Honolulu star-bulletin. [volume] (Honolulu [Oahu, Hawaii]) 1912-2010, 1914-05-11
H. GDQDIIG FIELD
ANSWERS QUERIES
ASKED IN LETTER
Continues nom page one,

Continued nom page one9
for borrowers? Why did he not,
therefore, report to the governor that
advances to the extent Of $50 600 90.
extending over q period of many
years, had been made by this bank
to the county auditor whose only
known means were his monthly sal.
airy? 80. s-... T.
Section 1887 of Chapter 15S of the
banking corporations reads, as under;
The treasurer and the registrar
of public accounts of the territory
shall. not less than two nor more
than four times in each year, make
an examination into all the affairs Of
each corporation formed under this
chapter, and for that purpose may
examine any officer and the agent
OF the same under oath, and shall
make full and detailed report OF
1 the condition OF the corporation to
the governor, and no such corpora.
ton shall be subject to any other
visitorial powers except those which
are vested in the courts Of justice.
This law was repealed by Act rs
Of the Session Laws OF 1913. Section
3 of this Act Is as follows:
"The duties OF bank examiner shall
be to, make a thorough examination
! OF the affairs and conditions of every
Lanking corporation lother than i
national bank and trust company do
ing business within the territory and
organized under the provisions Of any
law now or hereafter enacted by the
Legislature OF the Territory Of Hat
vail, or otherwise; and also Of any
fiduciary company. doing business
within the territory, as defined in Act
6S of the Session Laws OF 1905; and
also to make q thorough examination
of the affairs Of any copartnership or
individual that may be carrying on
now, or hereafter, banking and or
Trust business. "
Under the heading Liability Of
Bank Examiners (page 115l In the
before mentioned Manual for Audi
tors, the following recognized rule is
quoted, namely
The certification Of bank bal
ance sheet involves the thorough ex.
animation and exhaustive testing Of
every account in the general ledger,
the counting Of the balance of cash In
hand, the examination of all notes
tespecial care being taken to note
that all overdue notes are properly ax-
plained) and the inspection of all Sc
cnrities whether owned by the bank
or held as collateral for borrowers.
The work Of examining the secur-
tiles and collaterals is one Of the most
important branches Of the examina.
ton. Extensive defalcations have
been covered up by the failure to on
dorse partial payments on notes. All
the securities should be produced 81.
simultaneously and should remain ID
the auditors sole keeping until the
inspection Is completed. Extensive
frauds have been known to remain
|nndetected through failure TO observe
this simple precautioR
prefer not to make any comment
on the last part Of query No. 8.
Question No. 4. Was It not illegal
fer the county auditor to issue q war
rant for some IS, 10000 to Carl S.
Smith, an attorney, to whom the
claim had not been assigned, In set
Element Of Ia damage suit against the
county, the payment being made Al
days prior to the authorizations BY the
board Of supervisors?
sIn reply to the above query,
would state that at. the meeting of
the board of supervisors. held Aug.
ust 9Th, 1906 the county attorney was
asked by the board for an opinion re.
garding the legality of the county
auditor issuing warrants without the
approval OF the finance COMMITTEES
and passed by the board Of supefxi.
sors. The county attorney rendered
the opinion that an the claims were
legally examined, approved apd pass.
ed upon by the board of supervisors,
certified to and signed by the chair
man of the board and the county
clerk. the auditor must issue war
rants for the payment of said claims. .
A resolution to the above effect was
duly passed at the above meeting of
the, board of supervisors.
When Warrant No. 1884 for So
1882 was issued and made out per-
sonaily Ca rare occurrence) by the
county Auditor, on November 3Oth,
1903, to Carl 8 Smith, in settlement
Of the damage case of Kumazo Matsu.
mura VS.. the County OF Hawaii, there
was no assignment of this claim from
Matsumura (the. PLAINTIFF to Carl 8.
Smith on file in the auditors office,
as the assignment. in the handwrit-
ing of Carl s. Smith was made two
days later, on December 2nd, 1909.
The claim, also IN the handwriting OF
Carl S.. Smith, was allowed by the
board of supervisors on January 10th.
1910, for the full amount IS, 425.22,
and this date of authorization was en-.
Gorsed on the claim, countersigned