The City's $13,650 Hole in the North End Bank
A judge ruled that the bondsmen who covered Seattle's deposits in the failed North End Bank can step into the city's shoes and pursue the bank's assets.
Judge Osborn yesterday filed findings of fact and conclusions of law in the case of C. G. Perkins, trustee of the North End Bank. The findings recall the bank's shortage. On September 18, 1894, two days after the failure, there was due to the city as deposits $13,650. When the city demanded this part of the shortage, it looked to the bondsmen—T. Denny, John Y. Ostrander, S. E. Sander, Henry Fuhrman, R. H. Denny, Michael McTeigh, D. H. Gilman and others—who entered into an agreement to make the amount good. The court finds that the sureties have been substituted for the city as claimants against the bank and are entitled to all the rights the city formerly had, and that Perkins, as their assignee, is entitled to a judgment against the bank for the money made good and interest.
“The court finds that the sureties have been substituted for the city as claimants against the bank and are entitled to all the rights it formerly had.”
Public deposits in a private bank, a failure, and a fight over who stands first in line are familiar municipal-finance problems. The 1895 ruling turned on the same question cities still face: when a bank holding public money fails, who absorbs the loss and who gets to collect?
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