Summary
In State v. Frost (1979), 57 Ohio St.2d 121, 11 O.O.3d 294, 387 N.E.2d 235, paragraph one of the syllabus, this court stated, "Where there is no manifest legislative intent that a general provision of the Revised Code prevail over a special provision, the special provision takes precedence."
Summary of this case from Schindler Elevator Corp. v. Tracy Tax CommrOpinion
No. 78-805
Decided March 28, 1979.
Criminal law — Securities — Unlawful sale — Exemption defenses — R.C. 1707.03 — Burden of proof — Statutory construction — General versus special provisions.
1. Where there is no manifest legislative intent that a general provision of the Revised Code prevail over a special provision, the special provision takes precedence. (Paragraph one of the syllabus in Cincinnati v. Thomas Soft Ice Cream, 52 Ohio St.2d 76, approved and followed.)
2. The requirement in R.C. 1707.45 that the defendant bear the burden of proof in claiming an exempt transaction under R.C. 1707.03 does not violate the Due Process Clause of the Fourteenth Amendment to the United States Constitution.
APPEAL from the Court of Appeals for Franklin County.
This is an appeal by the state of Ohio, appellant, from a decision of the Court of Appeals, reversing the convictions of William Alvin Frost, appellee herein, who was indicted on 9 counts of selling securities without a license, in violation of R.C. 1707.44(A), and on 12 counts of selling unregistered securities in violation of R.C. 1707.44(C).
Appellee is the president of Consumer Companies of America, Inc. (hereinafter CCA). CCA, a corporation, was formed in 1971, at which time 1,000 shares of stock were authorized and issued, 250 to appellee. The initial issue of shares was exempt from compliance with the Ohio Securities Act, pursuant to R.C. 1707.03(O).
During 1975 and 1976, appellee sold, either for himself or others, stock in CCA. The stock sold was part of the original shares issued to appellee and three other persons. All the stock was sold to persons listed as "representatives" of CCA. None of the shares were sold to outsiders. Appellee never registered any of the shares nor was he ever licensed as a salesman or broker of securities.
Appellee, in essence, claimed that he had violated neither R.C. 1707.44(A) nor 1707.44(C), since the transactions were within the exemption contained in R.C. 1707.03(B). R.C. 1707.03(B) states that the sale of securities by a bona fide owner, who is neither the issuer nor a dealer, is exempt if the sale is made in good faith and not done to avoid R.C. 1707.01 through 1707.45, and is not made in the course of repeated and successive transactions of a similar character.
However, R.C. 1707.45 states that the "burden of proof" is on the party claiming the benefit of the exemption. In accordance with R.C. 1707.45, the trial court instructed the jury that the appellee had the burden of proof by a preponderance of the evidence in order to establish the exemption defense. Appellee was convicted on 14 of the counts charged, and judgment was entered on the verdicts.
The Court of Appeals reversed the judgment of the trial court and remanded the cause, stating that the trial court erroneously placed the burden of proof by a preponderance of the evidence upon the appellee contrary to R.C. 2901.05(A), which stated:
"Every person accused of an offense is presumed innocent until proven guilty beyond a reasonable doubt, and the burden of proof is upon the prosecution. The burden of going forward with the evidence of an affirmative defense is upon the accused." (Emphasis added.)
The appellate court held that the jury should have been instructed that the appellee had only the burden of going forward with evidence of a nature and quality sufficient to raise the exemption defense, citing this court's decisions in State v. Robinson (1976), 47 Ohio St.2d 103, and State v. Humphries (1977), 51 Ohio St.2d 95. In addition, Judge Whiteside stated, in concurrence, that placing the burden of proof on the appellee in effect violated the Due Process Clause of the Fourteenth Amendment to the United States Constitution, citing Mullaney v. Wilbur (1975), 421 U.S. 684.
The cause is now before this court pursuant to the allowance of a motion for leave to appeal.
Mr. George C. Smith, prosecuting attorney, and Mr. Alan C. Travis, for appellant.
Mr. Paul D. Cassidy and Mr. R. William Meeks, for appellee.
The first issue before this court is whether the enactment of R.C. 2901.05(A), as interpreted in State v. Robinson, supra, evinces manifest legislative intent to impliedly repeal the provision of R.C. 1707.45. R.C. 2901.05(A), a general provision of the Revised Code, was enacted in 1974, and provided, in pertinent part, that: " The burden of going forward with the evidence of an affirmative defense is upon the accused." (Emphasis added.) On the other hand, R.C. 1707.45, a special provision found within R.C. Chapter 1707, was enacted in 1953 to deal with securities regulation in Ohio. This section states, in part: " The burden of proof shall be upon the party claiming the benefits of any * * * [exemption]." (Emphasis added.)
R.C. 2901.05(A) was amended, effective November 1, 1978, to read, in pertinent part:
"* * * The burden of going forward with the evidence of an affirmative defense, and the burden of proof, by a preponderance of the evidence, for an affirmative defense, is upon the accused." (Emphasis added.)
In reversing appellee's convictions, a divided appellate court construed the provision of R.C. 2901.05(A) as manifesting legislative intent to repeal the provisions of R.C. 1707.45, even though the Act did not expressly do so. The dissenting opinion of Judge Holmes expressed the observation that, while it was within the power of the General Assembly to nullify the burden of proof language in R.C. 1707.45, the later enacted general provision of R.C. 2901.05 did not do so.
It has been a long-standing rule that courts will not hold prior legislation to be impliedly repealed by the enactment of subsequent legislation unless the subsequent legislation clearly requires that holding. See Ludlow v. Johnston (1828), 3 Ohio 553, as cited by this court in Cincinnati v. Thomas Soft Ice Cream (1977), 52 Ohio St.2d 76, at page 78. This rule of statutory construction was codified in 1972 in R.C. 1.51. This section provides:
"If a general provision conflicts with a special or local provision, they shall be construed, if possible, so that effect is given to both. If the conflict between the provisions is irreconcilable, the special or local provision prevails as an exception to the general provision, unless the general provision is the later adoption and the manifest intent is that the general provision prevail."
See, also, Leach v. Collins (1931), 123 Ohio St. 530, 533, citing Rodgers v. United States (1902), 185 U.S. 83; Lucas County Commrs. v. Toledo (1971), 28 Ohio St.2d 214, 217; State, ex rel. Myers, v. Chiaramonte (1976), 46 Ohio St.2d 230.
The language of R.C. 2901.05(A) refers to going forward with evidence or of raising an affirmative defense, while that of R.C. 1707.45 specifically refers to placing the burden of proof upon the party claiming an exemption. Clearly, the general provision of R.C. 2901.05(A) is irreconcilable with the special provision of R.C. 1707.45. The issue then is whether the General Assembly has manifested its intent that R.C. 2901.05(A) prevail.
Participation by our citizenry in the ownership of business enterprises is the cornerstone of our economic order. The willingness of individuals to purchase securities is directly related to their perception of the credibility of, and the resulting confidence in, this system. The Ohio Securities Act was adopted to prevent fraudulent exploitations through the sale of securities. The Act is special remedial legislation passed, pursuant to the police power of the state, to promote the general welfare by attempting to secure the people against ignorance often due from incomplete disclosure of facts by individuals in a unique position to know the undisclosed facts.
It is axiomatic that it will be assumed that the General Assembly has knowledge of prior legislation when it enacts subsequent legislation. It is reasonable, therefore, to assume, in light of the purposes behind the enactment of R.C. Chapter 1707 and absent manifest intent to the contrary, that the General Assembly desired that an individual charged with a violation of R.C. Chapter 1707 shoulder a heavier burden of proof because of the possibility of widespread fraud upon the public. Accordingly, we find that the majority opinion of the Court of Appeals is in error as a matter of law.
The second issue before the court is whether R.C. 1707.45 unconstitutionally shifts the burden of proof to a defendant in violation of the Due Process Clause of the Fourteenth Amendment to the United States Constitution.
Any discussion about the constitutionality of placing the burden of proof upon a defendant in a criminal case must begin with In re Winship (1970), 397 U.S. 358, wherein Justice Brennan, writing for the majority, at page 364, stated:
"Lest there remain any doubt about the constitutional stature of the reasonable-doubt standard, we explicitly hold that the Due Process Clause protects the accused against conviction except upon proof beyond a reasonable doubt of every fact necessary to constitute the crime with which he is charged." (Emphasis added.) In re Winship did not directly address the issue of whether it was constitutional to require the defendant to shoulder the burden of proof when he is claiming an affirmative defense or an exemption. It merely stated that the prosecution must prove every fact necessary to constitute the crime beyond a reasonable doubt.
In re Winship (1970), 397 U.S. 358, was a juvenile case originating in the New York Family Court. The specific holding of the case was that proof beyond a reasonable doubt, which is required by the Due Process Clause in criminal trials, is among the "essentials of due process and fair treatment" required during the adjudicatory stage when a juvenile is charged with an act that would constitute a crime if committed by an adult.
Mullaney v. Wilbur, supra ( 421 U.S. 684), decided five years later, involved a defendant charged with murder in the state of Maine. The Maine statute required a defendant charged with murder to prove that he acted in the heat of passion on sudden provocation in order to reduce the homicide offense to one of manslaughter. The court upheld the reversal of the conviction and held that the Maine rule does not comport with the requirement of the Due Process Clause of the Fourteenth Amendment that the prosecution prove beyond a reasonable doubt every fact necessary to constitute the crime charged, citing In re Winship, supra.
At first glance, it would appear that Mullaney v. Wilbur requires that the prosecution disprove affirmative defenses beyond a reasonable doubt once the issue has been sufficiently raised by the defendant. However, scrutiny of Justice Rehnquist's concurring opinion therein reveals that to read Mullaney v. Wilbur as standing for the proposition that the prosecution is constitutionally required to disprove affirmative defenses beyond a reasonable doubt, is to read it too broadly. He states, at page 705, as follows:
"I agree with the Court that In re Winship, 379 U.S. 358 (1970), does require that the prosecution prove beyond a reasonable doubt every element which constitutes the crime charged against a defendant. I see no inconsistency between that holding and the holding of Leland v. Oregon, 343 U.S. 790 (1952). In the latter case this Court held that there was no constitutional requirement that the State shoulder the burden of proving the sanity of the defendant."
In Justice Rehnquist's view, therefore, Mullaney strictly follows In re Winship. The Maine homicide statute presumed malice aforethought once the state had proved that the homicide was both intentional and unlawful. Once this was proved, the crime was to be considered murder unless the defendant proved by a preponderance of the evidence that he acted in the heat of passion on sudden provocation. Shifting the burden of proof on this issue was unconstitutional in light of In re Winship because it presumed a fact necessary to constitute the crime of murder, i. e., malice aforethought.
Any remaining doubt that Mullaney v. Wilbur does not stand for the proposition that the prosecution must constitutionally carry the burden of proof on affirmative defenses was removed by the United States Supreme Court's decision in Patterson v. New York (1977), 432 U.S. 197. A New York statute, requiring that the defendant in a presecution for second-degree murder prove by a preponderance of the evidence the affirmative defense of extreme emotional disturbance in order to reduce the crime to manslaughter, was held not to violate the Due Process Clause of the Fourteenth Amendment, the court distinguishing Mullaney v. Wilbur, supra. The court stated that such an affirmative defense, which does not negate any facts of the crime which the state must prove in order to convict, constitutes a separate issue concerning which the defendant is required to carry the burden of proof. Justice White, writing for the majority, at page 210, stated: "We thus decline to adopt as a constitutional imperative, operative countrywide, that a State must disprove beyond a reasonable doubt every fact constituting any and all affirmative defenses related to the culpability of the accused. * * *"
The appellee, in this cause, sought to avoid criminal liability for violating the Ohio Securities Act by claiming the protection of the exemption provided in R.C. 1707.03(B). It is not unconstitutional to require a defendant to carry the burden of proof in such a case, because it does not require the defendant to negate any facts of the crime which the state must prove in order to convict. It remains with the state to prove beyond a reasonable doubt the essential elements of the offense: (1) that the offense was committed in the county; (2) that the defendant was selling securities without having been licensed as a security dealer; and (3) that the defendant was selling unlicensed securities.
See United States v. Tehan (C.A. 6, 1966), 365 F.2d 191, in which Judge Anthony J. Celebrezze's opinion addresses the constitutionality of placing the burden of proof upon the defendant when an exemption to the Ohio Securities Act is claimed. This decision, however, predates In re Winship and its progeny.
Accordingly, the judgment of the Court of Appeals is reversed.
Judgment reversed.
CELEBREZZE, C.J., HERBERT, W. BROWN, SWEENEY and PATTON, JJ., concur.
P. BROWN, J., dissents.
PATTON, J., of the Eighth Appellate District, sitting for HOLMES, J.