Nash v. Faulkner

• Decision Date: 06 December 1887
• Citation: 107 N.Y. 477,14 N.E. 415
• Parties: PEOPLE ex rel. NASH, Surrogate, etc., v. FAULKNER, Jr., et al.
• Court: New York Court of Appeals Court of Appeals

107 N.Y. 477

14 N.E. 415

PEOPLE ex rel. NASH, Surrogate, etc.,

v.FAULKNER, Jr., et al.¹

Court of Appeals of New York.

December 6, 1887.

Appeal from general term, supreme court, Fifth department.

Samuel D. Faulkner was county judge and surrogate of Livingston county from the first day of January, 1872, until the ninth day of August, 1878, when he died intestate. The defendants James Faulkner and Henry J. Faulkner were sureties upon his official bond, which was conditioned that Samuel D. Faulkner should ‘well and truly and faithfully, in all things, perform his duties as county judge of Livingston county, and shall well and truly and faithfully perform his duties as surrogate of said county of Livingston, and shall well and faithfully apply and pay over all moneys and effects that may come into his hands as such county judge in the execution of his office, and shall well and faithfully apply and pay over all moneys and effects that may come into his hands as such surrogate in the execution of his office, without fraud, deceit, or delay.’ While he was surrogate of Livingston county, a mortgage executed by Samuel Finley, deceased, was foreclosed, and upon the foreclosure sale there was a surplus of $1,657.46, which was paid to the county treasurer. Afterwards, in June, 1876, upon the application of the administrators of Finley, an order was made, pursuant to the statute, directing the treasurer to pay over the money to Faulkner as surrogate, and the money was accordingly so paid to him. At that time James J. Cone was a banker in good standing and credit, doing a general banking business at Geneseo, Livingston county, and on the second day of June, 1876, Faulkner deposited in Cone's bank the sum of $1,212.90 of the money so received from the treasurer, and he took from Cone a certificate of deposit for that sum, payable to his order as surrogate on demand, with interest at 5 per cent. Immediately prior to the making of that deposit, one of the administrators of Finley informed Faulkner that the personal property of Finley was insufficient for the payment of his debts, and in July, 1876, such administrators filed with the surrogate a petition, pursuant to the statute, praying for authority to mortgage, lease, or sell the remaining real estate left by Finley, for the payment of his debts; and thereupon proceedings under the statute were taken, and many claims against the estate of Finley were proved and established by different creditors. In December, 1877, Faulkner became sick, and unable to perform the duties of surrogate, and he thereupon gave notice to the district attorney of the county, under chapter 54, Laws 1874, of the fact of such sickness, and requested him to act as surrogate, and he did so act. On the twenty-ninth day of January, 1877, in the proceedings to mortgage, lease, or sell the real estate of Finley, he made an order to sell the same for the payment of debts. The sale was duly made and confirmed, and on the ninth day of April, 1877, the administrators deposited the proceeds of the sale, to-wit, the sum of $1,591.50, in Cone's bank, to the credit of the acting surrogate, and took from him a certificate of deposit on demand, with interest at 5 per cent., and delivered the certificate to the acting surrogate. On the sixteenth day of April, 1877, the acting surrogate, upon the application of the administrators, made an order that the money received as above stated by the surrogate and by the acting surrogate be distributed among the persons entitled thereto, and caused a notice of such distribution to be published as required by law. After wards Faulkner recovered from his sickness, and resumed the duties of the office of surrogate, and the acting surrogate indorsed and delivered to him as surrogate the last-mentioned certificate.

On the first day of November, 1877, while the proceedings to establish the claims of creditors of Finley were still pending, and while the money represented by the two certificates still remained on deposit, Cone, who up to that time had remained a banker in good standing and credit, failed, and made an assignment of all his property for the benefit of his creditors, and his estate proved to be largely insolvent. Faulkner died before the settlement of the accounts of the assignee of Cone, and, on the ninth day of September, 1878, administration upon his estate was granted to James and Henry J. Faulkner. The two deposits of money were made in Cone's bank without fraud, and in good faith, and without negligence on the part of Faulkner, and with the intention of benefiting the creditors of the estate of Finley. The delay in the distribution of the money among Finley's creditors did not arise from any fault or neglect on the part of the surrogate, or the acting surrogate during his illness, but was occasioned by litigation arising over proofs of claims. Edwin A. Nash, the relator, was duly elected county judge and surrogate of Livingston county in November, 1878, and has since continued to be and now is surrogate of that county. Thereafter the administrators of Faulkner turned over to the relator the certificates of deposit, under an agreement that the relator should collect from the assignee of Cone the dividends applicable to the payment thereof, and distribute the moneys among the creditors of Finley; such action to be without prejudice to the rights of the relator, of any creditors of the estate of Finley, or of any cause of action which either of them might have against the estate of Faulkner to recover the balance of the moneys, and without prejudice to any defense which the administrators might have. Thereafter the relator collected and received from the assignees of Cone the dividends applicable to the payment of the certificates, to-wit, upon the first certificate the sum of $349.23, and upon the second certificate the sum of $440.30, which were all the moneys in the hands of the assignee applicable to the payment of the certificates. In December, 1879, the relator demanded of the defendants the amount remaining due upon the two certificates of deposit, and they refused to pay the same. Afterwards, at a special term of the supreme court, upon the ex parte application of the relator, an order was made authorizing him to prosecute the defendants, in the name of the people of the state of New York, as sureties upon the official bond of Samuel D. Faulkner, stating that the same was brought on his relation of surrogate of Livingston county, and this action was brought pursuant to the leave granted by that order.

Upon the trial at special term, the foregoing facts were established and found by the trial judge, and he ordered judgment against the defendants for the balance unpaid upon the certificates of deposit, amounting to $2,616.14. Subsequently to the entry of the judgment, and pending the appeal to the general term, James Faulkner, one of the original defendants, died, and James Faulkner, Jr., his executor, was substituted as a defendant in his place. The general term affirmed the judgment, and the defendants then appealed to this court.

Chas. J. Bissell, for appellants.

James Wood, for respondents.

EARL, J., ( after stating the facts as above.)

The finding that James J. Cone was a banker in good standing and credit, and that Samuel D. Faulkner, surrogate, deposited the two sums of money in his bank in good faith and without negligence, required a dismissal of the complaint, and a judgment in favor of the defendants. At common law, a public officer is bound to exercise good faith and reasonable skill and diligence in the discharge of his official duties, and he is not responsible for any loss of money which came to his official custody occurring without fault on his part. But there are various decisions of the federal courts and of some state courts imposing upon public officers, charged with the duty of receiving, keeping, and disbursing public money, responsibility for its loss, although occurring without fault or negligence. U. S. v. Prescott, 3 How. 578;U. S. v. Morgan, 11 How. 154;U. S. v. Dashiel, 4 Wall. 182;U. S. v. Keehler, 9 Wall. 83;U. S. v. Boyden, 13 Wall. 17;Bevans v. U. S., 13 Wall. 56;U. S. v. Thomas, 15 Wall. 337;Com. v. Comly, 3 Pa. St. 372; State v. Harper, 6 Ohio St. 607;People v. Powell, 67 Mo. 395;Halbert v. State, 22 Ind. 125;Inhabitants of Hancock v. Hazzard, 12 Cush. 112;Ward v. School-Dist., 10 Neb. 293, 4 N. W. Rep. 1001;Lowery v. Polk Co., 51 Iowa, 50. In these cases, it was held that various public officers, appointed or elected to receive, disburse, and keep public moneys, were absolutely responsible for them as debtors, although they were stolen or lost, or taken away from them by irresistible force, and without their fault. In some of the cases, the liability of the officers was based upon statutes defining their duties and responsibilities, and, in other cases, upon the terms of their official bonds; and the construction of the statues and of the bonds was much influenced by views entertained by judges as to the public policy to be enforced in such cases. In the case of U. S. v. Prescott, Mr. Justice McLEAN said that ‘every depositary of public money should be held to a strict accountability; not only that he should exercise the highest degree of vigilance, but that he should keep safely the moneys which come to his hands. Any relaxation of this condition would open a door to frauds which might be practiced with impunity. A depositary would have nothing more to do than to lay his plans, and arrange his proofs, so as to establish his loss, without laches on his part. Let such a principle be applied to our postmasters, collectors of the customs, receivers of public moneys, and others who receive more or less of the public funds, and what losses might not be anticipated by the public.’ At the time when that decision was made, in January, 1845, when there were no telegraph lines, and but few railroads in the country,...