Indiana Vs. Terre Haute and Indianapolis Railroad

In 1899, the state of Indiana brought forth a lawsuit against the Terre Haute & Indianapolis Railroad for tax money due for the school fund. It started with a charter. In the early days of Indiana, to create a railroad company (and basically any company, as far as that goes), a charter for the company and its goals would have to be written and taken before the Indiana General Assembly for approval. I would love to say that these things were basically rubber stamped…but I truly have no way of knowing without extensive research.

The Terre Haute & Indianapolis Railroad was issued it original charter by the Indiana General Assembly in 1831. The name on the charter was the Terre Haute & Indianapolis. The TH&I was then issued a special charter as the Terre Haute & Richmond Rail Road on 24 January 1847. The company was to build a railroad between the two title cities, through Indianapolis. The official name of the company had changed twice between the special charter of 1847 and the court case of 1899. First, in 1850, the space was taken out between rail and road, making it the Terre Haute & Richmond Railroad legally. Then, in 1865, the name was changed to suit the actual extent of the railroad company. It became the Terre Haute & Indianapolis Railroad Company.

Newspapers of the time often refer to the legal action against the Terre Haute & Indianapolis as the Vandalia Case. By the time of the legal action, the TH&I was already leasing the St. Louis, Vandalia & Terre Haute, the only line (for a while) connecting Indianapolis to St. Louis. The St. Louis, Vandalia & Terre Haute was known most of the time as the Vandalia. The Vandalia was in financial trouble while under construction. Money was floated from five railroad companies to complete the route in 1870: Terre Haute & Indianapolis, Pennsylvania, Panhandle, Steubenville and the Indiana Central. The last three being consolidated later into the Pittsburgh, Cincinnati, Chicago & St. Louis Railway, also nicknamed the Panhandle. The Pennsylvania would gain control of the Panhandle and the Vandalia…although the Terre Haute & Indianapolis would fight it the entire way.

The whole case stemmed from how the charter for the TH&I was read, and who was doing the reading. The State of Indiana was of the opinion that the TH&I owed the School Fund somewhere between $1.2 and $2 million dollars. Obviously, the TH&I was of the opposite opinion. The entire case stemmed from a special charter that had been issued for the company in 1847, give or take a year. The new charter, keeping a provision from the old one, would allow the railroad to set its own passenger and freight rates, and allow for a 15% profit to be split among its shareholders after all of the construction bills have been paid.

The state, in its case, claimed that the TH&I was setting its rates to a point where it was earning 18% to 35% profits. Since the limit was 15%, the rest, the state continued, would be required to be paid to the state school fund. Vandalia saw things differently.

The South Bend Tribune of 4 October 1899 describes the beginning of the case as such: “Noble C. Butler, as master in chancery, began taking testimony, Monday afternoon (2 October 1899), in the case of the state against the Vandalia railroad for money due the school fund on account of the special charter under which the road operated 20 years ago.”

“Experts have been examining the company’s books to ascertain the exact earnings and the proportionate amount due the state, and their testimony is expected to be interesting. About $2,000,000 is claimed to be due the school fund from the railroad.” (Source: South Bend Tribune, 4 October 1899, pp 1 via newspapers.com.)

When the time came to defend itself, the Vandalia brought out John G. Williams, a man, according to the Indianapolis News of 17 January 1900, “who is said to know more about the affairs of the road than any other man.” Attorney Williams started talking about the charter of the Terre Haute & Richmond, the charters of other railroads, and the fact that when the original charters were written for the early railroads, the company had a choice between building a railroad and building a toll road. The state saw no real difference between the two.

He also mentioned that, according to the News, “one of the first roads built in the State was the Baltimore & Ohio. In the beginning, its cars were moved by horses and, when the wind was favorable, sails were hoisted on the cars to help propel them.” I would be that the News meant in the United States, as the Baltimore & Ohio wouldn’t have been in Indiana in 1831.

Reference is also made by the attorney for the railroad that in the beginning, the B&O charged 4 cents a ton a mile for moving of freight. “Modern railroads” (1900) are lucky to get one half cent per ton/mile. And passengers were actually weighed and charged essentially a pro-rated charge of 4 cents per ton/mile. If I am reading this right, since I weigh 200 pounds, it would cost me eight cents to travel by train from Indianapolis to Greenfield in those days. If I lived then…and the train actually was built to connect the two.

Mr. Williams went on to argue that the ability to regulate tolls by the state was left out of the charters of seven of the eight railroads that were incorporated in 1832. All eight of these charters allowed for the company to build a railroad or turnpike. Also in 1832, a company applied for a charter to build a bridge across the Ohio River at the Falls, the location of New Albany and/or Jeffersonville, and Louisville on the Kentucky side.

In 1832, five more railroads were incorporated, including the Evansville & Lafayette. It, like the Terre Haute & Indianapolis (1831 charter), had a clause stating that the State of Indiana could purchase the road after a certain period. Very few railroad company charters included the state regulation of the amount of dividends to its shareholders.

Ultimately, the Vandalia won the original case. Special Master Butler determined that the state was owed nothing by the Vandalia. The State appealed to the Superior Court, in which it was determined that the Vandalia owed the state of Indiana $913,000.

According to the Indianapolis Journal of 18 June 1902, as the case was being brought before the Indiana Supreme Court, “the charter provided that the company should pay the State its surplus earnings over the operating expenses and 10 per cent to the stockholders. The company surrendered its special charter in 1873 and has since operated under the general railroad law.” The company claimed that the surplus money was spent to improve the road, and there was no money left to pay the state.

The case before the Indiana Supreme Court lasted three days, ending on 19 June 1902. When the ruling went against the Vandalia, the Pennsylvania Railroad announced that they would appeal the decision to the United States Supreme Court. That decision was made on 28 November 1902.

The Indiana Supreme Court judgement ruled that the Vandalia must pay $913,905, and a six percent interest from the date of the Superior Court judgement. This brought to total to $1,028,143. Of course, the state was to only receive $771,107 of that, with the rest going to attorney’s fees. The Vandalia would fall into receivership after the ruling, and arguments between Illinois and Indiana receivers would follow.

31 May 1904, and the United States Supreme Court ruled, after much deliberation, that the Vandalia Railroad owed a grand total of nothing to the state of Indiana School Fund. This would go on to allow the Vandalia to consolidate the following railroads into one corporate entity: Terre Haute & Indianapolis, Indianapolis & Vincennes, Logansport & Toledo, Terre Haute & Logansport, and the St. Louis, Vandalia & Terre Haute. A consolidation which created the Vandalia Railroad Company on 1 January 1905.

Planning and Building I-65 in Southeast Jackson County

When the Federal Aid Highway Act of 1956 was made the law of the land, states throughout the United States started looking at how to cash in on the new superhighway plan. Rough routes had already been laid out. It was up to the states, more or less, to nail it down even more. While there were already sections of road that were going to be added to the new interstate system, I want to focus on one of the built from scratch sections that was planned. This section was so quick to be added to the highway system that it was announced in the Seymour Tribune on 14 February 1958. It would connect US 50 east of Seymour to Uniontown.

“Early Construction May Put New Road Near Here In Use Before Rest Of New Highway.” That was what the sub-headline read in the Tribune that day. Engineer for the Seymour District of the Indiana State Highway Commission, E. C. Willis, announced on that Valentines Day 1958 that the new superhighway, not mentioned by number in the article, was on the 1958 State construction plans.

According to the information put out by the ISHC, interchanges were to be built at US 50, just west of the then current US 31, and at SR 250, east of Uniontown. “This will permit the new stretch of the superhighway to be used between those two points before the remainder of the new limited access highway is completed.” The new highway would run roughly parallel to US 31, the major highway through the area.

“Survey parties of the state highway department still are working on staking the right of way for the proposed new road and one of them is now engaged between U. S. 50 and Kriete’s curve southeast of Seymour. Due to the deeply frozen condition of the ground from the recent continued near-zero temperatures, the survey party is encountering difficulties but is continuing its work with interruption for the extreme cold in order that the project can be rushed under this year’s schedule.”

The article goes on to state that right of way purchase at the Jeffersonville end of the new road had already begun.

Google Maps image of the area known as the Kriete Curve.

“The programming of the Uniontown-U.S. 50 stretch in the 1958 highway plans will permit the early construction of that section of the new road, which will include the utilization of the three sets of new dual-lane bridges south of the present Kriete curve, which have been under construction for some time and are about ready for use when a road is built to them.” I would assume from that statement that the state had already planned to move US 31 southeast of Seymour, and that bridges were already built pending completion of the road. With the creation of the interstate system, those bridges could be easily moved to the replacement highway, to be called Interstate 65. It is also safe to assume that the bridges in question crossed the Muscatatuck River, as shown in the Google Maps image.

The section of Interstate 65 in question was shown as under construction on the 1959 Indiana Official State Highway Map. It was shown as complete to a point north of SR 256 near Austin on the 1960 version of the same map. The same 1960 map shows completion of I-65 north from Jeffersonville to Underwood, with the section between Underwood and Austin under construction.

Dec 1917: Main Market Roads Officially Announced

When the law creating the Indiana State Highway Commission was passed in early 1917, the announcement was also made that there were would five main market highways, later known as state roads, designated by that commission. There was a general idea of which roads would be involved, bot nothing set in stone. That is, until December 1917.

The Fort Wayne Journal-Gazette of 12 December 1917 announced the selection of the new main market highways. ISHC officials traveled throughout the state deciding which roads would be part of the new, and yet controversial, system. “A former election of four of the five routes was tentative, and although the general directions of the four roads announced formerly have been adhered to in the official selection, many changes have been made.”

The plan was to create a system which was typical of Indiana’s general demeanor: serve as many people as possible with as little cost and intrusion as possible. Due to the shape of the state of Indiana, it was decided that there would be three roads crossing the state, west to east, from the Illinois state line to the Ohio state line. One north-south road would be designated through the middle of the state. This was the basis of the first four main market roads. A fifth road would connect the fourth road to the Illinois state line in the southern part of the state. The December 1917 system included roughly 800 miles of roads.

The main market highways were officially described as follows: “No. 1. The highway beginning at the Indiana and Michigan state line, thence southerly through South Bend, Plymouth, Rochester, Peru, Kokomo, Westfield, Carmel, Indianapolis, Franklin, Columbus, Seymour, Scottsburg, Sellersburg, New Albany and Jeffersonville.” In the Auto Trail era, there was no one highway this route followed. It seems that it was planned very early to have a split in the highway at the south end, with one branch going to New Albany, and one going to Jeffersonville. And although the route numbers have changed, that split has existed in one form or another since that time.

Main Market Road #2: “The highway passing through the northern part of the state, beginning, at the Illinois and Indiana state line, thence easterly through Dyer, Valparaiso, Laporte, South Bend, Goshen and Fort Wayne via the Lincoln Highway to the Ohio and Indiana state line.” Depending on how one reads that, it could be that the Lincoln Highway was only used from Fort Wayne to the Ohio state line. This is far from true. It was decided that the entire original route of the Lincoln Highway through the state would be used for Road #2.

Main Market Road #3: “The highway crossing the central part of the state, commonly called the old national road trail, beginning at the corner of the Illinois and Indiana state line, thence easterly through Terre Haute, Brazil, Putnamville, Plainfield, Indianapolis, Greenfield, Knightstown, Cambridge City and Richmond to the Ohio and Indiana state line.”

Main Market Road #4: “The road crossing the southern part of the state, beginning at Evansville, thence easterly through Boonville, Huntingburg, Jasper, West Baden, Paoli, Mitchell, Bedford, Seymour, North Vernon, Versailles, Dillsboro, Aurora and Lawrenceburg to the Ohio and Indiana state line.”

Main Market Road #5: “The road connecting Vincennes and Mitchell, via Wheatland, Washington, Loogootee and Shoals.” Basically, this road was designated to connect main market road 4 to Vincennes. Again, this is due to the shape of the state. A (more or less) straight line across Indiana from Cincinnati west would, as is shown by the route of the current US 50, connect to Vincennes, leaving people south of there without a main market road. Evansville was, and still is, one of the top five largest cities in the state, population wise. So ignoring that city would not have been possible.

The article ends with the following: “The total mileage of the roads represents less than one-half of the total 2,000 miles of ‘main market highways’ which the commission may designate under the new state highway commission law prior to 1921.” The law that passed in 1917 created a state highway system so that Indiana could benefit from federal money for good roads. It wasn’t until the law was redone in 1919, with all of the 1917 law’s Constitutional questions answered, that the Indiana State Highway System was officially made part of the landscape.