414 31 SUPREME COURT REPORTER. much; and that the said deed was made by said Ochoa without the knowledge of the decree in said equity cause, and "if possible he must furnish the affidavit of Mrs. Blanco," stating that her purchase was an honest one and how much he paid for the property. The stay granted by the court was extend ed from time to time. There were hearings, and, it may be, some evidence tending to show the existence of the facts referred to by the court in the conditions upon which it granted the stay, and there was evidence to the contrary. Finally the court disposed of the matter by refusing to set aside the decree in the equity cause, and hence declining to allow Perez and Ochoa to defend, and refusing to grant the application for a preliminary injunction on the bill of Mrs. Blanco. From a final decree rejecting their application to set aside the equity decree and allow them to defend, Perez and Ochoa appeal. OCT. TERM, any form of the existence of the suit, and concluding from the facts before it that it was established that both Perez and Ochoa had been notified, either by information conveyed to them by persons in Porto Rico, or by the receipt of a copy of the newspaper containing the publication of notice which the court had directed to be made, the right to appear and defend was denied. But we think the construction of the statute which the court must necessarily have adopted in order to enable it to reach such conclusion was a mistaken one. The right to appear and defend within the year is given by the proviso to all defendants who have not been "actually personally notified as above provided." To determine, therefore, wheth er a defendant who appears and asks to be allowed to defend has been actually personally notified in such a manner as to exclude him from the enjoyment of the right involves ascertaining not whether he had been notified in any possible manner, but whether he had been "actually personally notified as above provided;" that is, as required by the previous provisions of the section. Now, the previous provisions are these: "That when in any suit commenced in any circuit court of the United States, to enforce any legal or equitable lien upon, or claim to, or to remove any encumbrance or lien or cloud upon the title to real or The defendants Perez and Ochoa being citizens of Spain, the court had general jurisdiction. Act March 2, 1901, chap. 812, § 3, 31 Stat. at L. 953. Power to award relief because of the situation of the property within the court's jurisdiction and the character of the rights asserted in and to the property even although Perez and Ochoa were nonresidents of the district and could not be found therein depended, as recog-personal property within the district where nized by the court below and by the parties, upon the act of March 3, 1875, chap. 137, § 8, 18 Stat. at L. 472, U. S. Comp. Stat. 1901, p. 513. The right of the absent parties defendant to have the suit reopened and the duty of the court to permit them to make defense depended upon the proviso to the section in question. That proviso reads as follows: "Provided, however, that any defendant or defendants not actually personally notified as above provided may, at any time within one year after final judgment in any suit mentioned in this section, enter his appearance in said suit in said circuit court, and thereupon the said court shall make an order setting aside the judgment therein, and permitting said defendant or defendants to plead therein on payment by him or them of such costs as the court shall deem just; and thereupon said suit shall be proceeded with to final judgment according to law." such suit is brought, one or more of the defendants therein shall not be an inhabitant of, or found within, the said district, or shall not voluntarily appear thereto, it shall be lawful for the court to make an order directing such absent defendant or defendants to appear, plead, answer, or demur, by a day certain to be designated, which order shall be served on such absent defendant or defendants if practicable, wherever found, and also upon the person or persons in possession or charge of said property, if any there be." After thus giving authority to the court to authorize the *actual personal service of a notice outside of the district, the statute then, in case where such personal notice is impossible, provides for publication as fol. lows: "Or where such personal service upon such absent defendant or defendants is not practicable, such order shall be published in such manner as the court may direct, not As the appearance of Perez and Ochoa less than once a week for six consecutive was within the year, their right to have the weeks." Plainly, therefore, the previous decree set aside depended upon whether they provision to which the proviso applies had been "actually personally notified" (in exacts an actual personal notice resulting the case wherein the judgment was ren- from the service on the party outside of the dered), "as above provided." Treating the district of an order of the court directed to words "actually personally notified" as him, and requiring him to appear and designifying information conveyed to them infend within a time stated, the whole con •230 *231 232 the judgment therein, and permitting said defendant or defendants to plead therein on payment by him or them of such costs as the court shall deem just." Reversed and remanded with directions for further proceedings in conformity with this opinion. (220 U. S. 233.) PERFECTO BLANCO Y BLANCO, Appt., V. formably to the express terms of the statute. I said court shall make an order setting aside In other words, where the property is situated in the district where the suit is brought, as provided in the statute, the right of the court to exert its authority is made to depend upon two forms of notice, which are distinct one from the other. First, an actual notice calling upon the person to appear, and which, in virtue of an express authority of the court, may be served upon the party outside of the district where the suit is pending. Second, a notice by publication, calling upon the party to appear and defend within the statutory time; this latter notice, however, being only necessary where the former method cannot be employed. Considering the two distinct subjects, the proviso of the statute ordains that where the actual personal notice has not been made as provided, and publication has therefore been resorted to, that within a year the party has a right to appear and the case must be reopened to permit him to make his defense. That is to say, the stat. Argued and submitted March 17, 1911. Deute, without ambiguity, confers the right to have the case reopened whereever the HARRY S. HUBBARD, U. S. Marshal for This case is governed by the decision in Perez y Fernandez v. Fernandez y Perez, ante, 412. [No. 111.] cided April 3, 1911. PPEAL District Court of the jurisdiction of the court has rested upon A United States for Porto Rico to re view a decree refusing to stay by injunction the execution of a decree in a suit to set aside conveyances as in fraud of creditors, which latter decree it had refused to open to permit absent defendants served by publication to appear in and defend the suit. Reversed and remanded for further proceedings. See same case below, 4 Porto Rico Fed. Rep. 201. Messrs. Frederic D. McKenney, John Spalding Flannery, William Hitz, and Thomas D. Mott, Jr., for appellant. Messrs. N. B. K. Pettingill and F. L. Cornwell for appellees. Mr. Chief Justice White delivered the opinion of the court: publication, and denies such right where the requirements of the statute as to actual personal notice have been complied with. It follows that in a case where the method for giving the actual notice pointed out by the statute has not been resorted to, and, on the contrary, publication of notice was the basis of the jurisdiction of the court, an inquiry as to information conveyed by letter or by other means of knowledge of the pendency of the suit to a defendant, for the purpose of determining whether such defendant has a right to appear within the year and have the case opened to enable him to defend, is wholly immaterial. We say this because, from the text of the statute as above elucidated, it clearly results that the right which it confers to have a case reopened is rested upon the criterion afforded by the record upon which the judgment was obtained, and is not caused to depend upon the uncertainty which might result from a resort to mat ters extraneous to the record. As the miscerns, therefore, the proceedings in the construction by the court of the statute in respect just stated requires a reversal, it is not essential that we should go further. In order, however, that misconception may be avoided, we think it well to observe that in the cases to which the statute applies the right to appear and have a cause reopened is not dependent upon terms to be fixed by the court, except to the extent that the statute provides for terms as to costs. This, we think, is clear, since, after providing for the entry in the circuit court of his appearance by a defendant embraced within the statute, it is said: "And thereupon the This record involves the bill filed by Perfecto Blanco in the lower court to enjoin the sale of the property under execution in the case of Fernandez and Perez. It con equity cause and the right to reopen the decree entered in the same, which we have just disposed of. As stated in that case, the application for injunction pendente lite in this case was considered by the court along with the request to be allowed to appear and defend in the equity cause, made by Perez and Ochoa. When the court temporarily stayed the execution of the judg ment, a suggestion was made to counsel by the court that in this case a demurrer be filed to the bill pending the delay which must transpire in considering the subject of the right to enjoin along with, or in con nection with, the right of Perez and Ochoa to appear and defend. When it was concluded that the two latter persons had no such right, and the right to an injunction pendente lite in this case was refused, the TERRITORIES (§ 6*)-RESULT OF CESSION- 3. Public property belonging to the city not be regarded as having passed to the of Manila as a municipal corporation canUnited States under the cession by Spain of the Philippine Islands for a cash consideration, under the treaty of Paris of December 10, 1898, of all "buildings, wharves, barracks, forts, structures, public which, in conformity with law, belong to the Crown of Spain," especially in view the public domain, and as such belong to of the further stipulation protecting and safeguarding the property and property rights of municipal corporations precisely as were those of individuals. reason which controlled the court in refusing to reopen and allow a defense in the equity cause were filed as its reasons for sustaining the demurrer and finally dismissing the bill in this case. As those rea-highways, and other immovable property sons, however, did not at all concern themselves with the grounds of demurrer sepa rately stated, but solely related to the right to stay, by the process of injunction, the execution of the unsatisfied judgment and the enforcement of the equity decree, we think it plainly results that the decree rendered in this case must be reversed, because the two cases in the mind of the court were so inseparably united that the error which led the court below to refuse in the other case the right to reopen the cause controlled its action in this. The decree is therefore reversed and the cause remanded for furthur proceedings not inconsistent with this opinion. (220 U. S. 345.) [Ed. Note.-For other cases, see Territories, Dec. Dig. § 6.*] MUNICIPAL CORPORATIONS (§ 48*)-RESULT 4. The present city of Manila, reincorporated by the Philippine Commission with substantially the same municipal powers, area, and inhabitants as the Spanish municipality of the same name, is liable upon municipal obligations incurred prior to the cession of the Philippine Islands by the treaty of Paris of December 10, 1898, to the United States. [Ed. Note.-For other cases, see Municipal Cor VERISIMO VASQUEZ VILAS, Plff. in porations, Dec. Dig. § 48.*] Err. and Appt., 1. Judgments of the supreme court of the Philippine Islands denying any liability of the present city of Manila upon municipal obligations incurred prior to the cession of the Philippine Islands to the United States by the treaty of December 10, 1898 (30 Stat. at L. 1754), are rendered in cases in which a treaty of the United States is involved, MUNICIPAL CORPORATIONS (§ 254*)-CON- 5. A claim under a contract to supply coal to a municipality for use in operating its waterworks system, apparently entered into upon the general credit of the city, does not constitute a charge upon the property and funds held in trust by the city to be devoted to the establishment and maintenance of such system. [Ed. Note.-For other cases, see Municipal Corporations, Dec. Dig. § 254.*] MUNICIPAL CORPORATIONS (§ 254*)-CONTRACTS-INDIVIDUAL LIABILITY OF TRUS April 3, 1911. within the meaning of the act of July 1. Argued February 24 and 27, 1911. Decided 1902 (32 Stat. at L. 695, chap. 1369, U. S. Comp. Stat. Supp. 1909, p. 226), § 10, gov. erning the appellate jurisdiction of the Federal Supreme Court, although no distinct claim under that treaty was made in the pleadings. [Ed. Note.-For other cases, see Courts, Dec. Dig. § 387.*] TERRITORIES (§ 5*) – CESSIONS OR CONQUESTS-DISSOLUTION OF MUNICIPALITY. 2. A municipal corporation is not totally dissolved as a mere consequence of military occupation or territorial cession. [EA Note. For other cases, see Territories, Dec. Dig. § 5.*] I' N ERROR to and APPEAL from the Supreme Court of the Philippine Islands to review decrees which affirmed decrees of the Court of First Instance of the City of Manila, sustaining demurrers to and dismissing complaints which seek to establish the liability of the city of Manila for obligations incurred prior to the cession of the Philippine Islands. Reversed with directions to overrule the demurrers. Also an *For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes $352 *351 A PPEAL from the Supreme Court of the Philippine Islands to review a judgment which affirmed a judgment of the Court of First Instance in the City of Manila in favor of defendant in an action to enforce the liability of the city of Manila for a debt incurred for coal supplied for its waterworks system prior to the cession of the Philippine Islands to the United States. Reversed and remanded with directions to render judgment for plaintiff. See same case below, 9 Philippine, 513. The facts are stated in the opinion. Messrs. Frederic R. Coudert, Howard Thayer Kingsbury, Paul Fuller, and Harry Weston Van Dyke for plaintiffs in error and appellants. Messrs. Paul Charlton and Isaac Adams for appellee. causes of action. There is identity of purpose between the Spanish and American charters and substantial identity of municipal powers. The area and the inhabitants incorporated are substantially the same. But for the change of sovereignty which has occurred under the treaty of Paris, the question of the liability of the city under its new charter for the debts of the old city would seem to be of easy solution. The principal question would therefore seem to be the legal consequence of the cession referred to upon the property rights and civil obligations of the city incurred before the cession. And so the question was made to turn in the court below upon the consequence of a change in sovereignty and a reincorporation of the city by the substituted sovereignty. This disposes of the question of the jurisdiction of this court, grounded upon the *Mr. Justice Lurton delivered the opin- absence from the petition of the plaintiffs ion of the court: The plaintiffs in error, who were plaintiffs below, are creditors of the city of Manila as it existed before the cession of the Philippine Islands to the United States by the treaty of Paris, December 10, 1898 [30 Stat. at L. 1754]. Upon the theory that the city, under its present charter from the government of the Philippine Islands, is the same juristic person and liable upon the obligations of the old city, these actions were brought against it. The supreme court of the Philippine Islands denied relief, holding that the present municipality is a totally different corporate entity, and in no way liable for the debts of the Spanish municipality. The fundamental question is whether, notwithstanding the cession of the Philippine Islands to the United States, followed by a reincorporation of the city, the present municipality is liable for the obligations of the city incurred prior to the cession to the United States. We shall confine ourselves to the question whether the plaintiffs in error are entitled to judgments against the city upon their several claims. Whether there is a remedy adequate to the collection when reduced to judgment is not presented by the record. But whether there is or is not a remedy affords no reason why the plaintiffs in error may not reduce their claims to judgment. Mt. Pleasant v. Beckwith, 100 U. S. 514, 530, 25 L. ed. 699, 703. The city confessedly may be sued under its existing charter, and that implies at least a right to judgment if they establish their demands. The city as now incorporated has succeeded to all of the property rights of the old city and to the right to enforce all of its 31 S. C.-27. *353 of any distinct claim under the treaty of es Paris, since, under § 10 of the Philippine organic act* of July 1, 1902 [32 Stat. at L. 695, chap. 1369, U. S. Comp. Stat. Supp. 1909, p. 226], this court is given jurisdiction to review any final decree or judgment of the supreme court of the Philippine Islands where any treaty of the United States "is involved." That treaty was necessarily "involved," since neither the court below nor this court can determine the continuity of the municipality nor the liability of the city as it now exists for the obligation of the old city, without considering the effect of the change of sovereignty resulting from that treaty. Reavis v. Fianza, 215 U. S. 16, 22, 54 L. ed. 72, 75, 30 Sup. Ct. Rep. 1. See The historical continuity of a municipality embracing the inhabitants of the territory now occupied by the city of Manila is impressive. Before the conquest of the Philippine Islands by Spain, Manila existed. The Spaniards found on the spot now occupied a populous and fortified community of Moros. In 1571 they occupied what was then and is now known as Manila, and established it as a municipal corporation. In 1574 there was conferred upon it the title of "Illustrious and ever loyal city of Manila." From time to time there occurred amendments, and, on January 19, 1894, there was a reorganization of the city government under a royal decree of that date. Under that charter there was power to incur debts for municipal purposes and power to sue and be sued. The obligations here in suit were incurred under the charter referred to, and are obviously obligations strictly within the provision of the municipal power. To pay judgments upon such debts it was the duty of the ayuntamiento *354 of Manila, which was the corporate name | force at the time of the passage of this act, of the old city, to make provision in its and not inconsistent herewith," until modibudget. fied or repealed by ordinances passed under this act. The contention that the liability of the city upon such obligations was destroyed by a mere change of sovereignty is obviously one which is without a shadow of moral force, and, if true, must result from settled principles of rigid law. While the contracts from which the claims in suit resulted were in progress, war between the United States and Spain ensued. On August 13, 1898, the city was occupied by the forces of this government, and its affairs conducted by military authority. On July 31, 1901, the present incorporating act was passed, and the city since that time has been an autonomous municipality. The charter in force is act 183 of the Philippine Commission, and now may be found as chapters 68 to 75 of the compiled acts of the Philippine Commission. The 1st section of the charter of 1901 reads as follows: Section 72 is the repealing clause, and provides for the repeal of "all acts, orders, and regulations" which are inconsistent with the provisions of the act. The charter contains no reference to the obligations or contracts of the old city. If we understand the argument against the liability here asserted, it proceeds mainly upon the theory that inasmuch as the predecessor of the present city, the ayuntamiento of Manila, was a corporate entity created by the Spanish government, when the sovereignty of Spain in the islands was terminated by the treaty of cession, if not by the capitulation of August 13, 1898, the municipality ipso facto disappeared for all purposes. This conclusion is reached upon the supposed analogy to the doctrine of principal and agent, the death of the princi"The inhabitants of the city of Manila, pal ending the agency. So complete is the residing within the territory described in supposed death and annihilation of a mu§ 2 of this act, are hereby constituted a mu- nicipal entity by extinction of sovereignty nicipality, which shall be known as the city of the creating state that it was said in one of Manila, and by that name shall have per- of the opinions below that all of the public petual succession, and shall possess all the property of Manila passed to the United rights of property herein granted or hereto-States, "for a consideration, which fore enjoyed and possessed by the city of Manila as organized under Spanish sovereignty." The boundaries described in § 2 include substantially the area and inhabitants which had theretofore constituted the old city. By § 4 of the same act, the government of the city was invested in a municipal board. Section 16 grants certain legislative powers to the board, and provides that it shall "take possession of all lands, buildings, offices, books, papers, records, moneys, credits, securities, assets, accounts, or other property or rights belonging to the former city of Manila, or pertaining to the business or interests thereof, and, subject to the provisions herein set forth, shall have control of all its property except the building known as the ayuntamiento, provision for the occupation and control of which is made in § 15 of this act; shall collect taxes and other revenues, and apply the same in accordance with appropriations, as herein before provided, to the payment of the municipal expenses; shall supervise and control the discharge of official duties by subordinates; shall institute judicial proceedings to recover property and* funds of the city wherever found, or otherwise to protect the interests of the city, and shall defend all suits against the city," etc. Section 69 of the charter expressly preserved "all city ordinances and orders in was paid," and that the United States was therefore justified in creating an absolutely new municipality, and endowing it with all of the assets of the defunct city, free from any obligation to the creditors of that city. And so the matter was dismissed in the Trigas Case by the court of first instance, by the suggestion that "the plaintiff may have a claim against the Crown of Spain, which has received from the United States payment for that done by the plaintiff." We are unable to agree with the argument. It loses sight of the dual character of municipal corporations. They exercise powers which are governmental and powers which are of a private or business character. In the one character a municipal corporation is a governmental subdivision, and for that purpose exercises by delegation a part of the sovereignty of the state. In the other character it is a mere legal entity or juristic person. In the latter character it stands for the community in the administration of local affairs wholly beyond the sphere of the public purposes for which its governmental powers are conferred. The distinction is observed in South Carolina v. United States, 199 U. S. 437, 461, 50 L. ed. 261, 269, 26 Sup. Ct. Rep. 110, 4 A. & E. Ann. Cas. 737, where Lloyd v. New York, 5 N. Y. 369, 374, 55 Am. Dec. 347, and Western Sav. Fund Soc. v. Philadelphia, 31 Pa. 175, 72 Am. Dec. 730, are cited and ap *356 |