Hitchcock & Co. vs. The City of Galveston.

from the proposition decided in the case of The Police Jury v. Britton, supra.

The point of difference between the judges seems to have been whether certificates of debt, city warrants, orders, checks, drafts, and the like, used for giving to public creditors evidence of the amount of their claims are or are not commercial paper, so that the holder takes them free from legal and equitable defenses, and with an absolute obligation on the part of the municipal corporation to pay them. But as I read the case, there does not appear to be any dissent from the general proposition, unless it be by Mr. Justice HUNT, that a municipal corporation, with power of taxation, given it for the purpose of raising means to carry on its functions, cannot raise money by issuing or selling its coupon bonds, due at a future day and payable to bearer, without legislative authority, expressly given or clearly implied.

These two decisions by the supreme court of the United States are a law to this court which it follows with willing steps. A construction of the charters of municipal corporations which, without the express permission of the legislative power, gives their officers the power to issue bonds, having all the qualities of commercial paper, without limit as to amount or time of payment, affords an opportunity for the most stupendous frauds, and presents a temptation to their perpetration to a class of officials who, as the history of the country shows, are frequently rapacious and unscrupulous. One of the great evils of these times is the increase in the amount of the indebtedness of counties, towns and cities. The facilities which have been supposed to exist for the borrowing of money and the issuing of bonds by these local jurisdictions have fostered extravagance, fraud and peculation, and loaded the people with burdens grievous to be borne. The result has been that the prosperty of cities has been destroyed, and the property of the inhabitants subjected to a public mortgage, in many cases equal in amount to the value of the property itself.

The assumption of authority by muncipal corporations to issue bonds by virtue of their general corporate power is a recent one. It has always been denied by many courts of the highest respectability. In my judgment, it should never have been admitted.

Hitchcock & Co. vs. The City of Galveston.

So dangerous a power should be expressly and deliberately conferred, so that the taxpayer may be protected by prudent guards and limitations. Whenever the power to issue bonds may become necessary for the prosecution of some work or improvement involving large cost, or for any other purpose, the power can be conferred by the legislature, with proper restrictions. But, in my judgment, no such authority ought to be implied from the general grant of corporate powers.

But it seems to me that the provisions of the charter of the city of Galveston clearly exclude the power to issue bonds to pay for sidewalk improvements.

The same section of the charter (sec. 8, art. 3, title IV), which confers upon the city council the power to construct sidewalks, points out with minuteness and precision the manner in which the cost of their construction is to be defrayed. There is no escape from the language: "The cost of construction of sidewalks shall be defrayed by the owners of the lot or part of lot or block fronting on the sidewalk," and "the cost of any sidewalk constructed by the city shall be collected, if necessary, by the sale of the lot on which it fronts." Here is a designation of the property which is to pay, and of the manner in which payment is to be enforced. These provisions exclude any other method of payment. They clearly exclude the idea that the city may pay for such pavements by issuing its coupon bonds, bearing ten per cent. interest, and payable to bearer in fifteen years. The Mayor v. Ray, 19 Wall., 468.

It is no answer to this to say that the city may, nevertheless, enforce payment from the owners of the lots. Suppose the lots do not pay the cost of the sidewalks? The city, by its issue of bonds, has made itself liable, and will have the deficiencies to meet. The city could not be made liable for these deficiencies if it had not assumed the liability by the issue of its bonds. Lake v. Williamsburg, 4 Denio, 520; McCullough v. The Mayor of Brooklyn, 23 Wend., 458; Baldwin v. Oswego, 1 Abb., 62; New Albany v. Sweeney, 13 Ind., 245.

The city undertakes to pay in the first instance for these sidewalks, and to take the risk of reimbursing itself from the property owners. This is a clear departure from the authority

Hitchcock & Co. vs. The City of Galveston.

conferred by the charter. "A corporation can act only in the manner prescribed by the act of incorporation which created it." Head v. Insurance Company, 2 Cranch, 127.

The city cannot assume a primary liability for these improvements. Reock v. The Mayor of Newark, 33 N. J. Law Rep., 131; New Albany v. Sweeney, 13 Ind., 245; McCullough v. The Mayor of Brooklyn, 23 Wend., 458.

The ordinance of August 19, 1873, which provides for the construction of the sidewalks, also declares that the cost of their construction shall be a charge against the property fronting thereon, and shall be assessed against the same. It then prescribes how the assessment shall be paid or its collection enforced. This, it seems to me, exhausts the power of the city council on this subject. It surely could not have been within the contemplation of the legislature that the city council, after taking these steps specially authorized by the charter, and amply sufficient for the payment of the cost of sidewalks, should then provide that the city itself should assume the primary liability, and advance the cost for the lot owners by an issue of its coupon bonds, payable to bearer in fifteen years.

My conclusions on this branch of the case may therefore be summed up as follows:

1. The power to borrow money and issue bonds for sidewalk improvements must be conferred upon the city council of Galveston before that body can assume to perform these acts.

2. This power is not inherent in a municipal corporation. 3. It is not expressly conferred by, nor can it clearly be implied from, any provision in the charter of Galveston.

4. The power is excluded by provisions found in the charter: (a) By the provisions for raising money by taxation for general and special purposes.

(b) By the provision for issuing bonds, which is limited to a specific purpose, and that purpose not being sidewalk improve

ments.

(e) By the provision that the cost of sidewalk improvements shall be borne by the owners of the abutting lots, and shall be collected by asssessments on the abutting property.

In my judgment, the assumption by the city council of author

Neilson vs. Garza.

ity to issue these bonds for sidewalk improvements was not only unauthorized by the charter, but was a clear and flagrant violation of its meaning and spirit.

The result of the views above expressed is:

1. That the plaintiffs have not by their pleadings shown a good cause of action against defendant, for want of an averment that they had performed the conditions precedent, which were necessary to be performed in order to make the contract, even if authorized, binding upon the city; and,

2. That neither the city council of Galveston, nor any committee of its appointment had authority to make the contract sued on. It is therefore, absolutely null and void.

The demurrer to the petition of plaintiffs as amended is therefore sustained.

BROWNSVILLE, MARCH TERM, 1876.

HENRY NEILSON VS. MARIANA TREVINO GARZA.

1. The right to make inspection laws is not granted to congress, but is reserved to the states; nevertheless, it is subject to the paramount right of congress to regulate commerce with foreign nations and among the several states. 2. If any state, as a means of executing its inspection laws, imposes any duty or impost on imports or exports, such duty or impost is void if it exceeds what is absolutely necessary for executing such inspection laws, but:

3. As the article of the constitution of the United States which prescribes the limit within which inspection charges shall be kept, goes on to provide that "all such laws shall be subject to the revision and control of congress, congress is the proper authority to decide whether a charge or duty is or is not excessive.

4. Therefore if a law passed by a state is really an inspection law, it must stand until congress sees fit to alter it, even though the fee allowed by it is in effect an impost or duty on imports or exports.

5. The scope of inspection laws is very large and is not confined to articles of domestic produce or manufacture, but applies also to articles imported and to those intended for domestic use.

6. The act of the legislature of Texas, approved October 14, 1871, and the further act, approved March 23, 1874, entitled “for the encouragement of stock-raising and the protection of stock-raisers," are inspection laws and are constitutional.

Neilson vs. Garza.

IN EQUITY.

Heard upon pleadings and evidence for final decree.

Messrs. Stephen Powers and Nestor Maxan, for complainant, cited Gibbons v. Ogden, 9 Wheat., 203; Brown v. Maryland, 12 id., 419; Story on the Const., secs. 1004, 1017, 1024; Clintsman v. Northrop, 8 Cow., 46; Hancock v. Sturges, 13 Johns., 331; Ferris v. Coles, 3 Caines, 212; Shoemaker v. Lansing, 17 Wend., 327.

Mr. J. R. Cox, for defendant.

BRADLEY, Circuit Justice. The complainant in this case resides in Matamoras, Mexico, and is largely engaged in the business of importing hides from that city to Brownsville, in Texas, and sending the same thence via the port of Brazos Santiago, in Texas, to New York.

The defendant is inspector of hides and animals for Cameron county, Texas, at Brownsville, appointed and acting under an act of the legislature of Texas, approved October 14, 1871, and a further act, approved March 23, 1874, entitled for "the encouragement of stock raising and the protection of stock raisers." By virtue of his said office, the defendant claims and exercises the right to inspect the hides imported as aforesaid by the complainant, and to exact and receive, and does exact and receive therefor, in accordance with said law, fees at the rate of from six to ten cents per hide, according to the number inspected.

The complainant contends that this exaction is in reality an impost or duty on the importation or exportation of said hides, and that it is contrary to those clauses of the constitution of the United States which declare that congress shall have power "to regulate commerce with foreign nations and among the several states;" and that "no state shall, without the consent of congress, lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing its inspection laws."

It is not pretended that congress has granted any consent in the case; and the complainant insists that congress, in making the importation of hides free from duty, has regulated the subject, and no state regulation can have any force or effect, but all such regulations are void.