State v. Bonfanti

 NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 111 State Street, Montpelier, Vermont 05602 of any errors in order
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                                 No. 90-498


 State of Vermont                             Supreme Court

                                              On Appeal from
      v.                                      District Court of Vermont,
                                              Unit No. 2, Chittenden Circuit

 Attilio E. Bonfanti                          November Term, 1991


 Edward J. Cashman, J.

 William Sorrell, Chittenden County State's Attorney, and Pamela Hall
   Johnson, Deputy State's Attorney, Burlington, for plaintiff-appellee

 David A. Nicholson, South Burlington, for defendant-appellant


 PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.


      MORSE, J.   Defendant pled no contest to fourth degree arson, 13
 V.S.A. { 505, in exchange for a negotiated sentence.  He appeals the trial
 court's order that he make restitution of $25,000 to Vermont Mutual
 Insurance Company and Northern Security Insurance Company, Inc.  These
 companies insured the building destroyed by fire which led to a charge of
 arson against defendant, the owner of the building.  We affirm.
     Defendant argues that the trial court did not have the authority to
 impose the condition that he pay restitution to the insurance companies.
 The companies had paid the Chittenden Bank the money due on the mortgage
 covering the destroyed building.  Defendant was the mortgagor.
      The statute which authorizes the payment of restitution as a condition
 of probation, 28 V.S.A. { 252(b)(6), provides that the court may, when im-
 posing a sentence, require the offender to "[m]ake restitution . . . to the
 victim of his conduct for the damage . . . which was sustained."  In State
 v. Webb, 151 Vt. 200, 201, 559 A.2d 658 (1989), we stated that this statute
 must be construed together with 13 V.S.A. { 7043, which provides that
 "[r]estitution shall be considered in every case in which a victim of a
 crime has suffered a material loss."  Section 7043 also outlines factors to
 be considered in determining whether and how a defendant should be ordered
 to make restitution.
      Defendant cites Webb, however, for the proposition that restitution
 cannot be paid to an insurer.  Defendant's analysis of the case fails to
 identify the distinction, made in Webb, between payment to the insurer of a
 party directly injured and payment to a party directly injured.  In Webb,
 the defendant was convicted of driving under the influence, and a condition
 of his probation was the payment of restitution to the company that insured
 the residence he damaged.  Webb, 151 Vt. at 200, 559 A.2d  at 659.  In
 reversing the order, we stated: "[N]one of [the statutory] provisions are
 intelligible if the term 'victim' is construed to include the insurer of the
 person directly injured by the offender's conduct. . . .  We conclude that
 restitution under the statutes may not include payments to insurers of
 direct victims."  Id. at 202, 559 A.2d  at 660.
      Defendant misconstrues the holding of Webb, which proscribed only the
 payment of restitution to insurance companies as indirect victims, not to
 insurance companies per se.  We agree with the sentencing court that the
 instant case is not a situation of third-party coverage.  Consequently, 28
 V.S.A. { 252(b)(6) does not preclude the restitution order because, as the
 sentencing court stated, "the insurer is in privity with defendant and the
 party directly damaged by the crime.  Within the meaning of the statute, it
 is the victim.  There is no general exclusion of insurance companies from
 the category of victim in [the] statute."
      Based on the circumstances of the crime, the sentencing court reason-
 ably concluded that the insurance companies were the immediate and intended
 victims of the crime.  The affidavit of probable cause, submitted by a fire
 investigator for the Vermont Department of Public Safety, stated that
 defendant had been unsuccessfully attempting to sell the property for "some
 time."  It was determined that an explosion preceded the fire, and that
 someone had tampered with the feeder gas line of the furnace in the
 basement of the building.  A pipe was missing, causing natural gas to flow
 freely.  In addition, someone had spread several gallons of kerosene on the
 first and second floors.  Defendant's wife told the investigator that the
 couple was experiencing "dire financial troubles" and that they were behind
 on their bills, including payments on the building.  No one resided in the
 building during the period preceding the explosion, and defendant had
 arranged to have the gas turned back on ten days before the fire after
 paying a long-standing bill.  There was no evidence of forced entry.
      Defendant's conduct was analogous to that of an embezzler, who
 fraudulently converts the money or property of another for personal use.
 See, e.g., 13 V.S.A. { 2531 (a person who "fraudulently converts to his own
 use . . . money or other property which comes into his possession or is
 under his care . . . shall be guilty of embezzlement").  Defendant, by
 committing the crime of arson, caused his obligation to the Chittenden Bank
 to be discharged because the insurance companies paid in his place.  In so
 doing, he fraudulently converted to his own use the insurance funds so that
 he was no longer indebted to the bank.
      Defendant argues that the victim of the crime under these facts was the
 Chittenden Bank, the holder of the mortgage on the building, not the
 insurance companies, who were forced to pay off the mortgage as a result of
 the fire.  Our statutory scheme, however, assumes the "victim" of a crime
 suffers some sort of wrong for which restitution compensates.  See 28 V.S.A.
 { 252(b)(6); 13 V.S.A. { 7043.  The wronged parties entitled to restitution
 in this case are the insurance companies.
      The nature of the arrangement between the insurance companies, the
 mortgage holder and defendant was that if a fire occurred, the insurance
 companies, not the Bank, would absorb the loss.  The Chittenden Bank
 received repayment on its promissory note because of the fire insurance, a
 satisfaction which would not have occurred had the Bank foreclosed on
 defendant's mortgage.  Conversely, had there been no insurance, defendant's
 obligation would have remained intact, despite the fire's destruction.
 Defendant's profit from the arson is evident.
      We hold that the sentencing court acted within its authority in
 ordering restitution to the insurance companies as a condition of
 defendant's probation.  We have stated that an insurer's loss is a relevant
 consideration at a sentencing hearing, even though we declined to reach the
 question of whether the insurer in that particular case was a "victim" for
 purposes of 13 V.S.A. { 5301.  State v. McElreavy, __ Vt. __, __ 595 A.2d 1332, 1336 (1991) (evidence of insurer's loss was relevant at arsonist's
 sentencing hearing because '"[t]he propensity and nature of the offender,
 the particular acts by which the crime was committed, and the circumstances
 of the offense are all relevant to the determination of an appropriate
 sentence.'") (quoting State v. Bushway, 146 Vt. 405, 407, 505 A.2d 660, 661
 (1985)).  Certainly, where the insurer has suffered harm as a direct victim
 of a defendant's wrongdoing, restitution is an appropriate condition of
 probation.
      The order was within the court's discretion and therefore will not be
 disturbed on review.  See 28 V.S.A. { 252 (a) ("conditions of probation
 shall be such as the court in its discretion deems reasonably necessary to
 ensure that the offender will lead a law-abiding life").  To hold otherwise
 would allow defendant to receive a windfall from his criminal activity
 because the parties experiencing an actual material loss happen to be
 insurance companies.  Our holding in Webb was never intended to lead to such
 a result.
      Affirmed.

                                         FOR THE COURT:



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