The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1904-09-03
HOW Dave DID IT..
Echo offs Bond Deal That Didn't
Go Through.
Treasurer HeflebOwer Refused
to Pay the Warrants.
WHAT THE COURT SAID
Tribunal Explicit
About State Securities.
Had No Right to Pay More Than
Market Price.
A Few Comments on Kansas
School Fund Commissioners.

The Comanche county bond deal re-
calls to mind the fact that the su-
preme court has passed on the ques-
ton of the market value of bonds. and
has practically laid down the law es-
| tablishing what is the market value
| of bonds. 1t seems to be what the
bonds will bring in the open market.
In the case in which the supreme
court rendered it's opinion the market
value of the bonds seems to have been
around 81 or SO, but when the school
fund commissioners purchased the
bonds at par, only slightly in advance
of the market value, the supreme
court decided that their action was not
in accordance with the law prohib-
iting the purchase of bonds at more
than the market price.
When "Uncle Dave" Hefiebower was
treasurer in 1897, w. w. Speer, a
bond broker offered the school fund
commission $4,000 of Graham coun-
ty bonds. They were owned by east
ern parties-in New York and Bos-
ton-and were sent to the First Ma
tional bank in Topeka which acted as
the agent of the eastern parties. Speer
got the bonds at SO but he sold them
to the school fund commission at par.
They were registered in the auditors
OlltCS anu SldulpeQ dS Ine properly OF
the state, and the warrant was issued
by the school fund commission to pay
for them.
But that was right where Uncle
Dave" Hehebower showed that he was
good state officer and that he had
the interests of the state at heart. He
fatty refused to pay the warrant for
the bonds. He was told that he had
no right to make such refusal and
that he had no authority to pass on
the action of the school fund commits
sioners, but it made no difference. He
said he wouldn't invest his own money
in those bonds at par and he wouldn't
pay out the states money for them,
either.
Finally a mandamus suit was
brought by the bank in the supreme
court to compel him to pay the war
rant In its decision, which is record
ed in the 5Sth Kansas report. page
1872, the supreme court says:
These bonds were purchased at
par. The testimony offered at the
trial shows that they were not worth
par in the market at the time of the
on behalf of the plaintiff was to the
effect that refunding bonds of Gra-
ham county had been sold a number
of years ago at a premium, but the
last sale, testified to by him, at par or
more was in 1890. 1t is conceded that
in this very transaction the owners sof
the bonds were to part with them for
about SO cents on the dollar the bal
the broker, Speer, who purchased
them for resale to the school fund
commissioners. He invested nothing
in the first instance, the bonds being
sent to the plaintiffs bank to receive
the whole proceeds and remit to the
owners what they were to receive.
Mr.. Bonebrake, called as a witness for
the defendant, testified to an offer to
sell other like bonds OF the same coun-
ty at 81 u cents on the dollar, which
he declined. Both he and Mr.. Null
vane testified that the bonds were not
worth par on the market. Even Mr..
Speer, the only witness for the plain
-iff, failed to state that the bonds
we're worth par on the market, but
said that he regarded a purchase at
hat price as a courageous but a judi
ciouS one. 1t will be perceived that
he margin between the market value
IF these bonds and par is not great.
f the question to be determined were
whether this is an improvident and
njudicious investment, it could not
De said that the showing made is suf-
icient to SO declare it. But the stat
lite quoted is plain and explicit that
he commissioners shall not pay for
my bonds any greater sum than the
lctua1 market price thereof at the
ime of purchasing the same. ALI the
lightly more than the actual market
,rice.
"The argument based on the prem
Sc that Topeka is not a market for
,onds, but that such market is in the
asst, is without force, in view of the
act that holders of these bonds in
Jew York and Boston, are content
o take SO cents on the dollar for
hem. If they were worth more in
hose markets. it is hardly probable
hat they would be sent here for re-
ale at a discount.
Tine treasurer cannot be compelled
Y mandamuS to perform any act neces-
ary to carry out this contract; not be-
ause he is vested with authority to
upervise the action of the board OF
chool fund commissioners, but because q.
hall not be made as the evidence in
reduced on the trial shows this one to
ave been. We do not know upon
that information as to the market
alue of the bonds the commissioners
cted. There is nothing in the trans
ction indicating. bad faith on their
art or a purpose to disregard the law.
Tor is the showing with reference to
ne value of the bonds such as would
ave warranted us in refusing the writ
n the ground that the purchase is an
or undesirable one"
Now Graham county is much bet-
er county than Comanche, and it il not
LEGGED that there was anything crook>
/ in the transaction, OF anything that
,oked in the least suspicious. The
onds could be legally purchased, all
lough the law then specified that
1unty's indebtedness must not be more
ian 10 per cent of dts assessed valua-
on where now the limit is is per cent,
lowing greater latitude 1t was nok
to raise" the assessed valu-
ton of Graham county nor to hide any
.cords in order to get the deal through.