Request By:
Mr. Harold B. McGuffey
Commissioner of Insurance
Capital Plaza Tower
Frankfort, Kentucky 40601
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
Beginning January 2, 1978, clerks of the Court of Justice will become state officers for various purposes. Accordingly, it will become necessary to bond these employees to the Commonwealth for the faithful performance of their official duties and for the handling of funds. KRS 62.170(1) provides for blanket bonds which would include all judges, clerks and employees of the Court of Justice. Subsection (2) of that statute provides for excess blanket bonds to provide additional coverage deemed necessary in view of the duties and responsibilities of the employee. KRS 30A.030 provides that all clerks of the Court of Justice shall be bonded to the Commonwealth for the faithful performance of their duties and for the accounting of all funds which may come into their hands by virtue of their office. They shall be covered by the blanket bond for all elected or appointed state officials. No other bond shall be required for performance of duty by the clerk.
Circuit court clerks will have a special financial exposure because of the duties of that office. This includes the collecting of funds accruing to the state (filing fees for civil cases, court costs, fines, child support payments, garnishments, etc.).
Your specific question is: Will additional coverage be needed, in connection with circuit clerks, for the present Commonwealth blanket bond to cover escrow funds held for payment to third parties and performance exposures?
We understand that the present blanket bond issued under KRS 62.170 establishes penal sums in connection with fidelity or honesty in accounting for money only. KRS 62.190 provides that bonds issued under KRS 62.170 shall be covenants to the Commonwealth that the officers or employees covered by the bond will faithfully account for and pay over all money and property that may come into their possession by virtue of their office or employment. KRS 62.060(3) provides that that section, which requires a covenant in officers' bonds that the principal will faithfully discharge his duties, has no application to a bond issued under KRS 62.170 [blanket bonds]. However, in 1978 the blanket bond covering circuit clerks should contain a covenant for the faithful accounting for and paying over all money and property that may come into their possession by virtue of their office, and a covenant for faithful performance of duties, as additionally required by KRS 30A.030.
It is our opinion that KRS 62.170, as amended in 1976 (Ex. Sess.), will require the Commissioner for Finance and Administration to procure a blanket bond that is deemed adequate by him to cover both the faithful handling of money and faithful performance of duties in fixing the penal sum. All funds in the hands of the clerks, state and third party, are required to be covered under the statute. Subsection (2) of KRS 62.170 provides for excess blanket bonds to cover selected groups of persons (e.g., circuit court clerks) to provide additional coverage which the Commissioner may deem necessary because of the financial exposure arising out of the duties of the office. The proper fixing of the penal sum by the commissioner should take into consideration the financial data and the duties of the office of clerk as furnished by the Administrative Office of the Courts. See KRS 62.170(4).
KRS 30A.030 suggests to us the covenants for the clerks of faithful performance of duties and faithful accounting of all funds. This is buttressed by the statement that "They shall be covered by the blanket bond . . ." The statute must be read as a whole and in light of its purpose.
Henry v. Com., 312 Ky. 491, 228 S.W.2d 32 (1950).
Finally, a statutory bond must meet the requirements of the statute. Any limitation in a bond in derogation of the statutory requirements is not binding generally.