Evening star. [volume] (Washington, D.C.) 1854-1972, 1904-04-15
WHY IT WAS OMITTED
APPROPRIATION TO MAKE GOOD
THE WATSON pEFALcATIoN.
action of House Committee Due to
Opinion Expressed by Corpora
ton Counsel DuvaIl.

The committee OF appropriations Vi INC
House OF Representatives in declining to
consider the request of the District Com
missioners for an item Of more than $780,
600 to make good the deficiency arising
from the Watson defalcation last June
has taken the ground that to make the
appropriation at this time might inter-
fere seriously with the suit to recover on
the $4,000 bond of former Auditor J. T.
Petty During the consideration of the
Commissioners estimate the committee
sent for Corporation Counsel Duvall and
questioned him closely regarding the
Watson defaleatioa and the effect of ap-
propriating at this time to meet the de-
flciency existing in the trust funds han
died at the District building. Mr.. Duvali
gave very interesting account of the
defalcation and of the efforts Of the local
government to recover something on
Watson's effects.
Mr.. Duvall said the deficiency was caus-
ing no immediate embarrassment, for the
fund from which the money was taken is
a continuing one If the fund were wound
up, however, at this time the deficiency
would exist. The committee inquired MI
nutely as to the method proposed for
handling these funds in the future. Mr..
Duvall admitted that if Congress should
provide funds at this session to wipe out
the deficit the bondSmen of former Au-
ditor Petty might set up the plea in court
that they were thereby released from
liability The corporation counsel had
prepared a clause. however, which he
thought would remedy the matter and act
as an estopal to such a plea Explaining
the defalcation. Mr.. Duvall said:
Watson's Method.
The details OF the modus operandi
we're something like this: For a long
period of time the deposits were made to
the credit OF the auditor. and he would
draw his official check, payable to him.
self as auditor, and transfer to the
count that was to be used. Instead of de-
posting to the credit of the auditor. Mr..
Watson drew the money and pocketed 1t.
Mr.. Watson was under no bond. Mr..
Petty, the auditor. was under $4,000
bond. When the defalcation was discov-
cred suit was brought against Watson at
once. We brought a suit for 10000 and
odd dollars on one of these branches of
default, and attachment proceedings
were taken. We did not get very much.
Mr' watson 1 think, had lost his money
on the stock exchange But we did get
an automobile and a barber shop and
some other valuable things of that kind
We obtained a Judgment on that suit for
$4,000, and garnisheed the banks where
he had some balances. 1 think we have
collected some $500 or $500; at least, in
excess of $780,
1--WE had some information that he had
property, or deposit. in New York and at
Atlantic City. We never could get any
clue to that. L went down to Atlantic City
and found out he had not anything there.
His wife was down there with the family
az the time. but we could not attach her.
We attached. however. the automobile
which had figured very extensively in the
newspaper accounts of this defalcation. 1t
was a valuable machine That was sold
and l think 1t brought in the neighborhood
OF $1,000. That is claimed by Mrs. Watson
and we have suit pending with her as to
the ownership of that. 1t was said that
Watson had some property in Virginia
down by Quantico-a hunting place |
went down to Manassas to the court house
there. and had that attached: but 1T was
a little farm that he had paid some $50
for. and there was a deferred purchase
trust on 1t for some 5000. That has been
sold. but did not yield anything. 1t merely
paid the expenses, So far as Mr.. Watson is
concerned. that Is the general statement
of the effort made to get anything out of
him. IN
Suit Against Petty's Bondsmen.
Then the bond was put in suit-the au-
ditor's bond for s20.O0O-and that suit is
now pending. In that suit 1 think the
whole amount of this defalcation was
stated according to its items. However.
the penalty of the bond is only $4,000. The
auditor and his sureties have demurred to
that declaration. and the case Is standing
on that demurrer now. the claim being that
there was no law or rule or regula ton I'M
der which the auditor was chargeable with
the custody of or otherwise accountable for
the money named in the declaration"
Would any legislation here at this time
In any way affect the pending ltigation?'
asked Chairman Hemenway To this Mr.
Duvall replied:
1T might. in my judgment. It might
have some effect so far the sureties on
that bond are concerned. AS 1 understand
this however, the proposed appropriation is
intended to adjust the accounts between
the auditor and the United States Treasury
Department. The District of Columbia
would still be minus all this money. You
he ri ~ tn 10 70
United States the money that was held
by the auditor belonging to the United
States I think, IL 1 Were representing the
sureties on that bond, 1 would undertake
to make some use of that provision"
Representative Underwood asked IL any
serious hurt would be done to the District
of Columbia If Congress should wait until
next year. or until the Petty suit Is de-
cided-
Claim Against the District.
81 understand" replied Mr.. DuvaI so
far as the District is concerned. that 1t is
quite essential to get this account where
the money can be paid. A large part of this
represents money that was put up by you
and by me for work to be done, and we are
entitled to have 1t back again. and the
District has not any money to respond to
our demand. Watson got away with the
money. The purpose OF this as l under
stand it, IS to put IN the hands of the Dis
trict taking 1t from the revenues of the
District, the money TO respond to your de-
mand mine"
IF this appropriation was made" inter-
1ected Representa- tive Burkett do you say
II would be used adversely to the Districts
interest in this suit2'
Il think the sureties might make some
use of it," Mr.. Duvall admitted.
Then ii should not be passed." added
Representative Burkett.
Proviso Suggested.
II would not pass it without a proviso,"
said Mr.. Duvall. 81 understood that was
the question was to be asked here and 1
have this to suggest to protect that: Pro-
vided, however. That this appropriation
shall be effective for no other purpose than
to adjust the accounts before named In the
hands of the auditor of the District of
Columbia and the Treasury Department of
the United States. With that proviso I
do not see how any claim could be made
by the suretles that bond that they
were released In any way. In point of fact,
the District of Columbia is minus after you
make that appropriation. IS Ii not? 1t has
not been made whole in this matter. You
have required II to take some of the United
fafa