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Statement of the case.

simply to protect the vendors, and if we except the three years before considered in its velation to California, its restraining effect extended no farther than was necessary for their protection.

We are unable, therefore, to see anything in the contract, so far as it is now in question, which militates against public policy.

There are no other points adverted to which demand the serious consideration of the court.

JUDGMENT REVERSED, and the case remanded to be proceeded in

ACCORDING TO LAW.

Dissenting, Justices CLIFFORD, SWAYNE, and DAVIS.

NATIONAL BANK OF WASHINGTON V. TEXAS.

1. A note payable to bearer, though overdue and dishonored, passes by delivery the legal title to the holder, subject to such equities as may be asserted by reason of its dishonor.

2. Any one disputing the title of the holder of such paper takes the burden of establishing, by sufficient evidence, the facts necessary to defeat it. 3. There is no competent evidence in this chancery suit that the bonds in controversy, which were issued by the United States to the State of Texas, though overdue when they passed from the treasury of the State, were issued by the State or received by the person to whom they were delivered for any treasonable or other unlawful purpose.

4. The absence of the indorsement of the governor of the State on the bonds does not raise a presumption of such unlawful purpose under the circumstances of this case.

5. The cases of Texas v. White and Chiles (7 Wallace, 718), Same v. Hardenberg (10 1d. 68), and Same v. Huntington (16 Id. 402), considered, and their true result ascertained and applied to the present case.

APPEAL from the Supreme Court of the District of Columbia; the case being thus:

The United States, on the 1st of January, 1851, issued to the State of Texas for the sale of a portion of her north

Statement of the case.

western territory, five thousand coupon bonds of $1000 each, numbered successively from No. 1 to No. 5000, and “redeemable after the 31st day of December, 1864." They were made on their face all payable "to bearer," and declared to be transferable on delivery. The coupons, which extended to December 31st, 1864, and no farther, were equally pay

able "to bearer." These bonds were known as Texas indemnity bonds.

On the 16th of December, 1851, in anticipation of the bonds being delivered to it, the State of Texas passed an act authorizing their governor to receive them from the United States,

"And when received, to deposit them in the treasury of the State of Texas, to be disposed of as may be provided by law; provided, that no bond issued as aforesaid, as a portion of the said $5,000,000 of stock, payable to bearer, shall be available in the hands of any holders until the same shall have been indorsed in the city of Austin, by the governor of the State of Texas."

After this act of December 16th, 1851, and between that day and the 11th of February, 1860, the State of Texas passed thirteen different acts, providing for the sale or disposal of the whole $5,000,000 of these bouds; for lawful State purposes; as ex gr., paying the public debt of the State; the erection of a State capitol; to establish a system of schools, &c., &c., the construction of railroads: the terms of none of these acts requiring an indorsement of the bonds. by the governor, as required in the above-quoted act of December 16th, 1851, nor any of them designating by numbers on them the particular bonds to be appropriated to the particular objects authorized. Subsequently to this again, the rebellion having broken out, and the State having gone over to the rebel side, and there being a large number of. the bonds still undisposed of in the State treasury, the legislature of Texas, by an act of January 11th, 1862, repealed the act of December 16th, 1851 (making an indorsement necessary), and the then authorities of Texas, through its "military board," in January, 1865, sold or transferred, as was said, and as in former cases in this court was sup

Statement of the case.

posed to be shown, certain of the bonds, but not all of them, to two persons, White and Chiles, for the purpose of auling the rebellion. In those cases-the cases, namely, of Texas v. White and Chiles,* and Texas v. Hardenberg,†—it was determined that as against the true, that is to say, the loyal State of Texas (particular citizens of which had stopped payment of them at the Federal treasury), no title had passed to bonds which had been thus transferred; and that notwithstanding the transfer, the reconstructed State might reclaim the bonds or their proceeds.

How many bonds were transferred to White and Chiles, or what were their exact numbers, was not well ascertained; but, as already said, it was well known that the bonds transferred to White and Chiles did not comprise the whole issue for $5,000,000, and that a considerable number of them had been transferred under one or other of the thirteen enactments already mentioned.‡ In particular, it appeared that one hundred and forty-eight of them (numbered from 4694 to 4842 inclusively) had been transferred, in pursuance of a statute, to the Southern Pacific Railroad Company; some of which the company paid out to contractors for work done on the road. These bonds were not indorsed by the gov

ernor.

In this state of things the State of Texas brought her complaint in chancery in the court below against the First National Bank of Washington, W. S. Huntington, its cashier, and others, for discovery and relief in regard to certain of these Texas indemnity bonds, of which the bill alleged that the State had been dispossessed by fraud or treasonable, practices. The number now claimed was nineteen; thus numbered:

"Numbers 4226, 4227, 4229, 4703, 4705, 4706, 4748, 4813, 4825, 4843, 4844, 4912, 4927, 4928, 4929, 4960, 4961, 4962, 4963."

* 7 Wallace, 700, where the history of the bonds is given in full.

† 10 Id. 68.

See Report of Mr. Comptroller Taylor, submitted to Mr. Secretary McCulloch, August 15th, 1865.

Statement of the case.

The bill alleged that these indemnity bonds were each for the sum of $1000, dated January 1st, 1851, redeemable after December 31st, 1864, and that those in controversy were received and remained in the treasury of the State of Texas until after the period fixed for redemption. It was alleged that in the year 1865 the insurrectionary power which had usurped control of the State, made a contract with White and Chiles by which from one hundred and forty-five to one hundred and sixty-two of the bonds were delivered to them, in consideration of which they agreed to furnish means to carry on the war against the United States in which that State was then engaged, with others, under the name of the Confederate States of America.

It was further alleged that these bonds, then overdue, afterwards came to the hands of the defendants, who purchased them with full notice of the purpose for which they had been delivered to White and Chiles.

It was also alleged that said bonds were never indorsed by the governor of the State of Texas in such manner as by the law of Texas was required, by reason of which no legal title to the same passed from the State, or was vested in the parties to whom they were delivered. The defendants were required to answer under oath, and a decree against them in regard to the bonds left with Taylor, or for other relief, was prayed.

The bank and Huntington answered and admitted the purchase of some of the Texas indemnity bonds, and having others as agents for the owners of them. They gave a list of all these, specifying those held in their own right and those held as agents. They averred that the bonds had all been paid to them in full by the Treasury of the United States before this suit was commenced, and that those owned by themselves were purchased for value (namely, ninety-eight cents to the dollar), without notice of any of the matters set up in the complainant's bill.

They denied all knowledge on their part, that the bonds claimed by them were part of the bonds issued to Chiles and White, or had been issued in aid of the rebellion; and

Statement of the case.

posed to be shown, certain of the bonds, but not all of them, to two persons, White and Chiles, for the purpose of aiding the rebellion. In those cases-the cases, namely, of Texas v. White and Chiles, and Texas v. Hardenberg,t-it was determined that as against the true, that is to say, the loyal State of Texas (particular citizens of which had stopped payment of them at the Federal treasury), no title had passed to bonds which had been thus transferred; and that notwithstanding the transfer, the reconstructed State might reclaim the bonds or their proceeds.

How many bonds were transferred to White and Chiles, or what were their exact numbers, was not well ascertained; but, as already said, it was well known that the bonds transferred to White and Chiles did not comprise the whole issue for $5,000,000, and that a considerable number of them had been transferred under one or other of the thirteen enactments already mentioned. In particular, it appeared that one hundred and forty-eight of them (numbered from 4694 to 4842 inclusively) had been transferred, in pursuance of a statute, to the Southern Pacific Railroad Company; some of which the company paid out to contractors for work done on the road. These bonds were not indorsed by the gov

ernor.

In this state of things the State of Texas brought her complaint in chancery in the court below against the First National Bank of Washington, W. S. Huntington, its cashier, and others, for discovery and relief in regard to certain of these Texas indemnity bonds, of which the bill alleged that the State had been dispossessed by fraud or treasonable, practices. The number now claimed was nineteen; thus numbered:

"Numbers 4226, 4227, 4229, 4703, 4705, 4706, 4748, 4813, 4825, 4843, 4844, 4912, 4927, 4928, 4929, 4960, 4961, 4962, 4963."

* 7 Wallace, 700, where the history of the bonds is given in full.

† 10 Id. 68.

See Report of Mr. Comptroller Taylor, submitted to Mr. Secretary McCulloch, August 15th, 1865.

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