Railroad Stock & Legal Documents

Contributed by Alice Horner

The second rail line (in Carroll County) was the ill-fated Racine and Mississippi to run through Beloit and Freeport to Savanna. In 1851, a special act incorporating the Savanna Branch Railroad authorized construction “from Savanna in the easterly and northeasterly direction to intersect the Galena and Chicago Union railroad or the Galena branch of the Central railroad at some convenient point within 15 miles of the town of Freeport.” This branch was merged with the Racine and Mississippi railroad and the road graded from Freeport to a point immediately east of Mt. Carroll.

Philip L. Keister, Freeport attorney and secretary of the Stephenson County Historical Society, in his pamphlet, “Stephenson County Roads” (1954), wrote in commenting on the 1839 “new, direct Savanna to Freeport road,” as follows:

“It also marked the location of a sad piece of financial history in our county (and we hasten to add, in Carroll county as well) namely, the ill-fated Savanna line of the Racine and Mississippi Railroad which followed closely the old direct wagon and stage route. The panic of 1857, along with the heavy expense of grading high grades, bankrupted the company and many of its farmer stockholders who had mortgaged their farms to buy stock which they hoped would yield big dividends to pay off their mortgages. Its high grades and deep cuts still scar the landscape.”

The final decision of the Illinois Supreme Court after much bitterly contested litigation was in favor of the few farmer-mortgagors who “held out to the bitter end” against the assignees of the mortgages; but long before this result, most of the farmers and merchants who had invested heavily to bring this railroad to fruition had been compelled to either pay or lose their mortgaged property.

A large railroad station site is shown on the recorded plat of Georgetown, a “paper” city about three miles north of Lanark which lost out when the later Western Union railroad was built through Shannon and Lanark instead of using the route already graded.

Investors in the railroad which ran from Freeport to Racine realized nothing because it had been seized and sold under court decree and the buyers were under no obligations to the stockholders. That line was a predecessor of the Milwaukee Railroad, according to L. H. Rabun, a former railroader and now supervisor of Savanna township. Mr. Rabun made a careful study of the history of both that and the Burlington Railroad for inclusion in this book.

Mr. Rabun’s research disclosed that a single track was constructed in 1862 from Lanark to Savanna, 17.9 miles. Dirt from deep cuts was loaded into wagons by hand shovelers and unloaded to build up the fills. The June 4th, 1862 Carroll County Mirror said “600 men are employed on the railroad. The heaviest grading to Savanna is done. They expect to be running trains to Mt. Carroll on July 4th. The erection of the depot in Mt. Carroll has commenced..” And the July 30 issue added “The railroad track is laid to Plum River, about one mile and a half to Savanna. It will take two or three days to build the bridge over that stream. Before we shall issue our paper again, the cars will be running into Savanna.”

Rails were imported from Scotland by boat to Racine, Wis.

A Goodly Heritage, Taken From Pages 70 & 71, Carroll County, Edited by E. George Thiem, Published in 1968 by Kable Printing Company,

This is just one of several copies of this transaction owned by Alice Horner.
If you want the complete set of documents please email her directly, she'll email them to you.

I am not an expert on either stock certificates, paperwork associated with them, or railroads from the 19th century, but based on the information provided in “Carroll County, A Goodly Heritage,” here’s what I think the history is of these certificates and receipts belonging originally to Sumner Downing, my great-great grandfather.

The primary document is a 4-page legal certificate, outlining the purchase of the stock and the mortgage and payment schedule. The first page of this document features the drawing of the train. The text states that Sumner Downing on March 12, 1856 is justly indebted and promises to pay $500 for 5 shares of stock in the Racine & Mississippi Railroad Company, and pay the amount on the 10th day of May, 1861 along with 10% interest payable semi-annually on the tenth day of November and May. There were coupons annexed to the bottom of the page, and one coupon had to accompany each interest payment. Six coupons (number 5-10) are still annexed and coupons 3 & 4 were cut and pinned to the document. Each coupon has the due date printed under the coupon number, on the upper right side. Each coupon was for $25, and signed by A. J. Redburn, the Secretary of the company. Coupons 1 & 2 aren’t there, so he definitely paid those two payments. He would have paid them in 1856. Whether that means the company had gone bust in 1857 before the 3rd payment was due May 10, 1857 I don’t know.

The first page of this document also states that the investor had to mortgage land as collateral. It concludes with the legal warning “And the said Company do hereby authorize and empower the holder of this Bond, at any time, in case said Company shall fail to perform any of the foregoing stipulations by neglecting to pay either principal or interest on this Bond, when the same shall become due, to proceed and foreclose the said Mortgage, or take other legal remedy on said Note and Mortgage against said Mortgager, or against this Company on this present Bond, or on both, as shall seem proper and expedient to said holder hereof.” The signature is Henry S. Durand, the Company President, and by A. J. Redburn; it’s dated March 31, 1856.

The second page states that Sumner Downing is “justly indebted to the Racine & Mississippi Railroad Company in the sum of $500“, and is also dated March 12, 1856. It was originally signed, probably by Sumner Downing, but the signature has been carefully cut out. I don’t know what that meant legally, especially since the company declared bankruptcy later, but then much later paid off the investors, or at least some of them. It is likely Sumner Downing was one of those paid off, since he lived until 1897, and the cut out signature might have meant he’d been paid off. But I really have no expertise in this.

The third page of this document describes the land Sumner Downing mortgaged in order to buy the stock. It is described as the “North East quarter of the South East quarter of Section 15 in Township 24 of Range 4 East containing 40 acres.” This probably means Section 15 of Mt. Carroll Township, along what is now S. Preston Road. It is signed on the lower left side by George N. Harris (who is not named in the Fourth Annual Report, but was probably from the Railroad) and S. D. Clough, who was the Company Auditor. Sumner Downing and his wife Isabell (Thomson) Downing must have signed on the lower right side, but like page 2, their signatures are cut out. (I didn’t show these cutouts on my scans of the documents since doing so would have showed the printing from pages underneath. All four pages were permanently attached by two metal grommets on the left side of the documents, making them inseparable.)

The final page is the Abstract of Title page. It is signed by J. H. Emmert, the Carroll County Clerk and Recorder, and by B. P. Shirk, his deputy, and is dated March 24, 1856. The “This is to Certify” portion at the bottom is signed by S. D. Clough and George N. Harris and states: “That we, the undersigned, at the request of the Racine and Mississippi Railroad Company, have examined the Premises described in the foregoing Mortgage and find the same to be worth Twelve Hundred Dollars, at a fair and reasonable valuation, exclusive of the value of all Buildings, Barns, and out-houses situated thereon. It is dated March 12, 1856.

The Stock Certificate itself is a rather plain document. Racine & Mississippi Railroad Company is printed across the top in large letters, and it is signed June 20, 1856 by A. J. Redburn, the Secretary, and John Dickson, the Vice-President. Sumner Downing’s five shares were certificate no. 133 and his was mortgage no. 1348. These numbers were written on each of the coupons on the first page of the 4-page legal document.

There is a plain 1-page receipt document, also dated March 12, 1856, stating that Sumner Downing executed a Note and Mortgage in favor of the Racine and Mississippi Railroad Company, detailing the amounts paid and the interest and that he received in payment in form of five shares, it states “Now, Therefore, In consideration of the Relinquishment and Assignment by the said Sumner Downing to the said Company of so much of the Dividends on said Stock, which he may become entitled to as shall be sufficient to pay the Interest on said Note, the said Company agree not to demand said Interest from him and in case said Note and Mortgage shall be negotiated by said Company, then said Company agree to save him harmless from said Interest.” There is more which I won’t transcribe. I’m not certain what this document means, if it’s a standard receipt or if it means something else.

The last legal document has “Satisfaction of Mortgage” printed in small letters on the upper left side. It states that “the Racine & Mississippi Railroad Company do hereby acknowledge satisfaction, and payment in full, of a certain Mortgage bearing date the 12th day of March, A. D. 1856 executed by Sumner Downing & wife to said Railroad Company.” It is dated August 3, 1864 and signed by H. S. Durand, President, and notarized by Loyal R. Durand, Notary Public.

I can’t tell from the Satisfaction of Mortgage document what Sumner Downing got out of this. He’d paid off his mortgage but I don’t know whether he every realized any money from owning the stock. I do know the company was in operation again later because I saw a stock certificate online from 1875. But when the company in which Sumner Downing and other investors bought stock was seized and sold under court order, the buyers of the company were under no obligation to the stockholders of the former company. I suspect Sumner Downing was one of those who “held out until the bitter end” but I have no records of what he got for doing so.

Like any 21st century stockholder, Sumner Downing received an annual report, and saved with these stock documents is the Fourth Annual Report of the Racine & Mississippi Rail Road Company, dated January 1857. It has 24 numbered pages, the first of which I have scanned, which lists the Board of Directors, which were elected January 21, 1857, and the Officers. The only Directors from Carroll County were Emanuel Storer, from Cherry Grove, John Rinewalt, from Mount Carroll, and Daniel P. Holt, from Savanna. As with other annual reports, it provides detailed financial figures, such as the amounts received from subscription to the Capital Stock (including $1,733,150 worth of farm mortgages at 10% interest), gross receipts, expenditures ($694,772.94 worth of construction, grading, masonry, and bridging), etc. There is also a Director’s Report, a Secretary’s Report, the Chief Engineer’s Report, a list of locomotives belonging to the Company (including ones named the Savanna, Mt. Carroll, Prairie Flower), and a statement of the miles run, and oil and waste used by each of these locomotives in 1856.

As with all annual reports everywhere, all seemed rosy. I don’t know enough about railroads to know from this report whether they were padding their figures. Or if they simply hadn’t anticipated the Panic of 1857. If someone has more information about this railroad and its financial failure please email Alice.

Transcribed and Contributed by Alice Horner