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SAN ANTONIO v. MEHAFFY.

October 1, 1877

SAN ANTONIO
v.
MEHAFFY.



ERROR to the Circuit Court of the United States for the Western District of Texas. The facts are stated in the opinion of the court.

The opinion of the court was delivered by: Mr. Justice Swayne delivered the opinion of the court.

Mr. Thomas J. Durant for the plaintiff in error.

Mr. T. A. Lambert, contra.

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 fulness 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 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 ...


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