STATE TREASURER ‑- OFFICIAL BOND ‑- EMPLOYEES OF STATE -- TREASURER ‑- FIDELITY BONDS ‑- SCOPE OF COVERAGE

STATE TREASURER ‑- OFFICIAL BOND ‑- EMPLOYEES OF STATE --TREASURER ‑- FIDELITY BONDS ‑- SCOPE OF COVERAGE

1. The general bond of the State Treasurer to the State of Washington in the amount of $250,000 covers all the various state funds and trust funds of which he is custodian, with the exception of those which require an additional bond in the act setting up such fund.

2. Fidelity bonds furnished by employees of the State Treasurer likewise cover these various and sundry funds.

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                                                                   June 23, 1953

Honorable Charles R. Maybury
State Treasurer
Olympia, Washington                                                                                                                Cite as:  AGO 53-55 No. 70

Dear Mr. Maybury:

            We have your letter in which you state that as State Treasurer you are custodian of numerous state funds in the treasury.  You also serve as custodian and ex-officio treasurer of several trust funds which are kept separate and apart from the funds in the state treasury.  One of these trust funds is the judges' retirement fund.  You also maintain, as fiscal agent for the state, several accounts for the redemption of state bonds and the payment of interest.

            RCW 43.08.020 requires the State Treasurer to file with the Secretary of State a bond to the state in the sum of $250,000.  RCW 2.12.050 requires the treasurer to furnish a surety company bond in the sum of $25,000 conditioned for the faithful discharge of his duties in connection with the judges' retirement fund.

            You have asked for an opinion on two questions:

            (1) Does the general bond of the State Treasurer in the amount of $250,000 cover all of these funds, and

            (2) Do the bonds of the employees of the treasurer's office cover all of these various and sundry funds?

             [[Orig. Op. Page 2]]

            In our opinion both questions may be answered in the affirmative, except where the legislature has specifically required an additional bond in connection with a particular fund.

                                                                     ANALYSIS

            RCW 43.08.010 sets forth the general duties of the State Treasurer.  RCW 43.08.020, as derived from the laws of 1890, page 642, section 2, provides in part as follows:

            "* * * Before entering upon his duties, he shall execute and deliver to the secretary of state a bond to the state in the sum of two hundred and fifty thousand dollars, to be approved by the secretary of state and one of the judges of the supreme court, conditioned to pay all moneys at such times as required by law, and for the faithful performance of all duties required of him by law.  * * *"

            RCW 2.12 relates to the judges' retirement fund.  RCW 2.12.050, as derived from section 5, chapter 229, Laws of 1937, provides in part as follows:

            "* * * The treasurer shall furnish a surety company bond in the sum of twenty-five thousand dollars, conditioned for the faithful discharge of his duties, and a strict accounting for all moneys received by him under the provisions of this chapter, the premium for such bond to be paid out of the moneys in said fund.  * * *"

            In 94 A.L.R. 614, the effect on a bond of a change in an officer's duties is discussed as follows:

            "* * * there now seems to be no question but that the sureties of a public officer or employee are not discharged by the imposition of additional duties on their principal, so long as the duties required are germane to the particular office held, since such additional duties are considered as being within the contemplation of the parties at the time of the execution of the bond.  * * *"

             [[Orig. Op. Page 3]]

            This rule is subject to a qualifying rule which is stated in 94 A.L.R. 624 as follows:

            "Where the act imposing new duties also provides for the giving of new or additional security to secure their performance, it is usually held that the legislative intention is thereby shown to relieve the sureties on the original bond from any liability for the default of their principal in the performance of his new duties."

            Apparently, the only Washington case concerning this particular problem isSpokane County v. Allen, 9 Wash. 229.  The court held that where the legislature, subsequent to the induction of a prosecuting attorney into office and the giving of a bond, imposed upon him the duty of collecting delinquent taxes upon real estate such duties are in no way so germane to the office as to render the sureties on the bond liable for any default of the principal.  The court pointed out that the normal duties of a prosecuting attorney did not entail the handling of public money and that his additional duties constituted an enlargement of the type rather than the scope of his official duties.

            Thus, it appears that the crucial question involved in these cases is whether or not the additional duties imposed upon the officer are germane to the normal duties of his office.

            It is our conclusion that the handling of all these funds and accounts is germane to the office of the state treasurer and certainly within the general language of the $25,000 bond.  However, in view of the rule which relates to the legislative requirement of the giving of additional security, it is our opinion that the $25,000 bond required of the State Treasurer in connection with his duties relating to the judges' retirement fund should be kept in force.

            Washington is committed to the rule that persons charged with the handling of public funds should be held to strict accountability for such funds, irrespective of the cause of the loss.  Shelton v. Clapper, 23 Wn. (2d) 811, and Fairchild v. Hedges, 14 Wash. 117.  RCW 43.08.120 provides that the State Treasurer shall be responsible on his official bond for all official acts of the Assistant State Treasurer and the Deputy State Treasurer.  This makes it imperative, from the standpoint of the State Treasurer, that all his employees be properly bonded for a sufficient sum.  It is the opinion of this office that the bonds of all these employees should be made payable to the State Treasurer personally as obligee.

             [[Orig. Op. Page 4]]

            Since he bears the ultimate responsibility for any shortage of funds, irrespective of the cause therefor, he should be placed in the most favorable position to exercise his right of subrogation in the event of a loss.  There is no valid reason, however, even though these bonds are not statutory bonds, why the obligation of these bonds should not cover all of these various and sundry funds.

Very truly yours,

DON EASTVOLD
Attorney General

ANDY ENGEBRETSEN
Assistant Attorney General