City of Larned v. Jordan

• Decision Date: 06 April 1895
• Parties: THE CITY OF LARNED v. M. A. W. JORDAN, as Assignee of the Pawnee County Bank
• Court: Kansas Supreme Court

39 P. 1030

55 Kan. 124

THE CITY OF LARNED v. M. A. W. JORDAN, as Assignee of the Pawnee County Bank

Supreme Court of Kansas

April 6, 1895

Error from Pawnee District Court.

AT the general city election in April, 1892, F. J. Mathias was elected and in due time qualified as the treasurer of the city of Larned, in this state. In April, 1893, he was elected and in due time qualified and continued to perform the duties of treasurer until July 1, 1893, when he resigned. While city treasurer he was also cashier and general manager of the Pawnee County Bank, of which bank H. Mathias, his father, was president, G. Krouch, vice-president, and G. Hartstein a stockholder. On March 7, 1893, F. J. Mathias received the sum of $ 5,121.74 belonging to the city, and of his own motion without any express authority from the city, but with the knowledge of the officers of the Pawnee County Bank deposited the same in that bank. The real issue in the election at which Mathias was chosen city treasurer was whether the city funds should remain in the First National Bank or be transferred to the Pawnee County Bank. Upon the election and qualification of Mathias, the money was removed by him from the First National Bank and immediately deposited in the Pawnee County Bank to the credit of the city of Larned, and continued to be so kept till the failure of that bank. All the city moneys received by him were added to this deposit, and all moneys paid out were paid upon checks drawn by him in the name of the city of Larned. This was done openly, and the city officers knew of it at the time, and particularly the finance committee, which from time to time examined and audited Mathias's accounts. The bank closed its doors on July 1, 1893, and made an assignment. M. A. W Jordan was appointed assignee of the bank, and was thereafter duly elected and qualified, and has ever since been the qualified and acting assignee. Demand was made on F. J Mathias, is city treasurer, by the proper authorities for the city funds in his hands. He was unable to comply with the demand, and it was then ascertained that he had defaulted to the amount of $ 4,645.18. Plaintiff, as one of the creditors of the bank, was duly notified of the time fixed for the election of a permanent assignee, and was also duly notified of the time and place or allowing claims against the estate. F. J. Mathias, as city treasurer, gave a bond to the city with G. Krouch, H. Mathias and G. Hartstein as sureties, and after the assignment, G. Krouch, as bondsman, appeared and made proof of a claim against the bank, as follows:

"State of Kansas, Pawnee county, ss. Personally appeared before me, the undersigned, a notary public in and for said county and state, G. Crouch, of Larned, Kan., who being duly sworn, says that he is one of the bondsmen of F. J. Mathias, city treasurer, who deposited the money in his hands in said bank as city treasurer to the credit of Larned city; that the city of Larned has demanded the money of this affiant as city treasurer's bondsman; that the Pawnee County Bank, of Larned, Kan., is justly indebted to this affiant, as bondsman, in the sum of $ 4,645.18, upon the following claim, to wit: Upon the deposit account as above stated in the sum of $ 4,645.18, which this affiant claims as bondsman of F. J. Mathias, city treasurer, aforesaid. This certificate of proof being made in behalf of G. Krouch and the other bondsmen of said F. J. Mathias, city treasurer--all of which is due and payable to himself alone, he having given no indorsements or assignments of the same or any part thereof; and he further says that he knows of no set-off or other legal or equitable defense to said claim or any part thereof.

"G. KROUCH; residence, Larned, Kan.

"Sworn to and subscribed before me this 6th day of December, 1893. Witness my hand and notarial seal.

[SEAL] GEORGE W. FINNEY, Notary Public."

This proof was filed with M. A. W. Jordan, as assignee, and by him allowed, as such assignee, on December 6, 1893. On the 13th day of January, 1894, the assignee declared a dividend of 10 per cent. This dividend upon the claim allowed to G. Krouch amounting to $ 464.51, was paid January 15, 1894, by a check of M. A. W. Jordan, as assignee, to G. Krouch, bondsman. This was turned over to T. McCarthy, as city treasurer, who succeeded F. J. Mathias, and it was credited on the account of F. J. Mathias, the defaulting treasurer. On the 23d day of January, 1894, the city of Larned brought an action on the official bond of Mathias, as city treasurer, which suit was subsequently dismissed by it. On August 11, 1894, while the action on the bond was pending, the plaintiff having learned that another dividend was about to be declared by the assignee, and without making any demand upon the assignee to be made a preferred creditor, and without tendering back to the assignee the amount received from G. Krouch, the bondsman of F. J. Mathias, commenced this action, and...