The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1908-05-15
Ex-Treasurer Kelly Holds Own
Well in Grilling Examination.
Processes Ignorance of Many
Details Concerning Deposits.
COURT WAS STRICT.
Leading Questions by Attorney
Blair Are Barred.
Case May Be Given to the Jury
Today.

The case Of the state of Kansas
against the First National bank as
principal and the United States Fidel-
ity & Guarantee company, as its sure
ties, in which the state seeks to recov-
er $148,000 still unpaid of the states
funds in the bank at the time of its
failure, today developed into a long
and hard fought legal battle by counsel
before the court on points Of law.
After the state had rested it's case yes
terady evening the defense entered
demurrer to strike out all the evidence
in the case. Argument was begun on
this motion this morning at 8 o'clock
by Henry A. Scandrett. one of the
counsel for defense, and he did not
conclude his plea until 10:45. At this
time Judge Dana called in the jury and
dismissed them until tomorrow morn
ing in order that he might hear full
argument on points of law in this
matter. John L. Hunt for the state at
once began his reply to argument for
the defense. He was followed after
dinner by Frank L. Williams of Clay
Center, also for the state. 1t was ex-
pected that the reply of the defense to
the court until adjournment this
evening
Mr. Scandrett based his plea upon
the propositions that Kelly's account
WIN the f1TSI NdIlOtldl Odhh was a
deposit and not a collection account,
and therefore not allowed bv law, and
the bond company was not bound by
transactions beyond the pale OF the
law. That $275,000 had been placed
in the bank by Kelly before there was
been placed there by the state treas
urer after the law allowing a state
depositary had been repealed. That
$45,O had been placed there by him
by check on the First National itself;
That after this total Of over 100000
had been deducted from the $547. 900
in the bank at the time Of its failure
and also the sums paid back to the
state by Receiver Bradley that the
state had already received more money
than the guarantee company was
bound for under its bond. That the
state had not shown that the deposits
made by Kelly in the First National
were for taxes as restricted by law.
That the law under which the con-
tract for the bond in question had
been made and entered into had been
repealed in March, 1905, and that the
state treasurer had unlawfully deposit
ed and kept state funds In the sum OF
over half a million dollars in the said
bank after the said repeal OF this said
law. These were the principal points
of his argument and he undertook. in
a most logical manner, to substantiate
them by evidence, figures, citations and
law points, the latter from the law OF
1879, which forbid the placing of any
Of the state funds in any banks; the
law of 1901 which made an exception
in favor Of allowing checks for state
taxes to be placed in bonded ana
designated repositories for collection
pealed the 1901 law under the terms
Of which the bond was drawn and ac-
cepted. The argument was that school
warrants, checks for insurance and a
mass of other instruments deposlteo
by Kelly in this bank were beyond tn 9
Kelly kept a deposit account with the
First National, which was unlawful.
and not a strict collection account
which was allowed by the law OF 1871,
and went on to support ms s1aeernen.
with a long list of items and figures:
He claimed that the $1b5,o00 turned
over by check by retiring Treasurer
Grimes to. Kelly should have been
placed at once in the state treasury
and not deposited in the First Ma
tional bank. This deposit could in no
way be called a collection. The pank
was bound to pay the Grimes check on
sight and it should have been casneo
and placed in the treasury. He de-
clared that the suit in large measure
hinged on whether or not Kelly kept
a deposit or collection account at the
First National from January 20. 1903,
to Julv 8, 1905. Mr.. Scandrett con-
cluded his exhaustive effort at IL
o'clock.
Mr. Hunt for state in replv held that
the account kept by Mr.. Kelly at the
First National was a collection account
and within the law. That the bond
when first going into effect was con,
tinuous until cancelled or all the Iegai
demands of the state against the First
National satisfied in full. In this re-
spect he held that the bond was
eternal in its obligations upon the
surety company. He replied to many
points of law cited by the derense, Gov
ering manv points Of the argument in
| a most thorough manner.
Mr.. williams for the state Followed
him in a most able and logical argu-
ment against the demurrer and under
took to cover all the important points
| in this intricate case.
It is not now expected that this case
will reach the jury before Saturday
evening, even If the judge should make