The Redwood gazette. [volume] (Redwood Falls, Minn.) 1873-1940, 1925-06-24
Supreme Rules Against
Morgan Bank
(Continued from first page)

(COntlnueQ IrOIn HISI pdSSJ
of wears, the loss to the bank much
exceeding the sum sued for. One
item alone amounting to $4,000.
1t appeared to the spectators as
though the defendant company made
little effort to combat this testimony,
and in effect practically conceded the
misappropriation of funds in large
amounts, and the carrying OF paid
notes and mortgages as live assets
in the bank.
The defense was that provisions of
the bond had been violated.
The bond contained provision for
its continuation from year to year
and it was continued. to and including
1922. Prior to each continuation the
bank signed certificate in substan-
TALLY the following language: TO the
Fidelity and Deposit Co. Of Mary
land: This is to certify that to the
best of my knowledge and belief, since
the issue of the above bond j. c.
jackson has faithfully, honestly and
punctually accounted to me for all
moneys and property in his control
or custody, as my employee, has al
ways had the proper securities and
funds on hand to balance his ac-
counts and is not now in default to
me-" One condition of the bond was:
''That the employer on becoming
the basis of any claim hereunder,
aware of any act which may be made
shall Immediately give the company
notice thereof in writing by regis
tered letter." Another was that the
bank should file with the company
its itemized and verified claim within
ninety days after becoming aware of
such act; and that suit should be
brought within twelve calendar
months after it became aware thereof.
Still another stipulation was that the
bank should make a complete inspec-
ton of the accounts and books of it's
employe at least once in every twelve
months from the date of the bonds,
such inspection to include the exam
ination of all cash and securities of
which he had custody or charge.
The bond company maintained that
sufficient time had elapsed between
the discovery of Jackson's misdo-
ings and their notification of same,
that the claim was outlawed under
the terms of the bond. Further
jackson habitually overdrew his ac-
count, which is illegal, and the COM
pany, claimed that the application or
certificate for a renewal of the bond
when jackson was in default (ac-
count overdrawn) to the hank was
fraud upon the defendant, and multi
fled the bond.
The question Of just when the bank
became aware of Jackson's dishones-
ty, which would be the basis of
claim under the bond, was a matter
for the jury to decide, but the facts
as to the overdraft at the time the
bond was renewed and at various
other times were sustained by the
books, and the supreme court opinion
state in regard to issuing a check
without sufficient funds in the bank,
The making of check with intent
TO defraud, knowing that the maker
has not sufficient funds in or credit
with the bank to pay it is made an
ohense, and the making of such is
prima facie evidence of an intent to
defraud."
1t would appear as though the
overdrawing of Jackson's account
without notice to the bond company
of such circumstances was the vital
factor in the case, and will serve as
a guidepost to banks throughout the
state.
After the case was tried the bank
discovered that E. P. Grabow, who
as cashier, signed the application for
continuing the Jackson bond, was also
sub-agent Of the bond company, and
as a soliciting agent as well as banker
was aware of Jackson's record but
the court disregarded this as para
mount.-Morgan Messenger.