The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1909-07-26
SALE OF BONDS INVALID
Attempt Will Be Made to Recall
Securities.

Inc claim of Kelly and Kelly,
| pond brokers, against Shawnee coun-
| ty for $500 commission on the sale
9 o. 80 shares of Kansas, Colorado
| alloWed by County Auditor Jas. E.
Larlmer, on the opinion of J. J.
| Schenck, county attorney, under sec
| ton 1858 of the general statutes
| of 1905.
Furthermore the sale of the stock
! is declared invalid and the $4,000
worth OF stock which was sold for
$4,000 will be recalled and money
| refunded if it can be located
Since the sale of the stock by Kelly
and Kelly and the presentation of
| their claim, July goth, the auditor has
been busy in little investigation
into the affair of the stock and its
| disposal. The stock of the Kansas,
Colorado Pacific. or the K. n. & D.,
or the Missouri Pacific, as it is also
called, is dated January 10, 1891 and
was bought at face value of $4,000
by county bonds. Subsequently all
these bonds were paid by the county.
The best offer for the stock which
had been made until Kelly and Kelly
took it up was 20 per cent or $4,000.
On May 81. 1909 a contract with
Kelly and Kelly was made by the
board of county commissioners
whereby Kelly and Kelly secured
exclusive right to negotiate the sale
of the stock and should receive as
so per cent of the amount above 20
per cent of par value for which the
stock should sell and the Bank of To-
peka was named to deliver stock and
receive the money which should be
accruing to the county.
The stock was sold at 40 per cent
of face value or 100000 and the bank
informed the county that $4,000 was
placed to the credit of the county but
according to the wording of the con
tract the county auditor held that the
entire amount of the sale price should
be placed to the account of the coun-
ty and the commission of Kelly and
Kelly be secured by claim as any
other claim against it. Consequently
he wrote to the bank on July II to
hold the entire amount, which was
done and Kelly and Kelly made
claim in the regular way.
When he was Informed by the
bank of the sale the president of the
bank had added his opinion that
''this is good sale. Auditot
the stock was being quoted at some
think like ss72 and If sTch was the
truth then the county would be
losing some $4,000 on the sale Then
he began his investigation before he
decided to allow the commission.
He looked up the section 1888 or
the general statutes of 1905 under
which the bond brokers said they sold
the stock which provides that the
the value of more than $4,000 un,
Loss +he proposal of sale or disposal
shall first be submitted to the cleo
+ors Of the county. There had been
no vote taken to sell and apparently
Kelly and Kelly had not read the
section carefully.
vet an enabling act had been
r,assed bv the legislature of 1901. be
ing chapter PSI of the laws OF 1SoI
witch provides that any county all
ready having such stock might sell
the same in any manner so long as
the proceeds were applied upon the
navment of the bonds issued there-
fore. c4.,....o,- W., 6
,,,ri++an for his opinion on the sale
NV the auditor who called attention 10
these two sections of the law me at
+ornev's opinion covers four pages
and advises the auditor TO ul9alAO ~
the claim of the brokers mus;
am therefore. of the opinion that
at1I,+ron+ entered into by Messrs. Kelly |
and KaI1v for the sale of these bonds |
under the circumstances mentioned III
I-o11r letter, is an illegal contract ana
mat il is your duty as county audltor
To disallow such claim.
# is the opinion of the auditor
that the stock will be recaHed Iho l.llsa
some of it may be hard to md since
~ +Tansfer. It is reported that the |
tEe1Iv and Kelly firm have sold mueh
49, for the counties of the state.
Bnf insofar as has been |
learned in all other counties Ihe sale
has been legal as none put S1aWIleS
have maid up all their bonds ana
I IIdFT +he bonds have not been paid in |
eli the sale of stock in amounts
a 10 $4,000 can be made so long as
~ proceeds are applied on the
bonds.