6. Fairs and markets.

7. Institutions for instruction and sanitary services.

8. Municipal buildings and in general all kinds of public works necessary for the fulfillment of the services, subject to the special legislation on public works.

9. Surveillance and police.

Second. Urban and rural police; that is, all that refers to the good order and surveillance of the established municipal services, care of public roads in general, cleanliness, hygiene, and health of the town.

Third. Municipal administration, which includes the use, care, and preservation of all estates, property, and rights belonging to the municipality, and to the establishments depending therefrom, and the determination, distribution, collection, investment, and account of all receipts and imposts necessary for the execution of the municipal services.

The royal decree of November 25, 1897, establishing autonomy in Cuba and Porto Rico provides (see constitution establishing selfgovernment in Cuba and Porto Rico, Trans. Div. Ins. Affrs.):

ART. 61. The provincial and municipal laws now obtaining in the island shall continue in vogue (?) wherever not in conflict with the provisions of this decree until the insular parliament shall legislate upon the matter.

*

The decree of autonomy, however, made important changes in the existing law regarding municipal finances by providing as follows: ART. 52. * * Every legally constituted municipality shall have power to frame its own laws regarding public education, * * municipal finances. *** ART. 55. The municipalities, as well as the provincial assemblies, shall have power to freely raise the necessary revenue to cover their expenditures, with no other limitation than to make the means adopted compatible with the general system of taxation which shall obtain in the island. The resources for provincial appropriations shall be independent of municipal resources.

ART. 62. No colonial statute shall abridge the powers vested by the preceding articles (52–62) in the municipalities and provincial assemblies.

ART. 69. Every municipal measure for the purpose of contracting a loan or a municipal debt shall be without effect, unless it be assented to by a majority of the townspeople whenever one-third of the number of alderman shall so demand. The amount of the loan or debt which, according to the number of inhabitants of a township shall make the referendum proceeding necessary, shall be determined by special statute.

From the foregoing it clearly appears that under Spanish sovereignty the municipalities of Porto Rico possessed the right to make loans and issue bonds therefor.

Such rights as the municipalities possessed in matters of this character were retained upon cession of the island to the United States. The right of municipalities to enter into contracts and incur liabilities for the purpose of securing public improvements is in harmony with the character and institutions of our Government. Upon the change of sovereignty being affected, this right did not cease, but the municipalities continue to possess it.

The broad ground on which this doctrine rests is as follows:

The conqueror who acquires a province or town from the enemy acquires thereby the same rights which were possessed by the State from which it is taken. If it

formed a constituent part of the hostile State, and was fully and completely under its dominion, it passes into the power of the conqueror upon the same footing. * * * The case, however, is different where the enemy possessed only a quasi sovereignty or limited political rights over the conquered province or town. The conqueror acquires no other rights than such as belonged to the State against which he has taken up arms. "War," says Vattel, "authorizes him to possess himself of what belongs to his enemy. If he deprives that enemy of the sovereignty of a town or province he acquires it, such as it is, with all its limitations and modifications. Accordingly, care is usually taken to stipulate * that the towns and countries ceded shall retain all their liberties, privileges, and immunities.” (Halleck's Int. Law, 3d ed., chap. 34, sec. 2.)

* *

The right under consideration is of such kind and character as bring it within the protection of Article VII of the late treaty with Spain. (Halleck's Int. Law, chap. 33, sec. 12.)

In a letter to this Department, dated July 10, 1899, with reference to the Dady contract with the city of Habana, Cuba, AttorneyGeneral Griggs says (22 Op. 527-528):

By well-settled public law, upon the cession of territory by one nation to another, either following a conquest or otherwise, those internal laws and regulations which are designated as municipal continue in force and operation for the government and regulation of the affairs of the people of said territory until the new sovereignty imposes different laws or regulations. Those laws which are political in their nature and pertain to the prerogatives of the former Government immediately cease upon the transfer of sovereignty. Political and prerogative rights are not transferred to the succeeding nation. Such laws for the government of municipalities in said territory as are not dependent on the will of the former sovereign remain in force. Such laws as require for their complete execution the exercise of the will, grace, or discretion of the former sovereign would probably be held to be ineffective under the succeeding power. Cuba, however, is now under the temporary dominion of the United States, which is exercising there, under the law of belligerent right, all the powers of municipal government. In the exercise of these powers the proper authorities of the United States may change or modify either the form or the constituents of the municipal establishments; may, in place of the system and regulations that formerly prevailed, substitute new and different ones.

* * *

Upon this line, the same authorities, exercising sovereignty over the islands, have the power to provide the methods, terms, and conditions under which municipal improvements, which relate entirely to property belonging to the municipality or held by it for public use, may be carried on. The old provisions of the Spanish law may be adopted, so far as applicable, or they may be entirely dispensed with, and a new system, set up in their place. The municipal authorities of Habana, in the matter of engaging in the construction of public works, may be permitted to proceed under such law as is now applicable, if that be adequate, or they may, at the will of the military commander, be restrained from engaging in any such works.

I am of the opinion that the provisions of the Spanish municipal laws of 1896, modified by the decree of autonomy of 1897, under consideration herein, are in force in Porto Rico at the present time, and that it is unnecessary to reestablish them by order or otherwise. (American Ins. Co. v. Canter, 1 Pet., 542; Halleck's Int. Law, chap. 34, sections 14 to 24.)

The procedure to be followed in this matter is that prescribed by

the municipal law of 1896, modified by the decree of autonomy, and is as follows:

1. The project is to be submitted to the municipal council (ayuntamiento), a body consisting of the mayor (alcalde) and the councilmen, for its decision on the advisability of making the loan, and the terms and conditions thereof.

2. The matter being favorably acted upon by the ayuntamiento is then referred to the municipal board, a body composed of the ayuntamiento and the junta municipal. The junta consists of "members, in equal numbers to councilors, appointed from among the taxpayers. (Art. 67.)

3. The matter is then to be advanced under the referendum proceedings required in article 69 of the decree of autonomy, as follows:

Every municipal measure for the purpose of contracting a loan or a municipal debt shall be without effect unless it be assented to by a majority of the townspeople whenever one-third of the number of aldermen shall so demand.

4. The requirements of the Spanish law relating to publication in the Official Bulletin and the Official Gazette of public contracts and documents should be complied with.

5. Final action by municipal council, i. e., declaring existence of contract, signing, sealing, and issuing of bonds.

6. The bonds should be sold to the highest bidder and the proceeds placed in the public treasury.

In 1896 the city of San Juan, Porto Rico, negotiated a loan of 500,000 pesos, for which the bonds of the municipality were given. The procedure followed was that above outlined, excepting as to the referendum. The decree of autonomy had not been issued, and under the law of 1896 the project was approved by the provincial deputation.

In addition to selling the bonds and using the money realized to pay for the construction of public works, I believe the municipalities of Porto Rico may lawfully contract for public work and pay the contractor in bonds.

The general law of public works for the island of Porto Rico provides:

ART. 48. Municipal councils may construct their works by management or by contract, subject to the provisions of the present law concerning this matter, in connection with the works in charge of the state and of the province. (Trans. Div. of Ins. Affrs. p. 14.)

Under Spanish régime in Porto Rico, when it was desired to construct a public improvement by contract and pay therefor in bonds, the proposition in regard to the bonds and all matters relating thereto were embraced in the contract proceedings, and known as the "economic” or financial branch of the project as distinguished from the "technical" or engineering branch. The "project" pursued the course prescribed for municipal contracts, which was essentially the

same as that herein described.

Such differences as exist are not of sufficient importance to require recital and consideration at this time. The extent to which the exercise of said powers by municipalities may be regulated and controlled by the military authorities of the United States now in charge of the civil government of the island is considered to be sufficiently discussed in the quotation from the opinion of the Attorney-General.

Without determining the questions discussed in the foregoing report, the Secretary of War decided to continue in force the order prohibiting the municipalities of Porto Rico from incurring indebtedness until such time as Congress, by appropriate legislation, should make provision for the exercise of authority by municipalities and other political subdivisions in Porto Rico.

IN RE GRANTING MUNICIPAL FRANCHISES BY THE MUNICIPALITIES OF PORTO RICO.

[Submitted October 9, 1899. Case No. 105, Division of Insular Affairs, War Department.]

1. The municipalities of Porto Rico were empowered by the laws of Spain to grant concessions or franchises within their several territorial limits where the privileges granted relate to the use and occupation of streets or other property owned in fee by the municipalities.

2. The rights of ownership, including that of alienation, possessed by the municipalities under the dominion of Spain, continued under military occupancy and after the cession of the island to the United States.

3. General Orders, 188, A. G. O., 1898, is a regulation of the exercise of the right; it does not affect the existence of the right.

4. The exercise of the rights of ownership over property by municipalities in Porto Rico while under the provisional government now in charge of civil affairs in the island should be in accordance with the requirements of said General Orders, 188, A. G. O., and the Spanish laws and regulations of municipalities in force in Porto Rico at the time the island was ceded to the United States, excepting such provisions as required the assent and approval of the officers of the Crown of Spain to the proceedings under said laws and regulations.

5. The provisional government now in charge of civil affairs in Porto Rico is a part of the government of each municipality in the island as well as of the government of the island considered as a whole. It is charged with the direction and control of the municipal powers as well as of the sovereign powers of administration and execution, and in granting concessions the municipal authorities are subject to such conditions as may be imposed by the provisional government. The treaty with Spain provides that the property rights of municipalities are to be respected the same as are those of individuals. (Article 8.)

Halleck says:

A municipality has the same rights as a natural person to dispose of its property during a war, and all such transfers are prima facie as valid as if made in time of

peace.

If forbidden by the conqueror, the prohibition is an exception to the general rule of public law and must be clearly established. (Halleck's Int. Law, 3d ed., chap. 33, sec. 12; Kent's Com. on Am. Law, vol. 1, p. 92.)

Military occupation produces no effect on private ownership of property, and it follows as a necessary consequence that the ownership of such property may be changed during such occupancy precisely the same as though such occupancy did not exist. The right to alienate is incident to ownership, and, unless restricted by the victor, the right of alienation continues the same during military possession of the territory in which it is situated as it was prior to the military occupation.

The possession of this right by the municipalities of Porto Rico is fully recognized by the United States, but its exercise has been restricted by General Orders, 188, A. G. O., promulgating Executive order dated December 22, 1898, as follows:

EXECUTIVE MANSION, Washington, December 22, 1898.

Until otherwise ordered, no grants or concessions of public or corporate rights or franchises for the construction of public or quasi-public works, such as railroads, tramways, telegraph and telephone lines, waterworks, gas works, electric-light lines, etc., shall be made by any municipal or other local governmental authority or body in Porto Rico, except upon the approval of the major-general commanding the military forces of the United States in Porto Rico, who shall, before approving any such grant or concession, be so especially authorized by the Secretary of War.

WILLIAM MCKINLEY.

If prior to the treaty of cession a municipality in Porto Rico possessed property rights in and to its streets or other lands, and possessed the power of alienation, such power would continue thereafter until changed by legislative authority.

The treaty of peace with Mexico (May 30, 1848) contained the same provisions in regard to the protection of property rights as are secured by Article VIII of the treaty of peace with Spain (December 10, 1898). (U. S. Stat. L., vol. 9, p. 929, Art. VIII.)

Prior to the invasion of California the pueblo or village of San Francisco existed, and, under the laws of Mexico, was entitled to the territory within certain prescribed limits known as "pueblo lands." It had also an ayuntamiento or town council and an alcalde. The alcalde was the chief executive officer of the pueblo, and as such had authority to make grants of the pueblo lands. The exercise of this function was subject to the authority of the town council and to the higher authority of the departmental governor and assembly. The claim was made that pueblo lands which had not been granted to individuals prior to the conquest became a part of the public domain of the United States, and, as such, subject to the exclusive control and disposition of Congress. The supreme court of California held, however, that such was not the effect of the conquest, but that the lands