Digitized by the Internet Archive in 2014 https://archive.org/details/reportsofspecialOOvirg iBRARY ^ . .;n.i€f Selden, Withers and Company; and the amount claimed by I 4 and paid to the said General Bradley T. Johnson, therefor, in each case. 4. That a committee of five be appointed, whose duty it shall be to carefully and thoroughly examine all the statements and exhibits which may be furnished in response to the foregoing resolutions, and enquire into all matters pertaining thereto, and report the facts to this House, with such recommendations as they may deem proper. Said committee shall have power to send for persons and papers — Respectfully submft the following report: "We consider that w^e have a two-fold duty to perform under the foregoing. We have endeavored to discharge our branch of it by collecting all the information within our reach, in regard to the transactions which form the subject of the resolutions, and report- ing the same to the House for such action as it may deem proper in the premises. In the view entertained by the undersigned, much of this enquiry was superfluous; but regarding the language of the resolution as imperative, we have endeavored to meet its requirements as fully as possible. In obedience to the further requirements of the resolution, call- ing for such recommendations from the committee as it may think proper, we proceed to discharge the other branch of our duty by expressing the view which we entertain of the subject, and the con- clusions at which we have necessarily arrived. On the 26th day of February, 1867, the general assembly passed the following resolution: Be it resolved by the general assembly of Virginia, That the board of public works be and they are hereby authorized and directed to adopt such measures as in their judgment may be neces- sary and proper to realize the preferred liens of the state upon the tolls and revenues of the Chesapeake and Ohio canal companj^i and for that purpose to contract with counsel for the enforcement of said liens, in concert with other holders of similar liens: provided however, that the compensation of such counsel shall be contingent only, and shall be paid by said board only out of the proceeds to] be realized from such proceedings, or "^he debts and liens secured thereby. It is claimed by the mover of the resolution under which we are acting, as will appear by reference to the minority report, that Tinder the joint resolution just recited there was no authority con- ferred upon the board of public works to contract with counsel to 5 do anything except to collect moneys actually due to the state of Yirginia. It will appear, however, by reference to the accompanying evi- dence, that Yirginia was not only the creditor of the company for moneys actually due, but that she was bound as guarantor in the principal sum of $500,000, upon bonds issued by the company, of which $200,000 were for repairs, the bonds for same being known as "repair bonds," while $300,000 belonged to what were known as "preferred bonds," part of a loan of $1,700,000, secured by mortgage dated June 8th, 1848. The liens indemnifying Yirginia for her liability as guarantor on these two classes of bonds, were somewhat diflerent in their nature : the preferred bonds being secured by a mortgage upon the net tolls and revenue of the company; while the repair bonds, issued later, were by express agreement with the company, to be provided for out of the gross revenues; that is to say, they were made a lien prior to the mortgage securing the preferred bonds. It will also appear from the evidence that Yirginia was a holder, to a considerable extent, of the preferred bonds, acquired by her in a settlement with the firm of Selden, "Withers & Co. It is necessary to consider these facts in the construction of the joint resolution authorizing the employment of counsel by the board of public works. The undersigned do not wish to be understood as saying that the question is without difficulty. The language of the resolution is somewhat vague, and is certainly calculated to give rise to differ- ence of opinion as to its meaning. After careful consideration, however, the undersigned have arrived at the conclusion that the board of public works placed upon it a construction of which it is legally susceptible. In reaching this conclusion, we have been influenced by the con- sideration that the legislature of Yirginia would hardly have undertaken to provide for the collection of the comparatively small amount due her, without at the same time taking measures to secure herself against the loss to which she was liable as guarantor upon the company's bonds, the principal of which was $500,000, while the interest upon it had been in arrear for many years. It has also seemed to us most probable, that if the collection of money had been the sole purpose of the resolution, a simpler phra- 6 seology would have suggested itself to the legislature, and would have been adopted. The word lien ^is not synonymous with the word debt, as is known to every lawyer. The realizing of a lien is not necessarily the collection of a debt; as, for instance, where a surety, appre- hending loss from the default of a principal, compels the creditor to enforce a lien held by him upon property of the latter. In this case, the suretj^ without receiving a cent, maybe said to have real- ized a lien, which, though actually held by another, nevertheless enured to his benefit. The matter under consideration presents just a similar state of facts, so far as they relate to Virginia's liability for unpaid debts, principal and interest, of the company. It is perfectly plain that she held a lien for her indemnity as guarantor of such debts. As to interest paid by her on such debts, she became by su- brogation, a creditor of the company, holding whatever lien the original creditor himself had held. In addition to this, she was the owner of some of the preferred bonds, as has been before stated; and the lien executed by the com- pany to secure these, was, of course, directly for her benefit in com- mon with other holders of such bonds. It is claimed that the reference in the joint resolution to "other holders of similar liens," limits the character of the liens which counsel were to be employed to realize, to those debts which were due to Virginia for interest paid, and preferred bonds held by her, inasmuch as she, being the only guarantor upon the company's bonds, no other person occupied' a similar position, and consequently, there could be no other holder of a similar lien." We think this view altogether too narrow, when taken with refer- ence to the fact that as to the preferred bonds the lien of Virginia as guarantor, and that of the holder of those bonds, is created by one and the same instrument, while as to the repair bonds, the rights of all parties depend upon the same agreement giving to them pri- ority over the other debt of the company. It is diflicult to conceive of liens growing out of the same acts or instruments being anything but similar. For these reasons, we have thought the board of public works warranted in placing upon the joint resolution the construction which appears from the original and supplemental contracts made by them with counsel. 7 • That these contracts were made hy high public functionaries, during the session of the very general assembly which passed the resolution under whose authority they were entered into; that they were deposited among the records of the state, and were thus acces- sible by every one; that a different board of public works, com- posed of equally high functionaries, endorsed this construction of their predecessors by making a final settlement upon the basis of the contracts entered into by them; that a committee of both houses, at a subsequent session of the general asssembly, unani- mously afiarmed the action of both boards; are all circumstances which confirm us in the impression that the construction placed upon the joint resolution can be sustained in law. If this position be correct, it follows naturally, that in the absence of all proof of fraud (and none is either proved or charged in these proceedings), a settlement had in accordance with the terms of the contract, based upon said resolution thus construed, is final. The board of public works being constituted by the resolution the agent of the state, with perfectly unlimited discretion, so long as they should act within the scope of their delegated powers, the state retaining no power of supervision, dissent, or revocation, have contracted with counsel, accepted the results of their labors, and paid them their fee. If this be not a completed transaction, we are at a loss to conceive one. So far as mere calculations are concerned, the report of the expert employed at the request of the committee agrees w^ith the statement exhibited by counsel, and accepted by the board of pub- lic works in the final settlement. We presume, theibre, that it is correct. In conclusion, we desire to say, that with the diversity of opinion existing among the committee, it would have been impossible to express any concurrent view as to the wisdom cfr policy of the con- tracts entered into, even if it were important that this should be considered at all. Regarding the whole matter as concluded by the action of parties having full power in the premises, if honestly exercised, we can conceive nothing more useless than a discussion which can be attended with no practical result. "We think it only just to say, however, that nothing has appeared in this investigation impugning the motives of any one of the con- tracting parties. 8 We are agreed, therefore, in view of the considerations above given, to recommend tliat the whole subject be dismissed from the further consideration of the House. JOim NEELY, CH. A. EOl^ALD. We have found much difficulty in arriving at a satisfactory con- struction^of the joint resolution of February 26th, 1867; but from such examination as we have been able to give the subject, prefer that suggested in the above re]3ort. Still, not confident of its cor- rectness, and being unw^illing practically to conclude further enquiry into the matter by competent counsel, with more time and better facilities for investigation, w^e assent to the recommendation of the minority report. A. A, GRAY, GEO. T. CLAEKE. REPORT 40f tlie Chairman of tlie Special Committee, appointed under the ^! following resolutions, made March 21st, 1877 : Whereas communications which have appeared in some of the ' new^spapers published in Virginia, make it manifest that the settle- ments made with the Chesapeake and Ohio canal company, by Gen- ' eral Bradley T. Johnson, as attorney for the state of Virginia, and his subsequent settlements with the board of public works of Vir- " ginia, are not so understood as to relieve the public mind from pain- , ful anxiety with regard to said settlements; and whereas it is due alike to the citizens of Virginia generally, and to those who were immediately connected with said settlements, that these matters Tdc properly enquired into, and the facts reported to this general assem- bly: therefore, 1. Resolved by the House of Delegates of Virginia, That the board of public works be and are hereby instructed to furnish this House a copy of all the records pertaining or relating to the con- tracts entered into by said board with General Bradley T. Johnson for the enforcement of the liens and the collection of the claims held by the state of Virginia against the Chesapeake and Ohio canal ■ company, from January 1st, 1867, to February 1st, 1873. 2. That the Hon. James isTeeson be and he is hereby respectfully requested to furnish this House a statement showing the amount and character of the claims against the firm of Selden, Withers and ' Company, which were placed in his hands for collection, as attorney , for the state of Virginia; the amount collected by him i^i money; I the amount collected by him in other assets; the character of those j:assets; and w^hat disposition was made of said money and other r assets. 3. That the auditor of public accounts be and he is hereby in- ^structed to furnish this House a statement show^ing the amount of claims and liens held by the state of Virginia against the Chesa- •peake and Ohio canal company, w^hich were placed in the hands of General Bradley T. Johnson for collection; the amount thereof, which was paid into the state treasury; the amount w^hich was paid into the state treasury on account of collections made of the firm ^of Selden, Withers and Company; and the amount claimed by and paid to the said General Bradley T. Johnson, therefor, in each >case. 2 10 4. That a committee of five be appointed, whose duty it shall be to carefully and thoroughly examine all the statements and exhibits which may be furnished in response to the foregoing resolutions, and enquire into all matters pertaining thereto, and report the facts to this House, with such recommendations as they may deem proper. Said committee shall have power to send for persons and papers. The undersigned deeply regrets that he finds it necessary to dis- sent from the opinions and conclusions of a majority of the special committee, of which he had the honor to be chairman, appointed under the foregoing resolutions. But, while he concedes to each other member of it the full measure of honesty in their purposes and conclusions which he claims for himself, he is totally unable to concur with them in their opinions and conclusions. He has aimed to give the whole subject patient, careful, and thorough investiga- tion, and it is due to himself, to this general assembly, and to all the people of this commonwealth, that he not only state the conclu- sions to which he has been impelled by the facts developed, but that he also state the main reasons which have led to those conclu- sions. Desiring to place all the material facts before the general assem- bly, he will aim, as briefly as a proper presentation of the facts allow, to give a general history of the case. The Chesapeake and Ohio canal company was organized on June 28th, 1828, for the purpose of constructing a canal from George- town, D. C, to Cumberland, in Maryland. Prior to March 10th, 1845, the state of Maryland had advanced large sums of money to the company and taken a first mortgage on its tolls, revenues, and works, to secure payment thereof. The caeal then lacked fifty miles of its completion to Cumber- land, its present western terminus. Maryland was not in condition to make farther advances to the company, and knowing that its future prosperity depended upon its completion of the canal to the "coal fields"; and knowing, also, that it could not obtain money for its completion and repaiis while she held a first mortgage upon its tolls ^ revenues, and entire works she, by an act of her general assembly, passed March 10th, 1845, autho- rized the company to issue bonds to an amount not exceeding $1,700,000. These bonds were known as ''construction bonds," as their proceeds were to be applied solely to the construction or comiole- tion of the canal from "Dam ISTo. 6" to Cumberland. 11 The act above referred to authorized the canal company to secure the payment of these bonds, and the interest to accrue thereon, by a first mortgage upon its net tolls and revenues; and provided "that the rights and liens of this state (Maryland) upon the revenues of the Chesapeake and Ohio canal company, shall be held and con- sidered as waived, deferred, and postponed in favor of the bonds that may be issued under the aforegoing sections, so as to make the said bonds and interest to accrue thereon preferred and absolute liens on said revenues, according to the provisions of the second section of this act, until said bonds and interest shall be fully paid." The canal company, under this authority, issued bonds to the amount of $1,699,500, payable thirty-five years after date, with coupons for the interest thereon, payable semi-annually, January 1st and July 1st, and executed a first mortgage upon its net tolls and revenues to secure their payment. On the 8th of March, 1847, the general assembly of Virginia passed an act to guarantee |300,000 of these construction bonds." They were issued as follows: $18,000 in 1847, $131,500 in 1848, and $150,500 in 1849. All were payable 35 years after the dates of their issue. By authority of its charter, and also of a proviso to the above re- cited act of the Maryland general assembly, the company issued bonds similar to those described above, known as ^'•repair bonds," to the amount .of $200,000, payable 20 years after date. The pro- ceeds of these bonds were to be applied to putting and keeping in repair that portion of the canal which had then been built. By an act of her general assembly, passed March 15th, 1849, Vir- ginia guaranteed these $200,000 of "repair bonds." They had priority of lien upon the tolls and revenues of the company, both by legal construction and by express agreement, over all its other debts and liabilities, including its ''•construction bonds." The company paid the accruing interest on its " construction bonds" to 1851, and on its "repair bonds" to 1853. Between those dates and 1865, Virginia paid interest on these two classes of bonds to the amount of $305,025, and thus became a creditor of the canal company to that amount. She also held other claims for amounts due her on other accounts. These claims, conceded hy the company, are recited on page 7 of the "Annual Report of the President and Directors of the Chesapeake- 12 and Ohio Canal Company to the Stockholders, June 3rd, 1867," as follows, to wit : There has been paid by tlie state of Virginia, coupons amount- ing to 1269,625, and they also hold bonds heretofore issued to Sel- den, Withers & Co., for coupons paid by them, §140,000, and in- terest thereon to the first of January, 1867, $126,000; and a certifi- cate for coupons funded, $35,400; with interest due thereon to the first of January, 1867, $21,731; total $592,756. The state also claims interest on advances made for pajmient of the coupons to the first of January, 1867, amounting to $140,829 22. These debts due to the state of Virginia, were held, botb by the state and the canal company, to be "preferred liens upon the tolls and revenues of the Chesapeake and Ohio canal company." Making a total of $738,585 22. In addition to the sums above recited, the transcript of the record furnished the committee shows, on page 22nd, that Virginia held, and placed in the hands ot the counsel, hereinafter named, prefer- red bonds of said company, amounting to $13,500, with $13,365 interest due thereon; total $26,865; making a grand total of $760,450 22. The court of appeals of Maryland has decided that the bonds as- signed to Virginia by Selden, "Withers & Co., amounting to $140,000, and the interest thereon, and also the interest due Virginia upon the coupons paid by her, were only simple contract debts, and not preferred liens. Prior to this decision, however, the state of Virginia claimed that all these debts were secured by a first mortgage upon the tolls and revenues of the canal company, and were, therefore, preferred liens. The canal company conceded the justice and validity of this claim, and had commenced their payment before the aforesaid deci- sion was made. Wishing to realize or collect the debts due to the state from said company, the general assembly of Virginia passed, on the 26th of February, 1867, the following joint resolution : Be it resolved by the general assembly of Virginia, That the board of public works be and they are hereby authorized and direc- ted to adopt such measures as in their judgment may be necessary and advisable to realize the preferred liens of the state upon the tolls and revenues of the Chesapeake and Ohio canal company; and for that purpose to contract with counsel for the enforcement of said liens, in concert with other holders of similar liens : provided 4 13 however, that the compensation of such counsel shall be contingent only,' and shall be paid by said board only out of the proceeds to be realized from such proceedings, or the debts and liens secured thereby. The day after the passage of this resolution, to wit: February 27, 1867, the board of public works made the following contract with the parties therein named : " Whereas the general assembly of Virginia did, on the twenty-sixth day of February, 1867, pass the following joint resolution : Be it resolved by the general assembly. That the board of public works be and they are hereby authorized and directed to adopt such measures as in their judgment may be necessary and advisable to realize the preferred liens of the state upon the tolls and revenues of the Chesapeake and Ohio canal company, and for that, purpose to contract with counsel for the enforcement of said liens in concert with other holders of similar liens: provided however, that the compensation of such counsel shall be contingent only, and shall be paid by said board only out o± the proceeds to be realized from proceedings, or the debts and liens secured thereby; And whereas the state of Virginia is interested in the Chesapeake and Ohio canal company for five hundred thousand dollars of bonds issued by said company, which bonds have been guaranteed by the state ; And whereas said company is utterly insolvent, whereby said state is really bound for the full amount of said bonds, to wit: the sum of five hundred thousand dollars; and the said state is further creditor of said canal company in the sum of two hundred and ninety-one thousand dollars, for interest paid on said bonds, and also in the sum of two hundred and eight thousand dollars, due on bonds held by the state, with interest from the first of Januarj^, 1852, and also for other sums due on other bonds which have been lost, stolen or mislaid, on which also interest is due; And whereas it is represented to this board, that if the tolls and revenues of said canal are appropriated to the payment of these debts due* the state of Virginia and other like debts due other per- sons of like dignity, that said revenues and tolls will be sufficient to infuse large value into interests which are now totally unpro- ductive, and will relieve the state from her aforesaid liability as guarantor, by providing for the payment of the interest on said bonds so guaranteed as aforesaid. Therefore, the board of public works of the state of Virginia, in pursuance of the authority given by the hereinbefore recited joint resolution of the general assembly, do hereby agree and contract with Bradley T. Johnson, of the city of Richmond, and IsTeilson Poe and John P. Poe, of the city of Baltimore, of the second part, that they, the parties of the second part, shall undertake to secure the aforesaid debts and interests of said state in said canal company, • 14 l)y securing possession of the canal and appropriating its tolls and revenues to the payment of the said debts and liabilities, and other debts and liabilities due by the canal company to other parties as well as to said state; and to secure this end the said board of pub- lic works do hereby constitute and appoint the said parties of the second part the attorneys of the said state, for her and in her name to take all such proceedings as may be necessary at law or in equity, before any court, anywhere, or before the general assembly of Mary- land, to secure said interests and debts of said state, by procuring possession of the tolls and revenues of said canal, and appropriating them to the payment of the said debts due said state, and liabilities for which she is security as aforesaid, and the like debts due by the canal to other creditors. And it is expressly understood and agreed between the parties to these presents, that the said parties of the second part shall bear all the expenses and costs of any proceeding which they shall insti- tute and carry on, and that they shall indemnify the state of Vir- ginia from all costs and charges whatsoever incurred by them in the prosecution of any proceeding commenced in the name of the state, either separately or in connection with other creditors. And it is further understood and agreed, that whenever the said canal or its tolls and revenues are delivered over into the possession of the preferred creditors thereof, and of which the state is one, as hereinbefore set forth, then and in that case the parties of the sec- ond part are to be considered as having performed their obligations under this contract and agreement, and to have secured the said debts, liabilties, and liens of said state on said canal. And the said board of public works of the state of Virginia, by and in pursu- ance of the authority vested in them by the hereinbefore set forth joint resolution, do hereby covenant and agree to pay and assign in bonds or coupons of said canal company, to the parties of the second part, as soon as said canal or its tolls and revenues are delivered or appropriated to the preferred creditors thereof, such per centum of the debts due, liabilities guaranteed, and claims against said canal held or guanteed by said state, as shall be determined by a general meeting of the preferred creditors of said canal company to be just, proper and sufficient compensation for like services. Richmond, February, 27, 1867. F. II. PEIRPOIXT, Governor Virginia, President Board of Public Works. "WM. F. TAYLOR, Auditor Public Accounts. BRADLEY T. JOHNSOX. JSTEILSOX POE. JOW P. POE. By order of the board of public works. 15 In testimony whereof we have hereunto set the seal of said board and affixed our names, this day and year aforesaid. [Seal] J. M. HERNDOiT, Secretary of Commomvealth^ And ex- officio Clerk Board of Public Works, Six days after the execution of the foregoing contract, the follow- ing supplemental contract was made: Whereas, on the twenty-sixth day of February, 1867, the board of public wor% of Virginia agreed with Bradley T. Johnson, ISTeilson Poe and John P. Poe, that they should procure the Chesapeake and Ohio canal or its tolls and revenues to be delivered over to the pre- ferred creditors thereof, or trustees for their benefit, and as soon as said work was done, then to pay said parties such compensation as might be agreed on by a general meeting of preferred creditors as £t and proper compensation in such cases, all proceedings to be at the expense of the parties of the second part; and whereas all par- ties consider it better to have the compensation fixed and agreed upon at once, without waiting for the general meeting: therefore it, this fifth day of March, 1867, is agreed between said board and said Johnson, Poe and Poe, that the rate of compensation shall be twenty per cent, of the debts due to, liabilities guaranteed, and money paid by the state of Virginia to, for and in behalf of the Chesapeake and Ohio canal company, which rate shall be in lieu of that referred to in original agreement, and which amount shall be paid the parties of the second part in bonds, coupons or other in- debtedness of the canal company in the hands of and belonging to the state, as soon as said canal or its tolls and revenues is delivered or appropriated to the preferred creditors thereof, or trustees for them. Witness our hands and the seal of said board. F. H. PEIPPOIOT, Governor of Virginia. WM. F. TAYLOR, Auditor of Public Accounts, jm. S. CALVERT, Treasurer of Virginia. By order of the board of public works of the commonwealth of Virginia, I have hereunto set the seal of the said board this 5th day of March, A. D. 1867. [Seal] J. M. HERNDON, Secretary of Commomveatth, And Clerk of the Board of Public Works. Witness our han :1s and seals this day aforesaid. BRADLEY T. JOHXSO^T, [Seal.] NEILSOE' POE, [Seal.] JOHN P. POE, [Seal.] The remarkably loose and unsatisfactory manner in which the records of the board of public works were kept from the time when the foregoing contracts were made, to the final settlement between the parties thereto, was such, that it is exceedingly difficult, if not impossible, to ascertain from them, with any degree of certainty, the precise amount or character of the claims of the state which were placed in the hands of the counsel for collection. The record contains no summary of such claims. Kor does it contain any reg- ular account with counsel ; nor any condensed statergent of their transactions. The reports and settlements of counsel are but little, if any, better. If their object had been to so obscure, mystify and perplex their transactions as to render a full and satisfactory under- standing of them exceedingly difficult, if not impossible, they could scarcely have accomplished that object more successfully. Their reports are numerous and lengthy, but not one of them contains a succinct statement of the claims in their hands, or their collections- upon those claims. It is only by wading through the whole mass of. matter, and thoroughly studying every part of it, that the facts can be educed. While, however, these records, when taken alone, fail to show what claims were placed in the hands of counsel, they, in connection with the published "Reports of the President and Directors of the Canal Company," and of the "Maryland Reports,'* do show that, omitting the Selden and "Withers' bonds for §140,000 and the interest thereon, and also all claims for interest on the cou- pons held by Virginia, the following claims, which were acknowl- edged by the canal company, and decided by the ^laryland court of appeals to be "preferred liens," were in their hands, and collected by them, to- wit: Certificate for coupons funded, - - 35,400 00 Coupons paid and held by the state, - - 269,625 00 Preferred bonds of the company, - - 13,500 00 Coupons for accrued interest thereon, - - 13,365 00 Aggregating the sum of - - 331,890 00 The whole amount paid into the state treasuc^y on ac- count of these claims, v>^as - - - 82,347 10 Leaving a balance in the hands of counsel, of - §249,542 90 Assuming that the above sum of §331,890 was all that was col- lected by the counsel, they w^ere entitled to §66,378, their compen- * 17 sation being 20 per cent, of their collections. This sum, taken from $249,542 90, leaves $183,164 90 still due. This statement is not claimed to be absolutely correct ; but it is as near an approximation to it as the ambiguous character of the ' records aifords. The contract of February 27th, 1867, provided that the compen- isation of counsel should be "such per centum of the debts due, lia- dbilities guaranteed, and claims against said canal held or guaran- teed by said state, as shall be determined by a general meeting of 4he preferred creditors of said canal compan}^ to be just, proper ,and sufficient compensation for like services." The supplemental contract, made si^ days thereafter, says: "The rate of compeusa- 'tion shall be twenty per cent, of the debts due to, liabilities guar- anteed, and money paid by the state of Virginia to, for, and in be- half of the Cheseapeake and Ohio canal company." ' By what authority was such a contract made? The authority of the board of public works to contract with bounsel for the enforcement of the liens of Virginia upon the tolls and revenues of the Chesapeake and Ohio canal company, is to be found in the joint resolution passed by the general assembly on the 26th of February, 1867. That resolution is recited in the contract as the authority for making it. The board had no authority to make a contract for such purpose before the passage of that resolution. Our first business, therefore, is to enquire into the scope and meaning of the joint resolution, and ascertain what powers it con- ferred upon the board. The resolution is as follows: Be it resolved by the general assembly of Virginia, That the joard of public works be, and they are hereby authorized and (lirected to adopt such measures as in their judgment may be neces- sary and advisable to realize the preferred liens of the state upon ,;he tolls and revenues of the Chesapeake and Ohio canal company; uid for that purpose, to contract with counsel for the enforcement |)f said liens, in concert with other holders of similar liens: pro- dded however, that the compensation of such counsel shall be con- lingent only, and shall be paid by said board only out of the pro- ceeds to be realized from such proceedings, or the debts and liens ecured thereby. i What did the general assembly mean by "the preferred liens of he state?" It doubtless meant such liens as it terms similar liens *n the hands of other holders. The correct answer to this question \ 3 18 may, tlierefore, be obtained hy ascertaining what kind of Wens tliese '^similar liens, in the hands of other holders/' were. What ^'pre- ferred liens" were held both by Virginia, and by other parties also? Held by them in common? The canal company had, as already stated, issued "construction bonds" to the amount of ^1,699,500, and "repair bonds" to the amount of |200,000. These were all coupon bonds, with coupons, payable semi-annually, for the interest thereon. The payment of both the bonds and the coupons thereon, as they should respect- ively become due, was secured by a first mortgage upon the net tolls and revenues of the canal company. Each of these bonds and coupons w^as, therefore, a preferred lien upon thog^ tolls and reve- nues. All parties, therefore, whether individuals or states, who held any of these bonds or coupons, were holders of '^preferred liens.'' Where two or more parties held them, they were holders of " sbnilar liens," or the same kind of liens, and might act in con- cert for their enforcement. Virginia held some of these liens, and various persons held others; hence, the state and thesQ persons were "holders of similar liens." How any of these holders of either the bonds or coupons became possessed of them, is a question which does not arise, and is wliolly foreign to the point under considera- tion. The question we are now seeking to solve is, what did the resolution mean by preferred liens? The preferred liens of the state were, indisputably, such liens as she held in common with " other holders of similar liens." This precludes the idea that the joint resolution had any reference to the release of Virginia from her guaranty of the bonds of the company. Virginia was the ojily guarantor of the bonds of the canal com- pany. In this respect there was no one who sustained a similar re- lation to either the company or its creditors. If, therefore, her guar- anty can be regarded a "preferred lien" in contemplation of law, it was not such a lien as Mie board was authorized to contract with counsel to realize or enforce "in concert with other holders of simi- lar liens." Again: As the "board" was "to contract with counsel for the enforcement of said liens in concert with other holders of similar liens," the question arises, what liens other holders held which could be enforced in 1867? There could be no foreclosure of their mortgage until there was default on the part of the company. The company was not in default on its bonds. ISTeither its repair nor 19 construction bonds were due. Its only default was in its failure to pay the coupons for interest on its bonds. The only preferred liens which were in the hands of other holders which could then be en- forced, therefore, were the past-due coupons. Virginia, by the payment of $305,000 of these coupons, had been subrogated to the rights of their original holders. Such subroga- tion gave her, however, no right which the original holder did not possess. Her lien was similar to that of other holders of past-due coupons, and they might act in concert for their enforcement; not because of her guaranty, but by reason of her ownership of fast-due coupons. A sentence in the contract of February 27th, 1867, strengthens this position. It says: These. debts due the state of Virginia, and other like debts due other persons of like dignity." '^Like dignity,''^ cannot, in this case, be applicable to the holders of these like debts'^ — that is, to the state of Virginia dinU individual creditors, h^at to the debts themselves. They were like debts,'^ of " like dignitg,'' due to the state and to persons. Such terms could not be applied to Virginia's guaranty of the bonds of the canal company. Again: Counsel was to "be paid by said board out of the proceeds to be realized from such proceedings, or the debts and liens secured thereby. Virginia's release from her guaranty was no recover!^ from the canal company of anything, but simply a release from her obligation to the creditors of that company, who held the bonds which Virginia had guaranteed. Her right of recovery did not arise from her guaranty, but from her oionership of bonds and coupons of the company, which she held in common with " other holders of similar liens." In what sense could counsel, who were to "be paid only out of the proceeds to be realized from such proceedings," that is, to be paid in kind, receive 20 per cent, of Virginia's release from her obligation to the creditors of the canal company? The joint resolution under which the board was acting settled the question, beyond a doubt, that counsel were to be paid in kind. Hence, if they receive money of the canal company, they were enti- tled to be paid in money. If they received bonds or other evidences of debt for the state, they were to be paid in the same. If they re- <3eived a release from the creditors of the canal company, a thing w^hich was not in the contemplation of the resolution, they have no 20 right to claim either the bonds or money of the state as their por- tion of such release. ■ The joint resolution does not contain one word about, or allusion to Virginia's guaranty, or an intimation of a desire to employ coun- sel to release her from it. l^o such meaning appears upon its face. If it be in the resolution at all, it is there covertly ; and as the reso- lution was drawn by the counsel themselves, as is shown by their oion testimony, the rule of law which requires that contracts shall be con- strued most strongly against the state, does not" apply in this case; but the rule that no man shall gain by his own ivrong, should be ap- plied to it, and the hidden meaning, if it has any, be discarded. The message of Governor Walker, of March 8, 1870, who was ex-officio president of the board, shows that he did not contemplate the absorption of Virginia's claims against the canal company by counsel upon such a construction. He says, page 13, when enu- merating the available assets of the state: The claim of the state against the Chesapeake and Ohio canal company, being for interest paid on account of the bonds of that company guaranteed by the state, is in process of settlement; and the agents of the state who have the matter in charge are confident that the state will soon realize therefrom, less expenses, nearly or quite the sum of $600,000. Realizing " the preferred liens of the state ujDon the tolls and revenues of the Chesapeake and Ohio canal company," evident!}^ means, so enforcing the legal remedies which the state, in common with "other holders of similar liens," or holders of "other like debts of like dignity" had, as to recover from the company the amounts due her on account of bonds and coupons which she held against it, just as other holders of similar liens obtain payment of the sums due them. The conclusion reached upon this point, after the 'most patient, careful, and thorough consideration of the whole subject, is, that the joint resolution authorized the board of ]3ublic works to contract with counsel to enforce the remedies which Virginia had, in com- mon with all other holders of similar liens, for the recovery of the respective sums due to the state, and to all others who joined in the movement, on account of bonds and coupons held b}^ them upon the canal company; and that it gave the board no authority to con- tract with counsel for any other purpose whatever. 21 The idea, advanced by the counsel, that this course is obnoxious to the charge of selfishness or narrow-mindedness, is contradicted by the facts themselves. If Virginia had only sought to recover what the canal company owed her, and to procure release, from her obligation to* the bondholders as guarantor of those bonds, the charge of selfishness and narrow-mindedness might well be made against her; but when she makes it the duty of the board of public works ^'to contract with counsel for the enforcement of {her) liens in concert with other holders of similar liens," and leaves her- self still hound by her guaranty, except so far as she becomes released from it by the payment of the coupons and bonds guaranteed by her as they become due, such a charge recoils upon those who make it, and completely refutes their proposition. The contract of February 27th, 1867, is based, in part, upon the assumption that "the said company is utterly insolvent." And the printed brief or statement of the counsel says, on page 10 : " From the year of its completion, 1851, to 1869, it never earned enough to pay off its floating debt, much less provide for any of the interest on preferred or mortgaged bonds;" Are these statements sustained by facts ? The 39th annual report of the president and directors of the canal company, made June 3,1867, says, on page 4 : "Excess of revenue over current expenses, $132,590 49." Yet during that year the extrtior dinar y work done by the company amounted to $40,006 25. Its total expenses were $234,256 37, and its earnings, $366,846 86. On page 6 of the same report, the following statement occurs : The annual report of June, 1865, gave a detailed statement of the outstanding current or floating debts of the company payable from their available surplus revenues, amounting to $301,024 25. During the past two years these obligations have been paid, with the exception of about $10,000, due for the greater part for out- standing certificates for repairs and small balances on superinten- dencies, to parties who have not presented them for payment; these can be paid when demanded, and for all practical fiscal purposes, the floating debt of the company may be regarded as extinguished. The future surplus, revenues, after the proper maintenance and improvements required to keep the canal in good condition, will be applicable to the payment of the interest due on the bonds of the company. 22 Again, on page 8, the same report, after speaking of the pros- pects and plans of the company, says : It is confidently anticipated that the coupons of interest on the bonds of the company issued for the completion and repair of the canal, becoming due on the 1st of July and 1st of Jaiiuary ensuing^, can be paid at maturity. That is, if past-due interest should be funded, the company would be able to pay interest from that time as it accrued. On the 22d of August, 1867, Bradley T. Johnson & Co. reported to the board a collection of $22,302, and received for their services in collecting it the sum of |4,460 40, that being twenty per cent, of the amount collected. The order of the board on that occasion is as follows : THURSDAY, August 22, 1867. An account of Bradley T. Johnson & Co., amounting to $4,460 40, being twenty per cent, on |22,302, realized from the tolls and reve- nues of the Chesapeake and Ohio canal company, and paid into the treasury, and applied to the liens of the state on said tolls and reve- nues, as per contract between said Johnson & Co. with the board of public works of Virginia, authorized by joint resolution of the general assembly passed February, 1867, w^as submitted and con- sidered. Whereupon, it was ordered that the said account be cer- tified to the auditor of public accounts, as correct, for paj^ment. The management of the canal company may have^been improvi- dent and injudicious; but wdth these facts before us, it is taxing our credulity too severely to ask us to believe that it was utterly in-' solvent,^' and that from "1851 to . 1869 it never earned enough to pay ofiT its floating debt," when the compani/ shows it had paid ofiP its floating debt before the board contracted with counsel; and when that very coimsd, who makes the statement, had received $4,460 40 for collections made by him on account of interest due the state, in less than six months after his contract with the board had been made, and about two years and a half before the time when he says it had not paid ofi:* its floating debt, much less provide for any of the interest on preferred or mortgaged bonds. Another paragraph in the contract of February 27, 1867, must be noticed. Immediately after declaring the canal company to be utterly insolveyit,'' and enumerating some of the debts and liabilities, the contract says: 23 And whereas it is represented to this board, that if the tolls and revenues of said canal company are appropriated to the payment of these debts due the state of Virginia, and other like debts due other persons of like dignity, that said revenues and tolls will bo sufficient to infuse large value into interests which arc now totally unproductive; and will relieve the state from ber aforesaid liability as guarantor, by providing for the payment of the interest on said bonds so guaranteed as aforesaid. Can tbere be anything more superlatively absurd than the state- ment, that large value'' can be infused into ^'totally unproductive'' interests by appropriating the net ''tolls and revenues" of an 'bitterly insolvent" company to the payment of its debts? With what propriety could the canal company be said to be "w^ terly insolvent" if the appropriation of its net earnings to the pay- ment of its debts would relieve it and its securities from all lia- bility ? Again : The board was not only unauthorized to contract with coun- sel to procure the release of Virginia from her liability as guarantor of the bonds of the canal company, but no reason or necessity exis- ted for their doing so. If the counsel employed "to realize the preferred liens of the state upon the tolls and revenues of the com- pany" took proper steps "for the enforcement of said liens in con- cert with other holders of similar- liens," as they were required to do by the joint resolution, these steps would secure the payment of the debts due by the canal company, both to Virginia and all her other preferred creditors, and the state's release from all liability as guarantor would follow as the legitimate and necessary consequence of such proceedings. The moment the debts of the company were paid all liability for those debts, on the part of both the company and the state, ceased. The same proceedings which secured the one^ necessarily secured the other ; and until those debts i(?erepaid, the state was no more released from her liability to the holders of the bonds she had guaranteed than the coinjoany was. The proceedings which would secure the payment of the debts due to Virginia would ne- cessarily secure the payment of the. debts due to ''other holders of similar liens." Hence the propriety of their acting in ''concert." When the board of public works contracted with Bradley T. John- son, Neilson Poe, and John P. Poe to pay them "twenty per cent, of the debts due to, liabilities guaranteed, and money paid by the state of Virginia to, for, and in behalf of the Chesapeake and Ohio 24 canal company," they contracted to pay them, and did afterwards pay them, out of the assets of the state, not only twenty per cent, of all debts due to the state from the canal company which they should realize or collect, but twenty per cent, also upon the whole amount of both principal and interest due to other creditors of that company who held its guaranteed bonds or coupons for the inter- est thereon. This was not only unwarranted by the joint resolu- tion, but was a fraud upon the state. The repair bonds of the company were all, with all the interest due thereon which had not been paid by Virginia, paid by the com- j)ani/ before Virginia realized or collected one dollar of the money she had paid on account of said interest; so that the payment to counsel of twenty per cent, thereon by Virginia was virtually giving to said counsel the sum of $63,100, because said company had paid to its other creditors the sum of $315,500. Another remarkable feature of the contracts between tho board and counsel is, that they not only construe the words *'to realize the ^preferred liens of the state upon the tolls and revenues of the Chesa- peake and Ohio canal company" to mean "to procure the release of Virginia from her obligation to the creditors of the canal com- pany who hold its guaranteed bonds," but they determine in ad- vance that that which would not be a release in law, and which is no release in fact, shall be construed to be such by this contract. The contract says : And it is farther understood and agreed, that whenever the said canal or its tolls and revenues are delivered over into the posses- sion of the preferred creditors thereof, and of which the state is one, as hereinbefore set forth, then in that case the parties of the second part are to be considered as having performed their obliga- tions under this contract and agreement, and to have secured the said debts, liabilities and liens of said state on said canal. This would seem broad and latitudinous enough to cover every purpose of the contracting parties. Yet even with this most re- markable and unprecented decision to regard a fictitious release of the state from her obligations to the creditors of the canal company a realization of the '^preferred liens of the state upon the tolls and revenues" of that company, the counsel have still failed to comply with their contract. Its language is : Whenever the said canal or its tolls and revenues are delivered over into the possession of the preferred creditors thereof, and of which Virginia is one, as -hereinbefore set forth. 25 > How is it hereinbefore set forth f Here it is: "The parties of the second part (the counsel) shall undertake to secure the aforesaid debts and interest of said state in said canal company by securing possession of the canal and appropriating its tolls and revenues to the , payment of the said debts and liabilities and other debts and lia- bilities due by the canal company to other parties as well as to said state." (!N"ot italicized in contract.) Neither Virginia nor the counsel has ever secured even an imciginarif possession of the Chesa- peake and Ohio canal, and it is to this day as absolutely in the pos- session and under the control of the canal company as it was when this contract was made. The settlement made between the board and the counsel on Jan- uary 3d, 1873, and the testimony taken since that time, develop facts, which, if characterized as they deserve to be, would require the use of harsher terms than would be proper to use in this .report. The facts will speak for themselves. On January 3d, 1873, the board and counsel assumed that the state had been released, according to the terms of.their contract, from her liability as guarantor of the construction bonds of the canal company. The principal of these bonds amounted to the sum of $300,000, and the interest on them from July, 1852, to July, 1872, to the sum of $369,000. Of this interest the sum of $28,674 had been paid; leaving a balance of $340,326 still due on interest. To these sums they added a debt due to Virginia from the canal company, remounting to $26,865, making a total of $667,191. Upon- the unfounded pretension that Virginia had been released from her obligation as guarantor of those bonds, the counsel claimed, and the board allowed and paid them $133,438, that being twenty per cent, upon the above-stated sum of $667,191. It was claimed, as has been stated, that Virginia, having guaranteed the bonds of the canal company, was liable to the creditors of the canal company for the payment of those bonds and the interest thereon, and that she had been released from her liahility. Hence counsel was paid twenty per cent, on the whole amount as compensation for their ser- vices in procuring this release. N"ow let us see how far Virginia has been released from her liability as guarantor of those bonds ? I^one of those bonds are yet due ; $18,000 of them will become due in the year 1882, $131,500 in 1883, and $150,500 in 1884. Those bonds, with Virginia's guaranty upon them, are still held by 4 26 the creditors of the canal companj^, and not one of ihem has eve intimated his purpose to release her from such guarantj^ What had the canal company done, up to January, 1873, whicl could have been construed as either a formal, a virtu{?l, or evei imaginary release? They had not, of course, paid any of the bonds They had from nine to twelve years to run before they would be come due. Neither had they then, nor have they yet paid the iyiterest due upon those bonds. Hamilton G. Fant, a broker of Washington city, and one of the counsel's own witnesses, testified that the company is in default ii the payment of interest on its preferred bonds from July, 1864, to the present time; and that its bonds have depreciated since 1873 How much they had depreciated, he did not know. E. H. Maury, Esq., a broker of Richmond city, testified that these bonds had recently sold as low as from 70 to 75 cents in the dollar; and, remember, they have past-due coupons on them for thirteen years' interest. These facts prove, beyond a doubt, that Virginia's liability as guarantor of these bonds is just as great noin both in law and in fact, as it was the day they were issued. Yet the counsel, after having been allowed to retain $63,100 of the funds of the state, upon the pretense of having released the state from her liability as guarantor of the ''repair bonds" of the canal company, when, in fact, every dollar of those bonds was paid by the company before the interest paid on them by Virginia could be refunded to her, were, in 1873, allowed to retain $93,224 more of the state's funds upon a fictitious release of her liability as guarantor of her "construction bonds." It is not surprising that, with suck guardians, Virginia's treasury should be empty. It is argued that even if the joint resolution did not authorize the board of public works to contract with counsel to procure the release of Virginia from her liability as guarantor, said counsel ought, nevertheless, to be paid twenty per cent, on the amount,, principal and interest, which the state had guaranteed, because it was by their labors and services that the state was released from her obligation to pay these bonds and the interest thereon. There are several weighty objections to this proposition : In the first place, Maryland held a second mortgage upon the tolls and revenues of the- canal company for about $10,000,000, none of which could be col- lected so long as the " preferred bonds " of the company were unpaid. She was, therefore, more deeply interested in its pros- I 27 ejiperity than any and all of its other creditors, and the change in the management of the canal was very largely due to this fact. That ;|change could not have been made without the active agency of iHiMaryland; and that agency v^ns prompted by her own interest, '^i In the next place, the other creditors of the company were as J^deepl}^, and, when combined, more largely interested than Virginia. UThe creditors of the company were not those only who held the bonds guaranteed by Virginia. Virginia had only guaranteed eii$300,000 of the $1,699,500 of construction bonds which had been issued. So there were $1,399,500 of those bonds which were not (^ guaranteed, and which the holders of would feel more anxiety about . ifrom that fact, and, consequently, would be more active in their , efforts to collect interest on them as it became due, and to place the i; company in a condition to pay the bonds as should become 5: due; so that these creditors are to be credited with a large amount ^ of the influence which improved the management of the canal . I In the third place, the improved condition of the finances of the ,! company was largely due to the revival of business after the war^ ) which had been greatly crippled during the war. The close of the t war found the company not only with an empty treasury, but with ; a floating debt of $301,024 25. *rhe revival of business enabled it to pay off" this debt in the years 1865 and 1866, before the contracts ' of February 27th and March 5th, 1867, were made; and it is fair f to presume that the counsel had knowledge of this fiict before ■ they contracted with the board of public works. It was made pub- lie by the canal company, and said counsel claimed to be familiar \^ with the affairs of the company. Said company not only paid off this large floating debt in 1865 and 1866, but published its readi- ^ ness to resume the payment of interest on its joreferred bonds, and did commence payment thereon. Virginia received the sum of ' $22,302 on the 22d of August, 1867, on account of her claims against the company, and paid ^'Bradley T. Johnson & Co.'' ^ $4,460 40 for collecting it. This sum was collected by said counsel t in about five months after they had been contracted with, and before aivj change had taken place in the management of the company, and was due solely to the revival of business on the canal. ^ When the canal company commenced these payments a dispute arose as to the proper distribution of its surplus revenues, and it , was enjoined from making further payments until the points in dis- ' pute should be settled by the courts. The canal company always 1 28 <3onceded the justice and correctness of Virginia's claims to a muc larger amount than was .allowed by the courts; and. but for the']^^ intervention, she would have received a much larger amount tha ^{^i she did: provided the counsel had not retained it all as compensatio\\^^ for their services. ,i2 ^ourthl3^ But conceding, as is fully and heartily done, that th' ^\ counsel displayed and exercised great skill, zeal, energy, and per severance in the management of the business they had undertaken except as to the payment into the treasury the proper sums due the state on account of collections made by them for her; and con-jj ceding, also, that the labors of said counsel were highly valuable, and contributed materially to improvement in the management of the canal company, and, consequently, to the promotion of the interests of all the creditors of that company, the sixty-six thousand dollars to which they were legitimately entitled, that being twenty per cent, of their actual collections, was not only ample, but liberal compensation for all the services they rendered. The final decree in the case of The Commonwealth of Virginia vs. Chesapeake and Ohio Canal Company was rendered by the Maryland court of appeals at its October term in 1871 — less than five years after the contracts of 1867 were made. A!l the legal costs of the proceed- ings, in both the lower and higher courts, were paid, by order of court, out of the funds of the canal company. If the other expenses of counsel amounted to $10,000, which is not reasonable to suppose, there was still left to them the net sum of $12,000 per annum for the whole time these proceedings were pending, while it is reasonable to suppose that not more than one-fourth of their time was devoted to them. They had already received large sums upon their collec- tions, and had done nothing that they thought unnecessary to en- able them to make those collections. Hence, the retaining by the counsel, with the concurrence of the board, on the 6th of August, 1871, of sixty-three thousand and one hundred dollars of the money which said counsel had collected from the canal company for the state, in addition to 20 per cent, allowed them on their actual collec- tions, and not as commissions on such collections, but as compensa- tion for services which said counsel claimed to have rendered in releasing the state from her liabihty as guarantor of the "repair bonds" of sAid company; and the further sum of ninety-three thou- sand two hundred and twenty-four dollars, on January 3d, 1873, not, as above stated, as commissions on their collections, but in addition f ! 29 ^^hereto, as compensation for services they claimed to have renderert '^[1 releasing the state from her liability as guarantor of the ''con- struction bonds'' of said company, when, in fact, there had not %en, nor has there yet been any such release, was neither autho- "ized by laio nor supported by equity ; and those sums, with legal hterest thereon from those dates, are still due the state, and their ;i)ayment ought to be legally enforced. ^ Wishing to understand all the facts connected with the matters ''mder investigation, and to do perfect justice to all parties inter- 'isted in them, without partiality or prejudice to any, the committee riflbrded the counsel the amplest opportunity to explain and vindi- 3ate their views and actions. Said counsel appeared and discussed :he subject fully, both in person and by other counsel, both orally knd by written arguments; introduced such wisnesses as they de- dred, and were allowed to write out the various questions they ivished them respectively to answer, place them in the hands of said witnesses to take away with them, and write out their answers apart From any of the committee, and to file the deposition of one of the counsel (General Johnson), prepared in the same way, without any cross-examination. It is deemed useless to comment, in this re- port, upon the testimony, as it will all be printed- Finding the records of the board of public works with reference to these transactions, and the settlements between the board and counsel shrouded in obscurity and uncertainty, the committee asj^ed and obtained leave to employ an accountant to state the account of said counsel, both upon their own theory and upon the theory of this report. They obtained the services of Robert M. Browm, Esq., Df Amherst, a lawyer and commissioner of skill and experience, who performed the duty assigned him assiduously and faithfully. His report will form a part of the record of the committee's pro- ceedings. . After carefully weighing the foregoing facts and the evidence in the record, I am impelled to the conclusion that the retention by Bradley T. Johnson, Keilson Poe and John P. Poe, attorneys for the state, of $63,100, on the 22d day of August, 1871, and of $93,224, on the 3d of January, 1873, of moneys collected by them prior to those dates, on account of claims due the state from the Chesapeake and Ohio canal company, and the consent of the board of public works thereto, were without authority of law and in vio- lation of their obligations to the commonwealth. 30 A sufficient apology tor the length of this report maybe found in the importance of the subject, and the fact that most of the infor- mation the general assembly or the people of Virginia have here- tofore had upon it has been from the parties interested or their agents. This being the first time the facts have ever been brought to the attention of the general assembly or the people of Virginia, it has .been deemed proper to state them at length. One of the contracting parties stated before the committee that the attorney-general concurred in his construction of the joint re- solution under which the contract was made. It is, therefore, deemed proper that other able counsel be consulted before any legal proceedings in the case are imperatively ordered; and as the reso- lution under which the committee was appointed requires them to ^'report the facts to this House, with such recommendation as they may deem proper," I now respectfully recommend the adoption of the following joint resolution: Be it resolved by the general assembly of Virginia, That liis excellency the governor of Virginia be, and he is hereby autho- rized and instructed to employ able counsel to examine into all matters pertaining to the contracts made by the board of public works with Bradley T. Johnson, Neilson Poe and John P. Poe, on February 27th and March 5th, 1867, and their settlements under said contracts; and if, in their opinion, there are proper grounds for sp doing, the said governor shall cause legal proceedings to be instituted by the attorney-general, in connection with such other able counsel, to recover whatever balances may be due the state on account of collections.made on her behalf by her attorneys, Bradley T. Johnson, [N'eilson Poe and John P. Poe, from the Chesapeake and Ohio canal company. All of which is respectfully submitted. JOHN E. MASSEY. I am of opinion that the fiicts in this case, as stated by the chair- man, are correctly set forth, and I concur in his construction of the resolution of the general assembly of February 26, 1867, and in the resolution recommended by him for adoption by the general assemblv. WM. F. GORDOX. PROCEEDINGS OF THE COMMITTEE. SATURDAY, Febkuary 24th, 1877. The special committee appointed under the following resolutions : Ij Whereas communications which have appeared in some of the 'newspapers published in Virginia, make it manifest that the settle- , rnents made with the Chesapeake and Ohio canal company, by Gen- eral Bradley T. Johnson, as attorney for the state of Virginia, and his subsequent settlements with the board of public works of Vir- ginia, are not so understood as to relieve the public mind from pain- ful anxiety with regard to said settlements; and whereas it is due alike to the citizens of Virginia generally, and to those who were immediately connected with said, settlements, that these matters be properly enquired into, and the facts reported to this general assem- bly: therefore, 1. Resolved by the House of Delegates of Virginia, That the board of public works be and are hereby instructed to furnish this House a copy of all the records pertaining or relating to the con- tracts entered into by said board with General Bradley T. Johnson for the enforcement of the liens and the collection of the claims held by the state of Virginia against the Chesapeake and Ohio canal company, from January 1st, 1867, to February 1st, 1873. 2. That the Hon. James Neeson be and he is hereby respectfully requested to furnish this House a statement showing the amount and character of the claims against the firm of Selden, Withers and Company, w^hich were placed in his hands for collection, as attorney for the state of Virginia; the amount collected by him in money; the amount collected by him in other assets; the character of those assets; and what disposition was made of said money and other .assets. 3. That the auditor of public accounts be and he is hereby in- structed to furnish this House a statement showing the amount of claims and. liens held by the state of Virginia against the Chesa- peake and Ohio canal company, w^iich were placed in the hands of General Bradley T. Johnson for collection; the amount thereof, which was paid into the state treasury; the amount which was paid into the state treasury on account of collections made of the firm 32 of Selden, Withers and Company; and the amount claimed by and paid to the said General Bradley T. Johnson, therefor, in each case. 4. That a committee of five be appointed, whose duty it shall be to carefully and thoroughly examine all the statements and exhibits which may be furnished in response to the foregoing resolutions, and enquire into all matters pertaining thereto, and report the facts to this House, with such recommendations as they may deem proper. Said committee shall have power to send for persons and papers — Consisting of Messrs. Massey, ll^eely. Carter of Loudoun, Ronald, and Gordon, met upon the call of the chairman. Present — Messrs. Massey, i^eely, Ronald and Gordon; and Gen. Bradley T. Johnson, witH William L. Royall, his counsel. The resolution under which the board of public works made the contracts with Messrs. Johnson, Foe and Poe, and the contracts made under the same, together with their reports, and other re- cords and papers connected therewith, were read and discussed by the committee and counsel for General Johnson. Pending which, General Johnson expressing his intention to introduce witnesses upon the subject under investigation, and de- siring time to procure their attendance, and the chairman being requested to set forth all the points upon which the investigations were to be made, in order that the same might be prepared in full and the attendance of the witnesses procured, the committee arose to meet again on the call of their chairman. THURSDAY, March 1st, 1877. The committee as enlarged by the appointment of Messrs. Clarke of Surry, and Gray, under the following resolution agreed to by the House of Delegates : Resolved, That the committee of five appointed to investigate matters pertaining to settlements of the claims of Yirginia against the Chesapeake and Ohio canal company be increased to seven — Met pursuant to the call of the chairman. Present — Messrs. Massey, Ronald, and Gordon. Not a quorum of the committee being present, the committee arose to meet again Friday evening, at 4 o'clock P. M. 33 FRIDAY, March 2d, 1877. The committee met pursuant to order. Present — Messrs. Massev, ^sTeely, G-ordon, Clarke, Ronald, and Gray. The subject-matter of investigation was discussed by Mr. J. P. Poe, of Baltimore ; upon the conclusion of which the committee arose to meet again on Tuesday evening, the 6th instant, at 8 o'clock P. M. TUESDAY, March 6th, 1877. The committee met pursuant to order. Present — Messrs. Massey, ITeely, Clarke, Ronald, Gordon, and Gray; and General Bradley T. Johnson, with "William L. Royall, his counsel. Mr. O. Horse}^, a witness on behalf of Messrs. Johnson, Poe and iPoe, being first duly sworn, deposeth and saith — Pending the further taking of this deposition the committee arose to meet again Wednesday, March 7th, at 4 o'clock P. M. WEDNESDAY, March 7th, 1877. The committee met pursuant to adjournment. Present — Messrs. Massey, ITeely, Gordon, Clarke, and Ronald ; land the further examination of Mr. Horsey was resumed. Deposition of Oitterbridge Horsey. Question. Mr. Horsey, where do you live, and what is your posi- tion? Answer. In Frederick county, Maryland, about three miles from the Chesapeake and Ohio canal; have lived there for forty years. I am a director on the part of the state in the Baltimore and Ohio railroad. I was a member of the constitutional convention of Maryland of 1867. 5 34 Question. State what you know about tlie management of tho' Chesapeake and Ohio canal for the last twenty-five years, and the influences which controlled that management. Answer. Prior to 1870, the management of the canal had been purely a political management, with all the drawbacks incident to such a system; changing with every change of administration in the state, occurring almost every two or four j^ears; so much so, that every effort made by conservative or disinterested persons to place the canal on a management independent of party, proved utterly fruitless; all its surplus revenues were consumed either in repairing improperly constructed dams, or fritted away among needy and blatant pensioners of the party that happened to be in power. Indeed, so much so, that the people of the state, who had expended nearly twenty millions in its construction, became hope- less of ever receiving from it any return, and those living in the western counties through which it passes regarded it as an institu- tion, the business of which was to accommodate their local trade, and the surplus revenues of which were to be distributed amongst their local politicians. This demand was in the main successful, except that the president and some of the other officers were some- times taken from some other parts of the state. I don't mean to say that all the revenues were actually paid to the officers of the canal as such. But that if there was any surplus, it was paid to the j)oliticians indirectly, through contracts for various matters, in the way of pretended improvements and unnecessary repairs — given to the politicians or their friends. This state of affiiirs continued until the act passed by the Maryland legislature in the spring of 1867, directing the canal to be turned over to the trustees for the jDreferred bondholders. Question. By what influence was the act of 1867 passed, and a change in the policy of the administration of the canal effi3cted ? Answer. The passage of the act was not eflected without great labor in the preparation of public opinion. It was procured through the direct influence of the leading men in the state. These gentle- men had been stimulated to their exertion to procure its passage by the incessant argument and appeals of General Bradley T. Johnson and his associates, made to them directly, together with the co- operative influence upon them of his personal friends in the state, whose assistance he had procured. General Johnson, and those who co-operated with him, had, by constant interviews with, and 35 representations to sucli gentlemen, shown them the condition into which the management of the canal had fallen and the necessity that existed as a matter of justice, right, arid true policy upon the part of the state of Maryland, that the canal should be put under the control of its creditors. That act failed because the governor of Maryland refused to enforce it upon constitutional grounds, and was subsequently repealed by the constitutional convention of 1867. This action of the governor and the convention was brought about by the pressure of the politicians from the canal counties. But the same influences which had procured the passage of the act of 1867 continued to operate upon public opinion in Maryland until the election of Governor Bowie, in 1869. He pressed this policy upon the attention of the legislature and the public, and ultimately suc- ceeded, by the appointment of Colonel James C. Clarke as presi- dent, whose administration for the first time imparted vitality to the canal, and gave to the people of the whole state the grounds of hope that at some day it might contribute to relieve them of the burden of taxation. This result was mainly accomplished through the persistent efl:orts of Johnson and his associates, who were un- remitting throughout the entire time, in every quarter where they could strengthen the feeling and movement in favor of a proper management of the canaL OUTERBIilDGE HORSEY. Deposition of William F, Jaylor. Mr. Wm. F. Taylor, another witness of lawful age, being first duly sworn, deposeth and says: Question 1. What has been your oflicial position since 1865 ? Answer. I have been auditor of public accounts since the first ot July, 1865, with the exception of the interval of time that the state was under military rule. Question 2. "What are your opportunities of knowing the finan- cial condition and claims of the state ? Answer. My opportunities of knowing the financial condition and claims of the state have been and are as favorable as those of any one else, and in many respects, better. Question 3. What estimate was placed on the debt due, and also on those guaranteed by the state for the Chesapeake and Ohio canal 36 company in 1867 ; and was the state's liability as guarantor con- sidered fixed and certain ? Answer. The opinion of the board of public works, and my own parlicularly, was that the Chesapeake and Ohio canal company was virtually insolvent, and that the debt due by that company to the state, was, of course, a very doubtful one; and further, that the state's liability as guarantor upon the bonds of the company, under the acts of March, 3 847, for extension, and of 1849, for repairs, was sucli that there was no escape from it. Question 4. What was your understanding of the intention and scope of the resolution of February, 1867? Answer. My understanding of the intention and scope of the re- solution of Februar3% 1867, was, that it conferred plenary powers upon the board of public works to take all necessary measures to relieve the state from its liabilities as guarantor of the bonds of the company, and to secure as far as possible the payment of the in- debtedness of the company to the state for the coupons paid by her; and to this end, to contract with counsel, as provided in the resolu- tion; in other words, to take all necessary steps to relieve the state ot its liabilities as guarantor, and recover what she had paid for the company in the shape of interest. I respectfully ask permission to add, as the only remaining member of the board of public works now in Virginia, that, in my opinion, the board did not transcend i the authority given it by the resolution, and that in this opinion I am fortified by that of the attorney-general, to whom I have sub- ' mitted the question. Question. Did the other members of the board put the same con- struction upon the joint resolution which you say you put upon it? Answer. I never lieard an intimation. of a doubt to the contrary. We all, jointly, construed it to mean that. Question. In your opinion, has the state been benefitted or in- jured by this contract, and the execution of it? Answer. I ani of opinion that the contract when made was a most judicious one, and that the results which have followed have been in a very high degree beneficial to the state. Cross-examined by committee : Question. What degree of publicity was given to the contract wlien made, and to the reports made by counsel at various times to the board of public works of their proceedings under said con- tract? I 37 Answer. As far back as the time of the contract, it is difficult for me to remember. The contract was made at the same session of the general assembly at which the resolution was passed. It is not usual for the board of public works to have any . of their proceed- ings published; their proceedings are public records, and as such open to the inspection of the public. Question. Were you well informed as to the financial condition of the Chesapeake and Ohio canal company in February, 1867. Answer. In 1867 I had no very special knowledge of the condi- tion of the Chesapeake and Ohio canal company. The state was guarantor for the bonds of the Chesapeake and Ohio canal com- pany to the extent of $500,000, and had been paying the coupons for 'interest of the company for several years; which I think indi- cated pretty clearly an embarrassed condition of the company. Much of the information on which the board acted was furnished by Mr. DeWitt, who was then secretary of the board, and had held that office for a long time, and was familiar with the affairs of the canal company. He gave us the impression that the canal com- pany was in a very bad condition. Question. Did you take any steps to inform yourself as to the ability of the Chesapeake and Ohio canal company to pay the debt due to Virginia on account of coupons and other evidences of debt held by Virginia against the said company; if any, what steps? Answer. It is impossible for me to tell 3^ou at this late day. I have no doubt in the world that there was steps taken. Question. "What interval was there between the passage of the joint resolution by the general assembly authorizing the board of public works to contract with counsel, and the execution of the contract between the board of public works and the counsel? Answer. I do not remember; the records of the board of public works will show. Question. By whom was that contract drawn? Answer. I do not know, sir. Question. Were the terms of that contract discussed and agreed upon by the board before it was presented for their execution ? Answer. I do not know that there was any discussion about the contract, or any extended convei^ation. The matter was spoken of, of course. I w^as satisfied with the contract as altogether advan- tageous to the state in the then condition of the company.- 38 Question. The record shows that the joint resolution was passed on the 26th day of February, 1867, and the contract entered into on the 27th day of the same month; did the board, between these dates, confer together as to the terms upon which they proposed to employ counsel, or w^as their decision and the execution of the contract arrived at at one and the same meeting of the board ? Pending the further examination of Mr. Taylor, it was Eesolved, That the chairman of the committee, Mr. Massey, in conjunction with the counsel for Messrs. Johnson, Poe and Poe, continue the taking of the depositions on behalf of General John- son, and on behalf of the committee, without the presence of the other members, and that when the same is completed a meeting of the whole committee be called — And the committee arose to meet again on Thursday, March 8th, at 91 o'clock A. M. THURSDAY, March 8th, 1877. The chairman of the committee, Mr. Massey, met ^vlth. William L. lloyall, counsel for G-eneral Johnson, under the resolution agreed to on yesterday, and the examination of Mr. W. F. Taylor was proceeded with. Answer. It is impossible for me to tell, at this late day. Just ex- actly how that matter was. I never imagined that ten years after the transaction I would be called upon to give the details of the same, and never charged ray memory with them. The leading points in the case I think I remember pretty clearly. Re-examined: Question. I understand from your deposition, that the details and circumstances under which this joint resolution was passed, and the contract thereunder made, have, owing to the length of time since, passed from your memory; are you not sure that at the time the conJ:ract was made, you and the other members of the board informed yourselves fully of all that it was necessary for you to know in order to deal w^ith the subject. Answer. I would not, of course, have consented to be a party to a contract without knowing all that it was necessarj- for me to know in order to deal with the subject intelligibly. And further this deponent saith not. AYM. F. TAYLOR. 39 Dejoositioii of Josej^h Bryan. Mr. Joseph Biyan, another witness on behalf of Messrs. Johnson, Poe and Poe, being first duly sworn, deposeth and says : 1st question. What opportunities have ^-ou had for becoming ac- quainted with the past and present management of the Chesapeake and Ohio canal company? Answer. In December, 1871, Wm. W. Corcoran, of Washington, 1). C, being a holder of preferred bonds of the Chesapeake and Ohio canal company, filed his bill in the supreme court of the Dis- trict of Columbia, in behalf of himself and of all other holders of the same kind of bonds, to "enforce the terms of the trust deed wliereby said bonds were secured. Default had been made by the company in the payment of interest on said bonds since about 1853. But after the efi:brts made by the. state of Virginia through her attorneys, Messrs. Johnson & Poe, the canal company began to pay interest on the preferred bonds; but under the decree of the court of appeals of Maryland, refused to pay interest on the coupons from the dates of their respective matuiities. The. suit of Mr. Corcoran was mainly intended to enforce this right. In March, 1872, I was retained by Mr. John Stewart, who was also a holder of preferred bonds, to manage his interests in the Corcoran suit. I proceeded to Washington and had a conference with Messrs. Car- lisle & McPherson, Mr. Corcoran's attornej^s and counsellors, and subsequently filed a formal petition to make Mr. Stewart a party plaintiff to the suit. My duties as attorney and counsellor from that time to this, has necessitated an extensive examination of the conduct of the canal company. 2d question. Have you a contract with any of the holders of the preferred bonds to enforce their rights against the said company ; and if so, wdiat compensation have they agreed to give you ? Answer. The suit by Mr. Corcoran being for the recovery only of interest on the coupons — which was considered an indisputable claim, except for certain technical objections of a purely legal character — Messrs. Carlisle & McPherson had contracted with Mr. Corcoran for a contingent fee of twenty per cent, of whatever might be recovered, the plaintiflTs to pay all expenses incident to the suit. I made the same contract with Mr. Stewart. It was understood between Messrs. Carlisle & McPherson and myself that we would 40 divide the aggregate of our several fees. The amount of bonds held by Messrs Corcoran and Stewart was about ^500,000, and the amount at stake in the litigation was over $200,000. 3d question. Do you know how much the canal company paid towards the liquidation of her debts between August, 1848, and June 1, 1870; and how^ much between June 1, 1870, and December 1,1871? Answer. From a report of the president — James C. Clarke — of the Chesapeake and Ohio canal company, made December 13,1871, it appears that $234,807 04 was paid by the canal on liquidation of the debt due by it on the repair and preferred bonds from August,. 1848, to June 1, 1870, while $441,333 33 was paid on the same account between June 1, 1870, and December 1, 1871. 4th question. Do you regard the contract made by the board of public works with Messrs. Johnson & Poe as one that was provident and advisable at the time it was made? and do you regard the com- pensation which the board agreed to give them as out of proportion to what they undertook to do? Answer. Considering the management of the canal from its foun- dation, in 1824, and the established fact that it had been, since its completion to Cumberland, in 1850, used chiefly for political pur- poses, and was absolutely under the control of the dominant polit- ical party of Maryland, and that the undertaking of the counsel of Virginia was not merely the enforcement of legal rights, but the control of political influences of great and important character — all of which was to be done at their own expense — and their reward or compensation to be only in the evidences of debt of the canal itself, the value of which was at that time little or nothing, I regard the contract made b}^ the board of public works of Virginia with Messrs. Johnson & Poe as favorable as could have been made with any counsel competent to carry out the undertaking. And I am further of opinion, that very few counsellors or attorneys possessed the legal and political qualifications or pecuniary resources neces- sary to carry out so complicated and diflicult an undertaking. 4th question. Do you, or not, think that they (Johnson k Poe) executed the contract upon their part in a manner that entitles them to the approbation of the state of Virginia? Answer. "With the exception of the refusal on the part of the court of appeals of Maryland to allow Virginia interest upon the coupons paid by her as guarantor of the repair and $300,000 of the 41 preferred bonds, the decree of that court in the snit of Virginia vs. The Chesapeake and Ohio Canal Company was extraordinarilj^, and,, I may say, unlawfully in favor of Virginia. I have examined the wliole question most minutely, and I am unable to see why the court of appeals of Maryland should have adopted the view of Messrs. Johnson and Poe, that the repair bonds and the interest accrued on them should be paid before the preferred bonds. How Messrs. Johnson and Poe accomplislied this I cannot tell; but it is certain that had they not succeeded Virginia would now be bound for those $200,000 of bonds and the arrearage of interest for twenty years. Moreover, the court of appeals of Maryland having required Vir- ginia to wait for reimbursement for money paid by her as guar- antor of tlie repair bonds until the whole of said bonds and interest due persons other than Virginia had been paid, Messrs. Johnson and Poe succeeded by arguments unknown to me in inducing the said court in the same decree to reverse its own decision in this respect as to the preferred bonds, and to decree that Virginia should receive repayment for coupons paid by her as guarantor of such loouds pari passu with, other holders. Had Virginia been required to wait for repayment in the case of the preferred bonds, as in the case of the repair bonds, she would now, and, in all probability^ would for many years continue to be deprived of all recovery what- ever on account of such payments. Besides, in regard to the $35,000 certificate, I cannot see how the court allowed that certifi- cate to be ranked as coupons. I have thought it was a noration, and stood on little better footing than the Selden & Withers certfi- cate, which clearly should not have been paid out of the revenues as coupons. I think, therefore, that the counsel of Virginia ac- complished more than could have been expected by the most san- guine friends of the state who had any knowledge of the legal bearings of the case, not to mention the political obstacles. Cross-examined by committee : Question. Is it to be understood, that in your answer to question 3d, you embrace all the payments made by the canal company from August, 1848, to June 1st, 1870 ? Answer. That answer was taken from a report of the president of the canal company, and I understood the payments therein men- tioned as made between August, 1848, to June 1, 1870, to embrace the payments made on account of the repair and preferred bonds and interest thereon — not the general expenses of the company. 6 ' 42 Qaestion. Have you examined the reports of the president of said company for -the years 1865, '66 and '67? Answer. The earliest report of the canal compaDy after the war that I have seen, was made to the stockholders in June, 1868. Question. Do 3^ou know the amount of the debt due by said canal company to the state of Maryland, wdiich was waived and deferred in favor of the bonds issued by said company, known as ''preferred and repair bonds;" if so, wdiat was the amount? Answer. The lien of the state of Maryland upon the canal com- pany, waived by her act of 1844, chapter 280, in favor of the pre- ferred bonds, '' not repair bonds," was a loan of two millions of dollars, bearing interest at the rate of six per cent, per annum, made by her to the canal in 1834, and secured by a mortgage both on the tolls and revenues and the corpus of the canal. Question. What w^as the amount of the entire indebtedness of the said company to the state of Maryland in 1867? Answer. I cannot possibly answer this question without a re- ference to documents and calculations of interest. Besides the $2,000,000 loan, and interest thereon, above mentioned, the state of Maryland owuied about four millions, I think, of preferred, or guar- anteed stock, in the canal, on which she had never received a cent of dividend; all of wdiich w^as due in 1867 — interest on this sum being at the rate of six per cent, per annum, and due from or before about 1838. Question. Could the state of Maryland enforce the collection of any part of this debt from the canal company until the preferred liens given by said canal under authority of an act of the legisla- ture of said state, w^ere satisfied? Answer. I think not. But the canal being virtually owned b}^ the state, and absolutely controlled by her, it would be a political question merely, whether, as to her own interest in it, she should require the rates of toll on the canal to be such as to pay a revenue into her treasury, or whether she should charge and collect only toll enough to keep the canal in repair, and allow it to be used practically as a free highway for her citizens. This latter view is now urged by the citizens of western Maryland, who I am informed vehemently oppose the present management of the canal, as being in the interest of the bondholders. That is, for making tolls on the <;anal such as to pay a revenue. From all I have observed of the management of the canal, it would be a serious question, whether 43 i Maryland would ever collect a revenue from the canal, above ex- penses, after the preferred bonds and interest are paid off— and her - own liens come in next for liquidation. [As chairman of the committee, and authorized by it to take de- ' positions, I feel it my duty, while not objecting to the fullest ex- pression of the opinions of witnesses in response to any question i.which call for such expressions, to object to that portion of the 1 above answer which commences with the word "but," in the first line of answer to last question, and ends with said answer, as not ' being responsive to the question asked. JIsTO. E. MASSEY, Chairman,'] And further this deponent saith not. I . JOS. BRYAK Deposition of JR. H. 31aury. Mr. E. H. Maury, another witness of lawful age, being first duly sworn as a witness on behalf of the committee, deposes and- says: [Mr. Eoyall, as counsel for General Johnson, before the entry immediately preceding was made, requested Mr. Massey, the chair- man, to have the entry made so that it should appear that the wit- ness was introduced by Mr. Massey himself, and not by order of the committee.] [This I decline to do because I am acting for and by authority of the whole committee, and not for myself alone. JOHN E. MASSEY, ChaiTman.-] Question 1. On page 21 of the printed statement or brief, pre- pared by General Johnson on behalf of himself and associates, the following language occurs, viz.: "We believe that the contract made with us in 1867 will be found, on examination, to have been a provident and discreet arrangement for the interest of the state; the per centum of compensation was fair, as is proved by the fact, that at that very time we made a similar contract with Mr. Robt. H. Maury, one of the well-known and old firm of R. H. Maury & Co., brokers, in which he agreed to give us contingent compensa- tion as much as twenty per cent, on the bonds held by him, amount- ing to many thousands of dollars: provided we succeeded in having the tolls and revenues of the canul company appropriated to the 44 payment of its lien creditors." Please state all the facts and cir- cumstances relating to the making and execution of said contract? Answer. I recollect making a contract with General Johnson, but what the provisions of it were, I do not now distinctly remem- ber, except I was to pay in kind twenty per cent, of what he recov- ered. This contract was made with me under tlie impression and understanding on my part, that other creditors and bondholders would join in it, and it was represented to me that other persons holding bonds had agreed, or would agree, to give that rate of compensa- tion. I at first objected to the compensation as being too much; but finally said I did not wish to be benefitted at the expense of other persons, and if others paid that amount I would do so too. After this contract was made, I made some enquiries and found that some of my friends who held considerable amounts of these bonds had not gone into the arrangement; and that, in fact, so far as I could ascertain, no party but the state had made the arrange- ment; consequently, on meeting General Johnson, some twelve months after this, I asked him how many persons had signed the contract beside myself He replied: "ISTo one." When I said, " of course then you do not hold me to my contract;" he replied, cer- tainly not"; and some few days thereafter called in my ofiice and cancelled the same by writing across the face of the duj)licate con- tract held by me, the words: ^'Cancelled October 12, 1871," and signed, ^'Bradley T. Johnson." Question 2. Were the bonds held by you the preferred bonds of the Chesapeake and Ohio canal company? Answer. Yes, sir. Question 3. Did you consider the canal company " utterly insol- vent" as to those bonds in 1867? Answer. 'No, I did not; but I thought it would not be worth any- thing to the bondholders, unless it was taken out of the hands it was then in 'and put into the hands of a good management. Cross-examined by General Johnson: Question 4. Was the rate of compensation the only reason that you had for desiring to withdraw from your contract? Answer. Yes, sir. Question 5. What did you do with your bonds? Answer. I held them until 1872, and sold them. Question 6. When you sold them, did they have on them all their coupons up to that time? if- Answer. They had all the coupons on them except what the com- 'pany had paid. Question 7. What did you get for them? Answer. I sold the bonds for their face value, being eighteen , thousand dollars. Question 8. Was your contract with General Johnson executed in duplicate? Answer. I think it was. Question 9. I suppose, then, that you retained one copy and he (iretained the other; am I right about this or not? Answer. It is my recollection that we each retained a copy. Question 10. I understood you to say that it was about twelve months after the contract was executed that General Johnson (returned to you the copy which he had; am I right about that being the length of time, as well as you can recollect, or not? Answer. My impression is that it was twelve months or longer, though it might have been shorter. Ee-examined: Question 11. What" is the present market value of the preferred boLds of the Chesapeake and Ohio canal company ? Answer. I have no personal knowledge of their value; but I was told by a gentleman in my office a few days ago that they had sold as low as 70 or 75; I do not remember distinctly which. Re-cross-examined : Question 12. Is not a bond which w^ould sell now as low as 70 or 75, one which in 1870 had all the accumulated interest due upon it since the time the canal had made default? and is it not one upon which much of that accumulated interest has since 1870 been paid? Answer. Yes. Re-examihed : Question 13. Have you any information as to the present condi- tion of the canal company and its probable ability to pay its pre- ferred bonds and the interest that may have accrued thereon ; if so, state what its present financial condition is? Answer. I have no personal knowledge of the condition of the company. [Mr. Eoyall (for General Johnson) at this point cautioned the witness that whatever he states that he may have heard other persons say, is not evidence; and that, therefore, he must object to 46 liis making any statement of matters that he does not know him- self to be true.] Question 14. Have you any sucli information as would enable you to form a satisfactory opinion as to the present solvency of said company? Answer. I have not. And further this deponent saith not. E. n. MAURY. The committee thereupon arose to meet again upon the call of the chairman. MONDAY, March 12th, 1877. The committee met pursuant to the call of the chairman, and no witness being present for examination, the committee arose to meet again Tuesday evening, the 13th instant, at 4 o'clock, P. M. TUESDAY, March 13th, 1877. The committee met pursuant to order. Present — Messrs. Massej^, Neely, Clarke, Ponald, and Gray. At the request of Mr. Royall, counsel for General Johnson, th^ following statement o*f the chairman, Mr. Massey, was spread upon the minutes of the committee as a part of tlie record, viz : IStatement. On the day after the deposition of Mr. P. H. Maury was taken, he called for me in the House of Delegates, and informed me that he had been mistaken in his statement that the contract between him and General Johnson had been delivered to him by said John- son and destroyed by himself; and that instead thereof. General Johnson had called at his office and cancelled the duplicate in his possession, and that he had been authorized by General Johnson to make this correction in his testimon3\ I thereupon placed in his hands the depo'Sition which he had given, authorizing him to make the correction; he then erased the words at the end of his 47 answer to the first question, " returned rae the contract, which I cle^ strojed," and wrote upon the riiargin of his deposition the words : "Called in ni}^ office and cancelled the same by writing across the '[face of the duplicate contract held by me the words, ^cancelled' ^October 12, 1871, and signed Bradley T. Johnson." JOHl^ E. MASSEY, Chairman. Deposition of Bradley T. Johnson, Bradley T. Johnson, a witness of lawful age, being duly sworn,, testifies : Question. State wdiat you know about the circumstances in wdiich -the contract was made between you and Messrs. Poe and the board of public works, and under which the joint resolution of the gen- eral assembly was passed ? Answer. In 1867, a meeting w-as held of some of the preferred bondholders of the Chesapeake and Ohio canal compan}^, in Balti- more. In consequence of it, Mr. IsTeilson Poe, a lawyer of Balti- more of reputation, and 40 years standing, came to Richmond and applied to me to get Virginia to make the effort to take the canal from its then present management, and by procuring its tolls and revenues to be appropriated to the payment of the preferred bonds under more vigilant and proper management, to secure the state. I applied to the board of public w^orks for some arrangement which would conduce to that end. They informed me that under the law then existing they had no power to make any such arrangement; that some action of the general assembly would be necessary to authorize them to make, such arrangement. The arrangement we proposed was, that they should authorize us to prosecute the claim of Virginia as creditor, and also as entitled to the preferred liens on the tolls and revenues of the canal, to save her as guarantor, our compensation to be contingent, and payable out of the claims held by the state. They were willing to make that arrangement, but thought they lacked power. In consequence of their views, Mr. Poe and myself prepared the joint resolution, and put it in the hands of Judge Ould, senator from Richmond, who introduced it in the Senate February 23d. It passed the Senate the same day, and on the 26tli February passgd the House. On the next day the board made the contract, the terms having thus been agreed upon before the resolution was introduced. On the same day the board 48 executed a power of attorney to us to represent them in all meet- ings of the preferred bondholders, a copy of which I herewith file, marked exhibit "A." Sometime afterwards, we found that the legislature of Maryland would adjourn about the first of April. Many preferred bondholders had employed their counsel to assist in the prosecution of this matter, and it became impossible to get a general meeting of preferred bondholders. The sessions of the Maryland legislature are biennial, and if we did nothing at the then session, we could do nothing for two years. We, therefore, asked the board to fix our compensation at once. They did so, and thence the fact that the contract was made and the compensation fixed at the time they were made and fixed. Question. State all the facts attending your contract with Mr. E. H. Maury, and the end of the same business? Answer. Our first intention was to have a general meeting of the preferred bondholders, to have them fix the compensation. In con- sequence thereof, the board gave us a power of attorney to represent them in a general meeting on February 27, the same day the first contract was made. Under it w^e had full pow*er to fix our compen- sation at fifty per cent., for no limit was named. The next day, Mr. Maury gave me the powxr of attorney, a copy of w^hich is hereto iinnexed, as exhibit ''B." We then went on with our business. In October, 1871, after the court of appeals of Maryland had settled the whole matter, and after we had made our settlement with the board of August, 1871, I cancelled the power of attorney given by Mr. Maury. IsTo general meeting had ever been held of preferred bondholders; therefore, Mr. Maury's liability had never been fixed; nnd then it was too late to call a meeting,*for the work had been done. 'No meeting would then have paid us anything, for the bond- holders had got the benefit of our work; therefore, I cancelled the whole thing. After Mr. Maury had testified the other day, and I was informed of the substance of his testimony, I went to General Ivogers, as the particular friend of Mr. Maury, and showed him the original instrument executed by Mr. ^laury, which he had testified he had destroyed, and asked him to see Mr. Maury and show him what a mistake he had fallen into. In an hour or two, Mr. Maury came to me and expressed his thanks that I had taken this means of showing him his error. I told him that it was necessary for me to have it corrected, and I would be glad to have him correct it, or I should do so. The next day he came to me and showed me the 49 duplicate of the power of attorney, which he had found in the mean- time; and I again stated to him the necessity of his error being cor- rected. I told him that I would be glad if he would do so; if not, I should correct it. He then went off to see Mr. Mjissey. I ask the , committee to permit me to file, as part of my case, the printed pamphlet entitled The Commonwealth of Virginia against The State of Maryland, the Chesapeake and Ohio Canal Company and , others; and also, the written statement of Mr. John P. Poe, one of my associates, as his statement and argument before the committee. ^ BRADLEY T. JOHKSOK i EXHIBIT "A," Filed with General Bradley T. Johnson^s deposition. Know all men by these presents, That the board of public works of the state of Virginia, by, and in pursuance of a joint resolution [ of the general assembly, passed February 26th, 1867, do hereby constitute and appoint William W. Crump, Esq., and Bradley T. I Johnson, Esq., of the city of Richmond, and Neilson Poe, Esq., and • John P. Poe, Esq., of the city of Baltimore, to be attorneys of the |i State of Virginia for her and in her name to institute legal pro- ; proceedings and take all necessary steps to secure and enforce the liens of the state in the Chesapeake and Ohio canal company on its tolls and revenues, whether in courts or before the general assem- ibly of the state of Maryland, and for that purpose to call general meetings of the preferred creditors of said canal company, and to represent the interests of the state of Virginia therein. I Richmond, February 27, 1867. F. H. PEIRPOIKT, Governor of Virginia, And President Board of Public WorI{s. ' WM. F. TAYLOR, I Auditor of Public Accounts. ''V By order of board of public works. In testimony whereof we have hereunto set the seal of said board ^ and affixed our names, this day and year aforesaid. , [Seal] . J. M. HERKDOISr, Secretary of Commonwealth, 7 And ex- officio Clerk Board of Public Works. I 50 EXHIBIT ''B," Filed with Geiieral JoJmson's deposition. ( 25 ct. ) R. H. Maury, Banking-House of \ U. S. Stamp, y J. L. Maury, R. 11. MAURY & CO., ( Cancelled, j R. T. Brooke. Richmond, Va., Feb, 28, 1867. Know all men by these presents. That I, Robert H. Maury, do hereby appoint Bradley T. Johnson my attorney to represent me in a general meeting of the preferred creditors of the Chesapeake and Ohio canal cornpany, or any subsequent meetings thereof, hereby authorizing him to make any arrangement for procuring possession of the tolls and revenues of the canal so that they may be appro- priated to the payment of the preferred creditors ; and to agree to any compensation to be paid to counsel for procuring the same : provided that such compensation does not exceed twenty per cent, of the amount recovered, and that I am saved harmless from all costs of any proceedings which may be determined upon, whatever may be the result of such proceedings. "Witness my hand and seal, this 28th February, 1867. [Seal.] R. H. MAURY. My interest is |17,500 of the honds^ with coupons from January, 1852, attached. Exhibit filed with Genercd Johnson's deposition. Extract from the original inventory of the personal estate of George Poe, Jr., deceased, filed and recorded in the office of the register of wills for Washington county. District of Columbia. Par Value. Market Value. ^ 35 canal bonds, $1,000 each, 10 cents on dollar, 35,000 3,500 ' 10 . " 500 " " 5,000 500 4 certificates, 1,200 " " 4,800 A true extract — Teste: [Seal.] ^ A. WEBSTER, Register of Wills. March 15, 1877. 51 My Dear General : At the instance of E"eilson Poe, Esq., of Baltimore, Md., I enclose the above extract taken from the original inventory of the personal estate of the said decedent, and hope it will answer the purpose intended. Yours, very truly, A. WEBSTER, Begistcr of Wills, D. C. lo General Bradley T. Johnson, 1014 31ain street, Eichmoiid, Va. Deposition of General Asa JRogers. General Asa Rogers, another w^itness of lawful age, being first ^duly sworn, deposeth and eaith: Question. Are you acquainted with the handwriting of Mr. R. II. Maury? Answer. I am. Question. Is the paper now shown you, purporting to be a power of attorney, executed on February 28th, 1867, by said Maury to General Bradley T. Johnson, in the handwriting of Mr. R. H. Maury? Answer. It is. Question. Examine the paper now shown you, marked "B," and marked as an exhibit and part of General Johnson's deposition, and say whether or not it is a true and correct copy of the power of attorney referred to in the preceding question ? Answer. It is. And further this deponent saith not. ASA ROGERS. . The committee thereupon arose to meet again Wednesday the 14th instant, at 4 o'clock P. M. 52 WED^^ESDAY, March 14th, 1877. Mr. Massej, the chairaian of the committee, met with Mr. Wil- liam L. Royal. Deposition of Hamilton G. Fant. Hamilton G. Fant, a witness of lawful as^e, being first duly sworn, deposes and says as follows: Question. What is your business? Answer. I was a banker and broker from 1850 to the fall of 1873, in the city of Washington, D. C. Question. Have you, as such, dealt in or owned any of the pre- ferred bonds of the Chesapeake and Ohio canal company? Answer. I have dealt in and owned them, as a member of the firm of Sweeny, Eittenhouse, Fant & Company, and other firms made up of the same parties in part. Question. Are you able to. state what was the market value of those bonds at various times? Answer. In 1852, the first-named firm purchased $30,000 of said bonds, I think at 80 or 85 cents in the dollar. I think there was no interest due upon them then. Payment of interest having been , suspended, they gradually depreciated in value until they reached, before the close of the war, to twelve cents on the dollar of prin- cipal, with the interest accumulated from 1852 thrown in. In the fall of 1870, I offered the |30,000 of bonds referred to above as having been purchased by my firm, to Bradley T. Johnson^ of Eichmond, at 38, including the accumulated interest, and he took $10,000 of them at that price. Shortly thereafter I sold the re- maining $20,000 to other parties at 38, including the accumulated interest from 1852. Question. "What is the highest that you have known them to sell for since then? Answer. I think they have sold for 125, including arears of in- terest. Cross-examined by Mr. Massey: Cross-question. Where do you now reside, nnd Avhat is your occupation ? Answ^er. I reside in W^ashington city, and am a broker. 53 Question. Do you know the present market value of the prefer- red bonds of the Chesapeake and Ohio canal company ? Answer. I do not. Question. Were the bonds which you and your company owned those that were guaranteed by the state of Virginia? Answer. They were not. Question. Have you no information as to the present value of those bonds? Answer. I have not, except that I have learned that they have depreciated since 1873; how much I do not know. Question. Do you know how far the canal company is in default in the jmyment of interest on its preferred bonds? Answ^er. I have learned from one of its directors, from July, 1864, (I think) to January 1st, 1877. Question. Are any of the bonds of that company now on the market foj: sale? Answ^er. I have heard of none. Re-examined by Mr. Royal : Question. Has not all the interest that has been paid since 1852, which I understand you to say, from your best information, is all the interest due from 1852 to 1864, been paid since the begining of the prosecution by General Johnson and his associates of the state's claim vs. the canal? Answer. The canal began paying the deferred interest, as I under- stand, in 1870 or 1871. Question. As well as you are informed, they had not paid any in- terest between 1852 and 1870 or 1871? Am I right in under- standing this to be your meaning? Answer. You are right; your understanding is correct. Re-cross examination by Mr. Massey : Question. Were you familiar with the financial affairs of the company from the end of the war, in 1865, to the period of 1873 ? Answer. I w^as not. Question. Can you then state certainly that the company paid no interest between those periods? Answer. My information was derived from notices of the com- pany published in the newspapers of Washington or Baltimore^ that they would pay at a given date the coupons of said company, -covering the period which the coupons had matured. 54 Question. Did those notices state that no interest had been paid" on account of matured coupons ? Answer. Thej did not. It only stated the deferred coupons ^ which would be paid on* a given date. Question. Have you any of those notices; if not, can you give' the exact purport of them ? Answer. I have not the notices, but as near as I can recollect, they notified the holders, say commencing with coupons of '52 and '53, would be paid, and sometimes confined to coupons of one year, depending upon the amount of money on hand, I suppose, at the time of the notice. This is my recollection of the notices. Question. What was the date of the first notice which attracted your notice ? Answer. My recollection is, in the fall of 1870, or in the spring or summer of 1871. Question. "Were you aware that the earnings of the canal com- pany during the years of 1865, '66, '67 and' '68, were largely in ex- cess of its expenses ? Answer. I have stated that I was not familiar with the affairs of the company, and cannot answer the question. Question. Do I then understand you to say that you don't know whether the canal company paid any of its past liabilities prior to 1870, or not? Answer. I do not. Further this deponent saith not. HAMILTON G. FAIS^T. The evidence in the investigation on both sides being concluded^ the committee arose to meet again on the call of the chairman for the purpose of considering their report. JOURNAL OF THE BOARD OF PUBLIC WORKS. WEDNESDAY, February 27th, 1867. Present — All the members. Resolved, That the board of public works, by and in pursuance of a joint resolution of the general assembly, passed February 26, 1876, do hereby constitute and appoint William W. Crump, Brad- ley T. Johnson, ISTeilson Poe, and John P. Poe, to be the attorneys of the state of Virginia, fo? her, and in her name, to institute legal proceedings, and take all necessary steps to secure and enforce the liens of the state on the Chesapeake and Ohio canal company^ or its tolls and revenues, whether in courts or before the general assembly of the state of Maryland; and for that purpose to call general meetings of the preferred creditors of said canal company, and to represent the interest of the state of Virginia therein. The following contract was submitted to the board, read, consid- ered, and approved: Whereas the general assembly of Virginia did, on the 26th day of February, 1867, pass the following joint resolution : Be it resolved by the general assembly. That the board of public works be and they are hereby authorized and directed to adopt such measures as, in their judgment, may be necessary and advisable to realize the preferred liens of the state upon the tolls and revenues of the Chesapeake and Ohio canal company, and for that purpose to contract with counsel for the enforcement of said liens in concert with other holders of similar liens: provided however, that the 56 compensation of such counsel shall be contingent only, and shall be paid by said board only out of the proceeds to be realized from such proceedings, or the debts and liens secured thereby; And whereas the state of Virginia is interested in the Chesapeake and Ohio canal company for five hundred thousand dollars of bonds issued by said company, which bonds have been guaranteed by the state; and whereas the said company is utterly insolvent, whereby said state is really bound for the full amount of said bonds, to wit : the sum of five hundred thousand dollars; and the said state is further creditor of said canal company in the sum of two hundred and ninety-one thousand dollars, for interest paid on said bonds, and also in the sura of two hundred and eight thousand dollars due on bonds held by the state, with interest from the first of January, 1852, and for other sums due on other bonds which have been lost, stolen, or rnislaid, on which also interest is due ; And whereas it is represented to this board, that if the tolls and revenues of said canal are appropriated to the payment of these debts due the state of Virginia, and other like debts due other persons of like dignity, that said revenues and tolls will be sufficient to infuse large value into interests which are now totally unproductive, and will relieve the state from her aforesaid liability as guarantor, by providing for the payment of the interest on said bonds as guaranteed as aforesaid; therefore. The board of public works of the state of Virginia, in pursuance of the authority given by the hereinbefore-recited joint resolution of the general assembly, do hereby agree and contract with Bradley T. Johnson, of the city of Eichmond, and ]^eilson Poe and John P. Poe, of the city of Baltimore, of the second part, that the parties of the second part shall undertake to secure the aforesaid debts and interest of said state in said canal company, by securing posses- sion of the canal and appropriating its tolls and revenues to the payment of the said debts and liabilities, and other debts and lia- bilities due by the canal company to other parties, as well as to said state; and to secure this end, the said board of public works do hereby constitute and appoint the said parties of the second part the attorneys of the said state, for her, and in her name, to take all such proceedings as may be necessary, at law or in equity, before any court, anywhere, or before the general assembly of Maryland, to secure said interests and debts of said state, by procuring pos- session of the tolls and revenues of said canal, and appropriating 67 them to the payment of the said debts due said state and liabilities for wbic^ she is security as aforesaid, and the like debts due by the canal to other creditors. And it is expressly agreed and understood between the parties to these presents, that the said parties of the second part shall bear all the expenses and cost of any proceeding which they shall institute and carry on, and that they shall indemnify the state of Virginia from all costs and charges whatsoever incurred by them in the prosecution of any proceeding commenced in the name of the state, either separately or in connection with other creditors. And it is further understood and agreed, that whenever the said canal or its tolls and revenues are delivered over into the posses- sion of the preferred creditors thereof, and of which the state is one, as hereinbefore set forth, then in that case the parties of the second part are to be considered as having performed their obliga- tions under this contract and agreement, and to have secured the said debts, liabilities and liens of said state on said canal. And the said board of public works of the state of Virginia, by and. in pursuance of the authority vested in them by the herein- before set forth joint resolution, do hereby covenant and agree to pay and assign in bonds or coupons of said canal company to the parties of the second part, as soon as said canal or its tolls and revenues, are delivered or appropriated to the preferred creditors thereof, such per centum of the debts due, liabilities guaranteed and claims against said canal, held or guaranteed by said state, as shall be determined by a general meeting of the preferred creditors of said canal company to be just, proper, and sufficient compensa- tion for like services. (Signed) F. H. PEIRPOINT, Governor of Virginia^ President Board of Public Works. W. F. TAYLOR, Auditor of Public Accounts. BRADLEY T. JOHNSOJST, IS^EILSOK POE, JOHN P. POE. And then the board adjourned. (Signed) 8 F. H. PEIEPOmT; 4 58 TUESDAY, 5th March/ 1867. Present — All the members. The following supplemental contract was submitted to the boards read and approved: "Whereas, on the twentj-sixth day of February, 1867, the board of public works of Virginia agreed with Bradley T. Johnson, IsTeilson Poe and John P. Poe, that they should procure the Chesapeake and Ohio canal or its tolls and revenues to be delivered over to the pre- ferred creditors thereof, or trustees for their benefit, and as soon as said work was done, then to pay said parties such compensation as might be agreed on by a general meeting of preferred creditors as fit and proper compensation in such cases, all proceedings to be at the expense of the parties of the second part; and w^hereas all par^ ties consider it better to have the compensation fixed and agreed upon at on'ce, without waiting for the general meeting: therefore it is, this fifth day of March,»1867, agreed between said board and said Johnson, Poe and Poe, that the rate of compensation shall be twenty per cent, of the debts due to, liabilities guaranteed, and money paid by the state of Virginia to, for and in behalf of the Chesapeake and Ohio canal company, which rate shall be in lieu of that referred to in original agreement, and which amount ghall be paid the parties of the second part in bonds, coupons or other in- debtedness of the canal company in the hands of and belonging to the state, as soon as said canal or its tolls and revenues is delivered or appropriated to the preferred creditors thereof, or trustees for them. Witness our hands and the seal of said board. (Signed) F. H. PEIRPOIXT, Governor of Virginia^ W. F. TAYLOR, Auditor of Public Accounts,. J. S. CALVERT, Treasurer of Virginia, 59 By order of the board of public works of the commonwealth of Virginia, I have hereunto set the seal of said board this 5th day of March, A. D. 1867. [Seal.] J. M. HERNDO^^-, ^ Secretary of Commonwealth ^ And Clerk of the Board of Public Works. . We hereunto set our hands and seals, this day and year aforesaid. BRADLEY T. JOH^TSO^T, [Seal.] NEILSOI^ POE, [Seal.] ^ JOim P. POE, [Seal.] And then the board adjourned. F. H. PEIRPOINT. SATURDAY, 18th May, 1867. Present — All the members. The board of public works, deeming it of importance that the sale of the real estate and other securities formerly held by the late firm of Selden, Withers and Company should be postponed, in view of the new arrangement about to be made with the bond- holders of the Chesapeake and Ohio canal company, under a late law of the state of Maryland; be it, therefore, Resolved, That it be recommended to James iTeeson, Esq., to^ postpone the execution of the order for said sale, if, in his judgment,, it will be for the interest of the state. And then the board adjourned. F. H. PEIRPOIISrT. SATURDAY, May 25th, 1867. Present — Treasurer and auditor. Resolved, That Bradley T. Johnson and James Neeson, or either of them, be and they are hereby appointed proxies to represent the state's interest in the meeting of the stockholders of the Chesa- peake and Ohio canal company. And then the board adjourned. J. S. CALVERT. 60 WEDi^ESDAY, 21 Aug., 1867. Present — Treasurer and auditor. Eesolved, That it is inexpedient at the present time to offer for sale the bonds of the Chesapeake and Ohio canal company held by the state, and that James i^eeson, Esq., be requested to act accord- ingly. And then the board adjourned. J. S. CALVERT. THURSDAY, August 22d, 1867. Present — Treasurer and auditor. An account of Bradley T. Johnson & Co., amounting to §4,460 40, being twenty per cent, on $22,302, realized from the tolls and reve- nues of the Chesapeake and Ohio canal company and paid into the treasury, and applied to the liens of the state on said tolls and reve- nues, as per contract between said Johnson & Co. with the board of public works of Virginia, authorized by joint resolution of the general assembly passed February, 1867, was submitted to the board and considered. Whereupon, it was ordered that the said account be certified to the auditor of public accounts, as correct, for payment. And then the board adjourned. J. S. CAL\^ERT. WEDNESDAY, 22 December, 1869. Present — Treasurer and auditor. Ordered, That the secretary of the board be directed to address :a communication to Bradley T. Johnson, Esq., asking him for a full report of his transactions, as the attorney of the state, in prosecu- ting the claims against the Chesapeake and Ohio canal company. And then the board adjourned. 61 TUESDAY, 28th December, 1869. Present — All the members. A report from Bradley T. Johnson,. Esq., in answer to the request of the board of the 22d inst., was submitted by him in person and read. It was — Eesolved, That James Neeson, heretofore acting as the attorney of Virginia in the matter of the prosecution of the claim of the State vs. Selden, Withers & Co., be requested to report in writing at a meeting of the board of public works to-morrow, December 29th, 1869, at 11 o'clock, in the treasurer's office, what sum of money have been collected by him, or by his authority, on account of said claim, and what disposition has been made of the same; and if any moneys have been collected by anyone other than him- self, upon what terms and conditions the same was collected, and what disposition has been made of it. And then the board adjourned. G. C. WALKER. FRIDAY, 29th December, 1869. Present — All the members. The report called for from Mr. iTeeson on yesterday was sub- mitted to the board and read. After consideration, the following preamble and resolution were adopted : Whereas it has come to the knowledge of the board of public works, that the sum of $21,000 has come into the hands of Bradley T. Johnson, which sum is interest on claims of the state against the estate of Selden, Withers & Co., and which Mr. James I^eeson only was authorized to collect by reason of his appointment, dated March 20th, 1866; it is, therefore, • Ordered, That the said ITeeson forthwith recover from the said Johnson the said sum of $21,000, and pay the same into the trea- sury of Virginia to the credit of this board. 62 Eesolvcd, That Mr. Bradley T. Johnson be directed to pay into the treasury of the state forthwith, to the credit of this board, the sum of $37,435, collected by him as agent of the state of Virginia to prosecute claims of the commonwealth against the Chesapeake and Ohio canal company, excepting only his commission of 20 per cent, on the said amount. And then the board adjourned. G. C. WALKER. FRIDAY, 31 December, 1869. Present — All the members. . Bradley T. Johnson, Esq., in person, submitted a supplemental report ot his proceedings, in writing, which was read by him to the board and considered. Resolved, That any moneys received by the second auditor from Bradley T. Johnson, attorney for Virginia, collected by him from the Chesapeake and Ohio canal company, be deposited with the treasurer of the state as a special fund, to the credit of the board of public works, and subject to their control. And then the board adjourned. G. C. WALKER. TUESDAY, January 4th, 1870. « Present — All the members. Resolved, That our counsel in the case of the commonwealth of Virginia against the Chesapeake and Ohio canal company and others, are authorized to consent to the application of the payment of ^58,435, heretofore made to the state, to any account due the commonwealth by said company as may be adjudged proper by the dbnvt of appeals of Maryland, in said case. And then the board adjourned. G. C. WALKER. 63 THURSDAY, May 19th, 1870. Present — All the members. Bradley T. Johnson, Esq., appeared before the board, and on be- half of himself and colleagues, acting as attorneys for the common- wealth prosecuting the claims vs. the Chesapeake and Ohio canal company, submitted a report of their proceedings in the case, and concluded with a wish that the state, in consideration of the magni- tude of the interests involved, should have a representative in the board of directors in said company, and in order to secure it, re- C[uesting this board to address a letter to the board of public works of Maryland upon the subject, and also submitting the following papers alluded to in the above report, viz:- 1. Message of Governor Bowie to the general assembly of Mary- land ; 2. Thirty-ninth Annual Report of the President and Directors of the Chesapeake and Ohio Canal Company to the Stockholders, 8d June, 1867; 3. Pamphlet entitled "The Duty of the State to the Preferred Bondholders," addressed tcf the constitutional convention: 4. Memorial of W. W. Corcoran and others in relation to the Chesapeake and Ohio canal company; . 4J. Pamphlets from J. H. Gordon, president, 15th Feb'y, '70, to the stockholders; 5 and 6. Printed copy of the record and argument before the court of appeals of Maryland — "Which was read. Resolved, That a letter be addressed to the board of public works of Maryland, desiring the appointment of a director in the Chesa- peake and Ohio canal company to protect the interests of Virginia, and * recommending John Poe, Jr., as a suitable person for the appointment. The above letter having been written, was signed by all the mem- bers and delivered to Bradley T. Johnson; after which, The board adjourned. G. C. WALKER. 64 TUESDAY, June 7th, 1870. Present — All the members. A communication from IT. Poe, Bradley T. Johnson and John P. Poe, dated 31st May, 1870, in regard to their proceedings in the court of appeals of Maryland in prosecution of the claims of th& state of Virginia against the Chesapeake and Ohio canal company^ was submitted to the board and read, and ordered to be filed. And then the board adjourned. G. C. WALKER. MONDAY, August 6th, 1871. Present — The governor and the auditor. General Bradley T. Johnson appeared and presented the follow- ing communication: 7o the Board of Public ^Vorks of the Commomvealth of Virginia: Gentlemen : We have the honor to report that we have procured the pa^mient by the Chesapeake and Ohio canal company, of the two hundred thousand dollars of bonds, with interest on the same from July 1st, A. D. 1852, all the bonds and coupons thereon having been paid, except to Virginia, from and including January 1st, 1853. The bonds were guaranteed by the act of assembly of March 15th, 1849, and the payments included coupons on $200,000 of the bonds, to and including January 1st, 1871, and on §50,000, to and including July 1, 1871. Herewith find certificate of payment from canal compan}^ BRADLEY T. JOIIISrSON, For himself and others. OFFICE OF THE C. & 0. CAITAL COMPANY, Frederick, Jidi/ 29/A, 1871. This is to certify that this company have taken up and paid all the bonds issued by the Chesapeake and Ohio canal company, known as repair bonds, guaranteed by the state of Virginia under her act of March 15th, 1849, for $200,000, including the coupons, for interest due on the- same from and including the first of Janu- ary, A. D. 1853, except a balance due the state of Virginia for money due her on account of money paid out by her for coupons 65 on the said repair bonds, since and including January, 1853. The entire indebtedness of the canal company on account of this debt guaranteed b}^ Virginia is now paid otF, except such amount as may be found due Virginia on a settlement with her. JAS. C. CLARKE, Pr&side7it C. ^ 0. Canal Company. K C. DICKERSOiT, Secretary and Treasurer. After the same had been duly considered, the following pream- ble and order were agreed to: It appearing to the board, from the record and decision of the court of appeals of the state of Maryland, in the case of the com- monwealth of Virginia against the state of Maryland, the Chesa- peake and Ohio canal company, and others, and from the certificate of James C. Clarke, president, and IT. C. Dickerson, secretary and treasurer of said Chesapeake and Ohio canal company, and from the report of Bradley T. Johnson, for himself and others, attorneys for this board, this day filed in this office, that the tolls and revenues of the said Chesapeake and Ohio canal company have been appropriated to the payment of the preferred liens thereon; And whereas it appears by said certificate that the bonds guaran- teed by the state of Virginia by the act of assembly passed March 15th, 1849, have been paid, with the coupons thereon from January 1st, 1853, inclusive, whereby the commonwealth of Virginia has been relieved from debt to that extent; And it appearing to this board that the commonwealth of Vir- ginia has paid on account of said bonds thus ^^aid and satisfied, the sum of $102,120, which, with interest, is a just claim against the said Chesapeake and Ohio canal company ; and it farther appearing that the amount from paying which the commonwealth of Virginia has been relieved by such payment aforesaid of said bonds by said Chesapeake and Ohio canal company is the sum of $315,380, and the said Bradley T. Johnson and others, attorneys for this board, having collected and paid over to the commonwealth of Virginia the sum of $58,435 on account of the said $102,120 paid by the commonwealth of Virginia, leaving a balance of $43,685 and interest still due the said commonwealth of Virginia on account thereof; and it further appearing that the said Bradley T. Johnson and others, attorneys for this board, w^ere paid twenty per cent, upon said $58,435, in accordance with the contracts 9 66 between tlieni and tliis board, dated respectively February 27th, 1867, and March 5tb, 1867— that is to say $11,687, leaving a balance of $63,100 due them on account of services rendered in relieving the commonwealth of Virginia troni the liability aforesaid, and a further balance of $8,737 to be paid them on account of the said $43,685, when collected from the said Chesapeake and Ohio canal company, making in all $71,813 to be allowed to the said Bradley T. Johnson and others, attorneys for this board, according to the contracts between them and this board above referred to; there- fore, be it Ordered, That is'eilson Foe, John F. Foe stnd Bradley T. John- son, attorneys for this board, be and they are hereby authorized and directed to transfer unto themselves such portion of the pre- ferred claim of the commonwealth of Viro-inia ag^ainst the said Chesapeake and Ohio canal company as will represent tlie said sum of $71,813. And it is further ordered. That all coupons and other evicj^ences of debt now held in possession by this board against the said Chesapeake and Ohio canal company be delivered to the said Keil- son Foe, John F. Foe and Bradley T. Johnson, attorneys for this board, for collection: provided that the bonds known as the Scl- den, "Withers & Co. bonds for funded coupons for $140,000 shall be retained by this board. G. C. WALKER. SATUFDAY, 22tii, 1872. Fresent — All the members. The foUowins: commmunication was laid before the board : 7 0 the Board of Public Works of Virginia : In the case of the Board of Fublic Works vs. Selden, Withers & Co., under the decree of the circuit court of Alexandria, James ^^"eeson and F. S. Beach are commissioners to make sale, among other things, of bonds of the Chesapeake and Ohio canal company (long held by the board). These bonds, since the decree, have been under our control and custody, but for safe-keeping they have been left in the safe of the board or of the second auditor. We now wish these bonds for sale on the seventh proximo under said decree. (Signed) JAMES XEESOX, For himself and F. S. Beach. 27th April, 1872. 67 It appearing that a portion of the securities referred to in this communication had, by order of the board dated August 6th, 1871 (see ante proceedings of August 6th, 1871, pages 341, 342 and 343), been delivered to Messrs. I^Teilson Poe, John P. Poe and Bradley T. Johnson, attorneys for the board, for collection, it was Ordered, That the second auditor be and he is hereby authorized and requested to deliver to James E"eeson, Esq., the bonds in his custody known as the Selden, Withers & Co. bonds for funded coupons, amounting to the sum of $140,000, executed by the Chesa- peake and Ohio canal company, payable to Selden, Withers & Co., and by them assigned in blank; and that the secretary of the board deliver to said Neeson a certified copy of the order of the board of August 6th, 1871. And then the board adjourned. (Signed) G. C. WALKER. FRIDAY, January 3d, 1873. -Present — The treasurer and auditor. The following communications were laid before the board : 2o the honorable the Board of Public Works of Virginia: Gentlemen : The undersigned, counsel of the commonwealth to prosecute her claims against the Chesapeake and Ohio canal. company, beg leave to report — That since our last settlement with this board, on August 7th, 1871, we have received from the canal company the balance of the amount due on the "repair bonds," viz.: $43,685, which had been allowed at that settlement; and also the additional sum of $5,602, not included in the statement then made, but subsequently allowed by the court upon the production of further proof. The board, by order of August 7th, 1871, assigned to us claims to the amount of $71,813, all of which have since been received by us from the company, as follows: $43,685 due on last settlement; 5,602 subsequently allowed on repair bonds; Making - - $49,287 paid us on"repair bond account; And also, - - 22,526 paid us on|preferred bond account. $71,813 68 Since the settlement of August 7th, 1871, we have recovered decrees for the commonwealth against the canal company, appro- priating its revenues to the payment of her claims upon preferred bond account, and also allowing to her a farther sum on repair bond account, to-wdt: Further balance on repair bond account, as above stated, 5,602 Amount due on account preferred bonds, as per auditor's account C, finally ratilied, - - - 140,130 Balance allowed by court of appeals on certificate of in- debtedness, - - - - 6,726 In all, - - - - 1152,458 Beside these sums, we hold for collection cou- pon bonds, - - - 13,500 And coupons thereon of the canal company, - 13,365 We have received the above sum of - 5,602 Also, on account of preferred bonds, - 22,526 26,865 $179,323 28,128 Leaving as the balance now due Virginia, - - $151,195 Our contract, entered into in February and March, 1867, pro- vided that our contingent compensation should be twenty per cent, of all debts due to, liabilities guaranteed, and money paid by the state of Virginia to, for and in behalf of the canal company; and this compensation is by the contract to be paid to us in bonds, cou- pons, or other indebtedness of the canal company in the hands of and belonging. to the state, as soon as said canal, or its tolls and revenues is delivered or appropriated to the preferred creditors thereof or trustees for them. It will thus be perceived that the contract fixed the measure of our compensation, designated the fund out of which it was to be paid, and named the time or times when our right to it should accrue. The total amount of preferred bonds guaranteed b}'- the state is - - - - 300,000 Coupons thereon from July, 1852, to July, 1872, - 369,000 669,000 Deduct amount heretofore paid on certificate for $35,400, 28,674 640,326- 69 . Debts due to the state by the canal company are: Bonds held by her, 13,500 bonds, 13,365 coupons. 26,865 $667,191 Twenty per cent, of this ao'o:regate, representing the debts due to and liabilities guaranteed by the state to, for, and on behalf of the canal company, amounts to the sum of $133,438, leaving the sum of $17,757 due to Virginia. To this sum, payable in Virginia claims against the company, we are now^ by our contract entitled. Our contract entitles us to twenty per cent, of all debts guaran- teed by the state for the company, and continues until all these debts are finally paid off. It is manifest, therefore, that if our settlement w^ith the state under our contract is postponed until the whole of the preferred bonds, together with the coupons yet to accrue thereon, shall have matured and been paid, our percentage will have to be calculated upon the present debt, as above stated, together with the amount of the coupons wdiicli will mature from the present time up to "the time when the whole debt shall be extinguished, instead of being calculated upon the debt as it now stands. And, therefore, as these coupons in the fifteen years which must elapse before the principal of the bonds is paid will be $270,000 or thereabouts, in addition to the amount now due, our compensation will be $55,000 or $60,000 more than if our settlement is made now, thus absorbing all the balance now due to the state by the canal company, and already decreed to be paid to her, together with nearly the whole of the $64,000 thus far paid by us to the board, which in that event v/ill have to be refunded to us. But we propose, with the permission of the board, to settle our account to date; to take an assignment from the board of the claims of the state against the canal company under an order similar to that of 7th August, 1871; to pay you at once in cash wdiatever sum may be found due the state, and to release the fund already in the hands of the board from all further claims on it under our contract. We file herewith a letter from his excellency Wm. Pinckney Whyte, governor of Maryland, on behalf of himself and the board of public works of that state, which will show you that, so far as human foresight can ^anticipate, Virginia is now practically released from liability on account of her guaranty of the bonds of the com- pany; and we also file certified copies of the auditor's reports, and the orders of the court thereon, showing the respective amounts decreed to the state in the suit against the canal compan}- which we have been prosecuting for the last five years. We might perhaps content ourselves w^ith this statement of the results which have been accomplished, and of the sum that is now" due us under our cantract; but in view of the importance of the 70 case, we trust we may be pardoned for a somewhat more detailed account of our connection with it. When we undertook the prosecution of these claims in February, 1867, the canal company had been insolvent for fifteen years, having since 1852 been unable to pay the coupons for interest on its repair bonds, amounting to §200,000, and upon its preferred bonds, amount- ing to $1,699,500. In consequence of this long-continued default, and the heavy accumulation of arrears of interest, the bonds them- selves had become almost unmarketable, and were at that time selling at from 10 to 15 cents on the dollar with the over-due coupons on. Virginia had redeemed her guaranty upon the $200,000 of repair bonds, and the $300,000 of preferred bonds, from 1852 up to Janu- ary, 1861, and from July, 1861, up to January, 1865, upon all the coupons which had been presented, the aggreocate sums paid by her amounting to about $269,000. Upon the evacuation of Richmond, in April, 1865, the coupons thus- redeemed by her, and which, as thus redeemed, had been carefully filed away as evidence of her claims against the canal company, were destroyed, lost, or possibly stolen; and many of the records which showed that they had been paid were mutilated, and to a great extent valueless as evidence to substantiate her claim. Her condition at the time was, therefore, that of a creditor hold- ing a large claim founded upon lost coupons, against what was then believed to be a hopeless insolvent debtor. This was the state of afiairs when the contract between us and the commonwealth was entered into. In conformity with its terms, we immediately set to work to pro- cure the passage of a law by the general assembly of Maryland, transferring the administration of the canal company from the hands of the stockholders to the management of the bondholders. In this we were successful, and late in March, 1867, an act was passed giving to the trustees of the bondholders the control of the stock held by the state of Maryland, which, being five-eights of the whole, practically delivered the work to the bondholders. Had this been executed, as in our judgment it should have been, by the then ad- ministration of Maryland, our work would have been completed, and our compensation, fixed by the contract, would have been im- mediately due, and payable to us in the claims of this state against the then insolvent canal company. The board of public works of Maryland, however, declined to execute the law, on the ground, as stated by them, that it was un- constitutional; and notwithstanding repeated meetings with them- and several arguments, both oral and written, adhered to their con- victions. The act thus became a dead letter. The constitutional convention of Maryland was then in session, and upon the refusal of the board of public works to execute the act of 1867, we applied to it for relief. After three weeks of earnest 71 and persistent efforts, we not only failed to obtain the redress we asked, but lost by repeal the benefit of the act of 1867. There was then no alternative but to resort to the courts. The prospect before us was anything but encouraging, and our efforts for six months had been without any substantial fruits, except, per- haps, to call public attention to the condition of the canal company and the necessity for some reform in its management. In Decem- ber, 1867, after first endeavoring, without success, to make some adjustment with the company, we filed a bill in the circuit court of Baltimore city against the Chesapeake and Ohio canal company, the trustees of the bondholders, and certain other parties, for the enforcement of the claims of Virginia, an adjustment of the pri- orities of the various classes of the bonded creditors of the canal compan}^ and a decree appropriating its net revenues to their pay- ment in the order of their priority. By unusual diligence the case was got ready fur hearing in June^ 1868, but a plea to the jurisdiction was interposed by the company, upon the ground that the state of Maryland was not made a party to the case, she being alleged to be an indispensable party. After argument upon this point, as well as upon the merits of the case, the court sustained the plea. Efforts were then made to bring the state of Maryland into the case as a party defendant, by the service of process upon her gov- ernor, attorney-general, and board of public works. After further argument, in March, 1869, the court decided that the case could not be proceeded with until the state of Maryland was made a party, and that she could not be made a party except by the passage of an act of her general assembly authorizing her to be sued. This decision, for the time, put a stop to all further proceedings. At the January session of 1870, application was made for the passage of such an act, and it was procured. All technical difiiicul- ties being thus removed, a pro forma decree was passed in March ^ 1870, by the lower court, dismissing the bill which we had filed. From this decree we appealed. The appeal was heard and deter- mined at the April term, 1870, of the court of appeals of Mary- land. The opinion and decree of that court finally established. First. That the repair bonds were the first lien upon the net tolls and revenues of the company; and, Secoyid. That after the payment of the repair bonds, principal and interest, the over-due coupons on the preferred bonds were entitled to be paid in the order of their seniority — the coupons redeemed by Virginia being entitled to be paid pari passu with those held by other parties, notwithstanding her default in meeting her guaranty since 1861 as to some of the bonds, and since 1865 as to all of them. [See report of the case in 32 Marjdand Reports.] The priority of the repair bonds was vigorously denied by the state of Maryland through her attorney-general, and by the repre- sentatives of the preferred bondholders. Had their views prevailed, the §108,000 of coupons on these bonds which Virginia had paid^ 72 and the $315,000 of principal and unpaid coupons on them, for which she was responsible as guarantor, would have been decided to be simple contract debts of the canal company, without liens upon tolls and revenues; and, of course, Virginia's claim for repay- ment by the company of the $108,000 would have been worthless, and her liability for the $315,000 of principal and unpaid coupons would have remained absolutely without any security whatsoever, and without any right of resort to the canal company, except as a common creditor, postponed to twenty millions of preferred debt due by an insolvent company. In other words, this whole repair debt, amounting to $423,000, would have been totally lost to her. After this decision we took the necessary steps to secure the pay- ment of the repair bonds and coupons thereon for which Virginia was liable, amounting to $315,000. This was accomplished by the f rst of July, 1871. We then went to work to prove the extent and details of Vir- ginia's claims upon the company for coupons on its bonds, both repair and preferred, redeemed by her from 1852 to 1865 under a commission issued by the courts for the purpose. We procured such evidence as the case allowed, and upon it obtained payment of the coupons on the repair bonds redeemed by Virginia, amounting, as has been stated, to the sum of about $108,000. A report of this has already been submitted to you. The whole repair bonds and coupons, amounting to $423,000 or thereabouts, having thus been paid in full, a question then arose as to the position held by the certificates of indebtedness issued by the company in the autumn of 1853, for the coupons of July 1, 1852, January 1, 1853, July 1, 1853, and January 1, 1854, which it was unable to pay, but funded in these certificates. Virginia held a certificate for $35,400, upon which she had ob- tained payments of interest amounting in the aggregate to eighty- one per cent, of the face of her certificate. The conflict of views on this question led to further litigation in the lower court and a second appeal by Virginia to the court of appeals in October, 1871. We will file with you a copy of the record of this case. In the argument in the court of appeals, in December, 1871, the attorney-general of Maryland, and the solicitor for the preferred creditors who had not funded their coupons in these certificates, maintained that these certificates were not entitled to be regarded as preferred claims at all, but were properly only simply unsecured debts of the company, and that the eighty-one per cent, which Virginia had received upon her certificate was a pa^'ment made in error, with which, and w^ith interest also on it, she w^as chargeable, and that the sums so paid her, and interest on them, ought to be applied to the extinguishment p?^o tanto of the coupons held by her. Fortunately, this view, which, if it had been adopted by the court, w^ould have annihilated the certificate and charged Virginia with upwards of 35,000, did not prevail, and under the decision rendered 73 by the court of appeals in this second case, she was declared enti- tled to the nineteen per cent., amounting to $6,726, upon her cer- tificate. (See report of this' case in vol. 35, Maryland Reports, 1.) Immediately after this decision, we brought to a hearing in the lower court the further question raised by the canal company, (see auditor's account A,) that Virginia was chargeable with interest upon the sura of |58,435, paid to her in December, 1869, from December 10, 1869, to July 1, 1871, amounting to 5,463 67, and after argument before the court, obtained a decree that the charge w^as improper. (See auditor's account, B.) All disputed questions are now^ settled, and under the final deci- sion of the court of appeals, a decree has been passed appropriating the net revenues of the canal company to the payment ot the over- due coupons on the preferred bonds in the order of their seniority, those held by Yirgimsi pari passu with the rest. During this cur- rent year, the outstanding coupons of 1852, 1853 and 1854 not funded, the balance on the the certificates for coupons funded, and four coupons (equal to f 204,000), viz: July 1, 1854, January 1, 1855, July 1, 1855, and January 1, 1856, upon the preferred bonds, have been paid by the company, Virginia receiving hers in common with other holders, notwithstanding her default in making good her guaranty from 1861 to the present time. In this connection it is proper to state that a serious diflB.culty (and to our mind one of the most serious difficulties in the whole case) was the point made in the argunient before the court of ap- peals, that Virginia was not entitled to receive any part of the 1269,000 wdiich she had paid, because she was herself in default as guarantor; and your honorable, board will observe that the court required her to wait for repayment of her $108,000 of repair cou- pons until the repair bonds and coupons unpaid by her on them were retired by the company. Had this same ruling been applied to her preferred coupons, (as was vigorously insisted by counsel in the discussion,) the fund out of which alone, by our contract, our contingent compensation was to be paid, (except the $13,500 of bonds held by Virginia,) would have been entirely divested, and while Virginia's liability would have been relieved, we would have been left without any fund to which to resort for our fees. "It will thus be perceived that our compensation was, therefore, contingent upon the following points: First. Our success in proving the payments by Virginia of the sums claimed by her, the coupons representing such payments hav- ing been destroyed, lost or stolen, and the liability of the company to Virginia being resisted on that grounch Second, Supposing this difficulty of fact and law removed, our success in resisting the defence, that until her default was made al- together o^ood, Virginia could not rightfully receive any portion of the $269,000 of coupons paid by her': 10 I 74 Third. The practical question of the value of the claims of Vir- ginia against the canal company, (out of which our fees were to he paid,) after those claims were at last established. Fourth. Success in asserting the priority of the repair bonds; and, Fifth. Success in resisting the claim of the state of Maryland, that the certificate for $35,400 was annihilated, and that Virginia was chargeable with the eighty-one per cent., and interest thereon, alleged to have been erroneously paid to her, and amounting to about $35,000. Failure upon the first and second points above stated would have been fatal to our claim for compensation, while the advantage to- Virginia in other respects would have been material. Failure upon the third point would have left in our hands claims against the canal company of no substantial value to us. It must be borne in mind that all the expenses of the litigation of five years, themselves very heavy, have been defrayed by us; and that, in view of the loss of the coupons, the court required us to furnish bonds of indemnity to the canal company belore the sums allowed to the state in the audi- tor's accounts were permitted to be paid to us; which bonds, with approved security, we have ourselves furnished and left on file in the case. As has been stated, all litigated questions in the case have been disposed of, the missing proof has been supplied, bonds of indem- nity have been furnished to the company, the repair bonds, princi- pal and interest, are wholly extinguished, the right of Virginia to participate in the regular distribution of the net revenues of the company until the coupons on preferred bonds redeemed by her are refunded, is established without reference to her own default, and nothing remains now but to settle and adjust finally the compensa- tion to which by the terms of our contract we are entitled. Public attention has been attracted to the canal company and the proper administration of its aftairs. For the last three years it ha& been prosperous; its revenues have increased; its expenses have been diminished; its capacity to pay off its bonded debt has been demonstrated; its credit is being re-established; and its bonds, which in 1867 were selling, with coupons on, at from 10 to 15 cents on the dollar, now readily bring, with coupons on, 100. Under such a condition of aftairs, there is no room for reasonable doubt that Virginia's guarantj^ is practically relieved, and that she will never again be called on to make provision to meet it. At the rate at which the company is now paying oft' the coupons- on its preferred bonds, from $250,000 to $300,000 per annum, all the arrears of coupons will be retired and the accruing coupons met within the next eight or ten years; and when the principal of the bonds falls due, in 1883, 1884 and 1885, the canal company will no doubt be in a condition to make arrangements for their payment sat- isfactory to all parties, and the bonds themselves will be considced a most excellent investment. 75 • The state of Maryland is interested in their payment at the ear- liest moment, for the reason that after they are provided for, the whole surplus of the net revenues of the company will belong to her as second mortgagor; and having, therefore, this great interest at stake, and with the experience of the prosperous management of the^ last three years before her, it is impossible that she will submit to any administration of the atfairs of the company, her appointees^ by which the realization of her claims will be postponed any longer than absolute necessity requires. ' Having therefore fully completed our work, and complied with all our obligations under our contract with your predecessors in office, we respectfully request that you will adjust and settle our compensation upon the basis of our contract, as indicated in the first part of this, our final report. We have the honor to subscribe ourselves,' with great respect, Your obedient servants, (Signed) BRADLEY T. JOHTTSOi^, N. & J. P. POE, Attorneys for the Cornmomoealth of Virginia, Correspondence. BALTIMORE, October 26th, 1872. To the Honorable the Board of Pablie Works of Mari/land: Gentlemen: In the year 1867 we were employed by the board' of public works of Virginia to take such steps before the legisla- ture, the state convention, or in the courts, as in our opinion might be best calculated to promote and protect the interests of that state as creditor and guarantor of the Chesapeake and Ohio canal com- pany. From time to time, subsequently, w^e made reports to our clients of what was being done; and now, our work being wholly com- pleted, we are about to submit a final report. In that report we think we can safely say, that under the present satisfactory afiPairs of the company, and in view of the recent payment of the princi- pal and interest of its repair bonds, and the regular payment during the. year of the oldest over-due coupons on its preferred bonds, the company will be able, year by year, regularly to continue to pay at least four or five of the over-due coupons on its preferred bonds. Judging from the receipts and expenditures of the last three years, the company will most probably be able to pay annually six, instead of four of these over-due coupons; but we would prefer to make no statement to the board of public works of Virginia upon the sub- ject which was not more than probable of being realized. 76 Accordingly, while we miglit confidently anticipate that under the continuance of the present efficient management the debt ot the company will be paid off at the rate of |300,"000, or six coupons, per annum, we propose to promise no more than that the payment of four or five coupons may, Avith reasonable certainty, be looked for; but, before submitting our final report to the board of public works of Virginia, we beg leave respectfully to request that you will favor us with some expression of your views on the subject, in order that we may be better able to know how far our opinion of the pre- sent condition and future prospects of the canal company is concur- red in by your honorable board. We have the honor to be, with great respect. Your obedient servants, (Signed) K & J. P. POE, BRADLEY T. JOHNSOi^, Attorneys for the Commonwealth of Virginia. STATE OF MARYLAND, Executive Department, Annapolis, November ISth, 1872. 'OentlExMen : In reply to your favor of the 28th instant, I am directed by my colleagues in the board of public works to say, that while they deem it best not to make answer in their official capacity as a board, they have no objection as individuals and officers of the state to ex- press the opinion, that at least four of the over-due coupons on the preferred bonds will be paid annually by the president and directors of the Chesapeake and Ohio canal company, until the whole over-due coupons are retired. The present management is likely to continue the same jDrudent course which has been followed since June last. We limit our expectation here to four coupons out of abundant .caution, though the present earnings of the canal encourage the hope that the payments will be in excess of that number. Very truly, yours, (Signed) WM. PIOT^XEY WHYTE. Messrs. K and J. P. Poe, Gen. B. T. Johnson. 77 In connection with the said communication the following account was presented : The Commonwealth of Virginia, In account with K & J. P. PoE AND Bradley T. Johnson, Attorneys : To amount allowed by order of board of public \vorks of August 7th, 187- - - -.71,813 By amount allowed at that date to state in repair bonds, and since paid, - - - - 43,685 By amount in repair bonds since allowed - - 5,602 By amount received on account of preferred bonds, 22,526 $71,813 On preferred bond account: To debts guaranteed or held by state — Preferred bonds, 300,000 Interest from July, 1852, to July, 1872, - - 369,000 669,000 By amount heretofore paid on certificate for $35,400, - - 28,674 Total debt guaranteed by state, - 640,326 To debts due to the state — Coupon bonds Chesapeake and Ohio canal, 13,500 Over-due coupons - - - - - 13,365 26,865 $667,1 91 Twenty per cent, on this due us on our contract, being total amount debts guaranteed by or held by state, $133,438 50. Total amount recovered and still unsettled : Further balance on repair bonds, - 5,602 00 Balance allowed by court of appeals on certificate for $35,400, - - 6,726 00 Auditor's account '^C," finally ratified in state of Virginia vs, Chesapeake and Ohio Canal Company, et cds., 140,130 00 $152,458 00 78 To amount paid on order of August 7th. 1871 : Balance on repair bonds, - - 5,602 00 On account preferred bonds as allowed in auditor's report " C," - - - 22,526 00 28,128 00 Balance due - Due us,' - 151,195 00 - 133,438 50 Balance due Virginia, 817,757 50 And the same having been duly considered, the following pream- ble and orders were agreed to : Whereas it appears from evidence heretofore filed in this ofiice, and more particularly specified in the preamble of the order of this board dated August 6th, 1871, that the tolls and revenues of the Chesapeake and Ohio canal company have been appropriated and safely secured to the payment of such of the liabilities of the said company as the commonwealth of Virginia is bound for. now as guarantor to the amount of $300,000 principal, with interest due thereon from July 1st, 1852, amounting to $669,000; on which, how^ever, the sum of $28,674 had been paid, leaving a balance of 1640,326 of said liability guaranteed by the commonwealth of Vir- ginia as aforesaid ; And whereas it appears trom the letters of his excellency the governor of Maryland, this day received and filed in this ofiice, that the said Chesapeake and Ohio canal company are now paying otf all arrears of interest on said liability, and is in such condition that the whole of the said liability for the which the commonwealth of V^irginia is liable as guarantor is secured to be liquidated by said company; And whereas E'eilson Poe, John P. Poe, and Bradley T. John- son, attorneys for this board, under contracts dated respectively February 27th, and March 5th, 1867, their agreements under which they have substantially fulfilled, in procuring, as above recited, the tolls and revenues of the said Chesapeake and Ohio canal company to be applied and secured to the payment of the liabilities of said company, for which the commonwealth of Virginia is liable as guarantor, have now jiroposed to pay at once in cash into the trea- sury of the commonwealth, the sum of $17,757 50, the amount due the state, as appears from their account this day filed in this ofiice, 79 which said account has been examined and found correct, and further propose to release the commonweaUh from all claims for further compensation for their services under the said contracts of February 27th and March 5th, 1867; therefore, Ordered, That the account of ITeilson Poe, John P. Poe," and Bradley T. Johnson, attorneys for this board, this day filed in this office, is hereby approved; and the secretary is dii'ected to procure and file a release in full on the part of the said Neilson Poe, John P. Poe, and Bradley T. Johnson, attorneys, of all claim against the commonwealth of Virginia for any further compensation for their services reiidered in accordance with the terms of the contracts aforesaid of February 27th and March 5th, 1867. Ordered, That the second auditor be and he is hereby authorized and requested to issue his warrant upon the treasury for the receipt therein, to the credit of the sinking fund, from l^eilson Poe, John P. Poe, and Bradley T. Johnson, attornej^s for the board of public works, of the sum of $17,757 50, on account of their collections of the claims of the commonwealth against the Chesapeake and Ohio ■canal company. And then the board adjourned. WEDNESDAY January 15th, 1873. Present — The treasurer and the auditor. In accordance with the order of the board of January 3d, 1873, the secretary having procured a deed of release in full on the part of Messrs. Neilson Poe, John P. Poe, and Bradley T. Johnson, attorneys, of all claims against the commonwealth of Virginia for any further compensation for their services rendered in accordance with the terms of the contracts between them and the board of public works, dated respectively February 27th and March 5th, 1867, the said deed of release was laid before the board, examined, found correct, approved, and ordered to be filed. And then the board adjourned. PAPERS FILED WITH BOARD OF PUBLIC WORKS., TEEASURER'S OFFICE, C. & 0. C. CO., 11th May, 1855, Washington, D. C. Second Auditor of State of Virginia, .Eichmond, Virginia: Dear Sir: Herewith I send you certificate ISTo. 154, for coupons funded by state of Virginia — Principal, - - _ _ . 35,400 OO Interest account, . _ _ . 1,056 14 For coupons banded me by Mr. DeWitt. I am, yours respectfully, JOK GUEST, Ireasuaer C. ^ 0. C. Co. P. S. Please sign and return witbin, received. OFFICE CHESAPEAKE & OHIO CAN'AL CO., Washington, 3Ia)/ 7th, 1876. To THE Treasurer of the State of Virginia, Bichmond, Virginia : Sir: A late law of the state of Maryland directs that all the arrears of interest due on the bonds of this company issued for repairs and the completion of the canal up to and including the coupons due on the 1st of January, 1867, be funded, by the issue of certificates bearing interest at the rate of 6 per cent, per annum. 81 I have to ask the favor of you to furnish me, at your earliest con- venience, a statement of the claims of the state of Virginia. These consist, I helieve, as follows : 1st. Bonds issued to Selden, Withers & Co. for coupons paid by them, and transferred to the state of Virginia, amounting to $140,000, with interest thereon. The coupons for which these bonds were issued remained with Selden, Withers & Go., as an evidence of the character of the debt, to be surrendered to the company when the bonds were satisfied, and should have been transferred to the state with the bonds. Was this done? 2d. A certificate for coupons funded to the 1st of January, 1854, amounting to $35,400, with interest due to the 1st of January, 1867, amounting to $21,731. 3d. Coupons on bonds issued for repairs of the canal, amounting to $200,000, guaranteed by the state of Virginia ; the amount of interest paid thereon by the state? 4th. Coupons on the preferred bonds of the company, amounting to $300,000, guaranteed by the state; the amount of interest paid thereon by the state ? Be pleased, also, to inform me if the executive authorities of the state competent to fund these securities without an act of the legis- lature ? Yours, very respectfully, W. S. EINGGOLD, Acting Treasurer. OFFICE CHESAPEAKE Al^D OHIO CANAL COMPANY, Washington, 3Iai/ 18ih, 1867. Dear Sir: I have just received yours of the 15th instant. The certificate for coupons funded included the coupons due and payable with 1st January, 1854. I would be pleased to receive your statement, if practicable, by the 25th proximo, with a view to the annual report of this company to be made on the 3d June next. I have transmitted by the present mail a copy of the law recently passed by the legislature of Maryland, for the information of the board of public works. We will also send you a copy of the 11 82 annual report as soon as published. In the meantincie, I beg to suggest, for the information of the board, that the company have discharged all their floating debt and that their future surplus reve- nues will be applicable to the payment of interest on their bonds. It is confidently believed that the interest due on the 1st July and 1st January ensuing will be paid. If the arrears of interest to the 1st of January last be funded conformably to the law", of which no action of the board will be taken before June next, and regular payments of interest can be maintained, it w^ill greatly enhance the value of the bonds. This I mention confidentially, in view of the sale of canal bonds advertised by the commonw^ealth of the state of Virginia at Alexandria on the 30th. They would now be sold at a great sacrifice, and the funding of the bonds would include all the $140,000, with the interest due upon them, assigned to the state by Selden, Withers & Co. Would it not be well for the present to withdraw them from sale? Please advise me if the coupons for which these bonds w^ere given are in the possession of the state authorities. It will be requested that they be delivered to the company when the bonds are adjusted. Yours very truly, W. S. RmGGOLD, Acting Treasurer. T. H. DeWitt, Second Auditor's Office, Bichmond, Va. [Copy.] RICHMOND, May 24th, 1867. W. S. Ringgold, Esq.: Dear Sir: . - Yours of 7th instant to the treasurer was handed to me for reply. The pressure upon this office and the time required to make up an accurate statement of the claim of the state against the Chesapeake and Ohio canal company, have delayed a compli- ance with your request till now. Enclosed you will find the information desired— showing the. amount due, principal and interest, 1st January, 1867, 8572,389 30. The coupons, I understand, were stolen from this office, but the 83 evidence of payment exist on the books, and will be furnished when required. Our Mr. DeWitt tells me he has replied to your other enquiries. The counsel employed by the authorities here wall be able, I pre- sume, to give you such explanations as you may require. If not, it will give me pleasure to furnish any that may be at my command. Very respectfully yours, (Signed) ASA ROGERS. OFFICE CHESAPEAKE & OHIO CAKAL CO., Washington, Aug. 14:ih, 1867. Dear Sir: I have received yours of the 13th instant, enclosing certificate Iso. 155, for $35,400, with the payment of interest endorsed thereon to the 1st of April, 1867, amounting to $22,302; for which sum I herewith transmit to you my check l^o. 8, on the Bank of Wash- ington, payable to 3^our order. I regret that I could not divide the check for you, as desired, in different amounts, as it would confuse our accounts. Yoii can, doubtless, have the check arranged to suit you at bank. Please, for uniformity, sign the receipt under the printed form. The certificate is herewith returned to you. Yours very truly, W. S. RINGGOLD, Acting Treasurer. Hon. Asa Rogers, Second Auditor of Virginia, Richmond, Va. RICHMOi^D, October 17th, 1867. General Asa Rogers, Second Auditor Virginia : Please deliver to John Johns, Esq., the bond of Chesapeake and Ohio canal company to the state for $35,600, [$35,400 should read,] given in 1853 or 1854, on which the canal company made that payment in August. I wish to use it in my settlement with 84 the company, and will return it next week if I do not get the money for it. I forgot it to-day. Your obedient servant, BRADLEY T. JOHNSOK Dear Jno : Get the bond and send it me per express, to the c'are A. Thos. Brady, Washington. Write by mail saying you've sent it. Yours, B. T. J. Office Board Pub. Works, Oct. 17ih, 1868. B. T. JOHIS^SOi^, By J. JOimS, Jr. DECEMBER 22, 1869. Bradley T. Johnson, Esq.: Dear Sir: I am instructed by the board public works respectfully to request of you a report of your transaction as attorney for the state Virginia, in pursuance of a resolution of the general assem- bly passed February 26th, 1866, to authorize the board public works to adopt measures for realizing the preferred liens of the state upon the tolls and revenues of the Chesapeake and Ohio canal company ; what has been the amount realized from your proceed- ings, the amount received, and the amount paid and to be paid upon the same, and the present condition of the aftairs of the company. I am trulv, &c., T. H. DeWITT. 85 f RICHMOND, YA., Wednesday Moening, Dec. 29th, 1869. , To the 'Board of Public Works, Virginia : The resolution of the board of public works of the 28th instant, relating to the prosecution of the claim of Virginia against Selden, Withers & Co., was handed to me late ^^esterday afternoon while I was engaged in professional business, which continued till a late hour after night. This has disabled me from making as full a report as I could desire, but I hope this will suffice at present. All the money collected by me in the prosecution of the claim has been paid into the state treasury, and will be found, according to the several dates and several sums of which it consisted, on the books of the auditor of public accounts, under the head of Selden, Withers & Co., except that retained on account of, but considerably less than the compensation. The money so collected was the pro- ceeds recovered in various legal proceedings in court, some of which, are concluded, and some of which are yet pending for further re- coveries anticipated, and to some extent, certain to be realized. I am not aware of the collection of any other money on this claim by my authority by any other person; though I was very recently informed by General B. T. Johnson, that he lately received in' Maryland, under some arrangement of parties to a suit then pending, about or some $20,000 towards satisfaction of a large sum, nearly $140,000 of coupons from the bonds of the Chesapeake and Ohio canal company, which .coupons I, as agent of Virginia, ac- quired and still held as part of the assets of Selden, Withers & Co., on account of the state claim I am prosecuting. I never authorized General Johnson, or any other person, to receive this money, or any part of it, and did not suppose it could be reaUzed until by legisla- tion the state of Maryland could be made a party to that suit, when a decision of the suit was anticipated, and when I expected to recover and receive what should be adjudged due on these coupons. General Johnson being much interested in that suit as involving a claim of the commonwealth of Virginia under his control, he and I conversed on the subject of the suit, and also of the coupons. It was understood by us that upon some occasion, which was antici- pated, but not defined or known, I should take the coupons to Mary- land and present them to the court having cognizance of said suit, 86 or some officer thereof, and have them audited. After this General" Johnson, either by letter or telegram, most earnestly urged me to come on immediately with the coupons, or send them to him by express. Being unable to go instantly, I sent them to him by ex- press, and they were afterwards returned to me. When I next saw General Johnson, he told me the coupons answered as well as if I had been there with them, and that no decision could be expected for some time. Those coupons have not in time or circumstances^ except as stated, been out of my possession or control, and no agreement ever made by General Johnson and myself that he should receive the money, or any part of it, due or recoverable in any way. upon these coupons, on any terms whatever. The money so received by General Johnson upon the coupons has not come to my hands, though he knows that I expect and desire him to deliver it to me,, in order that I may pay it into the treasury of the state. Under my appointment as agent by Governor Peirpoint, I am fully au- thorized to collect and receive said money, and no other person is authorized to receive the same for the state,' so far as I am informed. Therefore, I claim that said money should be paid to me, and by me into the treasury, as General Johnson fully understands. Very respectfully, JAMES •N'EESON', Agent of Virginia. To the Board of Public Works of Virginia : Gentlemen: I have the honor to acknowledge the receipt,, through the hands of your secretary, of copies of resolutions passed this day by the board : one directing me forthwith to pay into the treasury of the state, to the credit of the board, thirty-seven thou- sand four hundred and thirty-five dollars, collected by me as agent of the state, from the Chesapeake and Ohio canal company, less my commission of 20 per cent. ; and the other directing Mr. James Neeson forthwith to receive from me twenty-one thousand dollars, which your resolution asserts has come into my hands as interest on claims of the state against Selden, Withers & Co., and which Mr. N"eeson only was authorized to collect. 87 My report of December 27th to the board, and which would have been made sooner, as therein explained, except for my necessary absence in Maryland prosecuting the claims of the state in this matter, fully explained when, how, and on what account each of these amounts was collected by me. It gives a particular statement of each payment, the account on which it was received, and copies- of the agreements between creditors, and the action of the canal company under which it was paid to me. At the same time copies of our contracts with the board, and a special po"wer of attorney from the board to me to collect and receipt for all sums due to the state by and collected from the canal company, was furnished the board. At the same time, I particularly explained to the board, that as to the payments, making in the aggregate the sum of $37,435, the company claims to have discovered errors in the calcu- lations on which they are based — in one case amounting to $1,054 — • and that they had notified me by telegraph, and afterwards per- sonally, through their president and chairman of their committee on accounts, not to pay over that money until these errors had been corrected, and that I had informed them that I should retain enough to correct all errors. My report further showed, that there were six separate settlements, and that therefore $6,000 was riot more than sufficient to be retained for correction of errors; I, therefore^ proposed at once to pay over the balance, less our commissions on this $6,000, of which hereafter I proposed to present a particular account to the board. It further showed, that a most important part of our arrangement was yet to be carried out with the canal company, and that I should insist on its fulfillment before correcting any errors. Under these circumstances, and when the board had full knowledge of all the facts attending this pledge on my part professionally to the canal company, I respectfully submit that I had a right to expect that the board would at least have consulted me before making any such peremptory order. But I recognize the extreme delicacy of any retention of public funds in my pos- session without the entire concurrence and approbation of the agents of the state. I cannot allow any possible ground for mis- understanding between the board and ourselves to arise on such a question ; and I am, therefore, ready at once to pay into the treasury the sum of $37,435— less $7,487— $29,948, being the entire amount received by me on account of this class of debts due the state^ The pledge I have made the canal company I consider myself 88 bound in honor to perform, and shall do so out of mj personal es- tate, relying on the honor of the board to keep itself in a condition to indemnify me out of the fund without requiring any application to any other agency. With regard to the resolution in relation to the receipt by Mr. i^eeson from me of §21,000, I have to make these remarks : The preamble asserts that "whereas it has come to the knowledge of this board that $21,000 have come into the hands of Bradley T. Johnson, on account of the interest on claims of the state against the estate of Selden, Withers & Co." This assertion is incorrect in fact, and contains a reflection on me. The board was informed fully and particularly by me of the collection — when, where, how, and on wdiat account; and, therefore, I submit your resolution ought, in justice, to be so corrected as to indicate that w^hereas I had reported to the board that I had collected $21,000 from the canal company, &c. This is a matter of substance to me, for the proceedings of the board are of record, and I am sure the board never intended any intimation of improper conduct on ray part in this collection. The other fact miss-stated is, that the money is for interest on claims of the state against Selden, Withers & Co.; ^vhereas the fact is, that it is for interest on claims held by the board of public works against the Chesapeake and Ohio canal company, which claims were transferred to them January 25 and 26, 1855, and are now held by you, as stated to you in ray report and as the public records show. I respectfully ask, therefore, that these two mistakes be corrected, so that the record shall state accurately the facts. The allegation that Mr. ISTeeson only was authorized to collect this money, or that he has anything to do with it, is an entire mis- take, as I shall show. On January 26th, 1855, this board received from the trustees of Selden, Withers & Co. $208,000 of bonds and certificates of the Chesapeake and Ohio canal company, to be held as collateral secu- rity for the debt of that firm to the state, with power to sell the same, collect, or fund the interest due, and siie the canal company for the bonds, &c. (Pub. Doc. of Va., 1855, 17, p. 60, 61.) Among these $208,000 bonds then received, were certificates for funded coupons numbered 493, 494, 525, 526, and 527, for $140,000; which certificates were then delivered to this board, and have been ever 89 since, and are now, in tlie entire posession of the board, and are in the* auditor's safe with other securities. "When, therefore, this board made the contract with my associates and myself in 1867, they recited the fact that they held"these $208,- 000 of bonds among the claims of the state for preferred liens on the canal company, and they formed part of the basis on which the •contract was made. Subsequently, in 1867, I became aware that Mr. l^eeson was the attorney of the state in winding up the Seldeu, Withers & Co. debt; but I never did know until within three days that he had received his appointment by virtue of a joint resolution of the general assembly, at a regular salary of $3,000 and expenses allowed. AVhen I became, in 1867, aware of his connection with Selden, Withers & Co., it was my duty also as attorney for the state, as Well as my professional obligation as a gentleman and a lawyer, to keep him advised of the general progress of my prosecution, so that whatever professional rights he might have in the matter should be protected. "Whatever sums we received on account of the $140,000 certificate would necessarily be applied to the credit of the Selden- Withers debt, and it was necessary for him to know it. . Had I known he received a regular salary, this professional obli- gation would not have existed. Finding that the validity of these bonds, I^os. 493, 494, 525, 526 and 527, as liens was desired, in our investigation as to their origin, I found, from Mr. Ringgold, the secretary and treasurer of the company, that they were issued for coupons fanded, which coupons were at the time sarrendered to the company, and for the main part cancelled. Sometime after their delivery thus, it was considered better for Selden, Withers & Co. to have the cancelled coupons in their possession, as proof that these certificates were for funded coupons. The cancelled coupons were, therefore, delivered by the canal company to Selden, Withers & Co., but were not delivered by them to this board when the certifi- cates were, bemg coupons, in law cancelled, and in fact many of them, as I have seen, are cancelled on their face. Mr. Einggold told me that a person connected with the estate of Withers or Selden, liad brought these couj)ons to the company for funding, but he in- formed him they had already been funded and were worthless. I, acting in the same spirit of professional courtesy, informed Mr. iNeeson of these facts, and was very desirous to have him get them from the estate of Withers as valuable evidence to support the lien, 12 90 which alone made the certificates valuable. The liens of these cei- tificates as being for funded coupons, and the attendant circtim- stances, are fully set forth in a bill fi.led in the circuit court for Baltimore city in 1868 by myself and associates, in the name of the commonwealth of Virginia against the canal company and its creditors, for the purpose of asserting all claims for the state, and for those particular claims for those particular certificates, by name and designation. A printed copy of this bill was furnished by me to Mr. I^eeson at that time. It is clear, then, that Mr. JSTecson knew that these certificates were issued for funded coupons; that the coupons held by him were these identical funded coupons, the certificates for which are now in the possession and control of this board, and that these coupons have no money value whatever; they would not sell in the market for waste paper, nor could Mr. iTeeson collect the value of a postage stamp on them. If it be true that they are of value, it would fol- low that the state could recover double the amount due it. I am, therefore, utterly surprised at the strange inaccuracy of his report to this board as to his statement of facts and inferences there- from. Upon examining the resolutions of March 30, 3866, under which he has been appointed agent of the state, it will be seen that by no construction of it could he ever have been employed to col- lect these certificates from this board, which holds them in trust for the state. The joint resolution authorizes him to prosecute the claim of the state of Virginia against Selden, Withers & Co., and the trustee or trustee of either of said firm, or any other person having in his possession property conveyed in trust for payment of said debt. This board holds the certificates in trust for payment of the debt, and the legislature never authorized the employment of an agent to prosecute this board. The $21,000 received by me was for interest on those §140,000 of certificates from January 1st, 1852, to July 1st, 1854, as shown by my report to this board. It is not interest on the coupons held by Mr. Neeson, who has not $140,000 of coupons in his possession, but is interest on certificates 'No. 493, 494, 525, 526, and 527, for funded coupons now held by this board. If Mr. Neeson's coupons are a portion of those funded by the certificates, they are worthless. If they have not been funded, then this payment has nothing to do- with them. 91 I procured on one occasion the coupons from Mr. Neeson, to use as evidence in the equity suit in Baltimore to establish the lien of these certificates, just as I would have summoned him as a witness^ but never dreamed of any control he had over the certificates them- selves. On examination of the coupons, it was considered better not to exhibit them as evidence, and they were at once returned to Mr. ITeeson, not a soul having seen them than the attorneys of the state. We filed our bill to collect them ; we gave Mr. ISTeeson a copy of the bill, and it was impossible for him to help being fully informed as to our proceedings in the matter. Our course towards- him has been dictated by a scrupulous regard for all his professional rights, whatever they might be, for we never knew until to-day that he had a regular salary; nor did the present board have knowledge, I understand, until very recently, of the amount of that salary, no record of Mr. IsTeeson's appointment and powers having been made among the executive proceedings. "We supposed he might have some contingent fee, as we had, and therefore advised him of our progress. Even if Mr. Neeson's power included the authority to collect this ^140,000 of certificates from the canal company, it is clear that this board subsequently conferred the same authority in us, which we have in part successfully secured. We, therefore, on considering our contracts and powers from the board, and Mr. J^^ee- son's powers under his appointment from the governor, are advised by counsel, that under the express letter and spirit of our arrange- ment, the entire Chesapeake and Ohio claim held by this board is included in our contract; that Mr. I^eeson has no relation to or in- terest in it whatever; and, therefore, I respectfully decline to recog- nize him in any way in this matter. This board is our principal. With it our engagements are made, and from it our powers are obtained; and I propose, therefore, to pay over to them the sum of $21,000, less our commission of 20 per cent. If, after this full explanation, the board still entertains any doubt- on this point, I will give any security, in any amount, for the com- mission retained, and will submit the question, as to whether we are entitled to retain this commission on this $21,000 collected, to any member of the Eichmond bar, selected by yourselves and approved by my counsel. The certificates would have been sold in 1867 for from $22,000 to $28,000 but for my personal and urgent solicitations to the board of public works, and assurance that our labors would 92 certainly impart great value to them. I have collected on them 121,000, leaving $250,000 still due; and I hope this board will re- tain the entire control of them, either by a sale and purchase by them, or otherwise, as we shall hereafter collect more of the amount due. Mr. Neeson's coupons had better be left to him for collection, if he thinks they are of any value. I desire to direct the attention of the board particularly to the terms on which the sum due for interest paid on the repair bonds for 1853 and 1854, and on the preferred bonds for 1854, as particu- larly described in my receipt to the canal company, a copy of which is appended to my report as part of it, have been received by me. They were received on the distinct understanding, that by receiv- ing these payments in cash, w^e agreed to remit all claims for in- terest due on them, putting us on the same footing as other creditors who were to be paid coupons due as of that date. These sums, therefore, must be received by the board with the distinct understanding that such receipt ratifies the arrangement thus made. When the board made the arrangement with us in 1867, the bonds of the canal company were selling at from 15 to 20 cents, with 16 years coupons attached, or at the rate of from 7J to 10 cents for the coupons themselves. The claim of the state, therefore, for lost coupons, amounting to $269,000, could hardly have brought more than five cents, $13,450. The certificates would have sold for, say $25,000, and the whole saleable claim of the state would not have produced more than $38,450. We have collected the net sum of $64,000, after retain- ing our commission, and have procured the allowance of our claim to the amount of $350,000, besides $250,000 still due on the certifi- cates. We hope in the future to realize still larger results for the board. Yours, BHADLEY T. JOH^SOX. December 29tii, 1869. 93 AUGUST 6th, 1871. And it is further ordered, That all coupons and other evidences of debt now held in possession by this board against the said Chesa- peake and Ohio Canal company be delivered to the said ITeilson Poe, John P. Poe and Bradley T. Johnson, attorneys for this board, for collection: provided that the bonds known as the Selden, Withers & Co. bonds for fanded coupons for $140,000 shall be retained by this board. In pursuance of the above order from the board of public works, I have received from the second auditor the following coupons and other evidences of debt: 41 coupons of $30 each, 12 coupons of $15 each, 27 coupon bonds of $500 each, accrued from assets of Selden, Withers & Co. ; also a letter from J. S. Guest, treasurer of the Chesapeake and Ohio canal company, dated 10th May, 1855, acknowledging the receipt from the board of public works coupons from repair bonds to the amount of $17,820. (Sign ed) BRADLEY T. JOHI^SOiT, For s.elf and Poe ^ Poe. [Copy.] DECEMBER 31, 1869. Received of Bradley T. Johnson, attorney for the state, the sum of thirty-nine thousand and nine hundred and forty-eight dollars [should be $29,000], being net amount (less twenty per cent, com- mission) of thirty-seven thousand four hundred and thirty-five dol- lars collected by him from Chesapeake and Ohio canal company on account of coupons paid by the state in 1853 and 1854 on bonds of the Chesapeake and Ohio canal company guaranteed by the state, and on a certificate issued to the state by that company for $35,400 funded coupons up to October 1st, 1869. S. A. PORTER, Second Auditor, 94 [Copy.] Eeceived of Bradley T. Johnson, attorney for the state, the sum of sixteen thousand eight hundred dollars, being net amount of twenty-one thousand dollars, less twenty-per cent, commission, col- lected by him on certificate for funded coupons issued by the Chesa- peake and Ohio canal company to Selden, Withers & Co., and by them transferred to the board of public works, and now held by said board, said certificates being numbered J^os. 493, 494, 525, 526, 527, said amount being for interest on said certificate from January 1, 1852, to July 1, 1854, inclusive. S. A. POETER, Second Auditor. RICHMOi^D, May, 19th, 1873. Eeceived of Col. W. D. Coleman, secretary board of public works, coupons on repair bonds of Chesapeake and Ohio canal company for collection : Ko. 71, July, 1859, $15. 202, 30-. 203, 30. 204, 30. (Signed) BRADLEY T. JOHNSON. 1 1 RESPONSE OF JAMES NEESON. • Hon. Marshall Hanger, Speaker of the House of Delegates: Sir: I have the honor to acknowledge the receipt of a copy of "resolutions in regard to certain settlements between General B. T. Johnson and James I^^eeson and the board of public works, as to certain claims of the state against the Chesapeake and .Ohio canal company," passed the 30th day of January, 1877. The second of these resolutions is in the following words, to-wit : "That the Hon. James iTeeson be, and he is hereby respectfully requested to furnish this House a statement showing the amount and character of the claims against the firm of Selden, Withers & Company which were placed in bis hands for collection as attor- ney for the state of Virginia; the amount collected by him in money; the amount collected by him in other assets; the character of those assets, and what disposition was made of said money and other assets. " In compliance with this request I present through you to the House the following response : Prior to the late war some years, the board of public works of Virginia entrusted to the firm of Selden, Withers & Company, as agents, a large amount of the bonds of the commonwealth for sale or negotiation; in respect to which, or a large part of which, the firm proved delinquent and failed to satisfy the board therefor. The firm became insolvent and failed, and made an assignment of its .assets to trustees for the benefit of its creditors, including the board of public w^orks or Virginia; but provided that the latter should only be paid out of any surplus after paying other creditors. John Withers, one of the firm of Selden, Withers & Company, conveyed certain of his individual property, situate in Missouri and in Vir- 96 ginia, to trustees to secure to the board of public works or Vir- ginia any deficit which might remain due from Selden, Withers & Company of such surplus under the aforesaid assignment of assets. The board of public works also held as collateral security, certain bonds of the Chesapeake and Ohio canal company, to-wit: five "special bonds'' for $140,000, and a parcel known as "preferred bonds" for $13,500. Such was the character of the claim of the board of public works against Selden, Withers & Company. In a suit in tlfe circuit court of Alexandria for the enforcement of this claim, the amount was ascertained to be $513,615 29, with interest on $382,298 15 thereof from the 1st day of April, 1860. In the prosecution of this claim, I have proceeded in many direc- tions, upon persons and property whenever and wheresoever dis- covered, in every available method, and have reported, from time to' time, to the governor or board of public works, such proceed- ings, and the results thereof In performance of this duty, it be- came necessary, among other things, to have accounts and settle- ments with the trustees under the assignment of Selden, Withers & Co., to cause sales to be made of the individual property of John Withers in Virginia and in Missouri, and of the bonds above de- scribed. Sales of the said bonds and of said property in Virginia were decreed by the circuit court of Alexandria in the before-men- tioned suit. The amount collected by me in money will now be stated. Prior to a-nd down to the 28th day of April, 1874, as my reports show, I had collected the sum of $104,615 28; of which I had paid into the treasury of the commonwealth $95,732 46, and disbursed for ex- penses $1,076 14, making a total of $96,808 60. The remainder, $7,809 60, was retained on compensation, there being then yet due me the sura of $1,193 32. The report of a joint committee of the Senate and House, upon investigation, shows and approves the foregoing statement of receipts and payments and balances due me; which report was agreed to by both Plouses. The report and the action of the House of Delegates thereon, of the date of 28th April, 1874, appear in the Journal of the session, 1874, on pages 516-17. Since that date and report I have collected the sum of $2,918 63, and paid $1,600 into the treasury. Further collections will be made, but the amount is scarcely susceptible of estimate, being dependent 97 on litigation and contingencies to a considerable extent. It is not likely to be large. " The amount collected by me in otber assets" than money, and what disposition thereof has been made, I am requested to state. Of such other assets, there were two items, viz : coupons of the Chesapeake and Ohio canal company bonds to the amount of $140,000, and a package (or two) of the notes of the insolvent Bank of the Commonwealth, to the amount of about f 10, 000. After the decree of the circuit court of Alexandria before men- tioned, for the sale of the Chesapeake and Ohio canal company bonds for $140,000, and before sale, information was received in- ducing the belief that said bonds had been issued for coupons of an equivalent amount belonging to Selden, Withers & Co., and that they should go with said bonds, and be available to the board of public works. After much time and enquiry, I found these coupons (between $139,000 and $140,000) at Staunton, Ya., in possession of one of the trustees in the assignment of Selden, "Withers & Co., and I ob- tained them from him, giving therefor m}^ receipt as agent of Vir- ginia. I took possession of them for the benefit of the board of public works, (and so informed that body,) towards paying the debt of Selden, Withers & Co. It was my purpose to have these cou- pons presented and recognized for payment in a suit in Maryland, wherein General B. T. Johnson represented Virginia. Before this was done. General Johnson, then in Maryland, requested me to come on with the coupons, or to send them to him. At once I sent them to him by express. Soon afterwards he returned them to me, informing me that they had been duly proved and were not longer use for the court or its officer. These coupons are still in my possession. The money realized on these coupons for $140,000 never came to my hands. When part had been realized, to wit: $21,000, and had come into the hands of General Johnson without my knowledge or consent, I demanded it of him, that I might pay it into the treasury of the commonwealth, but he re- fused; upon which I informed the board of public works of the fact of the refusal. The board thereupon, by order of 29th Decem- ber, 1869, directed me to receive the money and pay it into the treasury. Afterwards, as I was informed, the board, upon the ap- plication of General Johnson, recognized his claim of right to 13 98 receive the proceeds of the said coupons; and I am further in- \ formed that he accounted therefor to the board of public works. The bank-notes above mentioned, for about $10,000, came to mj hands from one of the said trustees of Selden, Withers & Co. under the assignment, as collateral and part paj^ment of a sum decreed against him as trustee, on which sum he will be entitled to a credit for the amount which may be realized from the notes. A suit is pend- ing in the chancery court of the city of Richmond, by the style of Scott and others against The Bank of the Commonwealth and others, for the collection of these and other like notes by enforce- ment of the personal liability of the stockholders according to the law under which the notes were issued for circulation. The notes were received from Mr. William Bayne, and hence his name is used in the suit. Of my possession of these notes and everything relating to them, my report to Gov. G. C. Walker of February 1, 1870, fully advised the board of public works. I am, very respectfully, your obedient servant, JAMES NEESOK February 15th, 1877.