Indiana. General Assembly.

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what has already been shown, that when the first mortgage bonds
become due, viz: May 1, 1851, the road must from necessity fall
into the hands of the bond holders under that mortgage. That
there is not money enough in it to justify the State or any one else
to take the road by paying that debt and the other necessary out-
lays that will be added to it by the time the bonds become due.

Some suppose that the State never parted with the title to the
twenty eight miles of the south end of the road, and therefore this
first mortgage is no incumbrance upon it. To meet this view of
the case, inquiry has been made as to the value of that part of the
road and its present condition. The accompanying report of the
Superintendent shows it to be in a very bad condition, requiring
the immediate expenditure of one hundred and twenty-eight
thousand seven hundred and sixty-seven dollars and fifty cents to
put it in good running order. There is scarcely anything upon
that portion of the road that was put there by the State. The
road bed and the old iron is about all that is valuable of the struct-
ure made by the State. For further information in relation to
this part of the road, reference is made to the Superintendent's
report.

Some may think it the duty of the State to collect her debts
even if it require the sale of the property of the road. Let us see
what could be realized by breaking up the road and selling off its
property. Scarcely anything could be got for the road bed. The
result would be as follows:

Iron on the track SO miles at $50 per tun $400,000

The old iron put down by the State on 18 miles next to

Madison 23,760

Cars 66,685

Engines 60,700

Machine shops, warehouses, &c 51,400

$602,545

There is more than this amount required to pay off the first
mortgage, but it can hardly be presumed that any one desires that



372

this road should be destroyed and its property removed and sold.
The Commissioners do not understand that the Legislature intend-
ed that any such measure should be resorted to to compel payment
of the State's debt, but that they should ascertain what the com-
pany really were able to pay and still continue to operate their
road, and to secure the payment of whatever that might be. We
believe that seventy-five thousand dollars in the five per cent,
bonds of the State is all they are able to pay, and we have there-
fore agreed to take that amonnt in full satisfaction of the State's
mortgage.

All of which is respectfully submitted.

JOSEPH A. WRIGHT,
THOS. S. STANFIELD,
E. NEWLAND,

Commissioners.

We further report that on the ISth day of March, 1856, the
company deposited with the State Treasurer $75,000 in the five
per cent, bonds of this State, in compliance with our agreement, and
that we therefore executed a release of said mortgage.

JOSEPH A. WRIGHT,
THOS. S. STANFIELD,
E. NEWLAND,

Commissioners.



This indenture, made the first day of April in the year one thou-
sand eight hundred and fifty-one, between the Madison and In-
dianapolis Railroad Company, a corporation duly constituted as
such, by the laws of the State of Indiana, of the first part, and
John J. Palmer and William H. RusselUof the second part; where-
as the parties of the first part, pursuant to the terms of the stat-
ute of the State incorporating them, and other statutes of said
State affecting them, have constructed a railroad from Madison to
Indianapolis, in the State of Indiana aforesaid, which is now in
operation with a heavy stock thereon; and whereas, from the re-
quirements of business and trade upon said road, said parties of
the first part are now compelled to add largely to their equipments
of engines and cars, and make other expenditures deemed essential
to the conducting of the business of said company, for which pur-
poses they have determined to raise money by loan. And in order
to secure payment, therefore, a repayment thereof, to execute cer-
tain bonds to the persons making such loan, said bonds to be of the



373

denomination of one thousand dollars each, bearing inlerest at the
rate of seven per centum per annum payable semi-annually, in
the city of New York, on the first days of May and November in
each year, the principal of said bonds payable at the Merchant's
Bank in the city of New York, on the first day of May, one thou-
sand eight hundred and sixty-one, and convertible into the stock
of the company at the pleasure of the holder. On and after the
first day of May, one thousand eight hundred and fifty-four, the
aggregate of said bonds, not to exceed the sum of six hundred
thousand dollars to be issued under the following provisions, limi-
tations and restrictions, that is to say, the sum of two hundred
thousand dollars, to be issued on the first day of May, eighteen
hundred and fifty-one, for the more full equipment of the road as
aforesaid, the further sum of fifty thousand dollars of said bonds
to be issued at the discretion of the Board of Diiectors for addi-
tional equipment, or for carrying on the operations of said com-
pany, and the remaining sum of three hundred and fifty thousand
dollars, to be issued for the purposes only upon the approval by
vote of two-thirds of all the stockholders in interest at a meeting
to be held in the city of New York for that purpose, after due no-
tice in the public newspapers of said city, the holders of said bonds
to be upon an equality so far as regards security for the repayment
thereof by these presents, notwithstanding the same may be issued
at different times. Each of said bonds being authenticated by a
certificate, signed by said parties of the second part, recapitulating
the essential particulars of the said provisions, limitations, and re-
strictions, of said issue, and specifying the provisions under which
such bonds are classified.

Now, therefore, this indenture witnesseth, that the said parties
of the first part, in order to secure the payment of said bonds and

interest, and in consideration of the sum one dollars

to them in hand paid by the said parties of the second part at the
sealing and delivery hereof, the receipt whereof is hereby acknowl-
edged, have granted, bargained, sold, transferred and conveyed, and
by these presents, do grant, bargain, sell, transfer and convey, to
the said parties of the second part, who hereby accept the trust
herein created, and to the survivor, and successor, or successors,
in said trust, and assigning all the following presents and in future
to be acquired, property, real and personal, of said parties of the
first part, that is to say, their road completed as aforesaid, includ-
ing right of way and land occupied thereby, together with the
superstructure and tracks thereon, and all rails and other material
used thereon, with all bridges, aqueducts, culverts, fences, depots,
grounds and buildings thereon, wharves and fixtures thereto, en-
gines, tenders, cars now owned, and that may be purchased or
bought by the moneys acquired from the sale ot bonds herein pro-
vided for, and all tools, material, machinery, and ;ill other personal
property, right thereto, or interest therein, together with all prop-
erties, rights and privileges of the said parties of the first part, of,



374

into, and concerning said road, and the property aforesaid, and all
tools, incomes, issues and profits to be had from the same ; but
nothing herein contained, shall be so construed as to prevent the
parties of the first part from collecting and appropriating to their
legitimate purposes, any notes, bonds or titles that may be held or
taken by them for services performed for other persons or corpora-
tions, or for transportation on said road, or property heretofore
sold, not necessary to be retained for their road way, depot
grounds or stocks required for the convenient use of their roads,
nor to prohibit said company from declaring and paying regular
dividends of the said road; provided they shall faithfully apply all
moneys arising from such notes, bonds or bills, and the sale of such
real estate to the purposes to which they were originally appro-
priated, and the improvements of the property, preservation, and
repair of the road, and advancement of the interest of said com-
pany ; and provided also, that no default shall have been made
in the payment of the principal or interest of any of the above
described bonds. To have and to hold, the said premises, and
every part thereof, with the appurtenances, unto the said parties
of the second part, their successor or successors in said trust and
assigns upon the following trusts, that is to say, in case the said
parties of the first part shall fail to pay the principal or any part
thereof, or any of the interest on any of said bonds at any time
when the same may become due and payable according to the
tenor thereof, when demanded thereafter, sixty days from such
default npon request of the holder of any such bond or bonds, the
said parlies of the second part, the survivor or the successor or
successors in said trust, shall have power to enter into and take
possession of said railroad, and all and singular the property and
effects hereby conveyed, and by themselves, or himself, or agent, or
agents duly constituted, have, use and employ the same, making
from them to him all needful repairs, alterations and additions
thereto, and after deducting the expenses of such use, repairs,
alterations and additions, apply the proceeds thereof to the pay-
ment of the principal and interest of all of said bonds remaining
unpaid, or the said parties of the second part, the survivor or suc-
cessor or successors in the trust, at their or his discretion, may, or
on the written request of the holders of at least one-half of the
bonds then unpaid, or converted into stock, shall cause the said
premises, or so much thereof as shall be necessary to pay and dis-
charge the principal and interest of all such of said bonds as may
then be unpaid and unconverted as aforesaid, to be sold at public
auction in the city of Madison, in the State of Indiana, or in the
city of New York, giving at least forty days notice of the time,
place, and trust of such sale, and of the specific property to be sold,
by publishing the same in two newspapers of general circulation
in each of the cities aforesaid, and where else required by law.
And shall execute to the purchaser or purchasers thereof, a good



375

and sufficient deeds of conveyance in fee simple for the same,
which shall be a bar against the parties of the first part, their suc-
cessors and assigns, and all persons claiming under them, of all
right, interest or claim, in or to said premises, or property so sold
and conveyed, or any part thereof; and said trustee or trustees
shall, after deducting from the proceeds of said sale, the costs and
expenses thereof, and of managing said property, apply as much
of said proceeds as may be neecessary to the payment of said
principal and interest due and unpaid on said bonds, and shall re-
store the residue thereof to the parties of the first part. It being
hereby expressly understood that in no case shall any claim or
advantage be taken of any valuation, extension, or appraisement
laws, by the said parties of the first part, nor shall any injunction
or stay of proceedings, or any process be applied for, or obtained
by them to prevent or hinder such entry or sale as aforesaid, and
the said parties of the first pert hereby covenant for the considera-
tion aforesaid, to execute and deliver any further reasonable and
necessary conveyance of the premises, or any part thereof, to the
said parties of the second part, the survivor or successor or suc-
cessors in said trust, and assigns, for more fully carrying into effect
the objects hereof, and it is hereby mutually agreed, and these
presents are upon the express condition that on payment of the
principal and interest of said bonds, or the conversion thereof into
stock in manner aforesaid, the estate hereby granted to said par-
ties of the second part, shall be void, and the right to the premises
hereby conveyed, shall rent to, and revest in the said parties of
the first part, without any acknowledgment of satisfaction, recon-
veyance, re entry, or other act. And it is also mutually agreed,
that the said parties of the second part, the survivor or successor
or successors in said trust shall only be accountable for reasonable
diligence in the management thereof, and shall not be responsible
for the acts of any agent employed by them or him, when such
agent is selected with reasonable discretion, and that said parties
of the second part, the survivor or successor or successors in said
trust, shall be entitled to receive proper compensation for any labor
or service performed in discharge of said trust, in case they or
either of them shall be compelled to take possession of said prem-
ises, or ny part thereof, or manage the same. And it is further
mutually agreed, that in case of the death, mental incapacity, or
resignation of either of said parties of the second part, all the
estate, righ<, interest, power and curtail of such party shall be
divested, cease and determine, and the same shall from thenceforth
for the purposes aforesaid, be vested in, and all and singular, the
trust and duties herein before enumerated, shall devolve upon the
surviving trustees ; and in case of the death, mental incapacity, or
resignation of such surviving trustees, then all his estate, right,
interest, power and covenants, shall in like manner cease and de-
termine, and the same shall from thenceforth for the purposes
aforesaid, be vested in, and all, and singular, the trust herein be-



376

fore enumerated, shall devolve upon the President of the Mer-
chant's Bank, of the city of New York, so long as he shall remain
President of said Bank, and upon his successor in said office; and
if said President shall refuse to take and execute the trust so de-
volving upon, or shall at any time resign the same, the said parties
of the first part, shall, or in their default to take proceedings
therein for thirty days, the holder or holders of one-fourth of said
funds may apply to the Supreme Court of New York, at any regular
term session thereof, held in the city of New York, to appoint a
trustee, being a resident of said city, to fill such vacancy, and
thereupon such trustee so appointed, shall become vested for the
purposes aforesaid, with all the estate, rights, title, interest, power
and control hereby conveyed to, or vested in, the said parties of
the second part, without any further title aforesaid or conveyance
for the same, but if the same shall be necessary, both, or either of
the parties hereto shall execute any necessary release or convey-
ance for that purpose.

In testimony whereof, the parties of the first part
have caused their corporate seal to be affixed, and
the same to be subscribed by the President and
[s. l.J countersigned by the Secretary, and the said

parties of the second part have set their hands
and seals, the day and year first above written.
JOHN BROUGH,

President M. fy I. R. R.
JOHN J. PALMER, [s. l.J
WM. H. RUSSELL, [s. l.J
Witnesses to John Brough,

Moody Park.
Countersigned,

W. N. Jackson, Secretary.
We accept and agree to the present mortgage contained in the
above deed of mortgage, the 17th of April, 1851.

JOHN J. PALMER.
WM. H. RUSSELL.
Witnesses.

Henry Toucy and John Weeks.



REPORT OF ISAAC H. ARNOLD.



Chicago, Dec. "26, 1856.
To his Excellency, Gov. Wright —

Sir: I am directed by the Board of Trustees of the Illinois &
Michigan canal, to call your attention to the action of the Swamp
Land Commissioner of Lake county, Indiana.

The Illinois and Michigan canal, connecting the Illinois river
with Lake Michigan, is dependant on the waters of the Calumet
river as an important feeder. This is effected by a dam erected in
the State of Illinois, by which the water is raised and thrown into
the feeder, and which creates a back-water in Indiana. This feed-
er was made navigable in accordance with the joint plan of Indi-
ana and Illinois formed as early as 1S36; which plan was by the
Michigan and Erie canal on part of Indiana, ana the Calamut
feeder on part of Illinois, to connect the Illinois & Michigan and
Wabash & Erie canals, and thereby open a communication be-
tween the Illinois and Mississippi rivers with Lake Erie.

The Board of Trustees are advised, that the Swamp Land Com-
missioner of Lake county, Indiana, contemplates diverting the Cal-
umet river from its original channel, in such a way as will destroy
it as a feeder.

This project has been adopted by the Commissioner in forget-
fulness, or in consequence — the Bonrd of Trustees presume — of
overlooking the various acts of Indiana and her officers, with ref-
erence to the Michigan & Erie canal, and the connection through
it and the Calamut feeder, of the Illinois and Indiana canals.

The Calumet feeder was surveyed and located as a part of this
project. It was done by the commissioners and engineers of the
two States acting in connection, and with direct reference to its
being used in connection with the Michigan & Erie canal, to form
what was then deemed, and which may still be regarded as a very



378

important water communication between the States of Indiana
and Illinois, and indeed of the East and West.

The Board of Trustees of Illinois & Michigan canal, find by
the reports of engineers and commissioners, &c, of the two States,
that the early examinations and surveys were made in connection,
and that from 1834 down to the stopping of work on the Illinois
canal in 1842, the two States co-operated in this design, and the
improvements in both were made with reference to it; and that
both contemplated and sought this connection.

Under these plans, and with this understanding between the two
States, Illinois expended several millions of dollars, and her canal
was finally completed in 1848. The Calumet has been used as a
feeder since that time, the works for the same having been con-
structed some years before. Illinois has never been apprised by
Indiana, that she had changed or abandoned her design of making
this connection. She has expended her money in good faith, and
believing she was acting in accordance with the common design.

Reviewing the Legislature of Indiana on this subject, in connec-
tion with the messages of her governors, the reports of her engin-
eers, and commissioners, the Board of Trustees believe that this
project of diverting the Calumet feeder from its original channel,
while it would be disastrous to the Illinois canal, would be also fa-
tal to this contemplated connection, and therefore conclude, that
it has been projected without attesition to the early history of the
two States in reference to the matter.

They, therefore, take the liberty of calling your attention to the
subject, confident that Indiana will take such action in the matter
as will be in accordance with the plans of the two States, and
under which the works of Illinois have been constructed, sanc-
tioned as they were, by Indiana. The course of action on the
part of Indiana, with reference to the connection of the canals of
the two States, has been characterized by a spirit of comity and
justice, which the Board of Trustees of the Illinois and Michigan
canal do not doubt, will continue to actuate her in the future.
Very respectfully, your ob't serv't,

ISAAC N. ARNOLD,
Attorney for the Board of Trustees of the I. Sf M. Canal.






REPORT

OF E. DUMONT, PRESIDENT OF THE STATE BANK.



State Bank of Indiana, )

November 24, 1856. \

Hon. Joseph A. Wright,

Governor of the State of Indiana :

Sir: — In reply to your note of inquiry of the 17th inst., I send
you this.

You first inquire, "what is the average market value of the
stock held in the different branches of the Bank."

It is very unusual for those owning stock in this Bank to put it
upon the market, as it yields good dividends and is regarded as a
good investment.

I have heard however, of a considerable amount of the stock in
one of the branches having been sold recently at eighty dollars to
the share. The shares you know are fifty dollars each, I doubt
not it was worth all they got for it. The surplus fund of that
branch is large, but so it is in most of the branches, so that I think
that the average value of the stock might be safely estimated at
much above par. Some well qualified to judge think at least $75
to the share. It will readily occur to your excellency that their
enhanced value above par results from the Surplus Fund. It mani-
fests the wisdom of the surplus principle in banking institutions.

You next inquire, "what I consider the value of the interest of
the State in said Bank over and above the bonds held on the
State."



380

In reply, I state that the stock of the State in this Bank is as
follows :

Stock in State Bank of Indiana under the charter- • $S80,000 00
Stock of the State Bank of Indiana from investment

from the sinking fund 128,038 00

Stock in the State Bank of Indiana from the Saline

fund 4,924 20

Stock in the State Bank of Indiana from the bank

tax fund 792 07



$1,013,754 27

Which sum of one million thirteen thousand seven hundred and
fifty-four dollars and twenty-seven, cents divided into shares of fifty
dollars, would make a fraction over twenty thousand two hundred
and seventy-five shares. If the stock should yield $75 to the share,
these shares would net the sum of $1,520,625.

As you will see by reference to the 103d section of the charter,
the bonds that have been issued for Bank capital amounts to the
sum of $1,390,000. Some of these bonds have been bought in
and retired by the sinking fund commissioners, but for the purpo-
ses of answering your inquiry the result is the same whether re-
garded on hand or outstanding. It follows then that if the bonds
have to be taken up at par, and the stock should yield as much as
is above conjectured, the Bank stock will do it, and leave a surplus
of $130,625 to be added to the Sinking Fund.

The bonds are now worth, according to the best information
within my reach, some ninety cents to the dollar, but are seldom
put upon the market and are therefore scarce.

You ask thirdly, " that 1 will furnish you the precise amount of
stock now held by the State in the Bank." My answer above to
your second inquiry gives you the answer to this.

Your fourth question is. "Do you construe the charter so that
no new loans are made after the first of January, and in this con-
struction, do you permit the debtors of the bank to renew their
paper on the 1st of January, or require prompt payment?"

The inquiry requires a construction of the 111th section of the
bank charter in connection with the other sections of the act, and
especially the 5th section. It seems to me, that without an amend-
ment, no new loan can be made by the bank after the 1st day of
January, 1857.

I also think that at any time before the 1st day of January, 1857,
or on that day, the bank would have the power to permit her debt-
ors to renew their paper. In some cases it might be very inexpe-
dient to do so, whilst in others it might be judicious and prevent
loss. At the last session of the Board, the question of the power
of the bank after the first of January, 1857, was discussed. No
definite action was taken on the subject, but it was deemed a ques-



381

tion of sufficient importance to be thoroughly canvassed and in-
vestigated, and to that end the law committee of the bank was
instructed to consider the subject and report the result of their
examination on the 15th of December. I shall be pleased to fur-
nish your Excellency with a copy of the report that may be made
on the subject. It will, I doubt not, impart more light than any
crude opinion that I could give. I would however simply remark,
that the said 1 11th section seems to me so restrictive that legisla-
tion may be needed even to enable the bank to wind up advan-
tageously.

By your fifth inquiry, I am requested to state, " What is the
amount of the Trust Funds of the State held by this Bank, each
separately, and what do I regard as their probable value at the
winding up of the Bank in 1859?"

In answer. I state as 1 understand the matter, the Bank holds no
trust funds of the State except what has been converted into Bank
stock as above shown, under various enactments of the General
Assembly.

The items as already shown are as follows:

Stock of the State Bank of Indiana from investment
of the Sinking Funds and not included in the



Online LibraryIndiana. General AssemblyDocumentary journal of Indiana 1856, part 1 (Volume 1856, pt.1) → online text (page 28 of 53)