one also which must be carefully followed by the municipality in all essential particulars, or the subscription or security will be void. And while mere irregularities of action, not going to the essentials of the power, would not prevent parties who had acted in reliance upon the securities enforcing them, yet as the doings. of these corporations are matters of public record, and they have no general power to issue negotiable securities,2 any one who becomes holder of such securities, even though they be negotiable in form, will take them with constructive notice of any want of power in the corporation to issue them, and cannot enforce them when their issue was unauthorized.8 New London, 67 Wis. 416. There are decisions in the Supreme Court of the United States which appear to be to the contrary. The city charter of Muscatine conferred in detail the usual powers, and then authorized the city "to borrow money for any object in its discretion," after a vote of the city in favor of the loan. In Meyer v. Muscatine, 1 Wall. 384, the court seem to have construed this clause as authorizing a loan for any object whatever; though such phrases are understood usually to be confined in their scope to the specific objects before enumerated; or at least to those embraced within the ordinary functions of municipal governments. See Lafayette v. Cox, 5 Ind. 38. The case in 1 Wallace was followed in Rogers v. Burlington, 3 Wall. 654, four justices dissenting. See also Mitchell v. Burlington, 4 Wall. 270. A municipal corporation having power to borrow money, it is held, may make its obligations payable wherever it shall agree. Meyer v. Muscatine, 1 Wall. 384; Lynde v. County, 16 Wall. 6. But some cases hold that such obligations can only be made payable at the corporation treasury, unless there is express legislative authority to make them payable else where. People v. Tazewell County, 22 Ill. 147; Pekin». Reynolds, 31 Ill. 529. If the power to issue bonds is given, power to tax to meet them is impliedly given, unless a clear intent to the contrary is shown. Quincy v. Jackson, 113 U. S. 332. 1 See Harding v. Rockford, &c. R. R. Co., 65 Ill. 90: Dunnovan v. Green, 57 Ill. 63; Springfield, &c. R. R. Co. v. Cold Spring, 72 Ill. 603; People v. County Board of Cass, 77 Ill. 438; Cairo, &c. R. R. Co. v. Sparta, 77 Ill. 505; George v. Oxford, 16 Kan. 72; Hamlin v. Meadville, 6 Neb. 227; McClure v. Oxford, 94 U. S. 429; Bates Co. v. Winters, 97 U. S. 83; Buchanan v. Litchfield, 102 U. S. 278; Bissell v. Spring Valley, 110 U. S. 162. 2 Thomson v. Lee County, 3 Wall. 327; Police Jury v. Britton, 15 Wall. 566; Wells v. Supervisors, 102 U. S. 625; Claiborne Co. v. Brooks, 111 U. S. 400; Carter Co. v. Sinton, 120 U. S. 517; Starin v. Genoa, 23 N. Y. 439; People v. Supervisors, 11 Cal. 170; Dively v. Cedar Falls, 21 Iowa, 565; Smith v. Cheshire, 13 Gray, 318; People v. Gray, 23 Cal. 125. See Thomas v. Richmond, 12 Wall. 349; Katzenberger v. Aberdeen, 121 U. S. 172; Emery v. Mariaville, 56 Me. 815; Sherrard v. Lafayette Co., 3 Dill. 236. The power to tax in aid of railroads does not necessarily give power to issue negotiable bonds. Concord v. Robinson, 121 U. S. 165; Kelly v. Milan, 127 U. S. 139. Compare Savannah v. Kelly, 108 U. S. 184; Richmond v. McGirr, 78 Ind. 192. 8 There is considerable confusion in the cases on this subject. If the corporation has no authority to issue negotiable paper, or if the officers who assume to do so have no power under the charter for that purpose, there can be no doubt that the defence of want of power may be made by the corporation in any suit brought on the securities. Smith v. Cheshire, 13 Gray, 318; Gould v. Sterling, 23 N. Y. 456; Andover v. Grafton, 7 N. H. 298; Clark v. Des Moines, 19 Iowa, 199; M'Pherson . Foster, 43 Iowa, 48; Bissell v. Kankakee, 64 Ill. 249; Big Grove v. Wells, 65 Ill. 263; Wade v. La Moille, 112 Ill. 79; Elmwood ". Marcy, 92 U. S. 289; Concord v. Ports. mouth Savings Bank, 92 U. S. 625; St. In some of the cases involving the validity of the subscriptions made or bonds issued by municipal corporations in aid of internal Joseph v. Rogers, 16 Wall. 644; Pendleton Co. v. Amy, 13 Wall. 297; Marsh v. Fulton Co., 10 Wall. 676; East Oak land v. Skinner, 94 U. S. 255; South Ottawa v. Perkins, 94 U. S. 260; McClure v. Oxford, 94 U. S. 429. And in any case, if the holder has received the securities with notice of any valid defence, he takes them subject thereto. If the issue is without authority, the doctrine of protection to a purchaser in good faith has no application. Merchants' Bank v. Bergen Co., 115 U. S. 384. But where the corporation has power to issue negotiable paper in some cases, and its officers have assumed to do so in cases not within the charter, whether a bona fide holder would be chargeable with notice of the want of authority in the particular case, or on the other hand, would be entitled to rely on the securities themselves as sufficient evidence that they were properly issued when nothing appeared on their face to apprise him of the contrary, is a question still open to some dispute. In Stoney v. American Life Iusurance Co., 11 Paige, 635, it was held that a negotiable security of a corporation which upon its face appears to have been duly issued by such corporation, and in conformity with the provisions of its charter, is valid in the hands of a bona fide holder thereof without notice, although such se. curity was in fact issued for a purpose, and at a place not authorized by the charter of the company, and in violation of the laws of the State where it was actually issued. In Gelpcke v. Dubuque, 1 Wall. 175, 203, the law is stated as follows: "When a corporation has power, under any circumstances, to issue negotiable securities, the bona fide holder has a right to presume they were issued under the circumstances which give the requisite authority, and they are no more liable to be impeached for any infirmity in the hands of such holder than any other commercial paper." See also Commissioners of Daviess Co. v. Aspinwall, 21 How. 364; Bissell v. Jeffersonville, 24 How. 287; Lexington v. Butler, 14 Wall. 282; Moran v. Commissioners of Miami Co., 2 Black, 722; De Voss v. Richmond, 18 Gratt. 338; San Antonio v. Lane, 32 Tex. 405; State v. Commissioners, 37 Ohio St. 526. In Farmers' & Mechanics' Bank v. Butchers' & Drovers' Bank, 16 N. Y. 125, 129, it is said: "A citizen who deals directly with a corporation, or who takes its negotiable paper, is presumed to know the extent of its corporate power. But when the paper is, upon its face, in all respects such as the corporation has authority to issue, and its only defect consists in some extrinsic fact, such as the purpose or object for which it was issued, to hold that the person taking the paper must inquire as to such extraneous fact, of the existence of which he is in no way apprised, would obviously conflict with the whole policy of the law in regard to negotiable paper." In Madison & Indianapolis Railroad Co. v. The Norwich Savings Society, 24 Ind. 457, this doctrine is approved; and a distinction made, in the earlier case of Smead v. Indianapolis, &c. Railroad Co., 11 Ind. 104, between paper executed ultra vires and that executed within the power of the corporation, but, by an abuse of the power in that particular instance, was repudiated. In St. Joseph v. Rogers, 16 Wall. 644, it was decided that where power is conferred to issue bonds, but only in & particular manner, or subject to certain regulations, conditions, or qualifications, and the bonds are actually issued with recitals showing compliance with the law, the proof that any of the recitals are incorrect will not constitute a defence to a suit on the bonds, "if it appears that it was the sole province of the municipal officers who executed the bonds to decide whether or not there had been an antecedent compliance with the regulation, condition, or qualification which it is alleged was not fulfilled." And see Moran v. Commissioners of Miami Co., 2 Black, 722; Pendleton Co. v. Amy, 13 Wall 297; Chute v. Winegar, 15 Wall. 355 Coloma v. Eaves, 92 U. S. 484; Venice v. Murdoch, 92 U. S. 494; Marcy v. Oswego, 92 U. S. 637; Humboldt v. Long, 92 U. S. 642; Douglas Co. v. Bolles, 94 U. S. 104; Johnson Co. v. January, 94 U. S. 202; Scotland Co. v. Thomas, 94 U. S. 682; Wilson v. Salamanca, 99 U. S. 499; Menasha v. Hazard, 102 U. S. 81; Lin improvements, there has been occasion to consider clauses in the State constitutions designed to limit the power of the legislature coln v. Iron Co., 103 U. S. 412; Bonham proper and legitimate business, were void v. Needles, 103 U. S. 648. That neither in the hands of the plaintiff, although reirregularities in issuing bonds nor fraud ceived by him without actual notice of in obtaining them will be a defence in the their consideration. This decision was hands of bona fide holders, see foregoing affirmed in 3 N. Y. 430. In Gould v. cases, and also Maxcy v. Williamson Co., Town of Stirling, 23 N. Y. 456, it was 72 Ill. 207; Nicolay v. St. Clair, 3 Dillon, held that where a town had issued nego163; East Lincoln v. Davenport, 94 U. S. tiable bonds, which could only be issued 801; Copper v. Mayor, &c., 44 N. J. L. when the written assent of two-thirds of 634, Aberdeen v. Sykes, 59 Miss. 236; the resident persons taxed in the town had Lynchburg v. Slaughter, 75 Va. 57. See, been obtained and filed in the county further, that there may be an estoppel clerk's office, the bonds issued without by the recitals in favor of a bona fide such assent were invalid, and that the holder, Ottawa v. Nat. Bank, 105 U. S. purchaser of them could not rely upon 842; Pana v. Bowler, 107 U. S. 529; the recital in the bonds that such assent Sherman Co. v. Simons, 109 U. S. 785; had been obtained, but must ascertain for New Providence v. Halsey, 117 U. S. 336; himself at his peril. Say the court: "One Oregon v. Jennings, 119 U. S. 74; State who takes a negotiable promissory note v. Montgomery, 74 Ala. 226; Shurtleff or bill of exchange, purporting to be made v. Wiscasset, 74 Me. 130. Such estop by an agent, is bound to inquire as to the pel only applies to matters of procedure power of the agent. Where the agent is which the corporate officers had author- appointed and the power conferred, but ity to determine and certify. It cannot the right to exercise the power has been supply the lack of statutory authority: made to depend upon the existence of facts Northern Bank v. Porter Township, 110 of which the agent may naturally be supU. S. 608; Dixon Co. v. Field, 111 U. S. posed to be in an especial manner cogni83; School District v. Stone, 106 U. S. zant, the bona fide holder is protected; 183; Parkersburg v. Brown, 106 U. S. because he is presumed to have taken the 487; Hayes v. Holly Springs, 114 U. S. paper upon the faith of the representa120; nor avoid the effect of actual knowl- tion of the agent as to those facts. The edge of invalidity. Ottawa v. Carey, 108 mere fact of executing the note or bill U. S. 110. A holder cannot recover if amounts of itself, in such a case, to a repthe bonds show on their face their issue resentation by the agent to every person under a void act: Cole v. La Grange, who may take the paper that the requisite 113 U. S. 1; or show non-compliance with facts exist. But the holder has no such an enabling act: Gilson v. Dayton, 123 protection in regard to the existence of U. S. 59; or if, when they contain no the power itself. In that respect the subrecitals, their invalidity could be learned sequent bona fide holder is in no better sitfrom the records. Merchants' Bank v. uation than the payee, except in so far as Bergen Co., 115 U. S. 384; Daviess Co. the latter would appear of necessity to v. Dickinson, 117 U. S. 657. In Hal have had cognizance of facts which the stead v. Mayor, &c. of New York, 5 Barb. other cannot [must ?] be presumed to have 218, action was brought upon warrants known." And the case is distinguished drawn by the corporation of New York from that of the Farmers' & Mechanics' upon its treasurer, not in the course Bank v. Butchers' & Drovers' Bank, 16 of its proper and legitimate business. It N.Y. 125, where the extrinsic fact affecting was held that the corporation under its the authority related to the state of accharter had no general power to issue counts between the bank and one of its negotiable paper, though, not being pro- customers, which could only be known to hibited by law, it might do so for any the teller and other officers of the bank. debt contracted in the course of its See also Brady v. Mayor, &c. of New York, proper legitimate business. But it was 2 Bosw. 173; Hopple v. Brown Township, also held that any negotiable securities 13 Ohio St. 311; Veeder v. Lima, 19 Wis. not issued by the defendants in their 280. The subject is reviewed in Clark v. to incur indebtedness on behalf of the State, and which clauses, it has been urged, were equally imperative in restraining indebtedness on behalf of the several political divisions of the State. The Constitution of Kentucky prohibited any act of the legislature authorizing any debt to be contracted on behalf of the Commonwealth, except for certain specified purposes, unless provision should be made in such act for an annual tax sufficient to pay such debt within thirty years; and the act was not to have effect unless approved by the people. It was contended that this provision was not to apply to the Commonwealth as a mere ideal abstraction, unconnected with her citizens and her soil, but to the Commonwealth as composed of her people, and their territorial Des Moines, 19 Iowa, 199. The action was brought upon city warrants, negotiable in form, and of which the plaintiff claimed to be bona fide assignee, without notice of any defects. The city offered to show that the warrants were issued without any authority from the city council and without any vote of the council authorizing the same. It was held that the evidence should have been admitted, and that it would constitute a complete defence. See further, Head v. Providence, &c. Co., 2 Cranch, 127; Royal British Bank v. Turquand, 6 El. & Bl. 327; Knox County v. Aspinwall, 21 How. 539: Bissell ». Jeffersonville, 24 How. 287; Sanborn v. Deerfield, 2 N. H. 251; Alleghany City v. McClurkan, 14 Pa. St. 81; Morris Canal & Banking Co. v. Fisher, 9 N. J. Eq. 667; Clapp v. Cedar Co., 5 Iowa, 15; Commissioners, &c. v. Cox, 6 Ind. 403; Madison & Indianapolis R. R. Co. v. Norwich Savings Society, 24 Ind. 457; Bird v. Daggett, 97 Mass. 494. It is of course impossible to reconcile these cases. In Cagwin v Hancock, 84 N. Y. 532; s. c. 5 Am. & Eng. R. R. Cas. 150, on a review of the New York authorities it is declared to be the law of that State that there can never be a bona fide holder of town bonds, within the meaning of the law applicable to negotiable paper, as such bonds are always issued under special statutory authority, and are only valid when the statute is complied with. To the same effect are Craig v. Andes, 93 N. Y. 405, and Lyons v. Chamberlain, 89 N. Y. 578. See Fish v. Kenosha, 26 Wis. 23. That the powers of the agents of municipal corporations are matters of record, and the corporation not liable for an unauthorized act, see further Baltimore v. Eschbach, 18 Md. 276; Johnson v. Common Council, 16 Ind. 227. That bonds voted to one railroad company and issued to another are void, see Big Grove v. Wells, 65 Ill. 203. Those who deal with a corporation must take notice of the restrictions in its charter, or in the general law, regarding the making of contracts. Brady. Mayor, &c. of New York, 2 Bosw. 173; s. c. 20 N. Y. 312; Swift v. Williamsburg, 24 Barb. 427 ; Zabriskie v. Cleveland, &c. R. R. Co., 23 How. 381; Hull v. Marshall County, 12 Iowa, 142 ; Clark v. Des Moines, 19 Iowa, 199; McPherson v. Foster, 43 Iowa, 48; Marsh v. Supervisors of Fulton Co., 10 Wall. 676. If they are not valid, no subsequent ratification by the corporation can make them so. Leavenworth v. Ran kin, 2 Kan. 357. If bonds are voted upon a condition, and issued before the condition is complied with, this, as to bona fide holders, is a waiver of the condition. Chiniquy v. People, 78 Ill. 570. Compare Supervisors of Jackson v. Brush, 77 Ill. 59. In some States, after paper has been put afloat under laws which the courts of the State have sustained, it is very justly held that the validity and obligation of such paper will not be suffered to be impaired by subsequent action of the courts overruling their former conclusions. See Gelpcke v. Dubuque, 1 Wall. 175; Steines v. Franklin County, 48 Mo. 167; Osage, &c. R. R. Co v. Morgan County, 53 Mo. 156; Smith v. Clark Co., 54 Mo. 58; State v. Sutterfield, 54 Mo. 391; Columbia Co. v. King, 13 Fla. 421; Same v. Davidson, 13 Fla. 482. organizations of towns, cities, and counties, which make up the State, and that it embraced in principle every legislative act which authorized a debt to be contracted by any of the local organizations of which the Commonwealth was composed. The courts of that State held otherwise. "The clause in question," they say, "applies in terms to a debt contracted on behalf of the Commonwealth as a distinct corporate body; and the distinction between a debt on behalf of the Commonwealth, and a debt or debts on behalf of one county, or of any number of counties, is too broad and palpable to admit of the supposition that the latter class of debts was intended to be embraced by terms specifically designating the former only." The same view has been taken by the courts of Iowa, Wisconsin, Illinois, and Kansas, of the provisions in the constitutions of those States restricting the power of the legislature to contract debts on behalf of the State in aid of internal improvements; 2 but the decisions of the first-named State have since been doubted, and those in Illinois, it would seem, overruled. In Michigan it has been held that they were inapplicable to a constitution adopted with a clear purpose to preclude taxation for such enterprises.5 1 1 Slack v. Railroad Co., 13 B. Monr. 1. 2 Dubuque County v. Railroad Co., 4 Greene (Iowa), 1; Clapp v. Cedar County, 5 Iowa, 15; Clark v. Janesville, 10 Wis. 136; Bushnell v. Beloit, 10 Wis. 195; Pretty man v. Supervisors, 19 Ill. 406; Robertson v. Rockford, 21 Ill. 451; Johnson v. Stark County, 24 Ill. 75; Perkins v. Lewis, 24 Ill. 208; Butler v. Dunham, 27 Ill. 474; Leavenworth Co. v. Miller, 7 Kan. 479. 8 State". Wapello County, 13 Iowa, 388. And see People v. Supervisor, &c., 16 Mich. 254. 4 In People v. Mayor, &c. of Chicago, 51 Ill. 17, 35, it is held expressly that the provision of the State constitution prohibiting the State from creating a debt exceeding fifty thousand dollars without the consent of the people manifested at a general election, would preclude the State from creating a like debt against a municipal corporation, except upon the like conditions. And it was pertinently said: "The protection of the whole implies necessarily the protection of all its organized parts, and the whole cannot be secure while all or any of its parts are exposed to danger. What is the real value of this provision of the constitution if the legislature, inhibited from in - curring a debt beyond fifty thousand dollars on behalf of the State, may force a debt tenfold or one hundred-fold greater for there is no limit to the power upon all the cities of the State? We can perceive none." We do not see how this can be reconciled with the earlier Illinois cases, and it is so manifestly right, it is hoped the learned court will never make the attempt. 5 The following extract from the opinion in Bay City v. State Treasurer, 23 Mich. 499, 504, is upon this point: "Our State had once before had a bitter experience of the evils of the government connecting itself with works of internal improvement. In a time of inflation and imagined prosperity, the State had contracted a large debt for the construction of a system of railroads, and the people were oppressed with heavy taxation in consequence. Moreover, for a portion of this debt they had not received what they bargained for, and they did not recognize their legal or moral obligation to pay for it. The good name and fame of the State suffered in consequence. The result of it all was that a settled conviction fastened itself upon the minds of our people, that works of internal improvement should be private enterprises; that it was not with |