222
Argued and submitted September 23; decision of Court of Appeals reversed,
judgment of circuit court reversed, and case remanded to circuit court for
further proceedings November 19, 2020
STATE OF OREGON,
Respondent on Review,
v.
GERARDO MORALES,
Petitioner on Review.
(CC 150034CR) (CA A166240) (SC S067225)
476 P3d 954
Defendant was convicted of various sex offenses following a trial at which
he was represented by a court-appointed attorney. Following his conviction, the
state requested that the defendant be required to pay attorney fees for his court-appointed counsel. Defendant objected, arguing that the trial court could not find
that he had the ability to pay those fees, as required by ORS 161.665(4). The trial
court imposed attorney fees based on money deposited by defendant’s mother as
security for defendant’s pretrial release. The Court of Appeals affirmed without
opinion. Held: Funds paid by and belonging to a third party cannot be the sole
basis for a finding that a defendant has the ability to pay court-ordered costs such
as attorney fees. Because the trial court determined that defendant here did not
have the ability to pay, it was error to impose fees on the basis of the third party’s
security payment alone.
The decision of the Court of Appeals is reversed. The judgment of the circuit court is reversed, and the case is remanded to the circuit court for further
proceedings.
En Banc
On review from the Court of Appeals.*
Shawn E. Wiley, Deputy Public Defender, Office of Public
Defense Services, Salem, argued the cause and filed the
briefs for petitioner on review. Also on the briefs was Ernest
G. Lannet, Chief Deputy Defender.
Adam Holbrook, Assistant Attorney General, Salem,
argued the cause and filed the brief for respondent on review.
Also on the brief were Ellen Rosenblum, Attorney General,
and Benjamin Gutman, Solicitor General.
______________
* On appeal from Hood River County Circuit Court, Karen Ostrye, Judge.
299 Or App 521,
449 P3d 593 (2019).
Cite as
367 Or 222 (2020) 223
BALMER, J.
The decision of the Court of Appeals is reversed. The
judgment of the circuit court is reversed, and the case is
remanded to the circuit court for further proceedings.
224 State v. Morales
BALMER, J.
The issue before the court is whether funds deposited by a third party as security for release of a criminal
defendant prior to trial can provide the basis for imposing
attorney fees on the defendant, when the defendant does not
otherwise have the ability to pay those fees. Here, the trial
court found that defendant did not have the ability to pay
fees, but it nevertheless ordered payment of fees from security funds deposited by defendant’s mother. For the reasons
set out below, we hold that, because the trial court determined that defendant did not have the ability to pay, it was
error to impose fees on the basis of the third party’s security
payment alone.
The relevant facts are primarily procedural. Defendant was indicted on various sex crime charges and, after
the trial court set bail, defendant’s mother paid $20,000 as
security for defendant’s release prior to trial.1 The notice
defendant’s mother signed when depositing the security
funds on defendant’s behalf stated that “[t]he Court may
order that the security deposit be applied to any fines, costs,
assessments, restitution, contribution, recoupment, or other
monetary obligations that are imposed on the defendant.”
Defendant was represented by court-appointed counsel at
trial, after which the jury found defendant guilty of several
sex offenses.
Following those convictions, the state requested
that defendant be required to pay attorney fees for his court-appointed counsel. Defendant objected on the ground that
the court could not find that he had the ability to pay attorney fees. The state argued that when a third party makes
a security deposit on behalf of a criminal defendant—as
defendant’s mother did here—that third party is informed
that fees or fines might be paid out of that deposit. For that
reason, the state argued, those funds are available to pay
court-ordered fees and the defendant therefore has the
1
While we primarily use the term “security” in this opinion, like the trial
court and the parties, we sometimes use the older term “bail” as shorthand to
describe pretrial release or the amount of security deposit required for such
release. See Rico-Villalobos v. Giusto, 339 Or 197, 200 n 2,
118 P3d 246 (2005)
(discussing those terms).
Cite as
367 Or 222 (2020) 225
“ability to pay” such fees out of the security amount. The
court imposed $5,000 in attorney fees and ordered it to be
paid out of the money deposited by defendant’s mother as
security for his pretrial release. The court described its findings as follows:
“THE COURT: … I didn’t find that [defendant] had the
ability to pay [attorney fees]. I found that there was bail
sufficient to cover them. And that’s the only finding I could
reasonably make, and so that’s the finding I did make.”
Defendant appealed, arguing, inter alia, that the
trial court erred in applying the security funds paid by his
mother to the attorney fees without determining defendant’s
ability to pay, as required by statute. The Court of Appeals
affirmed without opinion. State v. Morales, 299 Or App 521,
449 P3d 593 (2019). We allowed review to examine whether
evidence that a third party paid a security deposit on behalf
of a criminal defendant is sufficient on its own to find that
that defendant had the ability to pay court-imposed attorney fees.
This question requires us to construe two statutes
together—ORS 135.265 and ORS 161.665. When a criminal
defendant is not conditionally released or released on personal recognizance, the judge “shall set a security amount
that will reasonably assure the defendant’s appearance” at
future court proceedings in the case. ORS 135.265(1). The
next section of the statute reads as follows:
“The defendant shall execute a release agreement and
deposit with the clerk of the court before which the proceeding is pending a sum of money equal to 10 percent of
the security amount[.] … When conditions of the release
agreement have been performed and the defendant has
been discharged from all obligations in the cause, the clerk
of the court shall return to the person shown by the receipt
to have made the deposit, unless the court orders otherwise, 85 percent of the sum which has been deposited ….”
ORS 135.265(2). ORS 135.265(2) thus provides that, upon
payment of 10 percent of the security amount and the execution of a release agreement, the defendant is released.
After the conditions of the release agreement have been
performed and the defendant has been discharged from all
226 State v. Morales
obligations in the case, the remainder of the security amount
is returned to the person who made the deposit “unless the
court orders otherwise.” ORS 135.265(2). Practically speaking, then, if the court is authorized to impose fees or costs on
a defendant, ORS 135.265(2) allows the court to order that
those fees or costs be paid out of the security amount.
The question in this case involves the circumstances
in which a court may “order[ ] otherwise,” and not return
the remaining security funds to the person who made the
deposit. As relevant here, following the conviction of a criminal defendant, the court “may include in its sentence thereunder a money award for all costs specially incurred by the
state in prosecuting the defendant … includ[ing] a reasonable attorney fee for counsel appointed” by the court. ORS
161.665(1). ORS 161.665(4) imposes certain requirements
before a defendant may be ordered to pay costs:
“The court may not sentence a defendant to pay costs
under this section unless the defendant is or may be able to
pay them. In determining the amount and method of payment of costs, the court shall take account of the financial
resources of the defendant and the nature of the burden
that payment of costs will impose.”
(Emphases added.)
The Court of Appeals has held that “a trial court
errs as a matter of law if it orders a defendant to pay court-appointed attorney fees without making [the] required finding” of the defendant’s ability to pay. State v. Mickow, 277
Or App 497, 500,
371 P3d 1275 (2016). The imposition of fees
cannot be “based on pure speculation that a defendant has
funds to pay the fees or may acquire them in the future,”
but rather the record must contain “some information from
which the court can find the statutorily required factual
predicate to imposition of the fees: that the defendant ‘is or
may be able to pay’ them.” State v. Pendergrapht,
251 Or App
630, 634,
284 P3d 573 (2012).
Thus, before imposing fees, the trial court must
complete a two-step process: first, the court must determine
if the defendant “is or may be able to pay” the fees, and,
second, the court must determine the amount of costs to be
repaid. It appears to follow necessarily from the text of the
Cite as 367 Or 222 (2020) 227
statute that, if a trial court is unable to find that the defendant “is or may be able to pay” the fees—or, to phrase it in
the affirmative, if the trial court finds that the defendant
does not have the ability to pay—the inquiry ends, and the
court may not impose fees in any amount.
The parties here do not dispute that the requirement in ORS 135.265(2) that the security deposit be returned
“unless the court orders otherwise” gives a trial court
authority to exercise its discretion, subject to other statutory requirements, to apply the funds deposited as security
to financial obligations imposed in the judgment—including
attorney fees imposed under ORS 161.665. The parties also
do not dispute that, prior to the imposition of attorney fees
under that section, the trial court is required to determine
the defendant’s “ability to pay” using the criteria set out
in ORS 161.665(4). What the parties do dispute, however,
is whether funds deposited by a third party as security for
release of a criminal defendant prior to trial can provide the
basis for imposing attorney fees on a defendant who does not
otherwise have the ability to pay those fees. For assistance
answering that question, we turn to the text and history of
the relevant statutes.
Both of the statutes at issue here—ORS 135.265 and
ORS 161.665—were based on the work of the 1971 Criminal
Law Revision Commission. Oregon law, however, has always
permitted courts to require a defendant to deposit security
funds and then later to apply the money deposited to costs
and fines imposed as part of the judgment:
“When money has been deposited in lieu of bail, if it remain
on deposit at the time of a judgment for the payment of
money, the clerk must, under the direction of the court,
apply the money in satisfaction thereof, and after satisfying the same, must refund the surplus, if any, to the
defendant.”
General Laws of Oregon, Crim Code, ch XXV, § 283, p 489
(Deady 1845-1864).
Both defendant and the state discuss two cases
from the 1920s, where this court interpreted a later version
of the statute in the Deady Code and stated that, under the
statute, “money deposited by a third person in lieu of bail for
228 State v. Morales
one charged with a criminal offense is presumed to belong
to the defendant[.]” Rosentreter v. Clackamas County, 127 Or
531, 534,
273 P 326 (1928) (citing Erickson v. Marshfield,
94
Or 705, 710,
186 P 556 (1920)). In Erickson, the plaintiff—
Erickson—sued the city of Marshfield to recover the $100
bail he had paid on behalf of a criminal defendant, Foote,
on a nuisance charge.
Id. at 706. That nuisance charge was
dismissed, but Foote ultimately was convicted of a different
charge, for which a $100 fine was imposed.
Id. at 705-06. The
court noted that, in some states, there is a presumption that
money deposited as security belongs to a criminal defendant
on whose behalf the money was deposited, and determined
that the statute it interpreted—which required that surplus
funds be returned “to the defendant”—also contained such
a presumption.
Id. at 708-10 (“Under the provisions of the
statute above quoted the defendant in the charge, with the
approval of the court, may furnish cash bail, and it appears
that when so furnished by a third party it shall be deemed
and treated as the money of the defendant on the charge.”).
However, in that case, the court concluded that, because
the testimony and evidence was conclusive that the money
deposited instead belonged to Erickson—rather than Foote,
the defendant—and was deposited on a charge other than
the one for which the fine was imposed, the presumption had
been overcome.
Id. at 710-11.
In the 1970s, the legislature began to reconsider the
structure of the criminal justice system in Oregon, including bail. Following the recommendations of the Criminal
Law Revision Commission, the legislature in 1974 revised
the existing statute regarding the return of money deposited in lieu of bail (and introduced the term “security” in
place of “bail”):
“When conditions of the release agreement have been performed and the defendant has been discharged from all obligations in the cause, the clerk of the court shall return to
the accused, unless the court orders otherwise, 90 percent
of the sum which has been deposited and shall retain as
security release costs 10 percent of the amount deposited.”
ORS 135.265(2) (1974). Although the 1974 statute and the
Deady Code provision contain minor differences in wording,
Cite as 367 Or 222 (2020) 229
both statutes, notably, provided that funds in excess of costs
be returned to the defendant.
Oregon courts continued to apply the presumption
recognized in Erickson to later versions of ORS 135.265.
Interpreting the 1974 version of ORS 135.265—which, as
noted, provided that excess security be returned “to the
accused”—the Court of Appeals held that security paid by a
defendant’s friends and family could be used to pay the costs
of the defendant’s court-appointed counsel:
“Defendant informed the trial court that only $150 of the
deposit was his own, that his mother had borrowed $500
and that friends had provided the remainder. He argues
that the effect of the forfeiture is to penalize his mother
and friends. They had raised money for him to obtain his
temporary freedom, but not for him to obtain a lawyer. We
hold that because it was lawful for the court to regard the
deposit as defendant’s and available to satisfy defendant’s
obligations under the judgment, it was within the court’s
discretion to withhold its return for payment of defendant’s
obligations under the judgment.”
State v. Grant, 44 Or App 671, 674,
606 P2d 1166 (1980)
(internal citations omitted).
In 1979, however, the legislature responded to arguments similar to those made by the defendant in Grant as
to the use of security deposits by third parties to pay financial obligations of defendants. It amended ORS 135.265 that
year to require that “[w]hen conditions of the release agreement have been performed … the clerk of the court shall
return to the person shown by the receipt to have made [the]
deposit … 90 percent of the sum which has been deposited
….” ORS 135.265(2) (1979) (emphasis added). This change
to the statute was intended
“to allow return of the security deposit in a criminal case
to the person who in fact deposits the security, whether it
be the defendant on his own behalf or a relative or friend
or possibly an attorney. Under the current security system
… [i]n a case where a defendant’s friend or attorney paid
the amount, it can only be returned to the defendant, even
though the defendant was not the person who put up the
money, and that has caused some problems.”
230 State v. Morales
Minutes, Senate Committee on the Judiciary, HB 3020,
June 25, 1979, 3 (statement of Diana Godwin, Legal Counsel
to the Senate Committee on the Judiciary). The legislature, then, seems to have considered whether the automatic
repayment of surplus security deposits to a defendant is
always the preferable choice, determined that it was not,
and therefore changed the statute to require that the money
be returned to the person who paid it. That change to ORS
135.265(2) reflects an intentional departure from the presumption read into the statute by this court in Erickson and
applied in Rosentreter and later cases.
The Court of Appeals, however, has continued to
apply the presumption adopted in Erickson and Rosentreter
that security funds belong to the defendant whose release
those funds secured. Over 20 years after the statutory basis
for those cases changed, the Court of Appeals still cited
Grant—which interpreted the earlier 1974 version of ORS
135.265—for that proposition:
“According to appellants, … the security deposit was the
property of defendant’s mother and Hoevet. Appellants
neglect to consider that, as we held in Grant, money deposited with the court as security under ORS 135.265(2) ‘is
to be regarded as belonging to the defendant.’ Moreover,
before she assigned her interest in the security to Hoevet,
defendant’s mother deposited the funds with the court on
the express condition that the funds would be used to satisfy defendant’s obligations ‘in this or any other case.’ In
other words, defendant’s mother voluntarily offered the
security to be used to satisfy defendant’s obligations.”
State v. Baker, 165 Or App 565, 571-72,
998 P2d 700, rev den,
330 Or 375 (2000) (internal citations omitted). The Court of
Appeals’ cases applying the presumption seem to assume,
without much discussion, that the 1979 amendments had
no effect on the presumption, stating that, “both before and
after the 1979 amendment to ORS 135.265(2), Oregon courts
have recognized a legal presumption that cash bail posted
on behalf of a defendant belongs to the defendant.” State v.
Laune,
303 Or App 541, 544,
464 P3d 459 (2020). Further,
the Court of Appeals has noted that it is “not aware of any
requirement that money deposited as security by a third
party be treated any differently than if it were deposited by
Cite as
367 Or 222 (2020) 231
the defendant.” State v. Davis,
116 Or App 607, 610,
843 P2d
460 (1992).
In our view, the impact of the 1979 amendment
requires a closer examination than the Court of Appeals has
given it. As discussed above, Erickson—the case cited as the
origin of the presumption—extrapolated the presumption
from the statutory text that it was interpreting: “Under the
provisions of the statute above quoted the defendant in the
charge, with the approval of the court, may furnish cash
bail, and it appears that when so furnished by a third party
it shall be deemed and treated as the money of the defendant on the charge.” 94 Or at 710 (emphasis added). The
statutory provisions to which the court in Erickson and its
progeny referred required that surplus funds be returned
“to the defendant” (or, later, “to the accused”)—a directive
which, again, is no longer part of ORS 135.265(2). Moreover,
when the legislature amended ORS 135.265 in 1979 to
return excess funds to “the person shown by the receipt to
have made [the] deposit,” it was specifically addressing the
practical problems with assuming that surplus bail money
belonged to the defendant, and it amended the statute
accordingly.
Unlike the Court of Appeals, then, we read that
1979 change to ORS 135.265 as clearly eliminating the presumption that had been read into the earlier version of the
statute by this court in Erickson and Rosentreter and applied
by the Court of Appeals in Grant and other cases. The statute applicable here, of course, includes the 1979 amendment
that requires the clerk to return the money paid as security
to the person who made the payment, rather than to the
defendant. Because the statute no longer provides that surplus security funds be returned to the defendant, but rather
to the person who paid them, we conclude that Oregon law
no longer includes a presumption that those funds belong to
the defendant. To the extent that Erickson and Rosentreter
could be read as establishing such a presumption on any
ground other than the now-amended statute, we expressly
disavow those decisions.
The question then becomes whether, without the
benefit of the presumption, funds deposited by a third party
232 State v. Morales
as security can be considered in determining defendant’s
“ability to pay” under ORS 161.665(4). The state argues that,
because the notice signed by the person making the security
deposit provides that “[t]he Court may order that the security deposit be applied to … monetary obligations that are
imposed on the defendant,” those funds are “available” to
the defendant to pay costs. In the state’s view, even in the
absence of the presumption that the money belongs to the
defendant, the trial court may consider those funds when
assessing a defendant’s ability to pay under ORS 161.665(4),
because the funds constitute a “financial resource” of a
defendant—at least for the purpose of paying court-ordered
costs. Defendant counters that, where the record shows that
the deposit was made by a third party, and there is no evidence that the deposit was intended to be a gift or other
transfer of money to the defendant, the court may not consider those funds as part of a defendant’s financial resources.
The question here is not whether a trial court ever
could apply funds deposited by a third party to satisfy a
defendant’s court-imposed obligations. The issue before
us, rather, is whether the deposit by a third party of security funds, by itself, can be the basis for a finding that a
defendant has the ability to pay court-ordered costs. Put
differently, do those third-party funds constitute “financial
resources” of a defendant such that an otherwise indigent
defendant may be deemed to have an “ability to pay” court-ordered costs?
The Court of Appeals has described what constitutes evidence of a defendant’s ability to pay for purposes of
ORS 161.665(4): “Such evidence may consist of information
about the defendant’s financial resources, educational background, work history, and anticipated future employment or
educational status, to the extent there is a nonspeculative
basis for assessing that future status.” State v. Mendoza,
286 Or App 548, 550-51,
401 P3d 288 (2017). But, despite
its statement in Davis that there is no “requirement that
money deposited as security by a third party be treated any
differently than if it were deposited by the defendant,”
116
Or App at 610, the Court of Appeals also has noted that “[a]
defendant is not necessarily able to pay attorney fees simply
because he, or a friend or relative on his behalf, has posted
Cite as
367 Or 222 (2020) 233
a security deposit,” State v. Nichols,
68 Or App 922, 923,
683
P2d 565 (1984).
In a recent decision, the Court of Appeals reiterated
its earlier cases on this question, stating that
“a trial court can find that a defendant has the ability to
pay a fee award where, as here, a security deposit has been
made subject to the express condition that it may be used
to pay fees or has been forfeited in a way that makes the
funds available to pay a defendant’s financial obligations.”
State v. Thomas, 292 Or App 756, 763,
425 P3d 437, rev den,
364 Or 209 (2018). The court, however, declined to address
the defendant’s argument that the earlier cases should be
reconsidered, concluding that the defendant had not objected
to the imposition of fees in the trial court and, therefore,
that the issue was subject only to “plain error” review. In
Thomas, Chief Judge Egan wrote separately, concurring
because of the plain error posture, but noting his concerns
about the unsettled case law and the implications of such
uses of third-party funds:
“In my view, the ability of friends or family to pay security
for a person whom they believe and trust to comply with the
terms of release is completely separate from a defendant’s
indigence and ability to pay for an attorney. The message
that our criminal justice system sends when it confiscates
money intended for security but which is applied to indigent defense is clear: We will punish any faith that friends
and family have in criminal defendants. In more polite
terms, this practice acts as a disincentive to the payment
of security. A disincentive to provide security for a family
member or friend who clearly qualifies for security and who
fully complies with the terms of that security is, by its very
nature, a policy decision to jail people who cannot afford to
pay the price of freedom out of their own pockets.”
Id. at 765 (Egan, C. J., concurring) (emphases in original).
Neither the concurrence nor the majority opinion in Thomas
discussed the presumption that the funds belonged to the
defendant or any of the cases establishing or applying that
presumption.
We share the concerns expressed in the Thomas concurrence, and note that the fact that there are surplus funds
234 State v. Morales
from a security deposit that could be available to cover costs
under ORS 135.265(2) does not absolve the trial court of its
independent responsibility to consider whether a defendant
has the ability to pay, as required by ORS 161.665(4). An
indisputably indigent defendant, for example, for whom a
nonprofit organization makes a security deposit to permit
the defendant’s release pending trial, certainly would not
have the “ability to pay” costs within the meaning of ORS
161.665(4), regardless of the terms and conditions in the
notice. Perhaps a more searching inquiry would be necessary when a member of a defendant’s immediate household
posts the security, or when there is some indication that the
party who posts the security funds intended to give or otherwise transfer that money to the defendant. In those cases,
the inquiry is whether the funds—due to the defendant’s
relationship with the third party or the third party’s intent
in posting security—can fairly be considered to belong to
the defendant and thus constitute “financial resources of the
defendant” for purposes of ORS 161.665(4). Where, for example, a defendant’s spouse makes a security deposit on behalf
of the defendant, a closer examination of the particular circumstances may be necessary to determine whether the
money deposited could be considered part of the “financial
resources of the defendant.” But when a non-spouse third
party posts security on behalf of a defendant, with no indication of a donative intent or other evidence that the money
in fact was the property of the defendant, surplus security
funds are not a part of the defendant’s “financial resources”
such that the trial court may consider those funds in determining the defendant’s ability to pay court-ordered attorney
fees.
Here, the trial court expressly found that defendant
did not have the ability to pay, but that, because there were
excess security funds available to pay court-ordered costs,
the “ability to pay” requirement had been satisfied. We disagree. As described above, the ability to pay inquiry requires
two steps: the court first determines whether the defendant
“is or may be able to pay” costs under ORS 161.665(4); if
the answer is yes, then the court determines a reasonable
amount to impose. If, however, the answer to the first question is “no”—that the defendant does not have the ability
Cite as 367 Or 222 (2020) 235
to pay—the inquiry ends, and the court is not permitted to
impose costs. A trial court may not determine that a defendant has no ability to pay costs under ORS 161.665(4) and
then, despite that finding, impose fees under ORS 161.665(1)
based solely on security deposit funds that do not belong to
the defendant.
As discussed, we need not decide whether funds
deposited by a third party as security never may be used
to satisfy a defendant’s obligations. When funds deposited
by a third party nevertheless belong to a defendant, they
may be used to satisfy the defendant’s financial obligations.
Without the presumption that security funds belong to a
defendant, however, funds paid by and belonging to a third
party cannot be the sole basis for a finding that a defendant
has the “ability to pay” court-ordered costs.
The decision of the Court of Appeals is reversed.
The judgment of the circuit court is reversed, and the case
is remanded to the circuit court for further proceedings.
