contemplates a settlement with no one but the bank, and the allowance of the several items to the bank would virtually be an allowance of them by the state to the several individuals against whom they stand charged on the books of the bank.

The bank allege that they have a just and equitable claim against the state for the foregoing enumerated items of advances made to different state officers.

The undersigned, upon inquiry of the officers of the bank and Mr. Hunt, learn that advances to him, as Commissioner, occurred in the following manner: Under a law, the former board of commissioners of internal improvement allowed the acting commissioners to have in their hands any amount of money not exceeding forty thousand dollars at any one time, to be expended upon the public works, and whenever the board audited their accounts they had the amount passed to the credit of such acting commissioner upon the books of the bank in general account, and he was permitted to draw till that was drawn out, and if necessary to carry on the public works, the bank did not refuse to pay the draft of such commissioner after the fund so credited had been exhausted.

The officers of the bank say that upon this subject they frequently applied to the board for instructions what to do, and invariably received for answer, to continue to pay their checks, and it would be all right, whenever the board met, which was at that time seldom.

On the 6th April, 1838, Mr. Hunt had overdrawn his account forty-nine thousand dollars, upon which day the board audited his accounts and gave him a warrant for thirty-thousand dollars; and on the 7th April one for twenty thousand dollars more; he still continuing to draw as usual.

In February, 1838, Mr. Howard, the Treasurer of State, in accordance with a resolution of the legislature, gave the board notice that he had placed in the bank in special deposite to the credit of the internal improvement fund, some safety fund money amounting to $7,224 84. The board, by resolution, authorized it to be loaned, and gave Mr. Hunt a warrant for five thousand dollars of it, charging his account upon the books of the board with that amount, which he loaned to G. W. Williams, for the Farmers' and Mechanics' bank of Pontiac. At a subsequent time Mr. Whittemore, of Pontiac, for the Bank of Oakland, borrowed five hundred dollars, and Mr. Williams two hundred and thirty-four dollars; afterwards Williams again took five thousand dollars, and again one thousand. Mr. Whittemore again applied to Mr. Hunt for more, and he gave him a check for five thousand, but he could select only twenty-five hundred that would answer his purpose. On the 21st March, F. H. Steevens borrowed of Mr. Hunt two thousand dollars of Clinton canal money, and gave

his note payable in one year from its date, in good funds, with interest. G. W. Williams took one thousand dollars on the same day, of the same kind of paper, upon like terms, so that upon recapitulation it will be found that Mr. Hunt loaned to G. W. Williams, for the Farmers' and Mechanics' bank of Pontiac,

To Mr. Whittemore, for bank of Oakland,

F. H. Steevens, in Clinton canal money,
G. W. Williams, on his private account,

Whole amount of money loaned,

$11,234

3,000

2,000

1,000

$17.234

for five thousand dollars of which he had the order and warrant of the board, and the balance of twelve thousand two hundred and thirty-four dollars was loaned without such warrant, and was not carried into his general account till some time during the summer. Mr. Hunt says he was told by Mr. Howard, Treasurer of State, that he had received this last amount or more under a resolution of the legislature, and that it was deposited in the bank as special, and could only be made available by loaning, payable in current funds. In addition to money loaned, Mr. Hunt says he has vouchers which are allowed by the board, but which the Auditor General refuses to audit, for $8,757 85

And also has a claim against G. D. Williams, which, however, he acknowledges himself bound to pay, for

Add the amount of money loaned as

800 00

$9,557 85

foregoing,

17,234 00

$26,791 15

Which deducted from the amount advanced to him by the Michigan state bank,

28,003 78

$1,211 86

leaves a balance against him, of

He further says, he has a balance due him on the books of the internal improvement board, of over two thousand dollars, and deducting from the items charged to his account, the first amount of five thousand dollars, which he had the order and warrant of the board to loan, it will leave a balance of over seven thousand dollars actually due to him from the board. The undersigned are unwilling to take upon themselves the responsibility of determining whether all, any, or how much of this shall be allowed, conceiving that they have no such authority under the act as before stated. If the money so advanced to him, was done in good faith on the part of the bank, and with assurances from the board of internal improvement that all should be made right, and had been expended for the works of the state, then there could be no

doubt of the justice and equity of the claim against the state. And again if those safety fund notes, which were loaned, were placed in the bank as special deposites, and it was deemed a matter of prudence and caution to loan them in order to prevent their perishing in the treasury of the state, then the bank is in equity entitled to have the claim allowed, although, perhaps strictly speaking, they have no legal right to demand it. The amount of Mr. Hunt's unaudited vouchers, if correct, and fully and fairly expended, should probably be allowed, although the undersigned did not consider it to be their province to enquire into that expenditure. They only take the order of the board in Mr. Hunt's favor as their guide.

The item to D. C. McKinstry is a balance of a large advance made to him, and which has been reduced from about twenty thousand dollars to the present amount. It was, a great portion of it, paid, Mr. Norton says, by him at one time while in Albany,to save the state iron from seizure by the transportation company for charges. The undersigned think, that if allowed it should be deducted from the estimates of McKinstry upon his contract upon the central railroad. The money advanced Jno. D. Pierce, Superintendent of Public Instruction is not, in the opinion of the undersigned, a matter of dispute. Mr. Pierce should settle and adjust his own account with the bank, and pay them this advance, if right; although the bank, in their anxiety to reduce its debt to the state as much as possible, would be glad to avail itself of this amount. The advance to Porter and Gibson, commissioners of state prison, was made, as the bank says, in good faith, and with the advice of some of the state officers, when the works at the prison would have stopped but for such advance. If the funds so advanced have been judiciously expended, the undersigned see no objection to the allowance of this item, to be deducted from the first appropriation which may be made for the progress of this work.

The board of internal improvement last summer, supposing that the claims for damages upon the central railroad, could be more advantageously settled by the acting commissioner, if he was allowed to have money on hand to do it whenever he saw fit, issued an order to H. Alden, acting commissioner at that time, authorizing him to negotiate with the Michigan state bank for ten thousand dollars. The order was presented to the Auditor General, who, considering such a proceeding not sanctioned by law, refused to draw a warrant upon the Treasurer for it. Nevertheless, Mr. Alden made the arrangement with the bank, and expended nine hundred twelve thirty one hundreths dollars, which would probably in equity, be allowed, although the legality of the act of the board may be questioned. The amount to L. S. Humphrey, is for the survey of the railroad from Lockport to Niles, which

the legislature have had some action upon at this session, directing it to be charged to the appropriations already made for the southern railroad, if the undersigned rightly recollect, which, when done, will get that matter out of the way.

The last item, viz: safety fund notes on hand, the undersigned can only present the facts as alleged by the bank, and the legislature must be the judges of its equity. Mr. Steevens, the president of the bank, says, that ten or twelve thousand dollars of the money was placed in the vault of the bank by the treasurer of Wayne county in a trunk, and remained there for weeks without being touched. It was finally passed to the credit of the Treasurer of State as a special deposite, being the only manner in which the bank would credit it. About two thousand dollars was received of Mr. Pierce, Superintendent of Public Instruction, and the balance from the Treasurer of State, and the railroad. The Bank and Treasurer consider that these moneys were received by the Treasurer, and by him deposited under an act of the legislature requiring him to receive all safety fund notes paid into the treasury on or before a certain day therein named, if the collectors who paid them would make oath that they were the identical moneys received for taxes by them. They were all entered as special deposites, and were laid away in the vault, with the labels and wrappers about them, and marked H. Howard, Treasurer, or railroad, as the case might be, which original wrappers and labels were around the notes when the committee of investigation from the House of Representatives during this session, went to examine the condition of the bank. The committee moved the labels and wrappers, for the purpose of assorting and counting the notes, and Mr. Steevens gathered them up, preserved them, and they were shewn to the undersigned, so marked.

The undersigned would further state, that upon the point, whether these were special or general deposites, must the legality of the matter depend. A special deposite, strictly speaking, is one made under seal or wrapper, and not entered in the books of the bank, and of course, in no way to be used by it, but the same identical bills returned as they were deposited: whether the bank made themselves liable when they entered the same upon the books, even if they were entered as special deposites, your honorable body must judge. From the unsettled state of things, and the unusual manner of doing business, in consequence of the derangement and fluctuation of the currency of our own state, the bank claims that it is entitled to this allowance as special depo

site.

With these claims allowed to them, the advances made to the legislature, the amount due them from John S. Bagg, state printer, and the transfer of fifty thousand dollars of moneys now standing to the credit of the Marshall and Allegan railroad company,

which they have paid to the Calhoun county bank, and which the bank wishes the state to receive the securities of said company for, in the same manner that the Ypsilanti and Tecumseh railroad company have, they will then owe the state the aforesaid sum of nearly three hundred and fifty thousand dollars, which they propose to pay in the following manner, namely: fifty thousand dollars on the first day of January next, and fifty thousand dollars every six months thereafter till the whole amount is paid, with interest, secured by a good and sufficient bond, signed by the directors of the bank.

The undersigned beg leave further to suggest for the consideration of the legislature, that the question of settlement depends upon the justice or equity of the claims of the bank against the state, and becomes in a measure, a matter of expediency. The bank at the present time, is in a crippled situation, as far as present means are concerned, and a large debt due to the state, is in consequence, in jeopardy. The bank claims, as equitably due to them, those sums, although in a legal point of view, the state may not be considered bound to allow them. When we take into view the present situation of the state affairs with that bank, and consider, that by allowing these claims, the remaining part of the debt will be made secure, and available to the state in time, and the bank will be able to redeem its circulation and outstanding drafts, it becomes a question of expediency which the undersigned respectfully ask the legislature to settle, whether these claims shall be allowed or not, and then the settlement with the bank becomes a very easy matter. The bank decline making such settlement till the legislature or the competent authorities say distinctly what shall be done with these items of disagreement. Respectfully submitted.

ROBERT ABBOTT, Auditor General.
RANDOLPH MANNING, Sec'y of State.
A. G. HAMMOND, Com. of the Legislature.

Detroit, April 12, 1839.

(No. 37.)

Report of the committee on incorporations, in regard to the condition of the Michigan State Bank.

The committee on incorporations, to whom the following resolutions were referred :

Resolved, That the committee on incorporations be directed to inquire into the amount of money belonging to the state at present in deposite in the State Bank of Michigan to the credit of the