Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1917-05-12
Bond Is Presented for Sigma
ture Representing Sum
Which Had Been Previous
" Paid to Creditor.
INVESTIGATION RESULTS
INTO UNUSUAL CONDITION
Holders of Bonds Offer to Re-
turn Them or Pay Face and
: interest Back Into Treas
ury of New Mexico,
rs-se,.l o,...reu 70 MOANING JOURNAL

Santa Fe, May 11.--Disclosures in
the transaction Of the financial busi-
ness of the state which threaten to as
sumo the character and extent of q
scandal, have been made as the re-
suit of an investigation initiated by
Governor w. f. Lindsey the second
day after he took the oath of office
as executive of the state.
AS one of the immediate results r,
C. Reid, legal adviser to the governor,
states that tender has been made to
refund $23.565.91 to the state treas
ury either In the form of refunding
bonds or cash.
The investigation has revealed n
condition of affairs that may lead to
the recovery of other large sums OF
money, possibly exceeding 100000.
How IL Started.
The investigation started when sew
eral refunding bonds were presented
to Governor Lindsey for his signature,
having already been signed by the
state treasurer and state auditor. The
governor refused to attach his sigma
ture until he had fully informed him
self as to the nature of the bonds and
the transaction under which they were
issued. This led to the discovery that
q Judgment for more than $4,000 had
been refunded twice. Charles A.
Spiess, representing Santa Fe county
bondholders. had secured judgment
for $4,000 against the county which
failed to pay the judgment. A few
days before the Judgment would have
expired by limitation Mr.. Spiess re-
vssed ii s.aa seccred a new Juiginent
which, With Interest on the old judg-
ment. amounted to more than $21 900.
- Issued by Mistake Is Claim.
This was presented to the state re-
funding board and refunding bonds
of series B were properly issued there
for. At later date Kelly & Kelly, a
Kansas City firm dealing in New
Mexico bonds, secured through pur-
chase claim to the original judgment
and presented it to the refunding
board, which issued series bonds In
payment thereof 1t Is this second is
sue of bonds, together with several
lesser items, which is to be recovered
on the ground that the bonds were is
sued by mistake.
The investigation disclosed that
coupons had been presented to the re-
funding board as ostensibly coming
from the same series of bonds, but in
which the Typography differs material
ly, part of the coupons being signed in
black ink and part in purple ink
There are other features in the inves-
tigation which have made thorough
audit imperative.
Interest Paid on sInterest.
In the meanwhile Mr.. Reid. legal
Ddviser, has set up the contention that
no interest should have been paid on
defaulted coupons-in other words
that interest on interest could not be
legally collected on bonds issued by
the county under the circumstances
The bonds presented to Governor
Lindsey for signature refunded a
1000 claim with refunding bond
for $2,321.25 of which 1915 was to be
for interest coupons and $446.25 on
tiefaulted interest. Mr. Reid main
tains that the total should have been
only $l,G50 and if he Is correct, then
the state should recover more than
$4,000 in interest. paid on defaulted
coupons. Payment may also be
stopped on interest coupons of certain
refunding bonds thus issued and in
order to determine the present own
ership. In that case suit undoubtedly
will be brought by the bondholders
and the issue thus placed before the
courts for decision. The bondholders
assert that they are entitled to inter
est on defaulted coupons that have
been detached from the bonds for the
purpose of being presented for pay
ment, just as they would be on any
other written evidence of indebtedness
or Judgment
History of Transaction.
The attention Of District Attorney
]. II. Crist has been called TO the mat
ter as Santa Fe county is primarily
affected. When the Santa Fe and
Grant county railroad Indebtedness,
which was validated by con-
gress, and for the payment
of which congress granted the
state million acres of public
lands, was called in to be refunded.
twelve of the old railroad bonds could
found since in New Hampshire, two in
Florida and two elsewhere. which
leaves seven still outstanding. The
refunding of these bonds was very
intricate matter because of the cloud
that was upon the original issue, fol-
lowed by the special valuation by con-
gress, the repeated and continued de-
fault Of Santa Fe county on bonds and
coupons, the filing of various suits in
Judgment. the repeated issuing and
refunding by the counties of other
bonds and the provisions Of the en-
abling act. II was left to refunding
board composed of the governor, the
attorney general and the state treas
urer to refund these railroad bonds
known as series bonds, while the
bonds refunding the other indebted
ness Of counties are known as series
B bonds
Much credit is due to Governor
Lindsey and his legal adviser. r. c..
Reid, for probing into these transac-
ti0ns and together with Attorney Gen.
eral H. L. Patton, they will 90 to the