The Rutland daily globe. [volume] (Rutland, Vt.) 1873-1877, 1873-07-07

the Vermont Central and Vermont & Can
ada Railroads with the st. Adams Foundry
Company. Considerable testimony was
taken in reference to the relations existing
between the railroad managers and this
company, which resulted in the developing
of the following state of facts:
The st. Adams foundry Is located at st.
Adams, and has furnished most of the cast
ings, and car wheels for the roads under
the trustees and managers since the com
mencement of the trust.
Prior to the appointment of ]. G.. Smith,
as one of the trustees of the first mortgage
bonds of the Vermont Central Railroad, in
1868, and sometime in the year 1854, a
contract was entered into by and between
the trustees of the first mortgage bonds
and the st. Adams Foundry Company,
which company was composed of j. q.
and w. G. Smith, by which contract the
Foundry Company furnished the car
wheels and castings to the Trust. Upon
the appointment of j. G. Smith as one of
the trustees, he sold and assigned
his interest in and to said contract
to w. G.. Smith in accordance with
the terms of his assignment as
shown by exhibit "M" that after that
time the trust continued to receive their
car wheels and castings of the st. Adams
Foundry Company, down to the present
time. After j. G. Smith retired from the
firm, w. G. Smith owned the foundry
business and prosecuted it until September
I, 1860, ct which time he leased the prop
crty to Geo. J. Stannard and Edward A.
Smith, according to the terms of their con-
tract ut that date, which contract was as set
forth in the Appendix, page 25. 1t was
claimed, and we find the fact to be that j.
G. Smith was made party to that con
tract for the reason that he was one-half
owner of the real estate that at the cX-
praton of this lease John W. Newton
took the place of Gen. Stannard, and that
from that time to the present time the
Foundry Company has consisted of Ed
ward A. Smith and John w. Newton, and
has been doing business since then under
the terms of the lease as made with Smith
and Stannard, except MS to the price of
castings furnished.
BY the terms of this contract ii will he
seen that "royalty" was reserved on all
the castings furnished the railroad, and
for all car wheels manufactured for tho
railroad, which "royalty" amounting in
all to more than $135.006, has been paid to
and received by w. G. Smith. Prior to
the time of his becoming one of the trus-
tees and managers of the road, we see no
improperly in his contracting in this man
ner with the Foundry Company. Since
his appointment in 1870, we find that this
contract has been continued in force, and
that he has received the royalty the same
as before. 1t was claimed before lis in
consequence of his relation to the trust
he had no right to retain this sum so re-
ceived. Upon this subject we have no
opinion to express, ~ it is proper mat
ter to be adjudcated in the settlement of
his accounts as receiver, with the Court of
Chancery.
In respect to the prices paid for castings
or wheels, and whether the prices were
greater than they ought to have been. we
found ourselves surrounded by consider
able conflicting testimony which il was
impossible to entirely reconcile, and al
though, We do not feel fully assured and
certain that there was not too much paid,
still we do not find afiirmatively. taking
into consideration all the advantages de-
rived from this contract, the saving of
freight the terms of guarantee, the con-
venience of having the castings delivered
to them, and other considerations Of like
character, together with the further fact
that this matter was submitted to the en-
tire board of trustees, that there was too
much paid or that there was any fraud in
these contracts with the Foundry Com
pany in respect to the prices paid
We ought perhaps to add that an adj
vsory committee elected by ballot by the
bondholders approved of this contract and
all other contracts made by the trustees
and managers.
SECRET SERVICE FUND.
Considerable testimony was introduced
in reference to II secret service fund set
apart by the trustees and managers. 1t
was charged that such a fund was set
apart, and we were requested to make
inquiry into the fact as to whether it
was done for corrupt purposes or not
and whether any corrupt practices were
covertly consummated through the
agency.
That there was fund set apart under
the direction of one of the trustees,
j. Gregory Smith, and was chiefly under
his supervision and control, there is no
question. 1t was stated by him that it
was set apart for detective purposes,
in order that there might be sum of
money that could be used in such Il man.
ner as moi to disclose the names of the per
sons to whom paid, or the service rendered
by them, and that if il was not necessary
1t was at least expedient that such a Gourse
should be pursued for the best interests of
the trust in the management OF their busl-
ness. We fail to see any great necessity
for such fund, and willie we do not be-
lieye il was set aside to facilitate the APP
preparation of any part of it to the private
Use of the trustees and managers, still we
do find that in some instances it was mis-
applied
The following are the material facts de-
velOped in relation to this fund-called the
secret service fund.
We find that the money itself which
from the funds of the trust-but that u
itself by the treasurer of the management.
We also find there was another book
kept upon which the final disposition Of
the funds moro fully appeared. This was
private book belonging to J. Gregory
Smith. We find that $3075 Of this fund
was loaned to Samuel Williams, the former
treasurer of the management We find
that December 90, 1870 $500 was paid to
10 ID. Hatch, but for what purpose we are
unable to ascertain. Mr.. Hatch does not
recolect of receiving it or disbursng it.
That January 5, 1871, $500 of this sum
was paid to 10 ID. Hatch, who has used a
part of it for expenses as agent for the
management and the balance is in his
hands,
We find that July 1871, the sum of two
hundred dollars was paid by w. G. Smith
to citizens association in St. Adams in
aid of the erection of an observatory. We
find that Mr.. Smith contributed of his own
funds fer this object and paid this sum of
1900 on the ground that this appropriation
would add TO tho attractions of St. Adams,
and necessarily tend to increase railroad
travel.
That the sum of six hundred dollars was
paid to b. H. Smalley by j. Gregory
Smith for counsel and in the interest of
the trust but as to the subject matter he
was advised with about Mr.. Smith refused
to disclose to the committee We find that
some twelve thousand dollars stands
charged to j. Gregory Smith, which sum
he stated in part had been paid for detect
i've service. The balance of this sum he