The Daily Ardmoreite. [volume] (Ardmore, Okla.) 1893-current, 1910-09-14
SUPREME COURT REVERSES THE
LOWER COURT IN SURETY
COMPANY SUITS.
GUARANTY FUND NOT LIABLE
School Deposit in Columbia Not in
General Class-Bank Guarantee
Fund Profits by the Decision Of
the Supreme Court.

Guthrie, Okla, Sept. 13.-Among
tihrty-five opinions handed down by
the supreme court today was one by
Associate Justice NJ. J. Kane, re.
lieying the Oklahoma depositors
guaranty fund of responsibility for
the $l90,000 of the permanent school
fund that was on deposit in the
Columbia Bank and Trust Company
of Oklahoma City when that concern
failed in September, 1909, with 49,
100000 liabilities. OF this amount
of schol funds approximately $4,000
was protected by bank collateral in
te form of county warrants, etc,
worth more than the amounts pro-
tected. The remaining $4,000 was
protected by surety company bonds,
and the suitd ecided today makes
the surety companies liable for the
full amount bonded.
The bank guaranty fund is ere
ated, says the opinion of Justice
Kane, under the police power OF
the state, which must not be in
voked, except to promote the pub
lie convenience, the general pros.
perity, the public health, the public
morals, or the public safety. 1t was
obvious that large sums of the pub
lie funds would necessarily be de-
posted in banks generally, and in
case of the failure of state bank
having such deposits payment out
of the guaranty fund would place an
additional strain upon it that might
jeopardize the claims of general
depositors for whose protection il
was primarily intended. To obviate
this the legislature upon permitting
such public funds to be deposited
in banks, further provided in the
same section, as ystem whereby they
would be completely protected
against los without impairing the
usefulness of the bank guaranty fund
as a protection to the general de-
positor."
Justice Kanes reference to the
system Of protection provided for
public funds is that statute re-
quiring all such funds to be pro-
tected by collateral, such as bonds.
etc, or by surety bonds.
1T is not unreasonable" con-
tinues Justice Kane, that the leg
lslature would provide a system of
protection amply sufficient to pro.
tect the permanent school fund
against loss wherever any part of
1t might be protected without re-
gard to the bank guarantee fund.
And it may be, that in addition to
the reasons herinbefore set out the
legislature intended this section re.
curing collateral or security pro.
lection for public funds. to he a
prop and not a burden to the bank
guarantee fund"
The National Surety companv of
New York is thus liable for the full
amount of its bond of $4,000 which
mas already been paid; the United
states Fidelity and Guaranty com.
pany of Baltimore is stuck for $40
ooo, and the Southern Surety com.
pahy OF Muskogee is liable for $40.
500. WV
lie case in question originated he.
lore District Judge George w. Clark
of Oklaoma county. and the lower
courts ruling is reversed and re-
manded
Judge Clark held, in brief that
the school land funds mus be treat.
ed as deposits and that the e,,arantv
fund was liable.
Iheb ond OF the Commerce Trus,
company of $4,000, given State
treasurer Menefee for funds of tho
banking board in the Columbia and
which has already been paid. and
'he bonds securing the Oklahoma
county deposits in the failed hank
said to be $4,000, probably come
uhder the same ruling. This being
true the bank guarantee fund nro,
lts S26O'oOO by the supreme courts
decision.