The schooner Albion, of Nassau, N. P., formerly the Lucy R. Waring, of Baltimore, Md., arrived at New York, a prize to the U. S. gunboat Pengain, which captured her while attempting to run the blockade of Charleston. She was laden with arms, ammunition, salt, fruit, provisions, oils, tin, copper, saddles, bridles, and cavalry equipments, and valued at one hundred thousand dollars. On the morning of the 25th ult., she was observed endeavoring to work into the inlet near Edisto Island, and after a chase of three hours was overhauled and captured. The schooner was in command of Captains Christy and Stevens, who admitted that they were residents of Savannah, Ga. They were also part owners of the vessel. The captains and crew were put on board the U. S. steamer Penguin. Master's mate George N. Hood was put on board the Albion with a prize crew, and ordered to proceed North.
This morning, a party of Union men from Whitley County, Ky., headed by George W. Lyttle, marched into the town of Huntsville, Tennessee, after having travelled through the night from Williamsburg, Ky., a distance of near fifty miles, and about twenty-five miles  into the Southern Confederacy; tore down the flag of rebellion, erected the Stars and Stripes, and captured five rebel troops, and bore them in triumph to Camp Calvert, with a number of good horses and rigging, also some splendid fire-arms, knives, &c.1 Those composing the little patriotic band, were R. Bird, Speed Faris, Samuel Freeman, J. W. Smith, Clint. Roe, Ples. Jones, Joe Cain, S. C. Cain, Wm. Ellison, Frank and Abel Bryant, G. W. Lyttle, S. Stanfield, Jeremiah Meadors, R. and J. Pemberton, and some others, making between twenty and thirty in number.--Frankfort Commonwealth (Ky.), Dec. 9.
A party of Unionists attacked the Confederate pickets at Morristown, East Tennessee, killing a large number of them, and putting the rest to flight.--Memphis Avalanche, Dec. 2.
Simon Cameron, the Secretary of War, in his report, proposed that the limits of Virginia be so altered, as to make her boundaries consist of the Blue Ridge on the east, and Pennsylvania on the north, leaving those on the south and west as at present. Thus Alleghany and Washington counties, of Maryland, would be transferred to Virginia, while all that portion of Virginia lying between the Blue Ridge and Chesapeake Bay, could be added to Maryland, and that portion of the peninsula between the Chesapeake and the Atlantic, could be incorporated into the States of Delaware.
The Memphis Avalanche of this day, says: “Hang 'em,” yes, hang them, every one. Every East Tennesseean found recreant to the will and interest of the State of Tennessee, and known to be actively conniving with its enemies, should be hung and loftily. When the citizens of a State have, by an overwhelming majority at the ballot-box, determined on its foreign policy, and by that policy have been necessitated to arm for the defence of their homes and firesides, every resident on the soil of that State who lends or gives aid to the invader, deserves as little mercy as Beelzebub will give them in his empire. Wherever the cobralike head of treason is lifted, it should be stricken off, and that quickly, for its poisonous saliva is as contagious as the airs of Malemma. “Hang 'em, hang 'em,” every one.
Three rebel gunboats came up in sight of Fort Holt, near Cairo, Ill., this afternoon and fired several shots, which were returned from the fort and the batteries at Bird's Point. A shot from the Point went over the rebel steamers and they turned back down the river. Soon after General Grant followed them, but was unsuccessful in overtaking the fleet.--Cincinnati Gazette, December 3.
This day General Blenker, learning that a party of rebel cavalry were foraging a few miles in front of his position at Hunter's Chapel, Va., despatched a squadron of horsemen to drive them off. They met, and a brief engagement ensued before the rebels put spurs to their horses and ran off, having three or four killed and wounded, and leaving two prisoners. The Nationals lost one man killed. The names of the prisoners are Alexander Maxwell, of Rectortown, Fauquier County, Virginia, and Wm. H. Dennis, of salem, in the same county. The latter's horse was taken with him. They were both members of Company H, Sixth regiment of Wise (Va.) Dragoons, Col. Field commanding. They had been sent to forage from their camp, two miles from Centreville.--Washington Star, Dec. 3.
A sharp engagement between the U. S. gunboats Hetzel, Seymour, White Head, Shawshene, and the rebel steamer Patrick Henry, took place about five miles above Newport  News, Va. The bombardment lasted about two hours, commencing at five o'clock in the morning. The rebel steamer kept close to the shore, where a powerful battery assisted it materially.--(Doc. 209.)
In the convention of Western Virginia, in session at Wheeling, Mr. Hagan, of Boone County, offered the following resolution, which was referred to the Committee on Fundamental and General Provisions: Whereas Negro Slavery is the origin and foundation of our National troubles, and the cause of the terrible rebellion in our midst, that is seeking to overthrow our Government; and whereas Slavery is incompatible with the Word of God, detrimental to the interests of a free people, as well as wrong to the slaves themselves; therefore, Resolved, That this Convention inquire into the expediency of making the proposed new State a free State, and that a provision be inserted in the Constitution for the gradual emancipation of all slaves within the proposed boundaries of the new State, to be submitted to the people of the same, for their approval or rejection.
A military execution occurred at Shepherd's Hill, near Centreville, Va. Two members of the New Orleans company, known as “The tigers,” were shot for mutinous conduct and an assault upon the officer of the day.--Richmond Examiner, December 9.
Both Houses of Congress met at Washington. In the Senate Mr. Trumbull gave notice of a bill to confiscate the property of the rebels and give freedom to persons in the slave States. Mr. Wilkinson gave notice of a bill to abolish the distinction between regular and volunteer forces. In the house Mr. Maynard was, after some discussion, sworn in as a member from the second district of Tennessee. The question as to the right of Mr. Segar, of Va., to a seat was referred. Mr. Eliot offered a series of resolutions in favor of emancipating the slaves in the rebel districts. A motion to lay them on the table was lost by a vote of fifty-six to seventy, and the further consideration of them was postponed until the next Tuesday. Messrs. Campbell and Stevens also offered resolutions of similar import. Mr. Roscoe A. Conklin submitted a resolution calling upon the Secretary of War for information in regard to the responsibility of the disastrous movement at Ball's Bluff, which was adopted. On motion of