Just How Safe is Your Safe Deposit Box?
Imagine that over the course of several months you deposited $96,000.00 cash in a national bank safe deposit box. Then one day you discover the box completely empty. You are in disbelief. You assume you had mistakenly been given the wrong box. You then notify a bank employee who assures you the empty box is yours. You believe a bank employee stole the money. You file a police report. Now what? An attorney may be able to help.
The attorney should first request all records police department investigation, if any. This should include: (a) copies of all witness statements relating to the Police Department’s investigation; (b) copies of any and all video, audio recordings, surveillance footage, and recordings or photographs that in any way relate to the investigation; (c) copies of any and all reports, court documents, handwritten notes, memorialized observations, statements, or other documents relating to the investigation; (d) copies of any and all documents, reports, photographs, video surveillance, audio recordings and witness statements provided by the bank to the Police Department relating to the incident; and (e) copies of any other documents or items not delineated within the request relating to the investigation. An Open Public Records Act request could be used.
If there is no cooperation with an OPRA request, you could file a motion under New Jersey Court Rule 4:11-1 and request a Court order for the preservation of any evidence relating to the matter. This petition could also seek an order allowing the law firm to inspect and/or receive copies of any and all documents or property relevant to this matter for the purpose of pre-litigation investigation and discovery.
Once you have all your documents, you consider what are your legal options. The question is whether and under what circumstances a bank or safe-deposit company will be held liable based on allegations that an employee stole valuables, certificates, or other items from a customer’s safe-deposit box. A number of jurisdictions may have rules, regulations, constitutional provisions, or legislative enactments bearing upon this subject. It will be important to consult a local attorney to discuss the appropriate statutory or regulatory laws.
Although safe-deposit box renters ordinarily have complete confidence that their deposits will remain safe behind the massive walls of the bank vault, some renters will be faced with the unpleasant discovery that their boxes had been emptied since the last time they inspected the contents. The bank or safe-deposit company may allege that the cause of the loss was negligence by the renter in failing to return the items to the box, replace the box in its proper location, lock the box, or guard the key, or they may allege that the property allegedly stolen had never been deposited in the box. On the other hand, the renter will claim that other causes were involved, such as a bank robbery by outsiders, the bank allowing an unauthorized person, such as an estranged spouse, access to the box, or a theft by a bank employee. In this connection it has been generally recognized that the relation of bailor and bailee exists between the bank or safe-deposit company and the renter with respect to liability for loss, despite the bank’s lack of knowledge of the character of the property deposited, and that the bank or safe-deposit company is held to the degree of care in the guarding of the property and in the hiring of employees as a prudent person would take in the keeping of valuable property.
Accordingly, courts held under certain circumstances that a bank or safe-deposit company was or could be held liable, based upon allegations that one of its employees took some or all of the contents of a safe-deposit box. In Cussen v Southern California Sav. Bank (1901) 133 Cal 534, 65 P 1099, the court held that the evidence supported a conclusion that a bank had not taken sufficient care and thus could be held liable for the theft by employees of $560 from a safe-deposit box. The court explained that despite a clause in the safe-deposit box agreement providing that the bank’s sole responsibility was that no unauthorized person should be admitted to any rented safe, the bank was required to use that degree of care in the selection of its employees as is demanded from a bailee for hire in the keeping of valuable property. Continuing, the court said that such standard required the bank to employ fit persons, both in ability and integrity, for the discharge of their duties, and for it to remove those persons employed whenever they were found wanting. Reasoning that the renter made a prima facie case by showing a deposit of the money and its subsequent loss, the court pointed out that the safety-deposit vaults for a long period of time were left in charge of a 17-year-old boy, who had been in the employ of the bank for only 3 months when he was put in this position. Furthermore, the court said that the boy left the employ of the bank before the loss was discovered, that no inquiry was ever made by the bank, prior to or during his employment, as to his honesty or integrity, and that a second boy also had charge of the vaults for a portion of the time, without his background being investigated. In addition, the court said that a conclusion that the bank was negligent was justified, in view of the fact that it failed to deliver to the renter both of the keys which unlocked his box, thus leaving outstanding a key to the box.
Upon evidence that a bank cashier who was in active charge of the bank’s affairs had possession of an extra key to a customer’s safe-deposit box, the court in Charters v Miller (1922) 82 Ind App 535, 137 NE 67, affirmed a judgment in favor of the customer who alleged that certain bonds had been taken from his safe-deposit box. The court said that there were two keys for each safe-deposit box, and it was customary to give both keys to the renter. A box could not be opened except by the combined use of one of the keys given to the renter and the bank’s master key. The customer testified at trial that he had dealt with the cashier when he rented the box, although the court pointed out that prior to trial he had claimed that the assistant cashier had given him the keys. The customer further testified that he had been given the keys, that because he could not take care of them at the time he gave them back to the bank official, and that the next day the official returned one, claiming that the other one was lost. Pointing out that it was uncontroverted that the cashier had access to the master key, the court said that from the testimony the jury could find that the cashier had the keys that would open the box and thereby had an opportunity to take the bonds from the box.
In O’Malley v Putnam Safe Deposit Vaults, Inc. (1983) 17 Mass App 332, 458 NE2d 752, 39 ALR4th 530, the court held that there was a jury question as to whether a safe-deposit company was liable because a vice president of the company had converted over 100 gold coins from a customer’s safe-deposit box, and it reversed a judgment directing a verdict in favor of the company. The vice president was in charge of the safe-deposit box operation, and was also involved in the sale of coins. The customer rented a box, and the vice president suggested that he keep one of the two keys to the box so that he would be able to put coins that the customer was ordering from him directly into the box when they were delivered. In addition to the customer’s key, the vice president had access to the general passkey which was needed before an individual key could be used to gain access to any given box. Although the customer originally allowed the vice president access to the box to conduct certain transactions with the coins, he later rescinded such permission, but the vice president nevertheless appropriated some of the coins. Explaining that the standard of care for the company was that of a prudent person operating a safe-deposit business, the court pointed out that there was testimony that the company knew of other coin shortages involving the vice president, but the company did not maintain strict supervision of his affairs. Moreover, the court said that there was no company rule against an employee being deputized to enter safe-deposit boxes of customers, and that the vice president and a director of the company had keys to boxes of other customers. The court concluded that the jury could find that the company was negligent in failing to establish more safeguards and in neglecting to provide more supervision, since the company had knowledge of the vice president’s own gold-trading business, and since there were inherent risks in the vice president’s dual roles. Furthermore, the court reasoned, a key system which enabled an employee who had access to the passkey to be deputized so as to be able to enter a box alone could be found by a jury not to show the degree of care which might be expected from a reasonably prudent safe-deposit enterprise. Rejecting a claim that there was insufficient evidence of causation, the court said that it could reasonably be inferred that had the company established closer supervision and proper procedures, the theft from the box could have been avoided. The court added that a contention that the customer’s contributory negligence in giving the vice president the key to his box was the sole proximate cause of the theft was also a matter for the jury.
Where an assistant cashier of a bank feloniously took money from a safe-deposit box, the court held in City Sav. Bank & Trust Co. v Pluchel (1930) 37 Ohio App 423, 9 Ohio L Abs 229, 175 NE 213, that the bank could not escape liability therefor on the ground that the assistant cashier acted beyond the scope of his authority. The assistant cashier was in direct charge of the safe-deposit boxes, had access to the guard or master key in connection therewith, and had authority to order the necessary keys thereto, and he ordered duplicate customer keys for the safe-deposit box in question and paid for the same out of the bank’s funds. The court explained that a bank is liable for torts committed by its servants, including its cashiers, when acting in the course of their employment, if not in the scope of it. The court pointed out that in Blair v Riley (1930) 37 Ohio App 513, 9 Ohio L Abs 669, 175 NE 210, infra, in which a cashier who in many instances was permitted to have the customer’s key, allegedly stole bonds from safety-deposit boxes, the court held that a bailment had been created, and that the failure of the bank to return the contents of the boxes on demand could not be avoided by a claim of the bank of want of knowledge of the dishonesty of the cashier. The court said that the assistant cashier was not simply a bookkeeper, watchman, or other employee, but was the officer of the bank who had direct charge over the boxes and had the authority to order necessary keys. Continuing, it said that the assistant cashier spoke for the bank more than any other officer would or could have done under the circumstances. The court also reasoned that where a contract of bailment contains no exemption from liability on account of unauthorized acts of the servants of the bailee, no act of a servant, committed while the servant is in possession of the subject of bailment by authority of the bailee, is effective to abrogate the contract between the bailor and the bailee nor to absolve the bailee from liability to the bailor for a breach of such contract.
In Blair v Riley (1930) 37 Ohio App 513, 9 Ohio L Abs 669, 175 NE 210, a proceeding against a bank by six holders of safety-deposit boxes who claimed that the cashier had converted securities from the boxes to his own use, the court held that when the depositors had shown the rental of the boxes from the bank, the placing of securities therein, and the failure of the bank to return them on demand, a prima facie case was made against the bank which could not be avoided by an assertion that the bank did not know that the cashier was dishonest. The court said that the directors of the bank had by common consent permitted the cashier to have full and complete charge of the business of the institution so as to justify the conclusion that in all circumstances presented the cashier was acting for and on behalf of the bank. He assisted holders of safety-deposit boxes in clipping coupons from the bonds, and on several occasions he was permitted in the absence of the holders of the boxes to go to them and clip the coupons. In some instances the boxholder left his key at all times at the bank. The court said that while the relation between the boxholders and the bank would, in all probability, not be paralleled in an institution of sufficient size to maintain a separate safety-box department, in the instant case all the cashier did was within the apparent scope of his authority. The court said that having permitted such a practice to grow up and to be followed by boxholders, and having at least consented to the entrusting of the added responsibility upon the cashier, the directors could not be heard to say that the cashier was without authority to bind them. The court added that the bank could not rest upon the broad principle of landlord and tenant, because its possession and control of the box was more complete than that of landlord over the property which he leases. Thus, without further discussion as to the particular claims of the boxholders, the court affirmed a judgment in favor of four of the boxholders and against two of the others.
In Safe Deposit Co. v Pollock (1878) 85 Pa 391, the court affirmed a judgment in favor of a depositor in an action to recover from a safe-deposit company the value of bonds missing from a safe-deposit box rented from the company, which bonds were alleged to have been lost through the negligence of the defendant company, where such negligence was predicated upon the company’s agreement to prevent the access of any other renter to the safe and to protect the safe and its contents from any dishonesty of the company’s employees. Pointing out that there was no evidence that the vault or the safe had been broken nor that the lock had been tampered with, and that in order to get access to the safe a person would be obliged to step into the vault, and would need one key during business hours or two keys at other hours, the court said that if it were found that the bonds were purloined by an employee, there was evidence to go to the jury of an omission on the part of the company to exercise that ordinary care and vigilance which men ordinarily exercise and ought to exercise under such circumstances, in the protection of their own property.
In other cases, the courts held that the liability of a bank or a safe-deposit company based on allegations that its employee stole the contents of a rented safe-deposit box was not proven or established. In Farnum v Connecticut Bank & Trust Co. (1960) 22 Conn Supp 257, 168 A2d 168, an action by a renter of a safe-deposit box against a bank to recover the value of securities which he claimed to have placed in the box, the court ruled that the renter failed to prove that the bank breached its bailment contract, despite a claim that the bank attendant might have palmed the renter’s key and made a wax impression of it. The box in question could be opened only by a combination of the use of a bank key and the customer’s key. The court explained that where a bank leases a safe-deposit box, the bank holds out the implied agreement that the property placed in its custody will be protected from the ordinary dangers to which valuables are exposed, and the court noted that there were no special contracts between the parties limiting any rights or liabilities. The court further explained that by proof of nonproduction of the goods, a safe-deposit box renter makes out a prima facie case of negligence, which may be overcome by the bank by any explanation which would satisfy the trier of fact that the loss was not due to failure to exercise reasonable care. Pointing out that the bank had proven that under the circumstances it had used proper care, the court observed that the renter was uncertain as to whether in fact he had deposited the securities in question, and admitted that he “must have made a careless move somewhere.” The court said that the claim that the attendant copied the key was pure conjecture, pointing out that there were many safeguards set up by the bank, and that the attendants “seemed far from having the legerdemain of a Houdini” to accomplish such a feat in full view of a customer or other persons.
The court in Shoeman v Temple Safety Deposit Vaults (1914) 189 Ill App 316, reversed a judgment in favor of a renter in an action against a bank to recover damages for the alleged failure of the bank to keep safe one $1,000 bill that the renter had deposited in a safety-deposit box, despite a claim that the bank employed incompetent, indiscreet, and dishonest persons who misappropriated the bill. The safe-deposit boxes were opened by a combination of a master key and a customer key. Before particular boxes were rented, the keys thereto were kept in a locked wooden cupboard in the vault, and the key to the cupboard was kept on a key ring along with the master key. This ring was kept directly over the desk where the employees in charge of the vault sat. The court rejected a claim that one of the employees, before the date the box was assigned to the renter and the keys delivered to him, took the keys from the cupboard and had a duplicate made, and retained this duplicate. However, the court said that there was no direct evidence that any employee took the money from the box. It reasoned that in order to impose liability on the bank, the inference would have to be drawn that the employee opened the box and took the property, and the further presumption would have to be drawn that the employee gained access to the box through the scheme suggested. Thus, the court concluded, a finding of liability could only be reached by indulging in a presumption based upon another presumption.
Reversing a judgment in favor of a safety-deposit box renter in an action against a bank to recover $10,500 alleged to have been deposited into, and to have later disappeared from, the box, the court in Hauck v First Nat. Bank (1944) 323 Ill App 300, 55 NE2d 565, said that the evidence did not tend to show that the money had been stolen by the employees of the bank. While noting that the gate between the vault and the tellers’ area was sometimes left unlocked for a few minutes in the morning, before the bank was open, while the tellers were taking their cash from their safes in the vault, during which time the vault custodian was taking their cabinets upstairs, the court said that this fact did not tend to show that any of the tellers or anybody else could have entered any of the safety-deposit boxes while the custodian was away from the vault. Continuing, the court pointed out that the testimony showed that the guard key, without which no box could be opened, was in the custodian’s personal possession at all times, except when it was locked in the vault at night. While noting that there was some evidence that locks were not changed on boxes bought from other banks or unsurrendered boxes, the court said that even if unauthorized duplicate keys existed, access to any of the deposit boxes could not be had except with the connivance of the vault custodian. Finally, the court said that the custodian, the relief custodians, and the tellers had good reputations and long service records, entitling the bank to rely upon their honesty and integrity.
Reversing a judgment in favor of a renter of a safe-deposit box in an action brought against a safe-deposit company for the failure of the company to keep safe $37,750 in cash alleged to have been placed in the box and to have disappeared therefrom, the court in Henderick v Uptown Safe Deposit Co. (1959) 21 Ill App 2d 515, 159 NE2d 58, said that the evidence did not establish a theory that one or more of the bank tellers, after checking their accounts at the close of the banking day and delivering the proceeds by truck to the vault area, might have surreptitiously gained access to the box through some unexplained means and committed the robbery. The court said that there was no evidence that any of the tellers ever entered the area of the vault where customers’ safe-deposit boxes were located, or that they could have gained access to the renters’ boxes if they entered that area. The court pointed out that a guard or custodian always remained in the customers’ area of the vault until all the funds from the tellers’ “trucks” had been deposited in the bank’s vault boxes, and that the side area of the vault area was never closed nor the timelock set until this operation was completed and all the tellers had left.
Furthermore, the safe box rental agreement may limit the liability of the bank. In Cincinnati Ins. Co. v. Diebold, Inc., 64 Ohio App. 3d 273, 581 N.E.2d 566 (2d Dist. Montgomery County 1989) an indemnification clause in agreement between bank and locksmith company, whose employee stole money from safe-deposit box he was servicing, was enforceable, thereby precluding bank’s insurer, as subrogee, from recovering loss from company; public policy did not prohibit agreement relieving employer of vicarious liability for intentional misconduct of employee.
In Paehler v. Union Planters Nat. Bank, 971 S.W.2d 393 (Tenn. Ct. App. 1997), the court held that a statute relieving banks from liability for loss of items stored in safe deposit box did not entitle bank and bank employees to summary judgment in action alleging conversion, breach of fiduciary duty, breach of contract, gross negligence, and fraud due to items allegedly missing from safe deposit box, inasmuch as statute did not preclude application of common law bailment principles to box’s rental.
The bottom line here is that depositing valuables in a bank safe deposit box is no guarantee that the items will be kept safe. If dishonest bank employees steal your items, you may not have legal recourse to get them back.