Shapleigh v. San Angelo
167 U.S. 646 (1897)

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U.S. Supreme Court

Shapleigh v. San Angelo, 167 U.S. 646 (1897)

Shapleigh v. San Angelo

No. 287

Submitted April 26, 1897

Decided May 24, 1897

167 U.S. 646

Syllabus

A state, being the creator of municipal organizations, is the proper party to impeach the validity of their creation, and if it acquiesces in the validity of a municipal corporation, the corporate existence thereof cannot be collaterally attacked; this rule is recognized in Texas.

Page 167 U. S. 647

An absolute repeal of a municipal charter is effectual so far as it abolishes the old corporate organization, but when the same, or substantially the same inhabitants are erected into a new corporation, whether with extended or restricted territorial limits, such new corporation is treated as in law the successor of the old one, entitled to its property rights, and subject to its liabilities; this view of the law has been accepted and followed by the Supreme Court of Texas.

The disincorporation by legal proceedings of the City of San Angelo did not avoid legally subsisting contracts, and, upon the reincorporation of the same inhabitants and of a territory inclusive of the improvements made under such contracts, the obligations of the old devolved upon the new corporation.

The Texas Act of April 13, 1891, c. 77, as construed by the supreme court of the state, must be regarded, as respects prior cases, as an act impairing the obligation of existing contracts.

Under the facts disclosed by this record, the new corporation is subject to the obligations of the preceding corporation, as existing legal obligations, in manner and form as they would have been enforceable bad there been no change of organization.

This was an action brought by Augustus F. Shapleigh, a citizen of the State of Missouri, against the City of San Angelo, a city incorporated on February 10, 1892, under the laws of the State of Texas. The plaintiff's amended petition, filed in the Circuit Court of the United States for the Western District of Texas on March 9, 1895, contained two counts, the the first asking judgment for the amount of certain unpaid coupons for interest on bonds issued by a municipal organization styled "the City of San Angelo," which, from January 18, 1889, to December 15, 1891, exercised the powers of an incorporated city within the territorial limits inclusive of all the territory afterwards embraced within the limits of the defendant corporation, and the second count seeking to recover, as money had and received to the use of the plaintiff, the amount paid by him for the bonds.

The essential allegations of the first count were that, on January 18, 1889, the County Judge of the County of Tom Green, Texas, made an entry upon the records of the commissioners' court of the said county setting forth that the inhabitants of the Town of San Angelo, in that county, were then and there incorporated as a city, within certain described boundaries, that on the said date, the city contained more

Page 167 U. S. 648

than one thousand inhabitants, that immediately after that date, an election was held in the city pursuant to an order of the county judge at which election a mayor, a marshal, and five aldermen were chosen, who thereupon organized a government for the city, and entered upon the performance of their duties as such officers, that, on May 16, 1889, the city council passed an ordinance entitled

"An ordinance authorizing the issuing of bonds for the purpose of improving the streets and public highways in the City of San Angelo, and to provide for the interest and create a sinking fund for the principal of said bonds,"

empowering the mayor and secretary of the city to execute, under the corporate seal, coupon bonds of the denomination of $1,000 each, and to negotiate the same, and providing that, for the payment of interest on the bonds, and to create a sinking fund for the redemption of the same, there should be levied and collected an annual ad valorem tax on all property within the city at the rate of twenty-five cents on the $100 of valuation; that in pursuance of the ordinance the mayor signed and the secretary countersigned ten bonds, and the mayor sold the same, sealed with the corporate seal of the city; that attached to each of the bonds were forty coupons, each for the sum of $30, or one semiannual installment of interest; that, before the bonds were issued the mayor forwarded the same to the Comptroller of public accounts of the State of Texas, who registered the same in a book kept for the purpose in his office, and endorsed upon each of the bonds his certificate that the same was so registered; that at the time the bonds were issued the assessed value of the property in the city amounted to $1,500,000, and that the bonds were issued and their proceeds used for the purpose of making streets in the city. It was further stated that, at the fall term, 1890, of the district court of the said county, the county attorney, at the instance of a citizen and taxpayer of the city, filed an information against the mayor and the members of the city council of said city alleging that the city was never legally incorporated, and that the defendants were unlawfully exercising the functions of such officers, and praying that the defendants might be cited to appear and show

Page 167 U. S. 649

cause why they should not be ousted from office and that the incorporation of the city might be declared null and void, that thereupon proceedings were had in the said court which resulted in the entry of a decree on December 15, 1891, ousting the said defendants from their said offices and declaring the incorporation of the City of San Angelo null and void. It was further alleged that on February 10, 1892, the defendant city was duly incorporated within certain described boundaries; that the territory of the new corporation was all embraced within the boundary lines of the old organization, and, although smaller in area than the territory of that organization, included all the lands thereof actually occupied and inhabited as a town, and all the streets and public buildings of the old city. The plaintiff averred that he was the bearer and owner of sixty of the coupons attached to the said bonds, which were due and unpaid, and asked judgment for the sum of $1,800, with interest on the amount of each of the coupons from the maturity thereof.

In the second count, the plaintiff repeated the above allegations and further alleged that, prior to December 15, 1891, the City of San Angelo, as first organized in 1889, sold and delivered the said ten bonds to certain persons residing in St. Louis, Missouri, for the sum of $10,000; that the proceeds of the sale were used by the said City of San Angelo in making its streets; that thereafter the said persons sold, for valuable consideration, some of the bonds to the plaintiff, and the remaining ones to certain other persons, from whom the plaintiff subsequently purchased the same; that the plaintiff thus became the owner of all of the bonds, and of the entire claim against the defendant on account thereof as for money had and received to the plaintiff's use. Upon this cause of action the plaintiff asked judgment for the sum of $10,000, with interest.

The defendant filed its second amended answer on April 2, 1895, which contained various averments of fact, a denial of all the essential allegations of the petition, defenses in the nature of pleas of non est factum and of the statute of limitations, and a demurrer, of which nine special causes were stated. Two of the causes of demurrer were as follows:

Page 167 U. S. 650

"2d. Because the said amended petition shows that the corporation which is alleged to have issued the bonds the interest of which is the subject matter of this suit had been, before the institution of the same, declared null and void by a court of competent jurisdiction, and, as shown by the allegations of said fact, was null and void, and that said corporation, as organized in 1889, has therefore ceased to exist, and was in fact void, and said petition fails to show or aver that any subsequent corporation has ever assumed the debt sued upon, or become liable for the payment of same, or that the requisite number of qualified voters of the City of San Angelo ever at any election voted in favor of, or received any property of, the old corporation, or ever voted to assume or pay for the debt of the old or defunct corporation of the City of San Angelo, and said petition wholly fails to show that the necessary and proper elections, and each of them, were held as a prerequisite to any liability of said defendant."

"4th. Because said amended petition shows that the territory included in the corporation of 1889 was entirely different from that embraced in the new corporation of 1892, and which is covered by the defendant in this suit, and fails to state any facts which would make said last incorporation liable for said bonds and interest or the debts of the old and first incorporation mentioned therein."

Replication having been filed by the plaintiff, to which the defendant demurred, the case was heard in the said circuit court upon the demurrer to the amended petition, and on April 5, 1895, the demurrer as to the second and fourth specifications was sustained. The plaintiff elected to abide by the amended petition, and subsequently, judgment having been entered in favor of the defendant, he sued out a writ of error, bringing the case here.

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