redundancy, however, poses no particular harm. Whether certain conduct is placed in paragraph (a) or (b) is of no consequence because in either case the conduct will fall within the definition of "obtains or uses" which is the conduct element in this section.

Because no state of mind is designated in this section with respect. to the conduct, the level of culpability that must be proved is at least "knowing," i.e., that the defendant was aware of the nature of his actions.20

B. Property

The subject matter that must be obtained or used in the proposed section is property. The term "property" is defined in section 111 to mean: anything of value, and includes (a) real property, including things growing on, affixed to, or found in land; (b) tangible or intangible personal property, including rights, privileges, interests, or claims; and (c) services.

"Anything of value," in turn, is defined in section 111 as: any direct or indirect gain or advantage, or anything that might reasonably be regarded by the beneficiary as a direct or indirect gain or advantage, including a direct or indirect gain or advantage to any other person.

As is evident, these terms are defined broadly. The purpose of these extensive definitions is to make clear that all forms of property are to be protected against an unauthorized taking or using.

By defining property to include real property, the section avoids distinctions between what is real property and what is personal property-and if characterized as real property what is movable and what is immovable 21-in order to determine whether an offense has been committed under this section.

Intangible personal property is also meant to be broadly construed. It is intended to cover contract rights, including insurance, guarantees and other obligations, privileges, interests, and claims as well as intellectual property. Thus, theft of trade secrets and documents containing confidential information would be covered under section 1731. In prohibiting the theft of documents-and duplicates of documents containing confidential information-this section reflects current law. Where documents constitute the property "obtained or used," as that phrase has been defined, the "ideas" contained in the documents, rather than the paper on which the ideas are written, establish the value of the stolen property. The Second Circuit in United States v. Bottone 23 has held that the copying of documents containing a secret formula and the asportation of the copies violate the

20 See sections 303 (b) (1) and 302 (b) (1).

21 The National Commission distinguished movable from immovable real property, applying the theft provision unrestrictedly to the former, but, with respect to the latter, only if the exercise of control involved a transfer of an interest in the property. See Final Report, § 1741 (f), defining "property;" Working Papers, p. 916. The Committee has decided to adopt the New York approach which does not recognize any such distinction. Where a person intends to deprive another of his property, it should not matter whether the deprivation involves a transfer of an interest. The criminologically significant element is the intent to deprive another of property, whether or not it is accomplished by a transfer or purported transfer of an interest. For a discussion of the application of this section to leasehold disagreements, see infra, p. 668.

22 See. e.g., Hancock v. Decker, 379 F.2d 552 (5th Cir. 1967); United States v. Bottone, 365 F.2d 389 (2d Cir.), cert. denied, 385 U.S. 974 (1966); United States v. Lester, 282 F.2d 750 (3d Cir. 1960); United States v. Seagraves, 265 F.2d 876 (3d Cir. 1959). With respect to government documents, the theft of records from any court of the United States or from any other public officer or government employee is covered by 18 U.S. C. 2071. The same result is intended under this section.

23 Supra note 22.

18 U.S.C. 2314 theft provision even though the originals of the documents were returned to their appropriate place. The same result is intended under this proposed section. The criminologically significant element is the theft of the confidential information. The fact that the information from the document is copied on other paper is of no consequence.

An important addition to current law effected by the definition. of "property" is the coverage of services among the items that can be the subject of theft.24 Present Federal criminal law is deficient in this respect. Theft of services is not currently covered except in a few narrow situations, such as use of the mails without paying proper postage.25 In prohibiting the theft of services, proposed section 1731 follows the lead of most modern reform efforts.26

C. Property of another

In order to make out a violation of section 1731, the prosecution must prove that the property involved is "of another." That term is defined in section 111 to mean: property in which a person or government has an interest upon which the actor is not privileged to infringe without consent, whether or not the actor also has an interest in the property.

This definition is patterned upon the definition proposed by the National Commission.27 As the consultants to the Commission explained the import of the term: 28

This definition is... intentionally broad, and is designed to include diverse kinds of invasions of property interests of other people. The operative concept is an interest which the actor is not privileged to infringe without consent. This would obviously include an ownership or a possessory interest. It is also meant to include situations such as sales tax money collected by a merchant and held for the government (the government would have an "interest" which the merchant would not be entitled to infringe), income taxes withheld by an employer to be transmitted to the government (again, the government would have such an "interest") and other similar arrangements where property is withheld or transferred under a specific reservation that it, or equivalent property out of the actor's own funds, will be dealt with in a particular way. The definition of "property of another" in section 111 is meant to carry the same thrust and breadth.

The fact that the property is that "of another" is an attendant circumstance. Accordingly, because no culpability level is specified in this section, the requisite state of mind that must be established is, at a minimum, "reckless," i.e., that the offender was aware of but disregarded the risk that the property was not "his." 29 This is deemed an appropriate standard to preserve the general scienter requirements of current statutes.30

24 The term "services" is defined in section 111.

25 See 18 U.S.C. 1720, 1725.

26 See Working Papers, pp. 937-938.

27 See Final Report, § 1741(g).

28 See Working Papers, p. 917.

29 See sections 303 (b) (2) and 303 (c) (1).

30 See Morissette v. United States, supra note 2. Note that it is not required to show that the defendant knew whose property an item or object was, provided he was aware of the risk that it was not his. See United States v. Smith, 489 F.2d 1330, 1332-1334 (7th Cir. 1973), cert. denied, 416 U.S. 994 (1974); see also Barnes v. United States, 412 U.S. 837, 847-848 (1973).

The Committee also believes that this culpability level is sufficient to deal with situations involving the so-called "claim of right" defense.31 The National Commission proposed to define the defense for all forms of theft.32 Under its suggested definition, it would be a defense to a prosecution for theft that the actor "honestly believed that he had a claim to the property or services involved which he was entitled to assert in the manner which forms the basis for the charge against him." Quite simply, the rationale for this position is that if the defendant honestly believed that the property was his, it should not be theft for him to take it.3: 33

The Committee believes that the "claim of right" defense is, to a satisfactory degree, built into the culpability requirements of the offense. Thus, if the defendant is wholly unaware of the risk that the property he obtains is that of another, and believes it is his, he has a defense to theft-even though his belief was incorrect-because he lacks the requisite culpability. He did not obtain the property in reckless disregard of the fact that it was property of another. On the other hand, where the defendant is aware that the property may be that of another (in the sense that the other has an interest which the defendant is not privileged to infringe without consent), then he would be guilty of theft if he took the property. The Committee believes that the penal sanction should be used to discourage persons from employing a self-help remedy such as taking property where the defendant believes that the property is his but is aware that it may in fact be property of another. Where the defendant has such an awareness, he should use the legal process to vindicate his claims. By incorporating the "claim of right" defense in the culpability requirements of the offense, the section discourages an individual from forsaking legitimate means for contested property where he is aware of the risk that he may not be entitled to the property 34 but allows a defense where the individual honestly believes that he is entitled to the property and is unaware of any other's claim to the property.

Two matters bear on the "property of another" element. The first deals with the ordinary credit transaction, i.e., where a seller extends credit to a buyer without retaining an interest in the property sold. The Model Penal Code, in an earlier draft, suggested a provision excluding liability where the transaction involved only a "promise or other duty to be performed in the future" so as to "avoid putting the force of criminal law behind transactions which are in fact credit transactions." 35 The concern, as the National Commission pointed out, is with the housewife buying a refrigerator on credit and subsequently failing or being unable to pay for the refrigerator. There is no intention to punish the housewife for theft.36

A provision like the one suggested by the Model Penal Code is not necessary to evince this intention for two reasons. First, it must be remembered that an intent to deprive another of his property or to

31 See Working Papers, pp. 941-944.

32 See Final Report. § 1739(1)(a).

33 See Working Papers, pp. 941-942.

24 The risk must be such, for criminal liability hereunder, that its disregard constituted a gross deviation from the standard of care that a reasonable man would have exercised in the circumstances. See section 302 (c) (1).

35 Model Penal Code, § 206.4, Comment, pp. 80-81 (Tent. Draft No. 2, 1954).

30 Working Papers, p. 918. This assumes, however, that the housewife in good faith intended to pay when she obtained the property. If a person acquires property on credit without intending to pay, his actions would constitute theft under this section (i.e., they would amount to "obtaining property by fraud," within the definition of "obtains or uses" in section 1738).

"appropriate" the property is an important ingredient of any theft charge. The offense is not simply a failure to pay but a deliberate attempt to deprive the seller of his interest in the property. This analysis, however, need not even be reached because of the second reason which is more fundamental: there is no interest of another that is infringed. In the definition of property of another, the operative. concept is an interest which the actor is not privileged to infringe without consent. In the ordinary debt situation, the seller does not reason which is more fundamental: there is no interest of another that can be infringed. The same is true where there is a security agreement, i.e., a seller retains a security interest in the property sold. In such a case the debtor's failure to pay still does not deprive the security holder of the security interest in the property. The security holder has an interest in his debt being paid and hence may sue the debtor for that purpose (including a suit to reclaim the secured property), but the mere failure to pay pursuant to the terms of the contract does not infringe the security interest of the seller in the particular property that is the subject of the sale.37

The second point involves the landlord-tenant relationship. As previously discussed, property is defined to include real property. There is no intention, however, to punish as theft the failure of a tenant to pay his rent on his leasehold, although again, as in the case of ordinary credit situations, there is no need specifically to evince this intention. Section 1731 would not apply to such a situation because, aside from the intent requirement, the landlord does not have an interest in the property at issue that is infringed by the failure to pay rent; rather he has a contractual interest in receiving payment which he may enforce, against the debter's assets, in the courts.

D. With intent to deprive another of a right to the property, or to appropriate the property to his own use or to the use of another person

The last element required to be proved in order to make out a violation of the theft offense is an intent to deprive another of his property or to appropriate the property. The phrases "with intent to deprive . . ." and "(with intent) to appropriate ." are purposive clauses that carry their own culpability standards. The terms "right to the property" and "benefit of the property" derive their meaning from the definition of "property of another," discussed above.

The National Commission intended the word "deprive" to carry more than the element of permanency. As the consultants to the Commission explained, "with intent to deprive . . . includes, but . . . is not limited to, a purpose permanently to appropriate the property to the actor's own benefit." 38 There is some dispute among legal authori ties whether common law larceny required an intent to appropriate property permanently.39

Federal cases construing theft statutes on this issue are quite few in number and a difference in viewpoint is evident. Two cases, in in

37 In the situation of a security agreement, section 1736 also applies. As in the case of the "ordinary debt situation," section 1736 would not encompass mere failure to pay. It requires a deprivation of the security interest by removing, concealing, encumbering, transferring, or converting property, for example, by selling the property without regard to the security interest. See United States v. Coleman, 259 F. Supp. 394 (N.D. Miss. 1966), aff'd, 383 F.2d 989 (5th Cir. 1967).

38 Working Papers. p. 920.

39 See 52A C.J.S., Larceny, § 27a; Mitchell v. United States, 394 F.2d 767, 770-771 (D.C. Cir. 1968).

dicating that larceny provisions should be construed as requiring an intent to deprive permanently, suggest that permanency is an element of the traditional or common law approach.10 But the contrary position is taken in Mitchell v. United States, supra, where the court concluded, upon its analysis of the authorities, that common law larceny did not involve an intent permanently to deprive and construed a District of Columbia Code provision accordingly. In another case, United States v. Henry, however, the court construed 18 U.S.C. 661 as not involving an intent permanently to deprive because the underlying Congressional intent was to broaden, not codify, the common law crime of larceny.

41

While the question may be unsettled with respect to larceny, it is clear that embezzlement in its various forms is committed without proof of any intent to deprive permanently. An embezzler may well mean to replace the embezzled funds at a subsequent time, but the crime is complete even if he succeeds in restoring the monies. "Borrowing" funds with which one is entrusted is embezzlement whether or not the borrower intends to restore the funds within a short period of time.42

The Committee is persuaded that the better reasoned case authority supports the view that Federal theft offenses should not carry the element of an intent permanently to deprive. Where one obtains property of another with the requisite intent to deprive the other of a right to the property or a benefit of the property, it ought not to matter whether the deprivation is intended to be temporary or permanent. Accordingly, the concept of permanency is not intended to be an element of the offense.43

The Committee considered including a defense of "consent," but ultimately decided that this was unnecessary. In a prosecution for theft, the government must show either an intent to "deprive" another of property, or an intent to "appropriate" the property. In either situation, the defendant could come forward with evidence of consent such as to negative the requisite intent. Because satisfactory proof of an "intent to deprive" precludes the possibility of consent, and because "appropriate" is used in its ordinary dictionary meaning of "take without permission," it is apparent that if the defendant can show that he obtained the property with the consent of the other person or that he believed that the other person consented, the government's case must fail.

The following examples illustrate the kind of conduct that is meant to be covered by this section, and which conduct the Committee feels would establish the requisite "intent to deprive . . . or to appropriate. . .":

(i) Creating or reinforcing false impressions in order to induce another to part with his property. For example, the defendant obtains

40 Government of Virgin Islands v. Williams, 424 F.2d 526 (3d Cir. 1970) (construing a provision of the Virgin Islands Code); Ailsworth v. United States, 448 F.2d 439, 442 (9th Cir. 1971) (dictum that had the evidence shown an intent to return the property, no violation of 18 U.S.C. 841 would have been committed).

41 447 F.2d 283 (3d Cir. 1971).

42 For a few examples in this area, see Rakes v. United States, 169 F.2d 739 (4th Cir.). cert. denied, 335 U.S. 826 (1948) (involving a check-kiting operation); Golden v. United States, 318 F.2d 357 (1st Cir. 1963); United States v. Friend, 95 F. Supp. 580 (S.D.W.Va. 1951) (no intent permanently to deprive required for misapplication of postal funds).

43 Whether the deprivation is intended to be temporary or permanent is an issue, however, that is relevant to sentencing. Subsection (b) (4) (B) provides that an intended temporary deprivation of a motor vehicle or vessel by a person under age eighteen shall be graded as a Class B misdemeanor rather than a felony.