State ex rel. O'Connell v. Engen

• Decision Date: 22 May 1962
• Docket Number: No. 35532,35532
• Citation: 60 Wn.2d 52,371 P.2d 638
• Court: Washington Supreme Court
• Parties: The STATE of Washington on the Relation of John J. O'CONNELL, Attorney General, Respondent, v. Gene O. ENGEN and Shirley Engen, his wife, Defendants, Kenneth B. Moss, Wesley A. Lacey and Hartford Accident and Indemnity Company, a corporation, Appellants.

Page 52

60 Wn.2d 52

371 P.2d 638

The STATE of Washington on the Relation of John J O'CONNELL, Attorney General, Respondent, v. Gene O. ENGEN and Shirley Engen, his wife, Defendants Kenneth B. Moss, Wesley A. Lacey and Hartford Accident and Indemnity Company, a corporation, Appellants.

No. 35532.

Supreme Court of Washington, En Banc.

May 22, 1962.

Rehearing Denied July 6, 1962.

Minnick, Hahner & Tuttle, Walla Walla, for appellants.

John J. O'Connell, Atty. Gen., Robert F. Hauth, Gerald F. Collier, Asst. Atty. Gen., Olympia, for respondent.

FOSTER, Judge.

The departmental opinion filed June 1, 1961, is withdrawn, vacated, and held for nought, and will not appear in the Washington Reports.

All parties, except Engen and wife, agree in a unique joint petition that the judgment is a final one which disposes of the entire litigation. We agree.

The action was instituted December 8, 1958, more than one year prior to the effective date, January 1, 1960, of the current rules of pleading, practice and procedure, and the judgment, likewise, antedated the effective date of Rule of Pleading, Practice and Procedure 42(b), RCW Vol. 0, respecting judgments on multiple claims against multiple parties.

The prayer of the respondent's complaint is for $14,733.85, less an admitted credit of $2,500, making the total amount of the judgment $12,233.85. Liability for parts of the total sum was claimed against some of the appellants separately, but the judgment entered comprehended the whole amount so that the satisfaction of that judgment would be a complete bar to a further prosecution of claims against individual defendants for any part of the whole sum. The judgment under appeal is a complete adjudication of the entire controversy, and the only thing which prevented execution was the appellant's supersedeas bond.

The fundamental question raised by the appeal is the liability of the appellant Lacey, a former commissioner of finance of the city of Walla Walla, and the surety on his official bond, and appellant Moss, the former city clerk, and the surety on his bond, for the alleged defalcation of Gene O. Engen, former deputy clerk.

The city of Walla Walla is a second-class city organized under the commission form of government. RCW 35.17.030 provides that cities organized under the commission form of government shall be governed by the statutes relating to cities of the second class. RCW 35.23.110 defines the duties of city treasurers in cities of the second class:

'The city treasurer shall:

'(1) Receive and safely keep all money belonging to the city from whatever source derived;

'(2) Place it to the credit of the different funds to which it belongs in a book kept for that purpose;

'(3) Disburse the funds of the city by direction of the council as authorized by law;

'(4) Report monthly to the city council the condition of the treasury.'

It is to be noticed that, in the first subdivision of that statute, the city treasurer is obliged to receive and safely keep all city moneys from whatever source derived. The appellant Lacey was the city finance commissioner. Section 1.64.260 of the Walla Walla City Code, which is § 1 of the ordinance 1594, adopted October 31, 1911, requires all fees collected by Walla Walla officials to be promptly turned over to the city treasurer. ¹

No provision of the ordinances of Walla Walla authorizing the clerk to receive fees in payment of license applications has been called to our attention, but § 5.04.010 of the Walla Walla City Code, which is § 1 of ordinance A-508, adopted April 7, 1921, provides that the fees shall be paid directly to the city treasurer, and the clerk shall act only upon the presentation of a receipt signed by the city treasurer. ²

RCW 35.23.190 provides for the bonds of the clerk, the city treasurer, city attorney and chief of police. The applicable portion of the section is:

'The clerk, treasurer, city attorney, chief of police, police judge and street commissioner shall each execute an official bond in such penal sum as the city council by ordinance may determine, conditioned for the faithful performance of their duties, including in the same bond the duties of all offices of which he is the ex officio incumbent.'

No claim is made that any of the funds ever came into the hands of appellant Moss, the former city clerk, or appellant Lacey, the former commissioner of finance. Both Moss and Lacey were completely innocent and the losses for which this action is brought were occasioned entirely by the defalcations of the deputy clerk, Engen. By a long line of cases beginning with Marx v. Parker, 9 Wash. 473, 37 P. 675; Fairchild v. Hedges, 14 Wash. 117, 44 P. 125, 31 L.R.A. 851; Kittitas County v. Travers, 16 Wash. 528, 48 P. 340; Skagit County v. American Bonding Co., 59 Wash. 1, 109 P. 197; Skagit County v. American Bonding Co., 59 Wash. 8, 109 P. 199; Pierce County ex rel. Dunbar v. Campbell, 176 Wash. 203, 28 P.2d 785; Grays Harbor Constr. Co. v. Paulk, 179 Wash. 300, 37 P.2d 584; City of Shelton v. Clapper, 23 Wash.2d 811, 162 P.2d 445, the law is settled that public officials having the official custody of public funds are insurers, act of God or act of a public enemy alone excepted. The rule so announced in such cases is based upon constitutional or statutory provisions requiring such officials to safely keep and pay over such funds, and a bond so providing and for the faithful performance of official duties is a prerequisite to qualification for such office.

The narrow question then is: Does the defalcation of the former deputy clerk Engen render appellants liable therefor?

A very strong argument is made that the rule of absolute liability is limited to the official custodian of public funds. Many cases ³ reject the rule of absolute liability and declare an official who collects public funds without authority of law is a mere bailee.

Skagit County v. American Bonding Co., 59 Wash. 1, 109 P. 197, and Skagit County v. American Bonding Co., 59 Wash. 8, 109 P. 199, lay down a contrary rule which controls here. Those actions were against the surety of the deceased county auditor who collected license fees without authority of law, while the statute required such fees to be paid directly to the treasurer. The trial court held in favor of the surety:

'* * * that the applicants were required by the statute quoted to themselves pay the license fee directly to the county treasurer; that the auditor had no authority to receive it; that payment to him was in violation of the statute; that he simply became the agent of the applicants when he colected the fees; that he did not act as county auditor; that he was not guilty of embezzlement in converting the money to his own use; and that the defendant bonding company is not liable as surety for the loss of such fees. * * *'

That judgment in favor of the surety was reversed because we held that, if the surety's view was correct, payment of the fees to the auditor would have been no payment at all and the...