For modification -- Chief Justice Weintraub, and Justices Jacobs, Francis, Proctor, Hall, Schettino and Haneman. Opposed -- None. The opinion of the court was delivered by Proctor, J.
[37 NJ Page 30] Defendants-appellants, Thomas F. McGann, Chief Probation Officer of the County of Essex, John A. Kervick, Treasurer of the State of New Jersey and The
State of New Jersey, appeal from a judgment of the Superior Court, Law Division, ordering them to satisfy a claim of the plaintiff, George Godfrey, and dismissing plaintiff's action against the defendants, Board of Chosen Freeholders of the County of Essex and Harry Lerner, Treasurer of the County of Essex. While the cause was pending before the Appellate Division, we certified it on our motion.
The facts giving rise to the present action are not in dispute and may be summarized as follows: In May 1958 the Essex County Court ordered William Cash, defendant in a criminal action, to make restitution to Godfrey in the sum of $1,700 by installment payments to the Essex County Probation Department. As of August 3, 1959, Cash had paid $1,150 in accordance with the order. An audit of August 25, 1959, conducted under the direction of the Essex County Board of Freeholders, revealed that $1,000 was missing since only $150 remained in the Cash-Godfrey account. It was later established that the missing funds had been embezzled by Frank A. Zazzaro, Cashier of the Probation Department.
The plaintiff demanded payment of the $1,150 from all of the above-named defendants, and after each denied liability, commenced this action in lieu of prerogative writ and for a declaratory judgment. In his complaint plaintiff requested that the court settle the "legal obligations of all of the defendants herein and to further enter judgment as to which of the said defendants should make payment, or alternatively, enter judgment that all of the said defendants make payment to the plaintiff, George Godfrey, of the moneys collected for and on his behalf."
In their answer the defendants, Board of Freeholders and Lerner, denied liability, asserting that the Probation Department is "part of the State Judiciary system" and therefore the State, not the county, is responsible for the defalcations of Zazzaro while he was an employee of that department. In their answer, McGann, Kervick and the State denied liability as to the missing $1,000, but stated that the Essex
County Probation Department has at all times been willing to pay to the plaintiff the $150 which remains in its hands for his benefit.
The parties stipulated that the Board of Freeholders purchased bonds from two surety companies to secure "the faithful performance of the employees (including Zazzaro) of the Essex County Probation Department." The Board named the County of Essex as the obligee of these bonds. The parties also stipulated:
"The defendant, Board of Chosen Freeholders of the County of Essex and the defendant, State of New Jersey, both admit that in accordance with the audit the monies are due to the plaintiff, George Godfrey, from either the Board of Chosen Freeholders of the County of Essex or from the State of New Jersey, each denying that it is the one obligated to pay and each contending that the other is the one legally responsible to pay."
While the action was pending a third-party complaint was filed in behalf of the defendants against the sureties demanding they "make payment of all or part of the amount demanded by plaintiff George Godfrey." This third-party action was settled, the defendants stipulating the sureties had made payments in amounts "more than sufficient to meet the demands" in Godfrey's action. The payments were made to the county which turned them over to the Probation Department.
The Superior Court, Law Division, after considering the above facts and the statutory provisions governing county probation departments (N.J.S. 2A:168-1 to 13) held the Essex County Probation Department is "an arm of the judicial power of the State" rather than a "county subdivision," and concluded the Department is a state agency and its officers and employees are agents of the State. 65 N.J. Super. 213 (1961). The trial judge considered the State's defense of sovereign immunity which was raised subsequent to the filing of its original ...