COUNTY OF PLACER v. Aetna Casualty and Surety Company, United Pacific Insurance Company and Leonard M. Layton, Defendants and Appellants.*

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District Court of Appeal, Third District, California.

The COUNTY OF PLACER, a Political Subdivision of the State of California, Plaintiff and Respondent, v. AETNA CASUALTY AND SURETY COMPANY, United Pacific Insurance Company, Leonard M. Layton and Sherlie A. Bennett, Defendants, Aetna Casualty and Surety Company, United Pacific Insurance Company and Leonard M. Layton, Defendants and Appellants.*

Civ. 9183.

Decided: November 08, 1957

Robinson & Robinson, Auburn, for appellants. Al. B. Broyer, Dist. Atty., Robert J. Cook, Deputy Dist. Atty., Auburn, for respondents.

While serving as clerk of the Roseville Judicial District Court in Placer County, of which court defendant Layton was Judge, defendant Sherlie Bennett appropriated funds belonging to the court. The county of Placer commenced suit against the clerk and also against Judge Layton and the sureties on his official bond for the amount of the unrecovered balance of the funds appropriated by the clerk.

Defendant Leonard Layton had been judge of the Roseville Justice Court for many years, when, on January 1, 1952, that court was consolidated with the Roseville City Court and became the Roseville Judicial District Court. Employment of a clerk having been authorized by the Placer County Board of Supervisors, the defendant Sherlie Bennett was hired by Layton to fill that position. She served until her arrest in early November, 1954. Although Judge Layton was assured by the supervisor from his district that Sherlie Bennett would be properly bonded, she was not so bonded until the County of Placer purchased a blanket employees' bond effective February 1, 1954.

Defendant Aetna undertook to bond Layton as principal in the sum of $1,000 beginning January 8, 1951, for four years. Defendant United Pacific executed a similar suretyship $5,000 bond for the term of Judge Layton commencing January 5, 1953.

When Straine & Son, the county's auditors, commenced their fiscal year audit of the books in the Roseville Judicial District Court on July 1, 1953, shortages appeared. A shortgage of $1,647.25 was called at that time to the attention of William Stevens, the Placer County auditor, and he called it to the attention of the chairman of the Board of Supervisors, who was also the supervisor from the Roseville District. It was formally called to the attention of the board itself on November 16, 1953. Sherlie Bennett substantially made up this $1,647.25 deficit by deposits which she made to the account of the Roseville Judicial District Court in July, August and September of 1953. Judge Layton testified that he was not told of the defalcation of his clerk at that time and that he did not see the audit report, nor did he know of these deposits by Sherlie Bennett. At that time Judge Layton was ill in a hospital and for some time during September and October, he did not sit on the bench while he was recuperating. Supervisor Paolini testified, however, that he called the attention of Judge Layton to the $1,647.25 shortage indicated in the audit report dated November 16, 1953, sometime in December.

When Straine & Son began their fiscal year audit in July, 1954, they began to pick up more shortages in the accounts of the Roseville Court, which led to a request by them to the Board of Supervisors for a special audit, and ultimately to the arrest of Mrs. Bennett in early November. Judge Layton testified that the first notice that he had of the defalcation of his clerk was a few days prior to her arrest in late October or early November, 1954. At that time he called at the office of the Placer County Clerk, who stated that Mrs. Bennett had been short before, that she had made it up and that the supervisors decided to say nothing about it. The auditors placed the total amount of money appropriated at $11,807.75. The blanket employees' bond held by the Board of Supervisors paid off all but $4,548.50. The prayer of the complaint was amended downward to that figure at the time of trial.

At the conclusion of the evidence the court granted the motion of plaintiff for a directed verdict and defendants (with the exception of defendant Sherlie Bennett whose default was entered) have appealed from the judgment entered upon said directed verdict.

Appellants contend that the court erred in applying to Judge Layton the standard of absolute liability without fault set forth in Government Code, section 1504, and in excluding from the case the questions of (a) negligence as set forth in section 1953.5 of the Government Code, and (b) the defense of estoppel.

Government Code, section 1504 prior to the 1955 amendment read:

‘Every official bond executed by an officer pursuant to law is in forced and obligatory upon the principal and sureties therein for:

‘(a) Any and all breaches of the conditions thereof committed during the time such officer continues to discharge any of the duties of or hold the office, and whether such breaches are committed or suffered by the principal officer, his deputy, or clerk.

‘(b) The faithful discharge of all duties which may be required of such officer by any law enacted subsequently to the execution of the bond.’

Government Code, section 1953.5 provides as follows:

‘No officer of the State, or of any district, county, city and county, city, or judicial district, is liable for moneys stolen from his official custody unless the loss was sustained because the officer failed to exercise due care.’

Appellants contend that the trial court should not have taken from the jury the question of estoppel and of whether or not Judge Layton failed to exercise due care. It is appellants' contention that the word ‘stolen’ as used in Government Code, section 1953.5 includes the acts of Sherlie Bennett in taking the money in question, and that therefore the plaintiff must prove lack of due care.

Respondent argues that the term ‘stolen’ as used in Government Code, section 1953.5, implies the offense of larceny, which is defined as ‘feloniously stealing, taking, leading, or driving away the personal property of another.’ Respondent contends that since it was embezzlement that Sherlie Bennett committed and not larceny, Government Code, section 1953.5 is not applicable to this case and thus the absolute liability imposed by Government Code, section 1504 is controlling.

Respondent relies strongly on the case of Union Trust Co. v. County of Los Angeles, 11 Cal.2d 675, 81 P.2d 919, in which it was held that the county clerk, as the principal officer, was personally liable for the acts of his deputies because of the liability which he assumed in signing his official bond. There the deputy county clerk embezzled moneys received in evidence in a criminal case in the superior court and delivered to such deputy county clerk by the deputy clerk of said court.

Respondent points out that section 1504 of the Government Code specifically makes the principal as well as his sureties liable on the official bond for ‘Any and all breaches of the conditions thereof committed during the time such officer continues to discharge any of the duties of or hold the office, and whether such breaches are committed or suffered by the principal officer, his deputy, or clerk.’

Appellants argue that the Union Trust Company case, supra, should no longer be followed because when the Legislature in 1949 enacted Government Code, section 1953.5, hereinbefore quoted, it commenced recognition of the modern trend away from an officer's liability for acts of his subordinate. Appellants point out that section 1953.5 refers to ‘money stolen’ from the official custody of a public officer and that Penal Code, section 490a provides that wherever any law or statute mentions larceny, embezzlement or stealing, that statute shall be ‘interpreted as if the word ‘theft’ were substituted thefefor.' Appellants also point out that Penal Code, section 484 includes embezzlement in the definition of theft and argue that, therefore, we should read the Government Code section as if the word ‘theft’ were substituted for the word ‘stolen’ and that this would include the embezzlement by Sherlie Bennett.

We are unable to agree with appellants that section 1953.5 should be interpreted as covering the acts of Sherlie Bennett in the instant case. The evidence is undisputed that she misappropriated funds that had been entrusted to her care as clerk of the Roseville Judicial District Court. We agree with respondent that the term ‘stolen’ as used in Government Code, section 1953.5 implies the offense of larceny which is defined as ‘feloniously stealing, taking, leading, or driving away the personal property of another’ and that the crime that Sherlie Bennett committed was embezzlement, not larceny. For as stated in People v. Tullos, 57 Cal.App.2d 233 at page 237, 134 P.2d 280, at page 282 (decided in 1943).

‘Any one of the acts denounced in the disjunctive in Penal Code section 484 constitutes the crime of theft, which offense has been substituted for the former separate offenses of larceny, embezzlement, and obtaining money or property under false pretenses. Pen.Code, sec. 490a. Although the offense of theft has been substituted for the offenses of larceny, embezzlement and obtaining money or property by false pretenses, no elements of the former crimes have been changed. The elements of the former offenses of embezzlement and larceny and the distinction between them are clearly stated in People v. Bojorquez, 35 Cal.App. 350, 354, 169 P. 922.’

We believe that the trial court correctly concluded that Government Code section 1953.5 did not apply to the instant case, and also that defense of estoppel was not available to appellants. Appellant Layton was the judge of the court and Sherlie Bennett was his clerk, employed by him and under his supervision and control. It was his duty and responsibility to manage and control his court and to know what was occurring in his department. If some outside person had broken into his office and stolen some of the funds of his court, then Government Code, section 1953.5 would permit him to set up the defense that the loss was not sustained because he failed to exercise due care. But when funds of his court were misappropriated by his clerk then we believe that he and his sureties on his bond became absolutely liable to respondent County of Placer for the amount of the shortage and that the trial court correctly granted respondent's motion for a directed verdict.

The judgment is affirmed.

SCHOTTKY, Justice.

VAN DYKE, P. J., and PEEK, J., concur.