The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1899-03-29
Alleged That Vice-President of
Defunct Cross Bank
NOW OWES $166,OOO.
Charged by Receiver Albaugh
With Gross Fraud.
Says Accounts Were Manipu-
lated and Notes Juggled.

| president, will be sued in the United
states district court at Topeka today
for $16S, 900 by u. S. Attorney Lambert.
The suit will be filed by Receiver AL
| baugh who, in his position. states TWEEN
| ty-three causes of action, principally
| consisting of fraudulent drafts.
The petition which has been prepared,
| is a lengthy document, and gives in
great detail the history of the transac-
tons which resulted in the failure of the
bank. According to 1t, most gIarlng
frauds were perpetrated; the accounts
were manipulated in an unlawful man
ner, and the books were doctored to
make things balance regardless of the
amount of the shortage.
Inc suit would not have been tnsti-
tuted by Receiver Albaugh against Mr..
Martindale if a plan which the latter
and his creditors had under conSidera-
ton for several weeks had gone through.
The plan discussed was for him to turn
over all of his property to Major Cal
vim Hood as trustee, to be disposed of
to the best advantage and the proceeds
to be divided pro rata among his cred
1tors. A1baugh, as receiver, signed an
the bank Mr.. Martindale was favor
bic to the scheme, but some of the
other creditors opposed it.
Among them was Ford Harvey, of
Kansas City, son of Fred Harvey, the
eating house man, whom Martindale
owed $4,000. When Harvey declined
to enter the agreement Albaugh con-
cluded that the only thing left for him
managing was to begin proceedings
against Martindale in the courts to re-
cover the amount he owed the bank.
Hence the filing of the suit.
The first cause of action alleged is
under the double liability act. Martin
dale held $40 shares of stock. Soon af-
found 1T necessary to levy an assess
ment against the stockholders for 100
cents on the dollar. Martinda1e never
paid in his assessment and is now sued
for the $34, 900.
AS a second cause of action Martin
dale is charged with directing his cash
Ter to discount note signed "Salina
Gas and Electric Light Company for
s1,76s, and placing the proceeds derived
from the discount to his individual
credit The Salina Gas and Electric
Light company had gone out of business
some time before the note was discount
ed. 1t had no property and ceased to
exist as a corporation.
The next allegation charges Martin
dale with diScounting a note for S. 500,
placing his sons name, George w. Mar
tfndale, to the note. 1t is alleged that
the signature of George w. Martindale
was made by William Martipdale The
proceeds derived from the discounting
of that note were placed to the individual
credit of William Martindale. George
Martindale is alleged to be insolvent,
having no property in his own name
Martindale is also sued on promissory
notes signed by Cross and Martindale
in the sum of IS, 900.
caused E. w Pike, who was insoIvent,
to execute a note in the sum of $4,000
and caused said note to be discounted
by the bank and the proceeds placed to
his individual credit. In other words
he is accused of using Pike as a straw
man to swell his bank account $4,000
1t is charged that he received $40 900
by having the bank discount a note of
Thomas Cross in the same manner as
the Pike transaction. The proceeds of
this note We're credited to the accounts
of Martindale and Cross.
1t is charged than on April IL. 1898
he caused the bank to discount a So 900
note signed "Salina Gas and Electric
Light Company. by Thomas Cross.
note to the credit of Martindale and
Cross. Said company had ceased to
exist long before this, having trans
ferred all of its property and franchise
to another company.
It is alleged that. on September g.
1898, the bank discounted note for the
same amount, signed by the same COM
pany, and the proceeds We're placed to
the credit of Martindale and Cross.
On August l, 1898, according to the
petition, the defendant caused his ac-
count at the First National bank of
Emporia to be credited with the sum of
Sc, 900 upon the books of said bank In
order to make the books balance he
caused the cash in the bank to be count
ed at Sc 900 more than it really was
After carrying the item in this way for
several days, the bank books were
made to show that the Madison State
bank of Madison, Kan, of which the
defendant was president, owed the First
National bank of Emporia $4,000 more
than it really owed. The Madison bank
was not notified of this fact
Upon July 27, 1898. Cross and Martin
dale, according to the petition, drew
their check upon the First National
bank of Emporia for $4,000, payable
to the Midland National bank of Kan
sas City. The last named bank en-
n National nj
of Commerce. Two days later the Bank
of Commerce sent the check to the First
National of Emporia for payment. When
the check was presented the Cross and
Martindale account was oVerdrawn
$1,000. In order not to have their ac-
count show an increased overdraft,
they caused the bank books to show
that note of $4,000 had been dis
counted, not giving the name of any
maker or indorser. At a matter of fact,
no such note was discounted, it is
charged.
1t is further charged that upon Au-
gust a similar transaction occurred
for the same amount.
The thirteenth cause for the action is
that William Martindale and c. S.
Cross, October 20, 1897, caused a draft
to be issued by the First National bank
for $1,000 drawn on the National Bank
of Commerce of Kansas City, Mo. The
draft was sent to the Investors Agency
corporation of Kansas City, Mo, to pay
a note of $4,000 due that day, signed by
the Saline Gas and Electric Light COM
pany and payable to the Investors
Agency corporation, guaranteed by
Martinda1e and Cross and individually
by William Martindale and c. S. Cross
At the time they caused the draft of
S., 600 to be issued by the First National
bank they caused the bank books to
show that it had purchased $1,000 worth
of school bonds when in truth the bank
had not purchased any bonds at all, the
entry having been made solely for the
purpose of covering up the fact that
Martindale and Cross had caused the