WRITING A BAD CHECK

I increasingly see businesses and contractors filing criminal charges (by way of civilian complaint) against people in routine breach-of-contract cases. These cases almost always follow the same pattern: a business accepts partial payment from a purchaser to do a job, but the business fails to complete the job in a satisfactory manner, such that the purchaser refuses to pay in-full, and/or demands a refund. Normally, this would result in a lawsuit in small claims court or the special civil part in a local county Superior Court. However, these suits are timely and cost money to prosecute. As a result, many contractors try to take a short cut and file criminal charges against the purchaser, trying to get the police and criminal courts enforce their interests in a civil contractual dispute.

In my experience, businesses routinely make use of two New Jersey statutes in these unscrupulous attempts to coerce payment. These are 2C:21-5, which deals with passing bad checks and 2C:20-8, which covers “theft of services.”

A.      Passing Bad Checks

The statute governing this crime is clear and straight forward.

2C:21-5 Passing Bad Checks

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 as provided for in subsection c. of this section. 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 post-dated check or order) would not be paid, if:

a. The issuer had no account with the drawee at the time the check or order was issued; or

b. Payment was refused by the drawee for lack of funds, or due to a closed account, after a deposit by the payee into a bank for collection or after presentation to the drawee within 46 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 any person.

c. An offense under this section is:

                (1)a crime of the second degree if the check or money order is $75,000.00 or more;

                (2)a crime of the third degree if the check or money order is $1,000.00 or more but is less than     $75,000.00;

                (3)a crime of the fourth degree if the check or money order is $200.00 or more but is less than     $1,000.00;

                (4)a disorderly persons offense if the check or money order is less than $200.00.

I totally understand the validity of such a charge if somebody knowingly and willingly wrote a check on an account, knowing that the account was empty or had insufficient funds. I also understand the validity of issuing such a charge when somebody forges and passes a fake check on a non-existent account.

However, I often see people who issue stop-payment orders on checks, after they issue them, because they discover shoddy workmanship and/or defective goods and they refuse to pay. This is normal and, generally speaking, is permitted under N.J. law.

However, issuing a stop-payment order does not constitute “writing a bad check.” If you are charged with such a crime, you need to prove a number of things:

First, you need to show that you had sufficient funds in your account at the time the check was drafted. This is often easy to do and banks have detailed records, including copies of your account statements. Here, I often like to provide the prosecutor with copies of your account statement for the month prior to the offense, the month of the offense, and the month after the offense, so that I can show him/her that you consistently had more than sufficient funds to cover the check throughout the time-frame at-issue. This is the most important evidence you can provide in defending against such cases. If you didn’t have sufficient funds in your account at the time you issued the check, it’s much harder to defend against such a case.

Second, you need to show that you issued an actual stop-payment order on the check. New Jersey appellate courts have specifically stated that if this is what happened, that it’s pretty good evidence that you didn’t commit an offense under the statute.

Third, if you did, in-fact, issue a stop-payment order on the check because of poor workmanship, it’s a good idea to have sufficient documentation that backs up your explanation. I find that it’s often useful to have photographic evidence, as well as estimates by third parties, that can corroborate the damage.

B.      Theft of Services

This is often charged when, rather than issuing a stop-payment order, the purchaser simply refuses to pay, due to a defective product or poor workmanship. This is inappropriate, because the statute was drafted to cover transactions lacking any such defense, such as where you steal cable TV, run out of a restaurant without paying your bill, and the like. Whenever you have a legitimate contractual reason to withhold or refuse payment, due to the other side’s breach (i.e., they provided you with a defective product, bad services, or poor workmanship), then it is inappropriate and improper for the State to issue criminal charges against you.

2C:20-8. Theft of services
a. A person is guilty of theft if he purposely obtains services which he knows are available only for compensation, by deception or threat, or by false token, slug, or other means, including but not limited to mechanical or electronic devices or through fraudulent statements, to avoid payment for the service. "Services" include labor or professional service; transportation, telephone, telecommunications, electric, water, gas, cable television, or other public service; accommodation in hotels, restaurants or elsewhere; entertainment; admission to exhibitions; use of vehicles or other movable property. Where compensation for service is ordinarily paid immediately upon the rendering of such service, as in the case of hotels and restaurants, absconding without payment or offer to pay gives rise to a presumption that the service was obtained by deception as to intention to pay. OR

b. A person commits theft if, having control over the disposition of services of another, to which he is not entitled, he knowingly diverts such services to his own benefit or to the benefit of another not entitled thereto.

I’ve handled a number of these cases before, and when I’ve been able to get them dismissed, it was due to the fact that my client had (a) a legitimate belief that the services or product were defective and (b) that there was already a prior, partial payment on the contract. Many judges are of the opinion that partial performance on a contract cannot constitute theft, as theft requires zero compensation. (See State v. Pearson, 39 N.J. Super. 50, 120 A.2d 468 (1956). Here, the court ruled that partial performance under a contract could not constitute a crime, absent proof of an “intent to defraud.”

“In our judgment, the circumstances proved by the State fell short of creating a jury question as to the existence of an intent to defraud at any time when a promise to build was made, either during the negotiations for or at the time of execution of the contract. At most, it showed breach of a contract after partial performance thereof…A showing of breach of contract for which a civil liability would exist must be differentiated from the criminality charged in the indictment.”

The most important thing in a case like this---provided that you're innocent, of course-----is to inform the prosecutor of the caselaw and inform him of the facts of your case. If your case is good, chances are the prosecutor will seriously consider dismissing it (even though you will probably show up to court a number of times, with the prosecutor each time asking that you plea guilty to a lower charge or municipal ordinance).

If the prosecutor does not dismiss it, then you will need to have a trial. These are tricky in municipal courts, due to the fact that they lack the same high levels of professionalism and adherence to the procedural and evidentiary rules found in our state's Superior Courts.  If your case is good, and you are found guilty in a municipal court, you always have the option of appealing the case to the Superior Court, where you are guaranteed a "de novo" appeal. This means that the Superior Court reviews all the evidence all over again without being bound by a municipal court judge's findings of fact. In a sense, this is like having a whole new trial, the only difference being that you are limited to the testimony and evidence submitted in the municipal court trial. If you are dealing with unreasonable municipal court prosecutors and judges, then I often find that such appeals are best and that one must fashion one's case with the appellate case in mind.

If you've been charged with writing a bad check, due to your refusal to pay a contractor for shoddy, sub-par, sub-standard or unacceptable workmanship/poor workmanship, then you may have a legitimate defense. My office has much experience handling cases like this in Camden, Gloucester and Burlington Counties. If you live in Runnemede, Bellmawr, Gloucester Township, Washington Township, Collingswood, Haddon Township, Mt. Ephraim, Haddon Heights, Barrington or Haddonfield, then please call my office for a free consultation.

Call us for quality, compassionate, and individualized representation: 856-873-3730