History of Iowa County, Wisconsin, Part 81

Author:
Publication date: 1881
Publisher: Chicago, Western Historical Company
Number of Pages: 958

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On June 4, 1856, Alvin Wilkins made an assignment of his contract to Luther Beecher, a brother-in-law, residing in Detroit. By the terms of his contract. Mr. Beecher was to receive $1,000,000 in caslı bonds and stock of the company, including $150,000 in Iowa County Bonds ; $60,000 in Town of Mineral Point Bonds, and $10,000 of Town of Waldwick Bonds, for which Mr. Beecher was to complete and equip the road, and pay and deliver up to the company to be canceled all the interest coupons due on the Iowa County Bonds, including those of July 1, 1857. It is idle to recount the financial operations of this contractor, through whose shrewd- ness and business capacity the road was ultimately completed, and under whose auspices the inaugural train was run in the spring of 1857.

To justify a repudiation of the bonds, it was asserted that a second mortgage, subordinate to a first of $10,000 per mile, was no security at all ; that even the first mortgage was valueless,

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HISTORY OF IOWA COUNTY.

as the road would never pay operating expenses, or even earn enough money "to lubricate the axles."

On the other side it was insisted, and detailed statisties were presented in proof, that the net earnings of the road would pay off both mortgages and leave a surplus for dividends to stock- holders ; and the convertible feature, which the bonds of the county were to contain, was a val- uable one of which the county would at some future time avail itself.

The more brilliant prospectus was generally accepted by a confident and enterprising people as a correct view of the merits of the undertaking, and, in support of their opinions, the eiti- zens cast their vote, and accepted the proposition. Reviewing the canvass now, in the light of subsequent experience, it is contended that the action was justified by the prospective profits, which, despite delusive statements, were not wholly chimerical. In this plight it becomes inter- esting to contemplate the course which eventually canceled the guarantee, and left the tax-pay- ers in the relentless grasp of financiers, whose only aim was to eke out payment to the last stiver. Anterior to the popular indorsement of the county loan, the railroad was subject to a bonded indebtedness of $10,000 per mile, or, in the aggregate, $320,000. But in reality the only mortgage that had been issued, paramount to the security of the county, was the Sehuyler mortgage, a lien to the amount of $50,000.

On April 8, 1856, the Railroad Company, by Parley Eaton, its President, executed a mortgage for $320,000 to D. R. Martin and L. D. Coman. These parties elaimed for the deed all privileges pertaining to first mortgage bonds, although there was nothing on its face to indi- cate that it was a first mortgage. In fact it was actually a third mortgage, and the bonds issued were subordinate to the mortgage issued to secure the county.

Owing to the recalcitraney of the railroad, in failing to provide payment for interest ma- turing on county bonds on July 1, 1858, a suit was instituted in the United States Court, upon forty-three of those bonds.

COUNTY REPUDIATION OF BOND INDEBTEDNESS.

At the annual meeting of the County Board of Supervisors, on November 11, 1858, the members were called upon to adopt a definite plan of action regarding the present and prospect- ive litigation arising from the railroad company's inaction, and it was

Resolved, That the Iowa County railroad bonds were obtained by fraud, issued against the wish of the people, first offered in market, against the published protest of a majority of the County Supervisors, and that the peo- ple never will consent to the payment of one dollar of them.

Resolved, That in view of a suit now to commence, or about to commence, against lowa County, for some por- tion of said bonds, it is ordered that a defense be made to such and all suits for any of said bonds, to the utmost extent of law.

Resolved, That the Chairman of the board be associated with the District Attorney, and that they be directed to employ the best legal talent of the State, at a cost, if necessary, of any amount not exceeding $5,000 per year, to assist in conducting the defense.

Resolved, That $1,000 be appropriated out of any money in the treasury, for present use, and the Chairman of the board be instructed to draw orders for the sum as needed, to carry out the objects of the foregoing resolutions.

Notwithstanding this repudiation, the United States District Court has always, and in all cases, rendered judgment against the county, the first deeree having been entered on September 3, 1860.

The allegations of misrepresentation and fraud specifically defined are : That it was repre- sented by those who advocated the issue of the county bonds, and especially by the Directors of the railroad company, that if the bonds were issued, the railroad should be extended northerly through the county. The Railroad Company would pay the bonds, principal and interest, and that the people of the county would never be called upon to pay one cent. Finally, that the election itself was fraudulent, and the apparent majority was obtained by illegal and fraudulent voting.

It is admitted by the most ardent supporters of the railroad, that it was represented that the road should be extended northerly through the county. These representations were, however,

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HISTORY OF IOWA COUNTY.

more the act of individuals, who, laboring to render the issue of county bonds more palat- able to the popular taste, did not always hesitate to qualify their promises, but unconditionally stipulated verbally that such extension would be completed. As a corporate body, no official emanation sanctioned the projected northerly branch. However, arrangements had been made with R. & G. L. Schuyler to extend the road to the Wisconsin River, whenever they had com- pleted their main line to Mineral Point. In justice to the contractors, it is only equity to pre- sume that they would have done it, had not their disastrous failure of 1854 intervened, to cause a suspension of operations on the main line for nearly two years, and defeated all hopes of the extension for an indefinite period. The only grounds existing for the charge of misrepresenta- tion were the acts and utterances of the Directors, some of whom, in an ebullition of excitement and transported by super-zeal, addressed mass meetings of citizens on the topic uppermost in their minds. Extravagant expectancies were incubated, and the golden prospects of the rail- road depicted in roseate tints of the most vivid character. So impressed were the Directors of the ultimate success of their project that, prior to the election, a circular, entitled " An Appeal," was printed and industriously distributed among the voters. In this "appeal" the income of the road was estimated at $72,000 per annum, and this amount the Directors expressed their confidence would be found " far below the truth." On behalf of the railroad, it is claimed that this prospectus deceived no one, as the figures of estimated profits were submitted to each tax- payer to either verify or disprove.

FIRST SUIT.

Notwithstanding the secondary nature of the Martin & Coman mortgage, a suit for the purpose of foreclosure was brought in April, 1859, in the United States Court, in which it was charged that the Janssen mortgage " was subject and subsidiary to the Martin & Coman mort- gage, and that the latter had precedence to and priority over the former and all other liens and incumbrances."

In this suit, the county was not made a party defendant, but the Trustee. the State Treas- urer, was. While this suit was pending, before decree or sale of the road, two citizens of Min- eral Point made strenuous efforts to induce the Chairman of the board to instruct the attorney of the county to answer in this suit. asserting that the Janssen mortgage, held for the security of the county, was the first and paramount lien on the railroad. Every argument that could be adduced was used with the Chairman, and he was furnished with the written opinion of an emi- nent law firm in Milwaukee, stating that if the county did not assert its rights in this suit, it would. by a decree, be forever debarred from so doing.

The records of the Board of Supervisors do not show that any action was ever taken by the board upon the question of entering the appearance of the State Treasurer as trustee of the Janssen mortgage in the foreclosure suit of the Martin & Coman mortgage ; but it does appear on the other foreclosure suit of the county, that Samuel D. Hastings, State Treasurer, was served with a subpoena, and that he transmitted the same to the Chairman of the Board of Supervisors of Iowa County, and gave the officers of this county authority by letter, "to nse his name in any way in defending said suit."

On reception of this authority, L. W. Joiner, the Chairman, met in consultation with the District Attorney, and was by him advised not to defend the Martin & Coman suit, as such action, by asserting a claim to the Janssen mortgage. would compromise the suit wherein the county contested the legality of the railroad bond issue.

The Janssen mortgage provided that $320.000 might be issued under it. Of this, $15.000 was issued to Iowa County in 1853, and the balance to other parties in 1856. The State Trcas- urer was the trustce under the mortgage for the several mortgagees, as well for the other parties as for the county. Under the circumstances, it is strange that a legal counsel with the un- doubted ability of Chief Justice Ryan, should have considered the county litigation compromised by an appearance in the Martin & Coman suit by the State Treasurer as trustee.

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HISTORY OF IOWA COUNTY.

[PUBLISHER'S NOTE .- After this chapter was printed, several errors were discovered. To correct them, the greater part of the defective pages were re-printed. The construction of the book necessitates the following errata : Page 532, fourteenth line from bottom, for "equitable," read " equal ; " line below, for a " mortgage," read "a second mortgage." " Jansen," wherever it appears, for "Janssen." Page 536, thirteenth line from bottom, read " summons " for " subpoena." Transpose the second paragraph from bottom to follow " debarred from doing," and make it read : "On reception of this opinion, L. W. Joiner, the Chairman, met in consultation with the late Chief Justice Ryan, employed by the county, and was by him advised not to defend the Martin & Coman suit, as such action by asserting a claim to the Janssen mortgage would compromise the suits on the county bonds wherein the county coutested the legality of the county bonds issued to the railroad company." Also, sixth line from bottoui, read $150,000. From this point to the end, the chapter is reprinted].

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HISTORY OF IOWA COUNTY.

In pursuance of a decree granted by the United States Court in the Martin & Coman suit, the railroad, equipments, etc., were advertised aud sold at Marshal's sale on November 6. 1861, to James C. Carter, a New York attorney, for the sum of $75,000.

In the spring of 1866, Moses M. Strong and William T. Henry were employed by the county to foreclose the Jansen mortgage, and to assert it as being a first hen on the railroad and all its property for the benefit of the county, and as a just offset to the claims made against the county. And at this time, Henry and Smith were employed by the county to defend it in all the other suits by the bond-holders, and they had been before so employed from 1860 by the city and town of Mineral Point. and a short time after by the towns of Waldwiek and Moscow. The attorneys, Strongand Henry, agreed with the County Board to prosecute the Jansen foreclosure suit for a fee which should be satisfactory to the board, and contingent upon succe-s, and if they were not successful they would only receive from the county their actual expenses. According to this agreement, the suit was commenced in the Circuit Court of Iowa County in September. 1866. Messrs. Reese & Mulks were employed by the county to assist in the suit. The case was brought to trial October 28. 1868, and the court adjudged that the Jansen mortgage was the first and paramount lien upon the railroad and all its property. Luther Beecher, President of the Mineral Point Railroad corporation, through his attorneys. appealed the decision to the Supreme Court of the State. The Supreme Court reversed the decree of the Circuit Court, and ordered that the case be dismissed, holding that the county had lost its privilege by not appearing in the Martin & Coman foreclosure suit ; that the county was by that decree forever barred and prohibited from setting up any claim by virtue of the Jansen mortgage.

By authority of the act " to authorize the counties and towns through which the railroad passes, to aid in its construction," the town of Mineral Point issued $60.000 and the town of Waldwiek $10,000 of their bonds, accepting stock of the railroad in return for the subsidy. Waldwick subsequently liquidated about one-fifth of their bonds.

In 1870, this outstanding liability against the tax-payers had assumed threatening pro- proportions, which speedily promised to seriously impair the finances of the county.

Subjoined is a statement of the bonded indebtedness of the rate-payers of Iowa County, together with accumulated interest, as compiled by William T. Henry in 1870 :

$413,000

Iowa County Bonds.

City of Mineral Point. 98,505

66.495

Town of Mineral Point

Town of Waldwick. 18.833

Town of Moscow ..... 8.162

Total $599,995

The claims against the county were thus augmented to $16.82 for each person, or $84.10 for a family of five persons, and 67's per cent on the high valuation of 1870. In the cities and towns that granted subventions. the claims of local bonds were to be added. In the city of Min- eral Point, the citizens were burdened with an oppressive debt of quadruple proportions, embrac- ing a tax respectively for the county, town. city and railroad stock assessments. Accepting the county and city debt in the aggregate, the assessment levied would be equivalent to 171% per cent. Including the town debt, the rate was increased to the startling figures of 2014 per cent.

In the town of Waldwick, a tax to cover the indebtedness would subject the inhabitants to an assessment of 1013% per cent. In the town of Moscow the rate of taxation would be 9fs per cent.

THE ENEMY STORMS MINERAL, POINT.

The first judgment against the county was September 3, 1860, and the first one against the city and town of Mineral Point was September 26. 1864, these being rapidly followed by other suits and other judgments.

One curious circumstance, connected with the first judgment against the county, which was in favor of Clark. Dodge & Co., of New York City, was that at the trial of said case in the

539

HISTORY OF IOWA COUNTY.

United States Court at Milwaukee, the original 150 bonds for $1,000 each, issued by the rail- road company to the county, were produced in court by the plaintiff's attorney (George B. Eley), and although afterward the most exhaustive search and investigation was had, every possible trace or clew being followed to its very end, parties being examined under oath, and every possi- ble means taken and used to find said bonds, it has never been found how they got out of the possession of the county, or where they went out of said court.

From the time of the first judgments, the bond-holders continued to bring suits and to obtain other judgments for different parties, and of course by different attorneys, and at the same time was trying in every known way, from 1860, to compel actual payment, and for years the county, city and town boards of Mineral Point could scarcely hold a meeting to transact the public bus- iness without having the Marshal appear and serve them with mandamus writs and other com- pulsory processes. In all these were seventy-five to one hundred suits in different stages of progress, giving the county attorneys plenty of occupation in attending to them. All processes were avoided or evaded. but, as practice makes perfect, the attorneys for the bond-holders. the principal and most active heing the late Hon. Matt IL. Carpenter, succeeded in so perfecting their processes that the usual taxes could not be collected, without also paying the bond judgment taxes ; so for 1870 no taxes whatever were collected in Iowa County. For 1871, they managed to collect the usual taxes, but for 1872, the bond holders had the people in the same situation as for 1870; so for 1872 no taxes whatever were collected in Iowa County, and the people having their revenues stopped, were deprived of means with which to continue the public schools, to pay their State tax, or to carry on their local governments. While all this was going on, the attorneys of the county, city and town, as opportunities offered and funds could be had, settled a good many thousand of dollars of county, city and town bonds, at prices varying from 25 cents to 50 cents on the dollar not at any time having any trouble to settle for 50 cents when they could get money.

At this time, the only active parties being the attorneys engaged in supporting the legal warfare and parrying offensive thrusts delivered against their respective clients. Tired of fruit- less skirmishing, in August, 1870, Matthew H. Carpenter, representing Luther Beecher and the majority of the claimants, indited a letter demanding an immediate settlement in full, under penalty of Marshal's execution. The County Attorney replied in a tone of firm moderation, advising a compromise. An answer was vouchsafed rejecting the offer, and ordering " an advance all along the line." The County Attorneys were aided by the legal firms of Emmons & Van Dyke on the part of the towns, and Palmer. Hooker & Pitkins, of Milwaukee, on the part of the county.

In the fall of 1872, at the instigation of Mr. Beccher, all the Town Clerks, Town Treas- urers and the Mayor and Aldermen of the city of Mineral Point, thirty-seven persons in all, were suddenly arrested by United States Marshal Hamilton. and taken to Milwaukee on at- tachments issued without any notice, for pretended contempt of court in not obeying the man- damus writs issued in 1870. The offenders were taken before the United States Court in Milwaukee on November 13, 1872, and after being granted a hearing as to the officers of the city of Mineral Point, they were each fined $100 and costs, exceeding in the aggregate $1,000. The fines were paid and the gentlemen released. Their names were William T. Henry, Mayor ; David Jacka, S. E. Shepherd, James Argall, Albert Sprattler, William J. Healy and Peter Frieden, Aldermen. The other cases were adjourned to the next term of court. The captive city and town officers were permitted to return home as prisoners on parole, with a most em- phatic direction from Judge Drummond to collect money and pay the judgments, as the next time they came before him in this way, the fines would probably be the full amount of the debts and costs.

The cause of this action shows that the tax was levied in compliance with the orders, but the Treasurers, who are required under the laws of the State to give bonds for twice the amount of tax to be collected, found it thus impossible to obtain securities, and on being ordered by the court to appoint others who could give bonds. no person could be found who would accept the

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HISTORY OF IOWA COUNTY.

office. As the clerks could not lawfully deliver the tax lists until the Treasurers had complied with the statutes, the tax was not collected, hence the decree of the court was contemned. The Judges in this case were Justices Drummond and Miller.

At a meeting of the Common Council of the city of Mineral Point, held November 20. 1872, the appended resolutions, which speak for themselves, were adopted :

Resolved, That in obedience to the orders and decrees of the Circuit Court, in and for the United States of Amer- iea, for the District of Wisconsin, made January 4. 1870, in the nine cases of John C. Havemeyer, Charles O. Webb. J. C. Carter, llenry Havemeyer, William F. Havemeyer, James Bruce, William F. Havemeyer, James Lee and Joshua F. Lamson, against the town and city of Mineral Point, and in compliance with the notice of Matt H. Carpenter. solicitor and counselor for said parties, there be and is hereby levied upon all the taxable property of Mineral l'oint, the sum of thirty-three thousand one hundred and one dollars and thirty-six cents, as n tax for the year .A. D. 1872, to pay and satisfy the share of the said city of Mineral Point, of the said judgments, costs and interests thereon. as is fixed and adjudged by the said court.

Resolved, That the City Clerk be, and he is hereby requested and directed to put the taxes so levied in the tax roll for the year A. D. 1872, with the other taxes according to law, and the City Treasurer is also hereby requested and directed to proceed and collect said tax, with the other regular taxes according to law, and when so collected, pay the same over to said parties or their solicitors, to satisfy said respective amounts due them as aforesaid.

Resolved. That with all respeet for said Circuit Court and the Judges thereof, the Common Council of said city leem it right to say that said judgments are not by said decrees properly equitably, justly or correctly apportioned or divided between said defendants-the town and city of Mineral Point, and the said Common Council levies said tax to comply with the order and decree of said court, but in no way acknowledging said amounts to be correct, and reserving the right to adjust and settle such sum or debt with the town of Mineral Point, upon the share and terms heretofore settled and agreed upon between them.

On motion. Mayor Cooper, with Aldermen Argall and Sprattler, were appointed a com- mittee to confer with the town authorities and the attorney for the town and the city, on the offer of T. A. Keep, on town bonds and on the fines and costs in the late cases of contempt before the United States Circuit Court at Milwaukee. When the city was organized out of the territory of the town, they had a settlement by which they divided all assets, and agreed to pay all liabilities on the basis of 597, for the city, and 403 for the town, and said fine and costs were settled on that basis as have been all settlements of railroad bond debts.

THE LEGISLATURE TO THE RESCUE.

At the Legislative session in January, 1873. William T. Henry visited Madison, and by interesting the members of the Legislature, procured the passage and approval of various bills, embodying every conceivable clause capable of protecting the city from paying assessments for the payment of railroad bonds. Following are the bills that were introduced into the Legisla- ture :

By Senator Little : No. 109-A bill to authorize the town of Mineral Point to settle and compromise its railroad indebtedness.

By Senator Little : No. 110-A bill to amend an act to incorporate the city of Mineral Point, approved March 16. 1861, and also all acts amendatory thereof.

By Senator Little : No. 131-A bill to repeal Chapter 143, general laws of 1871, entitled " An Act to Provide for the Collection of Taxes."

By Senator Little: No. 132-A bill to provide for investing a portion of the State school funds in bonds of the county of Iowa, and eity and town of Mineral Point, which may be issued to settle and compromise their railroad indebtedness.

Judge M. M. Cothren appeared before the Judiciary Committee of the House, representing the Mineral Point Railroad. He was opposed by William T. Henry for the consolidated county claim. The four bills were all passed and approved at that session, together with a law authoriz- ing the Governor to appoint a commission to investigate and examine the affairs and manage- ment of the Mineral Point Railroad from the time of its inception, with a view of repealing the charter if certain charges of misconduct and abuse of the people through their charter privileges were sustained. This act was approved March 19, 1873, and was published on April 1 of the same year.

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HISTORY OF IOWA COUNTY.

This attack on the franchise of a railroad was the first recorded, and, in the boldness of its design, was startling. When introduced into the Legislature, its provisions were laughed at, and the bill was at once characterized as Utopian in conception, never destined for practical application. Subsequent events dispelled the fallacy of this idea, and, when approved, Iowa County possessed an instrument that enforced a recognition of her rights. The commission was never appointed, but the bill precipitated a settlement by the bond-holders. Negotiations for an amicable understanding were re-opened with Luther Beecher and others, and on June 12, 1873, and a short time after, an agreement was concluded whereby the bond-holders, representing all the county, city and town bond debts, except that in the control of one Mariner, an attorney in Milwaukee, who, like old Shylock, insisted on every drop of blood, bound themselves to deliver up the bonds and coupons in their possession, in consideration of 65 cents on the dollar, payable in six annual payments, with 8 per cent annual interest thereon, payable at the Detroit Savings Bank. the first payment to be made on April 15, 1874. The proposition was submitted at the July meeting of the Board of Supervisors, in a communication from William T. Henry and J. M. Smith, attorneys for the county. .

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History of Iowa County, Wisconsin, Part 81

Author: Publication date: 1881 Publisher: Chicago, Western Historical Company Number of Pages: 958

Author:
Publication date: 1881
Publisher: Chicago, Western Historical Company
Number of Pages: 958