The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1905-08-02
THE BOND QUESTION.


the Title Guaranty and Trust COM
pany, the Pennsylvania surety COM
pany that is on T. T. Kelly's bond for
half million dollars, was quoted as
saying that his company is liable only
If Kelly has violated some law; and
that the company would contend that
the deposit of $547, 900 of state money
in the First National bank was lawful
and the surety company was therefore
not liable for its loss.
What basis there Is for q claim of
this kind is not evident. So far as
can be discovered there is nothing in
the bond to warrant it. The only
condition of the bond given by the
surety company is that 'sT. T. Kelly
shall faithfully discharge his duties as
state treasurer aforesaid and pay over
and account for all moneys that may
come into his hands by virtue of his
Office"
OF course Kelly has violated all sorts
of laws, so that the surety company
is liable for the shortage any way,
but bonds are given to protect the
assured not only against dishonesty
and violations of the law, but also
against any shortage whatsoever that
may occur in any way.
The bond given by the First Ma
tional bank was supposed to cover any
drafts that were deposited In the bank
for collection, but Kelly deposited in
the bank, and left there for months.
a sum far in excess of the banks
bond. Was this faithfully discharg-
ing his duties?" The bond given by
the bank seems to be regarded as
practically worthless, so the liability
for the $4,000 shortage appears to
certainly fall on the Pennsylvania
surety company to the extent of its
100000 bond.
A bond is supposed to absolutely
protect the assured, yet here is the
state of Kansas, holding Keliy's bonds
to the amount of a million dollars, and
about to stamp its warrants mot paid
for want of funds" because Kelly has
lost or tied up more than half a mil
| lion dollars of state funds by deposit
which has failedl
How much better is Kellys new
bond than his old one? Suppose he
should default? Suppose. for example,
he takes a notion to use another two
thousand dollars without warrant of
law. as he did the two thousand appro-
priated to pay for a new surety bond
In case one were given? What as
suranee has the state that it is any
better protected than it is on the
money it has already lost through
KelIy's violation of the law.
| If the depository law is faithfully fol-
| lowed there will be no danger of loss by
bank failure under that, for there is
| ample provision against it. OF course
| If Kelly remains in the treasury long
| the state has no assurance that the
law viii be faithfully followed for he
has habit of doing as he pleases with
the states funds regardless of law.
Under the new law before a bank can
receive any deposits from the state it
must deposit with the state, bonds, either
| of the United States or of the state of
Kansas. or of some county or municipal
ity in the state to an amount equal to
| the deposits which it may receive, and
1 the state treasurer is prohibited from
! depositing in any bank more than the
| face value of the securities which the
bank puts up. These securities, too.
must be approved by the attorney gen.
1 eral as legal and must have the in
| terest all paid up.
! Under this provision the state treas
| urer is released from liability for any
| loss resulting from the failure of state
depository, for these securities are sup
| posed to cover any such loss. This pro-
| tects the state far better than any bond
| like Kelly gives could do.
| OF course the state would have suf-
| fered no loss in the First National bank
| failure had Kelly obeyed the law in
! stead of breaking it. Had he obeyed the
| law he would have Withdrawn the funds
| of the state as fast as they were col
| lected, and there would have been no
! large amount in the bank. This, how
ever, would have prevented Kelly's
friend and bondsman, Mr.. Devlin, from
having the use of a half million dol
| lars and more of the states money. and
| it would also have kept the state treas
urer out of any rake-off or benefit there
| might be in 1t.