(No. 34.)

Report of the Committee on Claims, relative to the claims of the estate of the late Hiram Alden.

The committee on claims, to whom was referred the claims of the estate of the late Hiram Alden, together with the reports of the select committee of the Senate and Auditor General, relative thereto, would respectfully report.

That from an examination of said claims and accompanying reports, it appears that from the seventh day of May up to the 26th day of November, in the year 1838, the said Hiram Alden acted as one of the commissioners of internal improvement: that immediately on entering upon the duties of his office, he was appointed auditor of accounts, agreeably to the provisions of the act for the regulation of internal improvement, &c., approved March 21st, 1837; in which capacity he acted until the thirteenth day of June following, when he was appointed acting commissioner upon the central railroad, and continued in charge of the same until the time of his death, on the 26th of November aforesaid. By the report of the select committee of the Senate, it appears that said Alden has received pay for his services as acting commissioner, from the 14th day of June to the 13th Nov., but that for all services rendered previous to the said 14th of June, and subsequent to the 13th of November, nothing has been paid either to the said Hiram Alden in his lifetime, or to his legal representatives, since his death, which said last mentioned services are embraced in the claims now before your committee.

From the report of the Auditor General, it appears that said claims were presented to him for adjustinent, and their allowance refused on the ground that no charge for services rendered as auditor of accounts was admissible, under the act of April 6th, 1838. In regard to services rendered subsequent to the seventeenth day of Novomber, the said Auditor General also refused any allowance, that being the day the said Alden was taken ill, and ever after unable to attend to the regular duties of his office.

In order to arrive at a correct conclusion in relation to the propriety and justice of said claims, your committee have examined the several acts referred to in the report of the Auditor General, together with such others as they conceived might have any relation to the subject under consideration, and after mature deliberation, are inclined to the opinion that it was the intention of the legislature by the act of April 6th, 1838, virtually to abolish the office of auditor to the board and transfer the duties originally devolving upon that officer by the act of March 21st, 1837, to the Auditor General.

Such, however, is the peculiar phraseology of said act, and so conflicting are many of the provisions thereof, that your commit tee can readily conceive that an honest difference of opinion may have existed between the Auditor General on the one hand, and the commissioners of internal improvement on the other, in relation to their respective duties under the same. In relation, however, to the particular item of charge now under consideration, it does not appear, nor is your committee in any way informed what portion of time the said Alden was employed in auditing accounts. The charge is 14 days services as commissioner and auditor. In view therefore of all the circumstances of the case, and inasmuch as your committee believe said services to have been rendered in good faith, and under the impression that the same were duly authorized and required by law, they would recommend that forty-two dollars, (the sum charged therefor) be allowed. In regard to so much of said claim as refers to services rendered subsequent to the 17th of November, the day of confinement of the said Hiram Alden, your committee are credibly informed, that the said Alden did continue to do business at his room, by virtue of his office, up to the very day of his death, and that out door assistance was also rendered him in performance of his duties as commissioner, and for which no extra charge has ever been preferred against the state. Your committee are therefore of opinion that the claim made for such services is just, and should also be paid.

In addition to the claim for services hereinbefore mentioned, your committee are further of opinion, that a sufficient allowance should be made the estate of the said Hiram Alden, to cover the expenses attendant upon the last sickness, including funeral charg es of the said Hiram Alden. Which said several claims hereby recommended for allowance, amount in the whole to $405 50, and for authorizing the payment of which your committee ask leave to introduce a bill.

(No. 35.)

Report of the Attorney General, relative to the Farmers' and Merchants' Bank of St. Joseph, at Centerville.

To the Legislature of the State of Michigan.

In obedience to the resolution of the Senate and House of Representatives of the thirteenth of February last, "requesting the Attorney General of this state to transmit to the legislature his opinion as to the corporate existence of an institution purporting

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to be The Farmers' and Merchants' Bank of St. Joseph,' at Centerville, whether said institution is amenable to the provisions of the general banking law of this state, and what further legislation, if any, is required to afford a proper remedy to the billholders and creditors of said institution," I have the honor to make the following report:

The history of the Farmers' and Merchants' bank of St. Joseph, at Centerville, or as it has been familiarly called "the red dog," is concisely as follows:

The notice for its organization, it is believed, was originally ordered to be published by some of the citizens of St. Joseph county, but about the time operations were to be commenced, a "financier," who had already acquired considerable experience in the science of banking, and who then controlled a manufactory of the most approved material for establishing banks, happened to pass that way, and having his implements, to wit: specie certificates, memorandum checks, &c. &c., all ready, he succeeded in convincing the original publishers of the notice so fully of his superior skill in financiering, that the whole management of the concern was at once given up to him, and thus the public are indebted to William S. Stevens of Detroit, for the specimen of "better currency" afforded by the bills of the "Farmers' and Merchants' bank, at Centerville."

It is understood, however, that the engravings were executed and at first designed for a bank at the village of St. Joseph, in the county of Berrien ; but for some reason the original intention of the managing "financier" was abandoned, and the notes or bills of the "Farmers' and Merchants' bank of St. Joseph" were made to hail from "Centerville," by the impression of the name of that village in red ink on the face of the bills, and from this circumstance the bank derived its cognomen of "red dog," a name given to it perhaps as a term of reproach by some other "experienced financier," who deemed his peculiar province encroached upon in the "getting up" of this bank, fromt he fact that the materials used were not manufactured at the usual mint.

Unfortunately, however, for this scheme of fraud, even the forms of law were not observed as in most other cases; the usual certificate not having been obtained from the county officers that the managers had complied with the preliminaries required by law, before issuing their paper promises, the legitimate representative of their "specie certificate basis." So anxious was this "experienced financier" to exhibit to the world his specimen of a bank founded entirely upon the "credit system," and capable of an indefinite expansion, without the fictitious aid of a single dollar in specie, that the first notice which the public had of his benevolent intentions to furnish a circulating medium for their benefit, was the presentation of the notes or bills of the bank in

payment of his own debts, or in the purchase of property for the purpose of "speculation," the milder term used at the present time to designate a genteel robbery.

By reference to an official letter of the Hon. Thomas Fitzgerald, a copy of which is hereto annexed, dated March 5th, 1838, it will be perceived that although there were thirteen important particulars in which the managers of the bank (so called) had violated and outraged the laws under which they pretended to act, yet at that time they had already afforded community a "circulating medium" to the amount of nineteen thousand eight hundred and sixty dollars, the greatest part of which, it is believed, had been circulated and "palmed off" by the principal "financier."

At the time the above examination was made by Col. Fitzge rald, no certificate had been obtained by the operators in the bank from the county officers, and the law had been so entirely disregarded and violated, that it was deemed impossible to sustain any proceeding against them as a corporation, and no bill in chancery was therefore filed; but those who held their notes were advised to proceed against the individuals concerned, in order to collect the amount due on said notes or bills.

Subsequent to that time, however, the principal" financier,” William S. Stevens, made another effort to carry into effect the object (which it is supposed) he had originally in view, namely, to furnish himself, and others who were interested, with the means of carrying on their speculations.

In order to accomplish this object, a new selection of directors and officers was made, and a new organization was attempted under the amendment to the general banking law, approved December 30th, 1837. But at this time also the operators were in too great haste to get their bills in circulation, to take the course marked out by the law, for instead of waiting until the affairs had been examined by a Bank Commissioner, and his certificate had been obtained, as is required by the sixteenth section of the amendment above referred to, the directors, immediately upon being qualified, made out the certificate required by the 7th section, (a copy of which is hereto annexed,) and filed the same in the office of the Secretary of State on the 13th day of March, 1838. This was done too in reckless disregard and violation of every essential prerequisite of the statute under which they pro fessed to be acting. No specie was paid in and possessed by said bank. No actual capital was provided, (though it is said about five or six thousand dollars in specie belonging to the Clinton canal bank, left Detroit for Centerville, under the charge of William S. Stevens, but was returned in a few days.)

Nevertheless, they were ready to issue bills once more, and no doubt fully believed that they had taken all the necessary mea

.es, such as the publication of newspaper puffs, notices, &c. &c. to ensure a ready reception of their "precious paper promises," thrown forth into the world, a lie upon their very face, as they purported to be upon a bank, which had, in truth, no legal existence, and which never possessed, it is believed, one cent of real capital, and which had nothing to sustain it but the sublimated effrontery and fraud of its principal founders.

By reference to the copy of a bond hereto annexed, from William S. Stevens, to Thomas W. Langley, it will be seen that there was thrown into circulation about thirty thousand dollars, over twenty-one thousand of which went through the hands of Stevens; it is hoped that this is the extent to which the public were defrauded, although it is greatly to be feared, that the whole circulation has not yet been ascertained.

To meet this circulation, there is the bond of Stevens, which has, as I am informed, been sued by Langley; some assets and some real estate securities, the amount and value of which, I have not been able to ascertain, but even some of these securities, as I am informed, were obtained by said Stevens, from individuals not connected with or concerned in the bank, in consequence of false representations.

Such is succinctly the history of the Farmers' and Merchants' bank of St. Joseph, at Centerville, and from the facts disclosed, I corne to the following conclusions:

1st. That the bank never had a corporate existence.

2d. That although the bank never became a corporation, yet, as those engaged in "getting it up," held out to the public that their proceedings were had, and their bills and notes issued, in accordance with the provisions of the act to amend an act entitled "An act to organize and regulate banking associations, and for other purposes," they are estopped from objecting that they are not bound by its provisions, and are therefore amenable to all its penalties, and liable in their individual capacities, in the order and to the full extent provided by that act.

3d. To meet the circumstances of this case, and provide the best possible remedy for those who have been defrauded, I would respectfully suggest the passage of a law providing, first, that all persons who shall withhold any securities which may have been executed in this, or any other case under the provision of the general banking law, from any person or officer duly autho rized to demand and receive the same, shall, upon conviction thereof, be deemed guilty of high misdemeanor, and shall be punishable by fine or imprisonment, or both, at the discretion of the

court.

Secondly, That the Chancellor should be authorized to appoint a receiver for the purpose of taking charge of the property and effects, and "winding up" the affairs of the Farmers' and Me