Case Name: The City of New York, Respondent, v. Frank W. Fox and Massachusetts Bonding and Insurance Company, Appellants
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1919-11-21
Citations: 189 A.D. 440
Docket Number: 
Parties: The City of New York, Respondent, v. Frank W. Fox and Massachusetts Bonding and Insurance Company, Appellants.
Judges: 
Reporter: Appellate Division Reports
Volume: 189
Pages: 440–448

Head Matter:
The City of New York, Respondent, v. Frank W. Fox and Massachusetts Bonding and Insurance Company, Appellants.
First Department,
November 21, 1919.
Public officers — liability for public money in their possession — liability of warden of city workhouse for money of inmates deposited with him and stolen by subordinate.
A public officer having the custody of pubHe money is Hable for the loss thereof, although occurring without his fault or neghgence.
The warden of the city workhouse of the city of New York, charged by the rules and regulations of the department of correction, which have the force and effect of statutes, with responsibiHty for the proper care and dehvery of money of inmates “ required ” to be deposited with him, and also charged with responsibiHty for the conduct of his subordinates, is, together with his bondsmen, Hable to the city of New York for moneys so deposited with him by inmates and subsequently stolen by a subordinate appointed by him, as moneys so taken and held become of the nature of public moneys so as to render the doctrine 'of absolute responsibiHty therefor appHcable.
Merbell and Dowling, JJ., dissented, with opinion.
Appeal by the defendants, Frank W. Fox and another, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 13th day of January, 1919, upon the verdict of a jury rendered by direction of the court in an action on a bond.
John R. Halsey of counsel [William F. Delaney with him on the brief], Gillespie & O’Connor, attorneys, for the appellant Fox.
Halsey, Kiernan & O’Keeffe, attorneys for the appellant Massachusetts Bonding and Insurance Company.
John F. O’Brien of counsel [Terence Farley and Walter B. Caughlan with him on the brief; William P. Burr, Corporation Counsel], for the respondent.

Opinion:
Clarke, P. J.:
The case was tried upon stipulated facts. The defendant Fox was warden of the Workhouse, Blackwell's Island, New York City. He had general supervision over the institution, its officers and inmates. The defendant bonding company gave a bond to the city in the sum of $5,000 conditioned that he should faithfully perform the duties devolved upon him as warden and promptly account for and pay over all moneys by him received or with him deposited as such warden of the city work house in accordance with law.
Each inmate was required, upon his commitment, to deposit his clothing, money and valuables with the warden, and was entitled to have the same returned upon his discharge, less any disbursements made therefrom upon the requisition of the inmate during his commitment. The rules and regulations of the department of correction specifically provide: " The head of any institution will be held responsible for the conduct of his subordinate. The head of the institution may, subject to provisions of law, designate any deputy warden, headkeeper, keeper, matron or other employee under his control, to any particular assignment or duty . The Warden or officer in charge of _ any institution is specifically charged with the following duties : 4. Power of Assignment. He shall make assignments of all employees under his control to such work and duty as may be necessary for the efficient and proper conduct of bis institution. 18. Responsibility for Fines and Bail . He Shall be responsible for the receipt and custody of all fines or bail paid by or for prisoners and he shall turn the same over to the proper authority as required by law. 24. Responsibility for Property of Inmates. He shall be held directly responsible for the proper care and delivery of clothing, money or valuables of inmates committed to his care. He shall give each inmate a receipt for all such moneys or valuables."
One Luke T. McEvoy was an employee of the city as a prison keeper and designated by the warden to take charge of the clothing, money and valuables of the inmates committed to the care of the warden. There was a shortage in the cash account of moneys deposited by inmates of $4,020.88. Of the amount of the defalcation $2,221.17 represented moneys deposited by inmates and not returned .to them at the time of the discovery of the defalcation, and $1,799.71 represented the amount of moneys deposited by inmates for which they had received the equivalent in supplies. This money was stolen by McEvoy and he has been convicted of the larceny. The defendants offered to prove that the warden exercised good faith and reasonable skill and diligence in the discharge of his official duties, and was not guilty of any negligence in his care and custody of the deposits made with him by the inmates. This was objected to and being sustained the defendants excepted. The question is whether, said moneys not being public funds, but belonging to the inmates and deposited with the warden, as required by law, the warden and his surety are responsible. The learned trial court held they were and directed a verdict for the plaintiff for $2,221.17, and from the judgment entered thereon the defendants appeal.
It must now be regarded as the settled law in this State that public officers having the custody of public money are liable for a loss thereof although occurring without their fault or negligence.
In Tillinghast v. Merrill (151 N. Y. 135) the court said: " We must consider and decide this question upon general principles and in the light of public policy. In the case of an officer disbursing the public moneys much may be said in favor of limiting his liability where he acts in good faith and without negligence, and a strong argument can be framed against the great injustice of compelling him to respond for money stolen or lost while he is in the exercise of the highest degree of care and engaged in the conscientious discharge of duty. It is at this point, however, that the question of public policy presents, and it may well be asked whether it is not wiser to subject the custodian of the public moneys to the strictest liability, rather than open the door for the perpetration of fraud in numberless ways impossible of detection, thereby placing in jeopardy the enormous amount of the pubhc funds constantly passing through the hands of disbursing agents. Without regard to decisions outside of our own jurisdiction, we think the weight of the argument, treating this as an original question, is in favor of the rule of strict liability which requires a pubhc official to assume ah risks of loss and imposes upon him the duty to account as a debtor for the funds in his custody."
In Yawger v. American Surety Co. (212 N. Y. 292, 297), Judge Cardozo, writing for an unanimous court, said: " It is important to bear in mind the nature of a pubhc officer's liability for pubhc moneys received by virtue of his office. His liabihty does not grow out of negligence. It is absolute, admitting of no excuse, except perhaps the act of God or the pubhc enemy. (Tillinghast v. Merrill, 151 N. Y. 135, 142; Smythe v. U. S., 188 U. S. 156.) If he puts the money in a safe and burglars break open the safe and steal the money, he is hable. If he puts it in a bank, and the bank loses it, he is hable."
In Village of Bath v. McBride (219 N. Y. 92) the court said: "This court held in Tillinghast v. Merrill (151 N. Y. 135) that a pubhc officer having the custody of pubhc moneys is hable unqualifiedly for the loss thereof, and that it is no defense to an action on the official bond that the money was lost without fault or neglect on the part of the officer. The rule of strict habihty laid down in Tillinghast v. Merrill (supra) is a very important one, and it should not be frittered away in seeking to give relief in hard cases."
The appellants concede that the law is as stated but claim that as the moneys in suit were not pubhc moneys but belonged to the inmates the cases are not apphcable and rely upon People ex rel. Nash v. Faulkner (107 N. Y. 477). In that case a mortgage executed by one Finley was foreclosed and on the sale there was a surplus which was paid to the county treasurer. Finley having died, upon the apphcation of his administrators, an order was made directing the treasurer to pay the money over to the surrogate which was comphed with. The surrogate deposited the moneys with a banker then in good standing and credit who subsequently failed. The suit was to recover from the surrogate and his bondsmen the amount uncollected from the banker's estate. In holding for the defendants the court said: " It does not follow because public policy requires that public officers who receive public money should be held to the rigid responsibility, that the same rule should be applied to public officers who receive the money of individuals who are stimulated by private interests to some watchfulness over the conduct of the officials and to some scrutiny as to the custody of their funds. The surrogate was not a public officer appointed to receive or disburse public money, and it was not even his main duty to receive, keep or disburse the money of individuals. There is nothing in the policy of the law which requires that he should be absolutely responsible for such money."
The facts in the case at bar are vastly different. There was no option in the case of these unfortunate inmates. They were required to deposit their moneys with the warden. They had no opportunity, however much they might be " stimulated by private interests " to exercise any " watchfulness over the conduct of the officials " and any " scrutiny as to the custody of their funds," They were prisoners, under the control of the warden and his keepers, and were themselves the object of their watchfulness and scrutiny. The rules and regulations which had the force and effect of statutes provided that the warden " shall be held directly responsible for the proper care and delivery of clothing, money or valuables of inmates committed to his care." They also provided "he shall be responsible for the receipt and custody of all fines or bail paid by or for prisoners." Such last-mentioned moneys were undoubtedly public moneys. It seems to me that the warden should be held responsible for the moneys taken from the inmates by virtue of his office and in accordance with law as he is for the fines or bail taken from or for them. He assigns his keepers and employees to their specific duties. When the law says that he shall be responsible for the money of the inmates committed to his care and he appoints an employee to perform his work he adopts all that employee's acts in doing that work and is responsible therefor. I am of the opinion that public policy requires the protection of these helpless unfor tunates while in the custody of the pubhc officer and that their moneys so taken and held become of the nature of pubhc moneys sufficiently to have apphed the doctrine of absolute responsibihty therefor.
It follows that the judgment appealed from should be affirmed, with costs to the respondent.
Page and Philbin, JJ., concurred; Dowling and Merrell, JJ., dissented.