that they were issued in good faith and for a valuable consideration. The question, then, arises, Is the irregu larity in the conduct of the election such an illegality as throws on the plaintiff the burden to show that he paid value for the coupons? We are clearly of opinion that it is not. It will appear from an examination of the cases above cited in which the defense was illegality in the inception of the instrument, that the illegality which shifts the burden of proof on the holder to prove that he paid value must be something which relates to the consideration of the paper sued on. It must appear that the consideration arose out of a transaction contrary to law, or against public policy." Pana v. Bowler, 107 U. S. 529, 2 Sup. Ct. Rep. 704, 27 L. Ed. 424. Proof of defenses under general denial of allegations of petition. 998. (Nebr. 1887.) The answer to a petition on bonds besides containing affirmative matters of defense which had been stricken out by the court below contained what was in effect a general denial of the allegations of the petition. "It therefore put the plaintiff upon proof of every fact necessary to constitute the cause of action set out in his petition, and embraced a denial of the legality and validity of the bonds, and the lawfulness of their issue and delivery. It required the plaintiff to show by competent proof that he was the owner of the coupons sued on, taken from bonds in fact executed by the defendant, issued in accordance with law, and delivered to a party competent to receive the title. It permitted proof on the part of the defendant of every fact which tended to establish that the bonds were illegal and void. It follows, therefore, that every defense which was open to the defendant under that portion of the answer stricken out was equally open to it under the answer as it stood at the trial." Nemaha County v. Fank, 120 U. S. 41, 7 Sup. Ct. Rep. 395, 30 L. Ed. 584. Rights of prior bona fide holder. 989. (N. Y. 1893.) "As the bonds in this case, though good upon their face, were undoubtedly void as between the railroad company and the town of Lansing, it is incumbent upon the defendant Lytle to show that he, or some one through whom he obtained title to them, was a bona fide purchaser for a valuable consideration." Orleans v. Platt, 99 U. S. 676." "In such a case, however, the plaintiff fulfills all the requirements of the law by showing that either he, or some person through whom he derives title, was a bona fide purchaser for value without notice. Douglass County Comrs. v. Bolles, 94 U. S. 104; Montclair v. Ramsdell, 107 U. S. 147; Scotland County v. Hill, 132 U. S. 107." Lytle v. Lansing, 147 U. S. 59, 13 Sup. Ct. Rep. 254, 37 L. Ed. 78. Objections to offer of evidence; the exceptions to its admission. 990. (Colo. 1897.) "An examination of the records shows, however, that, while these assessment lists were objected to generally for immateriality when they were offered, yet no exception was saved when they were admitted. For this reason the objection to the assessment lists was waived, and cannot be noticed." E. H. Rollins & Sons v. Board of Comrs. of Gunnison County, Colo., 26 C. C. A. 91, 80 Fed. 692. County warrants; prima facie proof of claim evidenced by them; what defenses available; burden of proof. 991. (Kan. 1898.) A county warrant issued in pursuance of legal authority is prima facie proof of the validity of the claim it evidences. "The board was empowered to hear and determine claims against the county, and to issue warrants therefor. These warrants evidence the decision and judgment of the board that the county is justly indebted to the holders thereof in the amounts stated therein. They are not conclusive evidence of the indebtedness they admit. The county may defeat them by proof that they were without consideration, that they were fraudulently issued to the damage of the county, or that the incurrence of the debts and the allowance of the claims they evidence were beyond the jurisdiction of the board. But the presumption is that the action of the board was right and just, and the burden of establishing these defenses is upon the county. Until one of them is established, the warrants are prima facie evidence of just debts of the county, upon which the holder is entitled to judgment in any court of competent jurisdiction." "It is conceded that a purchaser of these warrants does not secure the immunity from defenses accorded to the purchaser of commercial paper under the law merchant. He takes them subject to the defenses that the allowance of the debts and the issue of the warrants were not within the scope of the authority of the board, that they were without consideration, and that they were fraudulently created. In short, he takes them subject to all defenses which challenge the merits of the claims. Nevertheless the warrants themselves are prima facie evidence that the debts are just, and that defenses do not exist." Speer v. Board of County Comrs. of Kearney County, Kan., 32 C. C. A. 101, 88 Fed. 749. 992. (Mich. 1890.) "The plaintiff by his counsel, produced the bonds, and thus arose the presumption that he was their owner." Rondot v. Rogers Township, 39 C. C. A. 462, 99 Fed. 202. Evidence of ownership of bonds; pos session; record of former suit by another person on same bonds; hearsay. 993. (Mo. 1900.) "The bonds and coupons were payable to bearer, and at the trial the plaintiff produced and read them in evidence. Possession of commercial securities is evidence of ownership, and the production of these bonds and coupons by the plaintiff at the trial was sufficient proof, in the absence of countervailing evidence, to determine this issue in his favor." "To overcome this proof the defendant in error offered in evidence, over the objection of the plaintiff that it was incompetent, and did not tend to prove that he was not the owner of the bonds and coupons, the record of an action in the court below by one Norman De V. Howard, through Mr. T. K. Skinker, the attorney for the plaintiff in this case, against this defendant, on November 13, 1889, on the same bonds and on some of the same coupons involved in this action. That record disclosed the fact that this action brought by Howard had never been tried, and that it was dismissed on March 2, 1891. The objection to this record was well taken. The statement or claim of Howard in his petition in that record that he owned the bonds and some of the coupons was hearsay." Edwards v. Bates County, 40 C. C. A. 161, 99 Fed. 905. Burden of proof; indebtedness in excess of constitutional limitation; an affirmative defense. 994. (Iowa, 1900.) When it is claimed as a defense to municipal bonds that they create a debt in excess of a constitutional limit, such defense must be pleaded and proven. "If they create a debt in excess of the constitutional limitation, that was an affirmative defense, and the burden was on the county to plead and prove it. It assumed the burden but it failed to bear it. It pleaded this defense but it failed to prove it." Lyon County, Iowa, v. Keene FiveCent Sav. Bank of Keene, N. H., et al., 40 C. C. A. 391, 100 Fed. 337. Proof of corporate character; when not necessary. 995. (Cal. 1902.) In this case the defendant was sued on bonds purporting to have been issued by it. The complaint alleged that the defendant was a corporation duly organized and existing and that it had issued the bonds and coupons which were the subject of the action. The defendant appeared in its corporate name and demurred to the complaint. Thereafter it answered, denying that it was or ever had been incorporated and made full answer to the complaint on the merits. Held, that by appearing generally and filing a demurrer and answering to the merits in its corporate name, it admitted its corporate existence for the purposes of the suit and could not thereafter, by denying such corporate existence, impose upon the plaintiff the burden of proving the fact. Proof of execution of bonds. Under California Code, in suit on bonds and coupons, when the com plaint contains copies of such bonds and coupons, unless the answer denying the execution of the instruments is verified, the defendant will be held to have admitted the genuineness and due execution of the bonds and' coupons. Perris Irrigation Dist. V. Thompson, 54 C. C. A. 336, 116 Fed. 832. Publication of ordinances; record prima facie of publication. 995a. (Colo. 1908.) "The ordinance was duly recorded in the 'Book of Ordinances' provided for by section 4443. That fact constituted prima facie evidence of its lawful publication. The statute conferring that prima facie effect was dictated by a wise public policy. New towns and cities of Colorado required for their proper development the construction of public buildings, sewers, water works, gas plants, bridges, and other like public utilities; and necessity frequently dictated that the cost of such improvements should be made a burden upon the future as well as the present. Proof of the publication or posting of ordinances required for their lawful authorization might after the lapse of years be difficult. The successful accomplishment of public enterprises, dependent largely upon the ability to borrow money for the purpose, required some readily available and reliable method of proving compliance with conditions precedent to the validity of bonds to be issued as evidence of the loan. For reasons like these, the statutes of the state made the record of an ordinance in the 'Book of Ordinances' to be kept for that purpose prima facie evidence of its lawful publication. In view of these facts, courts ought not to permit this salutary presumption of regularity to be overcome by anything less than substantial proof of irregularity. There was no proof of it in this case, and the trial court rightly directed a verdict for plaintiff on the second count." Town of Fletcher v. Hickman, 91 C. C. A. 353, 165 Fed. 403, CHAPTER XVI. FEDERAL COURTS; JURISDICTION; RULES OF DECISION. A. Jurisdiction and process of federal courts; not subject to control by state legislation or state courts. B. Decisions of state courts; when controlling on federal courts and when not; changed rules of decision affecting contract rights. 1. When federal courts will follow decisions of highest court of state. 2. When federal courts exercise independent judgment. 3. Change in rules of decision by state courts; contract rights protected by federal courts. The Federal courts are not courts of general jurisdiction. Subject to the provisions of the Federal Constitution relating thereto, their jurisdiction is conferred, limited, and regulated by the acts of Congress. Without making special reference to any such constitutional provisions or acts of Congress, we have cited and noted in the first part of this chapter the decisions which have been made in municipal bond cases on questions relating to the jurisdiction of the Federal courts. The jurisdiction and process of the Federal courts are independent of, and cannot be controlled or interfered with by, the legislatures or courts of the States. Questions frequently arise in causes prosecuted in the Federal courts as to what consideration should be given by those courts to the rules of decision of the courts of final jurisdiction of the States. The Revised Statutes of the United States (§ 721) provide that "the laws of the several States, except where the Constitution, treaties, or statutes of the United States otherwise require or provide, shall be regarded as rules of decision in trials at common law, in the courts of the United States, in cases where they apply." It is well settled that this provision does not apply to questions of commercial law, or those involving the application of the general principles of the common law. The provisions of State Constitutions and statutes are controlling upon the Federal courts when no Federal question is involved, and, generally, when the highest court of a State having jurisdiction of the matter has construed any provision of its Constitution or its statutes, such construction will be adopted and followed by the Federal courts, and where such State courts, by a course of decisions, have established a local rule of property, such decisions will generally be followed by the Federal courts. If the State courts, by subsequent decisions, reverse or change the rules of their former decisions concerning such matters, the Federal courts, in cases before them, will disregard such subsequent decisions, if by following them the rights of persons, who contracted before such subsequent decisions were made, presumably with reference to, and in reliance upon, such former decisions, would be prejudiced; and in the absence of such decisions by the State courts at the time of contracting, the Federal courts exercise an independent judgment. These rules are of special importance to purchasers and holders of municipal bonds as well as the corporate bodies issuing them, as questions involving the construction of both constitutional and statutory provisions frequently arise in cases prosecuted to enforce their collection, and the State courts do not always adhere to their first decisions in such matters. A. Jurisdiction and Process of Federal Courts; Not Subject to Control by State Legislation or State Courts. Jurisdiction of federal courts; not af- "Repeated decisions of this court fected by state legislation; in- have also determined that State laws, junction by state courts; process whether general or enacted for the parof federal courts not affected ticular case, cannot in any manner thereby; discussion; impairing limit or affect the operation of the obligation of contract by removal process or proceedings in the Federal of taxing power. courts." 996. (Iowa, 1867.) A State court cannot enjoin or interfere with process of a Federal court. "Where a State has authorized a municipal corporation to contract and to exercise the local power of taxation to the extent necessary to meet the engagement, the power thus given cannot be withdrawn until the contract is satisfied." "Authority of the Circuit Courts to issue process of any kind which is necessary to the exercise of jurisdiction and agreeable to the principles and usages of law, is beyond question, and the power so conferred cannot be controlled either by the process of the State courts or by any act of a State legislature." The Constitution itself becomes a mockery if the State legislatures may at will annul the judgments of the Federal courts and the nation is deprived of the means of enforcing its own laws by the instrumentality of its own tribunals. "State courts are exempt from all interference by the Federal tribunals, but they are destitute of all power to restrain either the process or proceedings in the National courts." Viewed in any light, therefore, it is obvious that the injunction of a State court is inoperative to control, or in any manner to affect the process or proceedings of a Circuit Court, not on account of any paramount jurisdiction in the latter courts, but because, |