The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1906-07-13
KELLY NOT LIABLE
Judge Dana Finds for Treasurer
in State Suit.
Doesn't Owe Anything for the
Alleged Shortages.
LOCK TO THE BROKERS
Admitted That They Got Mss
ing Coupons.
Oklahoma Warrant Account Is
Also Reviewed.
LOCK TO THE BROKERS

In the opinion handed down TINS
morning by Judge Dana Of the district
court state Treasurer r. r. Kelly is
not liable for the $4,000 shortage
discovered in his once by the account
ants employed by the state The eVl-
dence i'm the case was heard by Judge
Dana last Thursday and Friday
each side having waived their right for
a trial By jury. BY the decision hand
ed down this morning the state can not
recover The amount involved either
from the state treasurer OF his bonds
men and if d further attempt is made
to recover the money which is short
it must be against the bond brokers
who came to the rescue Of Treasurer
Kelly and testified that they we're re-
spcnsibie for the loss of the coupons
which assisted i'm causing I he deflelt IN
the treasury.
ON the second day Of the trial Judge
Dana sustained the demurrer OF the
defendant to the third count Which
was the charge of a shortage of S6.bbe
or the account of the loss of interest
on Oklahoma warrants sold mere
were originally eleven charges IN the
count. but nine Of them were prac-
tically withdrawn by Attorney General
Coleman before the trial of the case
and the decision this morning was
upon but two charges under the hrst
count
Referring to the contention of Attor-
nev General Coleman that i'm the sell
ing and disposing Of certain warrants
Kelly acted without authority of law,
Judge Dana says in his opinion;
complete answer TO that proposition Is
that Kelly is not being prosecuted here
for nlalfeasance in office, but this IS an
action for recovery OF damages alleged
to have been sustained BY the state,
+4 fe+ fruf
has sustained damage. it can not OF
course expect to recover
That there was no evidence in
Judge Dana's opinion to show me
state had sustained damage al me
hand of state Treasurer Kelly IN TINS
matter is evidenced by his decision IN
favor Of the defendant
Judge Dana's Opinion.
Judge Danas opinion I'm the case
follows.
This is an action by the state Of Kan
sas against It. y. Kelly and his bonds
men to recover damages;
"OO on account of the failure of the
defendant Kelly as state treasurer 10
account for certain coupons alleged 70
he the property of the state, and TO
have been delivered 10 him as state
treasurer; and
s-t2) Because of the sale and disposal
of certain warrants issued by Oklahoma
Territory 10 the state of Kansas for the
maintenance or tLf tJitN llAS 0A Atlt NTi-
rftory at the Kansas state penitentiary-
THE state relies largely upon the
statements made in what is known as
the Haskins & Sells official report made
to the governor on the condition Of the
state treasury
.'The coupons in question are a portion
of the coupons alleged to have been at
tached to certain blocks of Kansas coun-
ty. city and township bonds when pur-
chased bv the state permanent school
-. md he
missioner of the Agricultural college
with reference to this branch Of the
case the defense is except as to the city
and township of Leroy transactOns),
that the coupons in question were de-
tached from the bonds before they be-
came the property Of the state. and be-
fore they were delivered to the state
treasurer. and consequently that the
particular coupons. a failure to account
for which defendant Kelly is charged
herein never came into his hands as
state treasurer. This defense has been
clearly established. The evidence shows
that the coupons in question were de-
tached.
"O) In case. of refunding bonds, by
the municipalities themselves. before
signing the bonds. to prevent the pay
Iuent of double interest. or.
"(2) The bonds commanded a prem
fum and the commission being prohibit
ed by law from paying a premium GER
tain coupons were detached before the
bonds become the property of the state,
so that they could be purchased at par,
"0s) In cases. where in previous ne
eotiations of the same bonds to other
parties. certain coupons had been de-
tached to cover brokerage or commits
sion.
City and Township Of Leroy.
'These bonds We're dated July i. 1903.
and issued by the city and township of
bonds. and sold to the permanent school
fund on or about August 27 1903 The
negotiations in this instance We're di-
rect with parties representing the city
and township When the bonds were
purchased there were attached thereto
all the interest coupons representing
the interest thereon from the date of the
bonds to maturity. and the bonds and
coupons were delivered to the state
treasurer. Subsequently, coupons num-
bered ] on all of said bonds were paid
in fun to the state treasurer. and De-
fendant Kelly is charged with failure
to account for that portion of the cou-
pons numbered ]. which represent the
Interest on said bonds from their date,
July I. to date Of purchase August 81
The state contends that the bonds We're
purchased at par and accrued interest
and the Haskins & Sells report so
states On the contrary the minute
book from the Office of the school fund
commission, which contains the record
of the purchases of bonds, shows that
these bonds were purchased at par 1t
appears from the evidence that after
paying coupons numbered ] i'm full the
of1cers Of the city and township of
Leroy represented to the state treasur-
er. that they had paid interest on the
old issue of bonds up to the time the
new bonds were purchased by the state
school fund commission. or, for the per
iod from July to August 81 and de-
manded repayment Of the interest that
they had paid on these bonds for the
bonds to August q. the date Of pur-
chase. and the date they received from