§702-227  Penal liability of corporations
and unincorporated associations.  A corporation or unincorporated
association is guilty of an offense when:



(1)  It omits to discharge a specific duty of
affirmative performance imposed on corporations or unincorporated associations
by law and the omission is prohibited by penal law; or



(2)  The conduct or result specified in the definition
of the offense is engaged in, caused, authorized, solicited, requested,
commanded, or recklessly tolerated by the board of directors of the corporation
or by the executive board of the unincorporated association or by a high
managerial agent acting within the scope of the agent's office or employment
and in behalf of the corporation or the unincorporated association; or



(3)  The conduct or result specified in the definition
of the offense is engaged in or caused by an agent of the corporation or the
unincorporated association while acting within the scope of the agent's office
or employment and in behalf of the corporation or the unincorporated
association and:



(a)  The offense is a misdemeanor, petty
misdemeanor, or violation; or



(b)  The offense is one defined by a statute
which clearly indicates a legislative purpose to impose such criminal liability
on a corporation or unincorporated association. [L 1972, c 9, pt of §1; gen ch
1993]



 



COMMENTARY ON §702-227



 



  Corporations and unincorporated associations (partnerships,
unions, etc.) are a powerful part of contemporary society and their conduct,
like that of individuals, ought to be subject to penal sanctions when it
injures substantial social values and can be morally condemned.  The common law
originally found it difficult to impose penal sanctions on a corporation or an
unincorporated association because the former was regarded as an artificial
entity and the latter as a label for an aggregate of individuals and neither
could form a requisite state of mind or be imprisoned.  These
"philosophical" difficulties have been swept away by imputing to the
corporation or association the acts and mental culpability of its directors,
managers, or employees and by utilizing fines as an appropriate alternative to
imprisonment.



  Subsection (1) provides for penal liability of a corporation
or unincorporated association which (acting through its agents) fails to
discharge any affirmative duty imposed by law upon it and enforced by penal
sanction (e.g., a fine).  Examples would be failure to comply with health or
safety laws.  Since the definition of "person" includes, where
relevant, corporations and unincorporated associations, a corporation or
unincorporated association could not be held penally liable unless, with
respect to each element of the offense, it (through its agents) acted with the
requisite state of mind.  Penal liability of corporations or associations
should not be imposed absolutely merely because imprisonment is not an
available penalty.



  Subsection (2) imposes penal liability for any prohibited
conduct or result which is engaged in, caused, authorized, solicited,
commanded, or recklessly tolerated by persons who represent the policy of the
corporation or unincorporated association.  Policy is obviously represented by
the board of directors of a corporation and by the executive board (regardless
of what proper name is used) of an unincorporated association.  "High
managerial agent" is defined in §702-229 and is used to denote those
individuals whose conduct may be said to represent the policy of a corporation
or an association.



  Subsection (3) deals with conduct and results which are
engaged in or caused by a person who is not a high managerial agent and which
are not authorized by such an agent or by the board of directors or executive
board.  Corporate penal liability for conduct engaged in or results caused by
an "agent" will result if the offense is a misdemeanor, petty
misdemeanor, or violation, or if the definition of the offense shows a clear
legislative purpose to impose felony liability on a corporation or
unincorporated association for such conduct or results.



  The phrase "in behalf of the corporation or
unincorporated association" is intended to avoid imposing penal liability
on a corporation or unincorporated association for the conduct of an agent who,
though acting within the scope of the agent's employment, acts solely for the
agent's own benefit.  For example, a manager may falsify public documents to
conceal the manager's own fraud on the corporation or association--certainly
the corporation or association should not be held penally liable because the
manager was acting within the scope of the manager's employment simpliciter.



  The Code follows substantially the approach taken in New
York[1] and proposed in Delaware,[2] except that the Code imposes liability on
unincorporated associations along the same lines as that imposed on
corporations.  This treatment of unincorporated associations was suggested in
part by the Model Penal Code.[3]



  Although there is little law on the subject, Hawaii has
recognized corporate penal liability. H.R.S. §712-3 (as codified prior to this
Code) provided for collection of fines from corporations upon conviction; and
at least two cases have resulted in criminal convictions of corporations for
regulatory offenses.[4]



 



SUPPLEMENTAL COMMENTARY ON §702-227



 



  An example of the failure of previous Hawaii penal law to
cover situations involving unincorporated associations is contained in State v.
Good Guys For Fasi, 56 H. 88, 528 P.2d 811 (1974).  In that case, the court
held that an unincorporated association, namely a political campaign committee,
could not be prosecuted for failure to file certain campaign contribution
reports when the statute providing the penalty for the failure related only to
the candidate, an agent of the candidate, and the members of the committee
acting on behalf of the candidate.  The case does not preclude the possibility
of an unincorporated association being held liable for a penal offense.



  Section 702-227 clearly permits the imposition of penal
liability on corporations and unincorporated associations but if the liability
is based on the failure to discharge an affirmative duty of performance, the
duty must be imposed on the corporation or association and the omission must be
prohibited by penal law.  See subsection (1).



 



__________



§702-227 Commentary:



 



1.  N.Y.R.P.L. §20.20.



 



2.  Prop. Del. Cr. Code §140.



 



3.  M.P.C. §2.07.  See also Prop. Pa. Cr. Code §207.



 



4.  Territory v. Pacific Club, 16 Haw. 507 (1905) (selling
intoxicating liquor without a license), and Territory v. Hilo Mercantile Co.,
23 Haw. 409 (1916) (improper storage of explosives).