft, rather than on the bad check itself, the sanction provided for this offense is relatively mild, i.e., a misdemeanor, and the grade of the offense does not, as in the case of theft offenses, vary according to the amount involved.   The incorporation of the Uniform Commercial Code's definitions of "issue," "negotiable instrument," and "negotiation" in subsection (3), is intended to insure that in this area, where protection of commercial transactions are reinforced with criminal sanctions, the civil and penal law are closely correlated.  The use of the U.C.C.'s definition of "negotiation" insures that the indorser with knowledge or expectation of ultimate nonpayment, as well as the drawer, with such knowledge or expectation, will be covered.   Under the evidentiary rules established in subsection (2), the prosecution fulfills its initial burden of proving intent by demonstrating, beyond a reasonable doubt, either that the issuer had no account with the drawee, or that such an instrument was not made good within ten days of receipt of notice of dishonor.  Again, the definitions of the Uniform Commercial Code are used for both convenience and uniformity.  Note, however, the modifications toward leniency necessitated in adapting a civil statute to criminal use:  actual, rather than constructive, receipt of notice of dishonor is required before the time in which the actor must make good begins to run.  The time period required by subsection (2)(b) does not prevent prosecution before the time has elapsed, but only denies to the prosecution the benefit of that particular evidentiary provision before the stated time has elapsed.   Previous Hawaii law defined this offense similarly, except that Hawaii law required an intent to defraud.[3]  The Code provides that knowledge of insufficient funds is adequate culpability for the imposition of this penalty.  Moreover, distinguishing such knowledge from an intent to defraud introduces conceptual niceties of questionable value.  Hawaii law also recognized both the prima facie evidence of the requisite culpability based upon insufficient funds and failure to correct the insufficiency within five days.[4]  The Code attempts to better correlate this offense, both in language and substance, with the civil law relating to negotiable instruments. SUPPLEMENTAL COMMENTARY ON §708-857   Act 33, Session Laws 1993, amended this section by updating cross references to article 3 of the Uniform Commercial Code, which was repealed and replaced by Act 118, Session Laws 1991.  House Standing Committee Report No. 513, Senate Standing Committee Report No. 1068. Case Notes   Section construed as permitting but not compelling the inference of guilt under subsection (2)(b).  57 H. 526, 560 P.2d 110. __________ §708-857 Commentary: 1.  §708-800. 2.  Prop. Mich. Rev. Cr. Code, comments at 276. 3.  H.R.S. §744-1. 4.  Id. §744-3.
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  •      §708-857  Negotiating a worthless negotiable instrument.  (1)  A person commits the offense of negotiating a worthless negotiable instrument if that person intentionally issues or negotiates a negotiable instrument knowing that it will not be honored by the maker or drawee.

         (2)  For the purpose of this section, as well as in any prosecution for theft committed by means of a worthless negotiable instrument, either of the following shall be prima facie evidence that the drawer knew that the negotiable instrument would not be honored upon presentation:

        (a)   The drawer had no account with the drawee at the time the negotiable instrument was negotiated; or

        (b)   Payment was refused by the drawee for lack of funds upon presentation within thirty days after date or issue, whichever is later, and the drawer failed to make good within ten days after actual receipt of a notice of dishonor, as defined in section 490:3-503.

         (3)  The definitions of the following terms shall apply to this section:

        (a)   "Issue" as defined in section 490:3-105;

        (b)   "Negotiable instrument" as defined in section 490:3-104;

        (c)   "Negotiation" as defined in section 490:3-201.

         (4)  Negotiating a worthless negotiable instrument is a misdemeanor. [L 1972, c 9, pt of §1; am L 1993, c 33, §2]

     

    COMMENTARY ON §708-857

     

      This section is concerned with the passage of worthless negotiable instruments where the actor has knowledge that the instrument will not be honored.  Originally, bad check legislation was necessitated by the common-law limitations on promissory fraud: misrepresentation of a future fact was not sufficient to establish theft by deception.  Such artificial distinctions are largely obviated by the definition of "deception" used in the Code's theft provisions.[1]  As noted in the comments to the Proposed Michigan Code,

         the elimination of the promissory fraud doctrine thus eliminates the need for a bad check statute in its traditional form.  This might suggest that there is no point served in continuing a bad check statute in the Draft.  In answer, the statute can serve a useful purpose when the merchant or bank that is in fact defrauded does not wish to prosecute but the bank on which the bad check is drawn does.[2]

    This section, moreover, protects the prevailing system of negotiable paper in addition to those individuals involved in a given case.  Since emphasis in "bad check" cases ought to be placed upon the theft, rather than on the bad check itself, the sanction provided for this offense is relatively mild, i.e., a misdemeanor, and the grade of the offense does not, as in the case of theft offenses, vary according to the amount involved.

      The incorporation of the Uniform Commercial Code's definitions of "issue," "negotiable instrument," and "negotiation" in subsection (3), is intended to insure that in this area, where protection of commercial transactions are reinforced with criminal sanctions, the civil and penal law are closely correlated.  The use of the U.C.C.'s definition of "negotiation" insures that the indorser with knowledge or expectation of ultimate nonpayment, as well as the drawer, with such knowledge or expectation, will be covered.

      Under the evidentiary rules established in subsection (2), the prosecution fulfills its initial burden of proving intent by demonstrating, beyond a reasonable doubt, either that the issuer had no account with the drawee, or that such an instrument was not made good within ten days of receipt of notice of dishonor.  Again, the definitions of the Uniform Commercial Code are used for both convenience and uniformity.  Note, however, the modifications toward leniency necessitated in adapting a civil statute to criminal use:  actual, rather than constructive, receipt of notice of dishonor is required before the time in which the actor must make good begins to run.  The time period required by subsection (2)(b) does not prevent prosecution before the time has elapsed, but only denies to the prosecution the benefit of that particular evidentiary provision before the stated time has elapsed.

      Previous Hawaii law defined this offense similarly, except that Hawaii law required an intent to defraud.[3]  The Code provides that knowledge of insufficient funds is adequate culpability for the imposition of this penalty.  Moreover, distinguishing such knowledge from an intent to defraud introduces conceptual niceties of questionable value.  Hawaii law also recognized both the prima facie evidence of the requisite culpability based upon insufficient funds and failure to correct the insufficiency within five days.[4]  The Code attempts to better correlate this offense, both in language and substance, with the civil law relating to negotiable instruments.

     

    SUPPLEMENTAL COMMENTARY ON §708-857

     

      Act 33, Session Laws 1993, amended this section by updating cross references to article 3 of the Uniform Commercial Code, which was repealed and replaced by Act 118, Session Laws 1991.  House Standing Committee Report No. 513, Senate Standing Committee Report No. 1068.

     

    Case Notes

     

      Section construed as permitting but not compelling the inference of guilt under subsection (2)(b).  57 H. 526, 560 P.2d 110.

     

    __________

    §708-857 Commentary:

     

    1.  §708-800.

     

    2.  Prop. Mich. Rev. Cr. Code, comments at 276.

     

    3.  H.R.S. §744-1.

     

    4.  Id. §744-3.

     

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