subject: Licensing clerk: You received open checks and your employee stole them- who is liable? [print this page] Licensing clerk: You received open checks and your employee stole them- who is liable?
Adv. Gill Nadel, Moran Shmilovich
Recently, the Magistrate's Court of Tel Aviv discussed the liability of an employer for theft committed by one of his employees, of checks of the customs representation company.
The case involved a customs representation company that hired the services of another party (a licensing clerk) to receive secondary services ('second') at his place of work- that is, handling for the purposes of making payments, transferring documents, and so forth, to the shipping company, shippers, etc.
The customs representation company deposited a number of check books with the licensing clerks, all of which were signed by the company but without a sum. The checks were to the accounts of various service providers, including the shipping company, the international forwarders, etc. Another group of checks was signed by the company without amount or recipient.
During a routine check, the company discovered that checks for high and round numbers had been withdrawn from its account. It became clear that these sums had been withdrawn via the empty checks that had been deposited with the licensing clerk.
After an investigation, it was discovered that an employee of the licensing clerk had stolen these checkbooks, filled them out with any amount that he wanted and deposited them into a number of bank accounts. All the checks withdrawn without permission and without the knowledge of the company amounted to 210,000 NIS. The customs representative filed a financial action against the licensing clerk whom it claimed bore vicarious liability for the actions of its employee, as well as suing the employee himself.
In discussing the case, the court was divided between its opinion on the licensing clerk on one hand, and the employee of the other.
Regarding the licensing clerk, the court ruled that the behavior of the licensing clerk who would receive signed checkbooks and blank checkbooks for use by his office, to pay for service providers to clients of the customs representatives for whom he worked, including this corporation, was acceptable and ordinary for the field. The employees of the Licensing clerk used the checks, to the knowledge of the company, for the needs of its clients only.
The court ruled that in light of the fact that the customs agent was aware of the fact that the employees of the licensing clerks were filling out these checkbooks in its name, it out to have taken special care in examining the bank activities done via these checks. It was ruled that the customs agent has a duty to check the bank activities taking place in its account, particularly in light of its having given signed checkbooks to the licensing clerk and his employees, and he should have supervised these activities, both as self-oversight, as oversight of the licensing clerk, and to provide a warning. The court noted that only the company has the ability to check the bank activities in its account, in real time, immediately after they take place.
The court found that the company did not conduct inspections and bank balancing for 4 months, despite its knowledge that employees of the licensing clerk were filling out checks. The court ruled that the licensing clerk did not know and was not supposed to have known about the bank activities in the company's account being conducted by his employees, and that he acted like any reasonable employer in the field.
The court found that the full responsibility to conduct inspections of bank activities rested on the company, which could have stopped the theft after the first activity done by the employee. Similarly, the court added that if it was ruled that liability rested on the licensing clerk, the contributory negligence of the company towards the licensing clerk was 100%.
Regarding the employee, the court ruled that, given that the employee admitted his actions to the court, the full sum of the action should be issued against him.
Civil case 52542-08, Yatir Import Export Services Forwarding Agents Ltd. v. Koper and others. Decision given 27.12.09. Names of advocates not noted.
