## Facts

- John S. Nolan was an office manager for a finance company that received customer loan payments in cash.
- Customer payments were placed into the company’s cash drawer as received and recorded in daily reports during end-of-day balancing.
- The cash drawer served as the company’s designated repository for received funds, and company officers also had access to it.
- At the close of business on multiple occasions, Nolan removed cash from the drawer and kept it.
- A subordinate assisted by falsifying daily receipt records so reported totals matched the reduced cash remaining in the drawer.
- Nolan was charged and convicted of statutory embezzlement by a servant/employee.
- On appeal, Nolan argued the proof showed common-law larceny because the money was taken from the employer’s possession, not embezzlement requiring lawful possession by the employee before conversion.

## Issues

1. Whether an employee who removes cash from an employer’s designated cash drawer commits statutory embezzlement or common-law larceny when the employer has constructive possession of the funds.
2. Whether an embezzlement conviction can stand when the State’s proof establishes a trespassory taking from the employer’s possession rather than a fraudulent conversion after lawful possession by the employee.

## Decision

- The Court of Appeals of Maryland reversed the embezzlement conviction and remanded for further proceedings.
- The court held that once customer payments were placed in the company’s cash drawer (their intended destination), the company had possession at least constructively.
- Because Nolan took the money after it was in the employer’s possession, his conduct fit common-law larceny rather than statutory embezzlement.
- A concurrence agreed with reversal but argued the statutory elements of embezzlement were satisfied and criticized the majority’s reliance on common-law distinctions.

## Legal Principles

- Embezzlement applies when a servant or agent lawfully acquires possession for the employer and later fraudulently converts the property.
- Larceny applies when property is taken from the owner’s actual or constructive possession by a trespassory taking.
- Property that has reached its intended destination in the owner’s designated repository may be in the owner’s constructive possession even if the owner has not physically handled it.
- When the proof establishes common-law larceny because the taking is from the owner’s possession, an embezzlement charge fails; embezzlement statutes were enacted to fill gaps where larceny did not reach.

## Conclusion

The court reversed Nolan’s embezzlement conviction because the employer had constructive possession of customer payments once deposited in the company cash drawer, making Nolan’s end-of-day removal a larcenous taking from the employer’s possession rather than an embezzlement after lawful possession by the employee.


Nolan v. State, 213 Md. 298, 131 A.2d 851 (Md. 1957)