Witzenburg v. State

299 N.W. 533, 140 Neb. 171, 1941 Neb. LEXIS 199
CourtNebraska Supreme Court
DecidedJuly 25, 1941
DocketNo. 31081
StatusPublished
Cited by12 cases

This text of 299 N.W. 533 (Witzenburg v. State) is published on Counsel Stack Legal Research, covering Nebraska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Witzenburg v. State, 299 N.W. 533, 140 Neb. 171, 1941 Neb. LEXIS 199 (Neb. 1941).

Opinion

Simmons, C. J.

Plaintiff alleges that in July, 1932, he was employed by oral contract at $250 a month to render services to the defendant as an employee of the department of trade and commerce (later department of insurance) in connection with the affairs of the Lincoln Hail Insurance Company then in the hands of the department; that the statutes authorized the department to give its employees such powers and duties as it considered proper; and that the defendant agreed to hold harmless any person so engaged from liability for acts done pursuant to such orders and in reliance upon said orders and in the belief that such orders were authorized and lawful; that prior to July, 1934, the defendant incurred obligations of $20,543.61 in the administration of the trust and placed funds of said trust in the hands of plaintiff and one F. A. Wood and directed that they be disbursed in the payment of said obligations; that plaintiff and Wood were informed that said funds could be so used lawfully and that the court had so- authorized their use; that plaintiff and Wood so disbursed the funds, exercising no discretion in so doing, under orders of the defendant, believing that their acts were authorized and legal and relying on the agreement [173]*173of the defendant to hold them harmless; that the amounts so' paid were authorized and approved by the court in the action then pending involving said insurance company; that in July, 1934 (after the disbursement of said funds) policyholders intervened in the district court action claiming that the moneys used in the payment of said expenses were funds which could not be used for that purpose and that plaintiff was liable therefor; that the defendant and its attorney general were notified and agreed to defend said action and hold the plaintiff harmless; that the defendant abandoned the defense of said action and plaintiff employed his own counsel; that in said action it was adjudged that $12,633.56 was not lawfully disbursed and plaintiff and Wood were required to repay the same with interest, which they did, and that the judgment, costs and attorneys’ fees so paid amounted to $15,145.72; that the plaintiff acted throughout in good faith and relying upon defendant’s statement that it had the authority to so use the funds; that at all times during plaintiff’s employment the defendant had ample assets of the trust to have paid the expenses of its administration, and to hold the plaintiff harmless, but it failed to* do so; and that by reason thereof defendant is obligated to* indemnify plaintiff for the amount spent in making restoration. The above constitutes a summary of the allegations, of plaintiff’s first cause of action.

For a second cause of action plaintiff alleges that he was. paid his salary to December 31, 1933; that it was agreed that his salary subsequent thereto should be paid when the remaining assets of the trust were liquidated; that plaintiff continued said employment until January 28, 1935; that his. unpaid salary amounts to $3,233.33; and that defendant, disposed of the assets of the trust and did not pay him.

Plaintiff further alleged, as to both causes of action, that he presented a claim for the amounts due him to the department for approval, but that that department failed to approve the same; that he then presented the claim to the auditor of public accounts, who informed plaintiff that there were no funds appropriated or available for its payment and re[174]*174ferred the same to the claims and deficiencies committee of the legislature; that that committee did not approve the same; that that committee was of the opinion that it presented a question of contract and that the liability of the defendant could be determined by the courts without further legislative action.

Plaintiff prayed judgment for the sum of $15,145.72 on his first cause of action and the sum of $3,233.33 on his second cause of action.

To the petition the defendant demurred generally for the reason that the facts stated in the petition “are insufficient to constitute a cause of action against this defendant.”

The trial court sustained the demurrer, holding the petition deficient in the following particulars:

(1) The defendant was without power or authority, express or implied, to enter into the contract alleged; (2) the liability, if any, on the part of the state for alleged services or expenses rendered in the liquidation of the insurance company is a charge against the assets of the company and not of the state; (3) the action of the district court to which plaintiff refers in his petition was appealed to the supreme court of Nebraska and a decision rendered therein which is res adjudicaba of any alleged cause of plaintiff.

Plaintiff elected to stand on his petition; his case was dismissed and he appeals.

A detailed summary of the facts surrounding this transaction may be found in State v. Lincoln Hail Ins. Co., 133 Neb. 496, 276 N. W. 169, wherein this court affirmed a judgment in favor of the receiver of the insurance company against plaintiff and Wood in the sum of $12,633.56, for moneys unlawfully diverted and misappropriated and denied them a judgment for compensation.

The plaintiff in this action seeks to require the defendant (state) to reimburse him for the money which he alleges he paid in satisfaction of that judgment and to require thé defendant to pay him the salary which he was denied in that action.

The theory is that the acts done by the plaintiff which [175]*175resulted in the judgment against him were in fact the acts of the defendant; that the defendant itself, acting through its officers, took the trust funds to pay these expenses which the defendant had incurred; that the plaintiff was required to restore these funds because they passed through his hands while he was acting pursuant to orders; that he unknowingly and unwittingly trespassed upon the rights of the beneficiaries of the trust relying upon the statements of officials of the defendant that the funds could be so used and that said use of the funds had been approved by court order; that the decision to so use the funds was not the decision of the plaintiff but of the defendant; and that the defendant agreed to hold the plaintiff harmless; and that the defendant is liable to the plaintiff for the loss which he sustained.

As to the claim for compensation for services, the contention is that the defendant undertook the operation of the business of the insurance company, employed the plaintiff, used his services, and agreed to pay plaintiff for the services so rendered.

To support his contention that he has a right to maintain this action and that he has alleged causes of action' against the defendant, the plaintiff cites section 27-324,, Comp. St. 1929, providing that “The state may be'sued * * * in any matter founded upon or growing out of a contract,, expressed or implied, originally authorized or subsequently ratified by the legislature, or founded upon any law of the; state;” and upon the holding in Peterson v. State, 113 Neb. 546, 203 N. W. 1002, to the effect that a contract with the department of public works, previously authorized by the legislature, is essentially a contract with the state, upon which the state may be sued; and upon Moore v. Garneau, 39 Neb. 511, 58 N. W. 179, to the effect that a principal is bound by the acts of his agent, within the scope of the agent’s authority, and that that rule applies to the state as well as the individual.

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Cite This Page — Counsel Stack

Bluebook (online)
299 N.W. 533, 140 Neb. 171, 1941 Neb. LEXIS 199, Counsel Stack Legal Research, https://law.counselstack.com/opinion/witzenburg-v-state-neb-1941.