December 16, 172.-Referred to the Committee of Claims and ordered to be printed.

To the Senate and House of Representatives in Congress assembled:

The Milwaukee and Rock River Canal Company respectfully represent that, under public resolution No. 49, entitled "A resolution for the relief of the State of Wisconsin," approved July 1, 1864, (a copy of which is hereunto annexed, marked "Exhibit A,") and the settlement made thereunder, the amount of trust-funds arising from the sale of canal lands, found by the Commissioner of the General Land-Office to have come into the possession of the State of Wisconsin, was.. $156, 789 77 The amount credited to that State, for sums by it properly paid out, "toward the cost of selling the land, and toward the construction of said canal," was...

So that the balance of the trust-fund unexpended amounted

to

55, 434 72

101, 355 05

which balance was, by such settlement, placed in the United States Treasury, and was the fund out of which said resolution directed this company to be allowed and paid all "such sums of money as have been properly expended by said company in the survey and location of said canal, in the construction thereof as far as the same has been constructed, together with dams, locks, and slack-water navigation, and in the management and keeping the same in repair," limited only by the amount of said balance, by the terms of the said resolution. The amount actually allowed by said Commissioner to said company as trustee, and paid to it out of that trust-fund was.... $76,492 77 So that there remains of that trust-fund in the United States Treasury....

24, 862 28

Your petitioner further shows that several large items, claimed by this company upon such settlement, were disallowed by the Commis

sioner; and among the items so rejected was at least one which, as your petitioner is advised and believes, should have been allowed, in order to carry out the plain intention of Congress, as expressed in said joint resolution, to wit, the amount ascertained by the Commissioner to have been paid out by this company, from time to time, for interest, $55,545.77.

Your petitioner is advised and believes that the last named amount should have been allowed to it, and that this company should have been paid, on account thereof, the balance of said trust-fund, to wit, said sum of $24,862.28, in addition to what was paid to it, as aforesaid.

The only reason or ground on which the said item for moneys paid out for interest was rejected was this, in the language of the Commissioner, to wit:

"Disallowed, because interest forms no part of the cost of survey, location, construction, or management of any such public work, and is never charged in these accounts, the same being a liability of the company, not an expenditure upon the work. Its payment is not provided for by the resolution, and is against the policy of the Government and Congress, unless expressly provided for in the statute."

Your petitioner is well aware that it is against the policy of the Government and Congress" to allow interest on unliquidated claims against the United States, unless expressly provided for in the statute, &c., but your petitioner is advised that this reason is inapplicable, and must have been given in haste, without a full and adequate comprehension of the nature of the case.

All the facts hereinbefore stated appear more fully in the reports of the said Commissioner, Nos. 18340 and 18341, of which true and certified copies are herewith submitted.

If the relations in which the parties-the United States and this company-stand, are considered, it is believed that no doubt can remain as to the justice, or as to the legality, under said joint resolution, of the demand herein preferred. The mistaken use of the word "cost," by the Commissioner, would seem to have led to confusion and error.

This is not the case of a settlement between the United States and the company, under a contract by the former to purchase the works of the latter, at the sum which shall be found to be equal to the cost of the same, or equal to the amount expended by the company, in constructing, repairing, and maintaining the same, or the like. In such a case, it might be urged with great force that sums paid by the company for interest, in procuring money to put into the work, should not be allowed, for the reason that they were not properly put into the work, because it would be properly only the amount which the company put in of its own moneys that could be considered, and it would be immaterial how the company obtained the money, by borrowing, selling property, or otherwise, and the Commissioner could not consider the losses of the company in obtaining the money.

But this case is altogether different. This is a settlement between principal and agent; and therein lies a material distinction. The United States is the donor or principal, and the company is the mere agent or trustee. All that the company has ever done in the matter of the canal, it has done simply as agent or trustee, with an agency or trusteeship coupled with an interest, to some extent, as a mere security; but, after all, it was an agent or trustee, and nothing more, and now this principal proceeds to settle with this agent.

The company did not build, maintain, repair, and manage the canal as its own absolute property in its own right, nor had it any power to

do so. By the terms of the charter, (territorial act, approved January 5, 1838,) re-enacted or confirmed by the act of Congress approved June 18, 1838, it was fully provided that the company should not build or hold the canal as its own property, but that it should surrender the same to the State on being re-imbursed the amount expended thereon, with interest. (See sec. 23 of charter, and sec. 9 of act of Congress.) Both the charter and the act of Congress confirming the same and granting the land are contained in the pamphlet herewith submitted, marked "Exhibit B," pages 22 and 60. By sec. 5 of the act of Congress granting the land this fund arising from the sale of the lands was expressly pledged to the company as a security for its outlay and interest. By sec. 8 of the charter, so confirmed by act of Congress as aforesaid, the company was expressly "authorized to borrow any sum of money which may [might] be necessary for the proper and efficient prosecution of the work authorized by this [said] act."

So the material facts are clearly shown. The company was a mere agent or trustee, authorized simply to build, repair, and maintain the canal, and hold it, in trust; to hand it over upon being re-imbursed principal and interest; having full and express authority, as such agent or trustee, to borrow money to promote the business of the trust and to pay interest. It is clearly in proof, and is not denied, that the company did borrow money, and did pay out altogether the sum above named for interest on moneys borrowed and used in building the canal. Now, Congress recognized this agency and trust, and the rights of the company as trustee, and resolved to settle with such trustee and agent, allowing to it credit as aforesaid for all sums by it "properly expended,” &c.

It will be seen by reference to said act of Congress donating the land, (sec. 5 of the act of June 18, 1838, ante,) that these very moneys, to wit, the avails of the sales of these trust-lands, were expressly pledged to the re-imbursement of the company to the extent of the extinguishment of the claims of all other stockholders except the State.

Your petitioner submits that there can be no doubt that, in such a settlement, between principal and agent, where the agent has been charged with a certain business, with express authority to borrow money and pay interest in executing the trust or agency, the sums so actually paid out by the agent in good faith, pursuant to such authority, for interest on moneys borrowed to carry on the work, are moneys "properly expended" by the agent; and when, as in this case, the principal authorizes a settlement to be made with such agent, in which credit shall be allowed to the agent for all sums by him properly expended about the business of the agency, there is no room to doubt that sums so paid out by him for interest, strictly pursuant to his authority, should be allowed to him, as well as any other proper and justifiable expenditure. It will be seen that your petitioner is not now asking for interest on its investment in the work, (though it is advised that it was strictly entitled to that,) but simply for re-imbursement for sums actually paid out by it as agent, within the scope of its authority, about the business of the agency. To render this clearer, let it be stated in another form:

The United States gave the canal lands to Wisconsin, in trust, to be sold, and the avails of sale to be applied in aid of the work of the company in building the canal. Wisconsin accepted the trust, and commenced to sell the lands and to apply the money. It was the clear and undisputed duty of Wisconsin to continue to so apply the money; and the company had a right to rely upon receiving the money to pay for the work as it went on. Relying on such money, the company

entered into contracts for certain work, and for the loan of money that was paid out for work on the canal. The work so contracted for was done, when Wisconsin, in violation of its trust, refused to pay over the money, and so the company, purely by the fault and breach of trust of Wisconsin, was left under a debt on which it was obliged to pay interest to a large amount, as aforesaid. Now, the unexpended portion of that trust-fund was, under said joint resolution of July 1, 1864, transferred from the treasury of Wisconsin to the Treasury of the United States; and, by the same resolution, a settlement is ordered to be made between the company and that trust-fund, and payment is directed to be made to the company of "all such sums of money as have been properly expended by said company in the survey and location of said canal, in the construction thereof as far as the same has been constructed, together with dams, locks, and slack-water navigation, and in the management and keeping the same in repair," so far as said remaining portion of said trust-fund would go.

So it is apparent

1st. That this is not a petition for payment of interest on a claim against the United States.

2d. That this is not even a petition for payment of interest on what the company put into the canal work.

3d. That this is not properly a claim against the Treasury of the United States at all. It is a claim against the trust-fund arising from the sale of the canal lands, which fund was in possession of said State, but has been, by the consent of the company, transferred to the Treas ury of the United States for administration. It is a claim of the com-' pany to be made good (out of that fund, so far as it will go) for moneys which the company was obliged to pay out for interest on the debt incurred in building the canal, which debt should have been paid in full out of the trust-fund at the time when the work was done. It is a very ordinary case in the law of trusts and trustees. The trustee refuses to apply the trust-fund which he has on hand in money in payment of a debt which ought to be paid by it; and interest accrues on that debt; and the simple question is, whether, on settlement between the trustee and cestui que trust, the latter is entitled to credit, as against the trustfund, for the amount of such interest. The exact case is this: A holds a fund in trust to apply in payment of such debt as B shall incur in the building of a house. B incurs a debt to C in the course of that work, and A refuses to apply the trust-fund in payment thereof, whereby B is compelled to pay interest on that debt to C. The question is whether in a settlement between B and the trust-fund, B is entitled to credit for the amount which he was so compelled, by the bad conduct of the trustee, to pay. Here the company was compelled to pay interest by the refusal of Wisconsin, as trustee, to apply the fund to the payment of the debt, as ought to have been done.

It is not necessary to go into an inquiry as to the equitable rights of the company and Wisconsin as against each other. All such inquiries were intentionally cut short by the joint resolution. The company receives much less than its just claims. But it consents to accept as in full what the resolution gives. The resolution gives the company all such sums as it has "properly expended" about the canal, &c.; and the whole question is, whether this money paid for interest was "properly expended." It would seem clear that it was so. The company was fully empowered to run in debt and pay interest, and did so to promote the work. Besides, it was obliged to pay the aforesaid amount for interest by the refusal of the trustee to properly apply the trust-fund.

Your petitioner, therefore, prays that the intention of the resolution of July 1, 1864, may be carried out according to its true meaning; and that the remainder of said trust-fund, amounting to twenty-four thousand eight hundred and sixty-two dollars and twenty-eight cents, ($24,862.28,) may be appropriated and paid to this petitioner in full of all demands. Such further appropriation becomes necessary in order to give effect to the intention of Congress, for the reason that the said Commissioner was of opinion that the language of said former resolution was not explicit enough to warrant such allowance; and your petitioner will ever pray, &c. Dated at Milwaukee, January 22, 1869.

EXHIBITA."

[Public Resolution-No. 49.]

A resolution for the relief of the State of Wisconsin.

Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of the Department of the Interior shall, in adjusting the amount due to the State of Wisconsin, under existing laws, as five per centum of the net proceeds of sales of the public lands within her limits, estimate and charge against her the value of the one hundred and twenty-five thousand four hundred and thirty-one and eighty-two one-hundredth acres of land granted to the Territory of Wisconsin to aid in the construction of the Milwaukee and Rock River Canal, which have been sold by said Territory or said State at one dollar and twenty-five cents per acre, and as much more as the Territory and State received upon the same upon the sales of any part thereof at a higher price, and shall credit said State with the amount that has been legally and properly applied by said State or Territory toward the cost of selling said land and toward the construction of said canal. And the said Secretary shall also settle and allow to the Milwaukee and Rock River Canal Company such sums of money as have been properly expended by said company in the survey and location of said canal, in the construction thereof, as far as the same has been constructed, together with dams, locks, and slack-water navigation, and in the management and keeping the same in repair; and the same shall be paid to the said canal company out of any money in the Treasury not otherwise appropriated, not exceeding in amount, however, the balance charged against the State of Wisconsin upon the sales of said canal lands, as above required, after deducting the sum allowed said State for money paid by her out of the same fund, the same to be received by said canal company in full payment and satisfaction of all claims of said company against the State of Wisconsin and of the United States on account of said canal land-grant, or on account of any action of the Territory or State of Wisconsin, or of the United States in relation thereto.

SEC. 2. And be it further resolved, That the Commissioner of the General Land Office be, and he is hereby, appointed commissioner to adjust the accounts herein provided for, under the supervision of the Secretary of the Interior, and to determine what sum shall be charged to said State of Wisconsin for the lands granted for the construction of said canal, and what sums shall be credited respectively to said State and said company for the moneys expended by them in the construction of said locks and canal, as herein provided.

Approved July 1, 1864.