Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1915-06-12
UDCHARCE IN
ANSWERF|LED BY
SURETY COMPANY
Allegation Made That Cover
nor and State Officials Con-
ceaIed Truth Regarding Con-
dition Of First State Bank,
tsp.el.l o,.,.reA TO soamuo ,ovsa.u

Especial oispsreH TO soRniNo JouassLi
Santa Fe, June 1.-THE answer OF
the Southwestern surety company TO
the suit of the state of New Mexico
seeking to recover ON the bono OF
Morgan O. Llewellyn as treasurer Of
the board of regents OF the College Of
Agriculture and Mechanic Arts or
losses growing out of the failure saw
eral months ago of the First State
bank of Las Cruces has been filed in
the office of the clerk OF the district
court here. II covers seven typewrit-
ten pages and goes exhaustively into
the matters of defense on which the
company seeks to avoid liability on
the bond.
The answer declares that while
Lewellyn's bond purported to be an
official bond, there is no law OF the
state of New Mexico requiring the ex-
ecuton of such bond, and that the
bond was an involuntary one in that
Llewellyn was required by the board
of regents to give IL az a condition
precedent to his entering on the du-
ties Of the office. 1t Is alleged that
Llewellyn executed the bond under
the mistaken belief that 1t was re-
quired by the laws of New Mexico.
Cancellation Alleged.
II is further alleged that in the APP
plication for the bond made by Lew
ellyn there was the following stipula-
tion: II further agree that the surety
may decline to issue said bond hereby
applied for. and in case IT does issue
said bond II shall have the right t.
withdraw or. cancel the same when
ever il shall so desire and in no event
shall the surety be required 60 dis
close the reason upon which its ac-
ton Is based, and it shall not be liable
for the loss or damage | may sustain
by reason of such action"
The answer sets up that in accept
ing the application II acted under the
mistaken belief that the laws of New
Mexico required the execution of an
official bond by Llewellyn, and that
upon learning of its mistake it imme-
diately issued notice of cancellation
TO the state of New Mexico: that this
notice was delivered to and served
upon the governor of New Mexico, |
and il is claimed that liability on the
bond ceased at once.
Officials Charged With Fraud.
The sensational part of the answer |
comes in its third defense, in which IL |
Is alleged that the bond was obtained |
by fraud on the part of the state of
New Mexico. In regard to this the |
answer sets up that at the time said |
purported bond was executed and de- |
lvered, the governor of the state of |
New Mexico and the officials of said
state well knew that the said Morgan !
O. Llewellyn had designated as his de- |
pository of the funds of the said col |
lege the First State bank of Las |
Cruces, corporation organized under |
the banking laws of the state Of New
Mexico and which said bank was UNI
der the surveillance of said state and |
under the banking department and |
the office of the travelling auditor and
bank examiner of said state of New
Mexico; that said bank, at the time
said alleged bond was so procured to
be signed by this defendant was in
solvent and was unable to pay to the
said Morgan o. Ilewellyn or to his
successor in office, or to any person
authorized by law to receive same.
the money which had been deposited
by the said Morgan O. Llewellyn i'm
said bank, and that the governor of
said state of New Mexico and the trav-
cling auditor and bank examiner OF
said state well knew that said bank I
was insolvent and had been insolvent
for several months prior to the date
of said alleged bond. and said bank
had been examined by the duly con-
stituted authorities of said state and
the said bank examiner had reported
its condition to the governor Of said
state, and that its condition was to
said state and said governor we'll
known. but that the said state ofNew |.
Mexico, in securing the signature of
this defendant to said bond. concealed
that fact from this defendant and
fraudulently failed to apprise this de-
PENDANT of the facts"
II Is also alleged as a matter of de-
Tense that more than $4,000 of the
amount sued for did not come into
the hands of Llewellyn after the ex-
eeution of the alleged bond. but long
before the bond was executed and
mat this money had previously been
deposited In the First State bank and
never withdrawn therefrom. A SINH
larly large portion of the sum sued
Tor, according to the answer, was de-
rived from the sale of lands granted
TO the territory of New Mexico under
the enabling act, and should have
been kept in the treasury of the state
and not on deposit to the credit of
ldewellyn as treasurer of the state
college.