N.J. Stat. § 40:60-13
Nothing in sections 40:60-10 to 40:60-12 of this title contained shall be construed to make any municipality liable for the misappropriation of the funds created by the trust, nor to make good any diminution thereof resulting from the wrongful acts of its agents or any person appointed in conformity with the terms and conditions of the deed or instrument creating the trust. If, however, any agent or officer of the municipality is under bonds thereto, and upon default the municipality recovers from the sureties on the bond a sum sufficient to pay or make good the amount of misappropriation of the funds of the trust, the municipality shall make good the same out of the amount so received. No misappropriation of the funds aforesaid shall in anywise affect the trust.
N.J.S. § 40:60-13