Butcher

Defendant was convicted after a court trial of one felony count of violation of Penal Code section 484b, the diversion of construction funds. On appeal he presents two important questions of interpretation of the statute. The first is whether use of construction funds in good faith to defray project expenses other than those listed in an application for a progress payment is a diversion. We answer “no.” The second is whether a diversion must cause failure to complete construction or failure to pay for services, labor materials, or equipment used in the construction in order to warrant a conviction. We answer “yes.” We will reverse the defendant’s conviction because the trial court appears to have grounded its determination upon an affirmative answer to the first question.

Facts

Defendant contracted in writing on May 31, 1979, to build a house for his friend William Altaffer pursuant to plans filed with the Mono County Building Department. The contract provided that Altaffer was to pay defendant $110,000 in installments as “described by Bank of America Mammoth Lakes” and defendant was to “pay promptly all valid bills and charges for material, labor or otherwise in…