The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1897-06-04

that at the time this law was enacted the
great internal fmproveYnnnt scheme Of 1S36
was broken down, the State had given up
the job settled with it's creditors and turned
the Wabash and Erie canal over to them.
The Madison q Indianapolis Railroad for
winch Sl3O,OOO was appropriated in 1886,
had been ten years in completion to Indian
apohs. Such had been the experience of
the State in obtaining her first railroad.
But the people were determined to have
the railroads, and the Legislature, unable
TO get them otherwise was offering very
hlgh Inducements TO private corporations
to build them.
Acting upon that theory in this act, the
legislature gave TO the company absolute
right TO fix its own charges until it had
received the full amount of capital invested
ana ~ per cent. interest. At that point the
right was reserved to the Legislature to
intervene and regulate rates, but the COM
pany was still to be entitled to receive for
It's own use dividends not exceeding 10 per
cent. per annum, the surplus profits to be
paid to the treasurer of state for the bene-
fit of the school fund. These were hard
conditions but the Legislature submitted
10 them because 1t could do no better. 1t
was the only way to get the road. In his
view, the law imposed upon the company
the duty to divide its surplus earnings and
dividends as fast as earned until the capt.
tai and 10 per cent. interest had been re-
paid; After that the Legislature had a
right TO control rates But this meant sim
ply that 1t should see to it that the rates
were talr. II out of fair rates the COM
pany was able 10 make enough 10 pay itself
10 per cent. dividends and a surplus to the
school fund the school fund was entitled to
the surplus, and that would be a full reali-
cation of the whole original intention of
the law. And If the company realized
profits out of which this could have been
Done, and for the purpose of deceiving the
Legislature as to the true condition of af-
fairs, instead of dividing the profits, invest
ed them in stocks and bonds and other
property for the collective benefit of the
stockholders, 1t could not, in that way es-
cape its obligation to account for profits
received above 10 per cent. to the school
fund
Mr.. Taylor characterized the contention
of the other side imputing an absurd in
tenton to the Legislature. Suppose" he
SAID, when the time came that the Legis-
Iature was entitled to regulate rates, it
found the rates established by the company
to be fair. What should the State do?
The gentlemen argue that unless she reg
ulated rates the school fund would be not
entitled to any surplus. But if the rates
existing were fair, ought the Legislature
to change them unnecessarily and I'M
Justly? And suppose the rates adopted by
the company, and which were fair in
ing Is per cent? Would it be the duty of
the State to reduce those rates for the
mere purpose of preventing the school fund
from deriving reVenue?"
The attorneys idea was that the inten-
ton of the Legislature was that the ques
ton of revenue to the school fund should
When the company had received it's capital
and 10 per cent the Legislature was enti-
If it found them unfair it was its duty to
make them fair. And if when fair either
by the act of the Legislature or by the act
of the company, they produced a revenue
of more than Is per cent. on the capital,
the surplus belonged to the school fund.
According to Mr. Taylor, the position of
the other Side amounted to this: That the
school fund was to be a mere slop jar to
receive the drblets of revenue which the
Legislature would be unable to prevent
from accruing, notwithstanding their ut
most efforts to do He could not so con-
strue the law. The school fund was the IA
vorite fund of the Constitution and laws or
Indiana The Legislature of 1877 could not
know what conditions would prevail
twenty-five or fifty years later ; Ihey
out according to their intention, might or
might not produce a revenue for the School
fund. But if it did produce one on a basis
of fair rates, whether eEactedl by law or
adopted by the act of the company, such
surplus, whether little or great, belonged
to the school fund. And if such surplus
accrued, no act of the company in conceal
ing it's existence from the State could de-
feat the right Of the State to pursue and
recover it.
MIR. HAWKINS FOR THE STATE.
Mr. Taylor was followed by Roscoe o.
Hawkins. who spoke very briefly. He dis
cussed particularly the force and effect of
the prior suit brought by the State against
the Vandaia Railroad Company, in which
a demurrer to the complaint was sustained
by the court. Mr.. Hawkins argued that the
Judgment of the court in that case was not
a bar to this action, as might be contended,
because the suit was brought without au-
thority This suit was brought by the at
torney general in 1873 to recover an alleged
school fund Mr.. Hawkins contended that
the attorney general in 1878 had no author-
ity to bring such suit. In the hfst place,
the act of 1847 contemplated some further
proceedings on the part of the Legislature
before the company could be called upon for
payment. It had to be ascertained whether
any profits above Is per cent, with rea-
sonable reserve for contingencies, actually
contained the proviso that the Legislature
might call upon the companies for report.
Until such q report had been made ana set
Element had, or until the company upon de-
mand of the Legislature had refused to
make a report or settlement, the State was
not in a situation to bring the suit. NO au-
thority was vested by law in the attorney
general to make the demand in 1873 or bring
the suit against the company without some
direction from the Legislature. Conse-
quently, the suit was without authority,
and the judgment rendered in 1t not binding
upon the State.
Mr. Hawkins presented another PROPOSE
ton. He contended that the action brought
in 1878 did not present the same issues as in
this case. That complaint did not aIege
there had been any demand made or any
action take by the Legislature. There was
no allegation charging that the Legislature
had ever requested the defendant to make
any statement or authorized any officer to
demand an accounting. The present suit,
the attorney insisted, is predicated on the
right to recover after demand has been
made for an accounting. THE Legislature
of 1897 took up this matter and legiSlated
upon it, This suit is based that action.
1t cannot be said the action of the Legisla-
ture was unconstitutional, because it does
not take away any vested rights of the d-
rectors or officers, and does not seek to in
validate any existing contract. The Gen
eral Assembly had the right any time to
enact this kind of legislation. 1t was it's
duty to put on foot a movement which
would require this company to pay what
was due the State"
MIR. WILLIAMS'S CLAIM
John G. Williams general counsel for the
Terre Haute & indianapolis Railway re-
piled to Mr. Hawkins He spoke but a
short time yesterday evening, and will con-
clude this morning. During his argument
he said:
The claim that the amendment of Sec
ton 20 of the old charter made no change
whatever in the rights and obligations of
the parties is wholly unsupported by the
facts. II it made no changes, why was it
passed? The changes are apparent and ma
terial. Under the original charter in stat
ing an account between the company and
the State, you would have upon side the
aggregate amount of dividends declared
and upon the other side the total capital
employed in the enterprise, with 10 per
centum per annum thereon. When the two
amounts thus ascertained became equal the
State would have the right to regulate the
tolls. Under the amendment of last winter
the account would be stated in different
way. You would have upon one side the
net profits of the company. instead of diyi-
dendS declared, and upon the other side the