Repository: UIHistories Project: Board of Trustees Minutes - 1914 [PAGE 270]

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268

UNIVERSITY OF ILLINOIS.

[June 25,

responsibility for the collection of the securities or the sale of the lands. In fact, the State commission assumed complete control of the sale, and the whole matter was turned over to the Attorney General of the State. From the best information that I can obtain the Attorney General at that time, Howland J. Hamlin, took charge of the matter and made some collections. The valuations which had been placed on the securities were largely exaggerated. For instance, the notes- against N. W. and G. W. Graham were not worth more than the Carbondale Electric Light Plant, the security for the notes. The Grahams were insolvent. While the electric light company's property was estimated at $25,000, its true value did not exceed $6,000. The bonds of the Pocatello Power and Irrigation Company and the bonds of the Idaho Canal Company and the shares of stock in these two companies were worth nothing like the values placed upon them. The irrigation company and the canal company were in hard lines financially, and the shares of stock were of but little, if any, value. There was no demand for the Idaho lands. For these reasons, doubtless, the matter - was lost sight of by the State commission. In the mean time the real estate was sold for taxes. Notices were sent to the University by the purchasers at the tax sales and subsequently in suits to perfect title, and requests were made to the University to enter its appearance, disclaim or quit claim. As these notices were turned over to me from time to time by Professor Shattuck or Mr. Pillsbury, they were mailed to the office of the Attorney General at Springfield by me, with the statement that the University was not concerned in view of the legislation of 1897. Mr. Stead, the Attorney General, acted upon that assumption, and so the University has never been a served party to any litigation pending in the state of Idaho and has never authorized any attorney to enter its appearance. In fact, so far as I can ascertain, the University has never assumed an attitude of interest in the Idaho property since the creation of the State commission and the transfer of the securities and trust deed to it. Spalding was sent to the penitentiary. Soon after his release he began suit in the Superior Court of Cook County against the University for an accounting. Other parties were made defendants. The Attorney General and I appeared for the University and presented our contention that the University, by reason of the legislation of 1897 and the creation of the State commission and what followed, was not a party in interest. For some reason, presumably because Spalding did not at that time regard the University as liable, the bill was dismissed. That was several years ago. A few months ago Spalding began another suit for an accounting, in which he made the Board of Trustees, Francis M. McKay, Governor Yates, Auditor McCullough, Governor Deneen and the acting treasurer, and all other treasurers since the creation of the commission, parties defendant. The theory of the bill was that the securities and the real property turned over by Spalding to the University in 1897 were worth far more than the amount of the defalcation; that the University and McKay had been derelict in their duty in that collections were not made when they could have been made, and in that the real estate had been allowed to sell for taxes and title mature against it.in favor of the purchasers; and that the University and not the State commission was answerable to him, because he had not been a party to the transaction whereby the State commission was created and the securities turned over to it and had never consented to it. The contention made in his behalf was that the University could not shield itself by the legislation because so far as Spalding was concerned it violated two prominent provisions of the Constitution. One was that it was an act impairing the existing contract between him and the Board of Trustees. Second, that inasmuch as the property was held in trust and turned over in violation of the trust, it was taking property without due process of law. , While there is good ground for Spalding's contention from a legal point of view, I am satisfied that he could never recover a money decree. In no event could he receive a decree unless the property was worth more than his defalcation. From the best information that I have been able to obtain there has never been a day that all of the property covered by that instrument executed by Spalding would reach in value one-half of the defalcation. In fact, I am confident that the litigation, was started with no other view than to secure a little "hush money." I have had conferences from time to time with the Attorney General and his assistants concerning the matter. I have endeavored at all times to make clear the position of the University in these conferences as I have to the Governor. At a conference recently held in the Attorney General's office, at which he and three of his assistants were present, I expressed my opinion as above and opposed any character of a compromise; that is, I opposed 'it so far as the University is concerned. I also expressed the opinion (not in behalf of the University, however) that Mr. Spalding was entitled to nothing and that no compromise should be made with him. I did say, however, that I did not want it to be understood that the University was blocking or attempting to block any settlement. It was suggested that a conference be held with Spalding and his attorneys at Springfield on the Wednesday or Thursday of the week following that meeting, and when I left it was arranged that I should be called upon the telephone and notified when to come to Springfield and meet with them. It was not known whether their presence could be obtained on either of the two days mentioned. I remained in my office, or had some one remain in it, all of Tuesday and Wednesday of that week. I received no call. To my surprise I afterwards ascertained that his attorneys had met with representatives from the Attorney General's office, and that the terms of a compromise had been agreed upon which involved the payment of a much larger sum than had been, considered or mentioned when I met the Attorney General and the three assistants on the occasion when it was discussed. Tf the State commission has been overreached and there has been paid out of the State treasury to Spalding or his attorneys any money without just claim upon the same, it should be distinctly understood that neither the University, its