Daily capital journal. (Salem, Oregon) 1903-1919, 1914-04-16
WEST WINS OUT
IN THE s6,000,0O0
SCHOOL FUND CASE
Judge Galloway Overules De-
murer as Notes Are Not
Money.
OF NO CONSEQUENCE
WHO HOLDS NOTES
Land Board May Gain Posses
sion at Discretion of
Governor.

As the $6,O00,00O school fund notes
held by State Treasurer T. B. Kay are
not actual money but only representa-
tive of the irreducible funds secured
by mortgages, Judge William Galloway
this morning overruled the demurrer
of Treasurer Kay to the complaint
filed in the circuit court for Marion
county by the State of Oregon in re-
lation to Oswald West, governor, and
Ben w. OleOtt, secretary of state, de-
manding possession of the notes.
Judge Galloway held that it made
no particular difference who held the
notes as they were held by mortgages
that are recorded In his opinion if
the school notes were actually
destroyed, there would be no loss as
the mortgage record would be evidence
that the funds were in existence. 1t
was all right for the treasurer 70
have custody of them or for the state
land board. The school funds, how
ever, cannot be deposited in any bank.
In this ease, the judge said that he
passed merely on the law phase of the
question and did not enter whatever
into the fight between the governor
and the state treasurer If the state,
board secures control of the notes dur
ing this administration, he said when
the next one takes office the notes
may be handed back to the treasurer
again.
Judge Galloway's Decision.
In this case said Judge Gallo
way, "the defendant interposes de-
murrer, the principal grounds being
the lack of legal capacity of plaintiff
to bring this suit and that this court
is without jurisdiction of the subject
matter involved. Article 8, Section .
Constitution of Oregon, says-"The
Governor, Secretary of State and State
Treasurer shall constitute a Board Of
Commissioners for the sale of school
and university lands and for the in
vestment of the funds arising there
from, and their powers and duties shall
be such as may be prescribed by law;
cit follows that the State Land
Board is coordinate branch of the
State Government ard, therefore, has
discretionary power in all matters not
specifically prescribed by law.
1.-THE State Land Board elects a
clerk who shall give bond fixed by
the Board in an amount not less than
$4,000 for the faithful performance of
his duties and specifically requiring
him to turn over all money coming in
to his hands to the State Treasurer,
who is by law custodian Of the funds
of the State, but no where does the
law provide that the Treasurer shall
be the custodian Of these notes which
are only the evidences of the educa-
tional funds of the State. The plain
tiff is not asking possession of any
of the funds or money of the educa-
tional funds of the tSate
Educational Funds Excepted.
"The Common School, Agricultural
College and University funds and the
investment and disposition thereof is
reserved from the State Treasurer to
the State Land Board exclusively
Sec. 1854, L. 0. l..
"The powers and duties of the State
Treasurer are to receive and have
charge of all moneys paid into the
State Treasury, to deposit same in
solvent banks and to pay out as pre-
seribed by law, excepting however,
the educational funds of the State,
which are reserved.
"Every one of the 5000 or more
notes involved is secured by mortgage
of record in the county where the loan
is made and it is purely matter in
the discretion of the State School
Land Board where the notes are kept.
The notes in question may be de-
posted in the vaults of some bank and
this Court is not aware of any Law
restraining the action of the Board in
the matter of the custody of the notes,
as the State Land Board is eo-ordi-
nate branch of the State Government
and its discretions and decisions are
not subject to review by the courts.
"The demurrer will, therefore, be
overruled.