A GRAND FINANCIAL MUDDLE
The financial affairs of School Section No. 3, which embraces this village and part of the township of Fenelon, are in such a distressing muddle that it is pretty certain the intervention of lawyers and judges will be necessary to straighten them out again to the satisfaction of some and the dissatisfaction of other interested parties. A few months ago Mr. Havilah Davis, treasurer to the Board of Trustees, was discovered to have made away with over $1,400 of school funds, for which offence he suffered no penalty beyond a few hard words, the trustees thinking--or, at any rate, acting as if they thought--that as they had a surety to whom they could look for the money, it was not incumbent upon them to prosecute the dishonest official. That surety was Mr. George Keith, who shortly after the discovery of the embezzlement gave a mortgage on his property for the amount, but who now, as will be seen upon referring to the minutes, in another column, of the last meeting of the Board, declines to pay except under compulsion, as he has reasons for believing that he is released from his liability by circumstances of which he was not cognizant at the time he gave the mortgage. Mr. Keith's principal pleas--and he believes them to be good and sufficient ones--for refusing payment, are three in number, viz: 1. That he had only been Davis's surety for about twenty months, while Davis admitted at a meeting of his creditors that he had used school monies for his own purposes during the whole five years that he had been treasurer. 2. That no less a sum than $1,800 of municipal funds, which ought to have remained in the hands of the village treasurer, have from time to time been wrongfully placed in the hands of Davis, thereby enabling him to commit the crime of which he has been guilty. 3. That the trustees were aware that on several occasions the treasurer has been unable to meet claims on the school funds, and that they had failed to acquaint him (Mr. Keith) of the fact. We do not know what amount of weight is to be attached to the last point, as Davis--though in law a defaulter the moment he failed to meet a pecuniary liability--always managed somehow to scrape up the needed money upon being taken to task by the trustees ; but with regard to the first, it is quite clear to us that Mr. Keith cannot be compelled to replace any money which he can prove was stolen before he became Davis's surety. The second point, which may or may not be a strong one in favour of Mr. Keith, requires a little explanation. When the additions and improvements made to the school-house in 1876 were decided upon, it became necessary to raise the sum of $2,500, and in the by-law under which it was borrowed, which was signed by the reeve and clerk of Fenelon Falls and sealed with the seal of that municipality, it was expressly stated that the amount so raised should be deposited in the hands of the village treasurer. How that official was to dispose of it was not stated, and whether it was handed to him by the treasurer of the School Board or paid out on the trustees' order we do not know. But we do know that the $450 levied annually for four years, to pay interest and form a sinking fund, was trusted to the tender mercies of Davis, and that while $700 out of the $1,800 was used to meet seven semi-annual coupons of $100 each, the remaining $1,100 formed part of the amount appropriated by the treasurer of the School Board. The by-law contained no instructions as to what was to be done with the yearly $450 ; but Mr. Keith takes the not unreasonable ground that as the municipality of Fenelon Falls is looked to for both principal and interest, the treasurer of that municipality ought to have retained the money until it was needed instead of putting it into the hands of Davis, to be by him used to appease his creditors, or salted down against a rainy day. Whatever may be of Mr. Keith's success in defending the suit which we suppose will be promptly brought against him, we fancy he has a better case than they who go into court, and he feels quite confident that, at the worst, he will not have to pay the whole amount of Davis's defalcation.