1. The twelfth section of the Act of the Legislature of Texas
entitled "An Act to incorporate the San Antonio Railroad Company,"
which authorizes the City of San Antonio to subscribe for the stock
of said company and issue bonds to pay for the same is not
repugnant to the provision of the state Constitution of 1845,
requiring that "every law enacted by the legislature shall contain
but one object, and that shall be expressed in the title."
2. Certain bonds or securities issued by the City of San
Antonio, March 1, 1852, recite that
"this debt is authorized by a vote of the electors of the City
of San Antonio, taken in accordance with the provisions of an act
to incorporate the San Antonio and Mexican Gulf Railroad Company,
approved Sept. 6, 1850,"
&c.
Held that the city is estopped from denying the
verity of the recital, and that the bonds or securities are valid
in the hands of a
bona fide purchaser for value before
maturity.
3. The fact that the principal securities delivered to that
company were not sealed is immaterial, because the act under which
they were issued expressly authorized those charged with the duty
of making the subscription to "issue bonds bearing interest, or
otherwise pledge the faith of the city."
Page 96 U. S. 313
MR. JUSTICE SWAYNE delivered the opinion of the Court.
The cause of action in this case is certain "bonds," as they are
termed, and coupons, issued by the City of San Antonio in payment
for stock of the San Antonio and Mexican Gulf Railroad Company
subscribed for by the city.
The action is one of a class that has been very numerous in this
Court for several years past. Almost every question that can arise
in such litigation has been settled in this forum by repeated
adjudications. In the present case, our remarks will be confined to
the points to which our attention has been called by the counsel
for the city. No fullness of discussion is necessary.
The twelfth section of the Act approved Sept. 5, 1850, entitled
"An Act to incorporate the San Antonio Railroad Company,"
authorized the city to take the stock "and issue bonds bearing
interest, or otherwise to pledge the faith of said city, . . . to
pay for the same."
It was made a condition of the subscription that two-thirds of
the qualified electors of the city should vote in favor of it.
The eighteenth section of the act declared that if the work was
not commenced within one year from the 1st of November, 1850, and
if at least twenty miles of the road were not in running order
within three years from its commencement, the charter should be
void. An Act approved Feb. 14, 1852, extended the time for
commencing the work to two years from the date of the act, and
required ten miles to be finished within three years. Subsequent
acts bearing upon this subject were passed, but it is not deemed
necessary particularly to advert to them.
An election was held pursuant to the first-named act. All the
votes cast but three were in favor of the subscription. It was
thereupon made, and the securities were delivered to the company in
payment. Each of the bonds, so called, had on its
Page 96 U. S. 314
face the following recital:
"This debt is authorized by a vote of the electors of the City
of San Antonio, taken in accordance with the provisions of an Act
to incorporate the San Antonio and Mexican Gulf Railroad Company,
approved Sept. 5, 1850. Entered and recorded in the office of the
city treasurer, and is transferable on delivery. City Hall, City of
Antonio, March 1, 1852."
The road was not built, and the enterprise has been
abandoned.
The grant of the power given to the city was consistent with the
constitution of the state.
San Antonio v. Gould, 34 Tex.
49;
Same v. Jones, 28
id. 19.
The holder of commercial paper, in the absence of proof to the
contrary, is presumed to have taken it underdue for a valuable
consideration, and without notice of any objection to which it was
liable. 2 Pars. Bills and Notes 9;
Pinkerton v. Bailey, 8
Wend. (N.Y.) 600.
There is certainly nothing in the record which shows that such
is not the position of the defendant in error.
This shuts the door, as matter of law, to all inquiry touching
the regularity of the proceedings of the officers charged with the
duty of subscribing and making payment in the way prescribed. The
rule in such cases is that if the municipality could have had power
under any circumstances to issue the securities, the
bona
fide holder has a right to presume they were issued under the
circumstances which give the authority, and they are no more liable
to be impeached in his hands for any infirmity than any other
commercial paper.
Supervisors v.
Schenck, 5 Wall. 772;
San Antonio v. Lane,
32 Tex. 405.
We have, however, looked carefully into the record for light as
to the facts, and find that all the proceedings were in substantial
conformity to the requirements of the law, and the proof is clear
that every thing was honestly done.
The city is estopped by the recital on the face of the
securities to deny its verity. A
bona fide purchaser had a
right to regard it as true, and was not bound to look further.
Commissioners v.
Aspinwall, 21 How. 539;
Mercer
County v. Hackett, 1 Wall. 83;
Grand
Chute v. Winegar, 15 How. 355;
San Antonio v.
Gould, supra.
Page 96 U. S. 315
The principal securities delivered to the company were not
bonds, because they were unsealed, but this is immaterial. The
twelfth section, under which they were issued, expressly declared
that those charged with the duty of subscribing "may issue bonds
bearing interest, or otherwise pledge the faith of the city."
The securities issued were within the latter category. If that
clause were wanting, we should have no difficulty in holding that
the city was, under the circumstances, estopped from denying their
validity. The doctrine of
ultra vires, whether invoked for
or against a corporation, is not favored in the law. It should
never be applied where it will defeat the ends of justice if such a
result can be avoided.
Whitney Arms Co. v. Barlow, 63 N.Y.
62.
The Constitution of Texas of 1845 provided that "every law
enacted by the legislature shall contain but one object, and that
shall be expressed in the title."
It is insisted that the twelfth section of the act of 1850 is in
conflict with this requirement, and is, therefore, void. This
identical question arose in
San Antonio v. Lane, supra. It
was there unanimously held by the court that
"When an act of the legislature expresses in its title the
object of the act, the title embraces and expresses any lawful
means to achieve the object, thus fulfilling the constitutional
injunction that every law shall embrace but one object, and that
shall be expressed in its title."
The objection was overruled.
In the
City of San Antonio v. Gould, supra, and in
Gittings v. San Antonio, 47
id. 548, the same
court, consisting of judges other than those who sat in the first
case, came to a different conclusion. The question may therefore be
fairly considered as still unsettled in the jurisprudence of the
state. Under these circumstances, this Court has always felt at
liberty to follow the guidance of its own judgment.
We think the ruling in the case first mentioned has on its side
the greater weight of reason and authority. We therefore hold the
section not to be obnoxious to the requirement of the Constitution,
and that it is therefore valid.
The refusal of the court below to grant a new trial involved
Page 96 U. S. 316
only the exercise of its discretion, and cannot be made the
subject of review by this Court.
Judgment affirmed.
NOTE -- In
San Antonio v. Barnes, error to the Circuit
Court of the United States for the Western District of Texas, which
was argued by Mr. Thomas J. Durant for the plaintiff in error and
by Mr. Robert Sewell for the defendant in error, MR. JUSTICE
SWAYNE, in delivering the opinion of the Court, remarked: "This
case is in all respects substantially the same with that of
San
Antonio v. Mehaffy, just decided. The opinion in that case is
decisive of this."
Judgment affirmed.