Numbers 5. Report of Colonel John B. Palmer, Fifth-eighth North Carolina Infantry, commanding Western District of North Carolina.

HDQRS. WESTERN DISTRICT OF NORTH CAROLINA,
Asheville, January 19, 1864.

COLONEL: I regret to state that positive information has just been received that Brigadier General R. B. Vance, lately commanding this district, is a prisoner in the hands of the enemy. He was captured at Schultz' Mill, on Cosby Creek, in Cocke County, Tenn., on Thursday afternoon last.

General Vance crossed Smoky Mountain from Jackson County, in this state, to East Tennessee on Tuesday, the 12th instant, with one section of artillery, 375 cavalry, and 100 infantry. Leaving Colonel W. H. Thomas and Lieutenant Colonel J. L. Henry with the balance of the force at Gatlinburg, 4 miles below the Smoky Mountain, General Vance proceeded with 180 cavalry to Sevierville, where he, on Wednesday at 3 p.m., captured a train of seventeen wagons, with which he started for Newport, Tenn., via Schultz' Mill.

At this latter place he, on Thursday, about 2 p.m., stopped and remained about one and a half hours. Here he was surprised by a force of the enemy's cavalry, estimated at about 400, coming from their camp 6 miles below Sevierville, and himself, 1 captain, 2 lieutenants, and 37 privates, together with about 100 horses, 1 ambulance, &c., captured. The captured wagons and teams were also retaken by the enemy. There being no rear guard or pickets out, the enemy were enabled to approach within 100 yards before they were discovered. The surprise was complete.

Colonel W. H. Thomas, commanding the party left at Gatlinburg, had been ordered to fall back with his infantry and to send Lieutenant-Colonel Henry with his cavalry and artillery to Schultz' Mill, where they were directed to take up a position and await the arrival of General Vance. (See copy* of order marked A.) Lieutenant-Colonel Henry, commanding the cavalry and artillery, replied that he thought it best to fall back with Colonel Thomas, and failed to move as directed. (See statement* marked B, by Lieutenant Davidson, General Vance's acting assistant adjutant-general.) Lieutenant-Colonel Henry, however, proceeded to Schultz' Mill on Friday, and the enemy having retired passed safely on to Newport, and is now on his way up French Broad.

It is believed that if Lieutenant-Colonel Henry had obeyed the order sent him or even without his force if precautions had been taken to prevent surprise, this calamity could have been avoided and the train saved, as the country immediately above Schultz' Mill is admirably adapted to defense.

I shall feel it incumbent upon me to place Lieutenant-Colonel Henry under arrest for disobedience of orders, to await the decision of the general commanding as to whether he shall be tried by the general court-martial now in session at this place.

Very respectfully, your obedient servant,

JNO. B. PALMER,

Colonel, Commanding District.

Colonel G. W. BRENT,

Asst. Adjt. General, Army of Tennessee.