The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1908-05-14
WHO SHALL PAY IT
Suit to Fix Responsibility for
!. States Loss in First National.
u 8. Fidelity Company Sued in
District Court.
BLAIR'S ARRANGEMENT
Asserts That Treasurer Kelly
Violated the Law.
Outlines How State Money Was
Deposited in the Bank.

First National bank, which was be- |
gun in district court Wednesday af-
ternoon, the question of whether the |
state of Kansas can recover the sum
of S142,000 of its lost funds from the
banks sureties, the United States
Fidelity and Guarantee company, de-
pends entirely on whether or not ex-
State Treasurer T. T. Kelly was with
In the law in his handling of and de-
posting state funds. The banks su-
reties have protested payment of a
legal bond that they are clearly bound
in law to pay solely because of kel-
ly's irregular and unlawful handling
of the states money. They claim ex-
emption from payment under the law
Tor the reason that the law covering
the protection of state funds had
been violated by a state officer in the
person of the ex-state treasurer.
The state holds that the banks
surety is bound to make good the
states loss through the failure of the
bank as they bound themselves to do
In the sum of s250.000. The state
asks for about $4,000 of this sum,
principal and interest. The state in
troduced in court the bond given by
the surety company for the bank,
upon which it hopes to recover. The
bond reads in part as follows: Now
therefore if the said First National
bank of Topeka, Kan, should
promptly collect all drafts, checks
and certificates of deposits that shall
be delivered to 1t by the state treas
urer for collection; and shall safely
keep the proceeds of all such collec-
tions and promptly pay the same on
the treasurer's order, and If all
drafts that may be issued to
the state treasurer by it shall be paid,
then this obligation to be void, other
wise to remain in full force and vir-
tue"
J. C. Botkin, assistant secretary of
state at the time of the bank failure,
was placed on the stand as the first
witness yesterday. and introduced a
certified copy of the bond in question.
T. I. Kelly was the next witness.
He testified that he had served four
years as assistant under State Treas
urer Grimes. his predecessor in office.
He identified his bank book with the
First National, which was introduced
as evidence, and also a transcript
from his books of the records of his
dealings with the First National
bank. This was also introduced as
evidence. Kelly testified to the char
acter of a great many of these trans
actions and explained their seeming
Irregularities. He declared that the
bank had never reported a failure to
collect any paper he had deposited
there Kelly stated further that the
First National had been a state de-
positary for a number of years before
he assumed the office of state treas
urer. When adjourned at $3.50 Kel-
ly was still on the stand. His exam
ination was continued this morning
Deputy Treasurer Payne was called
to the stand at the beginning of to-
days session. He introduced books on
daily balances and collections from Oc-
tober 13, 1903. to October 16, 1906 from
the treaSurer'S office.
Mr.. kellY was then called tO the
stand to resume his testimony. Under
examination he went into the details
of the methods of business between the
First National and his office He sta.
ted that the arrangements were tina,
the bank should have at least ten day.
to collect on all paper before check:
were to be paid on such deposits H,
explained about the books and bal
ances and the listing of deposits ant
accounts. He described money and ex
press and postoffice orders, told wha
they were, and explained the meanin,
of school warrant. calling all thes
papers checks. He said that the larg
est amount of money ever in his Gus
tody at one time was S1S09 0OO
= At 10 O'Clock this morning Mr.. Blai
for the defense began his cross exam
ination and he hammered the witnes
until the middle of the afternoon ses
sion. Mr. Kelley admitted that he ha,
placed $275,000 in state funds in tn
First National before the banks bon,
to the state had gone into effect H
admitted that the banks bond wa
placed in his custody and that the frs
annual premium was paid on the sam
as shown by certificate attached t
bond but had no certificate for pay
ment of premium on bond for the yea
1905. He assumed that this premium
had ben paid because the bank officer
told him that it had. The certificat
was found in July, 1905. by Receive
Bradley after the bank had failed. ]
was due in January of that year. TIL
witness was questioned about his rela
tions with the late c. j. Devlin and tn
latetr's connection with the bank, bu
these questions were overruled. TIL
questions then went into the details
figures and the character of the pape
deposited in the bank for collectio
and along the line of the assertion
made below by Blair in outlining II
case for the defense. The cross exam
ination was sharp and exhaustive. E,
cry question of Importance on eitht
side was debated by counsel and pas
ed upon by the court.
1t is expected that the case will n,
go to the jury before Friday afternoo
Only One Farmer on Jury.
The jury that is trying the state
case to recover this large sum of MOI
ey from the insolvent banks sureti
is composed of Topeka men with OIL
exception. a farmer. There is Of
clerk, one farmer, one day laborer. tv
retired business men, one retired farr
er and seven business men on Il
panel. AS a whole this jury ran
above the ordinary in Intelligent
There are two negroes on the jur
which is composed as follows: j.
Going, Homer Boughton, Wiley For
r. ]. Nichols, Bradford Miller A
Strauss. Albert Heartburg Fred Gand
Fred Johns, Charles Besant, H.
Wilson. Hugh Moreland.