SACRAMENTO — A state appeals court on Tuesday dismissed a felony forgery charge against Republican Assemblyman John R. Lewis of Orange, ruling that Lewis committed no crime even if he did order the mailing of hundreds of thousands of campaign letters bearing the phony signature of former President Ronald Reagan.

The court agreed with attorneys for Lewis, who have argued since the lawmaker was charged a year ago that he could not be guilty of forgery because he did not intend to defraud anyone of money or property.

The three-justice panel of the 3rd District Court of Appeal, quoting from an earlier California Supreme Court decision, said its ruling ought not be construed as condoning what Lewis was alleged to have done.

But the justices added: "Whatever (his) misdeeds, he must not suffer for a crime which he has not committed."

Lewis, in a statement released by his office, said he was "happy but not surprised" that the court had ruled in his favor. Lewis was the first sitting California legislator in 24 years to be indicted for a crime involving political misconduct.

"Too much time and taxpayer money has been spent by the attorney general in pursuing this case," said Lewis, 35. "Although I am confident that I would have prevailed before a jury, I am pleased that the Court of Appeal has ordered the dismissal of this case."

Assembly Republican Leader Ross Johnson of La Habra said in a statement Tuesday: "I am happy for John. I always maintained that nothing of a criminal nature occurred, and I still believe that the charges were politically motivated."

Thomas A. Fuentes, chairman of the Orange County Republican Party, said the decision "renews one's belief in our system of justice. . . . I always believed that if cool heads and just minds examine the issue, then John Lewis would prevail."

But Assemblyman Richard E. Floyd (D-Carson)--who was the target of one of the letters supposedly signed by Reagan--said Lewis "ought to be thankful" for loopholes in the criminal justice system. The letter accused Floyd of "caving in to the powerful underworld drug industry."

"He's gotten away with it," Floyd said. "He's not the only criminal walking the streets on a technicality."

Atty. Gen. John K. Van de Kamp, who prosecuted the case after the Los Angeles and Sacramento County district attorneys declined, said in a statement that he had not decided whether to appeal the ruling to the state Supreme Court.