Commerce Bank of St. Joseph, N.A. v. State

• Decision Date: 22 May 1992
• Docket Number: No. 66744,66744
• Citation: 833 P.2d 996,251 Kan. 207
• Parties: COMMERCE BANK OF ST. JOSEPH, N.A., Appellant, v. STATE of Kansas, et al., Appellee.
• Court: Kansas Supreme Court

Page 996

833 P.2d 996

251 Kan. 207

COMMERCE BANK OF ST. JOSEPH, N.A., Appellant, v. STATE of Kansas, et al., Appellee.

No. 66744.

Supreme Court of Kansas.

May 22, 1992.

Syllabus by the Court

1. Summary judgment is proper where the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. When a summary judgment is challenged on appeal, an appellate court must read the record in the light most favorable to the party who defended against the motion for summary judgment.

2. Under K.S.A. 75-6103, the State is liable for damages (1) caused by the negligent or wrongful act or omission of any of its employees (2) while the employee was acting within the scope of the employment and (3) under circumstances where the governmental entity, if a private person, would be liable under the laws of this state.

3. The language of K.S.A. 75-6103 is plain and unambiguous and this court's responsibility is to give effect to the intent of the legislature as expressed, not to rearrange the legislature's work to express what the court thinks the law should or should not be.

4. The liability of the State for an act of an employee depends not upon whether the injurious act of the employee was wilful and intentional or was unintentional, but upon whether the employee, when the employee did the wrong, was acting in the prosecution of the State's business and within the scope of the employee's authority, or had stepped aside from that business and done an individual wrong.

5. A state employee's acceptance of a bribe is not within the employee's scope of employment and does not further the State's or the State agency-employer's business.

Mark S. Gunnison, of McDowell, Rice & Smith, of Overland Park, argued the cause and was on the briefs for appellant.

Nancy L. Ulrich, Asst. Atty. Gen., argued the cause, and Carl A. Gallagher, Asst. Atty. Gen., was with her on the brief for appellee.

LOCKETT, Justice:

Commerce Bank of St. Joseph, N.A., (Commerce Bank) lent money to a licensed public warehouse, Twombly Grain Company, Inc., (Twombly Grain) for grain storage. The bank held, as collateral, warehouse receipts issued on company-owned grain. Grain shortages were concealed by the grain company for many years and the bank loans were not repaid. When the shortages were discovered, in addition to suing Twombly Grain, Commerce Bank sued the Kansas State Grain Inspection Department (KSGID) and its chief warehouse examiner, Saverio Reda, claiming its damages occurred because Reda accepted money and warned the grain company when unannounced, "surprise" grain department audits were going to occur and what inspection techniques would be utilized during the audit. The State of Kansas was substituted as a party for KSGID and subsequently moved for summary judgment, asserting that under the Kansas Tort Claims Act it is not responsible for torts of an agent who is acting outside the scope of his employment. The trial court found (1) the chief warehouse examiner's acceptance of a bribe to cover up grain shortages was an act outside the scope of his employment (K.S.A. 75-6103[a]; (2) the State was immune from liability for the retention of the examiner because that was a discretionary function (K.S.A. 75-6104[e]; (3) the State was not liable for negligent supervision of its agent because that was a discretionary function (K.S.A. 75-6104[e] and there was no evidence the State was negligent in supervising its employee; and (4) the State does not recognize the common-law tort of negligent supervision. After summary judgment was granted to the State, the bank dismissed the examiner from the lawsuit without prejudice. Commerce Bank appeals the district court's grant of summary judgment to the State. We affirm.

Summary judgment is proper where the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. When a summary judgment is challenged on appeal, an appellate court must read the record in the light most favorable to the party who defended against the motion for summary judgment. Patterson v. Brouhard, 246 Kan. 700, 702-03, 792 P.2d 983 (1990).

For purposes of determining the State's motion for summary judgment and appeal, it is accepted as true that Reda accepted money from Raymond and his son, Tom Twombly, in exchange for information about the dates of forthcoming grain inspections and advised the Twomblys of the procedures that might be used during the audit so the Company could conceal grain shortages during the inspections.

Commerce bank first argues (1) Reda was acting within the scope of his employment and (2) under the Kansas Tort Claims Act the State is liable as a private person would be under the same circumstances. The bank states the wrongful act of the agent is not the act of accepting the bribe, but the negligent or fraudulent act of arranging the surprise examinations and informing Twombly in advance when the examinations would occur, falsely registering warehouse receipts for company-owned grain, and fraudulently granting the grain company an annual license to operate as a public warehouse. The bank asserts these acts of the State's agents allowed Twombly Grain to manipulate its records, generate fraudulent warehouse receipts, pass inspections to continue in business, and use the false warehouse receipts for nonexistent company-owned grain as collateral for loans from Commerce Bank.

Under K.S.A. 75-6103, the State is liable for damages (1) caused by the negligent or wrongful act or omission of any of its employees (2) while the employee was acting within the scope of the employment and (3) under circumstances where the governmental entity, if a private person, would be liable under the laws of this state.

Commerce Bank argues the scope of employment issue is not exclusively determinative of the State's liability. Commerce Bank asserts the phrases "acting within the scope of their employment" and "under circumstances where the governmental entity, if a private person, would be liable under the laws of this state" are not to be read in conjunction, but are separate tests of governmental liability under the Tort Claims Act. It contends the trial court erroneously found that respondeat superior is the sole test to determine governmental liability. The bank asserts there is governmental liability under K.S.A. 75-6103(a) without regard to scope of employment as long as a private party under the same circumstances would be liable.

The bank points out that the Kansas Tort Claims Act covers "wrongful acts or omissions," i.e., intentional torts. It observes that K.S.A.1991 Supp. 60-2202(c) provides that there shall be no judgment lien on an employee's property unless (1) the employee's negligent or wrongful act or omission occurred when the employee was acting outside the scope of the employment or (2) the employee's conduct which gave rise to the judgment was because of actual fraud or actual malice of the employee. It claims K.S.A.1991 Supp. 60-2202 recognizes that a state employee could commit a fraudulent act while acting within the scope of employment.

The trial court determined Reda's acceptance of the bribes was an act outside the scope of his employment; therefore, although Reda may be liable for his act, the State was not. In reaching this conclusion, the trial court relied on Focke v. United States, 597 F.Supp. 1325, 1339 (D.Kan.1982); Williams v. Community Drive-in Theater, Inc., 214 Kan. 359, 366, 520 P.2d 1296 (1974); and PIK Civ.2d 7.04.

PIK Civ.2d 7.04 states that an employee is acting within the scope of the employment if the employee is performing services for which the employee has been employed or is doing anything reasonably incidental to the employment. The test is not necessarily whether the specific conduct was expressly authorized or forbidden by the employer, but whether such conduct should have been fairly foreseen from the nature of the employment and the duties relating to it.

In Williams, an employee of a corporate drive-in theater shot and injured a theater patron who the employee thought was threatening a fellow employee. The injured plaintiff filed an action against the corporate drive-in theater and the employee. The trial court granted summary judgment to the employer, finding that the employee was not acting within the scope of her employment. Relying on PIK Civ.2d 7.04 et al., the Williams court reversed the trial court's grant of summary judgment, noting an employee is acting within the scope of his authority when he is performing services for which he has been employed, or when he is doing anything which is reasonably incidental to his employment.

The Williams court stated the liability of an employer for the acts of an employee depends not upon whether the injurious act of the employee was wilful and intentional or was unintentional, but upon whether the employee, when he did the wrong, was acting in the prosecution of the employer's business and within the scope of his authority, or had stepped aside from that business and done an individual wrong. The court recognized the general rule is that an employer is liable for the reckless, wilful, intentional, wanton, or malicious acts of an employee as well as for heedless and careless acts if they are committed while the employee is acting in the execution of his authority and...