tain coupons of bonds of the town of Coloma, there was a recital on the bonds that they were issued in accordance with a vote of the electors of said township of Coloma, signed by a supervisor and town clerk, and recovery was resisted mainly upon the alleged ground of a want of power in the officers of the town to issue the bonds, because the legal voters of the town had not been notified to vote upon the question of the subscription for which the bonds were issued. It was held that the recital estopped the town from the defense offered to be made.27 Again, where the law under consideration provided that the amount of bonds sold by any township should not be above such a sum as would require a levy of more than one per cent. per annum on the taxable property of the township to pay the interest, and objection was made that the issue of the bonds in controversy was in excess of this amount, the court said that the extrinsic facts were referred to the inquiry and determination of the board of county commissioners, and were determined before the bonds came into the plaintiff's hands; and that “he was, therefore, not bound when he purchased, to look beyond the act of the Legislature, and the recitals which the bonds contained." 28

§ 1543. So it has been held that it was no defense against bona fide holders of railroad bonds that the mortgage given to secure them was executed out of the State, instead of in it, as should have been the case.29 So that, where there had been a popular

case would seem to be that a bona fide purchaser of the bonds had a right to presume that the condition annexed by the city as to the $1,000,000 of other subscriptions had been complied with, and thus viewed, the judgment of the court rests upon grounds whose soundness cannot admit of question. It is not an authority upon its essential facts in favor of the proposition that, if the bonds had been issued without any vote, or attempt at a vote, they would have been binding in the absence of estoppel other than by recitals or other ground of liability." But see ante, § 538.

27. Town of Coloma v. Eaves, 92 U. S. (2 Otto) 484. See ante, § 1537 and note. But see Broadway Sav. Inst. v. Town of Pelham, 83 Hun, 96, 31 N. Y. Supp. 402; Wesson v. Town of Mt. Vernon, 39 C. C. A. 301, 98 Fed. 804; Rondot v. Rogers Township, 39 C. C. A. 462, 99 Fed. 202; Pickens Township v. Post, 41 C. C. A. 1, 99 Fed. 659; Hughes County v. Livingston, 43 C. C. A. 541, 104 Fed. 306.

28. Marcy v. Township of Oswego, 92 U. S. (2 Otto) 641. See also Humboldt Township v. Long, 92 U. S. (2 Otto) 645. But see Mosher v. Ind. School District, 44 Iowa, 122; City of South St. Paul v. Lamprecht Bros., 31 C. C. A. 585, 88 Fed. 449.

29. Galveston R. Co. v. Cowdrey, 11 Wall. 478 (1870).

66

vote in favor of a county subscription, the county could not resist payment of bonds issued in pursuance thereof, on the ground that the election had been ordered by the County Court instead of by the board of supervisors, as provided by law.30 So that, where the town of Grand Chute had been authorized to subscribe not exceeding $10,000 to a plankroad company, in such amounts as may be declared by the board of directors of said company necessary to the completion of said road at the time of such subscription," it could not resist payment of bonds issued by the supervisors, on the ground that the directors had not declared the amounts necessary, the bonds importing on their face compliance with the act.31 So that bonds signed by a de facto judicial officer with the seal of the court could not be impeached. in the hands of an innocent holder by showing that the officer did not have title de jure to his office at the time he officiated; nor could it be shown against such holder that the company to whose stock the bonds were subscribed was not organized within the time specified in its charter.32 Where municipal authorities were empowered by statute to issue bonds bearing interest at a specified rate, it was held that their validity was not affected by the fact that the authorities came within the power conferred, and provided for a lower rate of interest.33

The provisions of a city charter that all bonds issued by the city "shall specify for what purpose they were issued" is not satisfied by a declaration on the face of the bonds that they are issued by virtue of an ordinance the date of which is given but not its title or its contents.3

34

But recitals in bonds that they are issued "in pursuance of an act of the Legislature of the State and of the city council of the city passed in pursuance thereof" do not put a purchaser of the bonds on inquiry as to the terms of the city ordinance.35

1543a. Where the Constitution of a State prohibits the counties from contracting debts except in a certain limited proportion to the rates on taxable property, the United States Supreme Court has held that recitals in the bonds made by the board of

30. Supervisors v. Schenck, 5 Wall. 773.

31. Grand Chute v. Winegar, 15 Wall. 356 (1872).

32. Ralls County v. Douglass, 4 Morrison's Transcript, No. 1, p. 102.

33. Omaha Nat. Bank v. City of Omaha, 15 Nebr. 333.

34. Barnett v. Denison, 145 U. S. 135, 12 Sup. Ct. Rep. 819.

35. Evansville, City of, v. Dennett, 165 U. S. 434, 16 Sup. Ct. Rep. 613.

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commissioners were conclusive in favor of bona fide holders of the bonds, even though they were issued in excess of the limit prescribed by the Constitution.36

§ 1544. Cases in 'United States Supreme Court qualifying the general doctrines before stated. Illustrating the second series of propositions: It appeared that the Legislature of Illinois had authorized a county subscription to be made to any railroad corporation of the State, provided that a majority of the qualified voters of the county should vote for the same, and required that the notices calling for the election should specify the company in which stock was proposed to be subscribed. The powers of the county were only to be exercised by the board of supervisors, or by resolution by them adopted. The voters of the county authorized a subscription to the "Mississippi and Wabash R. R. Company," and to the "Petersburgh and Springfield Company,' and the supervisors authorized their clerk to issue the bonds to the first-named corporation. The clerk of the County Court, acting as their clerk, issued bonds to " The Central Division of the Mississippi and Wabash R. R. Company," which was a different corporation from the original company. By various acts the supervisors recognized the validity of these bonds by allowing interest on them, levying a tax to meet it, and appointing agents to represent the stock received by the county for the bonds in the corporate meetings, and also paid two of the bonds in full. The Supreme Court held the bonds invalid, on the ground that the supervisors, having had no authority to issue the bonds to the corporation, because the condition precedent of a popular vote had not been fulfilled, could not, therefore, by any act ratify the subscription when made by their clerk. In another case, where the Missouri

37

36. Gunnison County v. Rollins, 173 U. S. 255, 19 Sup. Ct. Rep. 390. See also Bush v. Litchfield, 102 U. S. 278; Orleans v. Platt, 99 U. S. 676; Northern Bank v. Porter Township, 110 U. S. 608, 4 Sup. Ct. Rep. 254; Dixon Co. v. Field, 111 U. S. 83, 4 Sup. Ct. Rep. 315; Lake County v. Graham, 130 U. S. 674, 9 Sup. Ct. Rep. 654.

37. Marsh v. Fulton County, 10 Wall. 683 (1870), Field, J., delivering the unanimous opinion, saying: "But it is earnestly contended that the plaintiff was an innocent purchaser of the bonds without notice of their invalidity. If such were the fact, we do not perceive how it could affect the liability of the county of Fulton. This is not a case where the party executing the instruments possessed a general capacity to contract, and where the instruments might, for such reason, be taken without special inquiry into their validity. It is a case where the power to contract never existed—where the

statute declared that before a municipal bond thereafter issued should obtain validity or be negotiated, it should be presented to

instruments might, with equal authority, have been issued by any other citizen of the county. It is a case, too, where the holder was bound to look to the action of the officers of the county and ascertain whether the law had been so far followed by them as to justify the issue of the bonds. The authority to contract must exist before any protection as an innocent purchaser can be claimed by the holder. This is the law even as respects commercial paper, alleged to have been issued under a delegated authority, and is stated in the case of Floyd Acceptances. In speaking of notes and bills issued or accepted by an agent, acting under a general or special power, the court says: 'In each case the person dealing with the agent, knowing that he acts only by virtue of a delegated power, must, at his peril, see that the paper on which he relies comes within the power under which the agent acts. And this applies to every person who takes the paper afterward; for it is to be kept in mind that the protection which commercial usage throws around negotiable paper cannot be used to establish the authority by which it was originally issued. It is also contended that if the bonds in suit were issued without authority, their issue was subsequently ratified, and various acts of the supervisors of the county are cited in support of the supposed ratification. These acts fall very far short of showing any attempted ratification even by the supervisors. But the answer to them all is, that the power of ratification did not lie with the supervisors. A ratification is, in its effect upon the act of an agent, equivalent to the possession by him of a previous authority. It operates upon the act ratified in the same manner as though the authority of the agent to do the act existed originally. It follows that a ratification can only be made when the party ratifying possesses the power to perform the act ratified. The supervisors possessed no authority to make the subscription or issue the bonds in the first instance without the previous sanction of the qualified voters of the county. The supervisors, in that particular, were the mere agents of the county. They could not, therefore, ratify a subscription without a vote of the county, because they could not make a subscription in the first instance without such authorization. It would be absurd to say that they could, without such vote, by simple expressions of approval, or in some other indirect way, give validity to acts when they were directly, in terms, prohibited by statute from doing those acts until after such vote was had. That would be equivalent to saying that an agent, not having the power to do a particular act for his principal, could give validity to such act by its indirect recognition. We do not mean to intimate that liabilities may not be incurred by counties independent of the statute. Undoubtedly they may be. The obligation to do justice rests upon all persons, natural and artificial, and if a county obtains the money or property of others without authority, the law, independent of any statute, will compel restitution or compensation. But this is a very different thing from enforcing an obligation attempted to be created in one way, when the statute declares that it shall only be created in another and different way." See also Bissell v. City of Kankakee, 64 Ill. 249; McClure v. Township of Oxford, 94 U. S. (4 Otto) 432; German Sav. Bank v. Franklin County, 128 U. S. 526; Purdy v. Lansing, 128 U. S. 557.

the State Auditor, who should register it, and certify by indorsement that all the conditions of the laws and of the contract under which it was authorized to be issued have been complied with, the Supreme Court of the United States held that unless the bonds were so indorsed, the holder could not maintain an action upon them; and, further, that no antedating of the bonds, so as to give them the appearance of having been executed before the statutory requirement went into effect, could cure the infirmity. The fact that the act under which bonds are issued is erroneously referred to in their recital, will not render them void. Where bonds were issued under a Colorado statute, in excess of the constitutional limitation, but reciting upon their faces fuil compliance with the requirements of the statute, it was held that the county was not estopped to allege that the bonds were issued in violation of the provisions of the Constitution.*

39

§ 1544a. Power of townships. A township has no inherent power to contract debts, and issue coupon bonds, and a statute declaring it "lawful for the agent of any corporate body" to subscribe to a railroad will not create such a power in such a municipal organization. Such a provision, it has been held, manifestly referred to private corporations.*1

SECTION IV.

HOW INVALIDITY OF THE BOND IS CURED BY ACQUIESCENCE OR RATIFICATION OF THE MUNICIPALITY.

§ 1545. There are four ways, according to the decisions of the United States Supreme Court and of some of the State courts, in which a municipal corporation may estop itself from objecting to the validity of corporate securities:

(1) By its members failing to interfere and enjoin their issue when they are about to be executed, and thereby acquiescing."

38. Anthony v. County of Jasper, 101 U. S. (11 Otto) 693. The case of Town of Weganwega v. Ayling, 99 U. S. (9 Otto) 112, is distinguished. 39. Commissioners, etc. v. January, 94 U. S. (4 Otto) 202. 40. Lake County v. Graham, 130 U. S. 674. In New Providence v. Halsey, 117 U. S. 339, it was held that the mere act of commissioners in issuing county bonds was equivalent to averring that the issue was within the prescribed limit.

41. Township of East Oakland v. Skinner, 94 U. S. (4 Otto) 257.

42. Supervisors v. Schenck, 5 Wall. 581. In Kentucky it has been held that parties are estopped from denying the constitutionality of a statute by