dornf U ICam Btl^mi Jlthratg KF 6245.A72"*" ""'"^'^''^ "'"''y * •r^at'se on the law of public securiti 3 1924 019 999 766 Cornell University Library The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31 92401 9999766 A TREATISE ON THE LAW OF PUBLIC SECURITIES By HOWARD S. ABBOTT OF THE MINNEAPOLIS BAR Author of "The Law of Municipal Corporations," "Pubhc Corporations," "Abbott's Elliott on Private Corporations," etc. CHICAGO CALLAGHAN AND COMPANY 1913 ll)l^% ^ COPYBIGHT, 1913 BY CALLAGHAN AND COMPANY TO MY MOTHER E TO HER NOBtE^XAi AS A SLIGHT TRIBUTE TO HER NOBtE^XAMPLE AND HER CONSTANT ENCOURAGEMENT AND INSPIRATION, THIS WORK IS AFFECTIONATELY INSCRIBED BY THE AUTHOR. TABLE OF CONTENTS CHAPTER I. INTRODUCTORY AND DETINITIONS. Section. Page. 1. Introductory 1 2. Definition of a Corporation 2 3. Public and Private Corporations Distinguished 4 4. Classification of Public Corporations 6 5. Definition of a Public Corporation 7 6. Definition of a Municipal Corporation 9 7. Public Quasi Corporations Defined and Distinguished From Mu- nicipal 11 8. Hamilton County Commissioners v. Mighels 14 9. Elements of a Public Corporation 15 10. Definition and Classification of Public Securities...'. 16 11. Definition of Negotiable Bonds 17 12. Warrants, Orders, Certificates, etc.. Their Nature and Definition 19 13. Coupons, Their Nature and Definition 20 CHAPTEE li. THE CREATION AND POWERS OF PUBLIC CORPORATIONS. 14. The Power to Create a Public Corporation 22 15. The Charter of Public Corporations and Its Legal Nature .... 23 16. Corporate Existence and the Doctrine of Collateral Attack.... 27 17. Change of Corporate Boundaries 29 18. Effects of Annexation or Division Upon Public Property and Liabilities 30 19. Division or Adjustment of Debts and Liabilities 32 20. The Legal Authority; Where Existing 35 21. Agency of Apportionment 36 22. Character or Form of Indebtedness 38 23. Dissolution of Corporation 40 23a. Effect of Dissolution on Debts and Liabilities 41 24. Meriwether v. Garrett 45 25. Legislative Power Over Public Corporations ; In General 48 26. Legislative Control Over Public Funds : 51 27. Power of the Legislature Over Public Eevenues 52 28. Legislative Control Over Corporate Boundaries 53 29. Legislative Control Over Public Property 54 V VI TABLE OF CONTENTS Section. Page. 30. Over Corporate Contract and Trust Property 55 Control Over Trust Property Held by Public Corporations. ... 57 31. The Power of the liegislature to Compel the Payment of Debts. . 58 32. Issue of Obligations When Compelled 63 33. Constitutional Limitations, Affecting Legislative Power 67 Special Legislation 67 34. Classification Laws 69 35. Other Constitutional Objections 70 36. Control Over the Corporation in Its Private Capacity 71 37. The Impairment or Destruction of Vested Eights as a Limitation 73 38. The Powers of Public Corporations 74 39. Express and Implied Powers 76 To Enact Ordinances 76 Public Offices 77 To Acquire and Hold Property 77 The Police Power 77 Miscellaneous Implied Powers 77 40. Discretionary and Imperative Powers 78 41. Exercise of Imperative Powers 79 42. Exercise of Discretionary Powers 80 43. Corporate Powers; Their Delegation and Surrender 81 44. Eules of Construction .- 82 45. Eule of Strict Construction; How Modified 84 46. The Power to Contract 86 47. The Implied Power to Contract 87 48. Ultra Vires Contracts 88 49. Other Classes of Ultra Vires Contracts 89 50. Ultra Vires Contracts ; Their Enforcement 91 51. Contracts; Their Formal Execution 93 52. Authority of Officers and Agents to Bind the Corporation 96 53. Eatification of an Invalid or Ultra Vires Contract 98 54i Contracts of Suretyship and Guaranty 99 CHAPTER III. THE POWEE TO INCUR INDEBTEDNESS AND ISSUE NEGOTIABLE INSTRUMENTS. 55. Distinction between Private and Public Corporations 100 56. Corporate Powers 101 57. The Power to Incur Indebtedness 101 58. Necessity for Express Authority; Basis of the Eule 105 59. To What Extent Discretionary when Expressly Given 106 60. Implied Power of the Courts to Compel the Payment of Debts. . 107 61. Basis of Implied Authority Ill 62. Soundness of Implied Power Doctrine •. 112 63. Nashville v. Eay 113 TABLE OP CONTENTS Vll Section. Page. 64. Distinction Between Borrowing Money and Incurring Indebted- ness by Contract 115 65. Authority of Public Officials and Agents in Respect to the In- curring of Indebtedness 116 66. Authority of De Facto Officers 120 67. Validity of the Acts of de Facto Officers 124 68. Fraud and Misconduct of Public Officers 125 69. Definition of the Word "Indebtedness" or "Debt" as used in Laws of Limitation 126 70. Miscellaneous Exceptions 131 Eef unding Bonds 131 Liability for Torts 131 Limitation on Power of State When Not Applied to a Municipality 132 Unearned Interest not Considered a Debt 133 71. Compulsory and Voluntary Debts 133 72. Current and Necessary Expenses 137 73. The Indebtedness must be a Legal Demand 137 74. Indebtedness Further Defined; Warrants Issued in Anticipation of Taxes Levied 139 75. Debts of Territorially Co-existing Public Corporations 140 76. Basis of Indebtedness ; Assessment or Valuation 142 77. Payments under Executory Contracts not Usually Considered a Debt 144 78. Indebtedness; Payment from Special Sources or a Special Fund 148 79. Net or Gross Debt 154 Deduction of Other Assets 155 80. The Power of the United States to Issue Negotiable Securities . . 156 81. Power of the States to Issue Negotiable Securities 157 82. United States Supreme Court Cases 160 83. Decisions by State and other Courts 165 84. The Power of Subordinate Public Corporations to issue Negotiable Securities 166 85. The Same Subject Further Considered 172 86. De Facto Corporate Existence Necessary 179 87. The Power to Issue Negotiable Securities; When Implied 179 88. The Power as Implied from the Grant of Other Powers 184 89. Power to Issue ' ' Negotiable ' ' Bonds 187 90. General and Special Laws 188 91. Eules of Construction 191 CHAPTEE IV. LIMITATIONS ON THE POWER TO INCUR INDEBTEDNESS OR TO ISSUE NEGO- TIABLE SECURITIES. 92. Construction of Limiting Provisions 198 93. Eetroaetive Effect of Limitations ,,.,,.,.,.,,,.... 199 VIU TABLE OF CONTENTS Section. Page. 94. When Self -Executing 201 95. Limitations Involving the Phrase "Current Expenditures".... 202 96. Anticipation of Current Eevenuea 202 97. Expenditures in Excess of Current Kevenues; When Prohibited 203 98. Current Expenses 205 99. Degree of Limitation; Percentile 207 100. Limitations; Amount or Tax Kate 210 101. The Purpose of the Debt as an Inherent Limitation 211 102. Constitutional Limitations as to Purpose of Debt 215 103. The Construction of Buildings; a Public Purpose 216 104. Private Schools and Charitable Institutions 218 105. Public Purposes Continued; "Light" 219 106. Illustrations of a Public Purpose Continued; "Water" 221 107. Public Utilities 223 108. The Construction of Local and Internal Improvements 225 109. Railway Aid 232 110. Eailway Aid Securities, Further Considered 234 111. Incomplete Organization: Charter Changes 236 112. Donations 237 113. Performance of Conditions Precedent Eequired of Railway Com- panies 238 114. Miscellaneous Provisions 247 115. Waiver of Conditions 247 116. Miscellaneous Illustrations of a Public Purpose 248 Payment of Debts 250 117. Local Improvements 251 118. Public Parks and Boulevards 252 Sewers 253 119. Construction of Conditional Grants of Authority 254 120. Provision for Payment When Debt is Incurred 25p 121. Illustrative Cases 261 122. AflSrmative Vote as Precedent to Valid Issue 263 123. Written Assent of Voters 265 124. Election When not Necessary - 266 125. Petition for Election 269 126. New York Decisions 271 127. The Notice or Order for Election 273 128. Form of Order or Notice for Election 277 129. Notice or Order of Election; Its Service or Publication 280 130. Questions to be Submitted 283 131. The Election 286 Place and Time of Holding 288 132. Ballots, Form of 289 133. Canvass of Election Returns 290 134. Necessary Votes 291 TABLE OF CONTENTS IX Section. Page. 135. Voters and Their Qualifications 295 136. Proceedings to Issue by Municipal Councils or other Official Bodies 298 137. Authority Conferred by Ordinance 299 138. Authority Conferred by Eesolution 302 139. What the Ordinance or Eesolution Should Contain 303 140. Official Action by Officials or Quasi-Legislative Bodies 304 CHAPTEE V. TAXATION. 141. Definition and Nature 307 142. Municipal power to tax, how Limited 311 143. Limitations Upon the Power 313 144. Organizations Co-Incident in Territory 316 145. Annexed or Detached Territory 317 146. Purpose of Taxation 317 147. Local or Special Assessments 319 148. Purpose for "Which Levied 321 149. Construction of Tax Limitations 322 150. Miscellaneous 322 CHAPTEE VI. PROCEEDINGS TO RESTRAIN OB COMPEL THE ISSUE OF NEGOTIABLE SECURITIES. 151. In General ; Appropriate Eemedy 324 152. The Eule in the State Courts 325 153. The Eule in the Federal Courts 327 154. Parties; Plaintiff and Defendant 328 155. Want of Authority 329 156. Non-Compliance with Conditions ■ 330 157. Popular Election 331 158. In Excess of Legal Limitation 332 159. Time of Action 333 160. Cases Where Belief was Denied 334 161. Injunction Against Illegal Taxes 336 161a. When Eelief Denied 337 162. Estoppel 338 163. The Issue of Securities, When Compelled 339 CHAPTEE VII. FORMALITIES REQUIRED FOR ISSUE OF NEGOTIABLE SECURITIES. 164. "Issue" Explained and Defined 343 165. Form of Bond 348 Miscellaneous Eef erences 352 S lAJBLE OF CONTENTS Section. Page. 166. Date and Ante-Dating of Securities 353 167. Signatures of Ofiacials 355 168. What a Sufficient Signature 358 169. Weyauwega v. Ayling 359 170. Anthony v. County of Jasper 360 171. Coler v. Cleburne 360 172. Sealing 362 173. Registration 365 174. Official Validation 369 175. Georgia Cases 370 176. Delivery 372 177. Young V. Township of Clarendon 375 178. Bonds in Escrow 377 CHAPTER Vin. COUPONS. 179. The Payment of Interest 380 180. Rate Paid 381 1 81. Coupons, Definition 383 182. Power to Issue 384 183. The Coupon, Its Form 385 184. lUustrative Forms of Coupons 386 185. Execution 389 186. Payee 390 187. Coupons ; Their Legal Character 390 188. Payment 393 189. Time, Place and Order of Payment , 394 190. Medium of Payment 396 191. Coupons Receivable in Payment of Taxes 397 192. Days of Grace 399 193. Severed Coupons 400 194. Overdue Coupons 401 Effect on Bond 402 Interest on Overdue Coupons 403 195. Demand When Necessary to Recover Interest on Unpaid Coupons 404 196. Equities Considered 405 197. Statute of Limitations 406 CHAPTER IX. REFUNDING, EENEVSrAL AND COMPROMISE SECURITIES. 198. Power to Issue 409 199. Refunding Bonds Excluded from Debt Limitations 412 200. Authority Where Expressly Given 413 201. Construction of Statutory Authority 414 TABLE OF CONTENTS XI Section. Page. ^02. Authority, When Implied 416 203. Conditions Esquired for Issue 417 204. What can be Eefunded 420 205. Formalities of Issue 424 206. Validity of Old Debt as Affecting the New 425 207. Invalidity of New Debt as Affecting the Old 428 208. Estoppel 429 209. Creation of New Debt 431 210. Doon Township v. Cummins 433 211. Compromise Bonds 437 CHAPTER X. NEGOTIABILITY OP PUBLIC SECURITIES AND BONA FIDE HOLDING. 212. Definition of Negotiable Instrument 440 213. Public Securities Regarded as Negotiable Instruments 442 214. Essentials of Negotiable Paper 445 215. The Time of Payment; Payee 450 216. Time of Payment as Affecting Negotiability , 450 217. Registration; Effect of 451 218. Bona Fide Holding 452 219. Definition of a Bona Fide Holder 453 220. Presumption in Favor of Bona Fide Holder 454 221. Eights of Bona Fide Purchaser 456 222. Conditions necessary to Constitute a Bona Fide Holder 457 228. Eights of the Transferee of a Bona Fide Holder 460 224. Bona Fides; Consideration; Manner or Acquirement 463 225. Purchase before Maturity and Without Notice of Dishonor 464 226. Notice 464 227. Constructive Notice 465 228. Constructive Notice, Lis Pendens, Judgments 467 229. Constructive Notice; Overdue Coupons 470 230. Actual Notice or Knowledge ,. 471 231. Title of Bona Fide Holder; How Defeated 474 232. Knowledge with which a Holder of Bonds is Charged 475 233. What a Purchaser is not Bound to Ascertain 477 234. Stolen and Lost Bonds or Coupons 478 235. Non-Negotiable Instruments 480 236. Illustrative Miscellaneous Cases 481 CHAPTER XI. SALE OP NEGOTIABLE SECURITIES. 237. General Statements 483 238. Authority to Sell 484 Xll TABLE OF CONTENTS Section. Page. 239. Medium of Payment 484 Sale on Credit 485 240. Time of Issue 486 241. The Manner of Sale by Public Advertisement 486 242. At Private Sale 488 245. The. Bights of the Buyer 488 244. Validity of Bonds as Affecting Sale 489 245. Bonds Sold at Less than Par 492 Eeeitala 494 246. Usury, When Involved in a Sale Less than Par 495 247. Commissions 496 248. Purchaser to Ascertain Authority for Issue 497 249. Legal Authority to Issue 498 250. Constitutionality of Act Granting Authority 500 251. Organization of Corporation and Manner of Acting 503 252. Issue in Excess of Constitutional Limitation 504 253. Eecitals of Fact 505 254. Authority of Officers to Act 506 Genuineness of Official Signatures 507 255. Examination of Eeeords 507 Application of Kule to Ordinances ; Court Orders, etc 507 256. Assessment Eolls and Other Eeeords 510 Official Assessment Eolls 510 257. Extent of Search Itequired of Purchaser 512 258. Dixon County v. Pield; Chaffee County v. Potter 513 259. Purchaser Charged with Knowledge of Public Eeeords only 516 260. Performance of Conditions 516 261. Purchaser Bound by What the Bonds Disclose on their Pace. . . . 517 262. Use of Proceeds by the Public Corporation 520 263. Use of Proceeds as Affecting Validity of Bonds 522 i:64. Warrants of Transferrer 526 CHAPTEE XII. THE VALIDITY OP PUBLIC SECUEITIES. 265. Presumption of Validity 530 266. De Facto Corporations 535 267. Validity as Affected by Adverse Decisions of a State Court.... 543 268. Validity as Affected by Subsequent Legislation 547 269. Validity, By what Court Decided 549 269a. Construction of State Statutes 549 270. When State Decisions Will Not Be Followed 553 271. State Decisions Not Followed 554 272. Absence of State Decisions 555 273. Decisions of State Courts Not Controlling on General Questions of Commercial Law 556 fABLE Of CONTENTS XUl Section. Page. 274. Validity of Negotiable Securities ; The Doctrine of Estoppel .... 559 275. Estoppel by Delivery 561 276. The Doctrine of Recitals 563 277. In Whose Favor the Doctrine of Estoppel Applies ; . . . . 568 278. Legal Effect of Eecitals '. 569 279. Leading and Illustrative Cases 569 280. The Doctrine in the State Courts 575 281. Absence of Eecitals 577 282. Eecital Contrary to Statutory Provisions 580 283. Express and General Eecitals 580 284. Eecitals, To Contain What, and Their Construction 584 285. Eecitals as to Lawful Authority, Constitutional Provisions 585 286. Eecitals of Authority ; Legislative 588 £87. Eecitals of Authority; Ordinances, Court Orders 590 288. Misrecltals of Legal Authority 592 289. Eecitals on Matters of Pact; Purpose for which Issued 594 290. Sufficiency of Eecitals 597 291. Modifications of the Eule 600 292. Estoppel by Eecitals, as Applied to Elections and Matters Per- taining thereto 602 293. The Effect of No Election 608 294. The Doctrine of No Election in the State Courts 610 295. Bonds Issued in Excess of Limit; Effect of Eecitals 611 296. No Eecitals 612 297. General Eecitals 612 298. Express Eecitals 615 299. Limitation; Whether Statutory or Constitutional 616 300. Examination of Eecords 617 301. Board of County Commissioners of Chaffee County v. Potter. . . . 621 302. Board of Commissioners of Gunnison County v. E. H. EoUins & Sons 623 303. When Officials Charged with Duty of Determining Debt Limit.. 625 304. Validity of Issue in Excess of Legal Authority 626 305. When Excess Securities Held Good 627 306. Excess Securities Held Void in Toto 628 307. Issue Held Valid in Part 629 308. Scaling Down 630 309. Hedges v. Dixon County 632 310. Other Eecitals 633 311. Invalidity as Based upon Express Statutory Eecital 636 312. Eecitals; Power to Make 640 313. Authority to Make; How Given 643 314. Eecitals without Authority 647 315. Estoppel by Judgment 648 316. Collateral Attack; Collusive Judgment 654 317. Examination of Original Cause of Action 657 XIV TABLK OF CONTENTS Section. Page. 318. Estoppel by the Payment of Interest 658 319. Equitable Estoppel as Based Upon Other Grounds 661 320. Equitable Estoppel ; the Doctrine of Laches 664 321. Estoppel by Eatification Further Discussed 667 322. Act of Eatification; How Performed 669 223. Valid Eatification Equivalent to an Original Authority 669 324. Curative Legislation 670 ii25. Curative Legislation; Character of; Construction 672 326. Curative Legislation; Original Want of Authority 676 327. Curative Legislation, Other Conditions 678 Excessive Issue 678 Unauthorized Subscriptions 679 Election Irregularities 679 Unauthorized Election; Failure to Hold Election 679 Informalities in Official Proceedings 680 Defect in the Original Act 681 328. Williams v. Town of Duanesburgh 681 329. Extent of Legislative Power 682 CHAPTER XIII. DEFENSES. 330. Want of Power 686 331. Irregularities in the Exercise of a Given Power 690 332. Performance of Conditions ; Waiver 695 333. Fraud 697 S34. Miscellaneous Defenses 698 CHAPTER XIV. THE PAYMENT OP PUBLIC SECUEITIES. 335. General Observations 701 336. Motives and Reasons for Payment 701 337. Payment Dependent Upon What 705 338. Good Faith 705 339. State Defaults 706 340. County Repudiations 706 341. Municipal Defaults 708 342. Validity of Securities 710 343. Sources of Payment 711 344. Meriwether v. Garrett 715 345. Exceptions to Rule Above Stated 718 346. Duty of Corporation to Pay .- 721 347. Corporate Obligation 722 348. Medium of Payment 723 349. The Legal Tender Cases 728 TABLE OP CONTENTS XV Section. Page. 350. To Whom Payable 730 351. Amount Recoverable 731 352. Time of Payment 733 353. Certainty in Eespect to Time of Payment 734 354. Order of Payment and Preference 739 355. Eight of Corporation to Call for Payment 740 356. Option in Pavor of Holder 741 357. Place of Payment 742 358. The Power to Tax 744 359. The Implied Power to Levy Taxes for the Payment of Interest or Principal 746 360. When Not Implied 749 361. The Direct Power to Tax 750 362. Contract Obligation, How Impaired 751 363. Sources of Payment 756 Securities a General Charge 757 364. Payable From Either Special or General Sources of Revenue. .. . 757 365. United States v'. Fort Scott 758 366. Payment from General Funds though Special Tax Provided.... 761 367. Securities a General Charge when Special Tax or Assessment In- valid 763 368. Payment from Special Fund by Special Tax 764 369. Taxing Districts 766 370. Duty to Levy Taxes 767 371. Diversion of Funds 769 372. Moneys Appropriated for Current Expenses Not Available.... 772 373. Payment of Securities by Sinking Fund Provision 772 374. Provisions for Payment at Time Debt was Incurred 774 375. Constitutional Provisions When Self -Executing 775 376. Securities When Not Held Void 777 377. Duty to Levy Sinking Fund Taxes 780 378. What Constitutes a Sufficient Provision 781 379. Debts to which Sinking Fund Provisions Apply 783 380. The Rule as to the Payment of Void Bonds 783 381. City of Litchfield v. Ballon to the Contrary 789 382. Recovery not Allowed ; Continued 790 383. Statute of Limitations on Implied Promise to re-pay Money Re- ceived for Void Bonds 791 CHAPTER XV. ACTIONS ON PUBLIC SECURITIES. 384. Jurisdiction of Federal Courts 793 385. Removal of Cases to Federal Ckjurts 796 386. Equitable Relief; When Afforded 797 Void Bonds 797 XVI TABLE OF CONTENTS Section. Page. Eeformation of Bonds 797 Collection of Assessments 798 387. Equitable Belief Denied 798 That Mandamus Futile no Ground for Equitable Belief. . . 799 Receiver Not Appointed 799 Void Bonds 801 Scaling Down of Excess Issue 801 388. Equitable Subrogation 801 389. Eight of Action on each Separate Bond and Coupon 802 390. Eight of Bondholder to Maintain Action 803 391. Questions Baiaed 805 392. Parties Plaintiff 806 393. Bonds Transferred for Collection Only 808 394. Bonds Transferred; When Action May be Maintained 808 395. Injunction As Bar to Right of Action 808 396. Parties Defendant 809 397. Bonds Payable from Specific Taxes or Property 809 398. Pleadings 811 399. Demurrers 813 Demurrer ; When Sustained 813 400. Burden of Proof 815 401. Issues Eaised by General Denial 818 402. Effect of Eecitals, Affirmative Defenses 820 Aifirmative Defenses 821 403. Burden When Shifted 822 Murray v. Lardner 822 404. Illinois Cases 823 405. Findings of Fact 824 406. Practice ; When Jury Unnecessary 825 Charge to Jury 825 407. Directed Verdict 825 408. Errors on Trial 826 409. Appeal ; Bill of Exceptions 827 410. Beview on Appeal 828 411. Scope of Inquiry on Appeal 828 412. Judgment ; Necessity for 830 413. Amount of Judgment 831 414. Collection of Judgment 831 415. Discretionary Power to Order Judgment Paid in Installments.. 832 415a. Judgment as Affecting Character of Debt or Special Remedy. . . . 833 416. Interference by State Courts 834 417. Inquiry into Previous Judgment 835 Dissolution of Public Corporation 835 418. Mandamus as a Remedy 836 419. Mandamus not Available to Control Judgment or Discretion... 838 TABLE OF CONTENTS XVll Section. Page. 420. Available as a Remedy for the Enforcement of a Judgment or to Compel the Payment of Corporate Bonds 838 421. What Petition for Mandamus Should Show 841 422. Eights of Parties 84] Necessity for Demand 842 423. Mandamus as an Ancillary Eemedy 843 424. Eiglit of Federal Courts to Issue Writ 843 Injunction by State Court 844 425. Parties in Mandamus Proceedings 845 426. Mandamus not a Creative Writ 848 Heine v. Board of Levee Commissioners 849 427. Same Subject; Writ Denied 851 428. Control of Municipal Discretion 851 429. When Courts Will Control Discretion in Eespect to Current Ex- penses 853 430. iVJandamus ; Defenses 854 Distress to Debtor ; no Defense 854 431. Failure to Perform Duty no Defense 855 432. Statutes of Limitations as a Defense 855 433. Creditors Eemedy, Change of 857 CHAPTER XVI. VALIDITY or LEGISLATION: TAXATION OP SECURITIES. 434. General Observations 859 435. Validity of Legislation 860 Presumption of Validity 860 436. Legality of Legislative Body; Meetings, Quorum 861 437. Form of Law 862 438. The Title '. 863 439. Subject Matter 866 440. Introduction of Bills; Form and Mode of Passage 867 441. Publication and Eecord 868 Eecord of Proceedings 869 442. Repeal of Prior Legislation 872 443. Ordinances as Legislation 873 444. Taxation 874 445. Special State Exemptions 877 CHAPTER XVII. VirARRANTS AND MISCELLANEOUS EVIDENCES OP INDEBTEDNESS. 446. Warrants ; Definition ; by Whom Drawn 882 447. Fund From Which Payable 887 448. Formal Issue and Sale 891 449. Audit and Allowance of Claims as Preliminary to Issuance 892 XVIU TABLE OF CONTENTS Section. Page. 450. Their Legal Character 892 451. Form of Warraat 897 452. Phraseology of Warrant 899 453. Validity; In General 901 453a. Validity as Affected by Debt Limitations 904 454. Warrants Invalid Because of Purpose for Which Issued 907 455. Invalidity Eesulting from Character 908 456. Refunding 910 457. Interest Payable 910 458. Actions on Warrants; Statutes of Limitation 913 459. Payment of Warrants 918 460. Presentation for Payment 921 461. Payment ; the Amount 921 462. Manner of Payment 923 463. Time of Payment 925 464. To Whom Payable 928 465. Miscellaneous Forms of Indebtedness 931 466. The Same Subject; Legal Character 936 467. Form and Phraseology 988 468. Mode and Time of Payment 938 CHAPTEE XVIII. ABSTBACTS FROM STATE CONSTITUTIONS BBLATIVB TO PUBLIC DEBT AND THE POWER OP TAXATION. 469. Alabama 940 470. Arkansas 943 471. Arizona 944 472. California 945 473. Colorado 948 474. Connecticut 952 475. Delaware 953 476. Florida 954 477. Georgia 955 478. Idaho 958 479. Illinois 960 480. Indiana 963 481. lovpa 964 482. Kansas 967 483. Kentucky 969 484. Louisiana 972 485. Maine 975 486. Maryland 977 487. Massachusetts 978 488. Michigan 978 489. Minnesota 979 TABLE OF CONTENTS XIX Section. Page. 490. Mississippi 982 491. Missouri 983 492. MoBtana 988 493. Nebraska 990 494. Nevada 991 495. New Hampshire 992 496. New Jersey 992 497. New Mexico ■ 994 498. New York 997 499. North Carolina 1003 500. North Dakota 1004 501. Ohio 1007 502. Oklahoma 1009 503. Oregon 1012 504. Pennsylvania 1014 505. Ehode Island 1016 506. South Carolina 1017 507. South Dakota 1022 508. Tennessee 1024 509. Texas 1025 510. Utah 1028 511. Vermont 1031 512. Virginia 1032 513. Washington 1034 514. West Virginia 1036 515. Wisconsin 1037 516. Wyoming 1040 517. Territorial 1042 518. Hawaii Territory 1043 519. The Philippine Islands 1043 CHAPTER XIX. BOND FORMS AND BECOKDS. 520. Marcy v. Township of Oswego 1044 521. County of Dixon v. Marshall Field 1045 522. Morgan et al. v. United States i 1045 523. Bernard 's Twp. v. Morrison et al 1046 524. Eich v. Town of Mentz 1047 525. Board of County Commissioners of the County of Chaffee v. Potter 1054 526. City of Brenham v. German-American Bank 1056 527. Board of Education v. De Kay 1058 528. Graves et al. v. County of Saline 1059 529. Woodruff v. State of Mississippi 1061 530. County of Presidio v. Noel- Young Bond & Stock Co 1062 XX TABLE OF CONTENTS Section. Page. 531. National Life Insurance Co. v. Board of Education of the City of Huron 1063 532. Eisley v. Village of Howell 1065 533. Hughes County, S. D., v. Livingston 1066 534. The County of Presidio v. Noel- Young Bond & Stock Company Plaintiffs Original Petition 1067 535. Defendant's First Amended Original Answer 1071 536. Bill of Exceptions 1080 537. Oral Charge of the Court 1098 538. Judgment 1099 538a. Petition for Writ of Error 1100 539. Assignment of Errors 1101 540. Judgment in XJ. S. Circuit Court of Appeals 1102 541. National Life Ins. Co. v. Board of Education of City of Huron Complaint 1102 542. Amendments to Complaint 1107 543. Amended Answer 1109 A TREATISE ON THE LAW OF PUBLIC SECURITIES CHAPTER I. INTRODUCTORY AND DEFINITIONS §1. Introductory. The importance of the subject of this work justifies its publication at the present time. The debts of the differ- ent states and their various civil subdivisions have in- creased enormously within the past few years. These debts are evidenced by public securities of one form or another which pass into the hands of savings banks, trust estates, and other private investors. In view of the increase, alarming in its extent, in public securities, the investor should observe every precaution in estab- lishing the technical legality of the securities which he buys, for while default and repudiation do not occur as frequently as in former years, yet in substantially all instances the only security behind the obligation is a moral duty to pay coupled with a desire to maintain good credit for the flotation of additional securities in the fu- ture. The rapid increase of public debts should tend to make an investor more cautious, for with every increase of liability the point for default and repudiation is more nearly approached. In the United States the municipal debt, which includes 2 PUBLIC SECUEITIES that of cities, towns, villages and other civil subdivisions, in 1880 was in round figures $1,123,278,000; in 1890, $1,137,200,000, and in 1902, $1,630,000,000. There was added in the period from 1902 to 1909, $1,445,000,000, ex- clusive of bonds issued for refunding purposes, making a a total net debt, i. e., gross debt less sums or assets held in sinking funds, on the first of January, 1910, of $3,075,- 000,000, to which was added during the year 1911, ap- proximately $320,000,000. In view of these figures and considering the fact that savings banks and trust estates are the largest purchasers of public securities, the great- est care should be exercised in examining and determin- ing the legality of different issues. To better understand many of the questions considered by the courts and arising in the cases decided, a brief discussion of the nature and powers of the different pub- lic corporations will immediately follow. This will be necessarily brief and reference made to but few authori- ties. For a full examination of the questions and prin- ciples involved the reader is referred to works on public corporations treating in full the questions raised. § 2. Definition of a corporation. The idea that an association or combination of natural persons or things may possess powers and properties dis- tinct from, as well as in common with natural persons, has been a necessary and a favorite one in all systems of jurisprudence. One of the divisions therefore found in the earliest known codified law is that of persons into natural and juridical, the latter including an "arti- ficial person" existing only in contemplation of law, and the logical sequence of existing conditions. Since that time all legal codes have recognized this "artificial per- son," the corporation. The definition of a corporation most widely known and quoted is that of Chief Justice Marshall in the Dartmouth College case, "A corporation INTEODUCTOKY AND DEFINITION 6 is an artificial being, invisible, intangible and existing only in contemplation of law. Being the mere creature of the law, it possesses only those properties which the charter of its creation confers on it either expressly or as incidental to its very existence. ' ' ^ Austin Abbott in the Century Dictionary defines a cor- poration as "An artificial person created by law or under authority of law, from a group or succession of natural persons, and having a continual existence irrespective of that of its members and powers and liabilities different from those of its members." The occasion of the creation of a corporation is chiefly for the resulting convenience, economy, unity and con- tinuity in the transaction of business or the manage- ment of property, the exercise of granted powers or the performance of prescribed duties. Certain powers and functions can be better exercised by an artificial body than by natural persons. Corporations have been classified according to the functions which they may perform, their purpose of cre- ation or the number of members comprising them. The only classification which concerns the present work is that first suggested, viz: the division based upon func- tions performed. This was broadly suggested in the Dartmouth College case in the opinion of Justice Story: "Public corporations are generally esteemed such as ex- ist for public ^political purposes only — such as towns, cities, parishes and counties, and in many respects they are so although they involve some private interests. But strictly speaking, public corporations are such only as are founded by the government for public purposes where the whole interests belong also to the' govern- ment. ' ' ^ 1 — Trustees of Dartmouth Col- 2 — Trustees of Dartmouth Col- lege V. Woodward, 4 Wheat. (U. S.) lege t. Woodward, 4 Wheat. (U. S.) 636. 668. 4 PUBLIC SECTJBITIES The basis of this classification arises upon a difference in the nature of the duties required and powers exercised and has existed since the first organization of artificial persons by a sovereign state, and the classification is that of public and private. In a California case ^ Chief Justice Sawyer in writing the opinion said in defin- ing a corporation and discussing its nature: "So also there are several classes of corporations, such as public municipal corporations, the leading object of which is to promote the public interest ; corporations technically pri- vate, but yet of a quasi public character, having in view some great public enterprise in which the public inter- ests are directly involved to such an extent as to justify conferring upon them important governmental powers, such as an exercise of the right of eminent domain. Of this class, there are railroad, turnpike and canal compa- nies. And corporations strictly private, the direct object of which is to promote private interests, and in which the public has no concern except the indirect benefits result- ing from the promotion of trade and the development of the general resources of the country." § 3. Public and private corporations distinguished. The rights and powers, the duties and obligations of a public corporation as compared with those of a private corporation are marked. This is true because of the entirely different purposes for which they are respec- tively created. A public corporation is an agency of the state of the sovereign ; it is organized to carry out some local political want as auxiliary to the sovereign power; it is a governmental agent created for the benefit of all affected; it is created and exists through the mere will of the Legislature as the delegated agency of the sov- ereign and the relations existing between itself and the * 3 — Miners Ditch Co. v. Zellerbach, 37 Cal. 543, 577. INTKODUCTOEY AND DEFINITIONS 5 sovereign do not partake of the nature of a contract. On the other hand, a private corporation is organized primarily for the benefit, generally pecuniary, of its members ; for the advantage of the few as compared with the many. This distinction is very clearly and concisely stated in an early decision in North Carolina,* where the court said: "The purpose in making all corporations is the accomplishment of some public good; hence the division into public and private has a tendency to con- fuse and lead to error in the investigation; for unless the public are to be benefited it is no more lawful to confer 'exclusive rights and privileges' upon an arti- ficial body than upon a private citizen. The substantial distinction is this: Some corporations are created by the mere will of the legislature, there being no other party interested or concerned. To this body a portion of the power of the legislature is delegated, to be exer- cised for the public good, and subject at all times to be modified, changed or annulled. Other corporations are the result of contract. The legislature is not the only party interested ; for although it has a public purpose to be accomplished, it chooses to do it by the instrumental- ity of a second party. These two parties make a con- tract. The legislature, for and in consideration of cer- tain labor and outlay of money, confers upon the party of the second part the privilege of being a corporation with certain powers and capacities. The expectation of benefit to the public is the moving consideration on one side, that of expected remuneration for the outlay is the consideration on the other. It is a contract, and therefore cannot be modified, changed or annulled with- out the consent of both parties. Counties are an instance of the former, railroad and turnpike companies of the latter, classes of corporations." 4— Mills V. Williams, 33 N. C. (11 Ired. L.) 558. b PUBLIC SECUEITIES The most important difference between public and private corporations is that in the one case, as suggested in the North Carolina decision, there is but one party to the transaction; that no contract relation exists as be- tween the inhabitants of the territory organized and the state, and the charter or political organization for this territory may be altered, amended or repealed at the pleasure of the sovereign state. This is not true ex- cept within certain well recognized legal limitations in respect to the private corporation. Its charter is a con- tract subject only to the law of the land governing the construction and enforcement of contracts. In the Dart- mouth College case, Chief Justice Marshall uses lan- guage often quoted, "The character of civil institutions do not grow out of their incorporation but out of the manner in which they are formed and the objects for which they are created. The right to change them is not founded on their being incorporated but on their being the instruments of government created for its purposes. The same institutions created for the same objects though not incorporated would be public institutions and of course be controlled by the legislature. The incor- porating act neither gives nor prevents this control. ' ' ° § 4. Classification of public corporations. There is found upon an examination of the reported cases, a classification of public corporations based upon fundamental characteristics and differences, viz. : muni- cipal and public quasi-corporations. These two classes have been generally recognized, though owing to a con- fusion of ideas and a failure to comprehend the basic reasons for the division the placing of the same govern- mental organization in the same class has not been uni- form by the courts. This is not altogether their fault 5 — Trustees of Dartmouth College V. Woodward, 4 Wheat. (U. S.) 638. INTEODUCTOEY AND DEFINITIONS t for different state constitutions and statutes have placed in different classes governmental organizations possess- ing the same relative powers. The essential difference between these classes is in the varying power of local action or initiative. This diminishes in passing from municipal to public quasi and accompanying this de- crease in power is found a corresponding diminution of duty and of liability." The distinction between these classes of public cor- porations is important and the proper placing of a par- ticular corporate organization in its class under con- stitutional or statutory provisions may be necessary to determine the legality of an issue of public securities in a specific instance. A corporate organization possessing substantially the same powers and exercising substan- tially the same functions may under constitutional or statutory provisions be termed a "municipal corpora- tion" in one state and a "public quasi" or "public cor- poration" in another. To properly place a particular corporate organiza- tion is further important in connection with a determi- nation of the powers which it may exercise and the con- struction of the powers granted to it. The grants of power to a public quasi corporation are subject to greater scrutiny and a stricter rule of construction than similar grants to a municipal corporation; although the courts never in either case depart from what is known as the strict rule of construction. § 5. Definition of a public corporation. The term "public corporation" will be used in this work as a generic one and includes both municipal cor- porations proper and public quasi corporations. The 6 — Abbott Man. Corp., 8ec. 5, et 8 PUBLIC SEOUBmES distinction between the two last named is difficult of detection at times, varying with the idea as it existed in the mind of the court writing a particular opinion. Broadly speaking, the term "public corporation" may include the state. It certainly includes all public govern- mental agents or political or governmental subdivisions, whatever their powers or obligations, their rights or their duties, may be, though some of them may not have, strictly speaking, all of the powers and capacities of a corporation. The attributes of a corporation attach in a varying degree, and yet they all will be included in the class. Other definitions of public corporations are, ' * The investing of the people of a place with the local govern- ment thereof," and those found in other cases cited in the note.^ A recent text book* defines a public corporation as "one that is created for a political purpose with political power to be exercised for purposes connected with the public good in the administration of civil government. It is an instrument of the government, subject to the con- trol of the legislature, and its members are officers of the government appointed for the discharge of public 7— Cuddon v. Eastwick, 1 Salk. v. Biesaida (111.), 90 N. E. 1009; 143; Society for Propagation of the People v. Niebruegge, 91 N. E. 115, Gospel V. New Haven, 8 Wheat. 244 111. 82; Slutts v. Dana (la.), (U. S.) 464; Trustees for Vin- 115 N. W. 1115 ; Inhabitants of Yar- cennes University v. State of In- mouth v. Inhabitants of North Yar- diana, 14 Howard (U. S.) 268; mouth, 34 Maine 411. Bank of Alabama v. Gibson's Ad- Rhodes v. Love (N. C), 69 S. E. ministrators, 6 Ala. 814; Dean v. 436- A public corporation is Davis, 51 Calif. 406; Eeclamation founded for public purposes and District No. 542 v. Turner, 104 Calif. generally has for its object the gov- 334. ernment of a portion of the state Metcalf V. Merritt, 111 Pac. 505. and is therefore endowed with a A reclamation district is a pub- portion of its political powers. lie as distinguished from a private Standard Dictionary, ' ' Corpora- corporation acting as a state agency, tion. " but it is not a municipal corpora- 8 — Clark & M. Private Corp., Sec. tion possessing in any degree gen- 31. eral powers of goveriunent. Smith INTEOCUCTOEY AND DEFINITIONS 9 duties. In other words a public corporation is a cor- poration created merely for purposes of government, and a private corporation is one that is created for other purposes than those of government." § 6. Definition of a municipal corporation. A municipal corporation has been defined by Judge Dillon as "the incorporation by the authority of the government of the inhabitants of a particular place or district, and authorizing them in their corporate capa- city to exercise subordinate, specified powers of legis- lation and regulation with respect to their local and in- ternal concerns. This power of local government is the distinctive purpose and the distinguishing feature of a municipal corporation proper. ' ' " Bouvier defines one as "a public corporation cre- ated by government for political purposes and having subordinate and local powers of legislation." '" "A corporation of persons, inhabitants of a par- ticular place, or connected with a particular district, en- abling them to conduct its local civil government," is still another definition given. A correct one should also convey the idea that organized territory of itself does not constitute a municipal corporation, but that it includes also the people residing within that district." An excellent descriptive definition is given in a re- cent work : ^^ 9— Dillon, Mun. Corp. (4th Ed.), 24 Barb. (N. Y.) 446; Grennan v. Sec. 20. Carson Okla., 107 Pac. 925; City of 10— Bouvier, Law Diet. Philadelphia v. Pox, 64 Pa. 180; 11— Kelly V. City of Pittsburgh, East Tennessee University v. City 104 TJ. S. 78; City of Galesburg v. ^f Knoxville, 65 Tenn. (6 Baxt.) Hawkinson, 75 111. 152; State v. i66; see, also, Abbott Municipal Cor- porations, Sec. 7, and cases cited. Barker, 116 Iowa 96, 89 N. W. 204; People V. Bennett, 29 Mich. 451; Heller v. Stremmel, 52 Mo. 309; 12— 20- Am. & Eng. Enc. Law (2d People V. Morris, 13 Wend. (N. Y.) Ed.), p. 1131, and cases cited; see, 325; Clarke v. City of Eochester, also, the following eases defining 10 PUBLIC SECURITIES "Municipal corporations are of a twofold character, — the one public as regards the state at large in so far as they are its agents in government; the other private in so far as they are to provide local necessities and conveniences for their own communities. And the fact that the legislature has blended the public and private functions of a municipal corporation in one grant of power does not destroy the clear and well settled dis- tinction between them. In its governmental character the corporation is made by the state a local depositary of certain limited and prescribed political powers, to be exercised for the public good of the state. In its pro- prietary character the theory is that the powers are not conferred chiefly from considerations connected with the and stating the powers of municipal corporations. Waller v. Osban (Fla.), 52 So. 970. Municipalities are legal en- tities established for local govern- mental purposes. Penick v. Foster (Ga.), 58 S. E. 773. A municipality is a mere political division of the state hav- ing for its object the administration of a portion of the power of gov- ernment delegated to it for that purpose. Head v. City of Des Moines, 119 N. W. 276. A municipal cor- poration has a two-fold character, in the one it may undertake obliga- tions and subject itself to liabilities for which it is answerable as any other corporation; in the other char- acter, it is an arm of a sovereignty of the state and power is conferred upon it to exercise governmentaJ functions. State V. City of Lawrence (Kan,), 100 Pac. 485. Municipalities are primarily created to perform the functions of local government but they are also created as agencies of the state for governmental pur- poses. Commonwealth v. City of Covington (Ky.), 107 S. W. 231. Libby v. City of Portland (Me.), 74 Atl. 805. Municipalities act in a dual capacity, the one corporate, the other governmental. Byars v. State (Okla.), 102 Pac. 804; Ex parte Simmons (Okla.), 112 Pac. 951; Acme Dairy Co. v. City of Astoria (Ore.), 90 Pac. 153. Ancrum v. Camden Water, Light & lee Co. (S. C), 64 S. E. 151. A municipal corporation is a legal institution created by charter from sovereign power, erecting a populous community of a prescribed area into a body politic and corporate, with a corporate name and continuous suc- cession and for the purpose and with the authority of subordinate self government and improvement and the legal administration of the affairs of state. Short v. Gouger, 130 S. W. 267; City of Burlington V. Centr. Vt. Ey. Co. {Vt.), 71 Atl. 826. INTEODUCTOKY AND DEFINITIONS 11 government of the state at large, but for the private ad- vantage of the compact community which is incorporated as a distinct legal personality or corporate individual." '" § 7. Public quasi corporations defined and distinguished from municipal. Public quasi corporations have been defined as: "It is universally agreed that all those subdivisions of state territory, such as counties, townships, school districts, and like bodies, which are created by the legislature for public purposes and without regard to the wishes of their inhabitants, are to be included in the class known as 'quasi corporations.' They are in essence local branches of the state government, though clothed with a corpo- rate form in order that they may the better perform the duties imposed upon them. Generally they comprise large areas of territory which are but sparsely settled, and the relations of life and business existing within them are extremely simple. ' ' " As illustrating the different legal character assigned to municipal or public administrative and political or- ganizations, see the authorities cited in the note. Since the name "public," "municipal," or "public quasi" may be given by constitutional or statutory provisions to organizations of the same relative grades in different 13— City of Winona V. Botzet, 169 Water Co.'s Appeal, 102 Pa. 515; Fed. 321 ; People v. Earl, 94 Pac. Atkins v. Town of Randolph, 31 Vt (Colo). 294; State v. Denny, 118 226. Ind. 449; Soper v. Henry County, ,. __.„. ,, ^. , „ 26 Iowa 264; Marion County l^-Wilhams, Mun. L,ab. Tort., Com'rs T. Eiggs, 24 Kan. 257; City ^''- ^.' '^^'"S El Paso County Com'rs . of Wellington V. Wellington Tp., 46 "■ ^^^^' ^^ ^°^°- ^''^J ^^e, also, Kan. 213; Parker v. Scogin, 11 La. '^^^^^ ^- Chowan county Com'rs, Ann. 629; Small v. Inhabitants of ^0 N. C. 437; Hamilton County Danville, 51 Me. 359 ; People v. Com- Com 'rs v. Mighels, 7 Ohio St. 109 ; mon Council of Detroit, 28 Mich. Chosen Freeholders of Sussex County 228; Hamilton County Com'rs v. v. Strader, 18 N. J. Law (3 Har.) Mighels, 7 Ohio St. 109; Lehigh 108; Cooley, Const. Lim. 247. 12 PUBLIC SECURITIES states, reference must be necessarily had to the authori- ties in each state for the proper designation of a par- ticular public corporation and no attempt of necessity can be made in this work to make an exhaustive citation of all the cases. ^' 15 — Sherman County v. Simmons, 109 U. S. 735. A county is not a corporation within the meaning of the constitution of Nebraska that ' ' the legislature shall not pass any local or special laws « * * granting to any corporation," etc. Town of Enfield v. Jordan, 119 U. S. 680. A village as used in See. 10, 111. act of Feb. 24, 1869, relative to the granting of railroad aid bonds includes an incorporated town. Atchison Board of Education v. De Kay, 148 U. S. 591. The Board of Education of the city of Atchison in the State of Kansas is a distinct corporation separate from the city of Atchison. Fallbrook Irrigation District v. Bradley, 164 U. S. 112. An Irriga- tion district held to be a public cor- poration. Clapp V. Otoe County (Nebr.), 104 Fed. 473. A precinct under the stat- utes of Nebraska is a mere political subdivision of a county. It is not a municipal or quasi municipal corpo- ration or entity. Wills V. Bates County, 170 Fed. 812. A drainage district not a quasi corporation under the Missouri Drainage Act. Eev. Stat. 1899, Sees. 82, 83, as amended by Laws 1905, p. 182. Kumpe V. Bynum, Ala. 48 So. 55. A county is a governmental agency and in a sense a municipal corpora- tion. Sixth District Agricultural Asso- ciation V. Wright (Calif.), 97 Pac. 144. An agricultural association duly organized under the laws of the state is a public agency of the state charged with the performance of a part of the functions of the state government. City of Santa Monica v. Los An- geles County (Calif.), 115 Pac. 945. A county but a branch of the state government. Hammond v. Clark (Ga.), 71 S. E. 479. The word "county" de- fined. School, City of Marion v. Forest, 78 N. E. 187 (Ind.). A li- brary board not a corporation. State V. Board of Com'rs of Ma- rion County (Ind.), 82 N. E. 482, 85 N. E. 573. A county is an in- voluntary corporation organized as a political subdivision of the state by the legislature solely for govern- mental purposes. State V. Gerdink (Ind.), 90 N. E. 70. The word ' ' town ' ' as used in Constitution, Art. 6, Sec. 6, is gen- eric and includes city. Posey Township, Franklin Coun- ty V. Senour (Ind.), 86 N. E. 440. Townships are the lowest class of municipal corporations. Austin Western Company v. Weaver Township (la.), 114 N. W. 189. A township is not a legal en- tity, cannot be sued; see, also as holding the same. Davis v. Laugh- lin, 124 N. W. 876. Marion County v. Eives & Mc- Chord (Ky.), 118 S. W. 309. A county is a local subdivision of the state, created by the state of its INTKODUCTORY AND DEFINITIONS 13 A corporation possesses certain rights and pow- ers, and there may be imposed upon it by the sovereign certain duties and obligations. Between the two classes of public corporations under discussion a marked differ- ence is found in these respects. This follows from vari- ous causes, one of which is the fact that as a rule the government of a public quasi corporation is imposed by the sovereign upon the people residing within certain geographical limits, without consulting their desires or wishes. On the other hand, the government or charter own will and is not a municipal cor- poration proper. State ex rel. Applegate v. Taylor (Mo.), 123 S. W. 892. A drainage district is a public corporation. Board of Education, etc. v. Board of Education, etc. (N. Y.), 71 N. E. 1128. A school district is a municipal corporation within Con- stitution, Art. 8, Sec. 1, excepting such corporations from the provi- sion against creating corporations by special act. Millville Gas Light Co. v. Vine- land Light & Power Co. (N. J.), 65 Atl. 504. The word "town" as used in legislative acts in New Jer- sey has no fixed significance and its use must be applied according to the manifest legislative intention as gathered from the occasion and ne- cessity of the act. Herman & Grace v. Board, etc. of Essex Co. (N. J.), 64 Atl. 742. A county held to be a municipality within the meaning of act of March 30, 1892, Public Laws, p. 369. Smith V. Board of Trustees, etc. (N. C), 53 S. E. 524. School dis- tricts are public quasi corporations included in the term "municipal corporation" used in Constitution, Art. 7, Sec. 7. Wittowsky v. Board of Commis- sioners of Jackson County (N. C), 63 S. B. 275. Townships are not corporate bodies but sometimes re- ferred to in legislative acts as quasi municipal corporations. Burgin v. Smith (N. C), 66 S. E. 607. Counties are subdivisions of the state created by the legisla- ture for political and civil purposes as agencies of the state government and they are subject to legislative control so that the legislature may compel them to levy taxes to the constitutional limit. Prantz v. Autry (Olda.), 91 Pac. 193. A county is a mere territorial division of the state, created for public and political purposes con- nected with the administration of the state government. Yamhill County v. Poster (Ore.), 99 Pac. 286. A county is not. a pri- vate corporation, but merely a polit- ical agent of the state created for governmental purposes. Lincoln County v. Brock (Wash.), 79 Pac. 477. A county is a munic- ipal corporation within Constitution, Art. 1, Sec. 16. See, also, numerous authorities cited in Abbott Munic. Corps, pp. 12-16. 14 PUBLIC SECXJKITIES of a municipal corporation proper is usually suggested by the sovereign and adopted or accepted by the pSople residing within a certain district. The fact that the government or organization is imposed in the one case and adopted or accepted in the other leads to the cor- relative part of the proposition, namely, the relative duties and obligations of the two classes of corporations, and we find upon an examination of the authorities that the duties and obligations resting upon the public quasi corporations are less in number, and these less burden- some, than those which devolve upon the municipal cor- poration proper. The people residing within a municipal corporation are given a greater latitude and degree of local self government, in adopting measures looking to their local advantage, than those residing within a pub- lic quasi corporation ; and as their powers and duties are not thrust upon them, but acquired voluntarily to a large extent, it follows as just and proper that their obligations and duties be in the same measure increased and of a higher character. § 8. Hamilton County Commissioners v. Mighels. One of the early and also a leading case, considering the differences between a municipal corporation and a public quasi corporation is that stated in the title of this section. The principles there stated have been uni- versally followed and the case frequently cited. The court in part in its opinion held that, "As before re- marked, municipal corporations proper are called into existence either at the direct solicitation or by the free consent of the people who will compose them. "Counties are local subdivisions of a state, created by the sovereign power of the state, of its own sovereign will, without particular solicitation, consent, or con- current action of the people who inhabit them. The former organization is asked for, or at least assented INTKODTJCTOBY AND DEFINITIONS 15 to, by the people it embraces ; the latter is superimposed by a sovereign and paramount authority. "A municipal corporation proper is created mainly, for the interest, advantage, and convenience of the lo- cality and its people; a county organization is created almost exclusively with a view to the policy of the state at large, for purposes of political organization and civil administra'tion, in matters of finance, of education, of provision for the poor, of military organization, of the means of travel and transport, and especially for the general administration of justice. With scarcely an ex- ception, all the powers and functions of the county organization have a direct and exclusive reference to the general policy of the state, and are, in fact, but a branch of the general administration of that policy." '^ § 9. Elements of a public corporation. The fundamental idea in the definition of a public corporation of any grade is the one that it is an organ- ization or an incorporation of the persons residing within a certain prescribed physical territory and the property included within its limits. It is not merely an organization of natural persons into an artificial one The physical elements comprising public corporations consist of the people and the property within certain limits. The name may be changed or the organization of a day abolished and another take its place but the duties and the obligations of that locality remain the same and cannot be changed through the dissolution of the artificial person or a change in the name of the legal person. This principle has repeatedly been the basis of decisions sustaining the character of public securities as valid claims against a new corporation including the 16 — Hamilton County Comm'rs v. Mighels, 7 Ohio St. 109. 16 PUBLIC SECXJEITIEB territory of an old organization dissolved pursuant to an act of the legislature or by order of court. The language used in these decisions recognizes unquali- fiedly the principle stated and the same doctrine is the basis of constitutional or legislative provisions provid- ing for the adjustment of debts and liabilities of public corporations upon a change in their boundaries through either division or annexation.'' § 10. Definition and classification of public securities. The phrase "public securities" as used in its broadest sense and as referred to in this work includes negotiable securities, municipal warrants, school district orders and all other evidences of indebtedness issued by the state and its minor civil subdivisions including cities, towns, villages, counties, townships, road districts, school dis- tricts, and other subordinate corporations created under authority of law to aid the sovereign state in executing its governmental functions and performing its public duties. It will be found upon an examination of the authorities that public securities as thus noted are di- vided into two classes: first, negotiable bonds issued under authority of law, negotiable in their form and character and to which are usually attached coupons containing like promises to pay as found in the body of the bond and representing the several installments of interest as they fall due; second, evidences of indebted- ness usually denominated warrants, orders, or certifi- cates, non-negotiable in character. In form, they are. 17 — See Sees. 179, 212 and 446 purposes is an investing of the peo- post. pie of a place with the local govern- State V. Barker, 116 la. 96, 89 ment thereof constituting an imperi- N. W. 204. The term ' ' public cor- um in imperio, the corporators and poration ' ' embraces both the terri- the territory are the essential ele- tory and the inhabitants. ments, all else being mere incidents Grennan v. Carson (Okla.), 107 or forms. Pac. 925. A charter for municipal INTEODUCTOEY AND DEFINITIONS 17 orders drawn by ttie proper authorities in the name of a public corporation and directing the payment of the sum therein stated upon presentation to the proper official from either a special fund set aside for their payment or from the general funds of the corporation." § 11. Definition of negotiable bonds. Negotiable bonds are evidences of indebtedness issued under legislative authority by the state or some one of its minor civil subdivisions negotiable in char- acter and form, payable at a future date, transferable by endorsement or delivery, usually under the seal of the corporation issuing them, with coupons attached rep- resenting the annual or semi-annual installments of in- terest as they respectively fall due. Daniel in his work on negotiable instruments refers to them in the follow- ing language: "The inventive spirit of modern finance and commerce, stimulated by the prodigious strides of internal improvements, has thrown into circulation a new species of securities for money which has sprung at once to the front rank of negotiable instruments. This security is styled a 'coupon bond.' A vast portion of the wealth of the country is represented in 'coupon bonds.' The reports of all the courts have been filled for the last ten years with decisions respecting their nature and uses. Every banker, merchant, capitalist and business man is deeply interested in the law concerning them. ' ' " Some 18 — Abbott Municipal Corpora- Elgin, 136 111. App. 435. An instru- tions, Sees. 170, et seq., 226, et seq. ment is not a bond within the mean- City of Nashville v. Bay, 19 Wall. ing of the local improvement act of 468. 189/ notwithstanding it may contain 19 — Daniel on Negotiable Instru- an express promise to pay money ments (5th Ed.), Sees. 1486, 1488. when it does not conform to the Tally V. Commissioners' Court provisions of the act. (Ala.), 39 So. 167. Court house Lane v. Embden, 72 Me. 354. The warrants not bonds within Const. word "bond" in its ordinary mean- See. 22. ing includes instruments not under First National Bank v. City of seal by which the maker binds him- p. s.— 2 18 PUBLIC SECUKITIES of the earlier decisions denied to them their true char- acter of negotiable instruments under the law mer- chant but the universal holding at the present time and for many years has been that when in form they comply with the essentials of a negotiable instrument they are to be received as such, they pass by delivery or endorse- ment, possess all the attributes of commercial paper and are not subject to equities, where the power to issue ex- ists, in the hands of bona fide holders for value without notice and before maturity. Their nature will be further and fully considered in the sections relating to the negotiability of public securities. In an early case in the Supreme Court of the United States,^" Justice Grier discussed and stated clearly and concisely some of the characteristics of negotiable or mu- nicipal bonds : "This species of bonds is a modern inven- tion, intended to pass by manual delivery, and to have the qualities of negotiable paper, and their value depends mainly upon this character. Being issued by states and corporations, they are necessarily under seal. But there is nothing immoral or contrary to good policy in making them negotiable, if the necessities of commerce require that they should be so. A mere technical dogma of self to pay money, as well as instru- 187. Under Const. Art. 16, Sec. 5, ments for like purposes under seal. as amended in 1894, permitting the Tucker v. Ealeigh, 75 N. C. 267. investment of school funds "in na- A bond is an acknowledgment of tional, state, county, or municipal indebtedness under the corporate or school district bonds," bonds seal. issued by a city already indebted to McCully V. Board of Education its constitutional limit for the pay- of Eidgefield Township, 42 Atl. 776. ment of a waterworks plant, payable Bonds issued by school districts un- out of a special fund composed of der authority of Gen. Stat., pp. 3038, a fixed per cent of the gross receipts 3042, are not mortgages notwith- of the plant, are not regarded as standing they are a lien by statute municipal bonds, on the property of the inhabitants 20 — Mercer County v. Hackett, 1 of the district. Wall. 83. State V. Clausen (Wash.), 82 Pac. INTKODXJCTOKY AND DEFINITIONS 19 the courts or the common law cannot prohibit the com- mercial world from inventing or using any species of security not known in the last century. Usages of trade and commerce are acknowledged by courts as part of the common law, although they may have been unknown to Bracton or Blackstone. And this malleability to suit the necessities and usages of the mercantile and com- mercial world is one of the most valuable character- istics of the common law. When a corporation covenants to pay to bearer and gives a bond with negotiable quali- ties, and by this means obtains funds for the accom- plishment of the useful enterprises of the day, it cannot be allowed to evade the payment by parading some obso- lete judicial decision that a bond, for some technical reason, cannot be made payable to bearer. That these securities are treated as negotiable by the commercial usages of the whole civilized world, and have received the sanctions of judicial recognition, not only in this court but of nearly every State in the Union, is well known and admitted. ' ' *^ § 12. Warrants, orders, certificates, etc.; their nature and definition. The essential difference between the evidences of in- debtedness stated in the title of this section and negoti- able or municipal bonds as the term is variously used, is that the latter are regarded as commercial paper ac- cording to the usages of trade while the former are not considered as negotiable instruments. They are uni- versally held to be, although in some instances in the form of commercial paper, mere orders or promises to pay the amount stated therein. The holder, although he may be a bona fide one, does not possess an absolute title free from all equities that may exist as between the 21 — See Chap. X post. 20 PUBLIC SECUBITIES original parties. The Supreme Court of the United States ^^ defined the instruments included in this sec- tion as "vouchers for money due, certificates of indebt- edness for services rendered, or for property furnished for the use of the city, orders or drafts drawn by one city ofificial upon another, or any other device of the kind used for liquidating the amounts legitimately due the public creditors; and are therefore necessary instru- ments for carrying on the machinery of municipal ad- ministration and for anticipating the collection of taxes out of which they must ultimately be paid. But to in- vest such documents with the character and incidents of commercial paper so as to render them in the hands of a bona fide holder absolute obligations to pay, however irregularly or fraudulently issued, is an abuse of their true character and purpose." Such evidences of indebt- edness are usually payable out of certain designated funds upon presentation and their payment is depend- ent upon funds available for that purpose. The subject will be treated fully in the subsequent chapter relating to warrants. §13. Coupons; their nature and definition. The term "coupon" is derived from the French "cou- per" to cut; and it is defined by Worcester to signify one of the interest certificates attached to transferable bonds and of which there are usually as many as there are payments to be made, so-called because it is cut off when presented for payment.^^ Coupons are substan- tially a minute repetition of what is contained in more complete terms in the bond. They are attached to the bond to be separated therefrom at the convenience of 22 — Mayor of Nashville v. Bay, 23 — Daniel Negotiable Instru- 19 Wall. 468. ments (5th Ed.), Sec. 1489. INTBODUCTOEY AND DEFINITIONS 21 the holder and to be thereafter negotiated as money or the representative of money by simple delivery.^* In a decision by the Supreme Court of the United States,^^ Mr. Justice Nelson said, in considering the nature of the coupon : ' ' The coupon is not an independent instrument like a promissory note for a sum of money but is given for interest, thereafter to become due upon the bond which interest is a parcel of the bond and par- takes of its nature; * * * These coupons are sub- stantially but copies from the body of the bond in re- spect to the interest and as is well known are given to the holder of the bond for the purpose : first, of enabling him to collect the interest at the time and place men- tioned without the trouble of presenting the bond every time it becomes due; and, second, to enable the holder to realize the interest due or to become due by negotiat- ing the coupons to the bearer in business transactions on whom the duty of collecting them devolves." Other definitions and a full discussion of the nature and principles of law relating to the collection of cou- pons will be found in the subsequent chapter upon this subject.** 24 — Evertsen v. National Bank, ard v. Bates County, 43 Fed. 276; 4 Hun., 569, 66 N. T. 14. Butterfield v. Town of Ontario, 44 25 — City of Kenosha v. Lamson, Fed. 171; Williams v. Moody, 95 9 Wall. 483. Georgia 8, 22 S. E. 30; Meyers v. 26— Aurora v. West, 7 Wall. 82; York & C. E. E., 43 Me. 232; Ben- Tennessee Bond Cases, 114 U. S. well v. City of New York, 55 N. J. 663 ; Nesbitt v. Independent District Eq. 260, 36 Atl. 668. of Eiverside, 144 U. S. 610; How- CHAPTER II. THE CREATION AND POWERS OF PUBLIC CORPORATIONS § 14. The power to create a public corporation. From tte fact that all corporations are artificial per- sons it follows that they must be created by a sovereign power or the state. They may be organized or incor- porated pursuant to general directions found in the con- stitution of a state, the provisions of general enabling acts or statutes, or through or by means of a special act or a special charter granted by the legislature of a state when not in contravention of a constitutional pro- vision prohibiting the passage of special legislation.' The organization of municipal corporations whereby their members exercise political rights and duties is a marked feature of American government. It is based on the fundamental idea that the people are the source of all political power and have an inherent right to exer- cise it at pleasure and controlled only by constitutional provisions. In the United States the power to create public corporations is lodged in the Federal government and in the various state governments as quasi independ- ent sovereigns.^ The states being quasi independent sovereigns or gov- 1 — See Abbott's Municipal Cor- eising the same powers, jurisdiction porations, Sec. 9, et seq. and cases and privileges cannot exist at the cited in the notes. same time within the same territory. Vernon v. Board of Supervisors 2 — Madison, The Federalist, Sept. of San Bernardino County (Calif.), 14, 1787; Jefferson's Memoirs 76 Pac. 253. In re Sanitary Board (1829), 523, 526; Act of Congress of East Fruitvale Sanitary District Feb. 21, 1871, 16 Stats at Large, (Calif.), Ill Pac. 368. Two dis- 419; McCulloch v. Maryland, 4 tinct municipal corporations exer- Wheat. (U. S.) 316; Osborne v. 22 CEEATION AND POWEKS OP PUBLIC COEPOBATIONS 23 emments not of enumerated powers possess the usual attributes of sovereignty, including the creation of arti- ficial persons and except as limited by the constitution of the United States, have the power to create corpora- tions for public 'purposes with all the means of self government including that of levying taxes for local purposes.^ The power to incorporate as possessed by a legislative body, since it is itself one delegated, cannot usually be delegated to subordinate bodies or officers, either legis- lative, judicial, or ministerial in their character, though the rule does not apply to purely clerical, mechanical or ministerial acts.* § 15. The charter of public corporations and its legal nature. The charter of a corporation is its legal authority to exist and exercise its powers as such. It may be a writ- ten instrument, or its existence may not be actual but Bank of U. S., 9 Wheat. (U. S.) acting directly, though not person- 738; Barnes v. Dist. of Col., 91 U. ally according to the rules estab- S. 540; State v. Cederaski (Conn.), lished by the majority. Bennett 69 Atl. 19. Trust Company v. Sengs tacken 3— See Abbott Municipal Corpo- (Ore.), 113 Pac. 863. rations. See. 11; Allen v. Board of Arey t. Lindsey (Va.), 48 S. E. Trustees of City of Bakerafield 889, construing Const, of 1902, Sec. (Calif.), 109 Pac. 486; Boise City 117, providing for the enactment of National Bank v. Boise City (Ida- general laws for the organization ho), 100 Pac. 93; State v. McDon- of cities and towns, aid (Minn.), 112 N. W. 278; State State v. Board of County Commis- V. Mayo (N. D.), 108 N. W. 36; sioners of Spokane County (Wash.), Smith V. Borough of Hightstown 94 Pac. 897, construing Const. Art. (N. J.), 57 Atl. 901. 11, Sec. 4, relative to the adoption Kierpan v. City of Portland of township organization. (Ore.), 112 Pac. 402. The term 4 — People v. Bancroft, 2 Idaho "republican" as used in the Fed- 1077, 29 Pac. 112; Commonwealth eral Constitution, Art. 4, Sec. 4, Heal Estate Company v. City of guaranteeing to every state a repub- South Omaha (Nebr.), 110 N. W. lican form of government means a 1007; see to the contrary. State v. government by the citizens en masse, Forest County, 74 WIb. 610. 24 PUBLIC SECUEITIES presumed, through either the doctrines of prescription or implication. One of the fundamental differences, it might be said the essential difference, between a public and a private corporation, is that in the case of a private corporation the charter is regarded as a contract under that clause in the constitution of the United States forbidding the states from passing any law impairing the obligation of a contract. The charter of a public corporation is not. considered a contract, nor does it come within the doc- trine of the Dartmouth College case.* The reason for this difference of lidding may be briefly stated: A public corporation, a municipal corporation considered in its character as a public corporation, and a public quasi corporation, are each and all regarded as agencies of the government. They are involuntary polit- ical or civil divisions of the state created by authority of law to aid in the administration of government. What- ever of power they possess, or whatever of duty they are required to perform, originates in the authority 5 — Trustees of Dartmouth College poration consists of the creative acts V. Woodward, 4 Wheat. (U. S.) and all laws in force relating to 518; Town of Mt. Pleasant v. Beck- the corporation either defining its •with, 100 TJ. S. 514; Prince v. powers or regulating their mode of Crocker, 166 Mass. 347; Mills v. exercise. Williams, 33 N. C, 11 (Ired. L.) Chalstran v. Board of Education 558; Sharpless v. City of Philadel- of Knox County, 244 111. 470; 91 phia, 21 Pa. 147; Town of Mont- N. E. 713. The charter not a cou- pelier v. Town of East Montpelier, tract. Horton v. City Council of 29 Vt. 12. Newport, 27 E. I. 283, 61 Atl. 759; Piatt T. City and County of San Southwestern Telegraph & Tele- Prancisco (Calif.), 110 Pae. 304. phone Company v. City of Dallas A municipal charter is the consti- (Texas), 134 S. W. 321, reversing tution of a municipality enumerat- 131 S. W. 80. ing and giving to it all the powers Sargent v. Clark (Vt.), 77 Atl. it possesses unless other statutes are 337. The action of the state- in also applicable to it. enlarging, restricting or destroying City of St. Petersburg v. English the corporate existence of a town (Pla.), 45 So. 483. The word does not impair contract obligation! "charter" as it is called when used within the meaning of the Federal in connection with a municipal cor- Constitution. CEEATION AND POWEES OF PUBLIC COEPOEATIONS 25 creating them. They are organized mainly for the in- terest, advantage and convenience of the people resid- ing within their territorial boundaries and the better to enable the government, the sovereign, to extend to them the protection to which they are entitled, and the more easily and beneficently to exercise over them its authority. The powers which they exercise in their pub- lic capacity are powers of the state, and the duties with which they are charged are duties of the state.® The rights conferred upon the people residing within the limits of these organizations are political in their character, and it has been said that, "It is an unsound and even an absurd proposition that the political power conferred by the legislature can become a vested right as against the government in any individual or body of men." Entirely different conditions exist and princi- ples apply to private corporations so familiar to all that it is unnecessary to repeat them.'' Not being a contract, therefore, the state has the power to alter, amend, change or repeal the charter of a pub- lic corporation at will. "A municipal corporation (in a broad sense) may be viewed in different aspects; that which it has to the citizen and that which it bears to the state. Seen in the latter relation it is a revocable agency constituted for the purpose of carrying out in detail such objects of the government as may be properly in- trusted to a subordinate; having no vested right to any of its forms or franchises, and entirely under the con- trol of the legislature, which may enlarge or circumscribe its territorial limits or functions, may change or modify its various departments, or extinguish it with the breath of arbitrary power. ' ' * 6— Askew V. Hale County, 54 Ala. Meriwether t. Garrett, 102 U. S. 639. 472; City of Covington v. Kentucky, 7— People V. Morris, 13 Wend. 173 U. S. 231. (N. Y.) 325. Hunter v. City of Pittaburgh, 207 8 — 1 Hare Const. Law, p. 628; TJ. S. 161. The court in its 26 PUBLIC SECUEITIES "Public or municipal corporations are established for the local government of towns or particular districts. The special powers conferred upon them are not vested rights as against the state, but being wholly political, exist only during the will of the general legislature; otherwise there would be numberless petty governments existing within the state and forming part of it, but in- dependent of the control of sovereign power. Such powers may at any time be repealed or abrogated by the legislature, either by a general law operating upon the whole state, or by a special act altering the powers of the corporation."^ On the other hand, the grant of authority from the state to a private corporation is considered a contract, within the rule as announced in the Dartmouth College Case, subject only to change or repeal by the sovereign opinion by Justice Moody uses the following language after citing many cases. "Municipal corpora- tions are political subdivisions of the state, created as convenient agencies for exercising such of the governmental povpers of the state as may be intrusted to them. For the purpose of executing these powers properly and eiEciently, they usually are given the power to ac- quire, hold and manage personal and real property. The number, na- ture and duration of the powers conferred upon these corporations and the territory over which they shall be exercised rests in the abso- lute discretion of the state. Neither their charters nor any law conferring governmental powers, or vesting in them property to be used for gov- ernmental purposes or authorizing them to hold or manage such prop- erty or exempting them from taxa- tion upon it constitutes a contract with the state within the meaning of the Federal Constitution. The state therefore, at its pleasure, may modify or withdraw all such powers, may take without compensation such property, hold it itself, or vest it in other agencies, expand or contract the territorial area, unite the whole or part of it with another munic- ipality, repeal the charter and de- stroy the corporation. All this may be done, conditionally or uncondi- tionally, with or without the con- sent of the citizens or even against their protest. In all these respects, the state is supreme, and its legis- lative body conforming its action to the state Constitution, may do as it will unrestrained by any provi- sion of the Constitution of the United States." Straw v. Harris (Ore.), 103 Pac. 77. 9— Sloan v. State, 8 Blackf. (Ind.) 361. CREATION AND POWERS OF PUBLIC CORPORATIONS 27 upon the terms and conditions which may be found within the instrument itself or which exist in the genei^al laws as a part of it. This doctrine is so firmly established in the jurisprudence of the United States that a mere ref- erence to it is sufficient, and authorities will be found in every state in the Union sustaining it. § 16. Corporate existence and the doctrine of collateral attack. A public corporation is created by direct act of the sovereign or indirectly through a delegated body, by the granting of a charter, which is its written authority to act as a governmental agent, and exercise and perform the appurtenant powers and duties. The corporation may be organized under laws subsequently declared un- constitutional or void, or the formal steps in the organi- zation may be imperfectly or irregularly taken, the con- dition in either case raising a doubt with an adverse decision upon the question being resolved into a cer- tainty. The corporation meanwhile has performed its duties and exercised its powers, it has levied and col- lected taxes, constructed public improvements, incurred debts and liabilities, and entered into contract relations with third parties who have acted in good faith and upon the assumption that the corporation possessed the neces- sary powers. The legality of the existence of the cor- poration or its right to perform these duties and exercise these powers is called in question. What is the effect upon past acts and the relations which exist as their re- sult? And, again, the proposition may present itself, — in what manner, by whom, and at what time can the ques- tion of legal right be raised? The rule of law invariably is that the state alone can question the right of the pub- lic corporation to exist and perform its duties and exer- cise its rights, and then in a proceeding brought for that purpose. And also that the question of legal corporate 28 PUBLIC SECUEITIES existence cannot be raised in a case or proceeding as collateral to the main issue or through collateral at- tack." This doctrine is adopted to protect the rights of inno- cent parties^' and to enable the corporation, however irregularly formed, to compel obedience and enforce its rights.*'' A public corporation exercises afiSrmatively certain functions, or it may enter into contract or other obliga- tions. It is with regret the statement is made that too often public corporations endeavor to avoid or defeat an honest debt or a legal obligation by the claim of no authority or power. In such cases the Federal courts have maintained vigorously the doctrine of collateral at- tack and have repeatedly held, that where there is a 10 — Ealla County v. Douglass, 105 XJ. S. 728; Skapleigh v. San Angelo, 167 U. S. 646; Nat. Life Ins. Com- pany of Montpelier v. City of Hur- on, 62 Fed. 778 ; St. Paul Gas Light Co. V. Village of Sandstone, 73, Minn. 225; Coler v. Dwight School Twp. 3 N. D. 249, with many au- thorities cited and collated; Stuart V. School Dist. of Kalamazoo, 30 Mich. 69; TJ. S. Bank v. City of Kendall, 179 Fed. 914; Reclamation Dist. No. 765 t. MePhee (Cal.), 109 Pac. 1106; People v. Pederson, 220 111. 554, 77 N. E. 251; People V. Bowmani, 247 III. 276, 93 N. E. 244; City of Topeka v. Dwyer (Kan.), 78 Pac. 417. Black ». Early, 106 S. W. 1014 (Mo.). In a suit to restrain the collection of taxes levied by a de facto school district to pay inter- est upon and to create a sinking fund for the payment of bonds, the validity of its organization cannot be attacked. State v. Several Par- cels of Land (Neb.), 113 N. W. 810; Lang v. City of Bayonne, N. J., 68 Atl. 90; Ward v. Grandln (N. D.), 109 N. W. 57; City of Carthage V. Burton (Tex.), Ill S., W. 440; Ex parte Keen (Texas), 125 S. W. 401 ; Agner v. Commonwealth (Va.), 48 S. E. 493; Board of Education of Flatwood's Dist. v. Berry (W. Va.), 59 S. E. 169; see, also, sec. 266 post. 11 — Ashley v. Presque Isle County Sup'rs, 60 Fed. 55; Spear v. Kear- ney Co. Comm'rs, 88 Fed. 749; Co- ler V. Dwight School Twp., 3 N. D. 249, 55 N. W. 587; Brown v. Bon Homme County, 1 S. D. 216; bul see, Euohs v. Athens, 91 Tenn. 20, and see, also, cases cited in the notes to Sec. 32, Abbott Municipal Corporations. 12 — Presque Isle County Sup'rs V. Thompson, 61 Fed. 914; Kewee- naw Association v. School District of Hancock Twp., 98 Mich. 437; Kuhn V. City of Port Townsend, 12 Wash. 605; Hornbrook v. Town- ship of Elm Grove, 40 W. Va. 643. CBEATION AND POWERS OF PUBLIC COKPORATIONS 29 doubt as to the legality of the creation of the corporation which can only be raised by the state, if the state fails to act until after debts are created and liabilities incurred, those obligations are not impaired or destroyed by a sub- sequent dissolution of the corporation,'* or the declara- tion by a Judicial tribunal in a proceeding brought for that purpose that the corporation was originally without legal authority. This doctrine of collateral attack ap- plies also to official acts of officers of public corporations, and it is the rule that in disputes between private parties the validity of a public corporation acting under forms of law cannot be called in question where its corporate ex- istence is unchallenged by the state." § 17. Change of corporate boundaries. A public corporation, using the term in its broad sense, is the organization of a certain geographical district under authority of law for the purpose, if a quasi public corporation, of acting as a governmental agent, — carry- ing out exclusively some one or more of the functions of government; or, if a municipal corporation, of combin- ing with the above additional powers or privileges and of legislating upon matters more particularly affecting the conditions and convenience of those residing within its limits. The corporation in both instances includes, within' its jurisdiction and control, a certain geographical area.; The fact that at the time of its organization it includes or is included within certain limits does not prevent the passage of future legislation enlarging boundaries or dividing territory, or preclude annexation or division under existing laws. To state the principle more con- cisely, a public corporation of whatever class, may have i' 13— Shapleigh v. City of San An- District, 85 Federal 693; State v. gelo, 167 TT. S. 646; see Sec. 266, Whitney, 41 Nebr. 613, 59 N. W. post. 884; State v. Henderson, 145 Mo. 14— Miller v. Ferris Irrigation 329, 46 S. W. 1076. 30 PUBLIC SECUBITIES its territorial limits under authority of law, arbitrarily or otherwise enlarged or reduced. i The paramount question, if action is taken of this character, is that of legislative authority,'^ and the ex- tent and manner of such annexation is a question solely within the discretion of the legislature except as re- strained by constitutional provisions *" with which the courts cannot interfere.^ ^ One of the essential questions involved in a change of corporate boundaries, whether by a division or an en- largement of territory, is the effect of such a change upon existing rights either of the corporation itself, of those residing within its limits or of those who may have had dealings with the corporation. The rule of law is uniform that organized territory cannot avoid or defeat existing rights and oligations by a change in its form of govern- ment or a shifting of its boundaries. The legislature cannot authorize nor will the courts permit the destruc- tion of contract rights or the impairment of legal obliga- tions through such proceedings by dishonest public cor- porations.'^ § 18. Effects of annexation or division upon public property and liabilities. A public corporation, during its existence, acquires property and usually contracts liabilities. This prop- 15 — Abbott Municipal Corpora- 16 — Opinion of Justices, 60 Mass. tions, Sec. 35, et seq.; Gray Limita- 580. tions of Taxing Power, Sec. 482, et 17 — Madrey v. Cox, 73 Texas 538. seq., especially See. 499, et seq.; 18 — See Sec. 23 et seq., post; United States v. City of Memphis, Planters & Savings Bank v. Huiett 97 U. S. 284 ; People v. City of Oak- Twp., 132 Fed. 627, citing many land, 123 Calif. 598 ; Town of Cicero oases ; Chalstran v. Board of Edu- V. City of Chicago, 182 111. 301; cation, etc. of Knox County, 244 Pence V. City of Frankfort, 101 Ky. III. 470, 91 N. E. 712; but see, 534, 41 S. W. 1011; Stone v. City Meriwether v. Garrett, 102 U. S. of Charleston, 114 Mass. 214; Baker 472. County V. Benson, 40 Oregon 207, 66 Pac. 815. CREATION AND POWEES OF PUBLIC COKPOEATIONS 31 erty is partially or wholly paid for through the levy of taxes upon taxable interests within its jurisdiction. In the annexation of territory, the effects of such action are comparatively few and unimportant. When territory is divided, however, other and more serious questions may arise : The obligations or liabilities existing before division ; how apportioned, and if wholly assumed by part of the territory thus divided, by what part; and, on the other hand, what part of this district thus divided should retain the property. On these questions many cases will be found fixing or attempting to fix a rule as to the di- vision of both liabilities and property, which shall be just and equitable considered from the standpoint of the corporation itself and private individuals or credi- tors of the corporation having claims against it.^" In many of the states constitutional provisions have been adopted fixing and establishing the rights and obli- gations of territory affected in cases of change of boun- dary under legislative or constitutional authority.^" 19— New Orleans v. Clark, 95 U. In re Hunter (Minn.), 116 N. W. S. 144; Town of Mt. Pleasant t. 922. The legislature has the right Beckwith, 100 U. S. 514; Comanche to change the boundaries of a munic- County Com'rs v. Lewis, 133 U. S. ipality without apportioning its in- 205; Commonwealth of Virginia v. debtedness and provide for the en- State of West Virginia, 220 U. S. forcement of the liability. 1, 55 L. Ed. 353; Pepin Township Galloway v. City of Memphis V. Sage, 129 Fed. 657; Towle v. (Tenn.), 94 S. W. 75. Legislative Brown, 110 Ind. 68; Mt. Hope acts annexing territory to the city Cemetery v. City of Boston, 158 of Memphis and exempting such Mass. 512 ; City of Winona v. School property from liability for existing Dist. No. 82, 40 Minn. 19; School debts of that city do not create a District No. 3 v. Greenfield, 64 N. contract which cannot be impaired, H. 86; Dare County Com'rs v. Cur- but merely grant privileges revok- rituck County Com'rs, 95 N. C. 192; able at any time by the general as- De Mattos v. City of New What- sembly. com, 4 Wash. 130; Board of Educa- 20— Calif. Art. 11, Sec. 3; Colo, tion of Barker Dist. v. Board of Art. 14, Sees. 4, 5; Ela. Art. 8, Education of Valley Dist., 30 W. Sec. 3; Idaho, Art. 18, Sec. 3; 111. Va. 430; Schreiber v. Langlade Art. 10, Sec. 3; Ky. Sec. 65; La. County, 66 Wis. 629; Forest County Art. 280; Md. Art. 13, Sec. 3; Mo. V. Langlade County, 76 Wis. 610. Art. 9, Sees. 3, 4, 5, 23; Mont. 32 PUBLIC SECUEITIES ' § 19. Division or adjustment of debts and liabilities. Considering first the division or readjustment of in- debtedness or liabilities. Sometimes, under laws author- izing division of territory, the liabilities or different por- tions divided or annexed remain the sole obligation of the original debtor, and taxes are levied by that corpora- tion upon the property within its district to apply on their reduction or payment. The indebtedness generally fol- lows the name; or the indebtedness is assumed propor- tionately by the reorganized corporations,^ and taxes to reduce or pay the same are assessed and levied to that same proportion upon all of the property within their limits.^' Where a new corporation is organized from ter- Art. 16, Sec. 3; Neb. Art. 10, Sec. 3; S. C. Art. 7, Sees. 6, 7; TenB. Art. 10, See. 4; Tex. Art. 9, Sec 1; Wash. Art. 11, Sec. 3; Wyo. Art. 12, See. 2. 21 — Laramie County v. Albany County, 92 TJ. S. 307; Morgan v. Beloit, City and Town, 7 Wall. 613, 617; Burlington Savings Bank v. City of Clinton (la.), 105 Fed. 269; Pepin Township v. Sage, 129 Fed. 657; Ex parte Folsom, 131 Fed 496; Planters & Savings Bank v. Huiett Twp., 132 Fed. 627; Columbia Coun- ty V. King County, 13 Fla. 451; City Council, etc. v. Board of Com- missioners of Adams County, Colo- rado, 77 Pae. 858; Yow v. Sulli- van, 58 S. E. 662; White v. City of Atlanta (Ga.), 68 S. E. 103. Blake v. Jacks (Idaho), 108 Pac. 534. Where a county is enlarged by annexing a portion of another county, the annexed portion is liable for its proportionate share of the debt. Town of Kettle Eiver v. Town of Bruno (Minn.), 118 N. W. 63; Pennsylvania County v. City of Pittsburg (Pa.), 75 Atl. 421; De Mattos v. City of New Whatcom (Wash.), 29 Pac. 933, 4 Wash. State 127; Houston County v. Henry County (Ala.), 47 So. 710; Wheeler V. Herbert (Calif.), 92 Pac. 353. , Pass School District, etc. v. Holly- wood City School Dist. (Calif.), 105 Pac. 122. In the absence of a legis- lative apportionment the common law rule obtains which leaves the property where it is found and the debt on the original debtors. Hayes v. Walker (Fla.), 44 So. 1147. Maumee School Township v. School town of Shirley City (Ind.), 65 N. E. 285. Creating a corpora- tion is not equivalent to annexation to an existing corporation. Terri- tory V. Board of Commissioners of Santa Fe County (N. M.), 89 Pae. 252. Cummins v. Gaston (Texas), 109 S. W. 47. An act making a bonded indebtedness created for the erec- tion of a school building a charge upon tax payers in added territory not originally liable for its pay.- CREATION AND POWEES OP PUBLIC COBPOEATIONS 33 ritory formerly comprised within others, a law providing for the assumption of all indebtedness by the new and that all existing rights of action by or against either may be maintained by or against the new corporation, it has been held, does not create a new debt or renew by im- plication the time of payment so as to affect the running of the statute of limitations against the old,^^ and it has also been held that where a part of a public corporation is separated from it, it is not necessary to provide for a readjustment of the debts or a division of the property in order that the law should be valid.^* A public corporation may change its character under lawful authority, passing from a public quasi corpora- tion to a municipal corporation of the highest grade or degree of organization embracing, however, the same territory. The rule is clearly established that such a change does not work a forfeiture of any rights exist- ing as against the old corporation, or defeat any of its liabilities, but that, so far as its obligations and liabili- ties are concerned, the new corporation is liable for the debts of the old. The transition does not work the disso- lution of the civil life of the corporation so as to extin- guish its indebtedness. The obligations remain the same and are not impaired or destroyed.^* ment, is in excess of legislative Town of Spooner v. Town of Min- power and therefore void. In re ong, 104 Wis. 425. Fremont County, 54 Pacific, 1073; 23 — Cullman County v. Blount see, also cases cited Abbott Munic- Co. (Ala.), 49 So. 315; Garland ipal Corporations, Sec. 46, especially County v. Hot Springs County, 68 notes 186 and 187; but see Geo. D. Ark. 83; Stuart v. Kirley, 12 S. D. Barnard & Co. v. Board of Commis- 245, 81 N. W. 147. sinners of Polk County (Minn.), 24 — Manahan v. Adams County 108 N. W. 294. (Nebr.), 110 N. W. 860. 22 — Robertson v. Blaine County, East Montpelier v. City of Barre 85 Federal 735; Montgomery Coun- (Vt.), 66 Atl. 100. The liability, ty V. Taylor, 142 Ky. 547, 134 S. however, would not accrue in favor W. 894; Kahrs v. City of New of an illegal claim. Washburn York, 90 N. Y. S. 793; Huffmire v. Water Works Company v. aty of City of Brooklyn, 162 N. Y. 584; Washburn (Wis.), 108 N. W. 194; p. s.— 3 34 PUBLIC SECUBITIES The same principle also applies where there has been a consolidation of different public corporations. The consolidated corporation succeeds to all the rights and assumes all of the obligations of the constituent organi- tions.^" And logically following this rule it is also held that the powers of the new corporation to levy taxes for the payment of such obligations remain the same. They are not or cannot be lessened so as to defeat the rights of creditors of the old corporation.^® The act of division and reapportionment of the debts, even upon a failure of the legislature to include a scheme or plan for the reapportionment and readjustment of the debts and property of the territory affected is consid- ered legislative in its character, political action on the part of the sovereign not to be interfered with or changed by the judicial branch.^^ see, also, Sec. 23 et seq., post, Ab- bott Municipal Corporations, cases cited Note 192, page 82. 25— Mt. Pleasant v. Beckwith, 100 TJ. S. 514, Speer v. Board of Com- missioners of Kearney County, 88 Fed. 749 ; D 'Esterre v. City of New York, 104 Fed. 605; Taylor v. Pine Grove Township, Saluda County, 132 Federal 565. White V. City of Atlanta (Ga.), 68 S. B. 103. A statute authorizing the annexation to Atlanta of Oak- land City and providing that the city of Atlanta should assume all its debts is not unconstitutional as attempting to loan the credit of Atlanta to Oakland City in violation of Civil Code 1895, Sec. 5891. Wayne County Savings Bank v. School District No. 5, etc. (Mich.), N. W. 378; Carpenter v. Town of Central Covington (Ky.), 81 S. W. 919. 26 — Louisiana v. Pilsbury, 105 U. S. 278. The annual tax was the security offered to the creditors; and it could not be afterward sev- ered from the contract without violating its stipulations any more than a mortgage executed as securi- ty for a note given for a loan could be subsequently repudiated as form- ing no part of the transaction. Su- song V. Cokesbury Township, Abbe- ville County, 132 Fed. 567; Boston & C. Smelting Company v. Elder, 77 Pac. 258; Toney v. City of Macon (Ga.), 46 S. E. 80. Carpenter v. Town of Central Covington (Ky.), 81 S. W. 919. An exemption from taxation follows the property upon its being annexed. White V. City of Atlanta (Ga.), 68 S. E. 103; Shoshone County v. Pro- fit (Idaho), 84 Pac. 712; Milster v. City of Spartanburg (S. C), 46 S. E. 539. 27 — Burleigh County v. Kidder County (N. D.), 125 N. W. 1063; Riverside County v. San Bernardino County, 134 Calif. 517, 66 Pac. 788; CBEATION AND POWEES OF PUBLIC COEPOBATIONS 35 Some of the attempts to formulate a rule applying to the adjustment or reapportionment of debts or property in the case of division of territory have been referred to in the foregoing paragraphs. A favorite expression of the law makers in announcing such a rule is the use of the word "ratable" or "proportionate." The debts and property must be adjusted in a ratable or proportionate manner, the words applying either to the population or the comparative assessed valuation of taxable property of the different portions.^* In some eases law makers attempt to arbitrarily decide what is either ratable or a just and equitable division of the debts and property of the territory divided or consoli- dated without any reference of these questions to local authorities for their determination.^^ § 20. The legal authority; where existing. The legislature having arbitrary power, as has been said, over the organization of all public corporations, In re Sugar Notch Borough, 192 and be liable for a just proportion Pa. 349; Blount County v. Loudon of the existing debts or liabilities County, 67 Tenn. 74; Eiehardson of the parish or parishes from which T. Boske, 111 Ky. 893, 64 S. W. said property is taken, an act of 919; Town of South Portland v. the legislature which fails to fix a Town of Cape Elizabeth, 92 Me. division of the assets and liabilities 328; Town of Ackley v. Town of or to provide a method by which Vilas, 79 Wis. 157, 48 N. W. 257. this can be determined is invalid. 28 — Town of Emery v. Town of Town of Farley v. Town of Box- Worcester, 118 N. W. 807; Wheeler ville (Minn.), 129 N. W. 381; Mun- V. Herbert (Calif.), 92 Pae. 353; hall Borough School Dist. v. Mifflin Shoshone County v. Profit (Idaho), Twp. School Dist., 207 Pa. 638; 56 84 Pac. 712, construing Const. Art Atl. 1125. A legislative act pro- 18, Sec. 3; Shoshone County v. viding for an accounting and an Thompson (Idaho), 81 Pac. 73. apportionment of indebtedness and Sandoz v. Sanders (La.), 51 So property rights gives no authority 436. Under Const., Art. 280, wJiich for the assignment of an undue pro- provides that whenever a parish portion. shall be created from contiguous ter- 29 — Pepin Township v. Sage, 129 ritory, it shall be entitled to a just Fed. 657. In the absence of con- proportion of the property in assets stitutional provisions, it is within 36 PUBLIC SECUEITIES to create or dissolve them, increase or diminish their boundaries, legislate as to their debts or liabilities and property, except so far as the rights of third parties may be affected, it follows that upon the division or annexa- tion of territory it has the right and power to determine and apportion, in a fitting manner, the obligations and the property of those corporations. It is for the legis- lature to determine to what extent the property or the inhabitants of the detached portion shall bear the bur- dens of the organization to which they formerly be- longed.^" The courts, even under constitutional pro- visions to the effect that every organization created out of another shall be liable for a just proportion of exist- ing debts, do not have the power to determine such pro- portion. It is held that this is a legislative question. It is for the legislature to either itself determine what this proportion shall be or to establish a rule or basis for the division, and where an act of division imposes what seems to be a disproportionate part of the liabilities or burdens, the courts have no power to inquire and adjust the obligations upon a different basis.^* § 21. Agency of apportionment. As already suggested, the basis of division or appor- tionment of debts and property of a portion of the terri- the power of the legislature upon Calif. 495; In re House Bill No. the dissolution of a municipal cor- 231, 9 Colo. 624; Clay County v. poration and the transfer of its Chickasaw County, 76 Miss. 418. territory to others to apportion its 30 — Desha County v. State (Ark.), indebtedness between such others and 84 S. W. 625; State v. Browne, 56 to determine what proportion shall Minn. 269; 57 N. W. 659; Town be borne by each; in the absence of Eutland v. Town of West Rutland, of legislative action they will be 68 Vt. 155; 34 Atl. 422. severally liable in proportion to the 31 — Desha County v. State (Ark.), value of the taxable property of the 84 S. W. 625; County of Tulare v. dissolved corporation which falls Kings County, 117 Calif. 195 ; Sedge- within their boundaries San Diego wick County v. Bunker, 16 Kan. 498 ; County V. Eiverside County, 125 City of Baltimore v. State, 15 Md. CEEATION AND POWEES OF PUBUC COEPOEATIONS 37 tory divided or annexed may be fixed by the legislature in the authority given for such action, or it may provide for the appointment of a board, or place upon some ex- isting official body the burden and duty of determining this question. In some instances it is left to an existing judicial body ; in others the apportionment is determined by a board ministerial or executive in its character.^^ It is usually held that a duty thus devolving upon these officers or bodies is a continuing one, and their refusal to perform such duty does not defeat or impair the rights of parties intended by the legislature to be established in this way.^^ The authority of boards whose duty it is to ascertain the amount of the debt at a certain time, and apportion it, is limited to what might be termed purely clerical duties. They have no power or authority to pass upon and determine the validity of indebtedness,^* and in the absence of fraud or mistake their action is final and will not be disturbed, though questions of law may be passed upon after appeal to the courts.^* 376; stone v. C5ty of Charleiton, Atl. 155; Town of Emery v. Town 114 Mass. 214; Town of Montpelier of Worcester, 118 N. W. 807. V. Town of East Montpelier, 29 Vt. 33— Elmore, Logan and Bingham 112. Counties v. Alturas County, 4 Idaho 32— Morgan v. Beloit, City and 145 ; 37 Pacific 349 ; People v. Town Town, 7 Wall. 613; Fontenot v. of Oran, 121 111. 650; 13 N. E. 726. Young (La.), 54 So. 408; Town of 34 — Blaine County v. Lincoln Partridge v. Dennie (Minn.), 117 County, 6 Idaho 57; 52 Pac. 165; N. W. 234. An adjustment of out- State v. McNutt, 87 Wis. 277; 58 standing indebtedness will be bind- N. W. 389; In re Fremont and Big ing upon the corporations consent- Horn Counties, 8 Wyo. 1, 54 Pac. ing though not necessarily upon the 1073. holders of the indebtedness thus ap- 35 — Vose v. Inhabitants of Frank- portioned. Perkins County v. Keith fort, 64 Maine, 229; Inhabitants of County (Neb.), 78 N. W. 630; Town Tisbury v. Inhabitants of West Tis- of Vaughan v. Town of Montreal bury, 171 Mass. 201; 50 N. E. 522; (Wis.), 102 N. W. 567; People v. Washington Twp. v. Borough of Alameda County, 26 Calif. 641; Etna (N. J.), 58 Atl. 1086; In re Shoshone County v. Profit (Idaho), School Directors of Aliquippa, 172 84 Pac. 712; Munhall Borough v. Pa. 81. Mifflin Township, 210 Pa. 527; 60 38 PUBLIC SECURITIES § 22. Character or form of indebtedness. Tlie indebtedness or obligations of territory divided often assumes a different legal character or form. It may consist of an issue of valid outstanding negotiable bonds ^* or what can be termed, for want of a better phrase, "floating indebtedness;"" or again the obliga- tion may exist as the result of a contract, claim or 36— Hackett v. City of Ottawa, 99 TJ. S. 86; Morgan v. Beloit, City and Town, 7 Wall. 613; Mt. Pleas- ant V. Beekwith, 100 U. S. 514; Scipio V. Wright, 101 U. S. 665; Louisiana v. Pilsbury, 105 U. S. 278; Ottawa v. First National Bank, 105 U. S. 342; Carter County v. Sinton, 120 U. S. 517; Comanche County V. Lewis, 133 U. S. 201; Harper County Com 'rs v. Rose, 140 U. S. 75; Barnett v. City of Denison, 145 V. S. 135; Morgan v. Town of Waldwick, 17 Fed. 286; Hill v. City of Kahoka, 35 Fed. 32; Ashley v. Presque Isle County, 60 Fed. 55 ; Pa- cific Imp. Co. V. City of Clarksdale, 74 Fed. 528; Speer v. Board of County Com'rs, 88 Fed. 729; Taylor v. School District of Garfield, 97 Fed. 753; D'Esterre v. City of New York, 104 Fed. 605; Burlington Savings Bank v. City of Clinton, 106 Fed. 269; Garland County v. Hot Spring County, 68 Ark. 83; Coconino County V. Yavapai County (Ariz.), 52 Pac. 1127; Johnson v. City of San Diego, 109 Cal. 468; County of Tulare v. Kings County, 117 Calif. 195, 49 Pac. 8; Columbia County v. King, 13 Fla. 451; State v. Suwannee County Com'rs, 21 Fla. 1; White v. City of Atlanta (Ga.), 68 S. E. 103; Marion County Com'rs v. Harvey County Com'rs, 26 Kan. 181; State v. Kiowa County Com'rs, 41 Kan. 630; Craft v Lofinck, 34 Kan. 365; Vandriss v. Hill, 58 Kan. 611; Hodgeman County Com 'rs v. Gar- field County Com'rs, 42 Kan. 409, 2& Pae. 430; Montgomery County v. Menefee County Ct., 93 Ky. 33, 18 S. W. 1021; Eumsey v. Town of Sauk Centre, 59 Minn. 316, 61 N. W. 330; Canosia Tp. v. Grand Lake Tp. 80 Minn. 357, 83 N. W. 346; Holliday v. Sweet Grass County, 19 Mont. 364, 48 Pac. 553; Territory v. Cascade County Com'rs, 8 Mont. 396, 20 Pac. 809; Clother v. Maher, 15 Neb. 1; Inhabitants of Orvil Tp. V. Borough of Woodeliff (N. J.), 38 Atl. 685; Sierra County Com'rs V. Dona Ana County Com'rs, 5 Gild. (N. M.), 190, 21 Pac. 83; People V. Coler, 26 Misc. 327, 56 N. T. Supp. 1072; Jeff Davis County v. City Nat. Bank, 22 Tex. Civ. App. 157, citing Presidio County v. City Nat. Bank, 20 Tex. Civ. App. 511, 44 S. W. 1069; Washburn Water Works Company v. City of Washburn (Wis.), 108 N. W. 194; Town of Vaughn v. Town of Montreal (Wis.), 102 N. W. 561; see also Sec. 80, et seq. post. 37 — Houston County v. Henry Clay (Ala.), 47 So. 710. The term " exist- ing debt" as used in Code 1907, Sec. 124, means anything then owing by the old county regardless of its as- sets or ability to pay. Colusa County CEBATION AND POWBBS OF . PUBLIC COEPOBATIONS 39 subscription payable at some future time, or a liability- existing as the result of a tort.^^ The cases cited in the notes under these various propositions suggest the differ- ent rulings made, but the basic principles of division re- main as given in the preceding sections. In apportioning the floating indebtedness to be paid by respective portions of detached territory, questions may arise as to what constitutes floating indebtedness. Accrued interest upon indebtedness, it is generally held, should be divided or apportioned on the same basis as the principal, though some cases hold to the contrary.^^ Cash in the treasury of an organization, portions of which have been detached, or credits resulting from tax- ation or some claim, should not be deducted before de- termining the amount of the indebtedness to be appor- tioned.*" The rule seems to be that the principal of the indebtedness should be adjusted and credit items treated as property to be divided in the same proportion, leav- ing it to the different organizations to apply these credits as they may elect, either upon the debt assigned to them or in the payment of current expenses. It is further held that an obligation, in order to be considered a "debt," need not be due and payable at the time of the division. The existence of an obligation is the determining ques- tion, not its due date. V. Glen County, 117 Calif. 434; the payment of indebtedness out- Bradish v. Luoken, 38 Minn. 186; standing. Grant County v. Lake 36 N. W. 454; Lawrence County v. County, 17 Ore. 453; Barber v. City Meade County, 6 S. D. 528; 62 N. °^ East Dallas, 83 Tex. 147, 18 S. W. 131. W- 438. 38-Hempstead County v. Howard, 39-Hempstead County t. Howard CI A 1 o.^^ n ■ ■ J! County, 51 Ark. 344; but see Gar- 51 Ark. 344; Commissioners of , , „ , „ ' Granville v. Com'rs of Vance, 107 6^8"l,*i°7f ^^ ^°' ^P"°^' '^°"°*^' N. C. 291, 12 S. E. 39. Indebted- 4olcheyenne County Com'rs v. ness outstanding at the time of Bent County Com'rs, 15 Colo. 320; separation must be reduced by the Forest County v. Langlade County, balance of taxes collected before the 91 Wis. 543, 63 N. W. 760 65 N. W. time this balance was applicable to 182. 40 PUBLIC SECUEITIES In a Maine case it was held that where the statute dividing the town provided for the assumption of cer- tain indebtedness, a subsequent statute exonerating the new town from its liability was unconstitutional, as it impaired the obligation of the contract created by the original act.*' § 23. Dissolution of corporation. Public corporations may be dissolved through an act of the legislature ; *^ they may voluntarily, under gen- eral laws, surrender their charters,*^ again, under gen- eral laws, they may change their grade or class, effecting in this manner a dissolution of the old corporation ; ^^ or the corporation may be dissolved as the result of a judgment of ouster in proceedings brought to determine its rights to corporate existence.** The courts have held as negative propositions that a corporation will not be dissolved by its failure to elect officers,*" for the misuser or nonuser of its charter rights,*^ or the misconduct of 41 — Bowdoinham v. Richmond, 6 44 — Mintzer v. Schilling, 117 Me. (6 Greenl.), 112. Calif. 361, 49 Pac. 209; see cases 42 — People v. City of Wilmington generally cited under Sec. 23, et seq. (Calif.), 91 Pac. 524; Allen v. ante. Board of Trustees of City of Bakers- 45 — Dodge v. People, 113 111. 491 ; field, 109 Pac. 486; McDonald v. State v. Shufford (Kans.), 94 Pac. Doust (Ida.) 81 Pac. 60. It is not 137; State v. Village of Harris, within the power of the legislature Chisago County (Minn.), 113 N. W. to abolish or destroy governmental 887. Sound policy requires that organizations recognized by the state where a de facto village has been Constitution at the time of its adop- permitted to exercise its functions tion. State v. Crow Wing County for over twenty years, that the state Com'rs, 66 Minn. 519, Board of should be precluded from attacking Township Com'rs v. Buckley (S. C), its franchises. 64 S. E. 163 ; James County v. Ham- 46 — U. S. Bank v. City of Kendall, ilton, 89 Tenn. 237; 14 S. W. 601. 179 Fed. 914; People v. Niebruegge, 43— State v. City of Birmingham 244 111. 82; 91 N. E. 115; Cofield v. (Ala.), 52 So. 461; Ex parte Cross, Britton (Tex.), 109 S. W. 493. 71 S. W. 289 ; State v. Yankee, 98 47— Butler v. Walker, 98 Ala. 358 ; N. W. 533; Fowler v. Vandal, 84 13 So. 261; Elliott v. Pardee Minn. 392; Milster v. City of Spar- (Calif.), 86 Pac. 1087; Cain v. tanburg (S. C), 46 S. E. 539. Brown, 111 Mich. 657; 70 N. W. CEEATION AND POWERS OF PUBLIC COEPOEATIONS 41 its officers. The debts and legal obligations of a public corporation cannot be impaired or destroyed by a change in the grade or class of a municipal organization, or through its dissolution.*^ The duty of their payment or performance devolves upon the new corporation succeed- ing the old. Property belonging to the corporation dis- solved usually passes to and under the control of the new organization embracing the identical or substantially the same territory. § 23a. Effects of dissolution on debts and liabilities. It will be noted from the preceding sections and as already stated that a corporation may be dissolved under authority of law through absorption by some adjoining or contiguous corporation, by a change of grade or class or through the forfeiture or abolition of the old charter with a subsequent reincorporation of the same territory, property and inhabitants under a new form. The au- thorities bearing upon a division and adjustment of lia- bilities where there has been a division or annexation of 337; Largen v. State, 76 Tex. 323; poratiou shall cease to exercise its Beale V. Pankey (Va.), 57 S. E. 661; functions, its property shall be but see Cincinnati, etc. Ey. Co. v. turned over to the treasurer of the Baughman, 76 S. W. 351 (Ky.), county and the commissioners' court where a city failed for more than shall provide for the sale of the seventeen years to exercise any of ^^^^ ^°^ ^^^ settlement of the debts the governmental functions granted "^"^ ^''"^ *^« corporation, and hold- by its charter, the rights and pow- ^°S that property of citizens of a ers thereby granted were held for- ^^ *^'^'° '""^i^P^l corporation J. .. , , brought into existence by the volun- feited by non-user. ° . •; . .£,„, _^ ^ -,„^, tary action of persons living m the 48— Chalstran v. Board of Edu- ^ .^ . 5 ^ . . ^ ^ territory sought to be incorporated cation, etc. of Knox County, 244 .^ ^^^j ^.^^^^ ^^^ ^^^ ^^^^^ .^^^^^^^ 111. 470; 91 N. E. 712; Garfield ^^ ^^^ incorporation and subject to Township V. Herman (Kans.), 71 successive tax levies until the same Dae. 517; Black v. Fishburne (S. C), ^^^^^ i,gg„ p^id; see also the many 66 S. E. 681; City of Carthage v. cases cited in the remaining notes Burton, 111 S. W. 440. Construing under this section and the cases Laws 1891, chap. 77, pg. 95, which cited in the notes to Sees. 23, et seq., provide that where a de facto cor- ante. 42 PUBLIC SECTJEITIES territory have been cited in the preceding sections. The common rule further obtains that the people and the property of a particular locality cannot avoid just debts and obligations by a mere change of boundaries, form of government, or a dissolution of a corporate organization. The authorities are numerous and well considered upon this point although some decisions to the contrary will be noted later.*® It has even been held that where an ex- tinguished municipality owes outstanding debts, it will be presumed that the legislature intended that the liabili- ties as well as the rights of property of the corporation which thereby ceases to exist should accompany the ter- ritory and the property into the jurisdiction to which the territory may be annexed ^^ and the Supreme Court of the United States in the case just cited held that the property of an extinguished corporation passes into the hands of its successors and that even if there was no power left to control in its behalf any of its funds or to P9,y off any of its indebtedness, the rule obtains that when benefits are taken, the burdens are assumed and the successor is thereby estopped to deny a liability for the old debts. In a leading case in the Supreme Court of the United States ^^ where an attempt was made by reincorporation under a new charter to avoid the pajrment of old liabili- ties, the court said: "When, therefore, a new form, is given to aji old municipal corporation, or such a corpora- tion is reorganized under a new charter, taking in its new organization the place of the old one, embracing sub- stantially the same corporators and the same territory, it will be presumed that the legislature intended a con- 49 — Burrough's Public Securities, Calif. 583; see many cases cited p. 559; Gray Limitations of Taxing under Sees. 17, et seq. ante. Power, See. 449 et seq.; Pacific Im- 50 — Swain v. Seamens, 9 Wall, provement Co. v. City of Clarksdale, 254. 74 Fed. 528 ; City of Uvalde v. Spier, 51— Broughton v. Pensacola, 93 U. 91 Fed. 594; Meyer v. Brown, 65 S. 266. CKBATION AND POWEES OP PUBLIC COEPOKATIONS 43 tinued existence of the same corporation, although dif- ferent powers are possessed under the new charter, and different officers administer its affairs; and, in the ab- sence of express provision for their payment otherwise, it will also be presumed in such case that the legislature intended that the liabilities as well as the rights of prop- erty of the corporation in its old form should accompany the corporation in its reorganization. That such was the intention of the State of Florida in the present case, we have no doubt; to suppose otherwise would be to impute' to her an insensibility to the claims of morality and jus- tice, which nothing in her history warrants. So a change in the charter of a municipal corporation, in whole or in part, by an amendment of its provisions, or the sub- stitution of a new charter in the place of the old one, should not be deemed, in the absence of express legis- lative declaration otherwise, to affect the identity of the^ corporation, or to relieve it from its previous liabilities." In another case in the same court,^^ the court followed the principles previously stated and further said: "We are of the opinion, upon this state of the statutes and facts, that the Port of Mobile is the legal successor of the city of Mobile, and liable for its debts. The two cor- porations were composed of substantially the same com- munity, included within their limits, substantially the same taxable property and were organized for the same general purposes. Where the legislature of a state has given a local community within designated boundaries, a municipal organization and by a subsequent act or se- ries of acts repeals its charter and dissolves the corpora- tion, and incorporates substantially the same people as a municipal body under a new name for the same gen- eral purpose, and the great mass of the taxable property of the old corporation is included within the limits of the 52— Mobile v. Watson, 116 U. S. 389. 44 PUBLIC SECURITIES new, and the property of the old corporation used for public purposes is transferred without consideration to the new corporation for the same public uses, the latter, notwithstanding a great reduction of its corporate limits, is the successor in law of the former, and liable for its debts; and if any part of the creditors of the old cor- poration are left without provision for the payment of their claims, they can enforce satisfaction out of the new. ' ' \ In a still later case ^* the same rule was followed. The city of San Angelo, Texas, was abolished by a decree of court on account of an irregularity in its corporation. Soon thereafter the city was again incorporated includ- ing the principal portions of the territory and property of the former corporation, and the question as to the lia- bility of the new organization for the debts of the old was raised, the court said : ' ' The state 's plenary power over its municipal corporations to change their organization, to modify their method of internal government, or to abolish them altogether is not restricted by contracts en- tered into by the municipality with its creditors or with private parties. An absolute repeal of a municipal char- ter is therefore effectual so far as it abolishes the old corporate organization; but when the same or substan- tially the same inhabitants are erected into a new cor- poration whether with extended or restricted territorial limits, such new corporation is treated as in law, the suc- cessor of the old one entitled to its property rights and subject to its liabilities." i It was also held that if the act creating the new incor- poration should be construed as leaving the assumption of such liability by the corporation to the option of its inhabitants or tax payers, it would follow that in that respect it would have the effect of impairing the obliga- 53 — Shapleigh v. San Angelo, 167 U. S. 646. CREATION AND POWERS OF PUBLIC CORPORATIONS 45 tions of existing contracts and would be unconstitutional and void. The same doctrine has been adopted by the state courts. In Kansas ^* where it was held that a township could not divest itself of its liability to pay its warrants by altering its boundaries and changing its name. In Massachusetts, an act imposing upon towns the debts of abolished school districts was held constitu- tional ®^ the surrender of a special charter by a city and reincorporation under general laws, it has been held does not affect the validity of bonds,^® and in Texas, it has been held that where a city whose incorporation was adjudged void ab initio, upon reincorporation was liable for the legal indebtedness and other obligations incurred by the city during its existence not even as a de facto corpora- tion.*''' § 24. Meriwether v. Garrett. In 1879, the city of Memphis, Tennessee, being heavily indebted, the legislature repealed the charter of the city, took possession through state officers of its public prop- erty and assumed the levy and collection of taxes and their application to the payment of its debts. The repeal- ing act was a general one and declared that all municipal offices held under various charters were abolished, that the population within the territorial limits were resolved back into the body of the state ; that all power of taxation in any form previously granted to their public authorities was withdrawn and reserved to the legislature. The same day with the passage of the repealing act, the legis- lature passed another act to establish taxing districts ia 54 — Walnut Twp. v. Jordan, 16 56— Black v. Pishburne (8. C), Pac. 812. 66 S. B. 681. 55— Whitney v. Stow, 111 Mass. 57— White v. Quanah (Tex.), 27 368; State v. Brock, 66 S. C. 367, S. W. 831. 44 8. E. 901. 46 PUBLIC SECUEITIBS the state and to provide the means for their local govern- ment. It declared that communities embraced in the ter- ritorial limits of the repealed corporations were created taxing districts in order to provide the means of local government and that the necessary taxes should be im- posed directly by the legislature and not otherwise. The day previous to the passage of the repealing act, Eobert Garrett and others, judgment creditors of the city of Memphis, filed a bill in the United States Circuit Court alleging the insolvency of that city; that a mandamus had been issued to the authorities of the city directing the levy and collection of taxes to discharge the city's indebtedness; that the taxes had not been collected and asking for the appointment of a receiver. After the re- pealing act was passed, a supplemental bill was filed al- leging the invalidity of the act mentioned and asking the same relief. The circuit court, by a decree, appointed a receiver who was directed to take possession of the moneys of the city and certain debts and property be- longing to it and its tax books, to collect taxes and debts due it, except the taxes of 1878, and enforce their pay- ment by the usual means, the proceeds to be held subject to the order of the court. It was also decreed that all property within the limits of the city was liable and might be subjected to the payment of the city's debts and that such liabilities would be enforced thereafter from time to time as the court might direct. This decree was reversed in the Supreme Court of the United States,^® where Chief Justice Waite announced the conclusions reached by the court in the following propositions: "Property held for public uses, such as public buildings, streets, squares, parks, promenades, wharves, landing places, fire-engines, hose and hose-car- 58 — Meriwether v. Garrett, 102 U. Fed. 105; Folsom v. Greenwood Co., S. 472, 26 Law Ed. 197; see also 130 Fed. 730; Ex parte Folsom, 131 Lehman v. City of San Diego, 73 Fed. 496. CEEATIOIT AND POWERS OF PUBLIC COEPOBATIONS 47 riages, engine-houses, engineering instruments, and gen- erally everything held for governmental purposes, can- not be subjected to the payment of the debts of the city. Its public character forbids such an appropriation. Upon the repeal of the charter of the city, such property passed under the immediate control of the state, the power once delegated to the city in that behalf having been with- drawn. "2. The private property of individuals within the limits of the territory of the city cannot be subjected to the payment of the debts of the city, except through tax- ation. The doctrine of some of the states, that such property can be reached directly on execution against the municipality, has not been generally accepted. "3. The power of taxation is legislative, and cannot be exercised otherwise than under the authority of the legislature. "4. Taxes levied according to law before the repeal of the charter, other than such as were levied in obedience to the special requirement of contracts entered into un- der the authority of law, and such as were levied under judicial direction for the payment of judgments recov- ered against the city, cannot be collected through the in- strumentality of a court of chancery at the instance of the creditors of the ciy. Such taxes can only be collected under authority from the legislature. If no such au- thcirity exists, the remedy is by appeal to the legislature, which alone can grant relief. ' ' 5. The receiver and back-tax collector appointed un- der the authority of the act of March 13, 1879, is a public officer, clothed with authority from the legislature for the collection of the taxes levied before the repeal of the charter. The funds collected by him from taxes levied under judicial direction cannot be appropriated to any other uses than those for which they were raised. He, as well as any other agent of the state charged with the duty of their collection, can be compelled by appropriate 48 PUBLIC SECTJKITIES judicial orders to proceed with the collection of such taxes by sale of property or by suit or in any other way authorized by law, and to apply the proceeds upon the judgments." The principles established by this case are perhaps sufficiently indicated in the quotation above given but a brief resume of them with some suggestions may be per- tinent. The first principle established is one which has often been adjudicated and is not denied that the public property, including taxes levied and collected, of a public corporation used for public purposes cannot be reached by legal process; that the private property of the in- habitants is not liable for the debts of municipalities, al- though some early cases hold to the contrary; that the municipal power to tax is a delegated one and may be revoked at any time by the state and that where this is done a municipality is without power to levy taxes. The only remedy then open to creditors is by appeal to the legislature. It is difficult to reconcile this decision with others and later ones by the Supreme Court of the United States but it can be said as the best commentary upon it as a ruling case that it stands substantially alone as authority for the principles decided, in respect to the repudiation of debts through the dissolution of corporate organization literally and practically applied. §25. Legislative power over public corporations; in general. A public corporation is organized primarily to act as an agent of the sovereign in the performance of govern- mental duties and the administration of public affairs. A private corporation is created under authority of law by a group or association of individuals for the purpose, primarily, of advancing their personal interests. The organization of all corporations, private as well as pub- CKEATION AND POWEKS OF PUBLIC COBPOEATIONS 49 lie, is an advantage to the state and results, in the case of a public corporation, directly in a benefit ; in the case of a private corporation indirectly. The basis of the con- tinued existence of a public corporation is the will of the sovereign; of the private corporation, the contract be- tween itself and the state. As between the state and the public corporation or the members comprising it, there exists no contract relation. This difference in purpose of organization and authority for corporate life leads, as can be inferred, to a fundamental and far-reaching dif- ference in the power of the sovereign over them.^* In considering the question there must also be kept in mind the distinctions already suggested between the dif- ferent grades of public corporations. We have public corporations as a generic term, including municipal cor- porations proper and public quasi corporations, — ignor- ing the eases holding that the state itself be considered a corporation. Referring to definitions already given of municipal corporations proper and public quasi corporations, it will be remembered that a public quasi corporation is that form of organization used for the exercising of governmental powers over territory less thickly settled than the territory usually included within the limits of a municipal corporation proper. The municipal corpora- tion proper includes cities^ towns (not the township or- ganization) and villages, or congested centers of popu- 59 — Laramie County Com'rs v. State, because there is not and can- Albany County Com'rs, 92 U. S. not be any reciprocity of stipulation 307; Mt. Pleasant v. Beckwith, 100 between the parties, and for the fur- U. S. 514. Institutions of the kind, ther reason that their objects and whether called cities, towns or coun- duties are utterly incompatible with ties, are the auxiliaries of the State everything partaking of the nature in the important business of munie- of a compact. State v. City of Mo- ipal rule; but they cannot have the bile, 24 Ala. 701; Hartford Bridge least pretension to sustain their Co. v. Town of East Hartford, 16 privileges or their existence upon Conn. 172; People v. Draper, 15 N. anything like a contract between Y. 532; Town of Montpelier v. Town themselves and the legislature of the of East Montpelier, 29 Vt. 12. p. S.— 4 50 PUBLIC SEOUEITIES lation. The wants and needs of the two classes differ essentially, and as agencies of the government they can each best perform their functions in a different manner. The property of public corporations acquired through the levy and collection of taxes or by grant and devise for public purposes can only be devoted to such uses. Public corporations of all grades may assume the character of a private corporation and acquire property in that character or as an individual. Their rights in the acquisition, holding and disposal of this property, acquired in their capacity of private corporations, are the same as those pertaining to other private persons. The legislature cannot exercise over these the same de- gree of control which it ordinarily exercises over the pub- lic corporation and its public property.''" To state concisely the rule of control: A public cor- poration in its capacity as a public corporation, is ab- solutely under the control of the sovereign, subject only to constitutional provisions and the fundamental law that property, contract, and vested rights of third parties dealing with it, cannot be impaired or destroyed.*' Act- ing as a private corporation, either in the acquirement of property or the exercise of certain powers, the public corporation, so far as legislative control is concerned, stands on an equal basis with a private corporation or an individual.''^ A municipal corporation proper more frequently acts as and assumes this character of a pri- vate corporation. Without discussing at present the rights of the public as a private corporation, it can be said that public cor- porations, as governmental agents, so far as the exercise of their governmental powers are concerned, their corpo- rate existence, boundaries, funds, revenues, property and 60— state v. County of Dorsey, 20 Keefe v. People (Colo.), 87 Pac. 91, Ark. 378; Nichol v. Coster (Calif.), and see also Sees. 36, 37 post. 108 Pac. 302; Davidson v. Hine 61 — See post, Sees. 36, 37. (Mich.), 115 N. W. 246; but see 62— See post Sees. 36, 37. CBBATION AND POWEKS OF PUBLIC COBPOBATIOKS 51 contract rights, are subject to the will of the state, which may modify their franchises, increase or diminish their corporate powers, amend their charters, enlarge or re- duce their privileges or annul their corporate existence, as in its judgment, the general good requires, and ir- respective of consent or objection on the part of the inhabitants of the territory affected, except so far as it is restrained by provisions in the constitution or funda- mental law."^ The limitations usually found in state con- stitutions are those which prohibit special legislation; laws not having "a uniform operation throughout the state," or those relating to the "business," the "af- fairs," or "internal affairs" of the corporation. § 26. Legislative control over public funds. The funds of a public corporation, acquired in its ca- pacity as such, are raised by the imposition of taxes on taxable interests within its jurisdiction, and the legis- 63 — ^Bissell v. City of Jefferson- (Mass.), 85 N. E. 1009; ScMgley v. ville, 24 Howard, 287; Eogers v. City of Waseca (Minn.), 118 N. W. Burlington, 3 Wall. 654; St. Joseph 259; Booth v. McGuinness (N. J.), Twp. V. Eogers, 16 Wall. 644; 75 Atl. 455; In re Allison (N. Y.), Barnes v. Dist. of Columbia, 91 V. 172 N. Y. 421, 65 N. E. 263, revers- S. 540; Barnard's Twp. v. Morri- ing 76 N. Y. S. 1008; People v. Bon, 133 U. S. 523; Polsom v. Metz, 85 N. B. 1070, reversing 110 Ninety-Six, 159 U. S. 611; Dudley N. Y. S. 1141; People t. Prender- V. Board of Com'rs of Lake County gast, 128 N. Y. S. 1082; Scott v. (Colo.), 80 Fed. 672; In re Sani- Village of Saratoga Springs, 115 N. tary Board of East Pruitvale Sani- Y. S. 796; Quilici v. Strosnider tary Dist. (Calif.), Ill Pac. 368; (Nev.), 115 Pac. 177; Wharton v. Piatt V. City and County of San City of Greensboro (N. C), 59 S. Prancisco (Calif.), 110 Pac. 304; E. 1043; Lutterloh v. City of Fay- People V. McBride, 234 111. 146; 84 etteviUe (N. C), 62 S. E. 758; Straw N. E. 865; Ward v. Field Museum v. Harris (Ore.), 103 Pae. 777; of Natural History, 241 111. 496; Horton v. City Council of Newport, 89 N. E. 731; Eekerson v. City of 27 K. I. 283, 61 Atl. 759; Aacrum Des Moines (la.), 115 N. W. 177; v. Camden Water, Light & Ice Com- McSurely v. McGrew, Iowa, 118 N. pany (S. C), 64 S. E. 151; State W. 415; Fullerton v. Des Moines, v. Frear (Wis.), 119 N. W. 894. 115 N. W. 607; Graham v. Eoberts 52 PUBLIC SECURITIES lature has the right to regulate and control either the original levy and collection of taxes, or to dispose of funds thus acquired ** without the consent of the people within its limits, so long as they are applied to public uses and purposes.^^ Another limitation upon the legis- lative right to dispose of funds other than the one sug- gested is, that those raised through taxation of taxable interests within a certain district cannot be used for the benefit and advantage of others.®^ § 27. Power of the legislature over public revenues. The legislature, as the law-making part of the sov- ereign, in the absence of constitutional restrictions, has the power to provide and regulate the manner in and the purposes for which the revenues of a public corporation may be raised and employed. The sovereign has the in- herent power of levying taxes for the purpose of raising revenue for its uses, which are presumably public. As it therefore possesses in the first instance the sole power, it has the right to direct the manner in which its mere agencies shall raise funds, either for their special and local public wants or for general purposes,®^ and this 64 — Pennie v. Eeis, 132 U. S. 464; not one of the powers of the legis- Eothachild v. Bantel (Calif.), 91 lature over municipal corporations as Pac. 803; Gutzweller v. People, 14 agencies of the state. 111. 142; Arnett v. State (Ind.), 80 65— Weismer v. VUlage of Doug- N. E. 153; McSurely v. MeGrew lass, 64 N. Y. 91; Allen v. Inhabi- (la.), 118 N. W. 415; State v. Lowe tants of Jay, 60 Me. 124; see Sees. (Nebr.), 131 N. W. 196; Horton v. 101 et seq. post. City Council of City of Newport, 27 66— Terrett v. Taylor, 9 Cranch E. I. 283, 61 Atl. 759; but see (U. S.), 43; Morgan v. Schusselle, Street v. Varney Electrical Supply 228 111. 106; 81 N. E. 814; State Co. (Ind.), 66 N. E. 895, which v. Haben, 22 Wis. 660. holds that the minimum wage law, 67 — E. E. Co. v. County of Otoe, Burns ' Eev. Stat. 1901, Sees. 7055a, 16 Wall. 667 ; New Orleans v. Clark, 7055b, is invalid, the power to con- 95 U. S. 644. A city is only a polit- fiscate property of tax payers by ical subdivision of the State, made forcing them to pay an arbitrary for the convenient administration of price for labor on public works is the government. It is an instrumeu- CEEATIOrN" AND POWEES OP PUBLIC COBPOBATIONS 53 right of the legislature goes not only to the original grant of power, but also to its modification, change or repeal, and the mode of coUection.^^ Further considering this power of the legislature there are cases holding, based upon sound reasons, that a pub- lic corporation cannot be compelled to undertake a public improvement purely local, not public or governmental in its character, to be paid for ultimately by compulsory taxation, without the consent of the people paying such taxes.®^ The same principle has also been applied in the granting of aid to railroad or other quasi public corpora- tions, and it has been held in several cases that municipal corporations cannot be compelled against their consent, even by act of the legislature, to give such aid where the only means of meeting the obligation is by levying local taxesJ" §28. Legislative control over corporate boundaries. The boundaries of public corporations as agents of the sovereign come within the doctrine of absolute control by the legislature. Originally possessing the right to create these agencies or subagencies, it can exercise the tality, with powers more or less en- Commonwealth (Ky.), J21 S. W. larged, according to the require- 411; Township of Stambaugh v. ments of the public, and which may Treasurer of Iron County (Mich.), be increased or repealed at the will 116 N. W, 569. of the legislature. In directing 68 — County of Calloway v. Foster, therefore a particular tax by such 93 TJ. S. 567; County of Scotland v. corporation, and the appropriation Thomas, 94 TJ. S. 682; Meriwether of the proceeds to some special v. Garrett, 102 TJ. S. 472. municipal purpose, the legislature 69 — Cooley Taxation, 2nd Ed., pp. only exercises a power through its 688 et seq. ; Park Comm'rs v. De- subordinate agent which it could troit Common Council, 28 Mich, exercise directly. Carter County v. 229; State v. Tappan, 29 Wis. 664. Sinton, 120 TJ. S. 517; Breckenridge 70 — Township of Elmwood v. County V. McCracken, et al, 61 Fed. Marcy, 92 TJ. S. 289; People v. State 191, 9 C. C. A. 442; Inge v. Board Treasurer, 23 Mich. 499; People v. of Public Works of Mobile (Ala.), Batchellor, 53 N. Y. 128; see also 33 So. 678; City of Louisville v. See. 32, post. 54 PUBLIC SECTTRITIES lesser power of changing or altering their boundaries/^ The right of the people within the districts affected to consent to such change or alteration may be given as a matter of favor. The legislature has also the right to determine the basis for the organization of municipal corporations proper, one of the classes of public corporations, and this can be any determining factor, such as population or geographical area, it may consider a valid and expedient one''^ in the absence of constitutional restrictions. Courts have no power or control to interfere with, in any way, the exercise of this discretionary law-making power by the legislature.''* § 29. Legislative power over public property. The power of the legislature is full, ample and su- preme over the property of the public corporation, ac- quired and held in its capacity as such and for public purposes. This property is usually acquired through the exercise of the power of taxation, a gift of the sovereign. The legislature has the power to provide means for its acquisition, its control and management, and its final dis- position.''' The only limitations upon this power are 71— City of Ensley v. Cohn 372, 47 Atl. 1104; see Abbott (Ala.), 42 So. 827; City o( Ensley Munic. Corp., Sees. 13, 14. V. Simpson (Ala.), 52 So. 61; 73 — Lenox Land Company v. City Wheeler v. Herbert (CaHf.), 92 Pae. of Oakdale (Ky.), 125 S. W. 1089; 353; Town of Ormond v. Shaw Maxey v. Powers (Tenn.), 101 S. W. (Pla.), 39 So. 108; Carruthers v. 181. See also Abbott Munie. Corp., City of Shelbyville (Ky.), 104 S. See. 86. W. 744; Chandler v. City of Boston, 74— City of Haitford v. Mas- 112 Mass. 200; Grainger County v. lem (Conn.), 57 Atl. 740; East State (Tenn.), 80 S. W. 750; Sar- Chicago Company v. City of East gent V. Clark (Vt.), 7 Atl. 337; Chicago (Ind.), 87 N. ^. 17; City see also See. 17 ante. of La Harpe v. Elm Township Gas- 72— City of Chicago v. Eumsey, light, etc. Co. (Kans.), 76 Pac. 448; 87 111. 348 ; Williams V. City of Nash- Codman v. Crocker (Mass.), 89 N. ville, 89 Tenn. 487; 15 S. W. 364; E.. 177; Eeis v. City of New York, Commonwealth v. Blackley, 198 Pa. 188 N. Y. 58. CREATION AND POWERS Q]? PUBLIC CORPORATIONS 55 those already stated and well-recognized, viz., the use of public revenues for public purposes, and the retention of local property and revenues for public local uses. If property has been acquired by a public corporation in its capacity as a private corporation, the control of the legis- lature is limited by the general laws and rules applying to private property. §30. Over corporate contracts and trust property. Public corporations may, during their existence either as corporations de facto or de jure, enter into contract relations with third parties, and if these, at the time of their inspection, are valid, the legislature cannot, al- though its powers are broad as to the control of public corporations in all respects, pass laws changing or re- pealing the powers of the corporation in such a manner as to impair the obligations of these contract rights or relations.^^ Laws in force at the time of the making of such contracts and which were their authority in whole or in part, enter into and form a part of the same.'" The principle applies to provisions for a sinking fund, par- ticular powers of taxation and also to any property or security which at the time of the legislation authorizing an issue of bonds was devoted to their payment; such sinking funds or means of payment cannot be diverted to other uses, the legislation repealed, or the power to tax lessened or destroyed." It has been held, however, 75 — Broughton t. City of Pensa- Detroit Citizens St. E. E. Co., 184 cola, 93 V. S. 266; Wolff v. City of U. S. 368; State of Minneaota v. New Orleans, 103 U. S. 358; City of Duluth & I. E. E. E. Co., 97 Fed. Ensley V. Simpson (Ala.), 52 So. 61; 353; Brunnitt v. Ogden Water Helena Consolidated Water Company Works Co. (Utah), 93 Pac. 828; V. Steele, 26 Mont. 1; 49 Pae. 382. see See. 362, post. See See. 362 post. 77 — State of Louisiana v. Pils- 76— Van Hoffman v. City of bury, 105 U. S. 278; Town of Mo- Quiney, 71 U. S. 535; German bile v. Watson, 116 U. S. 289; Sei- Savings Bank v. Franklin County, bert v. Lewis, 122 U. S. 284; Saw- 128 U. S. 526; City of Detroit v. yer v. Parish of Concordia, 12 Fed. 56 PUBLIC SECUEITIES that creditors or those holding contract obligations have no vested right to a particular form of remedy and the legislature may abolish or alter a remedy without im- pairing the contract obligation, providing it supply one which is equally efficacious and available.'^* Where a remedy is limited or abolished, this will constitute an impairment of a contract obligation for, or as has been said: "Nothing is more important than the means of enforcement." This protection is not afforded, however, to the public corporation in its capacity as such. It is the personal property, contract or vested right of the in- dividual which is protected."* 754; Fazende v. City of Houston, 34 Fed. 95; Liquidators of City Debts V. Municipality No. One, 6 La. An. 21; Morris v. State, 62 Texas 728; State v. City of Madison, 15 Wis. 30. See also Sees, 362, 370, 371, 374 post. 78 — State of Louisiana v. City of New Orleans, 102 TJ. S. 203; In National Bank of Western Ark. v. Sebastian County, 5 Dill. 414, Fed. Cas. No. 10,040, Judge Parker held that in reference to the obligation of contracts this provision of the Federal Constitution ' ' embraces those laws alike which affect its validity, construction, discharge and enforcement," and that "an act of a state legislature which provides that counties are no longer corpora- tions — that they cannot be sued — is void as to obligations legally issued by such counties when the law of the state provided they could be sued, when set up against a party seek- ing a remedy upon the obligations of a county in a federal court, be- cause the state legislature cannot take away the right of a holder of sucli county obligations to sue in a federal court when such right is given him by the constitution and laws of the United States, and be- cause such a law impairs the obliga- tion of such contracts." See Sec. 433 post. But see Meriwether v. Garrett, 102 U. S. 472, and Thomp- son V. Wiley, 46 N. J. Law, 476, where the agencies were removed through which the courts could alone act in enforcing the rights of cred- itors. 79— Edwards v. Kearzey, 96 U. S. 595. The court in its opinion by Justice Swayne in defining the obli- gation of a contract says: "The obligation of a contract includes everything within its obligatory scope. Among these elements noth- ing is more important than the means of enforcement. This is the breath of its vital existence. With- out it, the contract, as such, in the view of the law, ceases to be, and falls into the class of those 'im- perfect obligations,' as they are termed, which depend for their ful- fillment upon the will and conscience of those upon whom they rest. The ideas of right and remedy are in- OEEATION AND POWERS OF PUBLIC COEPOBATIONS 57 Trust property. The control of the legislature over property or contract rights of the public corporation in- cludes not only property belonging to the corporation in its public capacity, but also the property which it holds as a trustee for the benefit of a cestui que trust. The only limitation upon the power of the legislature in such a case is that the purpose for which the property or its in- come is to be applied cannot be changed.^" separable. 'Want of right and want of remedy ' are the same thing. ' ' State of Louisiana v. City of New Orleans, 102 TJ. S. 203. The obliga- tion of a contract in the constitu- tional sense is the means provided by law by which it can be enforced, by which the parties can be obliged to perform it. Whatever legislation lessens the efficacy of this means im- pairs the obligation. If it tend to postpone or retard the enforcement of the contract, the obligation of the latter is to that extent weakened. State of Louisiana v. Police Jury of St. Martin's Parish, 111 TJ. S. 716. Seibert v. Lewis, 122 U. S. 284. Provisions authorizing the levy and collection of a special tax to pay bonds are a part of the con- tract with the creditor and cannot be repealed unless a remedy equally efficacious is substituted. Fazende V. City of Houston, 34 Fed. 95. City of Cleveland, Tenn. v. United States, 166 Fed. 677. The rule ap- plies in all cases where a substituted remedy is more difficult, more bur- dened and more uncertain than the one repealed and which appreciably lessens the value of the contract. Liquidators of City Debts v. Munic- ipality No. 1, 6 La. Ann. 21. Munday v. Assessors of Eahway, 43 N. J. Law, 338. A statute was passed relating to the issue of writs of mandamus and sup- plementing certain authority for the issue of bonds by the city of Eahway, the efEect of which was to deprive bondholders of their imme- diate right to such writ. The stat- ute was held unconstitutional and the court said: "The act would strip him of his priority and at- tempts what in Martin v. Somer- ville Water-Power Co., 3 Wall. Jr. 206, Fed. Cas. No. 9,165, was de- cided to be beyond legislative power. It is as if the legislature enacted that no execution should issue to enforce a pre-existing judgment to the prejudice of the interests of cred- itors whose claims were not yet due." People V. Common Council of Buffalo, 140 N. Y. 300. Any law materially abridging a remedy for the enforcement of a contract exist- ing when it was made is an im- pairment of its obligation unless it provides a remedy equally ade- quate. Bassett v. City of El Paso, 88 Tex. 168, 30 S. W. 893; Terry v. Wisconsin M. & F. Ins. Co. Bank, 18 Wis. 87. See Sec. 433 post. 80— Vidal v. Girard's Ex'rs, 2 How. (U. S.) 127; McDonogh'a Ex'rs V. Murdoch, 15 How. (U. S.) 367; Girard v. City of Philadelphia, 74 U. S. (7 Wall.) 1; Board of 58 PUBLIC SECUEITIES § 31. The power of the legislature to compel the payment of debts. Public corporations, like individuals, have certain characteristics, one of these being, unfortunately, too often possessed, the desire to avoid the satisfaction of a moral or a legal obligation. A corporation may have ac- quired property directly or indirectly, which it retains and of which it receives the full benefit ; it has been or is used by the corporation for its legitimate public pur- poses; the people of the community in their collective and public capacity enjoy its use. The corporation, how- ever, declines to pay those who have parted with it in good faith, the excuse for non-payment perhaps being in- ability to pay; an alleged constitutional provision pre- venting the levy of taxes for such purpose, or in many cases, the dishonest wish on the part of the inhabitants to avoid the assumption of burdens after having enjoyed the benefits of the transaction, the debt being perhaps the result of an improvident contract. Under these condi- tions it is clearly within the power of the legislature to compel a payment t)f moral and legal obligations by the public corporation in the manner which it may provide,®' Handley Trustees v. Winchester and they exist and act in subordina- Memorial Hospital (Va.), 70 S. E. tion to the sovereign power that 131. creates them. The legislature may 81 — Board of Liquidation for determine what monies they may United States, 108 Fed. 689, 47 C. raise and expend and what taxes C. A. 587; Gray v. State, 72 Ind. may be imposed and it may com- 567; Carter v. Cambridge, 104 Mass. pel a municipal corporation to 236; City of New York v. Tenth pay a debt which has any moral Nat. Bank, 111 N. Y. 446. or meritorious basis to rest upon. City of Guthrie v. Territory, 1 Weister v. Hade, 52 Pa. 474; Okla. 188; 31 Pac. 190. Municipal Jackson County Sup'rs v. La Crosse corporations are but subdivisions of County Sup 'rs, 13 Wis. 490. But the state or territory, created for the see. Fitch v. Bd. of Auditors of convenience and better government Claims v. Manitou County, 94 N. of its affairs by local officers. Their W. 952. The legislature has no rights, powers and duties are the power to determine what debts a. creatures of legislative enactment municipality shaJl pay and compel CEBATION AND POWEBS OF PUBLIC COBPOEATIOSTS 59 and to enforce obedience to the^ directions contained in its positive laws through proper process of the judicial branch of the sovereign power. The legislature can pro- vide for the levy and collection of taxes with which to meet this obligation.^^ The power of the sovereign through its law-making branch goes still further, so it has been held, even to the payment under compulsion of a debt or obligation owing by a public corporation which technically can be avoided but for the satisfaction of which there exist the strongest moral reasons.®^ The their payment under Constitution, Art. 4, Sec. 31, prohibiting it from auditing accounts. 82 — State of Louisiana v. United States, 103 U. S. 289; New Tork Life Ins. Co. v. Cuyahoga County Com'rs, 106 Fed. 123; State v. Parkinson, 5 Nev. 17. See also cases cited in the following note. 83 — Sedgwick Stat. & Const. Law, 313, 314; New York Life Ins. Co. V. Cuyahoga County Com'rs, 106 Fed. 123; People v. Burr, 13 Calif. 343. Creighton v. City and County of San Francisco, 42 Calif. 446, where the rule is announced as follows: ' ' The power of the legislature to appropriate the money of municipal corporations in payment of claims ascertained by it to be equitably due to individuals though such claims be not enforcible in the courts depends largely upon the legislative con- science and will not be interfered with by the judicial department ei- cept in exceptional cases. ' ' Carter V. Cambridge, 104 Mass. 236; Friend V. Gilbert, 108 Mass. 408; People v. Onondaga Twp. Sup'rs, 16 Mich. 254. State V. Bruce, 50 Minn. 491. But the distinction between valid and in- valid legislation on this subject has been pointed out many times, and it is well settled that, if there rests upon the designated municipality any obligation or duty, moral or equit- able (using these words in a large and popular sense) to pay the claim, then a legislative act requiring its payment is supported as valid by the great weight of authority. Coles V. Washington County, 35 Minn. 124, 27 N. W. 497; State v. Foley, 30 Minn. 350, and cases cited. As the legislature possesses the con- stitutional power to compel a munic- ipal corporation, out of the funds in its treasury, or by means of taxes imposed for that purpose, to meet and discharge a claim, which in good conscience it ought to pay, al- though no legal liability has pre- viously existed, it simply remains for us to discover and determine whether there rested at any time upon the county, or upon the state, for that matter, a moral or equitable obligation or duty to refund the amounts paid by the relator. Merchants National Bank v. City of East Grand Forks (Minn.), 102 N. W. 703. The state can compel any of its political subdivisions to pay obligations not cognizable in any 60 PUBLIC SECURITIES principle has been well stated in a recent text book : ** "TLe power of the legislature to compel a municipality to recognize moral obligations, which, have an equitable but not a strictly legal basis, seems to be coincident with its general power to recognize such obligations in matters over which it has dire&t jurisdiction. That is : The legis- lature may compel a municipality or local subdivision to recognize a moral obligation resting on such municipality or local subdivision, if that moral obligation is of a class which the legislature may recognize in a claim against the state." As illustrating the basis of the principles inducing the courts to decide as above indicated, a refer- ence is made and quotations taken from two cases de- cided by the Supreme Court of the United States. In the earlier of the two:^^ "Assuming then, that the bonds were invalid for the omission stated, they still repre- sented an equitable claim against the city. They were issued for work done in its interest, of a nature which the city required for the convenience of its citizens, and which its charter authorized. It was therefore, com- petent for the legislature to interfere and impose the payment of the claim upon the city. The books are full of cases in which claims, just in themselves, but which, from some irregularity or omission in the proceedings- by court of law, but based on consider- tice, in the largest sense of these ations so equitable as to receive fav- terms. City of New York v. Tenth orable legislative consideration. Nat. Bank, 111 N. Y. 446; O'Hara Steines v. Franklin County, 48 Mo. v. State, 112 N. Y. 146; People v. 167; O'Neill v. City of Hoboken Board of Education, etc. (N. Y.), 86 (N. J.), 60 Atl. 50. N. E. 1130; People v. Miller, 124 Guilford v. Chenango County N. Y. S. 368; Burns v. Clarioni Sup'rg, 13 N. Y. 143. The legis- County, 62 Pa. 422; Chatham lature is not confined in its appro- County Com'rs v. F. M. Stafford & priation of the public moneys or the Co. (N. C), 50 S. E. 862. sums to be raised by taxation in 84 — Gray Limitations of Taxing favor of individuals, to eases in Power, See. 634. which a legal demand exists against 85 — City of New Orleans v. Clark, the state. It can thus recognize 95 U. S. 644. claims founded in equity and jus- CBEATION AND POWEBS OF PUBLIC OOBPOEATIONS 61 which they were created, could not be enforced in the courts of law, have been thus recognized and their pay- ment secured. The power of the legislature to require the payment of a claim for which an equivalent has been received, and from the payment of which the city can only escape on technical grounds, would seem to be clear. In- stances will readily occur to every one, where great wrong and injustice would be done if provision could not be made for claims of this character. For example, serv- ices of the highest importance and benefit to a city may be rendered" in defending it, perhaps, against illegal or extortionate demands ; or moneys may be advanced in un- expected emergencies to meet, possibly, the interest on its securities when its means have been suddenly cut off, without the previous legislative or municipal sanction required to give the parties rendering the services or ad- vancing the moneys a legal claim against the city. There would be a great defect in the power of the legislature if it could not in such cases require payment for the serv- ices, or a reimbursement of the moneys, and the raising of the necessary means by taxation for that purpose. A very different question would be presented, if the attempt were made to apply to the means raised to the payment of claims for which no consideration had been received by the city. ' ' And in a later case,^" the court said: "The term 'debts' includes those debts or claims which rest upon a mere equitable or honorary obligation, and which would not be recoverable in a court of law if existing against an individual. The nation, speaking broadly, owes a 'debt' to an individual when his claim grows out of general principles of right and justice; when, in other words, it is based upon considerations of a moral or merely honor- ary nature, such as are binding on the conscience or the 86— United States v. Realty Co., 163 U. S. 427. 62 PUBLIC SECURITIES ' honor of an individual, although the debt could obtain no recognition in a court of law." In a still later case,^' the same court followed its earlier decisions and held: "We regard the power of the terri- torial legislature to pass this act as indisputable. In United States v. Realty Co., 163 U. S. 427, 439, the power of Congress to recognize a moral obligation on the part of the national and to pay claims which, while they are not of a legal character, are nevertheless meritorious and equitable in their nature, was affirmed. The territorial legislature at least had the same authority as that pos- sessed by Congress to recognize the claims of the nature described." The court further says: "It is not neces- sary to say in this case that the legislature had the power to donate the funds of the municipality for the purpose of charity alone. The facts show plain moral grounds for the act, a consideration existing in the bene- fits received and enjoyed by the city or by its predeces- sors from whom it took such benefits." It is also within the power of the legislature, where there has been an alleged assumption of corporate pow- ers under a misapprehension of authority, to compel the payment of debts contracted by a void organization after it has become legally incorporated.^^ Legislative acts authorizing the payment of obligations of the character indicated have been held constitutional though the ob- jection was made that they were retroactive.^^ 87 — Guthrie Nat. Bank v. City of active is based upon the theory that, Guthrie, 173 U. S. 528. there having been no vested right 88 — Guthrie National Bank v. City at the time it was passed to recover of Guthrie, 173 V. S. 528; Cooper the money loaned, the legislature v. Springer, 65 N. J. L. 594, 48 created a liability upon a transac- Atl. 605; City of Guthrie v. Terri- tion which had been already closed tory, 1 Okla. 188. and in which no liahility had been 89 — New York Life Ins. Co. v. incurred by the county. But this, we Board of Com 'rs of Cuyahoga think, is a misconception of the pur- County (Ohio), 126 Fed. 123. The pose of the act, as well as of the facts conclusion that the act was retro- upon which it proceeded. It was not CBEATION AND POWERS OF PUBLIC COEPOKATIONS 63 The power of the legislature to apportion the debts and liabilities of subordinate public corporations, the boundaries of which have been increased or diminished, discussed in previous sections,''° is a further illustra- tion of its arbitrary power over their expenditures. The rule, however, is unquestionably true that a pub- lic corporation cannot be compelled to pay a claim against it where no obligation tq pay, either legal or equitable, exists; and in some states under constitu- tional provisions against the expenditure of public mon- eys for a private purpose, legislative appropriations or mandatory statutes directed to subordinate public cor- porations have been held void.®^ §32. Issue of obligations when compelled. In this connection it might be well to refer to the power of the legislature as the law-making branch of the state' to compel the creation of an obligation or the incurring intended to declare that the past no recognition or any estimate of transaction created a contract or im- the particular merits of the claim, posed any legal liability, but that a or the measure of relief which jus- moral obligation had arisen, which it tice would require. A statute of this was then incumbent upon the legisla- kind, enacted for the purpose of ture to provide the means to discharge providing for future transactions, by the exercise of its power of tax- would be anomaly. To deny the ation. The power of the legislature power of recognition of a moral to raise taxes to meet obligations, obligation because it rests upon past whether legal or moral only, is not transactions is to deny it altogether, restricted to such obligations as People v. Board of Education, etc. shall be thereafter incurred. It is (N. Y.), 86 N. E. 1130. not questioned that the legislature 90 — See Sees. 19 et seq. ante; of Ohio has, in some circumstances, Covington & C. Bridge Co., v. David- at least, the power to recognize and son (Ky.), 102 S. W. 339. provide for the discharge of obliga- 91 — See Sec. 101 et seq. post. See tions binding only in conscience and also Gray Limitations of Taxing honor. This has always been ad- Power, Sees. 390 et seq. and Sees. 635 ; mitted by the highest court of the Hoagland v. Sacramento, 52 Calif. State. In the nature of things, the 142; Craft v. Lofinek, 34 Kans. 365; moving facts must have already oe- People v. Haws, 37 Barb. 440 ; Board curred. Otherwise, there could be of Sup'rs v. Cowan, 60 Miss. 876. 64 PUBLIC SECUBITIES of an indebtedness by public corporations. They are created as agencies of the sovereign to exercise on its behalf governmental functions and to administer public affairs to a greater or less degree under its direction. It seems to be within the province and power of the legis- lature to insist that public corporations, as governmental agents, shall properly perform those duties and func- tions which ordinarily devolve upon the government and which have for their purpose the protection of life, health, property, the maintenance of civil life, and the administration of public affairs. Non-governmental purposes, not within the proper province of a govern- mental agent, the legislature cannot compel public cor- porations to accomplish or to perform.®^ The division 92— Quiney v. Cooke, 107 XT. S. 549; Trammell v. Pennington, 45 Ala. 673; Territory v. Vail (Ariz.), 85 Pac. 652 ; Napa Valley E. B. Co. V. Napa County, 30 Calif. 435 ; Peo- ple v. City of Chicago, 51 111. 17; State v. Atkin, 64 Kans. 174. State T. City of Lawrence (Kans.), 100 Pac. 485. Under the Kansas Constitution, Art. 6, the legislature may compel that municipality where the state university is located to is- sue its bonds in aid of the university and to levy and collect a tax to pay the same. This carries with it the subordinate power of compelling the municipality to furnish aid after a submission of the question to the electors of the city. State Board of Com 'rs of Marion County, 82 N. E. 482, Act of March 7, 1905 (Acts 1905, pp. 493, 496, Chap. 164), providing for the im- provement of unimproved highways on the boundary line between two counties and the issue of bonds in connection therewith, is not uncon- stitutional as a deprivation of the right of local Belf-govemment. Grosse Pointe Twp v. Finn (Mich.), 96 N. W. 1078. Williams v. Duanesburgh, 62 N. Y. 129. Although the legislature cannot compel a municipal corpora- tion to issue bonds in payment of a subscription to railroad stock, yet where under a mandatory act it has issued the bonds, the latter are not invalidated by the compulsory char- acter of the act; it operates as an authority and permission to do the acts; and having been done they will be considered as having been done voluntarily. People v. Board of Supervisors, 74 N. Y. S. 1142; Brockenbrough v. Board of Water Commissioners of City of Charlotte (N. C), 46 S. B. 28; Jones v. Madi- son County Com'rs (N. C), 50 S. E. 291. Blais V. Franklin (E. I.), 77 Atl. 172. The legislature may not only permit states and towns to incur indebtedness for the construction and maintenance of highways and bridges but may require them to incur such indebtedness. CBEATION AND POWEES OF PUBLIC COBPOBATIONS 65 between the obligations which the legislature can compel a public corporation to assume and those which it can- not, can hardly be characterized by the use of the word "local," although to a certain extent this states the proper basis. To illustrate, the supreme court of the state of Michigan held that the legislature could not compel the people of the city of Detroit to create an in- debtedness for the purpose of laying out and improving a public park within the limits of that city, such purpose being one, as it were, of an embellishment of the external appearance of the city. On the other hand it is quite clear that if the city of Detroit failed to provide a proper system of sewage, it could be compelled to do this without the consent of the people, the construction and the maintenance of a system of sewage being highly essential to the proper preservation of the health of the people, a governmental function beyond doubt.* ^ The 93 — Park Commissioners v. Com- mon Council of Detroit, 28 Mich. 228. In the opinion by Justice Cooley it is said, ' ' The proposition which asserts the ampKtude of leg- islative control over municipal coi^ porations, when confined, as it should be, to such corporations as agencies of the state in its government, is entirely sound. They are not created exclusively for that purpose, but have other objects and purposes pecu- liarly local, and in which the state at large, except in conferring the power and regulating its exercise, is legally no more concerned than it is in the individual an-d private concerns of its several citizens. In- deed it would be easy to show that it is not from the standpoint of the state interest, but from that of local interest, that the necessity of in- corporating cities and villages most distinctly appears. State duties of a p. s.— 5 local nature can for the most part be very well performed through the usual township and county organi- zations. It is because, where an urban population is collected, many things are necessary for their com- fort and protection which are not needed in the country, that the state is then called upon to confer larger powers and to make the locality a subordinate commonwealth. It is a fundamental principle in this State, recognized and perpetuated by ex- press provision of the Constitution, that the people of every hamlet, town and city of the State are en- titled to the benefits of local self- government. But authority in the legislature to determine what shall be the extent of the capacity in a city to acquire and hold property is not equivalent to, and does not contain within itself authority to deprive the city of property actually 66 PUBLIC SECUBITIES authorities, holding the legislature without power to com- pel the incurring of an indebtedness for public improve- ment or for purposes purely local in their character, as- sert as the reason for their holdings, the principle of local self-government.^^ Judge Cooley was an able exponent of this doctrine, and in the case of Park Commissioners v. Detroit Com- mon Council, cited above, as well as in other decisions and in his work on taxation, states, with his unusual clearness and force the reasons for his private as well as judicial opinions. The reader is referred to these au- thorities.^^ The power of the legislature in respect to the subject of this section is clearly limited by consti- tutional provisions if they exist, controlling the rate, manner, or purposes of taxation,^^ or the amount acquired by legislative permission. Ab to property it thus holds for its own private purposes, a city is to he regarded as a constituent in the State government, and is entitled to the like protection in, its property rights as any natural person who is also a constituent. The right of the state is a right of regulation, not of appropriation. It cannot be deprived of such property without due process of law. And when a local conven- ience or need is to be supplied in which the people of the State at large, or in any portion thereof out- side the city limits, are not con- cerned, the State can no more by process of taxation take from the individual citizens the money to pur- chase it, than they could, if it had been procured, appropriate it to the State use. People v. Magg, 46 N. Y. 401; Galloway v. Jenkins, 63 N. C. 147. 94 — See Gray Limitations of Tax- ing Power, Chap. 7; Cairo etc. E. B. Co. V. City of Sparta, 77 111. 705, and Park Commissioners v. Common Council of Detroit, 28 Mich. 228, cited in the preceding note and from which a lengthy quotation is made. 95 — Cooley Taxation, 2nd Ed. pp. 688, et aeq. 96 — Tovm of Elmwood v. Marcy, 92 U. S. 289, 23 L. Ed. 710. The corporate authorities of counties, townships, school districts, cities, towns, and villages, may be vested with power to assess and collect taxes for corporate purposes, such taxes to be uniform in respect to persons and property within the jurisdiction of the body imposing the same. 111. Const. 1848, Art. IX, Sec. 5. Held, following the decision of the Supreme Court of Illinois, that an act of the legislature iw- tended to validate the bonds of the township which had been illegally issued, violated this provision on the ground: "That this section hav- ing been intended as a limitation CBEATIOTT AND POWEKS OF PUBLIC COEPOBATIONS 67 of debt which can be incurred by designated public corporations.^'^ §33. Constitutional limitations, affecting legislative power. Special legislation. During the early legislative his- tory of the states there existed no limitations of this character upon the power of the different state law-mak- ing bodies. Nearly all legislation was special in its na- ture and it will be readily understood that such a system led to great abuses. Many of the states of the Union have now adopted in their constitutions or in amend- ments thereto, limitations upon the right of legislatures to pass acts special in their nature to meet a special con- dition or authorize special action.^* A general law has been defined as "a statute which relates to persons or upon the law-making power, the leg- islature could not- grant the right of corporate taxation to any but the corporate authorities, nor coerce a municipal corporation to incur a debt by the issue of its bonds for corporate purposes. Post v. Pulaski County, 49 Fed. 628; Choisser v. People (III.), 29 N. E. 546; Dun- kirk, etc., E. E. Co. V. Batchellor, 53 N. Y. 128. 97 — ^Eussell v. High School Board of Education, etc. 212 111. 327, 72 N. E. 441 ; Village of East Moline v. Pope, 224, 111. 386, 79 N. E. 587. In re Opinion of the Justices (Me.), 60 Atl. 85. The legislature cannot authorize a city to increase its debt beyond the constitutional limit nor compel it to become in- debted beyond such limit even to meet the cost of a public improve- ment, the duty of making which is imposed by the legislature on said city. Eaton v. Mimnaugh (Ore.), 73 Pac. 754. 98 — Pepin Township v. Sage, 129 Fed. 657 The express authority for the repeal of any existing special or local law conferred by the pro- viso to the constitutional amend- ment is a limitation upon the in- hibition against the passage of spe- cial or local laws. Hettinger v. Good Eoads Dist. No. 1, etc. (Ida.), 113 Pac. 721. Block V. City of Chicago (111.), 87 N. E. 1011. The question of whether a general law can be made applicable or whether a special law shall be passed is for the legislature and the courts cannot interfere. Bullock V. Eobinson (Ind.), 93 N. E. 998; State v. City of Lawrence (Kans.), 100 Pac. 485; Farwell v. City of Minneapolis (Minn.), 117 N. W. 422 ; Weston v. Eyan (Nebr.) , 97 N. W. 347. Van Cleve v. Passaic Valley Sew- erage Com'rs (N. J.), 58 Atl. 571. A law is special in a constitutional sense when by force of an inherent 68 PUBLIC SECTJEITIBS things as a class is a general law, while a statute which relates to perticular persons or things of a class is spe- cial." Th'^ mere arbitrary grouping, classing or arrang- ing of certain objects will not of itself make legislation general. There must be a logical basis for the desired effect independent of conditions or circumstances then existing.''* The existence of a constitutional limitation prohibiting the passage of special legislation may render limitation it arbitrarily separates two persons, places or things from tBose on which but for such separa- tion it would operate. People v. State Water Supply Co., 126 N. Y. S-. e37; Farwell v. Port of Colum- bia (Ore.), 91 Pac. 546; Cornman V. Hagginbotham, 227 Pa. 549, 76 AtJ. 721, Bailey v. Town of Clinton (S. C), 70 S. E. 446; see, as typical of such constitutional provisions, Minn. Const. Art. 4, Sec. 33. In all cases when a general law can be made applicable no special law shall be enacted and whether a general law could have been made applic- able in any case is hereby declared ■a judicial question, and as such shall be judicially determined with- out regard to any legislative asser- tion on that subject. The legisla- ture shall pass no local or special law regulating the affairs of, or incorporating, erecting or changing the lines of any county, city, village, township, ward or school district, or creating the oflices, or prescribing the powers and duties of the offi- cers of, or fixing, or relating to the compensation, salary or fees of the same, or the mode of election or appointment thereto ; authorizing the layiflg out, opening, altering, vacating or maintaining roads, high- ways, streets or alleys; • * * locating or changing county seats; regulating the management of pub- lic schools, the building or repairing of school houses, and the raising of money for such purposes; ♦ * * creating corporations, or amending, renewing, extending or explaining the charters thereof; granting to afiy corporation, association or in- dividual any special or exclusive privilege, immunity or franchise whatever, or authorizing public taxation for a private purpose. Pro- vided, however, that the inhibitions of local or special laws in this sec- tion shall not be construed to pre- vent the passage of general laws on any of the subjects enumerated. See, also Abbott's Municipal Corp., Sec. 93 with many eases cited, and Sees. 90 and 439, post. 99 — ^Harwood v. Wentworth, 162 U. S. 547; Guthrie Nat. Bank v. City of Guthrie, 173 U. S. 528; Pepin Twp. .v. Sage, 129 Fed. 657; Board of Education, etc. v. Alliance Assurance Co., 159 Fed. 994 ; Wheel- er V. Herbert (C^lif.), 92 Pac. 353; City of Denver v. Ilifif (Colo.), 89 Pac. 823; People v. Earl (Colo.), 94 Pac. 294; Eambo v. Larrabee (Kans.), 92 Pac. 913; State v. Cooley, 56 Minn. 540, 549; Eichards V. Hammer, 42 N. J. L. 435, 440; Summerton v. City of Elizabeth (N. J.), 78 Atl. 1119; Gubner v. CEEATION AND POWERS OF PUBLIC COEPOKATIONS 69 invalid an issue of securities authorized by law special in in its character, and which would otherwise be valid. § 34. Classification laws. The necessity for legislation classifying public corpo- rations arises from the fact that the density of popula- tion varies in different portions of a state, and those lo- calities densely populated require for their proper gov- ernment and for the proper administration of public and governmental affairs and functions, an organization or form of government more complex in character than that required by sparsely settled regions. The constitutional- ity of legislation providing for the classification of public corporations is well established so long as it comes with- in constitutional inhibitions and is based upon some dis- tinction that renders it reasonable and expedient. A classification is inoperative when based upon unsubstan- tial, arbitrary or illogical differences or characteristics. That the law has for its basis of classification reason- able and uniform conditions and genuine and substantial distinctions which may apply to the future as well as ex- isting conditions seems to be the test, though some cases hold that where the purpose of the law is temporary only, if it creates a distinctive class based upon existing circumstances it may still be constitutional.^ The power MeClellau (N. Y.), 115 N. Y. S. a class at this time does not neces- 755; Farrell v. Port of Columbia sarily make the act special. State (Ore.), 91 Pac. 546. v. Groth (Wis.), 112 N. W. 431; McGarvey v. Swan, 96 Pac. 697. see See. 439 post. A reasonable classification of ob- 1 — Ex parte Johnson (Calif.), 93 j«ts of legislation or localities may Pac. 199; Northwestern University be resorted to without rendering a v. Village of Wilmette, 230 111. 80, statute objectionable as local or spe- 82 N. E. 615; Dawson Soap Co. v. cial within the constitutional pro- City of Chicago, 234 111. 314, 84 vision relative to such laws. A N. E. 920 ; Eckerson v. City of Des classification by population is proper Moines (la.), 115 N. W. 177; Par- if reasonable and not arbitrary and ker-Washington Co. v. Kansas City the fact that only one city is within (Kans.), 85 Pac. 781; Kirch v. City 70 PUBLIC SECURITIES of a public corporation to issue securities, it will readily be seen, may depend in specific instances upon : First, the constitutionality of a classification law ; and, second, upon the application of that law authorizing the issue to the particular corporation claiming to come within the classi- fication established. §35. Other constitutional objections. The unconstitutionality of legislation affecting public corporations has been urged, not only upon the grounds noted in the preceding sections, but also upon the ground that a state constitution contains provisions that all laws relating to certain matters ' ' shall be uniform in their operation throughout the state," or there may be provisions which prohibit a legislature from passing any local or special law "regulating the affairs of counties, cities, etc.," or "regulating the internal affairs of towns and counties," and legislative acts or resolves authoriz- ing the incurring of indebtedness or the issue of public securities, may come within the prohibitions contained in these provisions, necessarily depriving the corporation of any power in this respect.^ That a bill deals with more than one subject, one only of Louisville (Ky.), 101 S. W. 373; v. Kennard (Nebr.), 116 N. W. 63; Specht V. City of Louisville (Ky.), Eapp v. Venable (N. M.), 110 Pae. 122 S. W. 846. 834; MeCarter v. McKelvey (N. J.), Griffin v. Powell, 143 Ky. 276, 74 Atl. 316. 136 S. W. 626. The classification Gentsch v. State (Ohio), 72 N. of a city by the legislature acting E. 900. A bona fide classification under Const. Sec. 156, is conclusive of cities and villages on the basis on the courts. of real and substantial differences Hjelm V. Patterson (Minn.), 116 in population and the conditions N. W. 610. Population alone fur- growing out of the same is valid, nishes no proper basis of elassifica- Village of Bloomer v. Town of tion for legislation in respect to the Bloomer (Wis.), 107 N. W. 974; appointment of highway superin- McGarvey v. Swan (Wyo.), 96 Pae. tendents. In re Gould (Minn.), 125 697. N. W. 273; State ex rel. Major v. 2 — Cole v. Dorr (Kans.), 101 Eyan (Mo.), 133 S. W. 8; Allen Pae. 1016; Seymour v. City of Or- CREATION AND POWEES OF PUBLIC COEPORATIONS 71 being expressed in its title, is another constitutional ob- jection urged against legislation looking to the control of public corporations or grants of power to them. Such a provision is intended to afford a protection to the peo- ple and to legislatures against the passage of laws deal- ing with more than one subject, some of which might not, but foi; this provision, be included in the title. The topics suggested in this section will be considered at length later in this work.* § 36. Control over the corporation in its private capacity. When acting as a private person, which condition sometimes occurs, a public corporation deals with the legislature or the sovereign state upon the same basis of equality as a private person or corporation. Property of whatever character it may acquire and hold is acquired and held subject to all the rules and limitations of the law affecting private property and interests. A legis- lature can no more arbitrarily pass laws affecting these interests and property than it can those of private per- sons. As recently said, "they (the courts) are also more and more recognizing that from the point of view of the inviolable private rights of municipal corpora- tions, these bodies may hold properties as private in character and therefore as inviolable in character by any ange (N. J.), 65 Atl. 1033; Smith Vineyard v. City of Grangeville, 98 f. Borough of Hightstown (N. J.), Pac. 422; Browne v. Town of Provi- 60 Atl. 393; McCarty v. Queen (N. dence, 38 So. 478; Armstrong v. J.), 72 Atl. 1119; State v. Kersten, George, 84 Kans. 248, 114 Pac. 209; 95 N. W. 120. Jackson v. Board of Education of 3— Montclair v. Kamsdell, 107 V. City of Minneapolis (Minn.), 127 S. 147; Otoe County v. Baldwin, N. W. 569; City of St. Louis v, 111 TJ. S. 1; Mahomet v. Quaeken- Mortman (Mo.), 112 S. W. 520; bush, 117 U. S. 509; Carter County Manufacturers Land & Imp. Co V. Sinton, 120 U. S. 517; The George v. City of Camden, 79 Atl. 286, W. Elder, 159 Fed. 1005; State v. afiarming 78 N. J. L. 247, 73 Atl. Miller (Ala.), 48 So. 496; Stokes 77; Allen v. Board of Education, V. Gallaway (Fla.), 54 So. 799; etc. (N. J.), 79 Atl. 101. 72 PUBLIC SECUEITIES governmental action as the property of individuals. It is indeed true that this position has not been reached without considerable reluctance. ' ' * 4 — Quoting from Darlington v. aty of New York, 31 N. Y. 164; see, also, City of Ensley v. Simp- son (Ala.), 52 So. 61. A statute opwating to destroy an incorporated city is not invalid as depriving it of its property in violation of II. S. Const. Amend. 14. Carr v. Dis- trict Ct. of Van Buren Co. (la.), 126 N. W. 791. McSurely v. McGrew (la.), 118 N. W. 415. Proprietary or private rights acquired by a municipal cor- poration and of which they cannot be deprived by the legislature in- cludes only property reduced to pos- session or held in trust for the inhabitants of that particular lo- cality as distinct from the people as a whole. In re Municipal Fuel Plants (Mass.), 66 N. B. 25. Municipal coal yards not authorized. Attorney General v. Common Council of the City of Detroit (Mich.), 113 N. W. 1107. The power to manufacture paving brick is not included in the powers ex- pressly granted to the city of De- troit nor is it fairly implied in nor incident to powers expressly granted; neither is it indispensable or even essential to the declared objects and purposes of the cor- poration. Sargent v. Clark (Vt.), 77 Atl. 337. The state has to some extent control of the property of towns held for municipal purposes but not property held for private purposes. Propr's. of Mt. Hojpe Cemetery V. City of Boston, 158 Mass. 509. In the opinion Judge Allen said: "The city of Boston is possessed of much other property which, in a certain sense, and to a certain extent, is held for the benefit of the public, but in other respects is held more like the property of a private corporation. Notably among these may be mentioned its system of waterworks, its system of parks, its markets, its hospital, and its library. In establishing all of these the city has not- acted strictly as an agent of the state government for the accomplishment of general public or political purposes, but rather with special reference to the benefit of its own inhabitants. If its cemetery is under legislative control, so that a transfer of it without compensa- tion can be required, it is not easy to see why other properties men- tioned are not also; and all the other cities and towns which own cemeteries or other property of the kinds mentioned might be under a similar liability. ' ' Love V. Holmes (Miss.), 44 So. 835. Power to own and operate an electric railway may be conferred by the legislature upon a municipal- ity though that is a business in- consistent with its customary func- tions. Sargent v. Clark (Vt.), 77 Atl. 337. The state has to some extent control of the property of towns held for municipal purposes but not property held for private purposes. Abbott's Mun. Corp. Sec. 97 with eases cited; but see the case of David V. Portland Water Committee, CEEATION AND POWERS OF PUBLIC COEPOBATIOKS 73 § 37. The impairment or destruction of vested rights as a limitation. The legislature of a state may pass laws creating pub- lic corporations, regulating and controlling their affairs, dividing their boundaries, providing for the disposition of their revenues and the manner in which taxes shall be levied and collected, such laws not coming within the constitutional objections noted in a preceding section and therefore not unconstitutional and void, but subject to fundamental principles of law and, if violating them, invalid or subject to other constitutional provisions re- lating to the impairment of contract obligations and other rights.^ The control of the sovereign, as has been said, is full, ample and supreme over public corporations, but the existence of this power does not permit even the sover- eign state, much less a legislature, its law-making brancb, to impair or destroy contract, property or vested rights possessed by aliens or citizens, within the jurisdic- tion of the state but protected by fundamental law. In short, the cases hold without exception that the legisla- 14 Ore. 98, where the court say: possession of it for the benefit of "Public parks, gas, water and municipal creditors and while a sewerage in towns and cities may municipal charter can be modified ordinarily be classed as private af- or abolished, yet after a municipal- fairs but they often become matters ity has become indebted under that of public importance and when the charter, the rights of the creditor legislature determines that there is based upon the obligation of the a public necessity for their use in contract cannot be impaired by any a certain locality, I do not think subsequent legislative enactment, they can be designated as mere pri- City of Colorado Springs v. Neville, vate affairs; that is a relative 93 Pae. 1096. question." McSurely v. McGrew (la.), 118 5 — Chalstran v. Board of Educa- N. W. 415. A private citizen can- tiom, etc. of Knox County, 244 111. not be deprived by an act of the 470, 91 N. E. 712. If a municipal legislature of any of his rights corporation upon the surrender or against a municipal corporation extinction in other ways of its under the guise of legislative con- charter is possessed of any prop- trol of those bodies, erty, a court of equity will take 74 PUBLIC SECUEITIES ture cannot pass a law affecting, either the existence, power or duties of a public corporation which in effect impairs or destroys the right of a creditor of that cor- poration. Creditors possess vested rights which even the state, controlled by constitutional limitations, cannot take away. Eights of this character may consist of a remedy given by the state to enforce the collection of a valid obligation," or it may be the means for the payment of an indebtedness provided at the time of the grant of the original authority, a corporate power of taxation conferred,'^ or again it may be specific property or reve- nues placed at the disposal of the creditor under specific circumstances and conditions.* §38. The powers of public corporations. A public corporation is an agency of government cre- ated by a sovereign state when such action seems most conducive for the public good for the purpose of aiding it in the exercise and administration of governmental func- tions. A corporation, either public or private, is an arti- ficial person of limited powers. The powers it possesses are to be found in the charter of its creation which has been held, include not only the act of incorporation whether a special or general law but constitutional pro- visions and also decisions of the courts of last resort- con- 6 — State V. Grefe (la.), 117 N. bia County Com'rs v. King, 13 Fla. W. 13; Milner v. City of Pensacola, 451; Palmer v. City of Danville, 2 Woods 632, Fed. Cas. No. 9619; 166 111. 42; Broadfoot v. City of Eader v. Southeasterly Bead Dist. Fayetteville, 124 N. C. 478; Ladd of Union, 36 N. J. L. 273; Upper v. City of Portland, 32 Ore. 271; Darby Twp. v. Borough of Lans- see, also. See. 358, et seq., post, dowoe, 174 Pa. 203; see. See. 37 8 — Warner v. Hoaglund, 51 N. ante, and Sees. 362, 370, 371, 374, J. L. 62, 16 Atl. 166; Weekes v. 377, post. City of Galveston, 2 Tex. ttv. 7— People V. lugersoll, 58 N. Y. App. 102, 51 S. W. 544; Smith v. 1; City of Covington v. Kentucky, City of Appleton, 19 Wis. 468; see, 173 U. S. 231; Devereaux v. City also, Sec. 366 et seq., post, of Brownsville, 29 Fed. 742; Colum- OBEATIOSr AND POWEES OE PUBLIC COEPOEATIONS 75 struing and applying these acts and provisions. The authorities, both federal and state, holding public cor- porations artificial persons of especially limited powers, are many.^ This rule necessarily follows from the nature of public corporations, the purposes for which they are organized, and the sources from which they derive the funds dis- pensed by them in the management and conduct of their affairs. The charter of a public corporation, used in the broad sense above indicated, is the measure of its powers which have been classified as : (1) Those granted in ex- press words ; (2) those necessarily or fairly implied in, or incident to the powers expressly granted; and, (3) those implied as essential to the declared offices and purposes of the corporation, not simply convenient, but absolutely indispensable. The reported cases teem with statements of the principle already stated but which cannot be too strongly emphasized, namely that public corporations can only exercise such powers as are clearly compre- hended in the legislative grant or derived therefrom by necessary implication. The incidental powers capable of being exercised by a public corporation must be indis- pensable to the exercise of powers expressly granted.^" 9— -Barnea v. District of Colum- ing 186 111. 179; United States v. bia, 91 U. S. 540; Tippecanoe Coun- MacFarland, 28 App. D. C. 552; ty Com'rs v. Lueas, 93 U. S. 108; City of Beasemer v. Bessemer Wa- United States v. City of New Or- ter Works (Ala.), 44 So. 663; In leans, 98 U. S. 381; Ottawa v. re Munro, 1 Alaska 279; Conradt Carey, 108 U. S. 110; Stoutenburgh . v. Miller, 2 Alaska 433; Santa Cruz V. Hennick, 129 U. S. 141; Hunter County v. Barnes (Ariz.), 76 Pae. V. City of Pittsburgh, 207 U. 8. 621 ; Piatt . v. City and County of 161; City of Detroit v. Detroit City San FranJeisco (Calif.), 110 Pac. Eailway Co., 56 Fed. 867; Gold- 304; Brunstein v. People (Colo.), thwaite v. City of Montgomery, 50 105 Pao. 857; Booth v. Town of Ala. 186; see, also, Sec. 38 et seq., Woodbury, 32 Conn. 118; Hardee ante. v. Brown (Pla.), 87 So. 834; Waller 10— Freeport Water Co. v. City v. Osban (Fla.), 52 So. 970; City of Freeport, 180 U. S. 87, affirm- of Chicago v. Weber (111.), 92 N. 76 PUBLIC SECUBITIES ' In this respect the rule differs from that applied to private corporations. As to such organizations they pos- sess the legal right of exercising incidental powers which are not always indispensable to the carrying out of some express powers or of the purposes for which they were created but which are merely convenient to them. §39. Express and implied powers. The express powers granted a public corporation are those to be found stated in clear and unmistakable lan- guage in its charter. It may possess not only the pow- ers granted in express words as above stated, but also those necessary or fairly incident to powers expressly granted but also those implied because absolutely essen- tial and indispensable to the declared offices and purposes of the corporation. A brief reference to some powers held as coming within the class of implied powers will be made." To enact ordinances. The power or right of a cor- poration to adopt such by-laws as it may deem proper for its own local or internal government in harmony with E. 859; Loeffler v. City of Chicago, (Okl.), 109 Pae. 570; Naylor v. 246 III. 43, 92 N. E. 586; Brooks MeCulloch (Ore.), .103 Pae. 68; V. Incorporated Town of Brooklyn Elliott v. Monongahela City, 229 (la.), 124 N. W. 868; Frank v. Pa. 618, 79 Atl. 144; Mannie v. City of Decatur (Ind.), 92 N. E. Hatfield (S. D.), 118 N. W. 817; 173; Leavenworth v. Norton, 1 Ball v. Texarkana Water Corp. Kans. 432; Phillips Village Corpo- (Tex.), 127 S. W. 1068; Village of ration v. Phillips Water Co. (Me.), Swanton v. Town of Highgate 71 Atl. 474; Wheeler v. City of S. (Vt.), 69 Atl. 667; Earwell v. City Ste. Marie (Mich.), 129 N. W. 685; of Seattle (Wash.), 86 Pae. 217; City of Hazlehurst v. Mayes Flannagan v. Buxton (Wis.), 129 (Miss.), 51 So. 890; Steitenroth v. N. W. 642. City of Jackson (Miss.), 54 So. 11 — City of Ottawa v. Carey, 108 955; State ex rel. Case v. Wilson U. S. 110; Baumgartner v. Hasty, (Mo.), 132 S. W. 625; Palmer v. 100 Ind. 575; Ball v. Texarkana City of Helena (Mont.), 107 Pae. Water Corporation (Tex.), 27 N. 512; Stern v. City of Pargo (N. W. 1068; see, Abbott's Munic. Corp. D.), 122 N. W. 403; Ex parte Jones See. 109, and eases cited. CREATION AND POWEBS OF PTJBLIC COEPOEATIONS It its charter, the laws and constitution of the state and the general law of the land, is not seriously questioned.^ ^ Public offices. Another implied power possessed by public corporations is that of instituting certain public offices and officials where such are necessary to the proper performance of the functions or duties imposed or re- quired by law of the corporation.^^ To acquire and hold property. A public corpora- tion has also the implied power unless restricted by law to acquire and hold such property as may be necessary and convenient to either exercise powers directly granted or perform properly the functions of government for which it was created.^* The police power. A public corporation unquestion- ably has the implied right to exercise the police power and to accomplish this purpose to adopt and enforce such police and sanitary regulations and ordinances as may be necessary and which are consonant with superior law.^® Miscellaneous implied powers. Public corporations and especially municipal corporations proper possess in addition to the implied powers suggested above, the right to make and use a common seal and alter it at pleasure; the power to sue and compromise; complain and defend in any court; acquire a name and by that name to have perpetual succession and to exercise such powers as are recognized necessary to the existence of corporate life of the kind and character possessed by public corpora- tions." 12— A Coal-rioat v. City of Jef- CaUf. 151; In re City of Buffalo, fersonville, 112 Ind. 15; Cross v. 68 N. Y. 167; see, also, Abbott's Town of Morristown, 33 N. J. L. Munic. Corp. Chap IX. 57; City of Nashville v. Linek, 80 15— Eae v. City of Flint, 51 Tenn. 499.' Mich. 526; Sayre Borough v. Phil- 13 — Lowry v. City of Lexington, lips, 148 Pa. 482 ; see, also, Abbott 's 113 Ky. 763, 68 S. W. 1109; Boehm Munic. Corp. Sec. 115 et seq. V. City of Baltimore, 61 Md. 259. 16— Girard v. City of Phil., 7 14— Von Schmidt v. Widber, 105 Wall. (U. S.) 1; Ball v. Texarkana 78 PUBLIC SECUKITIES Express constitutional provisions or action of the state in respect to any of the powers noted will neces- sarily control the corporation in the exercise of a power, and it will also be remembered that the universal rule obtains, that except as controlled by constitutional pro- visions, all rights and powers of public corporations, whether express or implied, are held, enforced and exer- cised only at the will of the sovereign state.''' § 40. Discretionary and imperative powers. There is found upon examination of the authorities an- other division of powers not co-ordinate or co-extensive with the one just given but based upon the idea that a public corporation may possess powers granted to it by the sovereign state, the exercise of which is optional. There are also other powers granted to it, the exercise of which is not a matter of choice. We have then impera- tive powers, or those whose exercise is obligatory upon the public corporation and the performance of which can be compelled by proper process ; '* and discretionary powers or those to be exercised or not within the sound discretion of the officers controlling public affairs and to whom such discretion may be given.'* Water Corp. (Tex.), 127 N. W. Y. 28; Cavender v. City of Charles- 1068; Eichards v. Town of Clarks- town (W. Va.), 59 S. E. 732. burg, 30 W. Va. 491; see, also, Ab- 19 — City of Joliet v. Verley, bott'a Munic. Corp. Sec. 109. 35 111. 58; St. Joseph Board of 17 — City of Louisville v. Weikel Public Schools v. Patten, 62 Mo. (Ky.), 127 S. W. 147; Weith v. 444. Wilmington, 68 N. C. 24; Plinkie- Herford v. City of Omaha, 4 wisoh V. Portland By. Light & Power Nebr. 336. The court here say: Co. (Ore.), 115 Pac. 151; see, Sec. "It sometimes becomes a very grave 25 et seq., ante. question in the construction of the _18 — Mason »'. Fearson, 9 How. statutes whether particular provi- (U. 8,), 248; City of Ottawa v. sions are to be regarded as ,manda- People, 48 111. 233; Inhabitants of tory or directory. It is, however, a Veazie v. Inhabitants of China, 60 familiar principle that statutes re- Me. 518; Phelps v. Hawley, 52 N. lating merely to matters of eoiwen- CEBATION AND POWERS OF PUBLIC COEPOEATIONS 79 §41. Exercise of imperative powers. Powers conferred on public corporations to be exer- cised for the public good involving the performance of governmental duties are imperative in their nature ; they become a duty and their performance, an obligation. The language used in conferring the power does not neces- sarily determine its character. It is the nature of that power which establishes this. The reason for this rule can be briefly stated. Public corporations are political, subordinate divisions of the state, organized as a part of its governmental machinery of administration. Their duties of this character are wholly of a public nature and their creation a matter of public convenience or gov- ernmental necessity. In order that they may better carry out the purposes for which they are created, certain pow- ers are conferred upon them, and whether they will as- sume and exercise these powers or perform the duties imposed are matters with which they have no concern. Necessarily therefore the exercise of public imperative powers is held involuntary.^" Imperative powers granted to or imposed upon public corporations cannot be abridged, surrendered or destroyed by any act of the corporation itself and the converse of this rule is also true, that a public corporation cannot by any act of itself increase its powers.^' ienee or to the orderly and prompt determinate point between a man- conduct of business and not to the datory and directory statute." essence of the thing to be done, 20 — Goodrich v. City of Chicago, are generally considered as directory 20 111. 445; Anne Arundel County only, but this doctrine has been Com'rs v. Duckett, 20 Md. 468; carried so far in some cases that McGillic v. Corby (Mont.), 95 Pac. it seems impossible to reconcile all 1063; Kennelly v. Jersey City, 57 the eases in which the question has N. J. L. 293; Phelps r. Hawley, 52 been considered and if equal force N. Y. 23. were given to each case found in 21 — Clark v. City of Washington, the books it would be a fruitless 12 Wheat. (U. S.) 40; City Coun- effort to attempt to fix any settled cil of Montgomery v. Capital City 80 PUBLIC SECUKITIES § 42. Exercise of discretionary powers. On the other hand, those duties or powers conferred upon a public corporation, either by the language of the statute conferring the power or by the character or na- ture of the act to be done may be considered as discre- tionary and optional so far as the performance or exer- cise by the corporation is concerned. The exercise of discretionary powers as well as the manner of exercise when not specified by the grant of authority is as indi- cated by the plain meaning of the words left to the dis- cretion of the corporation and its officials having in charge its management, or the transaction of the specific act.^^ Public corporations generally possess a wide discre- tion, both in regard to the opening of public streets or highways and their improvement, including the construc- tion and maintenance of drains, sewers, side-walks and pavements.^^ Courts are not permitted, nor do they assume the right to exercise any restraining or other influence in regard to the performance or non-performance of discretionary powers unless questions are involved of bad faith, fraud, corruption, or the invasion of private rights.^^ Water Co., 92 Ala. 361; New Or- Louis, 158 Mo. 505; Spears v. City- leans Gas Light Co. v. City of New of New York, 72 N. Y. 442; Carr Orleans, 42 La. Ann. 188; Gale v. v. Northern Liberties, 35 Pa. State Village of Kalamazoo, 23 Mich. 324; Grant v. City of Erie, 69 Pa. 444; City of New York v. Second 420; Kelley v. City of Milwaukee, Ave. R. E. Co., 32 N. Y. 261; see, 18 Wis. 83. also, Abbott's Munic. Corp. note 23 — Fulton v. Cumminga, 132 Ind. 34, page 195. 453; Hovey v. Mayo, 43 Me. 322; o2_xjnited States v. City of New City of Biddeford v. Yates (Me.), Orleans, 31 Fed. 537; Thompson 72 Atl. 335; People v. Queens Coun- V. Board of Trustees of City of ty Sup'rs, 131 N. Y. 468; City of Alameda (Calif.), 77 Pac. 951; Taeoma v. Titlow (Wash.), 101 State V. Tampa Water Works Co. Pac. 827 (Fla.), 47 So. 358; Edwards Hotel, 24 — City of East St. Louis v. Zeb- etc. Co. V. City of Jackson (Miss.), ley, 110 U. S. 321; Goytino v. City 51 So. 802; State v. City of St. of Waynesboro (Ga.), 50 S. E. 122; CEBATION AND POWERS OP PUBLIC COEPOKATIONS 81 The corrective and restraining power of the courts can be invoked where public corporations transcend or abuse their power or threaten to do so, but public corporations are ordinarily free to transact their police, administra- tive and local discretionary duties without restraint or hindrance by the judicial or other branches of the state government. ^^ § 43. Corporate powers; their delegation or surrender. The powers possessed by public corporations are usually governmental in their nature and when granted by the legislature cannot be delegated by the corporation to others for their discharge or performance. It must exercise the functions imposed upon it by its charter. The character of these duties and the manner of their performance is usually specified in the original grant of power. The manner of the exercise of discretionary powers, as already stated, is usually confided to the dis- cretion and good judgment of public officials.^^ This rule does not prevent, however, a delegation of the per- formance of ministerial duties or acts. The law recog- People V. Grand Trunk West. By. ger, 243 111. 167, 90 N. E. 369; Co., 232 111. 292, 83 N. E. 839; Le Peber v. Northwestern, etc. Co. Lincoln School Twp. of Hendricks (Wis.), 97 N. W. 206; see cases County V. Union Trust Co., 73 N. cited in the preceding note. E. 623; Swan v. City of Indianola 26 — Crittenden v. Town of Boone- (la.), 121 N. W. 547; Hibbard v. ville (Miss.), 45 So. 723; Thomp- Barker, 84 Kans. 848, 115 Pac. son v. Board of Trustees of City of 561; State ex rel. Gentry v. Village Alameda (Calif.), 77 Pac. 951; Ga- of Dodson (La.), 49 So. 635; Carl- lindo v. Walker (Calif.), 96 Pac. ing V. Jersey City (N. J.), 59 Atl. 505; Lowery v. City of Lexington, 395; So. Ry. Co. V. Board of Com 'rs, 75 S. W. 202; City of Bowling etc. (N. C), 61 S. E. 690; Jones v. Green v. Gaines (Ky.), 96 S. W. Town of North Wilkesboro (N. C), 852; City of Baltimore v. Gahan 64 S. E. 866; Seitzinger v. Bor- (Md.), 64 Atl. 716; Edwards v. ough of Tamaqua, 187 Pa. 539; City of Kirkwood (Mo.), 127 S. W. Brummitt v. Ogdeu Water Works 378; see, also, Abbott's Munic. Co. (Utah), 93 Pac. 828. Corp., Sec. 112 and Sec. 40 et seq., 25 — City of Chicago v. Schmidin- ante. p. s.— 6 82 PUBLIC SECUKITIES • ' nizes the clear distinction between duties or powers in- volving tlie exercise of judgment and discretion and those purely mechanical, clerical, or ministerial in their char- acter,^' Closely related to the principle stated in the preceding paragraph is the rule that a public corporation cannot surrender nor divest itself, of the law-making powers granted to it, without legislative authority, either ex- press or clearly implied. Subordinate public corpora- tions have no power to make contracts or do those acts which in effect are a surrender of their governmental powers or which tend to limit or embarrass them in the performance or discharge of their governmental and pub- lic duties.^* §44. Rules of construction. It is seldom that a rule other than that of strict con- struction is applied or should be applied to powers of whatever nature granted to and exercised by a public corporation. The reason for this salutary principle is that a public corporation is organized not for the per- sonal, pecuniary gain or profit of its members but as an agency of the government for the exercise of govern- mental powers and for the better performance of the duties which every good government owes to those within its jurisdiction. The charter of the corporation contains 27— City of Biddeford v. Yates go, 118 Calif. 524; People v. Clean (Me.), 72 Atl. 335; Edison Electric Street Company, 225 111. 470, 80 N. Light & Power Co. v. Bloomquist E. 298; Flynu v. Little Falls Wa- (Minn.), 124 N. W. 969; People v. ter Power Co. (Minn.), 74 N. W. Grand Trunk W. Ey. Co., 232 111. 180; State v. Board of Park Com'rs 292, 83 N. E. 839; Jewell Belting of City of Minneapolis (Minn.), Co. V. Village of Bertha (Minn.), 110 N. W. 1121; Columbus Gas 97 N. W. 424; City of Carthage v. Ligiht & Coke Co. v. City of Colnm- Garner (Mo.), 108 8. W. 521; bus, 50 Ohio St. 65; City of Mar- Schwartze v. City of Camden (N. shall v. Allen (Texas), 115 N. W. J.), 75 Atl. 647. 841. 28 — Higgins v. City of San Die- CEEATION AND POWERS OF PUBLIC COKPOEATIONS 83 the grant of its powers and powers, rights, or privileges, cannot be read into this charter by judicial construction or interpretation.^'* Any ambiguity or doubt, if such exists, must be con- strued or resolved in favor of the public and as against the exercise of the power by the public corporation. The action of a public corporation is to be held strictly to the limits imposed by its charter.^" If a public corporation. 29 — Minturn v. Larue, 23 How. (XT. S.) 435. Where Justice Nelson said : ' ' Any ambiguity or doubt arising out of the terms used by the legislature must be resolved in favor of the public." Curtis V. The County of Butler, 24 How. (TJ. S.) 435. Now we freely subscribe to the rule that neither privileges, powers nor au- thority can pass by the law of in- corporation unless they be given in unambigous words and that an act giving special privileges must be construed strictly. Thompson v. Lee Co., 3 Wall. (U. S.) 327. A municipal corpora- tion "can exercise no power which is not in express terms or by a fair implication conferred upon it." Omaha Electric Light & Power Co. v. City of Omaha, 179 Fed. 445, aiErming 172 Fed. 494; Boise aty v. Boise City Artesian, etc. Co., 186 Fed. 705; Howard v. Town of Eastlake (Ala.), 46 So. 754; State f. Smith, 67 Conn. 541. Spaulding v. City of Lowell, 40 Mass. (23 Pick.) 71. In this case. Chief Justice Shaw speaking for the court, said: "They can exer- cise no powers but those which are conferred upon them by the act by which they are constituted, or such as are necessary to the exercise of, their corporate powers, the perform- ance of their corporate duties, and the accomplishment of the purposes of their association. The principle is fairly derived from the nature of the corporations, and the mode in which they are organized and in which their afEairs must be con- ducted. ' ' Leonard v. City of Can- ton, 35 Miss. 189; Heaney v. Sprague, 11 E. I. 456. 30— Ottawa v. Carey, 108 TJ. S. 110; City of Port Scott v. Eads Brokerage Co. 117 Fed. 51. Omalia Electric Light & Power Co. V. City of Omaha, 179 Fed. 455, aflSrming 172 Fed. 494. Legis- lative grants of power to municipal corporations must be strictly con- strued and cannot operate except so far as expressly delegated or indispensably necessary to the exer- cise of some other power which has been expressly delegated. English v. Chicot Co., 25 Ark. 454. A county is a political corporation created for specific purposes and its powers like those of any other cor- poration must be strictly construed. A statute authorizing a county to subscribe to the capital stock of a railroad company does not author- ize it to issue county bonds in pay- ment of such stock. State v. Tampa Water Works Co. (Fla.), 47 So. 358; City of Chicago v. Gunning System, 214 111. 628, 73 N. E. 1035; City 84 PUBLIC SECtTEITIES through irresponsible, dishonest or extravagant agents, exercises an ambiguous or a doubtful power resulting in an oppressive debt, an injury or loss to public property or an increase in taxation, it is the community at large, the taxable interests that must sustain and bear the loss and the burden. The principle, therefore, of strict con- struction is universally applied and every doubt as to the existence of a power is construed as against its exercise, and in favor of the tax paying public.^^ §45, Rule of strict construction; how modified. The rule of strict construction as stated above, is oc- casionally modified. The courts hold that it should not be carried to such an extent as to defeat the very purpose for which the power was granted, if proper to be exer- cised, and that where it is necessary to adopt a more liberal rule of construction of a corporate power to ac- complish the result sought by the legislature, it should be done. The rule of strict construction also is not so fre- quently applied to grants of ordinary powers to munici- of Chicago v. Weber, 92 N. B. 859; 128 S. W. 625; State ex. rel. Case Chicago V. M. & M. Hotel Co., 248 v. Wilson (Mo.), 132 S. W. 625; 111. 264, 93 N. E. 753; Bear v. City State v. Edwards (Mont.), 106 Pac. of Cedar Eapids (la.), 126 N. W. 695; Meday v. Borough Rutherford, 324; City of Somerville v. Dicker- 65 N. J. L. 645; In re Village of man, 127 Mass. 272. Kenmore, 110 N. Y. S. 1008; State Leonard v. City of Canton, 35 v. Webber, 107 N. C. 962; Stern v. Miss. 272. The power of a cor- City of Fargo (N. D.), 122 N. W. poration is merely something added 403; Leslie v. Kite, 192 Pae. 268; as to the particular locality to the Blankenship v. City of Sherman general powers of government; or, (Tex.), 76 S. W. 805; Mantel v. in other words, it is a special juris- State (Tex.), 117 S. W. 855; City diction, created for specified pur- of Winchester v. Eedmond, 93 Va. poses and like all such jurisdictions, 711; Quint v. City of Merrill, 105 must be confined to the subjects ex- Wis. 406. presely enumerated. City of Hazel- 31 — Lachman v. Walker (Fla.), 42 hurst V. Mayes (Miss.), 51 So. 890; So. 461; see also cases cited in pre- State V. Butler (Mo.), 77 S. W. 560; ceding notes. State ex rel. etc. v. CUfEord (Mo.), CEEATION AND POWERS OF PUBLIC COEPOEATIONS 85 pal corporations proper, but even as to these corpora- tions, the principle is equally applicable to unusual or ex- traordinary powers or those which when exercised result in a public burden.^^ The customary rule in respect to the construction of statutes is also followed by the courts, viz: That it is the duty of the court to give effect, if possible to every clause and word of a statute and that when taken to- gether if the purpose of the different provisions of a statute is not ambiguous or doubtful that construction should be given, if possible, as will give effect to all its provisions.** The rule of strict construction is also modified where the corporation is endeavoring to extend its power to the injury of others and where it states by way of de- 32— Allen v. Louisiana, 103 U. S. 80; County of Moultrie v. Fairfield, 105 U. S. 370; Carey v. Blodgett (Calif.), 102 Pae. 668; Porter v. Vinzant (Pla.), 38 So. 607. Smith V. City of Madison, 7 Ind. 86. The strictness then to be ob- served in giving construction to municipal charters should be such as to carry into effect every povrer clearly intended to be conferred upon the municipality and every power necessarily implied in order to the complete exercise of the powers granted. In City of Port Huron v. McCall, 46 Mich. 565, it is held that the reason for the rule of strict con- struction does not apply where the power granted relates merely to a change in the form of municipal in- debtedness. The court in its opin- ion by Justice Cooley said: "There is a principle of law that munic- ipal powers are to be strictly inter- preted and it ia a just and wise rule. Municipalities are to take nothing from the general sovereignity except what is expressly granted. But when a power is conferred which in its exercise concerns only the munic- ipality and can wrong or injure no one, there is not the slightest reason for any strict or literal interpreta- tion with a view of narrowing its construction. If the parties con- cerned have adopted a particular construction not manifestly errone- ous and which wrongs no one, and the state is in no manner concerned, that construction ought to stand. That is good sense, and it is the ap- plication of correct principles in municipal affairs. State v. Wal- bridge, 119 Mo. 383; Gregory v. City of New York, 40 N. Y. 273. 33 — Allen v. Louisiana, 103 TJ. S. 80; County of Moultrie v. Fairfield, 105 TJ. S. 370; Montclair v. Eams- dell, 107 U. S. 147; Grenada County Sup'rs V. Brogden, 112 U. S. 261. 86 PUBLIC SBCUEITIES fense to an action brought against it that it has itself been guilty of usurpation of power.^^ § 46. The power to contract. A public corporation, it must be remembered, is: (1) An artificial person, and, (2) a governmental agent; so that as compared with private corporations its powers are still further restricted and limited. It is organized for the benefit and advantage of the community at large without special reference to any individual, family or class and for the further purpose of exercising govern- mental functions. The right to contract is one of the powers usually conferred upon it through some charter provision. The tendency of the court is to confine the exercise of corporate powers granted to public corpora- tions strictly to such as are clearly given and following this rule, the power to contract of a particular public corporation whether municipal or public quasi, will be determined not by the application of general rules or principles of laws but by the specific right given to it by some grant of legal authority.^' Public corporations have only such rights and powers as are especially granted or absolutely necessary to carry into effect the powers and rights so granted. This rule applies in its full force to the making of contracts,'"' 34— Bank of Chillicothe T. Town of West Virginia, 220 U. S. 1, 55 of Chillicothe, 7 Ohio Pt. 2, 31. L. Ed. 353, construing a contract 35 — City of Memphis v. Brown, between these two states relative to 20 Wall. (tr. S.), 288; Berry v. an adjustment of the debt of Vir- Mitchell, 42 Ark. 243; Hone v. ginia. Presque Isle Water Co^ (Me.), 71 36— City of Mobile v. Moag, 53 Atl. 769 ; Swift v. Inhabitants of Fal- A.la. 561 ; City of New London v. mouth, 167 Mass. 115; City of Lex- Brainerd, 22 Conn. 552; Eoberts v. ington V. Lafayette County Bank, 165 City of Cambridge, 164 Mass. 176; Mo. 161; Chamberlain v. City of Mayo v. Ins. Co., 96 Me. 539; la Hoboken, 38 N. J. L. 110; Hubbard re Board of Water Com'rs, 17C N. V. Norton, 28 Ohio State 116; Ab- Y. 239; Fawcett v. Town of Mt. bott Munic. Corp. Sec. 246; see also Airy, 134 N. C. 125, 45 S. E. 1029. Commonwealth of Virginia v. State CBEATION AND POWEBS OF PUBLIC COEPOEATIONS 87 and the legality of a particular contract will depend, therefore, not upon the general principles of law relating to the execution of contracts Ijut upon the special con- struction of some legal grant from which the right to contract is claimed." The purpose of the contract may be one also in fur- therance of an act which the corporation is prohibited by general principles or specific restrictions of the law from doing as not coming within the scope of the object or purpose for which the public corporation was incor- porated. Aid, donations or assistance rendered private individuals in the advancement of private enterprises are invariably prohibited by law.^^ §47. The implied power to contract. The implied power to contract on the part of a public corporation does not exist except so far as may be indis- pensably necessary to carry into effect those powers and rights which have been by law expressly granted. This rule precludes, save in exceptional cases, the existence of an implied or discretionary power to contract.^* The principle that there does not exist the implied power to contract must be distinguished, however from the one that where the authority exists, in the absence 37— Staten Island Water Supply Fed. 321; City of Hartford v. Hart- Co. V. City of New York, 128 N. ford Electric Light Co., 65 Conn. Y. S. 128. 324; Moss v. Sugar Eidge Twp. 38— Parsons v. Inhabitants of (Ind.), 67 N. E. 460; McDonald's Goshen, 28 Mass. (11 Pick) 396; Admr. v. Franklin County (Ky.), 100 Brick Pres. Church v. City of New S. W. 861 ; Dolioff v. Inhabitants of York, 5 Cow. (N. Y.), 538; Qty Ayer, 162 Mass. 569; Clark v. West of La Crosse v. La Crosse Gas & Bloomfield Twp. (Mich.), 117 N. Electric Co. (Wis.), 130 N. W. 530. W. 638; aty of Wellston v. Morgan, See Sec. 101 et seq., post. 65 Ohio State 219; McCormick v. 39— City of Litchfield v. Ballou, City of Niles (Ohio), 90 N. E. 803; 114 IT. S. 190; Gillette-Herzog Mfg. see Abbott Munic. Corp. Sec. 247, Co. V. Canyon Co. 85 Fed. 396; City with many caies cited, of Newport News v. Potter, 122 88 PUBLIC SECURITIES of an express contract, when a public corporation has re- ceived services or property of value and which it could legally use or acquire, an implied contract will be held to exist sufficient to enable the party rendering the serv- ices or transferring the property to recover their rea- sonable value.^" §48. Ultra vires contracts. A corporation, either public or private, may do an act in excess of or beyond its lawful authority as found in its charter ; such an act is termed ultra vires. A public corporation is an artificial person of a special character and as such is legally capable of only doing such acts and exercising such powers as may be conferred upon it by the charter of its creation directly or as indispensable and necessarily implied to carry into effect the powers directly granted. The legal authority to make a contract therefore lies at the foundation of its validity. This is found in the charter, using the term in its broad sense, and the absence of authority acts as a limitation upon the right of the public corporation to contract. Contracts entered into without such authority are beyond the power of the corporation to make and are necessarily void.*^ 40— Vilas V. City of Manilla, 31 59 Fed. 327; City of Fort Seott v. Sup. Ct. Eep. 416 ; Steele County v. W. G. Eads Brokerage Co., 117 Fed. Erskine, 98 Fed. 215, afiBrming 87 51. Fed. 630; Fernald v. Town of Gil- City of Mobile v. Moog, 53 Ala. man, 123 Fed. 797; Butts County v. 561. The doctrine of invalidity of Jackson Bank Co. (Ga.), 60 8. E. contracts because ultra vires is more 149; Darling v. Box Butte Co. strictly maintained in respect to (Nebr.), Ill N. W. 470; Eobbins public corporations than private. V. Hoover, 115 Pac. 526; Balch v. Coker v. Atlanta etc. Ey. Co. Beach (Wis.), 95 N. W. 132. (Ga.), 51 S. E. 481. The fact that 41 — Hitchcock v. City of Galves- great benefits will result to a city ton, 96 U. S. 341. A contract partly from the carrying out of an ultra lawful and partly unlawful, if sep- vires contract is no reason for deny- arable, can be enforced to the ex- ing equitable relief to a citizen who tent that it is lawful; Manhattan attacks it as illegal. City Council Trust Company v. City of Daytom, of Dawson v. Dawson Water Works CKBATION AND POWERS OP PUBLIC CORPOKATIONS 89 Persons dealing with a public corporation are charged with notice of its right to contract upon the subject-mat- ter and in the manner contemplated or of the legal au- thority of public officials to act on behalf of their prin- cipal." § 49. Other classes of ultra vires contracts. Contracts made by public corporations may be also ultra vires and therefore void because of their purpose or result,*^ because through or by the making of them the obligation of some previous contract is impaired ; ** because the effect of the contract as made will be in violation of some statutory or constitutional provision in respect to the amount of indebtedness which can legally be incurred or some other express provision Co., 106 Ga. 696; Blades v. Hawkins (Mo.), 112 S. W. 979; Fox v. Jonea (N. D.), 102 N. W. 161; City of Paris V. Sturgeon (Tex.), 110 S. W. 459; Schneider v. City of Me- uasha (Wis.), 95 N. W. 94; see Abbott Munie. Corp. See. 249. 42 — Sheridan v. City of New York, 145 Fed. 835; May v. City of Chi- cago, 222 III. 595, 78 N. E. 12, af- firming 124 111. App. 527; Martin- dale V. Incorporated Town of Roch- ester (Ind.), 86 N. E. 321; Citizens Bank v. City of Spencer, 101 N, W. 643; Perry County v. Engle (Ky.), 76 S. E. 382; Commercial Wharf Corp. V. City of Boston (Mass.), 94 N. E. 805; McCurdy v. Shiawassee County (Mich.), 118 N_ ^_ 525. Burns v. City of New York, 105 N. Y. S. 605; McAleer t. Angell, 19 E. I. 688, 36 Atl. 588; Schneider V. City of Menasha, 118 Wis. 298; see; also Sec. 62 post. 43 — Sutherland-Innee Company v. Village of Evart, 86 Fed. 597. Brooks V. Incorporated town of Brooklyn (la.), 124 N. W. 868. See especially in respect to contracts ef- fecting the incurring of indebted- ness and involving the subject- of purpose or result; Sees. 101 et seq. post. 44 — Houston & Texas Central B. E. Co. V. State of Texas, 177 TJ. S. 66; Board of Liquidation of New Orleans r. State of Louisiana, 179 XJ. S. 622 ; see, also Sees. 37 ante and Sees. 362, 373 et seq. post. But see Cox v. Jones (N. H.), 63 Atl. 178, where it is held that a later contract is not illegal even where a refusal to perform an earlier contract would make the public cor- poration liable in damages thereon. Wormser-Goodman Construction Co. V. Borough of Belmar (N. J.), 77 Atl. 466. 90 PUBLIC SECURITIES relative to the powers of the corporation; *° because the contract as made may infringe upon, affect or regulate some exclusive right, privilege or power given by the Federal Constitution exclusively to the Federal Gov- ernment to enjoy or possess; because the contract may result in a beneficial interest to the public officials execut- ing it on behalf of the public corporation ;■"" or finally, 45 — CitizeDS Bank v. City of Spencer, 101 N. W. 643; Higgins r. City of San Diego (Calif.), 45 Pac. 824; Baltimore etc. K. R. Co. v. People, 200 111. 541, 66 N. E. 148; Wabasb R. R. Co. v. People, 202 111. 9, 66 N. E. 824; Schnell v. City of Rock Island, 232 111. 89, 83 N. E. 462; Lund v. Board of Com 'rs of Newton County (Ind.), 93 N. E. 179. Johnson v. Board of Com 'rs of Norman County (Minn.), 101 N. W. 180. A contract for the erection of a court house at a price exceeding the debt limit of the county pay- ment for which is to be made by issuing county warrants on the an- nual income of the county is a mere evasion of the statutory limit and will be enjoined. Davenport v. Kleinschmidt, 6 ilont. 502. A county prohibited from incurring an indebtedness of more than $20,000 cannot when its bonded debt is $19,000, and its float- ing debt $15,000, contract to take water at an annual rental of $15,000. Painter v. City of Norfolk (Nebr.), 87 N. W. 31. A contract for the purchase of waterworks as- suming an outstanding bonded in- debtedness of the company is void unless authorized by popular vote as provided by statute. Raton Water Works Co. v. Town of Eaton, 9 New Mexico 70. Berlin Iron Bridge Company v. City of San Antonio, 50 S. W. 408. Contract will be valid, however, if it involves an expenditure included within a debt already incurred. State v. City of Pullman (Wash.), 63 Pac. 205; Sees. 696, 697 of Hill's Code prohibits a city from contract- ing for an extension of its water system without the approval of its citizens, in case an indebtedness ia to be incurred, it requires the assent of three-fifths of the voters. A con- tract for the part purchase of a water system not made in compli- ance with the above provisions is void; but see Simons v. City of Eugene, 159 Fed. 307; Swan v. City of Indianola (Iowa), 121 N. W. 547; City of Winona v. Jackson (Minn.), 100 N. W. 368. 46 — The authorities are numerous and a few only of the latest cases will be cited. Lainhart v. Burr (Fla.), 38 So. 711; Bullock v. Eobi- son (Ind.), 93 N. E. 998; Bay v. Davidson (Iowa), 111 N. W. 25; Commonwealth v. Lane (Ky.), 102 S. W. 313; Clark v. Logan County (Ky.), 128 S. W. 1079; State ex rel. Board of Liquidation v. Brede (La.), 41 So. 487; O'Neil v. Flan- nagan, 98 Me. 426, 57 Atl. 591; Consolidated Coal Co, v. Trustees etc. (Mich.), 129 N. W. 193; Stone V. Bevans (Minn.), 92 N. W. 520; Wilson V. Otoe County (Nebr.), 98 N. W. 1020; Harrison v. City of CEEATION AND POWEES OP PUBLIC COEPOEATIONS 91 because of illegal or fraudulent means used, either in its inception or its actual execution.*'' The subject of executory contracts as bearing upon the creation of debt in excess of a constitutional or statutory limitation will be considered in a later section.** §50. Ultra vires contracts; their enforcement. An unauthorized or an illegal contract executed by a public corporation is incapable of enforcement. It is ab- solutely void and neither the doctrine of estoppel nor ratification can be invoked to maintain it. The strict rule of law applying to ultra vires contracts of private cor- porations as followed by the English courts and the Fed- eral decisions in this country is strictly applied to the contracts of public corporations.*^ Where an application of the strict rule relative to the ultra vires contracts of private corporations results in injustice, many courts hold that a more liberal one should be applied and that where equities exist between the par- Elizabeth (N. J.), 57 Atl. 132; ward, 125 Calif. 119, 57 Pae. 777; State V. Williams (N. C), 68 S. E. City CouneO of Dawson v. Dawson 900; Poling v. Board of Education Water Works Co., 106 Ga. 696; City (W. Va.), 49 S. E. 148; Antigo of Indianapolis v. Wann, 144 Ind. Water Company v. City of Antigo 175, 42 N. E. 901; Boot v. City of (Wis.), 128 N. W. 888; see also Topeka, 63 Kans. 129, 65 Pac. 233; Abbott 's Miinie. Corps. Sec. 225, cit- VUlage of Eeed City v. Reed City ing many cases. etc. Works (Micli.), 131 N. W. 385; 47 — Rice v. Trustees of Hayward, Grannis v. Blue Earth County 107 Calif. 398; Nelson v. Harrison Com'rs, 81 Minn. 55; Peck- William- County (Iowa), 102 N. W. 197; son etc. Co. v. Board of Education State V. Ksm, 51 N. J. L. 259; etc. (Okla.), 50 Pac. 236; Smith v. City of Wichita v. Skeen, 18 Texas City of Philadelphia (Pa.), 76 Atl. Civ. App. 632; Herman v. City of 221; State v. True (Tenn.), 95 S. Oconto, 100 Wis.. 391. W. 1028; Baldwin v. Travis County 48— See post. Sec. 77. (Texas) 88 S. W. 480; Chippewa 49 — Manhattan Trust Co. v. City Bridge Co. v. City of Durand of Dayton, 59 Fed. 327; City of (Wis.), 99 N. W. 603; Hoeppner v. Detroit V. Grummond, 121 Fed. 963 ; City of Ehiuelander (Wis.), 125 Edison Electric Co. v. City of Pasa- N. W. 454; Abbott Munic. Corp. dena, 178 Fed. 425; Berka v. Wood- Sees. 258 and 259. 92 PUBLIC SECURITIES ties they should be established and enforced. The courts, however,, quite uniformly agree that this principle can not be applied under the same conditions or circumstances to the contracts of public corporations."" There are some decisions to the contrary and still other decisions hold that where, under an ultra vires contract the public corporation has received and retained goods or property or services of value, there is an implied obligation on its part independent of the contract to return full value for benefits actually received.^* There is a broad distinction to be made between the irregular or informal exercise of a granted power and the doing of an act entirely beyond or in excess of the legal powers of the corporation. The application of the doctrine of estoppel may depend upon this distinction; 50 — Hitchcock v. Galveston, 96 V. S. 341; City of Detroit v. Detroit City Ey. Co. 56 Fed. 867; Port Madison Water Co. v. City of Port Madison, 110 Fed. 901; Slaughter V. Mobile, 73 Ala. 134; State v. City of Helena, 24 Mont. 521; Parker v. City of Philadelphia, 92 Pa. 401; see Abbott Munic. Corps. Sec. 279 and cases cited. 51 — See Sec. 31, ante; Warner V. City of New Orleans, 87 Fed. 829; City Council of Montgomery v. Montgomery Water Works, 79 Ala. 233; Argenti v. City of San Fran- cisco, 16 Calif. 255; Higgins v. City of San Diego, 131 Calif. 294, 45 Pac. 8.24, 63 Pac. 470. Brown v. City of Atchison, 39 Kan. 37. Where a contract is en- tered into in good faith between a, corporation, public or private, and an individual person, and the con- tract is void, in whole or in part, because of a want of power on the part of the corporation to make it, * * * but the contract is not immoral, inequitable or unjust, and the contract is performed in whole or in part by and on the part of one of the parties and the other party received benefits by reason of such performance over and above any equivalent rendered in return, and these benefits are such as one party may lawfully render and the other party lawfully receive, the party re- ceiving such benefits will be required to do equity towards the other party by either rescinding the contract and placing the other party in statu quo, or by accounting to the other party for all benefits received, for which no equivalent has been ren- dered in return; and all this should be done as nearly in accordance with the terms of the contract as the law and equity will permit. Lon- don etc. Land Co. v. City of Jellico, 103 Tenn. 320; Monroe Water Works Co. V. City of Monroe, 110 Wis. 11, 85 N. W. 685; but see Edison Elec- tric Co. V. City of Pasadena, 178 Fed. 425. CREATION AND POWEES OF PUBLIC COEPORATIONS 93 the courts holding the corporation estopped in the former case while denying the application of the doctrine where the act is ultra vires in the proper and technical sense. This distinction is the hasis of many decisions although it may not directly appear as a reason."^ § 51. Contracts; their formal execution. A public corporation necessarily acts through its offi- cial representatives ; and every possible safeguard, there- fore is thrown around its property and interests likely to be affected or wasted by a misuse or abuse of the powers vested in public officials. Nowhere is this object of the law more apparent than in the establishment and main- tenance of rules controlling and regulating the formal execution of contracts by public corporations. As al- ready stated the authority of public officials is special, not general; they have the right to exercise only such powers and perform such duties as are expressly given and their principal is only held under such conditions and circumstances. A public corporation is not bound by acts coming within the apparent scope of the agent's power and authority. In this respect the rule differs widely from that applying to an agent of a private cor- poration or individual.'* One may find in charter or 52 — Rogers v. City of Burlington, Story on Agency, Sec. 307a. "In 3 Wall. (U. S.) 654; Lake County respect to the acts and declarations V. Graham, 130 U. S. 674; Scott's and representations of public agents, Exc'rs V. Shreveport, 20 Fed. 714; it would seem that the same rule Higgins V. City of San Diego, 118 does not prevail which ordinarily Calif. 524; Black v. Common Coun- governs in relations to mere private eil of Detroit, 119 Mich. 571 ; Wofm- agents, as to the latter, the persons stead V. City of Lynn, 184 Mass. are in many eases bound where they 425; Union Bank of Richmond v. have not authorized the declarations Oxford County Com 'rs, 119 N. C. and representations to be made. But 214; McTwiggan v. Hunter, 19 R. in cases of publie agents, the gov- I. 265; Abbott's Munic. Corp. Sec. ernment or other publio authority 133. is not bound unless it manifestly 53 — The Floyd Acceptances, 7 appears that the agent is acting Wall. (U. S.), 666. within the scope of his authority or 94 PUBLIC SECXJBITIES statutory provisions, minute details as to the mauner and formalities attending the making and execution of a contract. These are held mandatory, not directory merely.^"* Charter or statutory provisions may further require the execution or approval of contracts on behalf of public corporations by certain designated officials with countersignatures, and contracts executed by others, or he is held out as having authority to do the act or is employed in his capacity as a public agent to make the declaration or representation for the government. Indeed, this rule seems indispensable in order to guard the public against losses and injuries arising from the fraud or mistake or rashness and indiscretion of their agent. ' ' Clark V. City of Des Moines, 19 lovra 199. The general principle of law is well known and definitely settled that the agents, officers or even a city council of a municipal corporation cannot bind the corpora- tion when they transcend their law- ful and legitimate powers. This doctrine rests upon this reasonable ground: The body corporate is con- stituted of all the inhabitants within the corporate limits. The inhabi- tants are the corporators. The offi- cers of the corporation, including the legislative or governing body, are merely the pubUe agents of the cor- porators. Their duties and their powers are prescribed by statute. Every one, therefore, may know the nature of these duties and the ex- tent of these powers. These con- siderations as well as the dangerous nature of the opposite doctrine, demonstrate the reasonableness and necessity of the rule, that the cor- poration is bound only when its agents, by whom from the very necessities of its being it must act if it acts at all, keep within the limits of their authority. Not only so, but such a corporation may suc- cessfully interpose the plea of ultra vires; that is, set up as a defense its own want of power under its charter or constituent statute to en- ter into a given contract or to do a given act in violation or excess of its corporate power and authority. City of Baltimore v. Bschbach, 18 Md. 282. For tiis reason the law makes a distinction between the ef- fects of the acts of an oflScer of a public corporation and those of an agent for a principal in common cases. In the latter the extent of the authority is necessarily known only to the principal or the agent, while in the former it is a matter of record in the books of the cor- poration or of public law. City of Nashville v. Hagan, 68 Tenn. 495. 54 — Los Angeles Gas Co. v. Tober- man, 61 Calif. 199 ; Ness v. Board of Com'rs of Marshall County (Ind.), 91 N. E. 618, 93 N. E. 283; City of Baltimore v. Bschbach, 18 Md. 276; Butler v. City of Charlestown, 73 Mass. 12 ; Smart v. City of Phila- delphia, 205 Pa. 3S9, 54 Atl. 1025; Carpenter v. Teadon Borough, 208 Pa. 396, 57 Atl. 837; Beyer v. Town of Crandon, 98 Wis. 306 ; Chip- pewa Bridge Co. v. City of Durand (Wis.), 99 N. W. 603; but see Lar- kin V. City of Alleghany, 162 Fed. 611. I CBBATION AND POWEES OF PUBLIC COBPOKATIONS 95 not in the manner required by law, will be invalid.®^ The law does not countenance dishonesty or a wilful avoid- ance of an obligation entered into in good faith and fol- lowing substantially the conditions required, but it does require a strict observance of those provisions intended to protect public property from private plunder. Such charter or statutory provisions may require as prelimi- nary to the execution of a contract involving the expendi- ture of moneys or the incurring of a debt, the certifica- tion of the cost of or necessity for a proposed work of public improvement; a resolution or ordinance of the council or legislative body authorizing the execution of the contract with its attendant expenditures ; an appro- priation by the council of moneys for the purpose re- quired; the letting of the contract only upon public ad- vertisement for a designated time, or other provisions concerning the time of its execution; the making of the contract in duplicate ; a petition by a required number of residents or property owners who are to be affected by the proposed contract, or the approval of the contract by the electors.®** 55 — City of Superior v. Norton, after competitive bidding. City of 63 Fed. 357; Times Publishing Co. Newport News v. Potter, 122 Fed. V. Weatherby (Calif.), 73 Pac. 465; 321; Kansas City etc. Brick Co. v. City of Chicago v. Peck, 196 111. 260; National Surety Co. 167 Fed. 620; Bowditch V. Supt. of Streets Boston, U. S. Wood Preserving Co. v. Sund- 168 Mass. 239 ; City of Philadelphia maker, 186 Fed. 678 ; Tousey v. City V. Gorgas, 180 Pa. 296; but see of Indianapolis (Ind.), 94 N. E. Griffin v. CSty of Tacoma (Wash.), 225; Kenyon v. Board of Sup'rs 95 Pac. 1107. (Mich.), 101 N. W. 851; Attorney 56 — Continental Construction Co. General v. Public Lighting Com. V. City of Altoona, 92 Fed. 822; City of Detroit (Mich.), 118 N. W. Seward v. Town of Liberty, 142 Ind. 135; Woodruff v. Welton (Nebr.), 551, 42 N. E. 39; Town of Gosport 97 N. W. 1037; Case v. Inhabitants V. Pritchard, 156 Ind. 400. of Clinton (N. J.), 74 Atl. 672; Goddard v. City of Lowell, 179 Hart v. City of New York, 201 N. Mass. 496. Many charter pro- Y. 45, 94 N. E. 219; Hannan v. visions are to be found which pro- Board of Education of Lawton vide for the letting of contracts only (Okla.), 107 Pae. 646. 96 PUBLIC SECUEITIES §52. Authority of oflBcers and agents to bind the cor- poration. In preceding sections, the invalidity of a contract made by a public corporation the result of want of authority or legal power has been discussed, but granting this, the further principle is suggested that a public corporation being an artificial person can only act through its agents specially authorized. The principles creating and regu- lating the relations existing between principal and agent differ in their application to ofiQcers or agents of a public corporation as distinguished from such representatives either of private corporations or natural persons. A public corporation being merely a governmental agent and not organized for the pecuniary advantage of its members is restricted and limited in the exercise of its powers in every way. The legal principle cannot be too often repeated that a public corporation is not bound by acts of its agents coming within the apparent scope of their power and authority. Their authority to act must be explicit and direct that the corporation be bound.^'^ Many contracts therefore made or attempted to be made by public officials are held invalid which, if executed on behalf of a private corporation or a natural person, would be enforced. The power of public officials to bind a corporation, in the making of a contract or of the corporation itself to contract, is closely scrutinized, and unless the same clearly appears, its existence will not be presumed.^^ 57 — Coleman v. Township of Holroyd v. Town of Indian Lake, 83 Hartford (Ala.), 47 So. 594; Whit- N. Y. S. 533; In re Niland (N. Y.), ney v. City of New Haven, 58 Conn. 85 N. B. 1012 ; People v. Board of 450; Woodward v. City of Grange- Audit, 175 N. Y. 394, 67 N. E. 620; villa (Idaho), 92 Pae. 840; Krause Mahon v. Luzerne County, 197 Pa. V. Lehman, 80 N. E. 550; Hunne- 17; see also authorities cited under man v. Inhabitants of Grafton, 51 Sec. 65, post. Mass. 454; Attorney General v. 58 — Plummer v. Kennedy, 72 Mich. Murphy (Mich.), 22 N. W. 260; 295, 40 N. W. 433. CREATION AND POWEES OF PUBLIC CORPOEATIONS 97 A public corporation is an organization of a greater or less degree of complexity ; each of the different branches or departments having for its purpose the exercise, con- trol and management of certain governmental powers or duties. As exercising such powers on behalf of the cor- poration will be found certain designated officials to whom by law, is given the right to perform certain pre- scribed duties. Contracts made by officials concerning matters which do not come within the scope of duties thus specified or for which authority does not exist cannot be enforced. This doctrine is most emphatically applied in connection with those acts involving the expenditure of public moneys.^^ The authority of public agents or officials being thus' special and limited, all persons dealing with them are charged with notice of such limitations and are bound at their peril to ascertain the nature and extent of their authority and especially is this true of acts or duties con- ferred specifically by statute. The authority granted by charter or statutory provision must be exercised in the manner, at the time and in the place designated, and con- tracts not executed agreeably to such provisions will be held void and therefore, incapable of enforcement.®" 59— Neoslia County Com'rs v. S. W. 236; Whitney v. Parish of Stoddard, 13 Kans. 207; Butler v. Vernon (La.), 52 So. 176; Baldwin City of Charlestown, 73 Mass. 12; v. Inhabitants of Prentiss (Me.), 74 for full citation of authorities see Atl. 1Q38; Moore v. City of Detroit Sees. 65 et seq. post. (Mich.), 129 N. W. 715; Jewell 60 — A. H. Andrews Co. v. Delight Belting Co. v. Village of Bertha Special School Dist. (Ark.), 128 S. (Minn.), 97 N. W. 434; W. W. W. 361; Bobbins v. Hoover (Colo.), Cook & Son v. City of Cameron 115 Pae. 526; Kelly v. Town of (Mo.), 128 S. W. 269; Wakefield Torrington (Conn.), 71 Atl. 939; v. Brophy, 122 N. Y. S. 632; Hart Herd v. State (Ind.), 79 N. E. 916; v. Village of Wyndmere (N. D.), Bennett v. Incorporated Town of 131 N. W. 271; Stronger v. Frank- Mt. Vernon (la.), 100 N. W. 341; lin Co. (Texas), 123 S. W. 1168. Owen County v. Walker (Ky.), 133 p. s.— 7 98 PUBLIC SECURITIES § 53. Ratification of an invalid or ultra vires contract. A contract may, because of some irregularity or infor- mality in the manner or time of its execution be techni- cally incapable of enforcement. Such a contract, the authorities hold, may be ratified either by an acceptance of the benefits of a contract by the public corporation, by the subsequent performance of those acts and conditions required by law for the execution of a valid contract, by acquiescence in existing conditions, by silence or con- duct other than that already suggested."^ The rule stated in the preceding sentence does not apply to an ultra vires contract. If there is no legal authority for it, that authority cannot be created through the application of any doctrine or principle of estoppel, acceptance or rati- fication. The contract cannot be enforced."^ The courts recognize and apply the clear distinction 61 — Slaughter v. Mallett Land & Cattle Co., 141 Fed. 280; Audit County of New York v. City of Louisville, 185 Fed. 349; Randolph County V. Post, 93 U. S. 502 ; Daviess County V. Dickinson, 117 TJ. S. 657; Town of Bloomfield v. Charter Oak Bank, 121 IT. S. 121; San Diego Water Co. v. City of San Diego, 59 Calif. 517; Sacramento County v. Southern Pac. E. E. Co., 127 Calif. 217; City of Chicago v. Morton Mill Co., 196 111. 580; Eoberts v. City of Cambridge, 164 Mass. 176; Dar- ling V. City of Manistee (Mich.), 131 N. W. 450; Aurora Water Co. v. City of Aurora, 129 Mo. 540; Gutta Percha & Eubber Mfg. Co. v. Ogalalla, 40 Nebr. 775; Albany City National Bank v. City of Albany, 92 N. Y. 363; Silsby Mfg. Co. v. City of Allentown, 153 Pa. 319; Aspiuwall-Delafield Co. v. Borough of Aspinwall, 229 Pa. 1, 77 Atl. 1098; Norton v. City of Eoslyn, 10 Wash. 44; Abbott Munic. Corp. Sec. 279; see also Sees. 274 et seq. post, relating to the doctrine of estoppel as applied to an issue of negotiable securities. 62— Edison Electric Co. v. City of Pasadena, 178 Fed. 425, 431; Sioux City v. Ware, 59 Iowa 95; Eoot V. City of Topeka, 63 Kans. 129, 65 Pac. 233; Hilton v. Common Council of Grand Rapids, 112 Mich. 500; Village of Reed City v. Reed City etc. Works (Mich.), 131 N. W. 385; Berlin Iron Bridge Co. v. Wilkes County Com'rs, 111 N. C. 317; Smith v. City of Philadelphia, (Pa.), 76 Atl. 221;' Huron Water Wks. Co. V. CSty of Huron, 7 S. D. 9, 62 N. W. 975; State v. True (Tenn..), 95 S. W. 1028; see also 48 et seq. ante. CREATION AND POWEKS OF PUBLIC COEPOEATIONS 99 between an irregular or informal exercise of an express or implied power and the total lack or absence of power.®* The rule also obtains that if the legislature possesses the power to authorize the making of specific contracts by a public corporation, it can authorize such a cor- poration to ratify a contract previously executed by it without authority; the ratification is then equal in legal force to the grant of original authority and relating back to the inception of the transaction validates all acts in connection therewith.®* §54, Contracts of suretyship and guaranty. The power of a public corporation to enter into con- tracts of guaranty and suretyship must be expressly given. Such acts do not come within its implied powers as construed and defined by the courts.®^ The rule applies to contracts involving the guaranty by a public corporation of negotiable instruments issued by private persons or corporations. The authority to aid a railway company by subscrib- ing for its stock does not empower it to endorse the bonds of the company and such endorsement is void."" 63 — Lake County v. Graham, 130 own, for it could have authorized it TJ. S. 674; National Life Ins. Co. in the first instance. Whatever it V. Board of Education, 62 Fed. 778; can do or direct to be done orig- see sections 330 et seq. post for a inally, it can subsequently and when discussion of the doctrine as applied done lawfully, ratify and adopt with to an issue of negotiable bonds. the same effect as though it had 64 — Daviess County v. Dickinson, been properly done under a previous 117 U. S. 657; Hill v. City of Im- authority. dianapolis, 92 Fed. 467; Cranor v. 65 — Blake v. Mayor of Macon, 53 Board of Com'rs of Volusia County Ga. 172; Clark v. Des Moines, 19 (Fla.), 45 So. 455; State of Wis- Iowa 199; Carter v. Dubuque, 35 consin v. Torinus, 26 Minn. 1. Iowa 416; Louisiana State Bank v. Wittmer v. City of Jamestown, Orleans Nav. Co. 3 La. Ann. 294. 109 N. Y. S. 269. It was compe- 66— Blake v. :Uayor, etc. of Macon, tant, however, for the state as prin- 53 Ga. 172; but see City of Savan- cipal to make it good by a legisla- nah v. Kelly (Ga.), 108 XJ, S. 184, tive enactment adopting it as its CHAPTER m. THE POWER TO INCUR INDEBTEDNESS AND ISSUE NEGOTIABLE INSTRUMENTS §<55, Distinction between private and public corporations. The essential differences and distinctions existing be- tween a public and private corporation are well under- stood, but since these control so materially the powers of the public corporation in respect to the incurring of in- debtedness under whatever form, it may be pertinent to re-state them bene. (1) A public corporation is created solely as a gov- ernmental agent and for the purpose of local government ; "It is a representative not only of the state but is a por- tion of its governmental power ; it is one of its creatures made for a specific purpose to exercise within a limited sphere the powers of the state. " ^ It is organized for the common benefit and advantage of those within its territorial limits, who have no individual interest in its property. A private corporation, on the other hand, is organized solely and exclusively for the individual and particular benefit, gain or advantage of its members or stockholders. (2) No contract relation exists as between the public corporation or any of its members and the state which as has been noted in preceding sections ^ has full, ample and complete control over it in every respect. On the contrary, a contract relation is the basis of all of the 1 — United States v. Baltimore & 2 — See Sees. 15, 25 et seq. ante. Ohio E. B. Co., 17 Wall. (U. S.) 322. 100 POWEB TO INCUR INDEBTEDNESS, BtC; 101 rights and powers of a private corporation not only as among the members but also as between the corporation and its members, the corporation and the state, and its members and the state.^ §56. Corporate powers. A corporation, the authorities universally hold, may exercise powers either express or implied in their nature, all of which must be derived from its charter which is the true and sole test and measure of its legal capaci- ties. No question arises in either the case of a public or private corporation in respect to its right to exercise pow- ' ers directly and expressly granted. There is also a division found in the authorities oft im- plied powers into those which a corporation, eithenpublic or private, may exercise because absolutely necessary and essential to the execution of an express power. A further division is made of implied powers capable of being legally exercised by a private corporation into those which are not necessarily essential or indispensa- ble to the existence of the corporation or the execution of an express power but merely convenient for the cor- poration to exercise in furtherance of its legal objects and purposes. The last division of implied powers as thus broadly construed and as liberally interpreted by the overwhelming weight of authority cannot be exer- cised by public corporations.'' § 57. The power to incur indebtedness. Since a corporation, either public or private, is an ar- tificial person it necessarily follows as a legal proposi- 3— Abbott Municipal Corp. See. 4 — See Sees. 38 et seq. ante; Ab- 22; Clark & Marshall Private Corp. bott Munic. Corp. Sees. 108, et'seq.; Sees. 268 et seq.; Thompson Corp. McQuillen Munie. Corp. SecB. . 2nd. Ed. Sec. 313 et ieq. 102 PUBLIC SECTJBITIES tion that its acts must have as a basis for their validity the existence of a grant of power either express or im- plied, from the authority creating it. This principle applies in all its virility to the incur- ring of indebtedness. When the power to incur indebted- ness is expressly given and under proper constitutional authority, the only questions arising in connection with its exercise are those relating to the manner in which it may have been carried out. In the earlier cases there will be found, however, a serious conflict of authority in respect to the existence of an implied power on the part of public corporations to incur indebtedness.^ To simplify the subject, a division of the manner in which the debt may be created will be suggested since this may determine the right of the public corporation in the first instance to incur that debt. Subordinate gov- ernmental bodies may incur an indebtedness (excluding a liability for torts) in one or more of three ways : (1) by the issue of negotiable instruments or securities; (2) through the borrowing of money with or without issuing in return therefor evidences of indebtedness merely as- signable or quasi negotiable in character and form; and (3) the incurring of a liability for supplies, labor, serv- ices or materials used in carrying on the ordinary busi- ness of the public corporation, or in furtherance of some power expressly granted or included within the first class of implied powers." 5 — Brenham v. German American of Haekettstown v. Swaekhamer, 37 Bank, 144 IT. S. 173; Watson v. N. J. L. 191; Wells v. Town of City of Huron, 97 Fed. 449; Lind- Salina, 119 N. Y. 280; see also Sees, say V. Eottaken, 32 Ark. 619; Ex 88 et seq. post, and the cases cited parte Sims, 40 Fla. 432 ; Law v. in the notes under this and the im- People, 87 111. 385; Meyers v. City mediately following sections, of Jeffersonville, 145 Ind. 439; Love- 6 — Abbott Munic. Corp. Sees. 141, joy V. Inhabitants of Foxcroft, 91 143; Gray Limitations of Taxing Me. 367; Frost v. Inhabitants of Power, Sees. 21-23, et seq.; Bur- Belmont, 88 Mass. 152 ; State V. City roughs Public Securities, Sec. £4; of Great Falls, 19 Mont. 518; Town Daniel on Negotiable Instruments, POWER TO INCTJE INDEBTEDNESS, ETC. 103 The modern authorities all agree upon the principle that the power to incur indebtedness through the issue of negotiable instruments must be expressly given. This question and the reasons for the doctrine will be consid- ered at length and the authorities cited in subsequent sec- tions. Some of the earlier cases held that an implied power existed to incur indebtedness through the borrowing of money/ but the later authorities deny almost universally this doctrine.® 5th Ed. Sees. 1527 et seq. ; Eeid on Corporate Finance, Sees. 1 et seq. 7 — Gelpcke v. Dubuque, 1 Wall. (U. S.), 221; Desmond v. Jefferson, 19 Fed. 483; State v. Babeock, 22 Nebr. 614; Bank of Chillicotlie v. Town of Chillicotlie, 7 Ohio, Pt. 2, page 31; Mills t. Gleason, 11 Wis. 470; see also Glucose Suger Refin- ing Co. V. City of Marshalltown, 153 Fed. 620; Peed v. McCrary, 94 Ga. 487, 21 S. E. 232. Pennick v. Foster (Ga.), 58 S. E. 778. A municipal corporation may borrow money for the purposes of government when the power to bor- row is delegated in the charter. Smith V. City of Madison, 7 Ind. 81 ; New England Co. v. Eobinson, 25 Ind. 536; Richmond v. McGirr, 78 Ind. 192; Bicknell v. Widner School Twp. 73 Ind. 501; Lovejoy v. In- habitants of Foxcroft (Me.), 40 Atl. 141. 8— Police Jury v. Britton, 15 Wall. (U. S.), 566; Dudley v. Board of Com'rs of Lake Co. (Colo.), 80 Fed. 672; Ex parte Sims (Fla.), 25 So. 280; National Bank of JacksouTille V. Duval County (Fla.), 34 So. 894; Boise City Nat. Bank v. Boise City (Idaho), 100 Pao. 93; Law v. Peo- ple, 87 111. 385; Hewitt v. Normal School Dist. 94 111. 528; Indiana Trust Co. V. Jefferson Twp., Boone County (Ind.), 77 N. E. 63. Butts County v. Jackson Bank (Ga.), 60 S. E. 149. County Com- missioners have no authority to bor- row money to be used in defraying current expenses though the loan be payable within the current year and the general design be to discharge the same from the anticipated rev- enues of that year. McCord v. City of Jackson (Ga.), 69 S. E. 23; Tate V. City of Elberton (Ga.), 71 S. E. 420. Costello V. Inhabitants of North Easton (Mass.), 91 N. E. 219. A watch district established under Re- vised Laws, Chap. 31, Sec. 8, has no power to borrow money even in anticipation of taxes though it may raise and appropriate money for purposes for which it was organized. McCurdy v. Shiawassee County (Mich.), 118 N. W. 625. Town of Haekettstown v. Swack- hamer, 37 N. J. L. 191. Municipal corporations in the absence of a spe- cific grant of power do not in gen- eral possess the capacity to borrow money and a note given by such a corporation for an unauthorized loan cannot be enforced even though the 104 PUBLIC SECURITIES In Mayor of Nashville v. Eay, the court said: "The power to borrow money does not belong to a municipal corporation as an incident to its creation. To be pos- sessed, it must be conferred by legislation, either ex- press or implied. There are cases, undoubtedly, in which it is proper and desirable that a limited power of this kind should be conferred, as where some extensive public work is to be performed, the expense of which is beyond the immediate resources of reasonable taxation, and cap- able of being fairly and justly spread over an extended period of time. Such cases, however, belong to the exer- cise of legislative discretion, and are to be governed and regulated thereby." ^ The subject of the power of the legislature to compel the payment of debts has been considered in a previous section^** and it will be found upon an examination of the authorities that an implied power to incur indebtedness or the existence of an implied obligation on the part of a public corporation was and is based upon claims arising, under the circumstances or conditions noted in the third subdivision above noted." money borrowed has been expended & Trust Co. v. School Dist. jSTo. 5 for municipal purposes. Ford v. of Town of Ludington (Wis.), 92 Washington Township, Bergen N. W. 439. County (N. J.), 58 Atl. 79; Knapp 9— Mayor of Nashville v. Eay, 19 V. Mayor of Hoboken, 39 N. J. L. Wall. 468. 394; Ketchum v. Buffalo, 14 N. Y. 10— See Sec. 31 ante. 356. 11 — Clairborne County v. Brooks, Wells V. Town of Salina, 119 N. Ill U. S. 400; Desmond v. Jefferson, Y. 280, 23 N. E. 870. Under stat- 19 Fed. 483; Holmes v. City of utes authorizing municipal corpora- Shrevepo^-t, 31 Fed. 113 ; Daily v. tions to raise money for prosecuting Columbus, 49 lud. 169; Miller v. and defending suits and for all Cora'rs, 66 Ind. 162; State w. Bab- municipal purposes, it is intended cock, 22 Nebr. 614; Bank of Chilli- that the money is to be raised by cothe v. Town of Chillicothe, 7 Ohio, taxation and not by borrowing. Pt. 2, pg. 31; Williamsport v. Corn- Good Eoads Machinery Co. v. Old monwealth, 84 Pa. State 487; Eich- Lycoming Twp. (Pa.), 23 Pa. Super. mond etc. County v. Town of West Ct. 156; Montpelier Savings Bank Point, 94 Va. 688. POWER TO mCUE INDEBTEDNESS, ETC. 105 § 58. Necessity for express authority; basis of the rule. Another reason for the principle, that the authority to incur indebtedness must be expressly given, growing out of the distinctions, already noted, between public and private corporations, fundamental in its character and of controlling influence in doubtful cases involving the incurring of an indebtedness or the creation of an obliga- tion, is the source of funds available for the payment of these obligations. A private corporation is a private enterprise designed usually for the direct personal pe- cuniary advantage of the members. The funds for its promotion and the transaction of the corporate business are derived through contributions from or assessments upon their private means. If by mismanagement, the dis- honesty or extravagance of its agents, or the creation of ill-advised or imprudent obligations, a loss is sustained by the corporation, such loss is met by and falls upon the members personally. Entirely different are the condi- tions and results with public corporations. They are organized as governmental agents and as such share in the administration of governmental affairs and the exer- cise of public duties resting upon the sovereign. All the expenditures of these corporations in their public ca- pacity are paid by moneys raised through the imposition and collection of taxes upon taxable interests of the com- munity. Those in charge of the expenditures of public money may be irresponsible agents elected by some mis- guided, temporary, popular feeling. Irresponsible, how- ever, or otherwise, there is ever an irresistible tendency on the part of public officials, prudent though they may be in the management of their private finances, to ex- pend public moneys lavishly and extravagantly or un- necessarily to incur debts or contract obligations intended to advance their personal interests or to perpetuate them- selves in power. The expenditures of public moneys must be met by the levy and collection of taxes, or by the in- 106 PUBLIC SECUEITIES curring of indebtedness or the creation of obligations, which ultimately must be paid from the public purse. Foolish, unwise or extravagant expenditures and losses resulting from fraudulent or improvident contracts do not fall except in the most indirect manner, and then only to a limited extent, upon the private means of these irre- sponsible official agents. It is chiefly this difference in the manner of raising revenue which leads the courts to adopt the strict rule of construction in allowing and rec- ognizing the right to incur indebtedness by public cor- porations. § 59. To what extent discretionary when expressly given. The courts usually hold that if the power to incur in- debtedness or create an obligation is expressly given in the charter, statutes or constitution, it is to be considered as to the issue of bonds not as a continuing power but exhausted through their issue to the amount and for the purpose specified.^ ^ The power to incur indebtedness for governmental work or usual municipal purposes, if granted, has a different character and is generally con- sidered a continuing power, to be exercised however for the purpose and in the manner as provided by law and subject to constitutional restrictions respecting indebt- edness incurrable by public corporations. The courts further hold in construing this last power, whether ex- pressly given or found in the first class of implied pow- ers, that unless the specific purpose is designated by the authority, the time and place or the expediency of its ex- ercise rests within the sound discretion of the public au- thorities, so long as the purpose is a "public one," and the amount within constitutional limitations.^* 12 — Millsaps V. City of Terrell, 60 13 — Brenham v. German American Fed. 193; Wilson v. City Council of Bank, 144 U. S. 173; City of Hnron Florence, 40 S. C. 290. \: Second Ward Savings Bank, 86 POWEB TO INCITE INDEBTEDNESS, ETC. 107 § 60. Implied power of courts to compel the payment of debts. To protect the tax-paying public the courts have adopted and enforced almost universally the strict rule of construction of a corporate right to incur a valid in- debtedness. The practical effect of the working of this rule is to deny to public corporations the legal authority to incur an indebtedness if the question may arise or if there exists any doubt or ambiguity. There will be found, however, on an examination of the authorities, Fed. 272; Town of Greenburg v. In- ternatioual Trust Co, 94 Fed 755. White V. City of Decatur (Ala.), 23 So. 999. Courts liave no power to determine what municipal eipendi' tures are necessary. These matters are within the sound discretion of the municipal authorities. City of Badlands v. Brook (Calif.), 91 Pac. 150; Staples v. City of Bridgeport (Conn.), 54 Atl. 194; Anderson v. Newton (Ga.), 51 S. E. 508; Piatt V. City of Payette (Idaho), 114 Pac. 25; Advisory Board of Washington Twp. V. State (Ind.), 73 N. E. 700. Johnson v. Wilson County Com'rs, 34 Kans. 670. While under the statute the question of authority to borrow money must be submitted to a popular vote, the question of erect- ing the buildings for which the money is to be borrowed need not, however, be so submitted. Gray v. Bourgeois (La.), 32 So. 42. Where authority has been granted by the taxpayers to the municipal authorities to incur a debt and to issue bonds and to secure these by a special tax, the ofBcials of the town may, if they deem it more advantageous and advisable, create the debt and levy a special tax to pay it without issuing the bonds. Boston Water Power Co. v. City of Boston (Mass.), 10 N. E. 318; Matter of Saline County, 45 Mo. 52. State ex rel. Witmer v. Conrad (Mo.), 49 S. W. 857. The fact that the tiiue 01' holding a special county bond election is within the discretion of the county court does not author- ize it to refuse absolutely to caU such an election when duly petitioned for as required by law. Decker v. Deimer (Mo.), 129 S. W 936; Carl- son V. City of Helena (Mont.), 102 Pac. M; Jones v. Madison County Com'rs (N. C), 47 S. E. 753; Com'rs of Town of HendersonviUe V. C. A. Webb & Co. (N. C), 61 S. E. 670; Ackerman v. Buchman, 109 Pa. State 254; Mayor v. Aldan Borough, 209 Pac. 247, 58 Atl. 490; Garrison v. Kershaw County, 83 S. C. 88, 64 S. E. 1018. Clark & Courts v. San Jacinto County (Texas). County Com'rs cannot be compelled by mandamus to fund the indebtedness of the county since this is within their discretion; but see Schouweiler v. Allen (N. D.), 117 N. W. 866. 108 PUBLIC SECURITIES cases holding that defect of power may be no defense. For the purpose of enforcing just obligations, courts have adopted what might be termed the implied power of a public corporation to incur indebtedness other than by ordinance, charter, or statutory provision,^* either con- sidered as withholding the power or regulating the man- ner in which it shall be exercised. The late Justice Field when upon the supreme bench of the state of California held in an early case that^^ "The doctrine of implied municipal liability applies to cases where money or other property of a party is received under such circumstances that the general law, independent of express contract, imposes the obligation upon the city to do justice with respect to the same. If the city obtain money of another by mistake, or without authority of law, it is her duty to refund it — not from any contract entered into by her on the subject, but from the general obligation to do jus- tice which binds all persons, whether natural or artificial. If the city obtain other property which does not belong to her, it is her duty to restore it; or if used by her, to render an equivalent to the true owner, from the like general obligation. In these cases she does not, in fact, make any promise on the subject, but the law, which al- ways intends justice, implies one; and her liability thus arising is said to be a liability on an implied contract, 14 — Dodge V. City of Memphis, Backman v. Town of Charlestown, 51 Fed. 165, 167. The authorities 42 N. H. 125; Bigelow v. Inhabit- show that if negotiable paper is ants of Perth Amboy, 25 N. J. L. uttered by a municipal corporation 297; Oklahoma City v. T. M. Eich- without authority of law it is void, ardson Lmbr. Co., 3 Okla. 5; Town and a suit cannot be maintained of Topsham v. Sogers, 42 Vt. 189; thereon for any purpose. Eiehmond etc. Co. v. Town of West City of Logansport v. Dykeman, Point, 94 Va. 688; see also Sees. 48 16 Ind. 15, Art. 13, Ind. Const., et seq. ante, and 380 post, limiting municipal indebtedness af- 15 — San Francisco Gas Co. v. City fords no defense to an action upon of San Francisco, 9 Calif. 453; a contract made by a city for serv- Argenti t. City of San Francisco, ices rendered in effecting a com- 16 CaUf. 25. promise of municipal indebtedness. POWER TO INCUR INDEBTEDNESS, ETC. 109 and it is no answer to a claim resting upon a contract of this nature to say that no ordinance has been passed on the subject, or that the liability of the city is void when it exceeds the limitation of $50,000 prescribed by the charter. The obligation resting upon her is imposed by the general law, and is independent- of any ordinance and the restraining clauses of the charter. It would be in- deed a reproach to the law, if the city could retain an- other's property because of the want of an ordinance, or withhold another's money because of her own excessive indebtedness. In reference to money or other property, it is not difficult to determine in any particular case whether a liability with respect to the same has attached to the city. The money must have gone into her treas- ury, or been appropriated by her ; and when it is property other than money, it must have been used by her, or be under her control. But with reference to services ren- dered, the case is different. Their acceptance must be evidenced by ordinance to that effect. Their acceptance by the city with the consequent obligation to pay for them, cannot be asserted in any other way. If not orig- inally authorized, no liability can attach upon any ground of implied contract. The acceptance, upon which alone the obligation to pay could arise, would be want- ing. ' ' ^^ The consideration that one of the parties to the transaction is a public corporation should not permit it to defraud others or to play fast and loose with contract obligations. And the fact cannot be ignored that the con- tract or other obligation is entered into on behalf of the corporate body by agents elected by the people to rep- resent them and bind the corporation during official life. If these agents dishonestly or imprudently, or perhaps illegally, so far as the manner of the act is concerned, place burdens upon their principal, this of itself should 16 — See also Sees. 48 et seq. ante and 380 post. 110 PUBLIC SECUEITIES be no excuse for the failure to compensate the other party to the transaction for that of value with which he has parted, or to enforce specific contracts. In applying this doctrine of implied power on the part of a public corporation to incur indebtedness it may not be necessary for the courts to openly and arbitrarily over- ride charter or constitutional provisions or to hold con- trary to the strict rule of construction. In considering the powers exercised by corporations either public or private we have the classes already enumerated. An ultra vires act of a corporation is one beyond or in ex- cess of its legal authority or power. In considering the character of an act whether ultra or intra vires those cases where the power is absolutely lacking or wanting must be distinguished from those cases in which the power may exist for designated purposes, or acts done may be valid if done in a certain manner, but otherwise not. A corporation may be authorized to exercise certain powers or to do certain acts to carry out certain desig- nated purposes. If these are exercised or done for a different purpose or in excess of the designated power, the act is not questionable because of a lack of power but on account of the distinction between a want of power and a misuse or abuse of power. Or again a corporation may be authorized to exercise certain powers or do cer- tain acts which are valid if done in a specific manner, but otherwise not. Here we have a distinction and a differ- ence between a want of power and a want of necessary formality in executing a granted power. In applying the principle of the implied power of a public corporation to incur indebtedness, advantage is taken by the courts of the distinctions suggested in the preceding paragraph, and a legal reason, in addition to the moral one, will sustain a just decision. POWEB TO INCUK INDEBTEDNESS, ETC. Ill §61. Basis of implied authority. The basis of the doctrine of the existence of an implied power to incur indebtedness when the evidences of that indebtedness do not consist of negotiable instruments is partly suggested in the preceding section, viz : the power as residing in the legislature or the courts to enforce a just claim. Another and the principal rea,son is that where power is given directly to a public corporation to be exercised, it has the legal right as an incident of that power to borrow money or incur indebtedness. It is ar- gued in this class of cases that the power to borrow or incur indebtedness is necessary to the proper exercise of the express power granted." Two of the earlier cases illustrate well this line of argument and decision. The town of Chillicothe, Ohio, had power, under its charter, to purchase real estate, erect public buildings and repair streets; the town bor- roAved money for these purposes and a certificate was issued signed by the mayor acknowledging the debt and promising to repay the money borrowed at a certain time. The court held the town liable on the certificate on the principle that it in carrying out an express power granted for any legitimate municipal purpose had the implied power to borrow money to accomplish such object.^^ In another case, a city, by its charter had power to establish a market and it was held that in order to ac- complish this purpose, it could borrow money and issue its bonds in payment for the sums borrowed. The court said: "The charter does confer the power to purchase 17— Smith V. City of Madison, 7 v. City of Buffalo, 14 N. Y. 356; Ind. 81; Board of Com'rs v. Day, City of Williamsport v. Common- 19 Ind. 450; Miller v. Board of wealth, 84 Pa. State 487; Clark v. Com'rs, 66 Ind. 162; Eushville Gas Janesville, 10 Wis. 136; Mills v. Co. V. City of Eushville, 121 Ind. Gleason, 11 Wis. 470. 206; State v. Windle, 156 Ind. 648, 18— Bank of Chillicothe v. Town 59 N. E. 276; State v. Babeoek, 22 of CMUioothe, 7 Ohio Pt. 2, 31. Nebr. 614, 35 N. W. 941; Ketchum 112 PUBLIC SECXTKITIBS fire apparatus, cemetery grounds, to establish markets and do many other things for the execution of which money would be necessary as a means. It would seem therefore that in the absence of any restriction, the power to borrow money would pass as an incident to these gen- eral powers according to the well-settled rule that cor- porations may resort to the usual and convenient means of executing the powers granted, for certainly no means is more usual for the execution of such objects than that of borrowing money." ^^ § 62. Soundness of implied power doctrine. There is nothing in the nature of public corporations which favors the doctrine of implied powers of the sec- ond class and there is nothing to favor the implied power to borrow money and issue as evidences of that indebted- ness commercial paper or instruments even of an assign- able character. To carry on the ordinary functions of public corporations, they have been given by the state the power of taxation through which to raise the means for the exercise of the governmental powers with which they are endowed and which have been delegated to them. The possession of the power of taxation on prin- ciple, it would seem, should exclude any implied power to borrow money.^" Public corporations, further, are subordinate civil divisions of the state and even the state itself cannot borrow money except in pursuance of an express power stated in its constitution and con- ferred by the legislative department acting under that authority. A local and subordinate governmental agency of the state of which it is an involuntary part clearly can- not possess powers not enjoyed by its creator. 19— Mills V. Gleason, 11 Wis. 470. 20— See Sec. 141 et seq. post. POWEE TO INCTJE INDEBTEDNESS, ETC. 113 §63. Mayor of Nashville v. Ray. The presumption exists that for the purposes indicated, the power of taxation is sufficient and the more modern cases as well as the weight of authority hold that this presumption is ordinarily conclusive against any implied power to borrow money. This question was discussed at length in a case in the United States Supreme Court.^* One of the questions considered was, has a municipal corporation the power without express legislative author- ity to borrow money for any of the purposes of its incor- poration. Justice Bradley said : "A municipal corpora- tion is a subordinate branch of the domestic govern- ment of a State. It is instituted for public purposes only ; and has none of the peculiar qualities and characteristics of a trading corporation, instituted for purposes of pri- vate gain, except that of acting in a corporate capacity. Its objects, its responsibilities, and its powers are differ- ent. As a local governmental institution, it exists for the benefit of the people within its corporate limits. The legislature invests it with such powers as it deems ade- quate to the ends to be accomplished. The power of taxation is usually conferred for the purpose of enabling it to raise the necessary funds to carry on the city gov- ernment and to make such public improvements as it is authorized to make. As this is a power which immedi- ately affects the entire constituency of the municipal body which exercises it, no evil consequences are likely to ensue from its being conferred ; although it is not un- usual to affix limits to its exercise for any single year. The power to borrow money is different. When this is exercised the citizens are immediately affected only by the benefit arising from the loan; its burden is not felt until afterwards. Such a power does not belong to a 21 — Mayor of Nashville v. Bay, 19 Wall. (IT. S.) 468, 475. p. S.— 8 114 PUBLIC SECURITIES municipal corporation as an incident of its creation. To be possessed it must be conferred by legislation, either express or implied. It does not belong as a mere matter of course, to local governments to raise loans. Such governments are not created for any such purpose. Their powers are prescribed by their charters, and those char- ters provide the means for exercising the powers; and the creation of specific means excludes others. Indebt- edness may be incurred to a limited extent in carrying out the objects of the incorporation. Evidences of such indebtedness may be given to the public creditors. But they must look to and rely on the legitimate mode of raising the funds for its payment. That mode is tax- ation. ' ' And in a recent case,^^ it was held that "It is the policy of the laws that town charges shall be met by annual re- curring taxation, and thus extravagance and improvi- dence are in some degree checked, as those who create town charges or are the taxpayers when they arise must bear the burden of taxation to meet them. It is quite easy for the taxpayers of to-day to create a debt which they are not to feel and which the taxpayers of the future are to discharge. The system of laws relating to towns requires that all bills for moneys expended, or materials furnished, or services rendered to the town shall be verified and presented to the board of town auditors and audited by them, and then enforced by warrants of the board of supervisors against the taxpayers of the town. This whole system would be subverted if towns could bor- row money upon, credit to meet town charges. Then the money would have to be repaid whether the town had; had the benefit thereof or not, and the wise provisions of the statutes to secure economy and safety by the audit of ac- counts would be entirely frustrated. ' ' 22— Wells V. Town of Salina, 119 N. Y. 280, 23 N. E. 870. 115 §64. Distinction between borrowing money and incur- ring indebtedness by contract. A clear distinction exists between the power to make a contract for a particular purpose and to execute an obli- gation in payment of the contract price and borrowing the money for that purpose and executing an obligation for the borrowed money. The distinction is well-drawn in a New York case, ^^ where Mr. Justice Selden, deliver- ing the opinion of the court, used the following language : "A little examination, however, will show that there is a very material difference between the two. If the power of the corporation to use its credit is limited to contract- ing directly for the accomplishment of the object au- thorized by law, then the avails or consideration of the debt created cannot be diverted to any illegitimate pur- pose. The contract not only creates the fund but secures its just appropriation. On the contrary, if the money may be borrowed, the corporation will be liable to repay it, although not a cent may ever be applied to the object for which it was avowedly obtained. It may be borrowed to build a market, and appropriated to build a theater, and yet the corporation would be responsible for the debt. The lender is in no way accountable for the use of the money. It is plain, therefore, that if the policy of limiting the powers and expenditures of corporations to the objects contemplated by their charters is carried out, their right to incur debts for those objects must be strictly confined to contracts which tend to their direct accomplishment. If they procure the requisite funds by the indirect mode of borrowing, they may resort to any other indirect mode of obtaining them, such as establish- ing some profitable branch of trade, entering into com- mercial enterprises, etc., the avowed object being to ob- 23— Ketchum v. City of Buffalo, 14 N. Y. 356. 116 PUBLIC SECTJBITIES tain the means necessary to accomplish some authorized purpose. No one can fail to see that to concede to cor- porations the power to borrow money for any purpose would be entirely subversive of the principle which would limit their operations to legitimate objects. Hence the distinction between such a power and that of stipulating for a credit in a contract made for the direct advance- ment of some authorized corporate object." ^^ § 65. Authority of public oflBcials and agents in respect to the incurring of indebtedness. In Section 52 ante, has been noted somewhat at length the question of the general authority, of officials and agents of public corporations to bind their principal. In this section will be considered the cases and principles applying more particularly to their acts in incurring in- debtedness. The authority for the administration of governmental affairs in this country rests in the people of the different states and of the United States by whom it has been dele- gated to public officers and employes through constitu- tional or statutory provisions. The source of official power as possessed by these must therefore be found in some act or expression of the sovereign people and with- out which the exercise of governmental and administra- tive powers by an individual is clearly regarded as a usurpation and an unwarranted and illegal assumption of power.^^ Since the authority of public officials can 24 — See also Sehaeffer v. Bonham, or be appointed with their assent. 95 111. 368. It is enough to give them that char- 25 — Hussey v. Smith, 99 U. S. acter that however appointed they 20. are authorized by law to act for County of Mobile v. Kimball, 102 the county, district or other political U. S. 691. It is not necessary to subdivision. Hungerford v. Moore, constitute an agency of a political 65 Ala. 232; Opinion of Justices, 3 subdivision of a, state that its ofB- Maine 481. ciala should be elected by its people Amea v. Port Huron, etc. Co., 11 POWEE TO INCUB INDEBTEDNESS, ETC. 117 only be created by law and is therefore a matter of public record, all persons dealing with them are bound to take notice of the existence of that authority and must ascer- tain that it is sufficient in an assumed use. Persons dealing with a public official must take notice of the ex- tent of his powers at their peril and they cannot rely upon a mere presumption of official authority. The power and authority of public officials and agent is special and limited, not general ; and the right to act in a specific in- stance must be ascertained and determined by an inspec- tion of the law interpreted strictly.^'' The division of public corporations into municipal cor- porations proper, and public quasi corporations will be remembered and also the rule that public quasi corpora- tions are artificial persons of especially restricted and limited powers. The rule above stated as to official au- thority is necessarily applied,, and therefore with a still greater degree of strictness in considering the extent of Mich. 139. It is difficult to per- bind the township though they ara eeive hj what proceeding a public not the regular township officers. ' office can be obtained or exercised Travelers Ins. Co. v. Oswego, 55 without either election or appoint- Fed. 361. ment. It is absurd to suppose that Blair v. City of Waco, 75 Fed. 800. any official power can exist in any When the charter of the city corn- person by his own assumption or by mits to the city council the exclusive the employment of some other pri- control of the municipal finance, vate person. authority cannot be delegated by the 26 — The Floyd Acceptances, 7 council to the mayor to sell bonds Wall. (U. S.) 666. of the city in his discretion as to Marsh v. Fulton Co., 77 U. S. 676. the price and thereby bind the city. An unauthorized act cannot create Citizens Savings Bank v. City of an estoppel or prevent the public Newburyport, 169 Fed. 766. corporation going behind recitals in Courtner v. Etheredge (Ala.), 43 a bond to show the true facts. Bis- So. 36S. Ultra vires acts of school Bell v. Spring Valley, 110 U. S. 162; commissioners in making a loan may ' City of Louisville v. Bank of Louis- be subsequently ratified by the leg- ▼ille, 19 Sup. Ct. Eep. 753; Coler islature-. Waldo v. Portland, 33 y. Cleburne Co., 131 U. S. 162. Conn. 363; Dent v. Cook, 45 Ga. Bernards Twp. v. Morrison, 133 323; State v. Anderson, 39 Iowa U. S. 523. Officers designated by 274; State v. Peele, 124 Ind. 315, the Legislature may issue bonds and 24 N. E. 440; Troy v. Doniphan 118 PUBLIC SECtTEItlES the power of the officials and agents of public quasi cor- porations.^' The presumption of law, however, is in favor of the proper performance of official duties but the application of this rule did not include a vital jurisdictional fact nor an act done in furtherance of an extraordinary or un- usual power and one which results in a public burden.^* Co. Com'rs 32 Kans. 507; B'reaux V. Iberville Parish, 23 La. Am. 232; Washburn v. Commonwealth, 137 ilass. 139; Rogers v. Board of Com'rs Le Sueur County (Minn.), 59 N. W. 488; Young v. Board of Education, etc. 54 Minn. 385, 55 N. W. 1112; Sandeen v. Ramsey County (Minn.), 124 N. W. 243; Edwards Hotel & City R. R. Co. V. City of Jackson (Miss.), 51 So. 802; City of Hazlehurst v. Mayes (Miss.), 51 So. 890; Smith v. Town of Epping (N. H.), 45 Atl. 415-. Coler V. Board of County Com 'rs of Santa Fe (N. Mex.), 27 Pac. 619. An oflScial signature, however, may be mere surplusage and there- fore not affect the validity of an issue of bonds. Horgan 4 Slattery V. City of New York, 100 N. Y. S. 68; Brown v. Bon Homme County, 46 N. W. 173; City of Seattle v. Stirrat (Wash.), 104 Pac. 834. Veeder v. Lima, 19 Wis. 298. In the issuance of bonds the officers of the municipality are mere special agents the acts of whom must be strictly within the powers- and con- ditions imposed by the statute in order to give validity to the bonds. Lawson v. Schnellen, 33 Wis. 2S8; see also Daniel Neg. Ins. Sees. 420, 427, 1550. 27 — -Police Jury v. Britton, 15 Wall. (XJ. S.) 5B6; State ex rel. City of Centralia v. Wilder (Mo.), 109 S. W. 574. 28— Bank of United States v. Dandridge, 12 Wheat. (U. S.) 64. By the general rules of evidence, presumptions are continually made in cases of private persons of acts even of the most solemn nature, when those acts are the natural result or necessary accompaniment of other circumstances. In aid of this salutary principle, the law it- self, for the purpose of strengthen- ing the infirmity of evidence, and upholding transactions intimately connected with the public peace, and the security of private property, indulges its own presumptions. It presumes that every man in his pri- vate and official character, does his duty, until the contrary is proved; it will presume that all things are rightly done, unless the circum- stances of the case overturn this presumption, according to the maxim, omnia presumuntur rite et solemnitur esse acta, donee probetur in contrarium. Thus, it will pre- sume that a man acting in a public office has been rightly appointed; that entries found in public books have been made by the proper officer, etc. Mandeville v. Reynolds, 68 iN. Y. 528; In re City at Buffalo, 78 N. Y. 262: City of Albany v. Mc- Namara, 117 N. Y. 1688, 6 L. E. A. 212. POWBB TO INCUR INDEBTEDNESS, ETC. 119 It is evident, therefore, that a legal indebtedness can be incurred by a public corporation only when contracted by the corporation in the manner especially provided by law and further by that official body or agent of the cor- poration specifically designated by law to act in the par- ticular instance and to bind the corporation by that ac- tion. Indebtedness to be valid, if the authority to incur it exists, must be contracted by the particular official body or agent representing the public corporation in the exer- cise of certain of its powers.^^ To illustrate, a municipal corporation may have as one of its subordinate departments a school and park board, a police and a fire department. In matters of pub- lic education, the school board represents and is author- ized by law to engage in contracts or incur debts binding upon its principal. In respect to the acquirement or maintenance of a park system, the same is true of the park board or park commissioners. It would be clearly without the province or the authority of the school board or the park board to incur indebtedness binding upon the municipality in the support of or for the benefit of the fire or the police departments. Specific illustrations of acts of corporate officers and 29 — Sheboygan County v. Parker, v. Smith, 15 B. Mon. 155; Howard 3 Wall. (TJ. S.) 93; McClure v. v. Trustees of School District No. Township of Oxford, 94 U. S. 429; 27 (Ky.), 102 S. W. 318. Wilson V. Salamanca, 99 TJ. S. 499; State v. Babcock, 25 Nebr. 709, 41 Walnut V. Wade, 103 XT. S. 683; N. W. 654. A city created by act Kankakee County v. Aetna Life Ins. of March 1, 1879, out of a village Co., 106 U. S. 668. having a president and board of Norton v. Shelby County, 118 TJ. trustees may until the election of a S. 425. To give validity to the acts mayor and council exercise the ordi- of county courts or other tribunals nary powers of a city of the second- or boards, the presence and partici- class including the issuing of bonds pation of a legal quorum is neces- through the agency of the president sary. Eich v. Mentz Township, 134 and trustees. Musgrove v. Kennell, TJ. S. 632 ; Hancock V. Chicot County, 23 N. J. Eq. 75; Prairie School 32 Ark. 575; State v. Johns (Ind.), Township v. Haseleu (N. D.), 55 84 N. E. 1; Harrison County Court N. W. 938; City of Oklahoma v. 120 PUBLIC SECUEITIES agents held binding upon public corporations will be noted in the subsequent chapter relating to the formali- ties required in the execution and issuance of negotiable securities.^" § 66. Authority of de facto officers. A public official who has acted on behalf of a public corporation in the incurring of indebtedness may sub- sequently be deprived of that office in a proper proceed- ing and the questions will then arise of the validity of his acts and whether they are binding upon the corporation. A de facto officer has been defined as one "who has the reputation of being the officer he assumes to be and yet is not a good officer in point of law." ^^ He is one who exercises the duties of an office under color of right by virtue of an appointment or election to that office being distinguished on the one hand from an officer de jure and on the other hand from a mere usurper.32 ^ ^q j^j.g officer is one whose regular title to an office is clear while a usurper is one who has in- truded upon an office and assumes to exercise its func- tions without either color of right or the lawful title to it. It is the color of right which distinguishes an officer de facto from a mere usurper.^^ T. M. Richardson Lumber Co. 245 111. 496, 92 N. E. 291; Howard (Okla.), 39 Pae. 386; Town of v. Burke, 248 111. 224, 93 N. E. 775. Klamath Falls v. Sachs (Ore.), 57 32— Chandler v. Starling (N. D.), Pac. 329; City of Philadelphia v. 121 N. W. 198; Bennett Trust Co. Flannagan, 47 Pa. St. 221. v. Sengstacken (Ore.), 113 Pae. 30— See Sees. 140, 167 et seq., 185 863 ; In re Kriekbaum 's Contested et seq. and 254 post. Election, 221 Pa. 521. 31— Eex. V. Bedford Level, 6 East 33— State v. Carroll, 38 Conn. 449 ; 356, definition by Lord Ellenbor- Commonwealth v. Bush (Ky.), 115 ough; Balls County v. Douglas, 105 S. W. 249; People v. Stanton, 73 N. V. S. 728; Norton v. Shelby County, C. 546; McCraw v. Williams (Va.), 118 U. S. 425 ; Wright v. United 33 Grat. 510 ; see also Abbott Munic. States, 158 U. S. 232; Lavin v. Corp. See. 656, subdivisions (a). Board of Com'rs of Cook County, (b) with many cases cited. POWEE TO INCUR INDEBTEDNESS, ETC. 121 In order that one be considered an officer de facto, it is necessary that there should exist a legal office for which there can he an officer de jure. If this office does not exist, it is clear that no person by assuming the du- ties of an imaginary one can establish even the relations which flow from the existence of a de facto office and the pretended officer is merely a usurper to whose acts no val- idity can be attached. Where the legal existence of office depends upon the validity of corporate organization un- til an irregular or illegally formed corporation is so de- clared, its officers are considered de facto and their acts binding upon the people residing within its limits.^* Officers acting under, an irregular municipal organiza- tion are de facto officers and bonds issued by them on its behalf are not void. In one of the leading cases on this point 8^^ the court said: "In the case at bar the legal charter under the special act was laid aside. One ille- gal, , but having all the appearances of legality, was formed. It named the necessary officers, elected them, and performed all the functions of a municipal corpora- tion for a period of nearly seven years. The state, during this period, did not challenge its exercise of power. It issues $40,000 of bonds, and obtains the benefit of their sale. Then, by judgment of the court, the officers are re- moved as officers of the new organization, and others elected under the first charter. Can it be held that the city, composed of the same people, including the same resources for revenue, is now absolved of all liability upon the bonds ? Can a city, under an illegal and irregu- lar change of limits, preserving the same name, obtain credit for public improvements, and when the irregular charter is vacated, return to the use of the first, which 34— Norton v. Shelby County, 118 41 Atl. 98 ; Kirker v. City of Cincin- U. S. 425; Carlton v, People, 10 nati, 48 Ohio State 507, 27 N. E. Mich. 259; Leaeh v. People, 122 111. 898; see also See. 266 post. 420, 12 N. E. 726 ; Attorney General 35— City of Lampasas v. Talcott, V. Town of Dover, 62 N. J. L. 138, C. C. A. 94 Fed. 457. 122 PUBLIC SECUEITIES has all along been in force, and then stand freed of the debt? The people and property now sought to be charged were all, or nearly all, included and represented in the irregular corporation which issued the bonds. They get the benefits of the bonds. The facts show that the city and citizens were acting in good faith. The bonds were issued with public approval, and without objection. The improvements were accepted, and it was intended that the bonds should be paid. * * * The officers represent- ing the city in the issuance of the bonds believed that they were clothed with authority by the procedure of 1883. In this they were mistaken. The charter of 1873' was still in existence. It authorized the election of offi- cers of the city. The officers had been elected. Although they believed that they held office under the new organi- zation, they were officers de facto of the city, actually fill- ing places created by the special act of 1873. The special act of incorporation authorized the issuance of the bonds for public improvement. An ordinance was passed to issue them. The bonds, we hold, were not made invalid by reason of the illegal effort at incorporation made in 1883." One of the leading cases upon the necessity for the ex- istence of a legal office as well as the validity of the acts of de facto officers was decided by the Supreme Court of the United States in 1886.^" The court said in its opinion by Mr. Justice Field, relative to the two ques- tions above noted: "But it is contended that if the act creating the board was void, and the commissioners were not officers de jure, they were nevertheless officers de facto, and that the acts of the board as a de facto court are binding upon the county. This contention is met by the fact that there can be no officer, either de jure or de facto, if there be no office to fill. As the act attempting 36— Norton v. Shelby County, 118 U. S. 425. POWfiE TO INCUE INDEBTEDNESS, ETC. 123 to create the office of commissioner never became a law, the office never came into existence. Some persons pre- tended that they held the office, but the law never rec- ognized their pretensions, nor did the supreme court of the state. Whenever such pretensions were considered in that court, they were declared to be without any legal foundation, and the commissioners were held to be usurpers. ' ' The doctrine which gives validity to acts of officers de facto whatever defects there may be in the legality of their appointment or election is founded upon considera- tions of policy and necessity, for the protection of the public and individuals whose interests may be affected thereby. Officers are created for the benefit of the pub- lic, and private parties are not permitted to inquire into the title of persons clothed with the evidence of such offices and in apparent possession of their powers and functions. For the good order and peace of society their authority is to be respected and obeyed until in some regular mode prescribed by law their title is investigated and determined. It is manifest that endless confusion would result if in every proceeding before such officers their title could be called in question. But the idea of an officer implies the existence of an office which he holds. It would be a misapplication of terms to call one an offi- cer who holds no office, and a public office can exist only by force of law. This seems to us so obvious that we should hardly feel called upon to consider any adverse opinion on the subject but for the earnest contention of plaintiff's counsel that such existence is not essential and that it is sufficient if the office be provided for by any leg- islative enactment, however invalid. Their position is, that a legislative act, though unconstitutional, may in terms create an office, and nothing further than its ap- parent existence is necessary to give validity to the acts of its assumed incumbent. That position, although not stated in this broad form, amounts to nothing else. It is 124 PUBLIC SECUEITIES difficult to meet it by any argument beyond this state- ment. An unconstitutional act is not a law ; it confers no rights; it imposes no duties; it affords no protection; it creates no office ; it is, in legal contemplation, as inopera- tive as though it has never been passed." § 67. Validity of the acts of de facto officers. The rule obtains that all reasonable presumptions must be made in favor of the legality and validity of the acts of public officers. This principle is applied to the acts of de facto officers and the decisions are uniformly to the effect that the acts of an officer de facto within the scope of his actual authority are valid so far as the public and third persons are concerned.^^ This doctrine and rule has been well-stated by a text-book writer ^® and applies 37 — Ralls County v. Douglas, 105 V. S. 728. County bonds issued by a de facto county court, sealed with the seal of the court and signed by the de facto president, cannot be impeached in the hands of an in- nocent holder by showing that the president was not a de jure jus- tice of the court. In no state is it more authoritively settled than Missouri that the acts of an officer de facto, although his title may be bad, are valid so far as they concern the public or the rights of third per- sons who have an interest in things done, Norton v. Shelby County, 118 U. S. 425; Waite v. City of Santa Cruz, 184 U. S. 302; Waite v. City of Santa Cruz, 89 Fed. 619; Cardoza V. Baird (D. C), 30 App. D. C. 86; Pack V. United States, 41 Ct. CI. 414; Monahan v. Lynch, 2 Alaska 132; Kyle v. Abernathy, 102 Pac. 746; Gregory v. Woodbury (Fla.), 43 So. 504; Briggs v. Voss (Kans.), 85 Pac. 571. State V. Poulin (Me.), 74 Atl. 119. The de facto doctrine is exotic and was engrafted by the law as a matter of policy and necessity to protect the interests of the public and individuals where involving the official acts of persons performing the duty of an office without being lawful officers. Stuart v. Inhabit- ants of Ellsworth (Me.), 75 Atl. 59 ; Commonwealth v. Wotton (Mass.), 87 N. E. 202; Harrison v. Borough of Madison (N. J.), 78 Atl. 665; Knight v. Western Union, 45 W. Va. 194; see Abbott's Munic. Corp. Sec. 659 citing many cases. 38— Mechem Pub. Off. Sec. 328. ' ' Third persons who have occasion to deal with a public officer and to rely upon his acts, finding a person in apparent possession of the office and ostensibly exercising its func- tions lawfully and with the acqui- escence of the public, can neither be expected to know, nor to investigate in every instance, his title to the POWEE TO INCTJE INDEBTEDNESS, ETC. 125 both in respect to the creation of rights or relations between third parties and also between the corporation they represent and others. This rule includes the acts of a de facto council or other representative body of a public corporation and an indebtedness incurred by them is valid.^* §68. Fraud and misconduct of public officers. The principle obtains that officers and agents of a pub- lic corporation having special and limited power and au- thority, their principal is not bound by their acts when not coming within its actual and specific scope. In this as will be remembered, the rule is different from that which is applied to an agent of a private corporation or a natural person but the same rule applies to the fraud, misconduct, or irregular acts of public officers and agents that controls such acts or conduct of the officers and agents of private persons or corporations. The public corporation is bound; it is estopped to set up as a de- fense irregularities, misconduct or fraud of its agents when acting within the scope of the authority specifically granted to them.*" office or his eligibility to election enport, 94 U. S. 801. The case to it. As to them, he must be held shows that the plaintiff below was to be, what he appears to be, the bona fide owner of the coupon sued lawful occupant of the ofiiee. This on, questions of form merely or rule is demanded by public policy irregularity or fraud or misconduct as the only one affording protection on the part of the agents of the to the public. ' ' town cannot therefore be considered, 39 — National Life Ins. Co. v. whether the supervisor of the board Board of Education, 62 Fed. 778; signed the bond during the mid- Deeorah v. BuUis, 25 Iowa 12 ; State night hours, whether he delivered it V. Douglas, 50 Mo. 593. about daylight on the morning of People V. Bartlett (N. Y.), 6 April 2, 1873, and whether he im- Wend. 422. The doctrines stated in mediately left the town to avoid this section are so well settled that the service of an injunction, are a further citation of autborities is matters not chargeable to the owner unnecessary. of the bond. The supervisor was 40 — Town of East Lincoln v. Dav- not Mb agent but the agent of the 126 PUBLIC SECXJEITIES Itds sufficient to show that the agency existed and that the act was done within the general scope of the agent's authority. The public corporation is bound by the repre- sentations of its duly constituted agents, the truth or falsity of which the third person had no means of ascer- taining from public records, with the examination of which he might be legally charged.^' A public corportion, however, is not bound by the ultra vires acts of its agents. §69. Deflnition of the word "indebtedness" or "debt" as used in laws of limitation. The word "debt" or "indebtedness" is the one ordi- narily used in constitutional or statutory provisions lim- iting the obligations legally to be incurred by public cor- porations. What charges or obligations can be included properly within the meaning of these words may be ma- terial and important in determining the amount of in- debtedness incurrable and the courts from time to time have defined these words and included or excluded cer- tain obligations. ^^ town and if there has been a mis- fraudulently re-issued from the conduct on his part, the town rather State Treasurer's oflSce is subject than a stranger must bear the con- to defense. And see, also, State v. sequences. Perkins County v. GrafE, Hart, 14 So. 507, 46 La. Ann. 40. 114 Fed. 441; Columbia v. Denni- 41 — Mercer County v. Hackett, 1 son, 16 C. C. A. 125; Meyer v. Wall. (U. S.) 83; Lynde v. Winne- BrowB, 65 Calif. 583; Black v. bago County, 16 Wall. (U. S.) 6; Cohen, 52 Ga. 621; Copper v. Jer- Barnard v. Sangamon County, 190 sey City, 44 N. J. L. 634; Coler v. III. 116, 60 N. E. 109; Gould v. Star- Board of County Com'rs of Santa ling, 23 N. Y. 458; Brownell v. Fe (New Mex.), 27 Pae. 619; Town Town of Greenwich, 114 N. Y. 518; of Ontario v. Union Bank of Eochea- City of Seattle v. Stirrot (Wash.), ter, 47 N. Y. S. 927. 104 Pac. 134; see, authorities fully But, see, Pugh v. Moore (La.), cited in Sees. 52 and 65, ante. 10 So. 710. Where it was held that 42— City of Conyers v. Kirk, 78 a state bond in negotiable form Ga. 480, 3 S. E. 442. A debt even though in the hands of inno- arising from a breach of contract cent holders after having been to pay cash not within the eonstitu- POWEB TO INCTJE INDEBTEDNESS, ETC. 127 As to the purpose of these limitations, a decision upon the meaning of the Iowa constitutional provision is in- structive.** The Iowa Constitution, Art. 11, Sec. 3, reads as fol- lows: "No county or other political or municipal cor- poration shall be allowed to become indebted in any man- ner or for any purpose to an amount in the aggregate exceeding five per centum on the value of the taxable property within such county or corporation, to be ascer- tained by the last state and county tax lists previous to the incurring of such indebtedness." In the decision re- ferred to, Judge Lochren said: "The language of this section is plain and simple, and its meaning is unmis- tional limitation. Law v. People, 87 111. 385. Town of Kankalcee v. McGrew, 178 111. 74. The term does not apply to current indebtedness or to an obligation of the town not bearing intereest and not deferred for payment to some future dat«. Stone V. City of Chicago, 207 111. 492, 69 N. B. 970. The amount which a city has been assessed for public benefits in assessment cases and which remains unpaid is not a debt in the sense of the constitu- tional limitation, — "the water fund debt" of a city held included. Lobdell V. City of Chicago, 227 111. 218, 81 N. E. 354. The street railway certificates issued under Kurd's Eev. Stats., page 438, Chap. 84, known as the "Mueller Law" create an increase of the city's debt within the meaning of the Constitu- tion 1870, Art. 9, Sec. 12. City of Eichmond v. McGirr, 78 Ind. 192. The word "loan" as used in Ind. Eev. Stat. 1881, Sec. 3159, does not include the issue of negotiable bonds, payable in the future and bearing interest. Quill V. City of Indianapolis, 124 Ind. 292; City of La Porte v. Gamewell Fire Alarm & Tel. Co., 146 Ind. 46«, 45 N. B. 588; Allen v. City of Dav- enport, 107 Iowa 90, 77 N. W. 532; Bonnell v. Nuckolls Co., 28 Nebr. 90, 43 N. W. 1145; State v. Fayette County Coram 'rs, 37 Ohio State 526; Fowler v. City of Superior, 85 Wis. 411. Connor v. City of Marshfield (Wis.), 107 N. W. 639. Bonds on a water and lighting plant and as- sumed by a city are not to be in- eluded within the constitutional inhibition against cities incurring debts in view of the provisions of Eev. Stat. 1898, Sec. 959; see cases cited generally in sections imme diately following this, see, also meaning of the word "indebted ness. " Notes 44, Am. St. Eeps. 230, 232; L. E. A. Vols. 23, p 402, and 33, p. 474; Abbott Munic, Corp. See. 152, et seq.; Gray's Lim itations on Taxing Power, Seca, 2056, et seq. 43— City of Ottumwa t. City Water Supply Co. (C. C. A.), 119 Fed. 315. 128 PUBLIC SECUEITIES takable. The incurring of indebtedness beyond the amount limited is absolutely and unqualifiedly prohib- ited ; no matter what the pretext or circumstances, or the form which the indebtedness is made to assume. It curbs equally the power of the legislature, the officials and the people themselves, and was designed to protect the tax- payers from the folly and improvidence of either, or of all combined." Ingenious attempts have been made to incur obligations which by a "jugglery of phrases" it is claimed are not "debts" or "indebtedness" within the meaning of con- stitutional or other provisions, notably through the mak- ing of executory contracts for designated supplies or pro- viding for the payment of the obligation from special sources or funds. These will be considered in later sec- tions of this chapter.^* The fair construction of the words uninfluenced by ul- terior motives includes the aggregate *^ of all liabilities of whatever nature and contracted for whatever purpose and in whatever manner, that are or may become a legal 44— See Sees. 77 and 78, post. cess of indebtedness under Const. 45 — Hagan v. Coram 'rs Court of See. 158. Limestone County (Ala.), 49 So. State ex rel. City of Columbia v. 417. The aggregate amount of the Wilder (Mo.), 94 S. W. 495. A principal sums to be levied yearly bonded indebtedness of $110,000 to meet contract payments under issued for water works and electric a contract for the erection of a light plant owned by the city should courthouse and which provided for be included in ascertaining the total the levy of a certain tax each year indebtedness under Constitution for ti successive number of years 1875, Art. 10, See. 12. is to be included in applying the State v. Common Council of City limitation fixed by Const. 1901, of Tomahawk (Wis.), 71 N. W. Sec. 224. People v. Hanford Union 86. A liability on railroad aid High School District (Calif.), 84 bonds ia not incurred until the de- Pae. 193; Epping v. City of Colum- livery of the bonds and the question bus (Ga.), 43, S. E. 605. of whether the indebtedness of the Frost V. Central City (Ky.), 120 city including such bonds exceeds S. W. 367. The aggregate indebted- the constitutional limit is to be ness at the time of the issuance determined as of such date, and sale of bonds determine an ex- POWEB TO INCUR INDEBTEDNESS, ETC. 129 obligation due from and to be met by the public corpora- tion from the proceeds of public taxes levied and col- lected upon taxable property within its limits *'° together 46 — Hitchcock v. City of Galves- ton, 96 U. S. 341; Coulson v. City of Portland, Deady 481, Fed. Cas. No. 3,275; Murphy v. Town of East Portland, 42 Fed. 208. Springfield t. Edwards, 84 111. 626. The court here say: "A debt payable in the future, is obviously no less a debt than if payable pres- ently and a debt payable upon a contingency, as upon the happening of some event, such as the render- ing of service or the delivery of property, etc., is some kind of a debt and, therefore, within the pro- hibition. If a contract or under- taking contemplates, in any con- tingency, a liability to pay, when the contingency occurs the liability is absolute— the debt exists — and it differs from a present, unqualified promise to pay only in the manner by which the indebtedness was in- curred and since the purpose of the debt is expressly excluded from con- sideration, it can make no difference whether the debt be for necessary current expenses or for something else." Law V. People, 87 111. 385. The word ' ' indebtedness ' ' as used in the Constitution includes debts incurred to be paid in the future as -reel! as those payable at once. City of Logansport v. Jordan (Ind.), 85 N, E. 959. The obliga- tion of a city for its portion of the cost of a sewer arises when the sewer is completed and accepted by the city within Const., Art. 13, for- bidding a city to become indebted in excess of 2 per cent of its taxable p. s.— 9 property, and is not postponed until the final estimate of benefits result- ing to the city is made and an as- sessment therefore levied against the city; see, also, on this point, Jordan v. City of Logansport (Ind.), 86 N. E. 47. Windsor f. City of Deg Moines, 110 la. 175, 81 N. W. 476; Louis- ville & Nashville E. E. Co. v. Com- monwealth, 106 Ky. 633. State V. Graham, 23 Lia. Ann. 402. In this case the court defines the word ' ' debt ' ' as including an appropriation whereby the liabilities of the state are increased. Christie V. City of Duluth, 82 Minn. 202; State ex rel. Dickason v.. Marion County Court (Mo.), 30 S. W. 103, 31 S. W. 23; Barnard v. Knox County, 105 Mo. 382 overruling Pot- ter V. Douglass. 87 Mo. 240. Levy V. McClellan (N. Y.), 89 N. E. 569 But bonds issued to be redeemed within a year are not to be computed. Municipal Securi- ties V. Baker County, 33 Oregon 338, 54 Pae. 174; Brooke v. City of Philadelphia, 162 Pa. 123. In re State Bonds, 7 S. D, 42, 63 N. W. 223. Losses sustained by the school fund by. defalcation or mismanagement under Const. Art. 8, Sees. 2, 13, constitute a per- manent funded debt against the state which is not included in the "indebtedness" to which the state is limited by Art. 13, Sec. 2. City of Cleburne v. Qutta PercBa & Eubber Mfg. Co. (Tex.), 127 S. W. 1072. A note given by a city, payable within the year of its ex- 130 PUBLIC SECUBITIES with the accrued interest upon such obligation at the time of making tlie debt computation.*^ It was stated in a New York case that the purpose of New York Constitution, Article VIII, Sec. 10, limiting the indebtedness of municipalities to a specified per cent, of the assessed valuation of the real estate was to prevent them from improvidently contracting debts for other than ordinary current expenses of administration and to restrict their borrowing capacity; and that therefore the provision should be construed in the broadest sense which would give effect to it and that the word "indebt- edness" as found in the constitution should be defined as "a state of being in debt," and a "debt" as that which is due by express agreement unaffected by the manner or condition on which it is to be paid.''* There is no well established rule of construction which has been adopted in construing and applying the words. The desire on the part of the courts not to limit the in- debtedness of a public corporation or to compel on the ecution does not create a debt with- or asseta in the treasury or cur- in the Const., Ait. 11, Sec. 5, since rent revenues collected or in process it matures concurrently with the of collection for the payment of the city's revenues for that year and if same, that moment such debt must paid according to promise, it can- be considered in determining wheth- not be a. debt on the revenue for er such municipality has or has not future years. "Within the mean- exceeded the constitutional limit of ing of the constitutional provision, indebtedness. Eice v. City of Mil- the true test of whether an obliga- waukee, 100 Wis. 518, 76 N. W. 341. tion is a debt is, does it impose a State v. Laramie County Comm'rs, burden on the revenues of the city 8 Wyo. 104, 55 Pac 451. TTncol- for future years?" Pritsch v. Salt lected taxes due the state from a Lake City Comm'rs, 15 Utah 83, county should not be considered a 47 Pae. 1026; Stanley v. McGeorge, debt within the Const., Art. 16, 17 Wash. 8, 48 Pac. 738; Neale v. Sec. 4, limiting the power of coun- Wood County Court, 43 W. Va. 90, ties to create debts. 27 S. E-. 370. 47— Epping v. City of Columbus Earles v. Wells, 94 IWis. 285. (Ga.), 43 S. E. 805; Kelly v. Cole But the moment an indebtedness is (Kans.), 65 Pac. 872. involuntarily created in any manner 48 — Levy v. McClellan (N. Y.), or for any purpose with no money 89 N. E. 569, POWEE TO INCUE INDEBTEDNESS, ETC. 131 other hand the payment of a just obligation not techni- cally binding rather than any fixed rule of construction has at times influenced their decisions.^'' §70. Miscellaneous exceptions. Refunding bonds. The usual construction of the word "indebtedness" or "debt" excludes securities, negotia- ble or otherwise, issued under authority of law for the purpose of funding or refunding, as the phrase is used, outstanding corporate indebtedness, the courts holding that the issue of such securities or obligations does not increase or add to the debts of the corporation but merely changes their form. The authorities on this point will be cited and discussed in the chapter relating to refunding securities."" Liability for torts. Whether the liability of the pub- lic corporation for a tort should be included in any com- putation made for the purpose of ascertaining the extent of its indebtedness and whether a constitutional or statu- tory limitation is applicable will depend upon the form which that liability has assumed at the time of the com- putation.^^ The usual rule is that judgments for torts must be in- cluded in calculating the total debts of the corporation ; ^^ and the principle also applies equally well that unliqui- 49-7-BIood V. Beal (Me.), 60 Atl. debt in the sense of the constitu- 427. The Supreme Judicial Court tional limitation, has authority to prevent a city Levy v. McClellan, 89 N. E. 569 from creating a debt in excess of (N. Y.). Liability to owners for the constitutional limit whether property taken for a public use must created for a legal or an illegal be included in outstanding public purpose. debt. Fritsch v. Salt Lake City 50— See Chapter IX, post. Comm'rs, 15 Utah 83, 47 Pac. 1026. 51— Stone v. City of Chicago, 207 53— City of Chicago v. McDonald, 111. 492, 69 N. E. 970. The amount 176 111. 404. which a city has been assessed for Stone v. City of Chicago, 207 public benefits in assessment cases III. 492, 69 N. E. 970. Judgments and which remains unpaid is not a against a city unprovided for should 132 PUBLIC SECXTBITIES dated claims for damages and those in which a final judg- ment establishing a liability has not yet been rendered should not be included. Their contingent and uncertain character requires the application of the rule as thus stated.^* Limitation on power of state when not applied to a municipality. In some states where an express limitation is found in the Constitution on the power of the state to incur indebtedness, the courts have held that the pro- vision applies equally to all subordinate public corpora- tions on the theory that what the state itself is pro- hibited from doing, it legally cannot authorize that to be done by any one of the subordinate civil subdivisions created by it.^* On the other hand, in some states, it is expressly stated in the constitutional limitation that subordinate corpora- tions are excepted from the operation of its prohibi- tions.^'* And in still other jurisdictions, acting upon the theory be included in determining its in- etc. By. Co., 91 N. E. 422. The debtedness with reference to the passage of a compromise ordinance constitutional limitation; see, also, in the nature of an agreement with Conner v. City of Nevada (Nev.), a railroad company relative to track 86 S. W. 256. elevation through which there was But see Keller v. Seranton, 200 an adjustment and assumption of Pa. St. 130, 49 Atl. 781, where certain claims for damages by the the court said: "It is true that city held not an incurring of indebt- the Constitution does not exempt edness. Smith v. City of St. Joseph, municipalities, how great soever 122 Mo. 643, 27 S. W. 344. their indebtedness, from liability Levy v. McClellau (N. Y.), 89 for wrongful and tortious acts, but N. E. 569. Unliquidated claims it does not authorize the voluntary pending against a city the liability assumption of an obligation to pay for which is denied, are not debts money by a scheme of tort." within Const., Art. 8, Sec. 10. Ba- 54 — Cook V. City of Ansonia, 76 ker v. City of Seattle, 2 Wash. 576. Conn. 413, 3,4 Atl. 183; Thomas v. 55— Anderson v. Hill, 54 Mich. City of Burlington, 69 la. 140, 28 477; Oren v. Pingree, 120 Mich. N. W. 480; Ft. Dodge, etc. v. City 550, 79 X. W. 814. of Fort Dodge, 115 Iowa 568, 89 56— See Chapter XVIII, post, N. W. 7. containing abstracts from state con- City of Chicago v. Pittsburgh, stitutions. POWER TO INCUR INDEBTEDNESS, ETC. 133 that indentity of territory does not constitute corporate identity, the courts hold that constitutional restrictions limiting the state as to the amount, form or the purpose of a debt do not necessarily apply to subordinate civil subdivisions."'^ Unearned interest not considered a debt. In deter- mining the total amount of corporate liability for the purpose of determining whether its constitutional limit has been reached unearned interest coupons attached to valid and outstanding negotiable securities are not con- sidered a part of its indebtedness and should not be in- cluded in any computation of that amount.^ ^ §71. Compulsory and voluntary debts. It may become necessary for a public corporation to incur certain indebtedness in the exercise of imperative powers placed upon it by the state; and the question of whether debts thus made compulsory are to be included in computing the amount of outstanding indebtedness, is one which has arisen in a number of cases. The com- pulsory obligations referred to including fees of wit- nesses, jurors, constables or sheriffs in criminal cases,^* 57 — Pine Grove Township v. Tal cott, 19 Wall. 666; Patterson Yuba, 13 CaUf. 175; Marshall v, Silliman, 61 111. 218; Quincey, etc, Ey. Co. V. Morris, 84 111. 410; Chi- City of Helena (Mont.), 102 Pae. 39. 59 — ^Board of County Comm'rs of Lake County v. EolUns, 130 TJ. 3. 662, reversing Eollins v. Lake cago, etc. Ey. Co. v. Shea, 67 Iowa County, 34 Fed. 845; Hamilton 728, 21 N. W. 901; Van Cleve v. County Comm'rs v. Cottingham, 56 Passaic Valley Sewerage Com'rs (N. Ind. 559. J.), 58 Atl. 571; Eiley v. Carrieo Jenkins v. Newman (Mont.), 101 (Okla.), 110 Pae. 738; State ex rel. Pac. 625. The necessary services Jones V. Froelich, 115 Wis. 92, 91 of county ofScers as such in carry- N. W. 115. ing out for the county a public 58 — Epping V. City of Columbus work contracted for are a part of (Ga.), 43 S. E. 803; Blanchard v. their duties and must not be consid- Village of Benton, 109 111. App. ered in arriving at the cost of the 569; Pinlayson v. Vaughan, 54 work vrithin Const., Art. 13, Sec. 5, Minn. 331, 56 N. W. 49; Carlson v. but moneys expended for the em- 134 PUBLIC SBCUEITIES the expense attendant upon holding of a session of the legislature or others of a similar character. A bill of rights, perhaps providing for a speedy trial by jury for those accused of crime and a legislative session consid- ered necessary to the maintenance of organized govern- ment a reason sometimes of doubtful applicability. The Federal courts have held uniformly that there is no distinction between compulsory and voluntary indebt- edness within the meaning of that word as used in .con- stitutional provisions and that the word "debt" or '"'in- debtedness" uninfluenced by ulterior motives should in- clude all liabilities of whatever nature and contracted for whatever purpose or in whatever manner. The leading case upon this question in the Supreme Court of the United States is one decided in 1888,"'' where the validity was raised of a large number of county war- rants issued by the County of Lake, Colorado-, for ordi- nary county expenses such as witness and juror's fees, election costs, charges for the board of prisoners, etc. It was claimed in this case that the warrants were void since Sec. 6, Art. II of the state constitution fixed a maxi- mum limit beyond which no county could contract any in- debtedness and that the warrants sued on were a;ll issued after that limit had been reached and even exceeded. The court held the contention good and the warrants therefore void. The argument in favor of their validity was based upon the distinction made in this section be- tween a compulsory and a voluntary obligation. The court said on this point: "Neither can we assent to the ployment of inspectors other than Art. 8, Sec. 10, preventing munic- county officers should be included. ipalities from incurring indebted- Gubner v. McClellan, 115 N. Y. ness for other than municipal pur- S. 755. The provision of the public poses. City of San Antonio v. service commissions law for the pay- Beck (Tex.), 101 S. W. 263. ment of salaries and expense of 60 — Board of County Com'rs of the commission does not involve Lake County v. Eollins, 130 U. S. the creation of indebtedness and 662. therefore is not within the Const,, POWEE TO INCUK INDEBTEDNESS, ETC. 135 position of the court below that there is, as to this case, a difference between indebtedness incurred by contracts of the county and that form of debt denominated ' ' com- pulsory obligations." The compulsion was imposed by the Legislature of the State, even if it can be said cor- rectly that the compulsion was to incur debt; and the Legislature could no more impose it than the county could voluntarily assume it, as against the disability of a con- stitutional prohibition. Nor does the fact that the Con- stitution provided for certain county officers, and au- thorized the Legislature to fix their compensation and that of other officials, affect the question. There is no necessary inability to give both of the provisions their exact and literal fulfillment." This rule has been followed in a number of jurisdic- tions ^^ and by the later cases in Oregon.**^ In Washington, the contrary rule is held. In one of the cases,"^ the court in its decision after referring to 61 — Pacific Underwriters v. Wid- of officers, debts arising from ex- ber, 113 Calif. 201. The claim here press contracts and liabilities based arose upon a contract and although upon the negligence of county of- it was one made by the city in the ficials. Spillman v. Parkersburgh, performance of duties imposed upon 35 W. Va. 605, 14 S. B. 279; it by law yet the court held that the Hebbard v. Ashland Co., 55 Wis. obligation came within the constitu- 145, 12 N. W. 437; Grand Island, tional prohibition. Goldsmith v. etc. By. Co. t. Baker, 6 Wyo. 369, San Francisco, 115 Calif. 36, 46 45 Pac. 494. Pac. 816; People v. May, 9 Colo. 62— Eaton v. Mimnaugh, 43 Ore. 80, 404, 10 Pac. 641; Prince v. 465, 73 Pac. 754, modifying Grant Quincy, 128 111. 443, 21 N. E. 768; County v. Lake County, 17 Oregon Saekett v. New Albany, 88 Ind. .453, 21 Pac. 447; Burnett v. Mark- 473; Barnard 3. Knox County, 105 ley, 23 Oregon 43(6, 31 Pac. 1050. Mo. 382, 16 S. W. 917, over-ruling But see Cunningham t. Baling Potter V. Douglass County, 87 Mo. (Ore.), 112 Pac. 437. 239; Municipal Securities Co. v. Ba- 63 — State v. Board of Liquidation ker County, 33 Oregon 338, 54 Pac. of City Dedt, 51 La. Ann. 1849; 174. 26 So. 679; Underwood v. Town of Fritsch v. Salt Lake County Asheboro (N. C), 68 S. E. 147; Comm'rc, 15 Utah 83, 47 Pac. 1026. City of Oak Cliff v. Etheridge The limitation includes debts ere- (Tex.), 76 S. W. 602; City of ated by operation of law, salaries San Antonio v. Beck (Tex.), 101 136 PUBLIC SECUEITIES those provisions of the constitution of the state of Wash- ington, providing for the organization and maintenance of county government and for a speedy trial in criminal cases, said: "All these provisions of organic law are alike declared to be majidatory. It would make these various provisions of the constitution contradictory and render some of them nugatory if a construction were placed upon the limitation of county indebtedness which would destroy the efficiency of the agencies established by the constitution to carry out the organized and essen- tial powers of government. * * * "^^e are constrain- ed to rule that the limitation of county indebtedness does not include those necessary expenditures made manda- tory in the constitution and provided for by the legisla- ture of the state and imposed upon the county, that the payment of these is a prior obligation and other liabili- ties incurred by the county are subject and inferior to these primary obligations which must always continue." The decisions in this state, however, are to the effect that when the total indebtedness of a public corporation, including its compulsory obligations exceed or equal the constitutional debt limit, it cannot thereafter create vol- untary obligations.'* S. W. 263; Duryee v. Friars, services in making assessment rules, 18 Wash. 55, 50 Pac. 583; Hull city printing, etc., were valid though V. Ames, 26 Wash. 272; Over- the city had exceeded the limit of all V. City of Madisonville (Ky.), its indebtedness, that such were 102 S. W. 278; Eauch v. Chapman, necessary expenses incurred in main- 16 Wash. 568, 48 Pac. 253; see, taining its existence, also, Ferris v. Widber, 99 Calif., Wolfe v. School Dist. No. 2 413, 99 Pac. 412. (Wash.), 108 Pac. 442. The main- Gladwin v. Ames (Wash.), 71 tenanee of a. school throughout a Pac. 189. Where the court held school year is not such a necessity that municipal warrants issued for as to warrant incurring indebtedness labor and material furnished in the in excess of the legal limit, building of the city jail, publishing 64 — Duryee v. Friars, 18 Wash, notices and printing ballots of elee- 55, 50 Pac. 583. tion, insurance on city buildings, POWEE TO INCUE INDEBTEDNESS, ETC. 137 §72. Current and necessary expenses. By constitutional provision in some of the states, cer- tain necessary expenditures are excluded from any com- putation made to ascertain the total debt of the public corporation in order to determine whether it has reached or exceeded the maximum constitutional limit.^^ The con- struction of the word "necessary" is in all cases arising upon these constitutional provisions the only question considered and the decisions in some states hold to a nar- row interpretation of the word,*' and in others to a more liberal rule.*'^ It would seem that the word should only include those expenditures connected with the discharge of the usual and ordinary powers and functions of public corporations. The conduct of their every day affairs, to use a simple and homely phrase. Where no express exception is made, necessary ex- penses are usually included within a computation to as- certain the total debt.'^ § 73. The indebtedness must be a legal demand. Constitutional or other limitations usually restrict the debt legally incurrable by public corporations to a cer- es— Idaho, Art. 8, Sec. 3; Ky., Helena Waterworks Co. v. City of See. 158; Md., Art. 9, Sec. 7; Mont., Helena (Mont.), 78 Pae. 220. The Art. 13, Sec. 6; N. C, Art. 7, Sec. 7. question of what ia a current ex- 66— Undgrwood v. Town of Ashe- pense is ultimately for the courts, boro (N. C), 68 S. E. 147. The Expenditures to install a water sys- constitutional limitation does not tem held in this case not a current apply to an indebtedness of a town expense. incurred for necessary expenses. 67 — Fawcett v. Mt. Airy, 134 N. People V. aty of Geneva, 92 N. Y. C. 125, 45 S. E. 1029; Da-ria ,. Town S. 91. of Fremont, 135 N. C. 538, 47 S. Camden, Clay County, v. Town of E. 671; Highway Commission v. New Martinsville (W. Ta.), 68 S. C. A. Webb & Co. (N. C), 68 S. E. 118. The expenditure of current E. 211. revenue and accrued funds is not 68 — City of Springfield t. Ed- a contraction of debts within the wards, 84 lU. 626; La Porte v. constitutional inhibition. Gamewell Fire Alarm Tel. Co., 146 138 PUBLIC SECUEITIES tain definite amount or to a certain percentage upon the taxable property within the corporate jurisdiction. In determining whether an obligation is to be included for the purpose of ascertaining whether the legal limit has been reached, it is generally held that it must be a legal claim or demand against the corporation and of such a character that it can be enforced through the use of the available and proper remedies given by the laws of the state for the enforcement of such demands. Under this rule an unliquidated claim or demand or one unapproved by the proper officials would not be considered a "debt" or an "indebtedness" and in computing the total debt of the corporation should be excluded.^'* Ind. 466, 45 N. E. 588; City of Council Bluflfs v. Stewart, 51 Iowa 385; Windsor v. City of Des Moinea, 110 Iowa 175; Beard v. City of Hopkinsville, 95 Ky. 239, 24 S-. W. 872; State ex rel. Helena Water Works Co V. Helena, 24 Mont. 521, 63 Pae. 99. Municipal Securities Co. v. Baker County, 33 Ore. 338, 54 Pac. 174. A necessary county expense should not be included within the word "indebtedness" as used in the con- stitutional limitation since it is an involuntary obligation. See, also, Sec. 71, ante. 69 — Ashuelot v. Lyon County, 81 Fed. 127. Bonds in excess of the constitutional limit and therefore void are not to be included as a part of the municipal indebtedness in determining the total outstanding indebtedness with reference to an is^ sue of bonds. The court say: "The constitutional limitation which is relied on as a defense in this ease was intended to prevent the over- burdening of property within the municipalities of the state by debts created by corporate authorities, and the prohibition of the constitu- tion extends to all forms of indebt- edness and the true inquiry in each case is whether at the given date there exists indebtedness in any form up to the limit for which the municipality can be held liable at law or in equity. Whatever the form of the indebtedness may be if it can be enforced by a court of law or equity, it certainly comes within the constitutional provision; but on the other hand, claims which cannot be thus enforced and which are not binding on the municipality, do not come within the meaning of the term 'indebtedness' as used in the constitution of the state." German Insurance Co. v. City of Manning, 95 Fed. 597; Keene Five- Cent Savings Bank v. Lyon County, 100 Fed. 337, aflSrming 90 Fed. 523; Biekerdike v. State (Calif.), 78 Pac 270; Trowbridge v. Schmidt (Miss.), 34 So. 84; Graham v. City of Spokane (Wash.), 53 Pac. 714. POWER TO INCUR INDEBTEDNESS, ETC. 139 §74. Indebtedness further defined; warrants issued in anticipation of taxes levied. A public corporation may incur a liability for the pay- ment of which there are no funds in the treasury, al- though the taxes when collected will be sufficient to pay such demand. Or again municipal warrants may be drawn anticipating the payment of taxes not then delin- quent but levied and due. The courts hold that such war- rants or other evidence of indebtedness should not be considered a debt within the meaning of constitutional provisions, for, as said in one case, the "warrants" are drawn against existing values.^" In some states by constitutional provision an issue of securities or the incurring of debts, in anticipation of current revenues is permitted although these may exceed the maximum debt allowed by law.^' 70 — Hockaday v. Chaffee County Comm'rs, 1 Colo. 362, 29 Pac. 287; Stein v. Morrison (Idaho), 75 Pae. 246; City of Blanchard v. Village of Benton, 109 111. App. 569; Stone V. City of Chicago, 207 111. 492, 69 N. E. 970; Corliss v. Village of Highland Park (Mich.), 93 N. W. 610; Merchants National Bank v. City of East Grand Porks (Minn.), 102 N. W. 703. In re State Warrants, 6 So. Dak. 518, 62 N. W. 101. At first thought it may seem difficult to maintain that the issuing of an obligation to pay, is not the incurring of an in- debtedness. Critically considered, it may constitute the incurring of an indebtedness, * * » but it is not an indebtedness repugnant to the constitution because its payment is legally provided for by funds constructively In the treasury. If the drawing of the warrant upon thfe state treasury is the incurring of an indebtedness by the state, then the drawing of such warrant would violate the constitution even if there was money in the state treas- ury to pay it, if the constitutional limit of indebtedness had been reached, for there must always be some time intervening between the drawing of the warrant and its payment and during such time the indebtedness of the state would be increased beyond the constitutional limit. Such an interpretation of the constitutional limitation would ob- viously be too hypercritical to be practicable or reasonable. Fenton v. Blair, 11 Utah 78, 39 Pac. 485. But see Balch v. Beach (Wis.), 95 N. W. 132. 71— Ala., Sec. 225; Ga., Art. 7, Sec. 7, par. 1; Md., Art. 12, Sec. 7; Mo., Art. 9, Sec. 19; N. Y., Art. 8, Sec. 10; S. C, Art. 8, Sec. 7; Va., Art. 8, See. 127. 140 • PUBLIC SECUKlTIES §75. Debts of territorially co-existing public corpora- tions. The same territory may be and often is organized into and included within two or more separate and distinct civil bodies or public corporations, with a limit placed upon each of the amount of indebtedness it can legally incur. In determining the limit of such indebtedness the total debt of each of the civil bodies or corporations is to be separately considered and not the aggregate of all the corporate organizations which may be wholly or par- tially co-extensive territorially. The courts usually con- sider each of the civic corporations as bodies corporate, separate, independent and distinct from feach other.'' ^ The rule stated above is the one based upon the weight of authority. Sound reasoning is in favor of the excep- tion to the rule or of the exception as the general rule. There is no doubt but that the principle given has led to very great abuses and the placing of almost intolerable burdens of taxation upon taxable property and interests 72 — Atchison Board of Education Water District v. Waterville, 96 V. De Kay, 148 U. S. 591; Chilton Me. 234, 52 Atl. 774; Du Toit ▼. V. Town of Gratton, 82 Fed. 873; Village of Belview (Minn.), 102 Board of Education of City of N. W. 216; State v. Lancaster Huron v. National Life Insurance County, 6 Nebr. 214; Board of Co., 94 Fed. 324; Robertson v. Li- Education of Eddy v. Bitting, 9 brary Trustees of Alameda, 136 New Mexico 588; Vallelly v. Board Calif. 403, 69 Pae. 88; Broad v. of Park Comm'rs of Grand Forks City of Moscow (Ida.), 99 Pac. (N. D.), Ill N. W. 615; Eiley v. 101; Stone v. City of Chicago, 207 Carrico (Okla.), 110 Pac. 738; 111. 492, 69 N. E. 970; Kuoera t. Straw v. Harris (Ore.), 103 Pac. West Chicago Park Comm'rs, 221 777; Saltaman v. Olds, 215 Pa. 336, 111. 488, 77 N. E. 912; Wilcoxon 64 Atl. 552; Wilson v. Board of V. City of Bluffton, 153 Ind. 267, Education of Haron, 12 S. D. 535; 54 N. E. 110 ; Heinl v. City of Terre State v. Common Council of Toma- Haute, 66 N. E. 450, 161 Ind. 44; hawk, 96 Wis. 73, 71 N. W. 86. City of lola v. Merriman (Kana.), But see Pettibone v. West Chicago 26 Pac. 485 ; Ex parte City of New- Park Comm 'ra, 250 111. 304, 74 port (Ky.), 132 S. W. 580; Vicks- N. E. 387; and West Chicago Park burg, etc. Ey. Co. v. Goodenough, Comm 'Irs v. City of Chicago, 216 108 La. 442, 32 So. 404; Kenebec 111. 54, 74 N. B. 771. POWEB TO INCUR INDEBTEDNESS, ETC. 141 witMn certain localities. Identical territory is permit- ted, Tinder legislative authority to be organized into sep- arate corporations for the purpose of the carrying on by each one of its distinct functions of government and each of these organizations can legally incur the full amount of indebtedness permitted by the constitution or sta- tutory authority ; as a result the amount of indebtedness which can be placed upon the inhabitants and taxable property of this territory or district is unlimited. A constitutional limitation may prohibit the incurring of debts in excess of a certain per cent or amount. Under the prevailing rule it is possible to organize separate subordinate civil divisions under authority of law for performing the separate functions of government, each one of these can incur indebtedness to the full limit of the law, — a park board, police board, board of educa- tion and so on ad infinitum.'^^ The soundness of the reasoning above has been recog- nized in some of the states, notably New York, where counties altogether comprised within city limits are ex- pressly forbidden to contract any debts,''* and South Carolina where a limit is placed upon the indebtedness 73 — See as sustaining the views Board of Trustees for High School of this paragraph, City of Ottumwa of Logan County (Okla.), 76 Pae. V. City Water Supply Co., 119 Fed. 165, which holds the indebtedness of 315 C. C. A. a high school board of trustees is Orvis V. City of Des Moines Park to be computed in connection with Comm'rs, 88 Iowa 674, 56 N. W. the county debt in ascertaining 294. Where the court held that whether the federal limitation of even though a board of park com- four per cent has been exceeded, missioners was authorized under the Neale v. County Court of Wood special authority of an act of the County (W. Va.), 27 S. B. 370, legislature, yet its bonds were to where it is held that a subscription be considered a charge of the city by a magisterial district to an in- within the meaning of Const. Art. ternal improvement being a county 11, Sec. 3, limiting the amount of debt is to be regarded in determin- municipal indebtedness to five per ing the limits of the county indebt- cent of the value of the taxable ednesa fixed by Const. Art. 10, See. 8. property. Reynolds v. City of Wa- 74— N. Y. Const., Art. 8, See. 10; terville, 92 Maine 292 j Territory v. Levy v. McClellan, 89 N. E. 569. 142 PUBLIC SECURITIES which can be incurred by any given territory for all purposes, including all political subdivisions in which the territory is situated/^ §76. Basis of indebtedness; assessment or valuation. The percentage limit of indebtedness is based upon the assessed valuation of the taxable property within the taxing limits of the corporation. The controlling as- sessment upon which the computation must be made is ordinarily the one last before the proposed incurring of indebtedness and usually that which has been acted upon by a final Board of Equalization in the state.^^ 75-rS. C. Const., Art. 10, Sec. 5; City of Lawrence, 48 S. C. 395, 26 S. E. 682. Lancaster School District v. Eob- inson-Humphrey Co., 64 S. C. 545, 42 S. E. 998, Const. Art. 10, Sec. 5, limiting the indebtedness of polit- ical division to 15 per cent of its taxable valuation does not require the state debt to be included therein. Welch V. Getzen (S. C), 67 S. E. 294. 76 — Dupont V. City of Pittsburg, 69 Fed. 13. The word "valuation" as used in Pa. Const., Art. 9, Sec. 8, limiting the debts of cities to 7 per cent of the assessed valuation of taxable property means the valuation by city authorities for city taxation and not that made by county officers for county purposes. City of Gladstone v. Throop, 71 Fed. 341. In the absence of evi- dence of the assessed value of prop- erty, a sufficient amount will be presumed to support the validity of an issue of bonds based upon that valuation. Chilton v. Town of Gratton, 82 Fed. 873; Rathbone v. Board of Commissioners of Kiowa County, 83 Fed. 125, 27 C. C. A. 477; Board of Education, etc. v. National Life Insurance Co., 94 Fed. 324. City Water Supply Co. v. City of Ottumwa, 121 Fed. 309. The 5 per cent limitation is to be computed on the assessed value of the property for taxation and not on the actual value where the two are not the same; but see, the later case of C. B. Nash Co. v. City of Council Bluffs, 174 Fed. 182, where it is held that the construction given by the State Supreme Court will be fol- lowed by the Federal courts, viz.: that the constitutional limitation of 5 per cent for the indebtedness of a city is to be computed on the actual and not the assessed value of its taxable property as shown by the tax list. Law v. City and Coun- ty of San Francisco (Calif.), 77 Pac. 1014. N. W. Halsey & Co. v. City of Belle Plaine (Iowa), 104 N. W. 404. The actual value of the property and not the taxable value prescribed by Code, Sec. 1305, determines the 5 per cent limit of indebtedness un- der Const. Art, 11, Sec. 3. POWER TO INCUR INDEBTEDNESS, ETC. 143 In a Nebraska case,^' the word "assessment" as used in the law relating to the incurring of debts by public cor- porations was defined as being not only the act of the local assessor but the completed act of all the agencies employed in determining the amount of property avail- able for taxation. The court said: "Besides, in our opinion, the term 'assessment' has a wider signification than simply the listing and valuation of taxable property by the assessor. * * * Under our system of taxa- tion, the listing and estimate are not complete until after the county board has completed its work as a board of equalization. While as such board, they are authorized to assess all the lands that have been listed by the couut}^ clerk and not assessed by the assessor and otherwise to change the assessment, a large part of all railroad and telegraph property is assessed, not by the local assessor. Board of Coram 'rs, ete. v. Baker (La.), 48 So. 654. La. Const., Art. 281 authorizes drainage districts to issue bonds upon the basis of an ad valorem tax and also upon the basis of a specific tax on land. Bonds cannot be issued upon the theory that the two bases can be combined; the two methods are not concurrent. Thornburgh v. School Dist. No. 3 (Mo.), 75 S. W. 84. Southworth v. City of Glasgow (Mo.), 132 S. W. 1168. The ab- stract showing assessed value of property upon which to base in- debtedness properly includes the as- sessed value of railroads, bridges, telegraph and telephone lines within the city limits. State V. Babcock (Nebr.), 39 N. W. 783. Where the assessed valua- tion has been reduced in the interim between an election authorizing the issue of bonds and their issue, the constitutional limit is based upon the last assessment. Colburu V. McDonald (Nebr.), 100 N. W. 961. Holds as in a preced- ing case that the assessed valuation as last made before bonds are actu- ally issued is the basis for deter- mining the amount of such issue. Kronsbein v. City of Eochester, 78 N. Y. S. 813. Special franchises granted by a city are to be con- sidered as a part of its assessable real estate within Const., Art. 8, Sec. 10, relative to the limit of in- debtedness. Levy V. McClellan (N. Y.), 89 N. E. 569; Eay v. School District No. 9, Caddo County (Okla.), 95 Pac. 480; Amort v. School District No. 80 (Ore.), 87 Pac. 761; Elliott v. City of Phila- delphia, 229 Pa. 215, 78 Atl. 107; Rockwall County v. Roberts County (Tex.), 128 S. W. 369. 77— C. B. & Q. E. E. V. Village of Wilbur, 63 Nebr. 624, 88 N. W. 660. 144 PUBLIC SECURITIES but by the state board of equalization and certified to the county clerks in which the same is taxable and thus becomes a part of the basis upon which the levy of taxes is made. The basis for the issuance of bonds is 'the as- sessed valuation of the taxable property within said vil- lage' and is to be determined by 'the last preceding as- sessment.' To our minds it is clear that the assessment referred to is the completed act of all the agencies em- ployed in determining the amount and value of property available for taxation, ' ' §77. Payments under executory contracts not usually considered a debt. A plan often suggested and followed resulting in the increase of corporate indebtedness beyond the limit al- lowed by law, is the making of contracts by a public cor- poration calling for the performance of certain acts dur- ing a series of years, the service performed or rendered under the contract to be paid for at an agreed rate from time to time as the services or contract obligations are rendered or performed. The courts have quite uniformly held that such contract obligations should not be con- sidered an indebtedness or a debt mthin the meaning of constitutional or other express limitations for the rea- son that the payment of the obligation on the part of the public corporation being contingent upon the perform- ance of the act or the rendition of the service by the other party to the contract so long as this contingency exists, it is not a fixed and definite obligation or charge within the meaning of the words "debt" or " indebtedness. " '^^ 78 — Daviess County v. Dickinson, not create a debt except eondition- 117 U. S. 657; Doon Township v. ally and the annual payment is de- Cummins, 142 U. S. 366; Hedges pendent upon the performance of V. Dixon, 150 V. S. 182. the conditions imposed upon the Walla Walla City v. Walla Walla other party to the contract from Water Co., 172 U. S. 1, affirming year to year. Keihl v. City of 60 Fed. 957. Such a contract does South Bend, 76 Fed. 921; Cunning- POWER TO INCUE INDEBTEDNESS, ETC. 145 Such contracts are usually made with private corpora- tions or individuals and have for their purpose the sup- plying of the commodities of water, and light, the public corporation itself not deeming it expedient or not being in financial condition to undertake the construction of water works or lighting plants sufficient for its needs, is obliged to leave this to private enterprise. The obligation on the part of the public corporation in such a case, it has been held repeatedly, is the payment of an annual or other fixed charge at a stated interval for the services ren- ham V. City of Cleveland, 98 Fed. 65.7 C. C. A.; Fidelity Trust & Guaranty Co. v. Fowler Water Co., 113 Fed. 560; City of Centerville V. Fidelity Trust & Guaranty Co., 118 Fed. 332; Columbia Ave., etc. Trust Co. V. City of Dawson, 130 Fed. 152; Simons v. City of Eugene, 159 Fed. 307; Mercantile Trust & Deposit Co. V. City of Columbus, 161 Fed. 135; Lakey v. Fayetteville Water Co. (Ark.), 96 S. W. 622; Doland v. Clark (Calif.), 76 Pac. 658; McBean v. City of Fresno, 112 Calif. 159; Smilie v. City of Fres- no, 112 Calif. 311 ; MeMaster v. City of Waynesboro (Ga.), 50 S. E. 122. Cain v. City of Wyoming, 104 111. App. 538. Contracts for the annual supply of such necessaries as water and light and which do not create a, debt for the aggregate amount are not included within the constitu- tional limitation. City of Danville V. Danville Water Co., 180 111. 235. Valparaiso v. Gardner, 97 Ind. 1. A city can contract to pay an an- nual water rent for twenty years provided it can be paid out of the current revenues although the aggre- gate of payments for the contract term exceed the constitutional limit. Crowder v. Town of Sullivan, 128 Ind. 486, 28 N. E. 94; Foland v. p. s.— 10 Town of Frankton, 142 Ind. 546; Creston, Iowa, Works Co. v. Creston, 101 la. 687, 70 N. W. 739; Younger- man V. Murphy, 107 Iowa 686, 76 N. W. 648. Overall v. City of Madisonville (Ky.), 102 S. W. 278. A lease of premises to be used in installing a lighting plant with an option to the city to continue it from year to year or to buy it at a fixed price does not contravene Const. Sec. 157 prohibiting cities from incurring a liability beyond the revenues of the year. Blanks v. City of Monroe (La.), 34 So. 921. Houma Lighting & Ice Mfg. Co. V. Town of Houma (La.), 53 So. 970. A contract of a municipality for a public improvement payable out of the revenues of future years will not be held invalid when the evidence shows that it is reasonable and the financial condition of the municipality warrants the belief that future revenues will be suflEL- cient to pay the contract obligation, Smith V. Inhabitants of Dedham 144 Mass. i;^7, 10 N. E. 782; Lud ington Water Supply v. Ludington 119 Mich. 480, 78 N. W. 558; Sal eno V. City of Neosha, 127 Mo. 627 Lamar Water & Electric Light Co V. City of Lamar, 128 Bio. 188 146 PUBLIC SECtTEITIES dered, this payment contingent upon the proper perform- ance of the contract by the other party thereto. The form of the contract, may, however, lead the courts to hold otherwise in some cases. Where there is a fixed and definite agreement on the part of a municipality to pay a certain sum from time to time irrespective of serv- ices performed, or the language imposes a general lia- bility, such obligations or charges have been held to be of a sufficiently fixed and definite character as to come with- in the meaning of a constitutional or other provision pro- hibiting the incurring of an indebtedness or a debt be- yond a certain sum.'''' City of Lexington v. Lafayette County Bank, 165 Mo. 671; State v. City of Great Palls, 19 Mont. 518; Eaton Water Works Co. v. Town of Eaton, 9 New Mexico 870, 49 Pac. 898. Kronsbein v. City of Eochester, 78 N. Y. S. 813. An indebtedness is not incurred by a city within Const. Art. 8, Sec. 10, through a. contract which provides that it shall not be required or liable to make payments except when there shall be money or funds in the Treasury properly applicable to that specific purpose. Giles V. Dennison (Okla.), 78 Pac. 174. A contract for the construc- tion of a courthouse and jail pro- viding for its payment through an- nual rental does not create a pres- ent indebtedness against a city in a sum equal to the aggregate amount of the rentals. City of St. Joseph V. Joseph Water Works Co., Ill Pac. 864. Bedding v. Esplin Borough (Pa.), 56 Atl, 431. Contract for the con- struction of sewers. Wade v. Oak- mount Borough, 105 Pa. 479. I Bailey v. City of Sioux Falls, 103 N. W. 16. Contract for pur- chase of boilers. City of Tyler v. L. L. Jester & Co. (Tex.), 74 S. W. 359. In the absence of evidence to the eontrary, it will be presumed that contract payments are matters of ordinary expenditures and intended to be paid out of current revenues. Alli- son V. City of Chester (W. Va.), |72 S. E. 472; Stedman v. City of Berlin, 97 Wis. 505, 73 N. W. 57; Herman y. City of Oconto, 110 Wis. 660. See. also, Abbott Munie. Corp. Sees. 152 and 159 citing many eases. Gray Limitations of Indebtedness, Sec. 2079, et seq. The citation of authorities under this and the fol- lowing note is not exhaustive but a suflBcient number have been given and from different jurisdictions to support the principle stated in the text. 79 — Coulson v. City of Portland, Deady 481 ; City of Helena v. Mills, 94 Fed. 916 ; Ford v. City of Carter- ville, 84 Ga. 213, 10 S. B. 732. City Council of Dawson v. Daw- son Water Works Co., 106 Ga. 696, 32 S. E. 907. A contract for water POWEB TO INOTJB INDBBTEDKESS, ETC. 147 It will be noted from an examination of the cases cited that specific language of a contract determines in many cases the holding of the court and this condition will ex- plain seeming inconsistencies in decisions of the same state though in Iowa, it will be noted from the later au- thorities that the courts have considerably relaxed their earlier and stricter construction of the constitutional to run for twenty years each year's supply to be paid for semi-annually from year to year is operative only from year to year so long as neither party renounces or repudiates it. Prince v. City of Quincy, 128 111. 443, 21 N. E. i768; Pontiac Water, L. & P. Co. V. City of Pontiac, 149 111. App. 57; City of Chicago v. Mc- Donald, 176 111. 404 overruling City of St. Louis V. East St. Louis Gas- light & Coke, 98 111. 415; City of Chicago V. Galpin, 183 111. 399. B. & O. S. W. E. B. Co. V. People, 200 111. 541, 66 N. E. 148. A eon- tract requiring a city to pay for a company's lighting plant by rentals from year to year creates an in- debtedness within the Const. Art. 9, Sec. 12, and the contention that such a contract includes the pay- ment of interest, taxes, repairs and insurances, sums not definitely known in advance and therefore not creating a debt cannot be sustained where it definitely provides for the payment of a specific sum which exceeds the debt limit. Sehnell v. City of Eoek Island, 232 111. 89, 83 N. E. 462; Evans v. Holman, 244 111. 596, 91 N. E. 723. Voss V. Waterloo Water Co. (Ind.), 71 N. E. 208. A contract for water or light to be paid for at fixed periods by a town who'Je rev- enues are insufficient to meet the payments required by the contract creates an indebtedness in violation of Const. Art. 13, limiting munic- ipal indebtedness. The plan in this case provided for the incorporation of a company to construct a water and light plant of which the city was to be a stockholder and issue bonds therefor. The city agreed to pay a specified sum per annum for twenty-five years as water rentals for hydrants and a specified sum per year for ten years as light rentals. These sums were required to be paid to trustees for the bond- holders and to be applied on the bonds. Special taxes authorized by law for water and light and the gen- eral taxes of the town were pledged for the payment of the rentals. The whole scheme as noted above was held to create an indebtedness to the amount of the cost of the con- struction of the plant within the constitutional limitation; see, how- ever, Indiana Laws, 1907, p. 499, C-. 245; Allen v. City of Davenport, 107 Iowa 90, 77 N. W. 532. Windsor v. City of Des Moines (Iowa), 81 N. W. 476. This case also holds that where it is entirely optional with a city whether it should pay anything further on a contract of the nature indicated in the text that such a contract did not create a debt to be included in computing its total debt, with refer- ence to constitutional limitation. 148 PUBLIC SECUEITIBS provision in that state, and the decisions in Illinois have invariably followed the rule of strict construction in passing upon the question involved in this section. §78. Indebtedness; payment from special sources or a special fund. Many public corporations have engaged in the con- struction of works of local or internal improvement, the cost of which is to be paid from the proceeds of special taxes or assessments upon property benefited. The ob- jection has been made where bonds are issued as obliga- tions of a public corporation in payment of the cost of these improvements, that they are ' ' debts ' ' or constitute Beard v. City of Hopkinsville, 95 Ky. 239; Mayfield Woolen Mills V. City of Mayfield (Ky.), 60 S. W. 43; State ex rel KnoUman v. King (La.), 33 So. 7^6; Westminster Water Co. v. City of Westminster (Md.), 56 Atl. 990. Nilea Water Works v. Niles, 59 Mich. 311. A contract not author- ized by popular vote for the use of water hydrants for thirty years at a yearly rental creates liability to the full extent of the thirty years rent and this being in excess of the revenue for any one year, the con- tract is void. State v. City of Helena (Mont.), 63 Pac. 99; At- lantic City Water Works Co. v. Eeed (N. J.), 15 Atl. 10; Brockway V. City of Eoseburg (Ore.), 79 Pac. 335; but see, the later case of City of Joseph V. Joseph Water Works Co., Ill Pac. 864; Brown v. City of Corry, 175 Pa. 528; Keller v. City of Scranton, 200 Pa. 130. Earles v. Wells, 94 Wis. 285. The constitution of this state pro- vides that "No county, city or town, vUlage, school district or other municipal corporation shall be al- lowed to become indebted in any manner for any purpose, to an amount including existing indebted- ness in the aggregate exceeding five per centum on the value of the taxable property therein to be ascertained by the last assessment for Etate and county taxes previous to the incucring of such indebted- ness," that before "incurring such indebtedness ' ' such municipality must "provide for the collection of a direct annual tax sufficient to pay the interest on such debt as it falls due and also to pay and dis- charge the principal thereof within twenty years from the time of con- tracting the same." It requires the authority of no adjudication to prove that this constitutional lim- itation means just what it says and is absolutely binding, not only upon every such municipality and officers but also upon the legislature itself. See, also, Culbertson v. City of Ful- ton (111.), 18 N. E. 781. But see Burlington Water Works Co. V. Woodward, 49 la. 58, where POWEB TO INCUB INDBBTEDKESg, ETC. 149 an "indebtedness" within the meaning of constitutional limitations and therefore invalid. The courts have quite generally held that it is the form of the obligation which determines its character as a general liability or other- wise with the consequent result of establishing it as an "indebtedness" or a "debt," or the reverse. If the bonds or obligations in their form and recitals are not a general liability of the corporation but payable principal and interest from the proceeds of the special taxes or as- sessments levied upon benefited property, and if the hold- ers are limited in their recovery to such sums as can be collected from these special or local assessments, then the bond or othei; evidence of such indebtedness is not to be regarded as a general debt or charge against the municipality and should not be included within its in- debtedness in determining whether the constitutional limitation has been reached.^" If, however, the form of the court said: "The obligation of the city is to levy a tax and see that the amount collected is applied to the specified purposes. If the spe- cial fund legally provided is not sufficient, then it may be well said the deficiency is not payable by the city and it is difficult to conceive that there can be such a thing as a debt which is never to be paid. No burden is created thereby and there cannot be such an indebted- ness. In a constitutional sense, the prohibited indebtedness must be a burden and payable from funds which could not constitutionally be appropriated to that purpose. Whether the fund legally provided will be sufficient for the designated purpose, we have no means of know- ing. Nor is this regarded as mate- rial if no other charge is created on the city by the ordinance. ' ' See, also, Woodward v. City of Waynesville (Idaho), 92 Pac. 840, where it was held that a city could not evade the statutory limitation by voting bonds to provide a par- tial payment on a contract, making no provision for the balance due. 80 — United States v. Capdevielle, 118 Fed. 809; City of Mankato v. Barber Asphalt Paving Co., 142 I'ed. 329; Sandford v. City of Tucson (Ariz.), 71 Pac. 903; Broad v. City of Moscow (Idaho), 99 Pac. 101; Comm'rs of Highways v. Jackson, 165 111. 172, 61 111. App. 381; Board of Comm'rs of Jack- son Co. V. Branaman (Ind.), 82 N. B. 65; Smith v. Board of Comm'rs of Hamilton County (Ind.), 90 N. E. 881, reversing on rehearing 89 N. E. 867; Quill v. City of Indianapolis, 124 Ind. 292. City of ainton v. Walliker (la.), 68 N. W. 431. The court here say: "There ought to be no question 150 PUBLIC SECUEITIES the bonds or evidences of indebtedness is of a general character or nature or does not limit the holder in his ultimate right of recovery to such, special assessments or taxes, then they will be considered as obligations or in- debtedness of the city to be included within its total or aggregate debt.*^ that the district improvement bonds are payable from the special assess- ment made against the owners of abutting property, and in no other manner. We will not set out a copy of these bonds. They plainly pro- vide for payment to be made from the special assessments and they are not general bonds against the city. This court held years ago that where a contractor for a serviee accepted certificates of assessments made upon adjacent property in full satisfaction of his work, such cer- tificates did not create a debt against the city within the meaning of the article of the constitution, limiting the lawful indebtedness of a city to five per cent of the value of its taxable property." Corey v. City of Fort Dodge (la.), Ill N. W." 6; City of Catlettsburg v. Self (Ky.), 74 S. W. 1064; Adams v.. City of Ashland (Ky.), 80 S. W. 1105; Guilfoyles' Exe'r v. City of Maysville (Ky.), 112 S. W. 666; Huoma Lighting & lee Mfg. Co. v. Town of Huoma (La.), 53 So. 970; Kelly V. City of Minneapolis, 63 Minn. 125; Johnson v. Board of Comm 'rs of Norman County (Minn.), 101 N. W. 180; Kansas City V. Ward, 134 Mo. 172, 35 S. W. 600; Atkinson v. City of Great Falls, 16 Mont. 372; Vallelly v. Board of Park Comm'rs, etc., of Grand Forks (N. D.), Ill N. W. 615; Brockenbrough v. Board of Water Comm'rs, etc. (N. C), 46 S. B. 28; Addyston Pipe & Steel Co. V. City of Corey, 197 Pa. 41; City of Houston v. Stewart (Tex.), 87 S. W. 663; Winston v. aty of Spokane, 12 Wash. 524; Faulkner V. City of Seattle (Wash.), 53 Pac. 365; State v. Sup. Ct. of Whatcom County (Wash.), 85 Pac. 256. See, also, Abbott Munic. Corp., See. 152; note 278 and cases cited, and Sec. 77, ante, on executory contracts. But see City of Ottumwa v. City Water Supply Co., 119 Fed. 315, 120 Fed. 309; McGilvery v. City of Lewiston (Ida.), 90 Pac. 348. 81— United States v. Port Scott, 99 U. S. 152; Kimball v. Grant County Comm'rs, 21 Fed. 145. Burlington Savings Bank v. City of Clinton, 111 Fed. 439. Bonds issued for street improvements. Lobdell V. City of Chicago, 227 111. 218, 81 N. B. 354. Street raU- way certificates issued under "Muel- ler Act" so-called in case of de- fault would be chargeable on the property of the city and not upon that of individuals and the prin- ciple involved in special assessments, the warrants for wMch do not con- stitute an indebtedness of the city within the meaning of the constitu- tional limitation, therefore does not apply. City of Logansport v. Jordan (Ind.), 85 N. E. 959; Allen V. City of Davenport (la.), 77 N. W. 532; Windsor v. City of Des Moines, 110 la. 176, 81 N. W. 476; Helena Water Works Co. v. City of POWEE TO INCXTB INDEBTEDNESS, ETC. 151 Other schemes devised have been to issue securities the interest and principal payable from the rentals, or the net income of specific property or to make the equiva- lent of a contract of purchase in the form of a lease, the contract obligations being met by the levy of special taxes or charges. These devices have often been used in the construction of plants for the purpose of supplying a municipality and its inhabitants with water, light, or a system of sewerage, the municipality being already in- debted to the constitutional limit. They have been, al- most without exception, held illegal as being what they are as a matter of fact, a scheme for evading a constitu- tional limitation.^^ Helena (Mont.), 70 Pac. 513; Levy V. McClellan, 89 N. B. 569 (N. Y.) ; Winston v. City of Spokane, 12 Wash. 524, 41 Pac. 888; Fowler v. City of Superior, 85 Wis. 411. 82— City of Ottumwa v. City Wa- ter Supply Co., 119 Fed. 315, 120 Fed. 309; Hagan v. Comm'rs of Limestone Co. (Ala.), 49 So. 417; Doland v. Clark, 143 Calif. 170, 76 Pac. 958; Baltimore, etc. Ky. Co. V. People, 200 111. 541, 66 N. E. 148; Village of East Moline v. Pope, 224 111. 386, 79 N. E. 587. Sohnell v. City of Eoek Island, 232 111. 89, 83 N. B. 462. A city ordinance providing for the exten- sion of existing water works through the issuance of certificates payable out of a water fund created by the ordinance from the proceeds of water rents and out of special taxes which might be equally levied and available for that purpose is void as authorizing an indebtedness in excess of constitutional limit. Voss V. Waterloo Water Co. (Ind.), 71 N. E. 208; Scott v. La Porte, 162 Ind. 34, 68 N. E. 278, 69 N. E. 6i75; Hall V. Cedar Rapids, 115 la. 199, 88 N. W. 448; Eeynolds v. City of Waterville, 92 Me. 292. Eaton V. Mimnaugh (Ore.), 73 Pac. 754. Construction of court house. Brix V. Clatsop County (Ore.), 80 Pac. 650. Construction of court house. Melloe v. Pittsburg, 201 Pa. St. .397, 53 Atl. 1011. McKinnon v. Mertz, 225 Pa. 85, 73 Atl. 1011. Construction of sehoolhouse; Savage v. City of Tacoma (Wash.), 112 Pac. 78; Spillman v. City of Parkersburg, 35 W. Va. 605, 14 S. E. 279. But see Evans v. Holman, 244 111. 596, 91 N. E. 723, which holds that a municipality does not create an indebtedness by obtaining prop- erty to be paid for wholly out of the income thereof though this case in other respects is in accordance with the principle stated in the text. Putnam v. City of Grand Eapids, 58 Mich. 416, 25 N. W. 330 and Kuhn V. Common Council, City of Detroit, 129 N. W. 879, where it is held that under Constitution, Amendment, 1908, Art. 8, Sees. 23 152 PUBLIC SECUEITIES In deciding the Iowa case,^* opinion by Judge Lochren, referred to above, where the indebtedness sought to be incurred involved a plan similar to that suggested, the court said, and its reasoning is so sound that it is quoted here in full: "Appellant's contention amounts to this, that notwithstanding the constitutional limitation re- ferred to, and that the city, being already indebted be- yond its limit, has no power, even with the legislative sanction, to incur any new indebtedness to the amount of a single dollar, it may nevertheless borrow money to the extent of $400,000, issuing its negotiable bonds therefor with interest, contracting to pay the same at specified dates, and that this will not create any indebtedness, if it shall at the same levy taxes to be collected annually from the taxable property of the city for a long term of years, or indefinitely till the sum borrowed is paid therefrom, and provide that the bonds shall only be paid and 24, which authorizes any city to acquire, own or operate public utilities and to issue mortgage bonds therefor beyond the general limit of bonded indebtedness, pro- vided such bonds shall not impose any liability on the city, bonds is- sued beyond the debt limit and which are secured only by the prop- erty and revenue of the public utili- ties do not come within Constitution, Art. 8, See. 20 restricting the pow- ers of municipalities to contract debts. State ex rel. Smith v. City of Neosha (Mo.), 101 S. W. 99; Brokenbrough v. Board of Water Comm'rs^ etc. (N. C), 46 S. E. 28; Winston v. City of Spokane, 12 Wash. 524, 41 Pac. 888. Dean v. City of Walla Walla (Wash.), 92 Pac. 895. City bonds issued for the purchase of water works and payable out of the gen- eral fund under the constitution are not included in the general indebted- ness but constitute a portion of the five per cent additional indebted- ness allowed for water, light and sewer purposes; see, also as passing upon the same question, Griffin v. City of Tacoma (Wash.), 95 Pac. 1107. 83— City of Ottumwa v. City Water Supply Co. (C. C. A.), 119 Fed. 315. But see, Swanson v. City of Ot- tumwa, 118 la. 161, 91 N. W. 1048, where the Supreme Court of the State of Iowa in sustaining the validity of the scheme held void in the Federal decision above noted, based its opinion largely upon the reason that where a special fund is created or special and future revenues are assigned to creditors without recourse against the city, no debt is created within the mean- ing of the constitutional limitation. POWER TO INCUB INDEBTEDNESS, ETC. 153 from the taxes so specially levied. If this may be done to build waterworks, the city may go on and in the same way borrow and issue its bonds for an equal amount to build public buildings, and for another equal amount to construct a system of sewers, and for another equal amount to construct modem school houses, and an un- limited amount as bonus to some railroad, taking care in each case to levy once for all a sufficient annual tax to meet the maturing bonds ; and though the property of the taxpayers may be thus practically confiscated, by being loaded down with taxes beyond any income which the property can produce and for periods beyond any ex- pectation of life which the taxpayers can indulge in, still those taxpayers while groaning under such special levies, fixed upon them and extending hopelessly into the fu- ture, will have the happiness and satisfaction of knowing that they live in a city which has no municipal indebted- ness large enough to cause uneasiness. "The fact that these proposed bonds are to bear in- terest at 4% per cent cannot be overlooked. Why should the city pay interest, — that constant, distinguishing, most irksome and disagreeable feature of indebtedness, — upon money which it does not owe; money which be- longed to it before it was received; being only its own fixed revenues, gotten hold of for present use, a little in advance, by 'anticipation,' and in no wise incurring in- debtedness?" In the Maine case already cited,** a city hall commis- sion was created and authorized to issue bonds for the construction of a city hall, the building to be leased to the city, the surplus of rentals as paid by the city, over ex- penses and interest to be paid into a sinking fund for the payment of bonds. A conveyance of the property was to be made upon the final payment of the indebtedness upon 84 — ^Eeynolds t. City of Water- ville, 92 Me. 492, 42 Atl. 553. 154 PUBLIC Secubities the building. An injunction was granted restraining the execution of the scheme and the supreme court of the state said in the course of its opinion: "But under the guise of the principle thus stated, a municipality should not be allowed to pass off, as an agreement for renting a hall, an agreement which is not really entered into strictly for such purpose. And we feel that the transaction here in question must be repudiated upon that ground. The transaction has in some respects the semblance of a lease, but it is a misnomer to call it such. It is attempted to make it one thing in form, while in reality it is some- thing else. It is apparent enough that the city is to have not merely the use of the building to be erected. Taut the building itself. It is not to get an annual service to be paid for out of annual revenues, but the city is to acquire a city hall presently, to be paid far by .assessments of taxes for the long period of thirty years. It is a pur- chase. It would not be a misinterpretation to say that the city of Waterville, instead of leasing the property, undertakes to pay for it on the installment plan, and that what are called rentals for the hall are merely partial payments on its cost." §79. Net or gross debt. In determining whether a constitutional or statutory limitation in respect to the incurring of indebtedness has been reached, the question has often arisen in respect to whether the words of limitation mean the gross debt of the public corporation or its gross debt less certain de- ductable items or, in other words, its net debt. The courts have usually held that uncollected taxes and a current levy if actually made and in the process of col- lection should be deducted from the outstanding gross debt for the purpose of ascertaining the actual indebted- ness.^" 85— Soule V. McKibben, 6 Calif. 102 N. Y. 213; Brooke v. City of 142; Bank for Savings v. Grace, Philadelphia, 162 Pa. 123; Mc- POWEE TO INCITE INDEBTEDNESS, ETC. 155 Deduction of Other Assets. The cash assets of the public corporation and its resources readily convertible into cash should also be deducted from outstanding in- debtedness and also all funds or securities held in its sinking fund, if any.^'' The assets which can be deducted must, however, be those applicable to the payment of indebtedness or if uncollected revenues only those where the charge is definite and certain can be incliided.^^ The rule applying to the deduction of sinking fund as- sets is well-stated in a Minnesota case,*^ where it was held that the amount of money and bonds in the sinking fund of Minneapolis was to be deducted from the total amount of outstanding bonds of the city in determining whether the indebtedness of the municipality had reached the con- Cavick V. Independent School Dis- trict of Florence (S. D.), 127 N. W. 4(76; State v. Hopkins, 13 Wash. 5; Graham v. City of Spokane, 53 Pac. 714; City of Eau Claire v. Bau Claire Water Co. (Wis.), 119 N. W. 555; Bach v. Beach (Wis.), 95 N. W. 132. 86— Stone v. Chicago, 207 111. 492, 69 N. E. 970. Gold V. City of Peoria, 65 111. App. 602. The assumption by a private corporation of bonds on a water plant does not extinguish the debt as a liability against the city so as to reduce the total amount of its in- debtedness. Kronsbein v. City of Eocbester, 78 N. Y. S. 813. Levy V. McClellan, 89 N. E. 569. City bonds held in sinking funds are not debts within Const. Art. 8 Sec. 10 and in determining the in- debtedness of a city under that article and section there should be deducted cash in the sinking funds, bonds payable°" (N- C), 61 S. E. 599. Brumby v. City of Marietta Claybrook v. Com'rs of Eocking- crumoy v y County, 117 N. C. 456, 23 S. (Ga.), 64 S. E. 221. Where irregu- i^ ' '' " ,j, i E. 360. The registration list is larities in registration would not ^^.^^ ^^^.^ ^^.^^^^^ ^^ ^^^ ^^^ affect the result, the bonds author- ^^^^^^g^ ^^^^^ ized must be validated. ll_Board of Education of City Coggeshall V. City of Des Moines, „f Atchison v. De Kay, 148 U. S. 117 N. W. 309 Code, Sec. 1131. 591 . g^^^ ^ city of Arkansas Exempting a woman from registra- city, 61 Fed. 478; Portsmouth Sav- tion not contrary to Const. Art. 1, jngs Bank v. Village of Ashley, 91 Sec. 6, which provides that privi- Mich. 670; Brown v. Bon Homme leges or immunities shall not be County (S. D.), 46 N. W. 173. POWER TO ISSUE NEGOTIABLE SECUEITIES 299 qualification of voters ; the canvass of the returns and the declaration of the result.^ ^ While mere irregularities and informalities, the courts have sometimes held, will not affect the result where there has been a substantial compliance with the law yet since the exercise of the power to incur indebtedness or issue negotiable securities is one which places a burden and in many cases a substantial one on the taxpayer, a failure to follow constitutional or statutory provisions conferring the authority usually raises a serious ques- tion in respect to the validity of the action.^* § 137. Authority conferred by ordinance. It is customary to confer upon municipalities the pow- er to incur indebtedness or to issue securities by the af- firmative action of its municipal council through the passage of an ordinance which is the usual method for legislative action by these bodies.^* 12 — People V. Florville, 207 111. the submission to the qualified vot- 79, 69 N. E. 623. An ordinance era of the questions of funding and after having been sanctioned by the order directing the issue of the vote cannot be subsequently amend- bonds shall be by ordinance. But ed vrithout further action by the an examination of th6 whole stat- people. Blaine v. City of Seattle ute concerning towns and cities (Wash.), 114 Pac. 164; see, also, has satisfied my mind beyond a Sec. 122 et seq., ante. doubt, that it was in the coutempla- 13 — ^Swan v. City of Arkansas, tion of the law makers, and is a 61 Fed. 478; National Bank of necessary deduction from the tenor Commerce v. Town of Granada, 54 of the whole act that wherever the Fed. 100 C. 0. A.; Force v. Town governing body of such municipali- of Batavia, 61 111. 99; Town of ties is empowered to create a debt Middleport v. Aetna Life Insurance on the whole constituency, or to Company, 82 111. 562; Harmon v. take action looking to the issue of Auditor of Public Accounts, 123 municipal bonds it should proceed 111. 122, 13 N. E. 161. in the more formal and solemn 14 — National Bank of Commerce mode of an ordinance. Irwin v. ^, Town of Granada, 44 Fed 262. Lowe, 89 Ind. 540; Bills v. City of It is true that section 3419 of the Goshen, 117 Ind. 221; Newman v. Colorado Statute which provides Emporia, 32 Kan. 456; Eanney v. for the funding of the debts of Baeder, 50 Mo. 600; Linn v. City towns does not in terms say that of Omaha (Nebr.), 107 N. W. 983; 300 PUBLIC SECURITIES An ordinance is a "local law prescribing a general and permanent rule of conduct." It is a local law of a "mu- nicipal corporation duly enacted by the proper authori- ties prescribing general, uniform and permanent rules of conduct relating to the corporate affairs of the mu- nicipality. ' ' 1^ The legislative body of a municipal corporation hav- ing the power to legislate for those within its jurdisdic- tion must necessarily act in the same manner under the same conditions and controlled by the same general prin- ciples of law and the special restrictions that may exist for its prototype, the legislative body of the state or na- tion. Its enactments are laws in all their essential char- acteristics but limited in operation only with respect to territory." These principles are unquestioned and it necessarily follows that legislative action of the character indicated to be valid must possess all of the characteristics of a general law. There are many constitutional and statu- tory provisions relative to the power to pass, the form, the mode of passage and the publication of general laws which must be complied with to establish their validity. These questions will be considered so far as applicable to the subject in hand in a later chapter relating to the validity of general legislation as affecting the power of public corporations to issue negotiable securities and in the same chapter the cases will be referred to which ap- ply especially to municipal ordinances when involving the subjects above referred to." Horton v. City of Greensboro (N. 16 — ^Pittsburg, etc. E. E. Co. v. C), 59 S. E. 1043; Hoffman v. City Hood, 94 Fed. 618; Murphy v. of Pittsburg, 229 Pa. 36, 78 Atl. 26. City of San Luis Obispo, 119 CaUf. 15— Citizens Gas & Mining Co. v. 624, 39 L. E. A. 444; State v. Try- Town of Elwood, 114 Ind. 332; on, 39 Conn. 183; State v. Clark, Mason v. City of Shawnee Town, 77 25 N. J. L. 34; Abbott Munic. 111. 533; McQuillin Municipal Or- Corps., Sec. 513. dinanoes; Abbott Municipal Corps., 17 — See Chapter XVI, post. Sees. 514, et seq. POWEB TO ISSUE NEGOTIABLE SECUEITIES 301 It is immaterial as to the method to be followed by a public corporation when that method is established by a grant of authority from the state. The law is well set- tled that a municipal corporation especially may declare its will as to matters within the scope of its corporate powers either by a resolution or an ordinance unless its charter requires it to act by ordinance and generally it is of little significance whether a legislative measure is couched in the language of an ordinance or of a resolu- tion where it is enacted with the same formalities which usually attend the adoption of ordinances.^* The point to be observed is that the method prescribed in order to confer authority must be strictly pursued. Constitutional, statutory, or charter provisions empow- ering a municipal corporation to issue negotiable securi- ties, establish the measure of the powers of the corpora- tion in this respect. Securities issued without such ac- tion or after action not taken in the manner prescribed by legal authority will not be regarded as valid and in many cases it has been held that the buyer of municipal securities is charged with the duty of ascertaining and with the knowledge of the manner in which the initial and subsequent proceedings have been taken. Legal ac- tion by the corporation is jurisdictional and forms a basis for all the subsequent steps and acts of public oflS- cials acting pursuant to it.** These principles apply to 18 — Board of Education of City Fed. 278 and following Dixon of Atchison v. De Kay, 148 V. S. County v. Field, 111 TJ. S. 83; 551; City of Alma v. Guaranty Hinckley v. City of Arkansas City, Savings Bank, 60 Fed. 203; Butler 69 Fed. 768 C. C. A.; McCoy V. .Passaic, 44 N.' J. L. 171; Sower v. Briant, 53 Calif. 247; Law v. V. Philadelphia, 35 Pa. St. 231; City and County of San Francisco, City of Tyler v. L. L. Jester & Co. 77 Pac. 1014. (Tei.), 74 S. W. 359; see, also, Ellinwood v. City of Eeedsburgh, Abbott's Munic. Corps., Sees. 514- 91 Wis. 131, 64 N. W. 885. The 517. plan for the construction of water- 19 — National Bank of Commerce works as presented in an ordinance V. Town of Granada, 54 Fed. 100 does not preclude the council from C. C. A., affirming 44 Fed. 262, 48 afterwards changing it, where this 302 PUBLIC SECURITIES many conditions relating to the form and passage of the ordinance or resolution as above stated and also to its necessity as a basis for the election ^° and further prelim- inary action may be required of municipal councils in respect to estimates of costs, declarations of necessity or other similar provisions.^' §138, Authority conferred by resolution. In many instances the public corporation, especially a municipality, acts with equal force by ordinance or by resolution, and while a resolution, ordinarily, is adopted with less formality and in a determination of its legal ef- fects, it is construed more strictly than where an ordin- ance is the method followed, yet bonds issued in pursu- ance of a resolution and not an ordinance should not be declared invalid unless the charter of the city contains unmistakable evidence that the council could not lawful- ly act otherwise than by an ordinance.^^ To state the rule more concisely, where under existing laws a municipality can act with equal force by either ordinance or resolution, bonds issued pursuant to either will be considered valid. If the authority to act is con- is within its discretion. See also Mich. 532, 60 N. W. 46. A declara- Secs. 248, et seq., post. tion of necessity is not a condition 20 — City of Tarkio v. Cook precedent to the issue of bonds by (Mo.), 25 S. W. 202; HershofE v. the city to pay its proportion of Beardsley, 45 N. J. L. 288; see the cost of a local improvement, cases cited under notes 16, 17 ante. 22 — Atchison Board of Education 21— Clark v. City of Los Angeles v. DeKay, 148 V. S. 591; Alma v. (Calif.), 116 Pac. 722; Eichardi Guaranty Savings Bank, 60 Fed. V. Village of Bellaire (Mich.), 116 203; City of lineoln v. Sun Vapor N. W. 1066; but see Com'rs of Street Light Co., 59 Fed. 756; Swan Parks, Boulevards, etc. v. Comp- v. Arkansas City, 61 Fed. 478; Eyan troUer of City of Detroit, 84 Mich. v. Mayor, etc. of Tuscaloosa (Ala.), 154, 47 N. W. 676. It is not 46 So. 638; Kline v. City of necessary that park and boulevard Streator, 78 111. App. 42; State v. bonds should be approved by the Babeock (Nebr.), 31 N. W. 8; City board of estimates before they can of Patterson v. Barnett, 46 N. J. L. be Issued. 62. Naegely v. City of Saginaw, 101 POWEE TO ISSUE NEGOTIABLE SECURITIES 303 ferred only upon the adoption of an ordinance, securities issued under and by virtue of a resolution unless other principles are applicable and operate as an estoppel will not be considered valid. § 139. What the ordinance or resolution should contain. Since the passage of the ordinance or resolution au- thorizing the issue of bonds is held to be jurisdictional, great care and particularity should be exercised in its drafting. It should be passed pursuant to authority duly given and in the manner provided. Since it is a law, it should contain within it the technical essentials of a law which have been held to include a title and enacting clause, the body or substance of the law, repealing clause, the operative clause and the proper and necessary sig- natures and approvals.'" In some cases it is held there should also be included a recital of the reasons for its passage. The provisions of the constitution or statutes conferring authority to is- sue the securities in question in respect to their purpose, denomination, maturity, time of payment and rate of in- terest if mandatory should be literally followed.^* 23 — Atkins v. Phillips, 26 Fla. induced to Vote for the bonds by 281. Defects in respect to form can- such statements. See Abbott 's not be remedied by a subsequent Munie. Corps., Sees. 522, et seq. motion. Bills v. City of Goshen, 24 — Knox County v. Ninth Na- 117 Ind. 221; Naegely v. City of tional Bank, 147 U. S. 91; Quaker Saginaw, 101 Mich. 532, 60 N. W. City Bank ». Nolan, 59 Fed. 660; 46; Elyria Gas & Water Co. v. Potter v. Lainhart (Fla.), 33 So. City of Elyria, 7 Ohio Dec. 527. 251 ; Hillsboro County v. Henderson Elliott V. City of Philadelphia, (Fla.), 33 So. 997; Mayor, etc. of 229 Pa. 215, 78 Atl. 107. It is Baltimore v. Ulman, 30 Atl. 43 sufScient if the ordinance sets out State v. Ziegler, 32 N. J. L. 262 the purpose or purposes for which Smith v. Gouldy, 58 N. J. L. 562 the debt is to be incurred. Coates v. New York, 7 Bow. 585 State V. Salt Lake City (Utah), Welker v. Potter, 18 Ohio State 85, 99 Pac. 255. Mere irregularities In respect to the effect of a mis- in the statements of an ordinance recital of authority in an ordinance do not render it invalid in the ab- upon the validity of the bonds, see eence of a showing that voters were Sec. 288, post. 304 PUBLIC SECUEITIES §140. Official action by officials or quasi-legislative bodies. In other instances and especially where public quasi corporations are involved, the power to initiate proceed- ings looking to an issue of public securities is vested by law in certain designated public oflBcials or in various quasi-legislative and administrative bodies: boards of education, park boards, county courts, boards of county commissioners, school district trustees, drainage trustees and other similar bodies are typical illustrations.^' The same rules apply in respect to action by these vari- ous official bodies which are applied to similar action by municipal councils and of the people when they are vested with the power to initiate proceedings by petition or otherwise. The initial steps prescribed by law are re- garded as jurisdictional and a failure to comply with them renders their subsequent action with its attendant results voidable if not entirely void.^^ 25— Goodson v. Dean (Ala.), 55 130 N. W. 287. A Board of Edu- So. 1010. cation may submit a proposition to Pollock V. City of San Diego issue school bonds by a two-thirds (Calif.), 50 Pac. 760 — Under San vote of its members without a peti- Diego charter the certificate of the tion from the electors. Christie v. auditor that the proposed liability Board of Chosen Freeholders of can be incurred without violating Bergen County (N. J.), 66 Atl. any of its provisions is necessary. 1073; Frick v. Mercer County (Pa.), Johnson v. Williams (Calif.), 95 21 Atl. 6; Alley v. Mayfleld (Tex.), Pac. 655; Akin v. Ordinary of Bar- 131 S. W. 295. ton County, 54 Ga. 59. 26 — Eondot v. Rogers Township, Brown v. Tinsley (Ky.), 21 S. 99 Fed. 202 C. C A. The failure W. 535. It is not necessary that of a township in Mississippi to pass a justice of the peace be associated a resolution directing the issue of with the county judge of a county bonds held not to render the bonds court when the order is made sub- invalid where it appears they are mitting the question, of subscrip- issued by direction of the town- tion to the capital stock of a rail- ship board. Wetumpka v. We- way company, to the voters of a tumpka Wharf Co. (Ala.), 73 Ala. county. See also Shorten v. Green 611. County (Ky.), 59 S. W. 522. Potter v. Lainhart (Fla.) 33 So. Kockrow V. Whisenand (Nebr.), 251. A resolution of the Board of POWER TO ISSUE NEGOTIABLE SECUEITIES 305 The cases, however, observe this distinction in con- nection with the various papers and records prepared and kept by them. It is commonly recognized that bodies of the character noted in this section as compared with municipal councils are less accustomed to legal proceed- ings and in many instances less qualified to prepare offi- cial resolutions and documents and therefore irregulari- ties and informalities in their proceedings are more liable to occur. For this reason the courts do not apply so frequently the rule of strict construction to their acts and proceed- ings and securities which might otherwise be regarded as void, the validity of them will be sustained. Their power in a given instance must be determined from an inspection of the legal authority under which they assume to act. The principle already stated equally applies to such officials as to all public officers that they are agents of the public corporation they represent hav- ing only a special and limited power and authority, their County Commissioners relative to authorizing the borrowing of money, the issue of bonds if it otherwise Berkeley v. Board of Education complies with the law is not in- (Ky.), 68 S. W. 506. valid though the minutes of the Board of Com'rs, etc., Drain- board do not recite that the resolu- age District v. Baker- (La.), 50 So. tion was seconded and formally 16. Irregularities in the call for voted upon by the board. Hillsboro an election upon a bond issue may County V. Henderson (Pla.), 33 So. be cured by a second election prop- 997; Hogan v. State (Ga.), 67 S. erly held. B. 268; Gem Irrigation District v. Wilson v. Borough of Collins- Johnson (Ida.), 115 Pac. 924; wood (N. J.), 80 Atl. 335, afSrm- Poree f. Town of Batavia, 61 111. ing 77 Atl. 1033. A borough must 99; State v. Board of Com'rs of first obtain the approval of the Newton County (Ind.), 74 N. E. state board of health and the state 1091. water supply commission under P. First National Bank v. Van L. 1909, p. 457, Sec. 3 and P. L. Buren School Trustees (Ind.), 93 1910, p. 551, before it can hold an N. E. 863. Construing the term election to authorize the construc- " emergency" as used in Burns' tion of water works and the issu- Annotated Stats. 1908, Sec. 9595, ance of bonds. p. S.— 20 306 PUBLIC SECXJKITIES acts must be within the terms of that power as expressly given and strictly and literally construed and applied.^^ Action by them must be had at meetings held pursuant to lawful authority and in their official and represent- ative capacity.^® 27 — St. Louis, etc. Ry. Co. v. Peo- ple, 200 111. 365, 65 N. E. 715; Lincoln School Township v. Union Trust Co. (Ind.), 73 N. E. 623; see Sees. 52 and 65, et seq., ante. 28 — Shoshone County v. B. H. Eollius & Sons (Ida.), 82 Pac. 105. Township Board of Education v. Carolan, 182 111. 119, 55 N. E. 58, reversing 81 111. App. 359. Where a regular meeting has been pre- viously provided for no special no- tice to the members of the Board of Education of that meeting is necessary. Advisory Board of Coal Creek Township v. Levandowski (Ind.), 84 N. E. 346; State ' v. Board of Com'rs of Marion (Ind.), 85 N. E. 513. CHAPTER V. TAXATION § 141. Definition and nature. The power of taxation is one of the inherent attributes of sovereignty. It is that power, political and govern- mental in its nature, which can compel, if and when neces- sary, a contribution for the support of the government from those within its jurisdiction. Theoretically, it has no limit. It is that power most necessary to the existence and maintenance of government and the exercise of the various functions which are universally recognized as proper. It is through the exercise of this power by the state that its ordinary expenses are paid, and, in addition, it is enabled to maintain the various beneficent agencies having for their purposes the safety, advancement and the advantage of society. Under some theories the indi- vidual is supposed, in return for a surrender to govem- meat of the right to tax his person and property, to receive the obligation of that government to protect him in the proper use and enjoyment of his property and to ' guard his personal rights, but ordinarily the power of taxation is a governmental and political necessity and there is no legal obligation to render a return.^ Judge 1 — Pine Grove Township v. Tal- v. Madere (La.), 50 So. 609; In re cott, 19 Wall. 66; New Orleans v. Opinion of the Justices (Mass.), 84 Clark, 95 XJ. S. 644; County of N. E. 499; Eolph v. City of Fargo, Mobile V. Kimball, 102 V. S. 691; 7 N. D. 640, 76 N. W. 242, 42 L. Preston v. Sturgis Milling Co., 183 R A. 646; Hanson v. Franklin (N. Fed. 1; Smith v. Stevens (Ind.), D.), 123 N. W. 386; Yamhill County 91 N. E. 167; Lucas v. Purdy (la.), v. Foster (Ore.), 99 Pac. 286; Salt 1-20 N. W. 1063; La. By. & Nav. Co., Lake City v. Christensen Co. (Utah), 307 308 PUBLIC SECURITIES Cooley in his work on Taxation ^ has given an excellent statement of the first theory: "The justification of the demand is therefore found in the reciprocal duties of pro- tection and support between the state and those who are subject to its authority, and the exclusive sovereignty and jurisdiction of the state over all persons and property within its limits for governmental purposes. The person upon whom the demand is made, or whose property is taken, owes to the state a duty to do what shall be his just proportion towards the support of government, and the state is supposed to make adequate and full compen- sation, in the protection which it gives to his life, liberty and property, and in the increase to the value of his possessions, by the use to which the money contributed is applied. ' ' However pacifying to the taxpayer this rule may seem, it remains none the less a fact that the power to tax in its very nature acknowledges no limitations and may be carried, subject to constitutional restrictions only, even to the extent of exhaustion and destruction. If the power is abused or threatened with abuse, relief and security can only be found in the responsibility of the legislative body that imposes the tax to the constitu- ency which must pay it.^ 95 Pac. 523 J State v. Clement Na- ing the river, bay and harbor of tional Bank (Vt.), 78 Atl. 944. Mobile is harsh and oppressive, and Myers v. Commonwealth (Va.), that it would have been more just 66 S. B. 824. Power of taxation to the people of the county if the an attribute of sovereignity and its legislature had apportioned the ex- exercise is vested exclusively in the penses of the improvement, which legislative department. Courts will was to benefit the whole State, not interfere on the ground of in- among all its counties. But this expediency. court is not the harbor, in which the 2 — Cooley on Taxation, Second people of a city or county can find Ed., pp. 1 and 2; Chicago & N. W. a refuge from ill-advised, unequal Ey. Co. V. State (Wis.), 108 N. W. and oppressive State legislation. 557. The judicial power of the Federal 3 — County of Mobile v. Kimball, government can only be invoked 102 V. S. 691. It may be that the when some right under the Consti- aet in imposing upon the county of tution, laws, or treaties, of the Mobile the entire burden of improv- United States is invaded. In aU TAXATION 309 The power of taxation, therefore, being a governmental and political one in the abstract sense as already stated, is without limitation and can be exercised without restric- tions. In this country there are well established and clearly defined limitations upon the right of the sovereign state to levy taxes. These limitations and restrictions are to be found in the constitution of the United States and those of the different states ; various statutory enact- ments passed pursuant to constitutional authority and in what might be termed for want of a better phrase some fundamental principles of equity.* The power of a sovereign to delegate to subordinate bodies or agencies its powers of taxation is unquestioned though such grant conveys no unlimited or irrevocable rights. The liniitations upon the power usually applied by the courts have for their purpose the imposition of taxes in a uniform, orderly and impartial way, both as to the subjects and methods of taxation and the enforce- ment of the power.^ It is not a discretionary power when other cases, the only remedy for the Junkin (Nebr.), 123 N. W. 1055; evils complained of rests with the Anderson v. Eitterbuseh (Okla.), people, and must be obtained 98 Pac. 1002; In re McKenan's through a change of their represen- Estate (S. D.), 126 N. W. 611; tatives. They must select agents State v. Eldridge (Utah), 76 Pae. who will correct the injurious leg 337; Chicago & N. W. Ky. Co. v. islation, so far as that is prae- State (Wis.), 108 N. W. 557. tieable and be more mindful than 4 — Pine Grove Township v. Tal- their predecessors of the public in- cott, 19 Wall. 66; New Orleans v. terests. Louisiana v. Pilsbury, 105 Clark, 95 U. S. 644; Davidson v. TJ. S. 278; Marion County v. Coler, New Orleans, 96 U. S. 97; See also 67 Fed. C. C. A.; Harders Fire cases cited under Note 3, this see- Proof Storage & Van Co. v. City tion. of Chicago, 235 111. 58, 85 N. E. 5— Citizens' Savings & Loan 245; State v. Board of Com'rs of Association v. City of Topeka, 20 Marion County (Ind.), 82 N. E. Wall. 655; W. C. Peacock & Co. v. 482; Judy v. Beckwith (la.), 114 Pratt, 121 Fed. 772; Eisley v. City N. W. 565; Wolf County v. Beckitt of Utica, 173 Fed. 502, 179 Fed. (Ky.), 105 S. W. 447; Succession 875; Stein v. City of Mobile, 24 of Levy, 39 So. 37; Billings Sugar Ala. 591; Vance v. City of Little Co. V. Fish (Mont.), 106 Pae. 565; Eock, 30 Ark. 435; Livingston Mercantile Incorporating Co. v. County Sup'rs v. Welder, 64 lU. 310 PUBLIC SECUEmES once granted and its exercise for legitimate purposes can be compelled by those who would suffer from a failure or neglect to tax.^ It is a continuing power, the exercise or non-use of which does not defeat the right to tax whenever necessary subject to legal limitations. To be legally exercised by a delegated agency of the sovereign, it must be expressly granted and further is one of a limited and restricted nature. Provisions granting it cannot be extended or enlarged by implication beyond the clear import of the language used in the granting clause.^ Where the authority to tax does not exist no court has the power to issue process compelling its exer- cise.* 427; State v. Owsley, 122 Mo. 68; State V. Mason, 153 Mo. 23. Jones V. Com'rs of Stokea Cbunty (N. C), 55 "S. E. 427. An act pro- viding that county taxes derived from railroad property situated within that county which has is- sued bonds in aid thereof shall be used exclusively by said county in payment of said obligations is eonstitutional. Appeal of Duraeh, 62 iPa. 491; East Tenilessee Uni- versity V. City of Knoxville, 65 Tenn. 166; Batfes v. Bassett, 60 Vt. 530;' Peters v. City of Lynchburg, 76 Va.. 927; Gasaway y. City of Seattle (Wash.), 100 Pac. 991; see also cases cited Abbott Munic. Corp.-, notes 5 and 6, pp. 672, et seq. 6 — Meriwether v. Muhlenburg County Court, 120 U. S. 354; May- field Woolen Mills v. City of May- field, 111 Ky. 172, 61 S. W. 43; State v. City of Great FaUs, 19 Mont. 518, 49 Pac. 15; State v. City of Cincinnati, 19 Ohio 178; see also Sees. 358, et seq., post. 7 — ^Gamble v. Erdrich Bros. Marx (Ala.), 39 So. 297; People v. Opel (111.), 91 N. E. 458; Meiropalis Theatre Co. v. City of Chicago, 246 111. 20, 92 N. E. 597; People v. Me- Elroy, 248 111. 574, 94 N. E. 81; School County of Marion v. Forrest (Ind.), 78 N. E. 187; Smith v. Board of Com'rs of Hamilton County (Ind.), 90 N. B. 881; Ger- inan Washington Fire Association V. City of Louisville (Ky.), 80 S. W. 154; Adams v. Duoate (Miss.), 38 So. 497; Jersey City v. North Jersey City Street Ey. Co. (N. J.), 73 Atl. 609; Ex parte Unger (OWa.), 98 Pac. 999; State v. Brax- ton County Court (W. Va.), 55 S. E. 382; but see State v. City of Bristol (Tenn.), 70 S. W. 1031. 8— nVance v. City of little Eock, 30 Ark. 435; see Sees. 358 et seq. and 420, et aeq., post. TAXATION 311 §142. Municipal power to tax; how limited. The legislature in delegating it should provide for its exercise in an equal and uniform manner. The power of taxation in a municipal corporation as a rule is not general in its nature. Municipal or subordinate corpora- tions are local agencies of the government operating within a limited and definite locality, the municipal power to tax, therefore, is restricted to community or local pur- poses.® General taxes cannot be levied therefore by one for the support either of the nation, the state or of com- munities of an equal or an inferior grade to itself. On the contrary it is quite generally held that for purely local or municipal uses the legislature cannot require a subordinate corporation to levy taxes. This principle has been applied to acts attempting to compel municipal authorities to issue bonds for the cost of acquiring and maintaining public parks." 9— United States v. City of New Orleans, 98 IT. S. 381. The posi- tion that the power of taxation be- longs exclusively to the legislative branch of the government no one will controvert. Under our system it is lodged nowhere else. But it is a power that may be delegated by the legislature to municipal cor- porations, which are merely instru- mentalities of the state for the bet- ter administration of the govern- msnt in matters of local concern. Southern E. E. Co. v. St. Clair County, 124 Ala. 491; Nevada Na- tional Bank v. Board of Sup'rs of Kern County (Calif.), 191 Pac. 122; Board of Com'rs, etc. v. Board of Pilot Com'rs, etc. (Pla.), 42 So. 697; Wells v. City of Savannah, 107 Ga. 1; Clark v. City of Davenport, 14 la. 494; McDonald v. City of Louisville, 113 Ky. 425, 68 S. W. 413; Merrick v. Inhabitants of Am- herst, 94 Mass. 500; Turner v. City of Harrisburg (Miss.), 53 So. 681; Penrose v. Ventnor City (N. J.), 77 Atl. 1061. Yamhill County v. Foster (Ore.), 99 Pac. 286. A county may be re- quired by law to apply all or part of its funds to any legitimate pub- lic purpose so long as it does not conflict with some "constitutional provision." Hope v. Deaderick, 27 Tenn. 1. 10 — Sutter County v. Nicols (Calif.), 93 Pac. 872; People v. City of Chicago, 51 111. 17; Living- ston V. Weider, 53 111. 302. State V. Edwards (Mont.), Ill Pac. 734. The object of Const. Art. 12, Sec. 4, prohibiting the Legisla- ture from levying taxes for munic- ipal purposes, but authorizing the Legislature to vest by law in cor- porate authorities of cities the power to assess and collect taxes 312 PtTBLIO SECtTEITIES In Illinois and Michigan, this principle has been em- phasized in several decisions. In People v. Chicago, already cited, the court said in part: "While it is con- ceded that municipal corporations, which exist only for public purposes, are subject at all times to the control of the legislature creating them, and have, in their fran- chises, no vested right, and whose powers and privileges the creating power may alter, modify or abolish at pleas- ure, as they are but parts of the machinery employed to carry on the affairs of the state, over which, and their rights and effects, the state may exercise a general super- intendence and control, we are not of opinion that power, such as it is can be so used as to compel any one of our many cities to issue its bonds against its will, to erect a park or for any other improvement — to force it to create a debt of millions, — in effect, to compel every property owner in the city to give his bond to pay a debt thus forced upon the city. It will hardly be contended that the legislature can compel a holder of property in Chi- cago to execute his individual bond as security for the pajTnent of a debt so ordered to be contracted. A city is made up of individuals owning the property within its limits, the lots and blocks which compose it and the struc- tures which adorn them. What would be the universal judgment should the legislature, sua sponte, project mag- nific^it and costly structures within one of our cities — triumphal arches, splendid columns, and perpetual foun- tains and require in the act creating them, that every owner of property within the city limits should give Eis individual obligation for his proportion of the cost and for such purposes, is to secure to only the inhabitants of the partio- the people of the municipalities the ular city but permitting the Legis- measure of local self-government lature to coerce a city in the per- which they enjoyed at the time of formance of a public duty in which the adoption of the Constitution, the people of the state have with and to preserve the theory of local the people of the city a common self-government in matters of purely interest. State v. Nelson, 105 Wis. private concern primarily affecting 111. TAXATION 313 impose sucli costs as a lien upon his property forever? What would be the public judgment of such an act and wherein would it differ from the act under considera- tion?" In Michigan, court decisions have been equally em- phatic.i^ §143. Limitations upon the power. In addition to the general limitations upon the power to tax as suggested in the preceding section, there will be found special limitations based upon specific grounds relating either to the amount raised or its purpose. Con- stitutional limitations of whatever nature as affecting the power of taxation cannot be overridden by a legis- lative body or public officials in whom the power is vested of levying and collecting taxes.^^ In this country it is the desire of the individual that the exercise of the power shall not result in a confiscation of private prop- erty. As a measure of precaution and to secure this end the amount of taxation which can be levied either by the government itself or any of its subordinate agencies upon property within their jurisdiction for a stated period of time is generally fixed by constitutional or 11 — People V. Common Council of sion of the question to the voters." Detroit, 28 Mich. 228. See also Sec. 32, ante. Blades v. Water Com'rs of De- 12 — United States v. County of troit, 122 Mich. 366, 81 N. W. 271. Macon, 99 IT. S. 582; County of m, t • -i ... ., .„ Moultrie v. Fairfield, 105 U. S. 370; The court m its opinion m this ' ' i -J (tJBLlC SECUBlTIES certificate of the completion of a railroad upon which is to be based an issue of bonds where the town- ship had no power to extend the aid. Morris v. William, 23 Wash. 459, 63 Pac. 236. But see State v. Com'rs of An- derson County, 28 Kan. 673. Man- damus will not lie to compel county com'rs to call an election when proceedings are pending for the di- vision of the township, also Chalk V. White, 4 Wash. 156, 29 Pae. 979. Mandamus will not lie to compel the mayor to sign bonds in excess of the amount of indebted- ness which the city can lawfully incur. But see State v. Harris, 92 Mo. 29, following State v. City of Mor- ristown, 24 S. W. 13; Echols v. City of Bristol, 17 S. E. 943. CHAPTER VII FORMALITIES REQUIRED FOR ISSUE OF NEGOTIABLE SECURITIES §164. "Issue" explained and defined. Constitutional or statutory authority conferring the power upon public corporations to issue negotiable se- curities may prescribe conditions and limitations, com- pliance with and observance of which will be necessary in order that the power conferred may be exercised. This may also provide certain formalities to be followed in connection with the manual and mechanical part of or connected with the actual execution and delivery of the securities when the power has been created by proceed- ing in conformity to the conditions required. The various conditions and limitations have been or will be noted and discussed from time to time and in this chapter will be considered some of the mechanical or manual formalities required by law or to be observed under the general principles relating to an issue of nego- tiable securities.^ Securities cannot be issued in the technical sense of the word without the existence of authority conferred by law and the creation of that power in a particular in- stance by the performance of conditions required. The manual and mechanical execution of bonds in the absence of power to issue cannot make them valid.^ 1 — County of Kails v. Douglas, stamped under the provisions of the 105 U. S. 728. County bonds and internal revenue laws of the United coupons issued in 1870-71 admis- States in force at that time. Bible as evidence in an action to 2— Bergen County Freeholders v. recover on them although not Merchants Exchange Bank, 21 343 344 PUBLIC SECUBITIES The conditions required by statutory or constitutional provisions may include the performance of official acts by certain designated public authorities and the rule fol- lows that negotiable securities cannot be "issued" in case of a failure to perform the act required or where it is done by an ofScer of a public corporation not charged by law with the performance of that duty.^ Illustrating these principles it held that municipal bonds are not legally issued unless they have been duly registered under the laws of Missouri in the office of the State Auditor.* They cannot be issued in excess of a constitutional limitation of indebtedness though no debt is created un- til the bonds are technically issued and where the debt at the time of the vote conferring the authority if the bonds had been issued would have been increased to beyond such a limitation but is subsequently reduced, bonds then Blatchf. C. C. 13. Bonds issued by a county collector after his term of office had expired held to be forgeries and unenforoible. Eisley V. Village of Howell, 57 Fed. 544. Potter V. Lainhart (Pla.), 33 So. 251. Bonds cannot be issued for any other purpose than that author- ized. See, also, as holding the same, the cases of Callaghan v. Town of Alexandria, 52 La. Ann. 1013, 27 So. 540 and Applegate V. Board of Education of Cranberry Township (N. J.), 33 Atl. 923. Wilson V. City of Shreveport, 29 La. Ann. 673. A negotiable form does not impart validity in the ab- sence of power to issue. Milan Tax- payers V. Tenn. E. B. Co., 11 Lea (Tenn.) 329. Galbraith v. City of Knoxville (Tenn.), 58 S. W. 643. Plea of non est factum sustained. Clark y. City of Janesville, 13 Wis. 463. Berliner v. Town of Waterloo, 14 Wis. 409. Bonds issued by munici- pality before the law authorizing them has gone into effect are null and void. But see Knox County v. Aspinwall, 21 How. 539. 3 — Lehman v. City of San Diego, 73 Fed. 105; German Savings & Loan Association v. Kamish (Calif.), 69 Pac. 89; First National Bank v. City of Elgin, 136 111. App. 453. Town of Eagle v. Kohn, 87 111. 292. If conditions are performed after issue, the bonds will be valid. Lewis V. County Com'rs, 12 Kan. 186; State v. Saline County Court, 45 Mo. 242; but, see, Henry v. Nicolay, 95 TJ. S. 619; Gardner v. Haney, 86 Ind. 17. 4 — Douglas V. Lincoln County, 2 McCrary, Oir. Ct. 449; see, also, Sec. 173, post. FOEMALITIES EEQUIEED FOE ISSUE 345 issued under the previous authority are not void because no debt is created until the bonds are issued.^ The word "issue" in its technical sense as used in this chapter has been variously defined. In one case the word, it was held, was confined to the delivery of the bonds and did not embrace the preliminary acts of signing and dating.® In another, it was held that city bonds are not "issued" until actually or constructively delivered under a contract of sale.^ In Coming v. Mead County Commissioners,^ the Court in defining the word "issue" said: "The word 'issued' ordinarily means 'emitted' or 'sent forth' and in the absence of other definition, that must be taken to be the sense in which it was used in the legislation of Kansas." And it was further held: "Any other con- struction would have rendered the act impracticable and useless, because it was only in reliance upon a favorable vote already cast, and upon a subscription actually made that railroad companies could be induced to build their roads into many of the counties of Western Kansas. No reason occurs to us why the word 'issued' in the former limitation should be given a meaning so different, so unique and so broad as to make it cover the presentation of the petition and call for the election, while in the latter it retains its ordinary significance, moreover, if the mean- ing of this word was ambiguous, the practical construc- tion given to it and to the proviso in which it occurs by the officers of the state and county and the purchasers of the bonds while they were acting and contracting under it is entitled to great consideration and ought not to be modified or avoided to the destruction of rights resting upon it, unless that construction was clearly and palpably erroneous. ' ' 5 — Thompson-Houston Electric 7 — ^Black v. Fishbume ^. C), 66 Co. V. City of Newton, 42 Fed. 723. S. E. 681. 6— Perkins County v. Graff, 114 8—102 Fed. 57. Fed. 441. 346 PUBLIC SECTJEITIES City bonds legally executed, certified by the attorney general and registered by the comptroller of state ac- counts are ' ' issued ' ' though they remain unsold," and in another Texas case ^° it was held in construing article 11, section 5 of Texas constitution relative to the creation of debts by municipalities that the terms ' ' created ' ' as used in the constitution and "issued" as found in the charter would be construed as referring to the time of the sale of bonds. In still another Texas case," in construing laws of 1907, p. 78, providing for the creation of drainage districts and the issuance of bonds, the court held that the word "issued" as used in section 23, of the act meant bonds executed by signing and attesting them but the word "issue" as used in section 24 of the same act in the phrase ' ' desiring to issue bonds ' ' meant to put bonds into circulation by selling them while the phrase "the bonds to be issued" meant those to be offered for sale and not those to be prepared and executed. It is not necessary to a legal issue of bonds that the authority conferred be immediately exercised and they have been held valid when issued in one instance as late as six years after the conference of authority. General financial conditions may at times make this course of action not only expedient but absolutely necessary. '^ Neither is it essential to their validity that the entire 9— Moller v. City of Galveston, Minn 256, 59 N. W. 296. It is a 23 Tex. Civ. App. 693, 57 S. W. question of fact whether bonds is- 1116. sued three years after the election 10 — City of Austin v. Valle authorizing them are issued within (Tex.), 71 S. W. 414. a reasonable time. Town of Lex- 11 — Hidalgo County Drainage ington v. Union National Bank, 75 Dist. No. 1 V. Davidson, 120 S. W. Miss. 1, 22 So. 291; Moller v. City 849. of Galveston, 23 Tex. Civ. App. 12— Ghickaming v. Carpenter, 106 693, 57 S. W. 1116. Two years. U. S. 663; School Dist. No. 40 v. See, also, Tippett v. McGrath (N. Gushing (Kan.), 54 Pae. 924; J.), 59 Atl. 1118; Miller v. School State V. Lake City, 25 Minn. 404. Dist. No. 3, Carbon County (Wyo.), Woodbridge v. City of Duluth, 57 39 Pae. 879. FOEMALITIES BEQUIRED FOE ISSUE 347 amount authorized be issued at one time. Where author- ized for the payment of some work of local improvement or of some public utility in order to save interest it may be desirable and advantageous as well to issue the bonds in installments as the work progresses.^ ^ Where bonds are authorized at one election for a num- ber of purposes, it is not necessary that separate issues be made for each of the various objects. A general issue may be made covering the entire amount authorized.^* Where authority has been conferred and the conditions requisite to its exercise have been complied with, the issue of negotiable securities becomes obligatory and if public officials refuse or neglect to issue and deliver the bonds to those entitled to them, the performance of this manda- tory duty can be compelled.^® The cancellation of bonds before delivery and the issu- ance of others in their stead to the purchasers will not invalidate the bonds last issued.^" 13_-Wells v. Sioux Palls (S. D.), 839. The fact that some of the 94 N. W. 425; Aylmore v. City of bonds of the series were exchanged Seattle (Wash.), 92 Pac. 932; see for invalid warrants is no defense also Gage v. City of Chicago, 216 when the bonds in suit are not any 111. 107, 74 N. E. 726. of those so exchanged. Town of 14— Town of Mill Valley v. Solon v. Williamsburg Savings House (Calif.), 76 Pac. 658. Bank, 114 N. Y. 122, 21 N. E. 168. 15 — See See. 163, ante. Oswego City Savings Bank v. Edward C. Jones Co. v. Town of Board of Education, etc., 60 N. E. Guttenberg (N. J.), 51 Atl. 274. A 1113. The substitution of printed change in the membership of a bonds for typewritten ones, the body charged with a duty will not originals being mutilated and sur- relieve it from the performance of rendered will not invalidate those that duty when the rights of others actually and finally issued. Kunz have intervened. Schonweiler, v. v. School District No. 28 of Hutch- Allen (N. D.), 117 N. W. 866; inson County (S. D.), 79 N. W. Welch V. Getzen (S. C), 67 S. E. 844. 294; see, also, Coler v. Dwight City of Eadford v. Heth, 40 S. E. School Township of Eichland Coun- 99. Bonds not negotiated may be ty (N. D.), .55 N. W. 587. destroyed and others substituted 16— Board of Lake County bearing less rate of interest than as Com'rs V. Linn (Colo.), 68 Pac, originally authorized. 348 PUBLIC SECURITIES § 165. Form of bond. Statutory provisions relating to the form of negotiable securities may have for their purpose the safe-guarding of the public corporation issuing them. Such provisions are commonly construed as mandatory and a substantial compliance at least with the statute is required for their validity. Ordinarily, however, statutory provisions relative to the form of bonds serve no purpose in safe-guarding a public corporation but are inserted with the object of securing a better price for them in the open market or in making them more attractive to purchasers by offering a pledge of certain means of payment or including provi- sions affecting the place of payment and their negotia- bility. Such provisions are regarded universally as direc- tory only and a failure to literally comply with them or in some cases to observe them will not invalidate the securities issued." To protect bona fide holders, the courts are inclined to extend this principle further and to hold that bonds where the form is prescribed by legislative authority for their issue although not complying technically with the form as thus required but yet which in their substan- tial features follow the law will not be invalid on account of such variation.*® 17— Wood V. Alleghany County, Heffnei v. City of Toledo, 80 N. 3 Wall. Jr., 267 Fed. Cas. 17, 937. E. 8. The statutory requirements D'Esterre v. City of New York, that street improvement bonds shaU 104 Fed. 505. Special act authoriz- have the name of the street written ing the issue of municipal bonds or printed upon them does not ap- supersedes general statutory provi- ply to bonds issued to pay the sions prescribing their form and city's part of the cost of such im- the conditions to be inserted. Had- provement. ley V. Dagne (Calif.), 62 Pac. 500; 18 — City of New Orleans v. "Wiley V. Board of Education, 11 Clark, 95 V. S. 644. The ordinance Minn. 371; Catron v. Lafayette of a city authorizing the issue of County (Mo.), 17 S. W. 577, 106 bonds provided the company should Mo. 659; Ontario County v. Shep- "guarantee the said bonds and as- ard, 91 N. Y. S. 611. sume the payment of the principal FOBMALITIES EEQUIKED FOE ISSUE 349 A failure to observe directory provisions in other respects as affecting the form of the bond,^* the num- thereof at maturity," the indorse- ment on the bonds by the president of the company, guaranteeing "the payment of the principal and inter- est," was held a sufficient compli- ance. Calhoun County Sup'rs v. Gal- braith, 99 TJ. S. 214. Bonds issued payable to the railroad company or bearer was not held a sufficient ■variance to invalidate them where the act provided that they should be made payable to the president or the directors of the company, their successors or assigns. In Board of Education of Atchison v. De Kay, 148 TJ. S. 591, the validity of bonds issued under the general statute of Kansas, held not to be affected where in reciting the title of that act the word "organize" was substituted for the word "in- corporate." D'Esterre v. City of Brooklyn, 90 Fed. 686; Eoberts & Co. V. City of Paducah, 95 Fed. 62; Village of Kent v. Dana (C. C. A.), 100 Fed. 56. Murphy v. City of San Luis Obis- po (Calif.), 48 Pac. 974. The statutory authority gave power to issue bonds payable "in gold coin or lawful money of the United States." The bonds were issued payable in "gold coin of the United States." Held a sufficient variance to invalidate them. This case was reversed, however, in Murphy v. City of San Luis Obispo, 119 Calif. 624, 51 Pae. 1085, where it was held that under such conditions the trustees of the city could, at their option, make the bonds payable in either gold coin of the United States or lawful money of the United States. Woodward v. Eey- nolds, 58 Conn. 486. Middleton v. City of St. Augus- tine, 42 Pla. 387, 29 So. 421. Bonds and coupons providing for their payment at a place different from the one specified in legislative au- thority is a material variance and departure from such authority. State V. School Dist. No. 3, 34 Kan. 237; Oswego Twp. v. Anderson, 44 Kan. 214; Bogart v. Lamotte Twp., 79 Mich. 294. State V. Eoggen, 22 Nebr. 118, 34 N. W. 108. The absence of a required certificate by certain offi- cials invalidates bonds. Starin v. Town of Genoa, 23 N. Y. 439. Allen v. City of Davenport, 107 Iowa, 90, 77 N. W. 532. Misreeital of authority held immaterial. State v. Village of Perrysburg, 14 Ohio St. 472. Bonds issued in the name of "The town of Perrys- burg" instead of "the incorpor- ated village of Perrysburg" held valid. State v. Anderson County, 67 Tenn. (8 Baxt.), 249; Shelby County V. -Tarnagin (Tenn.), 16 S. W. 1040. Bronson v. Smith, 93 Tex. 614. School district bonds not required to be certified by the Atty. General under Eev. St. Art. 918d; City of Memphis v. Memphis Sav. Bank, 99 Tenn. 104; see, also, cases cited in the immediately following notes. 19— Village of Kent v. Dana, 100 Fed. 56, 40 C. C. A. 281; Ontario County V. Shepard, 91 N. Y. S. 611; County of Jefferson v. Jen- iiing Banking & Trust Co., 79 S. W. 876; Jones v. City of Seattle, 19 Wash. 669, 53 Pac. 1105. 350 PUBLIC SECUEITIES berj^" the denomination, ^i the payee,^^ the mechanical make-up of the bond,^^ statements relative to the purpose 20 — Commonwealth v. Emigrant Savings Bank, 98 Mass. 12; City of Elizabeth v. Force, 29 N. J. Eq. 587. Birdsall v. Eussell, 29 N. Y. 220. The number is not a material part of the bond and its alteration or erasure even with fraudulent intent has been held not to affect a bona fide holder for value and without notice. In case of an over-issue, however, the numbering may be- come material as determining the validity of particular bonds of an issue where a part of the issue is within the limit and part in excess. See Sec. 304, et seq., post; Davis County V. Dixon, 107 U. S. 607; McPherson v. Poster, 43 la. 48; Ball V. Presidio County (Tex.), 29 S. W. 1042. 21 — County of Green v. Daniels, 102 If. S. 187. Bonds not void be- cause not of the same denomina- tion as specified in the proposition of the railroad company for aid voted on at the election. E. M. Darby v. City of Modeata (Calif.), 38 Pac. 900; Law v. City and County of San Francisco (Calif.), 77 Pac. 1014. City of Santa Barbara v. Davis (Calif.), 793 Pac. 308. Where an option is given as to the denomina- tions of bonds proposed to be is- sued, the city council need not ex- ercise this until after the authority to issue has been conferred by the voters. Town Council of Lexington v. Union National Bank (Miss.), 22 So. 291. That renewal bonds are issued in different denominations from the old will not invalidate them; and where required to be ' ' executed to " a certain railroad company and delivered to the presi- dent of that company they are valid though made payable to bearer. Milan Taxpayers v. Tenn. E. E. Co., 11 Lea (Tenn.) 329. If a city is authorized to issue bonds of a certain denomination and bearing a certain rate of interest they can- not be lawfully issued for a greater denomination and at an increased rate of interest. Bingham v. Board of Sup'rs of Milwaukee County, 106 N. W. 1071. 22 — County of Leavenworth v. Barnes, 94 U. S. 70. Bonds not invalid because the name of the railroad company to which issued was not correctly given in them. Sup'rs V. Galbraith, 99 U. S. 214. School Dist. No. 40 v. Gushing (Kan.), 54 Pac. 924. Bonds made payable "to or bearer" sufficiently complies with the law which provides that they shall state on their face ' ' to whom issued. ' ' See Sec. 350, post. 23— McKee v. Vernon County, 3 Dill. 210. Substitution of en- graved county bonds bearing cou- pons, the signatures on which were lithographed, for ordinary bonds held not to invalidate them. Town of Washington v. Coler, et al., 51 Fed. 362. It is not neces- sary that bonds should have at- tached coupons for installments of principal. Oswego City Savings Bank v. Board of Education, etc., 60 N, E. 1113, FORMALITIES EEQUIEED FOE ISSUE 351 for which issued and other provisions of a similar nature will not invalidate the securities.^* Where provisions relative to the facts and questions noted in the last preceding notes are mandatory in their character or have for their purpose the protection of the public corporation in respect to the issue of bonds, the contrary rule will prevail. The objects to be attained determine, generally in cases where there is a variance from statutory provisions, the validity of bonds and the two principal ones have already been stated.^ ^ Illustrative of the principles above stated, the court in a New York case,^® where bonds were issued under an act of the legislature which authorized either coupon or registered bonds or coupon bonds registered as to the principal only, to be signed by the supervisors and coun- tersigned by the treasurer of the town and if registered to be made payable to the persons to whom issued, the place of registration to be fixed in the bonds by the offi- cials registering the same and to have a certificate entered thereon following the registration and when sold by the 24 — Com'rs of Marion County v. bond shall show upon its face the Clark, 94 U. S. 278. An immaterial class of indebtedness to which it variation in time of maturity held belongs and from what fund it is not to invalidate bonds. Barnet v. payable." Village of Kent v. Da- Dennison, 145 IT. S. 135. na, 100 Fed. 56, 40 C. C. A. 281; Carpenter v. Buena Vista, 5 Dill. City of Gladstone v. Throop, 71 556. Bonds legal in all other re- Fed. 341; Clapp v. City of Marice, spects are prima facie valid al- 111 Fed. 103; Barker v. Town of though the particular purpose for Oswegatehie, 10 N. Y. S. 834; which they are issued is not stated. Hoag v. Town of Greenwich, 15 N. City of Cadillac v. Woonsocket Y. S. 743; Maxey v. City of Osh- Institute for Savings, 58 Fed. 935. kosh (Wis.), 128 N. W. 899. See, The bonds in this case recited that also. Sec. 352, et seq., on time of they were issued "for the purpose maturity; Sec. 180, on interest of extending the time of payment rate, and Sec. 357, on place of pay- of bonds formerly issued by the ment. city." This statement was held to 25 — See note 17 this section, be a substantial compliance with 26 — D'Esterre v. City of New the legal requirement that "each York, et al., 104 Fed. 605. 352 PUBLIC SBCUEITIES payee that they might be registered in the name of the new purchaser, it was held that when the bonds so issued purported to be registered bonds but were not dated and did not contain any designation of the place of registra- tion and were payable in , that these departures from the prescribed form did not invalidate the bonds. The court in part said: "It was obviously the intention of the statute that the bonds to be created should be negotiable. As it authorized the creation of coupon bonds at the discretion of the supervisor, which were not to be registered, even as to the principal sum, it is manifest that the provisions in respect to registra- tion, in respect to the name of the payee, and in respect to all matters merely of form and phraseology, were not designed as limitations of his authority, or to protect the town against his abuse of his functions. They were formalities which could not subserve any essential pur- pose, except to assure purchasers that they were buying bonds which were literally perfect. If purchasers were willing to accept registered bonds which were not, as to particulars, devised for their interests or convenience, in strict conformity with these provisions, the town could not be harmed. The provisions should, therefore, be con- sidered as directory, and not mandatory, and, in the ab- sence of any language in the act importing that noncom- pliance would invalidate the bonds, any departure in respect to them should not be deemed a defect of sub- stance. ' ' The insertion in bonds of statements not required by law and when not in conflict with the authority conferring the power to issue will not affect the validity.^'' Miscellaneous references. The form of a bond as in- volving the time of maturity,^* the payee,'^^ the place and 27 — Carlson v. City of Helena, 28 — See Sec. 352, et seq., post 102 Pac. 39. 29— See Sec. 350, post. FOBMALITIES BEQUIKED FOE ISSUE 353 time of payment,^" and the interest it bears,^* will be con- sidered in the sections referred to in the notes. §466. Dating and ante-dating of securities. Bonds which upon their face purport to have been issued in conformity with an act specified but which were not actually issued until after the repeal of the act being antedated so as to appear to have been issued prior to the repeal and which in addition were signed by persons not filling the official positions as represented on the date at which the bonds were dated are void in the hands of even bona fide holders,^^ although the common rule is that where the authority to issue exists the antedating of bonds will not render them invalid provided in other respects there has been a compliance with the conditions prescribed by law and with the authority conferring the power and where the officials executing them were such officers at the time the bonds are dated.^^ Immaterial irregularities in dating will not affect the validity of securities in the hands of a bona fide holder,^* and the presumption exists that a signature of a public 30 — See See. 357, post. ler v. City of Galveston (Tex.), 57 31— See Sec. 180, post. S. W. 1116; Yesler v. City of Seat- 32 — Lehman v. City of San Die- tie, 1 Wash. St. 308, 25 Pac. 1014. go, 73 Fed. 105, 83 Fed. 669 0. C. 34— Louisiana v. Wood, 102 XT. A.; see. also, Anthony v. Jasper S. 294; Gilchrist v. Town of Little County, 101 V. S. 693; Coler v. Cle- Eock, 1 Dill. 261; Flagg v. Mayor bume, 131 XJ. S. 162; Owensboro of Elmyra, 33 Mo. 440. Water Works Co. v. City of Owens- State v. Moore, 46 Nebr. 590. boro, 96 S. W. 867. Antedating of eight days held not 33 — Village of Kent v. Dana, 100 to invalidate bonds where that act Fed. 56, 40 C. C. A. 281. Pretty- did not operate as an evasion of man v. Sup'rs, 19 111. 406. Eail- the law or a departure from the road aid bonds should bear date proposition ratified by the voters, and draw interest from the time Yesler v. City of Seattle, 1 Wash, when it was intended they should St. 308, 25 Pac. 1014. It is not issue though their issue has been a violation of a statute which re- delayed by the neglect of the coun- quires bonds to ' ' bear the date of . ty officials. Morrell v. Smith their issue" that where they are County (Tex.), 33 S. W. 899; Mol- negotiated some months after the p. s.— 23 354 PUBLIC SECTJEITIES ' ofiScial was affixed when he had the right irrespective of the date, or stated in another way, the date of the signing and sealing as determined by an inspection of the face of the bond is conclnsive and evidence showing or tending to show that signatures and seals were affixed on a day subsequent to that required by law or that which is shown by the face of the bonds is not admissible to establish their invalidity.^^ Bonds dated on Sunday are regarded as void though it is no objection that they bear interest from a Sunday, their date, and it may be shown where bonds bear date of a Sunday that they were not in fact delivered upon that day.^^ In a leading case in the Supreme Court of the United States,^' involving the antedating of bonds and where, as in one of the cases already cited, the person officially executing the bonds was not that public official at the time of the date appearing upon the face of the bonds though being such official at the time the bonds were actually issued, the court said in part: "The authority of a public agent depends on the law as it is when he acts. He has only such powers as are specifically granted ; and he cannot bind his principal under powers that have been taken away, by simply antedating his con- tracts. Under such circumstances, a false date is equiva- lent to a false signature; and the public, in the absence of any ratification of its own, is no more estopped by the day of their date, the purchaser Paul, 173 Mass. 148, 53 N. E. 272; was allowed interest from that day. School District v. First National State V. Madison, 7 Wis. 668. Bank of Xenia, 19 Nebr. 89; State The writing out of bonds is a min- v. Moore, 46 Nebr. 590; Brown v. isterial act as the authority has Bon Homme County, 1 S. D. 216. been conferred and a mistake in the 36 — King v. Fleming, 72 111. 1; date is not vital to their validity. Conrad v. Kinzie, 105 Ind. 281; 35 — Town of Weyauwega v. Ayl- Sayre v. Wheeler, 31 la. 112; Mat- ing, 99 U. S. 112; Village of Kent shall v. Eussell, 44 N. H. 509. V Dana, C. C. A. 100 Fed. 56; 37— Anthony v. County of Jas- Inhabitants of Stoughton v. St. per, 101 U. S. 693. ' * FOEMALITIES EEQTJIEED FOR ISSUE 355 one than it would be by the other. After the power of an agent of a private person has been revoked, he cannot bind his principal by simply dating back what he does. A retiring partner, after due notice of dissolution, cannot charge his firm for the payment of a negotiable promis- sory note, even in the hands of an innocent holder, by giving it a date within the period of the existence of a partnership. Antedating, under such circumstances, par- takes of the character of a forgery, and is always open to inquiry, no matter who relies on it. The question is one of the authority of him who attempts to bind another. Every person who deals with or through an agent assumes all the risks of a lack of authority in the agent to do what he does. Negotiable paper is no more protected against this inquiry than any other. ' ' §167. Signatures of officials. It is within the power of a state to prescribe the form in which municipal bonds shall be executed in order to bind the public corporation for their payment, if not so executed they create no liability. The due execution of securities includes necessarily the signing of them, and the countersigning if required, by those officials charged by law with the performance of this duty.^** The authorities generally hold that securities should be executed by the officials in office at the time they are originally issued and not those in office when the bonds are sold.^^ 38— Anthony v. County of Jas- McDowell County, 70 N. C. 208. per, 101 U. S. 693; Bissell v. Where bondo have been executed Spring Valley, 110 TJ. S. 162; by certain officials their action may Northern Bank, etc. v. Porter be subsequently validated by the Township Trustees, 110 U. S. 608; legislature. See Sec. 173, post, on Caaibome County v. Brooke, 111 TJ. registration. S. 400; Merchants National Bank 39 — Coler v. Cleburne, 131 U. S. v. Bergen County, 115 V. S. 384. 162; Halsey v. Gillette (Calif.), Alexander v. Commissioners of 103 Pac. 339; Town of Stoughton 356 PUBLIC SECURITIES The duty may be especially conferred,*" or it may de- volve upon them through their general power and author- ity to perform for the public corporation the act in question.*^ It is not necessary, however, that those thus acting should be in all cases de jure officials. It is sufficient if at the time they were officers de facto and performing the duties of the office which they assumed. If this condition is established no objection can be made to the validity of securities because executed by de facto officials.*^ The courts, however, hold that purchasers of municipal securities must always take the risk of the genuineness of the official signature of those who execute the paper they buy and that this includes not only the genuineness of the signature itself but the official character of him who makes it.*^ The presumption of law, however, exists that officials executing securities sustain the official character they assume that the signatures affixed are genuine and that they have been signed during the term of office.** f. Paul (Mass.), 53 N. E. 272; affirming 140 Fed. 89; Lane v. but see Brown v. Bon Homme Coun- Inhabitants of Embden, 72 Me. ty (S. D.), 46 N. W. 173. 354; Neely v. Yorkville Town Coun- 40 — Town of Queensbury v. Ciil- oil, 10 S. C. 141. ver, 19 Wall. 83; Brooklyn v. Ins. 42 — Ealls County v. Douglas, 105 Co., 99 V. 8. 362; Corporation v. U. S. 728; Waits v. City of Santa County of Pontiae, 17 Can. S. C. Cruz, 184 U. S. 302, reversing 98 E. 406; Currie v. Lewiston, 15 Fed. Fed. 387; National Life Ins. Co. 377. V. Board of Education of City of 41 — Lynde v. County of Winne- Huron, 62 Fed. 778; Color v. bago, 16 Wall. 6; Walnut Township Dwight School Township, 3 N. D. V. Wade, 103 U. S. 683; County of 249, 55 N. W. 587, 28 L. E. A. Ealls V. Douglas, 105 U. S. 728; 649. But there can be no oflacer County of Kankakee v. Aetna Life de facto where no legal office exists. Ins. Co., 106 U. S. 668; Middleton See Sees. 66 and 67, ante. V. MuUica Township, 112 U. S. 433; 43 — ^Anthony f. County of Jas- Town of Aroma v. Auditor of State, per, 101 U. S. 693; Coler v. City of 15 Fed. 843; Eondot v. Eogers Cleburne, 131 U. S. 162. Township, 99 Fed. 202, 39 C. C. A. 44— Weyauwega y. Ayling, 99 U. 462; Board of Com'rs of Onslow S. 112. County V. Tollman, 145 Fed. 753, FOKMALITIES EEQUIEED FOE ISSUE 357 The authority of officials of public corporations to bind their principal must be expressly given. The usual rule does not apply namely, that acts done within the apparent scope of the authority and power of an agent will bind his principal. The rule as stated in respect to public officials must of course be constantly observed in deter- mining the validity of public securities as affected by the execution of them.*^ It is not necessary in all cases that the public official act within the geographical limits of the public corpora- tion he represents,*^ nor is it essential that he personally sign his name, if this is done under his direction and by his authority, it is sufficient.*'^ Securities executed by officials whose terms of office have expired are void.*® Where the official signatures of an administrative board are required it is usually sufficient if a majority of that board join in the execution of the securities as previously 45 — See Sees. 52 and 65, et seq., 27. It is fundamental that those ante. The Floyd Acceptauees, 7 seeking to deal with a municipal cor- Wall. 666. poration through its officials must Anthony v. County of Jasper, take great care to learn the nature 101 tJ. S. 693. The authority of a and extent of their power and au- pubUc agent depends on the law thority. as it is when he acts. He has only 46 — ^Lynde v. County of Winne- such powers as are specifically bago, 16 Wall. 6. The fact that a granted. City of Louisville y. Bank county judge from Iowa while in of Louisville, 174 TJ. S. 439. New York for purposes connected Hull V. Marshall County, 12 la. with a sale of county bonds affixed 142. A county judge is an officer his seal to them while there would of limited powers. His authority not affect their validity, is defined by statute, which every 47 — Lynde v. County of Winne- one is bound to know and compre- bago, 16 Wall. 6; Montgomery v. hend. No one need be deceived or Township of St. Mary's, 43 Fed. injured ty such a rule; if the act 362; Neely v. Yorkville, 10 S. C. is legal and within the power of 141. the county judge, it is easy to allege 48 — ^Anthony y. County of Jas- and show it. per, 101 IT. S. 693; Coler v. City of Smith V. Town of Epping, 69 N. Cleburne, 131 TJ. S. 162; but see H. 558, 45 Atl. 415. McDonald v. Weyauwega v. Ayling, 99 U. S. 118. City of New York, 68 N. Y. 23- 358 PUBLIC SECUEITIES authorized and they may unless otherwise directed by statute authorize one of their members to execute the bonds for and on their behalf.*^ The acts of public officials in executing bonds whether under an authority especially conferred or under their general powers are regarded as the acts of the public cor- poration which they represent.^" The countersigning of bonds is usually considered a ministerial act and an officer whose duty it is to counter- sign has no authority to determine whether the bonds have been issued in accordance with law or otherwise. He may be compelled by mandamus to affix his signa- ture,^i and if there has been a failure to countersign, this will not necessarily invalidate the securities.^^ Where, however, the statute makes the countersignature an essen- tial part of the execution of the bonds, it is necessary that this should be done.^* § 168. What a sufficient signature. It is not necessary that in all cases the signature of the public officer should be affixed in his personal handwrit- 49 — Curtis v. County of Butler, 756; Town of Queensbury v. Cul- 24 How. 425; Blair v. Cuming ver, 19 Wall. 83; German Insurance County, 111 tJ. S. 363; Phelps v. Co. v. City of Manning, 78 Fed. Town of Lewiston, 15 Blatehf. 132. 900; Potter v. Lainhart (Pla.), 33 Fed. Cas. 11,076; First National So. 251; Thompson v. Village of Bank of North Bennington v. Ar- Mecosta (Mich.), 86 N. W. 1044; lington, 16 Blatehf. Cir. Ct. 57; Brownell v. Town of Greenwich, 114 Currie v. Lewiston, 15 Fed. 377; N. Y. 518. Eondot V. Rogers Township, 99 Fed. 51 — Houston v. People, 55 111. 202, 39 C. C. A. 462; Board of 398; see, also, Bissell v. Spring Com'rs of Onslow County v. Toll- Valley, 110 U. S. 162. man, 145 Fed. 753, affirming 140 52— Melvin v. Lisenby, 72 111. 63. Fed. 89; Potter v. Lainhart (Fla.), Town Council of Lexington v. 33 So. 251; Clarke v. Sup'rs of Union National Bank (Miss.), 22 Hancock County, 27 111. 305. So. 291. The same rule applies as 50— Morrison v. Inhabitants of to coupons. Township of Benard's, 36 N. J. 58- Bissell v. Spring Valley, 110 L. 219; Eahway Savings Institution U. S. 162. V. City of Eahway (N. J.), 20 Atl. FORMALITIES EEQUIEED FOE ISSUE 359 ing. A lithographed or typewritten signature, and this is especially true in the case of coupons attached to the bond; if authorized and adopted by him as his official act is sufficient. Where there has been an irregularity or a defective execution of securities if in other respects they are valid, upon application of a bond holder, a court of equity will afford relief and direct a proper execution and the validity of bonds will not be affected thereby.^* It might be stated generally in respect to all the formal- ities attendant upon the execution of securities that irreg- ularities will not affect the validity where the directions of the statute are not of the essence of the thing to be done, and where a failure to observe the rights of those interested will not be prejudiced. Such statutory direc- tions are not regarded as mandatory but as merely di- rectory only, and a change will not affect the validity of the bonds when in all other respects the power to issue exists and no greater burden is imposed upon the tax- payers. They cannot complain.^" § 169. Weyauwega v. Ayling. In this case,^" the bonds of a town bore date June 1st, and were signed by A. as chairman of the board of super- visors, by B. as town clerk and were delivered by A. to a railroad company. When sued on coupons by a bona fide purchaser of the bonds for value before maturity, the town pleaded that the bonds were not in fact signed by 54 — Melvin v. Lisenby, 72 111. in fact signed municipal bonds. 63; Town Council of Lexington v. Sutherland Stat. Construction, Sec. Union National Bank (Miss.), 22 447; E. M. Darby & Co.- v. City of So. 291. Modesta (CaUf.), 38 Pae. 900; 55 — Curtis v. County of Butler, Lane v. Inhabitants of Embden, 72 24 How. 435; City of Gladstone v. Me. 354; Coler v. Santa Fe County Throop, 71 Fed. 341. Com'rs, 6 New Mexico, 88, 27 Pae. German Insurance Co. v. City of 619; Statesville Bank v. Statesville, Manning, 78 Fed. 900. A munioi- 84 N. C. 169; Carriger v. Morris- pality is estopped to deny the au- town, 1 Lea (Tenn.) 243. thority of city oflficiala who have 56 — 89 U. S. 112. 360 ^ PUBLIC SECUEITIES B. until July 13th at which date he had ceased to be a town clerk and his successor was in office. It was held, Chief Justice Waite, delivering the opinion of the court, that the town was estopped from denying the date of the bonds because in the absence of evidence to the contrary it must be assumed that the bonds were delivered to the company by A. with the assent of the then town clerk. §170. Anthony v. County of Jasper. In this case, also decided by the Supreme Court of the United States,^' the court distinguished it from Weyau- wega v. Ayling and said that in the latter case, it was held that the town was estopped from proving that the bonds were actually signed by a former clerk after he went out of office because the clerk in office adopted the signature as his own when he united with the chairman in delivering the bonds to the railroad company. While in the case under consideration, the bonds were not com- plete in form when they were issued and it was only by a false date that they were apparently so. §171. Coler v. Cleburne. In a latter case in the same court,^* it appeared that bonds were issued by the city of Cleburne under a statute which required that the bonds of the city "shall be signed by the mayor ' ' and forwarded by him to the comp- troller of public accounts of the state for registry. The bonds in question were dated January 1, 1884, and issued pursuant to a valid ordinance which provided that they be signed by the mayor and the city secretary. The term of the mayor in office January 1st, the date of the bonds, expired in April following and a new mayor was elected at that time, the city secretary remaining in office. The bonds were not signed until July, 1884, and were then 57—101 U. S. 693. 58—131 U. S. 162. FORMALITIES EEQTJIEED FOB ISSUE 361 signed by the former mayor and the city secretary who had remained in office. Hodge, the former mayor, signed the bonds pursuant to a resolution of the city council adopted in July, 1884. The suit was brought by W. N. Coler, a bona fide holder, to recover on some of the cou- pons cut from the bonds and the city interposed a plea of non est factum. The bonds were issued for a lawful purpose, and the city received their full benefit. The plaintiff contended that the defendant was estopped to set up the defense stated because the bonds were signed by the then mayor and upon their face they were appar- ently regular and signed by the person who was mayor at their date and further that they had been forwarded by him for registration as required by statute; that he was not bound to look beyond the bonds themselves and the enabling acts authorizing their issue, and that if there was lawful authority to issue them and the city appeared to have acted upon that authority, he was not obliged to inquire further no matter what irregularity characterized the acts of the officers who issued them on behalf of the city. That an examination of the statute and the ordinance would show authority to issue the bonds; that the records of the city would show that the persons who signed the bonds were the mayor and the secretary of the city on the 1st of January, 1884, the date of the bonds; that the endorsement on each bond would show that they had been registered by the comptroller and that he had a right to assume that the bonds had been forwarded to the comptroller by the mayor as provided by the statute or otherwise the comptroller would not have registered them. The court said in part: "But we have always held that even bona fide purchasers of muni- cipal bonds must take the risk of the official character of those who execute them. An examination of the records of the city in regard to the issuing of the bonds would have disclosed the fact that the bonds had not been signed and issued under the ordinance of September 362 PUBLIC SECURITIES 13, 1883, until July 3, 1884; that W. N. Hodge was not mayor on that date ; and that the person who then signed the bonds as mayor was a private citizen." The court then distinguished Anthony v. County of Jasper, 101 United States 693 and Weyauwega v. Ayling, 99 United States 112, and held that the case under consideration was to be decided according to the principles of Anthony V. County of Jasper. The decision held in substance that where a statute provides that the bonds of a city shall be signed by the mayor they must be signed by the person who is mayor of the city when they are signed and not by any other person and that the city council can- not authorize them to be signed by another person; that bona fide purchasers of municipal bonds must take the risk of the official character of those who execute them and that a public agent cannot bind his prin- cipal under powers that have been taken away by simply antedating his contracts. That under such circumstances a false date is equivalent to a false signature and the public in the absence of any ratification of its own is no more estopped by the one than it would be by the other. §172. Sealing. The validity of securities as dependent upon the affix- ing of the corporate seal is determined largely by the character of statutory provisions in this respect whether mandatory or merely directory; if mandatory, it is essen- tial that the seal be affixed.°^ If no express statutory provision exists or if one is to be found but merely directory in character, the omission 59 — ^Mereer County v. Haekett, 1 272. Coupon bonds not sealed but Wall. 83. The negotiability of showing by their wording that seal- bonds is not affected by the fact ing was intended are void. City of that they bear the corporate seal. San Antonio v. Gould, 24 Tex. 42. Avery v. Springport, 14 Blatchf. FOEMALITIES EEQITIEED FOR ISSUE 363 of a seal is immaterial if in other respects the bonds are proper both as to form and execution.^" It is also true that an irregularity in this respect can be cured by a court of equity and it is not necessary where a statute provides that bonds should be issued by town- ship commissioners ' ' under their hands and seals respec- tively" that the bonds be sealed with the corporate seal of the township.*^ In the case of Bernard's Township v. Stebbins,"'^ which was a suit in equity for the reformation of township bonds to which no seal had been affixed and to enjoin the township from setting up as a defense the want of such seal, it was contended with other objections that the bonds were void because they were not under the seal of the commissioners as required by the statute. The court held in part and a fairly full quotation is made from the opinion in the case because of its applicability to other irregularities and informalities; "It has been settled, upon fundamental principles of equity jurisprudence, by many precedents of high au- thority, that when the seal of a party, required to make an instrument valid and effectual at law, has been omit- ted by accident or mistake, a court of chancery, in order to carry out his intention, will, at the suit of those who 60— San Antonio v. Mehaffy, 96 Minn. 371; Gould v. Venice, 29 U. S. 312. Barb. (N. Y.) 442; People v. Draper v. Springport, 104 U. S. Mead, 24 N. Y. 114; Kelly v. Mc- 501. The technical form of the Cormack, 28 N. Y. 318; Board of obligation was a matter of form Education v. Fonda, 77 N. Y. 350; rather than substance. The issue Thornburgh v. City of Tyler (Tex.), of the bonds under seal as contra- 43 S. W. 1054; Morton v. Carlin, distinguished from bonds or obliga- 51 Nebr. 202. tions without seal was merely a 61 — Smythe v. Inhabitants of directory requirement. Eondot v. New Providence Township, 158 Fed. Bogers Township, 99 Fed. 202 C. 213; Bernard's Township v. Steb- C. A.; Stockton v. Powell (Fla.), bins, 109 IT. S. 341; City of Defi- 10 So. 688; Augusta Savings Bank ance v. Schmidt, 123 Fed. 1 C. C. V. City of Augusta, 56 Me. 176; A., affirming 117 Fed. 702. Wiley V, Board of Education, 11 62—109 V. S. 341. 364 PUBLIC SECUEITIES are justly and equitably entitled to the benefit of the in- strument, adjudge it to be as valid as if it had been sealed, and will grant relief accordingly, either by com- pelling the seal to be affixed, or by restraining the set- ting up of the want of it to defeat a recovery at law. ' ' It was argued that the power conferred upon the com- missioners to issue bonds was a statutory power, defects in the' execution of which could not be supplied or re- lieved against in equity. There is much learning on this subject in the books. But, Mr. Chance, upon a full re- view of the older cases, has clearly demonstrated that the true ground upon which equity grants relief is 'the same as that on which it relieves against the want of livery, the want of enrolment, or any other ceremony required, either at common law or by statute, but considered as not meant to be positively essential. The main point to be ascertained, at least with reference to forms pre- scribed by act of Parliament, is whether the legislature has attached a decisive weight to the observance of the forms. ' "The bonds are in other respects in the form prescribed by the statute. The commissioners intended to issue them in behalf of the toVn, pursuant to the statute, and stated on the face of the bonds that they had done so, and that they had thereto set their hands and seals. The town received full consideration for the bonds, and the pur- chaser bought them in open market, in good faith and for value, and in ignorance of the want of seals. These facts present a strong case for the interposition of a court of equity, having jurisdiction of the cause and of the parties, to prevent the formal defect of the want of the seals of the commissioners from being set up to de- feat an action at law upon the bonds or coupons. The mere fact that the purchasers, at the time of their pur- chase, did not observe the omission of seals upon securi- ties having in all other respects the appearance of mu- nicipal bonds, is not such negligence as should prevent FOBMALITIES EEQUIEBD FOE ISSUE 365 them from applying to a court of equity to correct a mis- take of tMs character." The court held that the plaintiff could maintain the bill and was entitled to the relief prayed for. The presumption exists that the seal attached is the corporate seal and not the private seal of the agent ^^^ and in a New York case ®^ where an action was brought by a town to compel a bank to surrender bonds because they were not sealed by the commissioners when they is- sued them as required by statute, it appeared from the evidence that at the time of their execution seals were not affixed but that subsequently and before their sale some persons unknown completed the formal execution by affixing wafer seals opposite the names of the officers signing them. The court refused to compel their sur- render and held that the general rule in respect to a ma- terial alteration in a written instrument after its execu- tion "is not necessarily applicable to a defendant in an action brought to have a security held by him cancelled upon that ground when it appears that such defendant is in no sense chargeable with mala fides in that respect. Our attention is called to no authority going to that ex- tent and the proposition does not seem to commend itself to a court of equity which is opposed within recognized bounds to exercise discretionary powers in such cases." It was further held that a court of equity would afford the necessary relief and direct the affixing of the seal to the bonds. §173. Registration. In some states either by constitutional or statutory provision it is required that an issue of bonds be for- 62a — Miller v. Superior Machine 63 — Town of Solon v. Williams- Co., 79 111. 450; Memphis v. Adams, burg Savings Bank, 114 N. Y. 22, 9 Heisk (Tenn.) 553; Fidelity, etc. 21 N. B. 168, 35 Hun. 1; see also Co. V. Shenandoah, etc. Co., 32 W. Armfield v. Town of Solon, 19 N. Va. 244. Y. S. 44. 366 PUBLIC SECUBITIES warded to some designated official generally an officer of the state for registration or endorsement *'* and in some cases copies of the proceedings are also required, to ac- company the bonds and the officer to whom sent for reg- istration or record is charged not only with the duty of registering them in his office but also of passing upon the legality of the proceedings and of issuing a certificate in respect to the validity of the bonds,**^ the effect of a com- pliance with the requirements noted is to make bonds un- impeachable in the hands of bona fide purchasers "^ and it also logically follows that the validity of bonds where there has been a failure to secure the certificate or reg- istration as provided by statute is not unassailable.^' 64 — Kan., General Statutes, 1909, Sees. 579, et seq ; Mo., Eevis. Stats., 1909, Sees. 1268, 1274-1279 and 9606; Neb., Const., Art. XII, Sec. 2; N. D., Const., Art. XII, Sec. 187; Okla., Const., Art. X, Sec. 29; see also Gen. Stats. 1908, pp. 301, et seq. and Laws of 1911, c. 80; S. Car., Const., Art. X, Sec. 11; Tes., Sayles' Tex. Civil Stats., 1898, Art. 469, et seq.; Wyo., Const., Art. XVI, Sec. 8; Ontario, Eevised Stats, of Ontario, 1897, p. 2490, Sees. 396, et seq.; see also the fol- lowing section. Priekett v. Marceline, 65 Fed. 469. The dating of such record is not the time when the municipal indebtedness is incurred but the date of the execution and issue of the bonds. 65— Garden City, etc. E. E. Co. V. Nation, 82 Kan. 345, 108 Pac. 102. The auditor of the state un- der the act relative to registering railroad aid bonds cannot require a showing that the holder has ex- pended money equal in amount to their face value for right ' of way and terminal facilities in the city which issued them. Pollock v. City of San Diego (Calif.), 50 Pao. 760. 66— Converse v. Fort Scott, 92 U. S. 503; Marcy v. Town of Oswego, 92 U. S. 637; Humboldt Township V. Long, 92 U. S. 642; Lewis v. County Com'rs, 105 U. S. 739; Har- per County V. Eose, 140 IT. S. 71; City of Cairo v. Zane, 149 XJ. S. 122; Flagg V. School Dist. No. 70 (N. D.), 50 N. W. 499. Martin County v. Gillespie County (Tex.), 71 S. W. 421. Under the statute the attorney general's cer- tificate cuts off all defenses except forgery and fraud; but see Bissell V. Spring Valley Township, 110 U. S. 162, distinguishing Lewis v. Com'rs, 105 U. S. 739. 67— Anthony v. County of Jasper, 101 U. S. 693; Young v. Clarendon Twp., 132 U. S. 340; Prank v. But- ler County (Nebr.), 139 Fed. 119; State V. Eoggen (Nebr.), 34 N. W. 108. State V. Babeock, 19 Nebr. 223. The provisions of the Nebraska Constitution requiring the certificate of the state auditor and secretary on municipal internal improvement FOBMALITIES EEQUIEED FOB ISSUE 367 The effect, however, of registration or certification will depend largely upon the purpose of the law requir- ing this to be done. If this is merely to afford a minis- terial and clerical record of bonds issued, their validity can be attacked. The registration or certification is not conclusive upon this point. ®* If, on the? other hand, the language of the statute as well as its purpose indicates the proceedings to be of a quasi judicial character, a certification by the official with the act of registration will operate substantially as a judgment upon the questions within his jurisdiction and they will be regarded as a res adjudicata.*^ bonds is imperative and self-en- forcing. State V. McMillan (N. D.), 96 N. W. 310, construing Const., N. D., See. 187. 68 — Dixon County v. Field, 111 V. S. 83. The fact that municipal bonds have been duly registered, and a certificate indorsed upon them stating that they are issued accord- ing to law, does not preclude the municipality from asserting their invalidity, the provision of law re- quiring registration and a certifi- cate not having declared the effect thereof to be conclusive as to the validity of the bonds. German Savings Bank v. Frank- lin County, 128 U. S. 526. The registration of the bonds by the state auditor has nothing to do vpith the- nature of the terms and conditions on which the stock was voted and subscribed. Neither the registration nor the certificate of the registrar conveys or certifies any fact as to the compliance with the conditions prescribed in voting on which alone the bonds were to be issued. 69— Converse v. Ft. Scott, 92 IT. S. 503; Marcy v. Town of Oswego, 92 V. S. 637; Humboldt Township V. Long, 92 V. S. 642; Menasha v. Hazzard, 102 U. S, 81. Hoff V. Jasper County, 110 U. S. 53. The act providing for registra- tion does not contravene the con- stitution of Missouri on the alleged ground that it delegated the exer- cise of judicial power to an execu- tive officer of the state. Crowe V. Oxford, 119 U. S. 215. The certificate of the state auditor is not conclusive when made in re- spect to bonds as to which he had no authority to register and certify. Garden City B. E. Co. v. Catron, 82 Kan. 345, 108 Pac. 102; but see German Savings Bank v. Franklin County, 128 U. S. 526. State ex rel. Carrollton School District, etc. v. Gordon (Mo.), 133 S. W. 44. The term "obtain valid- ity" means to become clothed with validity as a present and subsist- ing obligation and the term "nego- tiated ' ' means that the bonds should have been sold and put into circu- lation by delivery in consummation of the sale; construing these words as used in the revised statutes of Missouri, 1909, Sec. 1275, which 368 PUBLIC SECXJEITIES AVTiere bonds, as a matter of fact, have been presented and examined as required by law, the neglect or failure of officials charged with the duty either of registering them or of certifying that conditions required as pre- cedent to their issue have been complied with does not necessarily invalidate the bondsJ" The provisions for registration may not apply to all bonds authorized to be issued by subordinate public corporations.''^ When statutes require the forwarding by certain des- ignated officials of bonds for registration or certifica- tion, they are generally construed to mean that they must be forwarded by the person who occupied the official po- sition specified at the time the securities were signedJ^ The form of the certificate required when given in the statute if substantially followed and executed by the offi- cials designated is sufficient,^ ^ following the usual rule provides that before any school bonds "shall obtain validity or be negotiated such bonds shall be first presented to the state auditor who shall register the same, ' ' etc. Flagg V. School Dist. No. 70 (N. D.), 50 N. W. 499. 70— Town of Eock Creek v. Strong, 96 V. S. 271. In an action on bonds where the defendant off- ered to show that no registration existed although the certificate of the state auditor appeared upon them, the court said: "We cannot think this evidence, if admitted, could in any degree avail the de- fendant. The certificate of that officer endorsed on the bond was all that was required for the holder of them. If the state auditor failed to make in his oflSce an entry of his action, we do not perceive how his failure in this respect can invali- date bonds upon which he has cer- tified a registration." Comanche County V. Lewis, 133 U. S. 198. Com'rs- of St. Louis County v. Nettleton, 23 Minn. 256. Failure to register boirds with the auditor of the state will not prevent a board of commissioners from making pro- vision for the payment of interest upon them. Frank v. Butler County (Nebr.), 139 Fed. 119. A bond holder held barred by laches after a lapse of thirteen years from enforcing equi- table rights involving registration of bonds. 71 — Anthony v. County of Jas- per, 101 U. S. 693. The act re- quiring the registration by the state auditor of bonds issued by counties, cities, etc., extends to township bonds issued by county courts. Brownson v. Smith, 93 Tex. 614, 57 S. W. 570. 72 — Coler v. City of Cleburne, 131 U. S. 162; Martin County v. Gillespie County (Tex.), 71 S. W. 421. 73— In re Menefee (Okla.), 97 FOEMAIilTIES REQUIRED FOE ISSUE 369 that informalities or irregnilarities not of tlie essence of the act to be done will not affect the validity of the se- curities. § 174. Official validation. In several of the states, notably in Colorado,''* Georgia,'^ Idaho,'''' Nebraska,^'' and New York,''* laws have been passed which provide in effect that where an issue of bonds has been made, the public corporation is- suing them or any party interested may by a petition or otherwise as provided by law addressed to the official or the court designated in the law have the issue or the pro- ceedings connected therewith officially and judicially de- termined as valid. In some of the states named the pro- visions refer especially to irrigation districts and the se- curities issued by them. Upon the filing of a proper pe- Pac. 1014. The certificates of the auditor and attorney general as re- quired by Const., Art. 10, Sec. 29, need not be jointly executed but are equally valid when separately signed by such officers. Hardeman County v. Foard County (Tex.), 47 S. W. 30. Bonds are not invalidated when payable ' ' to bearer ' ' but described in their registration as payable to the ' ' State of Texas ' ' since the statute does not prescribe what the registra- tion shall contain. 74— Colorado Laws, 1901, p. 198 t. 87; Ahern v. Board of Directors of Highline Irrigation Dist., 89 Pac. 965. 75— Acts of 1897, p. 8; Van Epp's Code Supp., Sees. 6074-6081. 76— Eev. Codes, 1901, Sees. 2401, et seq.; Emmett Irrigation District V. Shane (Idaho), 113 Pac. 44, con- struing Eevised Codes, 1905, Sees. 2401, et seq. P. s.— 24 77— Laws of 1899, p. 59, c. 8, commonly known as the refunding bond act and Laws of 1895, c. 70, Sees. 59, et seq.. Compiled Stats., 1897, c. 93a, Art. 3, Sees. 59, et seq., relating to irrigation districts. Colburn v. McDonald (Nebr.), 100 N. W. 961. In proceedings to determine the validity of county bonds under the refunding bond act so-called, the supreme court will not on appeal determine the effect of the decision as to innocent pur- chasers of the bonds who are not parties to the record. Wyman v. Searle (Nebi.), 128 N. W. 801. The exchange of irrigation district bonds for property is not authorized by laws of 1895, c. 70, Sec. 59, et seq. 78— Acts of 1911, p. 2044, Chap. 769, providing for the legalization of municipal bonds by the Supreme Court. 370 PUBLIC SECUBITIES tion by the board of directors of an irrigation district in special proceedings not only may the validity of the bonds proposed to be issued be determined but also as preliminary question the validity of the organization of the district itselfJ® § 175. Georgia cases. The Greorgia statute providing for the official valida- tion of negotiable securities issued by public corpora- tions has been cited in a preceding note and a number of cases will now be referred to passing upon the validity of this law, the circumstances under which it becomes operative and its effect upon the validity of the bonds as final and conclusive. It must affirmatively appear that the issue was sanctioned by two-thirds of the qualified voters of the municipality issuing the bonds,® ^ and if the conditions required for the legal issue of the bonds for instance, the publication of the notice of election for the required time have not been complied with, a judgment should be entered declaring the election invalid accom- panied by refusal to validate the bonds.* ^ One interposing objections on facts which do not ap- pear in the pleadings must prove their truth and unless this is done, the objection should be over-ruled.*^ Where in the validation proceedings the municipality is do scribed in the caption as ' ' the town of Louisville, Jeffer- son County, ' ' and there is no such municipality but there is one with the corporate name, "City of Louisville," the notice is sufficient. The misnomer will not vitiate the judgment of confirmation especially where the officers of 79 — Ahern v. Board of Directors 82 — ^Davis v. Dougherty County, of HigWine Irrigation District 42 S. E. 764. (Colo.), 89 Pac. 963, Emmett Irri- 83 — Epping v. City of Columbus, gation District v. Shane (Ida.), 113 43 S. E. 803; see also Spencer v. Pao. 444, construing Eevised Codes, City of Clarkesville, 59 S. E. 274. 1905, Sees. 2401, et seq. 81— Smith V. City of Dublin (Ga.), 39 S. E. 327. FOEMALITIES REQTJIKBD FOE ISSUE 371 the city appeared and the judgment in the proceeding set forth the proper corporate name.^* A provision for an annual tax under Civil Code of 1895, Sec. 5894, must be made after validation and before the bonds can actually be negotiated and the debt incurred.*' An answer admitting all of the allegations set forth in the petition for validation is not subject to demurrer.*^ The judgment of validation and confirmation pursuant to the Georgia statutes is conclusive and bonds cannot thereafter be declared invalid on the ground of irregulari- ties in the performance of conditions required for the conferrance of authority. The method declared by this statute whereby the validity of bonds may be judicially investigated and determined before issue does not con- travene Const. Art 1, Sec. 1, Par. 3 on the ground that it seeks to deprive citizens of a municipality of their property without due process of law by excluding future investigation as to the validity of bonds after a judgment of validation and confirmation authorized in such pro- ceedings.®^ After the judgment of validation, an objection by a taxpayer to the regularity of the notice of election comes too late ; and the fact that no contest is made by the mu- nicipality to validation proceedings does not necessarily make the judgment void as being collusive.^® It is not necessary that the hearing in validation pro- ceedings should be had in the county where the bonds are to be issued but by order of court it may be held in an- other county of the same judicial circuit.*® 84 — Rhodes v. CSty of Louisville, general was also passed upon in 49 S. E. 681. this case and the court further holds 85 — Woodal v. Adel, 50 S. E. that it is not the purpose of the 102. act to validate invalid or irregular 86 — Spencer v. City of Olarksville, bonds. 59 S. E. 274. 88— Farmer v. Tovm of Thomp- 87— Lippitt v. City of Albany, son, 65 S. B. 180. 63 S. E. 33. The form of the no- 89— Farmer v. Town of Thomp- tice to be served upon the solicitor son, 65 S. B. 180. 372 PUBLIC SBOUEITIES The endorsement of the Clerk of the Circuit Court of the county proposing to issue the bonds of "filed" on papers in the proceedings is not necessarily insufficient because made by him when he was out of his office and out of that county.^" §176. Delivery. Delivery is the final step necessary to perfect the legal existence of any written contract and the rule therefore necessarily applies to negotiable securities as a particu- lar form of written contract. The execution in the proper form of such issue is not alone sufficient even where there is no question of authority and the steps necessary for the issue have been not only substantially but technical- ly taken. They must be delivered by the proper officials to those for whom they are intended and if not so ob- tained the holder can secure no title which can be en- forced.*^ While this rule applies without question to the original holder or one with notice of a legal infirmity as to delivery, it will not be applied to a bona fide holder without notice of the defect as to delivery. The weight of authority as to the validity of a negotiable instrument which by fraud or inadvertence has passed into the hands of holders for value without notice of the manner in which it was put into circulation is that the makers are bound although they did not intend that the instrument should be put into circulation. The want of legal deliv- ery is not a defect apparent upon its face and where the maker has given to it all the appearance of delivery, if one of two innocent parties is to suffer he who has put it 90— Hogan v. State, 67 S. E. 268. mouth Savings Bank v. Village of 91 — Young V. Clarendon Town- Ashley (Mich.), 52 N. W. 74; ship, 132 U. S. 340; Perkins County Prairie School Township v. Haseleu, V. Graff, 114 Fed. 441; State v. 3 N. D. 328, 55 N. W. 938. Suwanee County, 21 Fla. 1; Ports- FOEMAIilTIES KEQUIEED FOE ISSUE 373 into the power of the third party to produce this condi- tion ought to bear the loss.®* In accordance with this rule, it has been held in a num- ber of cases where through neglect or fraud negotiable securities have passed into the hands of innocent pur- chasers for value that they are valid and the principle has been extended to apply in instances where negotiable instruments before delivery have been stolen and event- ually have passed into the hands of bona fide holders for value.®^ Bonds with coupons payable to the bearer are nego- tiable securities and pass by delivery and the possession of them carries the title with it to the holder. The pos- session and title are one and inseparable.** So long as the bonds remain undelivered it has been repeatedly held that equities between the parties who 92— D'Esterre v. City of New York, 104 Fed. 605. Town of Prairie v. Lloyd, 97 111. 180. Where a town has ample au- thority for issuing its bonds to a certain railroad company as a dona- tion or subscription, and the bonds are executed in proper form and made payable to the proper com- pany, but are delivered to the secre- tary of a new company and there is nothing pertaining to them, or which could have been ascertained from the record, indicating their delivery to one not entitled to re- ceive them, the bonds cannot be held invalid by reason of such alleged improper delivery after they have passed into the hand of innocent holders. Kinyon v. Wohlford, 17 Minn. 215 (Gill 239); Borough of Montvale v. Peoples Bank (N. J.), 67 Atl. 67. City of Jefferson v. Marshall Na- tional Bank (Tex.), 46 N. W. 97. Delivery is sufficiently proved by the date on a receipt given for city bonds which coincides with the minutes of the city council. Jones v. City of Seattle, 19 Wash. 699; see also Barnard v. Campbell, 55 N. Y. 456. 93 — Murray v. Lardner, 2 Wall. 110; Cooke v. United States, 12 Blatehf. 49, Fed. Cas. 3178; Worces- ter County Bank v. Dorchester, etc. Bank, 10 Cush. 448; Shipley v. Carroll, 45 111. 285; McCurdy v. School District No. 1 (Mich.), 86 N. W. 803; Cooper v. Jersey City, 44 N. J. L. 634; City of Jefferson V. Jennings Banking & Trust Co. (Tex.), 79 S. W. 876; but see Ger- mania Savings Bank v. Village of Suspension Bridge, 73 Hun. (N. Y.), 590. 94 — Murray v. Iiardner, 2 Wall. 110, following Swift v. Tyson, 19 Pet. 1, and Bank of Pittsburg v. Neal, 22 How. 96; Thompson v. Lee County, 3 Wall. 327. 374 PUBLIC SECURITIES may be entitled to receive them and tlie public corpora- tion issuing them can be investigated and determined by the courts which cannot be so considered or determined after delivery ,^^ and the possession by a bona fide holder of negotiable paper carries the title with it to the holder. The character of bonds with coupons payable to bearer as negotiable securities has been unquestionably established subject to and protected by all of the principles applying to such instruments."" It is to be noted, also, that delivery may be construc- tive, as well as actual, through the manual passing of the instrument, by direction to a third party who is in actual custody thereof to hold it subject to the order of the payee or the transferee and its delivery to a third person for the payee without condition is a sufficient de- livery in legal contemplation.'''^ The authority of officials of public corporations is lim- ited and ordinarily the rule applies that to perfect a technical delivery it should be made only by those au- thorized,®* but the courts have held, as modifying this doctrine that where bonds have been delivered in viola- tion of special conditions of which the purchaser had no notice or knowledge either from the statutes or other- wise or where the delivery is within the power and offi- cial authority of the public officials so acting either as especially or generally conferred that the remedy of the public corporation is not against the bona fide holders 95 — Allesandro Irrigation District that railroad aid bonds should be V. Savings & Trust Co., 88 Fed. delivered by the Board of Trustees 928. was dil:ectory merely and a deliv- 9g^Washington County v. David ery by the Board of Com'rs of the (Nebr.), 89 N. W. 737. See chap- County would not invalidate them, ter X post. Portsmouth Savings Bank v. Village 97_Daniels Negotiable Instru- of Ashley (Mich.), 52 N. W. 74; ments, 5th Ed., Sec. 63a. Thompson v. Village of Mecosta, 98— Board of Com'rs of Onslow 127 Mich. 522, 86 N.' W. 1044; County V. Tollman, 145 Fed. 753, Satterlee v. Strider, 31 W. Va. 781, affirming 140 Fed. 89. A provision S S. E. 552. FOEMALITIES EEQUIEED FOE ISSUE 375 or purchasers of the securities but against its own un- faithful or negligent officials.^' Irregularities in the delivery of securities not affect- ing the essence of the issue will not invalidate them/ and where the right to issue and deliver has accrued before the taking of effect of constitutional or statutory pro- visions of a prohibitory character such provisions will not destroy the right to make a subsequent delivery of the securities.^ The delivery of securities in some cases has been held to constitute a material and an essential part of their technical "issue" or "issuance" and this is not regarded as complete until the delivery is made though other au- thorities hold to the contrary and still others hold that the term "issue" applies only to the delivery.* § 177. Young V. Township of Clarendon. As illustrative of the principle that the act of delivery is essential to the existence of a bond as an enforcible 99 — Brooklyn v. Insurance Co., 1 Wall. 384; Com'rs of Marion 99 U. S. 362; Menasha v. Hazzard, County v. Clark, 94 V. S. 278; 102 U. S. 81. Board of Com'rs of Onslow County Ledwich v. McKim, 53 N. Y. 314. v. Tollman, 145 Fed. 753, affirming The court in speaking of the im- 140 Fed. 89. plied authority of an agent to de- Lake County Com'rs v. Linn, 29 liver or put in circulation a nego- Colo. 446, 68 Pac. 839. The ex- tiable instrument said: "But this change of invalid warrants for authority is not implied from the bonds duly authorized does not in- fact alone, that the paper is in validate such bonds in the hands of hands other than those of him who bona fide purchasers. Town of is to be bound, but from that fact Prairie v. Lloyd, 97 111. 180; Town joined with this other fact, that it Council of Lexington v. Union Na- has been by him intrusted to those tional Bank (Miss.), 22 So. 291; hands for the purpose and with the City of Marshall v. Marshall Na- intent that it shall go into use and tional Bank (Tex.), 46 S. W. 97. circulation;" but see Thomas v. 2 — Hackett v. Tyrrell (N. C), 68 Morgan County, 39 III. 496; S. E. 202; Town of Cherry Creek Com'rs of Knox County v. Nichols, v. Becker, 2 N. Y. S. 514. 14 Ohio 260. 3— See cases cited in See. 164. 1 — Meyers v. City of Muscatine, 376 PUBLIC SBOUEITIES demand, a case in the Supreme Court of tlie United States is frequently cited.* The legislature of Michigan by an Act of March 22, 1869, authorized the issue of bonds by a township in aid of a railroad company and which provided that the bonds should be "executed by the su- pervisor and clerk," and delivered to the state treasurer who would receipt therefor and hold the same as a trus- tee for the township and the company, to be disposed of upon the Governor's certificate that the company in aid of which they had been issued had complied with the provisions of the act and was entitled to the bonds or any of them. If the bonds were not demanded of the state treasurer within three years after their receipt by him, they were to be cancelled and returned to the proper toAnm- ship officers. Bonds were issued pursuant to this act and delivered to the state treasurer but no demand was made for them owing to the refusal of the Governor to give his certificate which refusal was based on a decision of the state Supreme Court that the act was unconstitutional. Within a few days of the expiration of the three years from the date of their delivery to the treasurer as stated above they were cancelled by him and returned to the township officers. Over twelve years after the date of their return the appellant obtained judgment against the railroad company and an execution was returned nulla bona. On the 24th of February, 1885, or nearly thirteen years after the date of the return of the bonds by the state treasurer to the township authorities the appellant filed a bill in equity against the township and the company claiming that the township was equitably indebted to the company to the amount of the bonds and coupons with interest and that he was entitled to recover the amount of the debt. The court held that whatever rights the company had in the premises were lost by laches in fail- 4 — Young V. Township of Claren- don, 133 U. S. 340. ^ . .- FORMALITIES EBQXJIRED FOR ISSUE 377 ing to assert them until nearly thirteen years after the surrender of the bonds. The Michigan statutes of limita- tions affecting the right to sue varying from six to ten years. It was also held that: "The bonds were to be 'executed;' that is to say, written or printed, signed and sealed, by the supervisor and clerk of the township. Here the powers of those persons ceased. They could not per- fect the instruments by delivery. The word 'executed,^ used in the statute in connection with the acts mentioned, manifestly does not impart the final delivery ; for that is expressly directed to be done by the treasurer. Such de- livery as they could make was clearly not the technical delivery needed to complete the bonds as negotiable in- struments, because the power to hand over to the payee was not conceded to them in any event. ' ' And also that to the Governor, and the Governor alone, was given the power to determine whether the bonds should ever in fact issue, and if issued, when ; that his certificate in this respect was to be conclusive upon the state treasurer and that finally, since the bonds were never endorsed and de- livered by the treasurer as required by the statute, they never became operative. The act of delivery, the court held, was essential to the existence of any debt, bond or note, which although drawn and signed, so long as it is undelivered, is a nullity — not only does it take effect only by delivery but also, only on that delivery. §178. Bonds in escrow. Negotiable securities may be delivered in escrow, that is, delivered to a third party not the payee, to hold until a certain event happens or certain conditions are com- plied with, the liability of the maker to commence as soon as the event happens or the conditions are fulfilled either with or without an actual delivery by the deposi- tary to the payee. A delivery of this character fre- quently occurs in an issue of railroad aid bonds which are 378 PUBLIC SECTJBITIES placed in the hands of some depositary to take effect upon the performance of certain conditions, generally the completion of the railroad to a specified extent. The authorities are at variance as to the validity of the bonds when delivered by the depositary before the performance of the conditions required or the happen- ing of the contingent event. Some hold that where by the statute the depositary holding them in escrow is charged with the duty of ascertaining and adjudging the performance of the condition or the happening of the contingent event, a delivery by him of the securities to a bona fide holder will be conclusive although the condi- tions have not been performed or the contingent event has not happened ; that the depositary is under such con- ditions the agent of the public corporation and respon- sible to it for the manner in which his duty is dis- charged.® On the other hand, there are cases which hold that a public corporation is not estopped from showing that conditions have not been complied with under the circum- stances noted and especially will this rule obtain if the purchasers have notice by the statute that the lawful delivery of the bonds was subject to the performance of the conditions required." The latter rule unquestionably applies where the de- positary is not charged by law with the duty of deter- mining whether the conditions have been performed and the requirements of the law complied with.^ 5 — Lewis V. Barbour County Township v. Post, 99 Fed. 659; Com'rs, 105 V. S. 739. The eertifi- Estill County, Kentucky v. Embry, eate of delivery to the proper offi- 144 Fed. 913; Sohmid v. Village of eial is conclusive as to this fact. Frankfort (Mich.), 91 N. W. 131. Provident Life & Trust Co. v. 6 — Mercer County v. Provident Mercer County, 170 XJ. S. 593. The Life & Trust Co. of Philadelphia, trustee held in this case to be the 72 Fed. 623; W. Va. & P. K. E. agent of the county and responsible Co. v. Harrison County Court (W. to it for the manner in which he Va.), 34 S. B. 786. discharged his duty. Pickens 7 — Mercer County v. Provident FOKMALITIES REQUIRED FOR ISSUE 379 If certain conditions are required to be performed by those entitled to the bonds the delivery can be delayed until such conditions or obligations are performed and this delay unless otherwise provided by law does not ren- der void such bonds upon the performance of the condi- tions. Delivery should then be made and can be de- manded from the corporate officials.^ Life & Trust Co. of Philadelphia, Graff, 114 Fed. 441; Thomas v. 72 Fed. 623. County of Morgan, 59 111. 479 ; Town 8— County of Henry v. Nicolay, of Eagle v. Kohn, 84 111. 292. 95 U. S. 619; Perkins County v. CHAPTEE VIII. COUPONS §■179. The payment of interest. In common with others belonging to the unfortunate class of debtors, from public corporations is required the payment of interest, "that constant, distinguishing, most irksome and disagreeable feature of indebtedness." Unless the authority to incur the indebtedness pro- vides otherwise, it is immaterial whether this is paid an- nually or semi-annually. No objection can be made to the validity of bonds where a statute fixes the rate of interest per annum if provision is made for its payment at lesser intervals. The parties may lawfully contract for the payment of the interest at the rate fixed before the principal debt becomes due and at periods shorter than one year.^ 1 — Com'rg of Marion County v. may be provided for by county eom- Clarke, 94 V. S. 278; Wilson v. missioners although the bonds have Neal, 23 Fed. 129; Board of Com'ra not been registered with the auditor of Onslow County v. Tollman, 145 of state as provided by law. Fed. 753, affirming 140 Fed. 89; Coler v. Board of Com'rs of California Bank v. Dunn, 66 Calif. Santa Fe County (N. Mex.), 27 Pac. 38; E. M. Derby & Co. v. City of 619. Any rate of Interest as fixed Modesta, 104 Calif. 515, 38 Pac. by vote of electors is valid in the 900; City of Bridgeport v. Housa- absence of a usury statute, tonic E. E. Co., 15 Conn. 475. Comjnonwealth v. Com'rs of Alle- State V. Hart, 46 La. Ann. 54, 14 gheny County, 32 Pa. 218. Although Bo. 430. One who collects from the bonds were issued and sold for less state interest on coupons clipped thaa par in violation of the statute from void bonds with knowledge of authorizing them, means for the pay- their invalidity must make restitu- ment of the accruing interest must tion to the state. be provided by the county issuing Com'rs of St. Louis County v. them. Nettleton, 22 Minn. 356. Interest Nelson v. Haywood County 380 COUPONS 381 There is usually no obligation resting upon a public corporation to pay interest upon securities before their issue.^ From the date of issue until its maturity, this obligation does exist in the manner and upon the terms specified in the evidences of indebtedness.^ After ma- ti^rity the cases differ though the weight of authority is to the effeqt that in the absence of statutory provisions to the contrary the securities bear interest until paid at the rate specified or that determined by the general laws of the state.* §180. Rate. The rate of interest to be paid may be fixed at a stated maximum in the authority conferring the power to is- sue the securities or this may be left to the discretion of officials charged with the public duty of issuing the obli- gations ; if the latter condition exists, arrangements made by the officials with creditors in respect to the rate to be paid cannot be interfered with by the courts and the (Tenn.), 11 S. W. 885, 3 Piok 781. Bonds are not void for usury which bear interest at the legal rate where payable which is in another state and where the legal rate is greater than in Tennessee. Morrell v. Smith County (Texas), 33 S. W. 899. The amount of cou- pons paid before railroad aid bonds were purchased cannot be deducted in a subsequent action to recover on the bonds from the amount of the principal due. 2 — United States v. County of Clark, 95 U. S. 769; Com'rs of Sinking Fund of LouisviUe v. Zimmerman, 41 S. W. 428. 3— Tesler v. City of Seattle, 1 Wash. St. 308, 25 Pac. 1014. The citation of authorities on this propo- sition is unnecessary. 4r— Kendall v. Porter (Calif.), 45 Pac. 333. The fact that interest coupons attached to bonds do not extend beyond their maturity, does not raise the presumption that the bonds were not intended to bear interest after maturity. EUis v. Witmer (CaUf.), 66 Pac. 301; Peo- ple V. Getzendaner, 137 111. 234, 34 N. B. 297; but see United States V. State, 136 U. S. 211. A state cannot be compelled to pay inter- est on its bonds after the principal has become due unless its consent to do this has been manifested by an act of its legislature or by a lawful contract of its executive offi- cers. Meyer v. City and County of San Francisco (Calif.), 88 Pac. 722; City of Chicago v. English, 80 111. App. 163; State v. Mayes, 28 Miss. 706. 382 PTJBLIO SECTJEITIBS fixing of a rate affords no ground for relief by tax- payers.^ Where, however, a maximmn rate is fixed by the act conferring the authority, no discretionary power on the part of public officials as above suggested exists. If the bonds are issued bearing a greater rate than that pro- vided although they will not be invalidated thereby yet the excess of interest is void and cannot be collected.^ If by skillful financiering or through opportune and favorable financial conditions the officials are enabled to 5— People V. Ford County, 63 111. 142. Bate of interest to be paid discretionary up to limit fixed by the authority to issue bonds. Beattie v. Andrew County, 56 Mo. 42. Any rate of interest may be fixed that is not prohibited by law in the absence of a special provision in regard to interest so held as to railroad aid bonds. State ex rel. City of Carthage v. Gordon (Mo.), 116 S. W. 1099. Barr v. City of Philadelphia, 191 Pa. St. 438, 43 Atl. 335. Where an ordinance for a loan provided that "interest on the said loan at a rate not exceeding 3%% per an- num shall be paid by the city" and it further provided "that the mayor is hereby authorized to borrow in such proportions as in his judgment the best interests of the city de- mand," the rate of interest is fixed at 3%% and no discretionary power is vested in the mayor. See also Scott V. Hayes (Ind.), 70 N. E. 879, as to sufficiency of ordinance, fixing rate of interest. 6 — Lewis V. Clarendon, 5 Dill. 329, Fed. Cas. No. 8,380. • Brook V. City of Oakland (Calif.), 117 Pac. 433. A provision limiting rate of interest on city obligations held not to apply to local improve- ment securities. Johnson County v. Stark, 24 111. 75. City of Quiney v. Warfield, 25 111. 317. In this case the statute author- ized but 8%, while bonds were issued bearing interest at 12%, the bonds were held valid but with in- terest at the rate of 8% only, the court said: "All acts performed in excess or beyond the power dele- gated must be regarded as unwar- ranted, but if after the revocation of such acts there has been enough done to show a proper execution of the power, the act will be sustained irrespective of the acts performed beyond the power delegated, — in other words, so much of the act done as is within the power granted shall be upheld, while all beyond the power shall be rejected as an excess of power." Sherlock v. Vil- lage of Winnetka, 68 111. 530; Park- inson v. City of Parker, 85 Pa. St. 313; see also Milan v. Tenn. Cen- tral E. E. Co., 79 Tenn. 329, hold- ing that an issue of bonds of a de- nomination and a rate of interest greater than that authorized by stat- ute is null and void; but see Yes- ler V. City of Seattle, 1 Wash. St. 308, 25 Pac. 1014. COUPONS 383 issue securities bearing a less rate of interest than the maxunum allowed by law, this cannot affect the validity of the bonds issued/ The interest payments as they fall due from time to time are provided for by coupons, so-called attached to bonds and the principles of laws relating to which will be considered in the following sections. §181. Coupons, definition. The term "coupon" is derived from the French "cou- per ' ' to cut, and it is defined by Worcester to signify one of the interest certificates attached to transferable bonds and of which there are usually as many as there are pay- ments to be made, so-called because it is cut off when presented for payment. They are substantially a min- ute and concise repetition of what is contained in greater detail in the bond to which they are attached, and from which they are to be separated at the convenience of the holder and negotiated as money or the representative of money by simple delivery.* Mr. Justice Nelson in a case in the Supreme Court of the United States,^ in considering the nature of a cou- pon and defining it said : "The coupon is not an independent instrument like a 7 — Prantz v. Jacob (Ky.), 11 S. of the State of Virginia as author- W. 54; Omaha National Bank v. ized by the funding acts of March Omaha, 15 Nebr. 333; Town of 30, 1871 and March 28, 1879. Lancaster v. First National Bank, Striekler v. Yager, 29 Fed. 244; 80 S. C. 547, 61 S. E. 1025; Bed Evertsen v. National Bank of New- Eiver Furnace Co. v. Tenn. Cent. E. port, 4 Hun. 569, 66 N. Y. 14; E. Co. (Tenn.), 87 S. W. 1016. Antoni v. Wright, 22 Gratt (Va.), 8 — Daniels Negotiable Instru- 833 ; Poindexter v. Greenhow, 84 Va. ments, 5th. Ed., Sec. 1489; Bur- 441, 4 S. B. 742, following Antoni roughs Public Securities, Sec. 48, et v. Greenhow, 107 U. S. 769; see seq. ; City of Kenosha v. Lamson, 9 also cases cited generally under the Wall. 477; Moore T. Greenhow, 114 following notes. TJ. S. 338. 9 — City of Kenosha v. Lamson, 9 Vashon v. Greenhow, 135 U. S. Wall. 483. 713, construing the coupon contract 384 PUBLIC SEOXJBITIES promissory note for a sum of money but is given for in- terest, thereafter to become due upon the bond which cou- pon is a parcel of the bond and partakes of its nature; * * * The coupons are substantially but copies from the body of the bond in respect to the interest and as is well-known are given to the holder of the bond for the purpose : first, of enabling him to collect the interest at the time and place mentioned without the trouble of pre- senting the bond every time it becomes due ; and, second, to enable the holder to realize the interest due or to be- come due by negotiating the coupon to the bearer in busi- ness transactions to whom the duty of collecting them devolves." Coupons are defined in another case in the same court ^^ as ' ' written contracts for the payment of a definite sum of money on a given day and being drawn and executed in a form and mode for the very purpose that they may be separated from the bonds, it is held that they are nego- tiable and that a suit may be maintained on them without the necessity of producing the bonds to which they were attached. ' ' A coupon is therefore a written promise by the maker of the security to which it may be or was originally attached to pay one of the installments of interest due upon the principal." § 182. Power to issue. It will be remembered that the right to issue negotiable securities is but seldom implied from the grant of author- ity to borrow money or incur indebtedness. Where the power exists to issue negotiable securities the right to issue them with coupons attached is implied without question and such right clearly exists where in direct 10 — Aurora City v. West, 7 Wall. 214; Daniels Negotiable Instru- 82. ments, '5th. Ed., Sec. 1490. 11 — Abbott Munic. Corps., See. COUPONS ' 385 terms the lawful authority to issue negotiable bonds with coupons attached has been given. Illustrative of the principle that the power impliedly exists a case can be cited from the Supreme Court of the United States ^^ where it was said by the court : "But it is further insisted that even if the bonds were valid, the coupons were not because coupons are not named in the section of the sta- tute authorizing the issue of the bonds. But coupons are simply the instruments containing the promise to pay interest, and the express authority was to issue bonds bearing interest. While it is true that the power to borrow money granted to a municipal corporation does not carry with it by implication the power to issue nego- tiable bonds we are of the opinion that the express power to issue bonds bearing interest carries with it the power to attach to those bonds interest coupons. ' ' § 183. The coupon; its form. Coupons, as commonly issued, are in the form of an express promise to pay to the bearer the interest due at a fixed time and place. They are then considered as nego- tiable instruments complete in themselves and can be declared upon without reference to the bond from which they are detached.^ ^ In other instances they are in the form of a check or draft upon some banking house in favor of the bearer, and again they may be in the form of a bill of exchange.^* 12 — Board of Education of the and place of payment but contain- Ojty of Atchison v. De Kay, 148 ing no promise to pay the interest U. S. 591. the rule stated in the text will not 13 — City of Lexington v. Butler, apply. 14 Wall. 282; see cases cited Sec. 14 — Woods v. Lawrence, 1 Black 193 post; but see Woods v. Law- 390; Moran v. Com'rs of Miami rence County, 1 Black 386, where County, 2 Black 128; Arents v. it is held that if the coupon is a Commonwealth, 18 Gratt (Va.), mere memorandum of the amount 750. of interest due stating the time p. s.— 25 386 PUBLIC SECUKITIES In whatever' form they may be drawn or executed the legal character and intent of the coupon is the same. It is to furnish the holder with legal evidence of the amount of the interest due at a certain time or place upon valid obligations and theretofore issued and of his right to receive the same.^^ § 184. Illustrative forms of coupons. ' ' County of Lawrence. "Warrant No. 37. For thirty dollars." "Being for six months' interest on Bond No. pay- able on the first day of January, A. D. 1873, at the office of the Pennsylvania Eailroad Company in the city of Philadelphia. "$30. , Clerk."" "Auditor's Office, Miami County, "Peru, Indiana. ' ' The treasurer of said county will pay the legal holder hereof, one hundred dollars on the first day of September, 1857, on presentation thereof, being for interest due on the obligation of said county. No.' 16, given to the Peru and Indianapolis Railroad Company. By order of the commissioners. "Ira Mendenhall, "County Auditor."!^ 15 — The City of Kenosha v. Lam- 5th Ed., See. 1493. ' ' In all of the son, 9 Wall. 477. Beside the cou- eases the coupon is furnished as pons are given simply as a. eon- evidence of a sum due on the bond venient mode of obtaining payment or interest at a particular time and of the interest as it becomes due place and as authority to the holder upon the bonds. * * * It is to receive it." See also cases cited issued for interest due at a certain in section 181, ante, day and place on a bond giving its 16 — Woods v. Lawrence, 1 Black number and date. Woods v. Law- 390. rence County, 1 Black 386; Knox 17 — Moran v. Com'rs of Miami County V. Aspinwall, 21 How. 539. County, 2 Black 128. Daniel Negotiable Instruments, COUPONS 387 "No. 3521. "Nashville, Dec. 23, 1868. ' ' Treasurer, Corporation of Nashville. "Pay to A. J. Duncan, or bearer, One Thousand Dollars on account of waterwork. "A. E. Alden. W. Mills, ' ' Mayor. Eecorder. "(Indorsed) Thos G. Magrane, T'r, Dec. 26, 1868." ^^ ' * Humboldt Township. $17.50. ' ' ' ' The Treasurer of Humboldt Township, Allen County, Kansas, will pay the bearer, the sum of seventeen and 50/100 dollars, at the Banking House of Gilman, Son & Co., in the City of New York, on the 31st day of Decem- ber, A. D. 1873. "Z. Wisner, "Chairman County Commissioners. "Attest: W. F. Waggoner, County Clerk." i» " Harrisonville, Cass County, July 11th, 1870. "The County of Cass promises to pay the sum of $25 on the eleventh day of January, 1873, being interest on bond No. 53, for $500, payable at the banking-house of Northup and Chick, in the city of New York, State of New York. "C. H. Dore, "Clerk of the County Court of Cass County, Mo."^" "$100. $100." "Butler, Bates County, Mo., January 18th, A. D. 1871. "The county of Bates acknowledges to owe the sum of $100, payable to bearer, on the eighteenth day of Jan- 18— Mayor, etc. of Nashville v. al., 92 U. S. 642, 23 L. Ed. 792. Eay, 19 Wall. 468, 22 L. Ed. 167. 20— County of Cass v. Johnston, 19— Humboldt Twp. v. Long, et 95 U. S. 360, 24 L, Ed. 416. 388 PUBLIC SECXTBITIES uary, 1872, at the Bank of America, in the City and State of New York, for one year's interest on bond No. 56. "W. I. Smith, "Clerk of the County Court of Bates County, Mo." ^i "Eeceivable at and after maturity for all taxes, debts and demands due the State. "The Commonwealth of Virginia will pay the bearer thirty dollars, interest due 1st January, 1884, on bond No, 2731. "Coupon No. 20. "Geo. Eye, ' ' Treasurer. ' ' ^^ " '$35.00. < < i rpj^g Town of Mentz, County of Cayuga, will pay the bearer hereof at the Fourth National Bank, in the City of New York, on the 15th day of July, 1876, the sum of thirty-five dollars, for six months' interest then due on bond No. 7. "'$35.00. " 'W. A. Halsey, " 'Commissioner.' "^^ "$— . (Coupon) $— . "The County of Chaffee, in the State of Colorado, will pay the bearer dollars, in the town of Buena Vista, or at the banking-house of Kountze Brothers, in the City of New York, on the first day of , being six months' interest on funding bond. No. , Series . "E. B. Jones, ' ' County Treasurer. " ^* 21— County of Bates v. Winters, 23— Rich v. Town of Mentz, 134 97 IT. S. 85, 24 L. Ed. 933. U. S. 632, 33 L. Ed. 1074. 22 — Poindexter v. Greenhow, 114 24 — Board of County Com'rs of U, 8. 270, 29 L. Ed. 185. the County of Chaffee v. Potter, 142 U. S. 355, 35 L. Ed. 1040. COUPONS 389 "The levee board of the State of Mississippi, district No. 1, will pay to the bearer on the 1st day of January, 1879, at the National Park Bank of New York, twenty ($20) dollars in currency of the United States, being the semi-annual interest on bond No. 52. "(Signed). "A. R. Howe, ' ' Treasurer. ' ' *° ' ' Coupon, City of Wheeling, guaranteed by the State of Virginia. "Duncan, Sherman & Co., of New York, will pay the bearer thirty dollars, the half-yearly interest on Wheel- ing bond No. — on the day of , 18 — . ' ' ^® §185. Execution. In the absence of statutory provisions designating cer- tain officials as authorized to execute the coupons, they are usually signed by an executive or administrative of- ficer of the public corporation.^^ Where additional signatures are required by statute or counter-signatures they may be necessary to their validity.^* A printed or lithographed signature upon the coupons is usually considered sufficient unless otherwise provided by law.^* The same questions in respect to the authority of an of- ficial to execute them and the delegation of authority by an administrative board to one of their number of this 25 — Woodruff v. State of Missis- with attached coupons not sealed as Bippi, 162 XJ. S. 291, 40 L. Ed. 973. required by statute, held in a suit 26 — ^Arents v. Commonwealth, 18 on the coupons that the bonds were Gratt. (Va.), 773. void. 27 — Town of East Lincoln v. 28 — ^Bissell v. Spring Valley Davenport, 94 U. S. 801 ; Thayer v. Twp., 110 U. S. 162, 28 L. Ed. 105. Montgomery County, 3 Dill. 389; 29 — Lynde v. The County, 16 King V. Johnson, 6 la. 265; but Wall. 6; McKee v. Vernon County, see Avery v. Springport, 14 Blatchf. 3 Dill. 210; Pennington v. Baehr, 272. Where a town issued bonds 48 Calif. 565. 390 PUBLIC SECUKITIES power may arise as in the execution of the bond itself and the same principles apply in a determination of what is a sufficient execution of the coupons.^" The same principles also apply in respect to informali- ties and irregularities involving the time when coupons are formally executed and it will be remembered that these, unless of the essence of the act to be done, will not affect the validity of the instrument executed.^^ §186. Payee. It is not necessary to the validity of coupons that they name a payee for while they are separate instruments from the bond yet they are construed together with it and the obligation to pay is without question sufficiently evident from the general character of the coupon and its construction when taken in connection with the bond from which it has been detached. The purpose and in- tent of the coupon as a legal obligation in the hand of bearer is established not only by the great weight of authorities but by well established custom and usage.^^ § 187. Coupons; their legal character. Coupons attached as interest warrants to bonds for the payment of money and lawfully issued by public cor- porations as well as the bonds to which they are attached, when they are made payable to order and endorsed in blank or made payable to bearer are transferable by de- livery and subject to the same rules and regulations so far as the title and rights of the holder are concerned 30 — Thayer v. Montgomery 32 — Woods v. Lawrence County, County, 3 Dill. 389 ; Phelps v. 1 Black 386 ; Smith v. Clark County, Town of Lewiston, 15 Blatchf. 131; 54 Mo. 58; Johnson v. County of see Sees. 167, et seq., ante. Stark, 24 111. 75; but see Evertsen 31 — Town of East Lincoln v. v. National Bank of Newport, 66 Davenport, 94 XJ. S. 801; see Sees. N. Y. 14. 166, et seq., ante. COUPONS 391 as negotiable bills of exchange and promissory notes. The holders of them if endorsed in blank or payable to bearer are as effectively shielded from the defense of prior equities between the original parties if unknown to them at the time of the transfer as the holders of any other class of negotiable securities.^^ They, though originally issued as appendant to bonds are transmutable into independent contracts for the pay- ment of the interest they represent by severance and de- livery pursuant to the intent of the obligors.^* If the 33 — Curtis v. County of Butler, 24 How. 436; Gelpeke v. Dubuque, I Wall. 175; Board of Com'rs of County of Knox v. Aspinwall, et al., 21 How. 539; Murray v. Lardner, 2 Wall. 110; Thompson V. Lee County, 3 Wall. 327; Aurora City V. West, 7 Wall. 82. County of Lexington v. Butler, 14 Wall. 282. Holders of such instru- ments, if the same are endorsed in blank or are payable to bearer are as effectually shielded from the de- fense of prior equities between the original parties if unknown to them at the time of the transfer, as the holders of any other class of negotiable instruments. Clark v. Iowa City, 20 Wall. 583; New Orleans v. Clark, 95 U. S. 644; Ketshum v. Duncan, 96 IT. S. 659; City of Bay v. Vansycle, 96 XJ. S. 675; Cooper v. Town of Thompson, 13 Blatchf. 434; Bank of Calif, v. Dunn, 66 Calif. 38; Dudley v. Board of Com'rs of Lake County (Colo.), 80 Fed. 672; Spooner v. Holmes, 102 Mass. 503. Manhattan Savings Institute v. New York National Exchange Bank, 170 N. y. 58, 62 N. E. 1079. Where the negotiability of coupons is not restricted they are payable to any subsequent owner in good faith al- though stolen. City of Memphis v. Bethel (Tenn.), 17 S. W. 191; but see Arents v. Commonwealth, 18 Gratt. (Va.), 750. 34 — Board of Com'rs of County of Knox v. Aspinwall, et al., 21 How. 539. A question was made upon the argument, that the suit could not be maintained upon the coupons without the production of the bonds to which they had been attached. But the answer is, that these coupons or warrants for the interest were drawn and executed in the form and mode for the very purpose of separating them from the bond, and thereby dispensing with the necessity of its production at the time of the accruing of each installment of interest, and at the same time furnish complete evidence of the payment of the interest to the makers of the obligation. Stewart v. Lansing, 104 U. S. 505; McCoy V. Washington County, 3 Wall. Jr. 381; Kinnard v. Cass County, 3 Dill. 147; Trustees of Internal Improvement Fund v. Lewis, 34 Fla. 424; Town of Cicero V. Clifford, 53 Ind. 191; Evertsen V. National Bank of Newport, 66 N. Y. 14; Burroughs v. Richmond County, 65 N. C. 234; County of Beaver v. Armstrong, 44 Pa. St. 63; 392 PUBLIC SECURITIES coupon however imperfectly states the contract between the parties in respect to the interest to be paid, it will be necessary to construe the bond and the coupon together and the latter will be controlled by the provi- sions in the bond and this is also the rule where there is a variance between the coupon and the bonds.^^ As commonly drawn they are regarded as negotiable instruments, but if they do not contain words of nego- tiability this character will be denied them.^" The dif- ference between coupons negotiable in form and coupons in the form of interest warrants is well illustrated in the case of Evertsen v. National Bank of Newport ^^ where coupons of the two classes were sent to New York by express, they were stolen and came into the hands of a bona fide holder for value. The court held that the holder could recover as to the negotiable coupons notwithstand- ing the fact that they were stolen from the true owner and in the case of the non-negotiable coupons in the form of interest warrants, he obtained no better title than the vendor. In Burroughs on Public Securities ^^ the author says : "If the parties desire their paper to be negotiable they must put it in the form of commercial paper; coupons are only negotiable when in the form which by the law- merchant makes them negotiable as representatives of money. It is doubted if it is within the power of parties but see Clark v. Janesville, 1 Bia- gusta Bank v. Augusta, 49 Me. 507. sell 98. Evertsen v. National bank of 35 — City of Lexington v. Butler, Newport, 66 N. Y. 14. The nego- 14 Wall. 282; MeClure v. Town- tiability of coupons is not affected ship of Oxford, 94 U. S. 429. by a recital in them that they were 36 — City of Atchison v. Butcher, for the interest upon bonds speci- 3 Kan. 104. In this case the cou- fied by numbers. Partridge v. pons were payable to bearer but at- Bank of England, 9 Q. B. 396; but tached to bonds containing no ne- see Town of Queensbury v. Culver, gotiable words, and the court held- 19 Wall. 83. that the coupon owner was an in- 37 — 66 N. Y. 14. nocent holder entitled to the pro- 38 — p. 576. ! taction of the law-merchant. Au- COUPONS 393 to give a negotiable character to an instrument not in the form known to the law as negotiable." §188. Payment. Coupons are in effect promissory notes due on the day fixed for the payment of the interest on bonds and like promissory notes due on a specified date payment need not be demanded of the maker on that day in order that the holder of them may maintain his right to enforce them at a subsequent time subject only to the statute of limitations which may run against such instruments.^^ Neither is it necessary that they be presented for al- lowance and approval under statutory provisions requir- ing the presentation of claims to certain designated of- ficials for their allowance and approval.*" Where, however, the coupons have been endorsed by another, the same strictness in regard to presentment and demand is essential to charge the endorser which applies to other commercial paper.* ^ The coupon should be presented at maturity and the endorser duly notified of a failure by the original maker to pay in accordance with the terms of his contract.*^ 39 — Greene County t. Daniel, 102 40 — County of Greene v. Daniel, tJ. S. 187. 102 U. S. 187. The claim was to Walnut V. Wade, 103 U. S. 683. all intents and purposes audited by The failure to present the coupons the court when the bonds were for payment does not prevent the issued, the validity and the amount running of interest. Smith v. Talla- of the liability were then definitely poosa County, 2 Woods 574. fixed. Lorsbaeh v, Lincoln County Hughes County v. Livingston, 104 (Nev.), 94 Ted. 963; Shinbone v. Fed. 306. The fact that coupons Eandolph County, 56 Ala. 183; are made payable at a particular State v. Lincoln County Com'rs, 23 place does not make a presentation Nev. 263, 45 Pac. 982; but see for payment at that place necessary People v. Fogg, 11 Calif. 351. before an action can be maintained 41 — Bonner v. City of New Or- upon them. State v. Bank of Wash- leans, 2 Woods 135 ; Evertsen v. ington, 18 Ark. 554; City of Jeffer- National Bank of Newport, 66 N. sonville v. Patterson, 26 lud. 16; T. 14. Mayor, etc. v. Nashville v. First Na- 42 — Bonner v. New Orleans, 2 tional Bank, 57 Tenn. 402. Woods C. C. 135 ; Hodges v. Shuler, 394 PUBLIC SECTJEITIES The obligation of an endorser is direct. He insures the •payment of the debt upon the failure of the original maker to do so. In the case of a guarantor, the ulti- mate solvency of the original maker only is assured. Where the payment of bonds and coupons have only been guaranteed the guarantor is responsible upon a final fail- ure to realize from the assets of the obligor the payment of the securities issued.*^ §189. Time, place and order of payment. The fact that coupons are made payable at a certain place or a certain time does not necessarily require their presentment or a demand for their payment at that time and place. The promise to pay is not defeated by the failure of the holder to present the coupons or demand their payment at the very instant they become due.*^ i It is not necessary that they be made payable within the geographical limits of the corporation issuing them unless so directed by statute and even then some cases hold that the provision is a directory one merely.^^ 22 N. Y. 114; Lane v. East Tenn., railroad company which afterwards etc. B. R. Co., 13 Lea (Tenn.) 547. became insolvent, the payment of 43 — New Orleans v. Clark, 65 V. which with the interest was guar- S. 644; Electric Plaster v. Blue anteed by the state. County of Eapids City Township (Kan.), 96 Lancaster v. Sheraw & C. E. E. Co. Pae. 68. (S. C), 5 S. E. 338; Arents v. State V. Clinton County, 6 Oh. St. Commonwealth, 18 Gratt. (Va.) 771. 280. A railroad company by eon- 44 — See Sec. 188, ante, tract in writing agreed with the 45 — The City of Kenosha v. Lam- county to pay the interest on aid son, 9 Wall. 478; City of Lexington bonds issued by the county. The v. Butler, 14 Wall. 282; Town of railroad company paid to the' bond Lancaster v. First National Bank, holders the interest as it became due 80 S. C. 547, 61 S. E. 1025; see for the first three years only, the also See. 357, post, upon the place county was held liable for the in- of payment of bonds; but see Peo- terest becoming due after that date. pie v. City of Tazewell, 22 111. 147, State V. Spartanburg, etc. E. E. and Johnson v. County of Stark, 24 Co., 8 S. C. 129, construing liability 111. 75, which hold that unless espe- of the state for bonds issued by a cially authorized by law a munic- COUPONS 395 The order of payment is generally immaterial and only becomes so in case of a sale of property specifically pledged to pay them/" If payable out of a special fund it is generally required in an action to enforce payment to allege and prove the existence of the fund and in case there are not moneys sufficient in this -fund, a demand for payment is properly refused and the holder of such coupons will have no right to recover the amount due fl-om the general revenues of the corporation.*^ If the obligation is one which is a proper charge both against a special fund and the gen- eral revenues of the corporation, it will only be neces- sary to prove the insufficiency of the special fund to establish the right of the coupon holder to recover from ipal corporation cannot bind itself to pay indebtedness at any other place than its treasury. 46 — ^Ketchum v. Duncan, 96 XJ. S. 659 ; Munson v. Mudgett, 15 Wash. 321, 46 Pac. 2^6. The payment of interest coupons cannot be postponed in favor of warrants subsequently issued but previously presented for payment under act of March 21st, 1890, Sec. 8 which provides that interest coupons on county bonds shall be considered for all purposes county warrants. 47 — Corcoran v. Chesapeake & Ohio Canal Co., 1 MacArthnr 358; Hall V. New Orleans, 19 Fed. 870. Board of Com'rs of Onslow County V. Tollman, 145 Fed. 753. Taxes levied and collected especially to pay the interest coupons of rail- road aid bonds are impressed with a trust in the hands of th« county treasurer for the benefit of the coupon owners. Bates v. Gerber, 82 Calif. S50, 22 Pac. 1115; Davis v. City of Sacramento, 82 Calif. 562, 22 Pac. 1118. Owensboro Water Works v. City of Owensboro (Ky.), 96 N. W. 867. A sum received for accrued interest on bonds sold should be set apart and applied to the payment of the coupons attached when_ they become due. Brinkworth v. Grable (Nebr.), 63 N. W. 952; Ghiglione v. Marsh, 48 N. Y. S. 604. Mall V. City of Portland (Ore.), 56 Pac. 654. The property of one paying a special assessment in full instead of by installments as per- mitted by the law cannot be charged with the interest on bonds issued for the construction of that special improvement. Seymour v. Frost, 25 Wash. 644, 66 Pac. 90; see also City of Boise City v. Union Bank & Trust Co. (Ida.), 63 Pac. 107, relative to compliance with Const., Art. 8, Sec. 3, requiring pro- vision to be made for the collection of an annual tax to pay the inter- est on bonds issued. State v. Eath- burn (Wash.), 2 Pac. 85; see also Sees. 363, et seq., post. 396 PUBLIC SECUEITIES the general funds or revenues of the public corpora- tion.^s §190. Medium of payment. The medium of payment of interest due on outstanding negotiable securities may be determined either by the authority conferring the power to issue or in the ab- sence of provisions in this respect by the terms of the contract itself. It may be gold coin of a specified weight and fineness, treasury notes or other forms of currency. The rights of a coupon holder to demand and receive payment in a prescribed medium may be waived by him and the acceptance of a check, draft or bill of exchange will be regarded as a sufficient payment.*" The question has been raised of the right of a public corporation to deduct from the amount due on coupons the taxes due from the holder to the public corporation. In a case in the Supreme Court of the United States ^^ the city of Charleston by ordinance imposed a tax on all the real and personal property within the city of two cents on the dollar, and further directed that taxes due should be retained by the city treasurer out of interest obligations of the city when due and payable. Murray, a holder of the bonds of the city issued prior to the pas- sage of the ordinance brought suit against the city for the amount retained out of the interest due him. The court held that he was entitled to recover for the city could not under the guise of taxation interfere in any manner with its promise to pay the creditor the amount agreed upon and any action by it which diminished the amount due the creditor, impaired the obligation of the contract between him and the city and was therefore void.^^ 48 — Seymour v. Frost (Wash.), S. 433; see also Hartman v. Green- 66 Pae. 90. how, 102 U. S. 672. 49 — See Sec. 348, post. 51 — See also Hartman v. Green- 50— Murray v. Charleston, 96 TJ. how, 102 V. S. 672. COUPONS 397 § 191. Coupons receivable in payment of taxes. Interest coupons attachfed to negotiable securities is- sued either by the state itself or by its subordinate civil subdivisions are often by the authority conferring the power to issue made receivable in payment of taxes or other dues to the state or the subordinate public corpora- tion. It is customary in such cases that the coupons should show upon their face that they are so receivable. Provisions of the character noted increase the commercial value of both of the bonds and the coupons and afford the holder a means of payment which other creditors do not possess for, as has been said: "So long as the mu- nicipality or the state finds it necessary to levy and col- lect taxes, so long will there by a demand for the cou- pons. " ^^ The courts have held that the insertion of pro- visions of the character noted constitute a contract obli- gation between the corporation issuing the securities and the holder of the coupons which cannot be impaired either by a refusal of the corporation to accept them for the uses specified or by the passage of subsequent legislation which prohibits the issue of securities having coupons attached and containing the privilege noted. This rule applies to both coupons which are still attached to the bonds and those which have been severed.^^ In a case decided in the Supreme Court of the United States,"* the opinion was rendered by Mr. Justice Field 52 — Hartman v. Greenhow, 102 U. authorized to be received in satis- S. 672; Moore t. Greenhow, 114 U. faction of certain specified taxes S. 338; Willis v. Miller, 29 Fed. are so limited. Commonwealth t. 238; Strickler v. Yager, 29 Ted. McCullough (Va.), 19 S. E. 114; 244. Poindexter v. Greenhow (Va.), 4 S. Shell V. Carter Sounty (Teun.), E. 742; see also Sec. 81, et seq., 42 S. W. 78. The acceptance in ante. payment of taxes of coupons will 53 — Hartman v. Greenhow, 102 not be held a ratification of the TJ. S. 672; Poindexter v. Greenhow, bonds from which they are cut. 114 TJ. 8 270. Antoiti V. Wright, 22 Gratt. (Va.) 54 — Hartman v. Greenhow, 102 833; but see Wyman v. Searle TJ. S. 672. (Nebr.), 128 N. W. 801. Coupons 398 » PUBLIC SECTJEITIES and on the following facts : In 1871, the state of Virginia issued bonds to its creditors payable to order or to bearer and the coupons which were attached were payable to bearer. The coupons were payable semi-annually and declared that they should be "receivable at and after maturity for all taxes, debts, dues and demands due the state." In 1872, the Legislature of Virginia passed an act which provided in effect that thereafter it should not be lawful for any of the officers charged with the col- lection of taxes or demands due the state to receive in payment thereof anything else than gold or silver coin. United States Treasury notes, or notes of a National Bank of the United States. The plaintiff in the case tendered to the treasurer of the City of Eichmond, Vir- ginia, in 1878 for taxes due, coupons from bonds issued under the funding act of 1871. The tender was refused and he applied to the Circuit Court of Appeals of Vir- ginia for a mandamus to compel the treasurer to receive the coupons. The case was ultimately taken to the Su- preme Court of the United States and' that court held that the writ of mandamus should issue to compel the treas- urer to receive the coupons tendered to him in payment of taxes due the state for their full amount, and said in part after referring to the funding act and exchange of securities thereunder: "The contract was thus con- summated between the state and the holders of the new bonds and the holders of the coupons from the obligation of which she could not without their consent release herself by any subsequent legislation. She thus bound herself, not only to pay the bonds when they became due but to receive the interest coupons from the bearer at and after their maturity to their full amount for any taxes or dues by him to the state. This responsibility of the coupons for such taxes and dues was written on their face and accompanied them into whatever hands they passed. It constituted their chief value and was the main consid- eration offered the holders of the old bonds to surrender COUPONS 399 them and accept new bonds for two-thirds of their amount." The court also held in accordance with the rule stated in Murray v. Charleston, cited above, that the coupon holder was entitled to the full amount due him for interest and that a tax imposed on the bonds under au- thority of an act passed subsequent to their issue could not be deducted from the full amount due without impair- ing the obligation of the contract between the creditor and the state to pay that full amount. In the later case of Poindexter v. Greenhow,^^ the court held that by the terms of the funding act of March 30, 1871, of the State of Virginia, and through the issue of bonds and coupons in virtue of the same, a contract was made between every coupon holder and the state that such coupons ' ' should be receivable at and after maturity for all taxes, debts, dues and demands due the state;" the right of the coupon holder under which it was to have his coupon received for taxes when offered and that any act of the state which forbid the receipt of these coupons for taxes was a violation of the contract and void as against the coupon holder ; that the faculty of being receivable in payment of taxes was of the essence of the right and con- stituted a self -executing remedy in the hands of the tax payer. § 192. Days of grace. Whether coupons are entitled to days of grace like other commercial paper payable on a given date is at the present time largely an academic question, — days of grace having been abolished in nearly all of th© states of the Union. If allowed, however, coupons will be en- titled to them since regarded as commercial paper and circulating as negotiable instruments with all of their attributes.®^ 55—114 XT. S. 270. ties, Sec. 348; Evertsen v. National 56 — ^Burroughs on Public Securi- Bank of Newport, 66 N. Yi 14. ties, p. 578 J Hainer Munic. Securi- 400 PUBLIC SECUEITIES There are some authorities, however, which hold to the contrary.*^ § 193. Severed coupons. A coupon as representing an installment of interest due upon the bond to which it is originally attached is uni- versally regarded when couched in the terms of a nego- tiable instrument as a separate and independent prom- ise to pay the installment of interest specified therein and may be detached or severed from the bond without de- stroying its character as a negotiable instrument or as a separate and independent promise to pay. In legal effect, it is equivalent to a separate bond for the different installments of interest and is a complete instrument capable of sustaining a separate action without refer- ence to the maturity or the ownership of the bond from which it has been detached.^^ It has been held, however, that where the coupons upon their face refer to the bonds from which they were de- tached that this puts the purchaser upon inquiry as to 57— Alabama, etc. E. E. Co. v. Morehead (Ky.), 46 S. W. 216; Eobinson, 56 Fed. 690; Chaffee v. Augusta Bank v. City of Augusta, ■Middlesex E. E. Co., 146 Mass. 224; 49 Me. 507; First National Bank Daniels on Negotiable Instruments, of St. Paul v. Scott County Com'rs, Sec. 1490a; Arents v. Common- 14 Minn. 77; Smith v. Clark County, wealth, 18 Gratt. (Va ) 750. 54 Mo. 58; Evertsen v. National 58 — Thompson v. Lee County, 3 Bank of Newport, 66 N. Y. 14; Wall. 327; Eogers v. Burlington, 3 Burroughs v. Eichmond County Wall. 54; City of Kenosha v. Lam- Com'rs, 65 N. C. 234; City of Mem- son, 9 Wall. 477; Clark v. Iowa phis v. Bethel (Tenn.), 17 S. W. City, 20 Wall. 523; Town of Coloma 191; Brown v. Town of Pt. Pleas- V. Eaves, 92 V. S. 484; Marcy v. ant, 36 W. Va. 290, 15 S. E. 209; Township of Oswego, 92 XT. S. 634; see also Brinkworth v. Grable County of Scotland v. Thomas, 94 (Nebr.), 63 N. W. 952 in respect ■0. S. 682; Koshkonong v. Burton, to validity of coupons detached 104 U. S. 668; Thompson v. Per- from bonds prior to registration as rine, 106 V. S. 589; Kennard v. provided in compiled statutes of Cass County, 3 Dill. 147; Dudley v. Nebraska, 1893, c. 9, Sec. 37; Beav- Lake County Com'rs, 80 Fed. 672 er v. Armstrong, 46 Pa. St. 63. , C. C. A.; Muhlenburg County v. COUPONS 401 the bonds and charges him with notice of all they con- taxn.^'' The first rule noted is well settled by an unquestioned line of authority. In a late case in the Supreme Court of the United States '^° it was said: "Each matured coupon is a separate cause of action. It may be detached from the bond and sold by itself. Indeed, the title to several matured coupons of the same bond may be in as many different persons and upon each a distinct and separate action be maintained. So, while the promises of the bond and of the coupons in the first instance are upon the same paper, and the coupons are for interest due upon the bond, yet the promise to pay the coupon is as distinct from that to pay the bond, as though the two promises were placed in different instruments, upon different paper." »• §194. Overdue coupons. The questions involved in a discussion of the subject of overdue coupons are principally two, namely: First, the effect of the fact that a matured coupon is unpaid has upon the bond itself to which the coupon is attached or from which it has been severed ; and Second, the right of the coupon holder to collect inter- est upon the matured and unpaid coupon from and after the time it became due and payable and at what rate.®^ 69 — McClure v. Township of Ox- rights of bond holder to have bonds ford, 94 U. S. 429; Bailey v. extended without matured coupons County of Buchanan, 110 N. Y. attached under Louisiana Act. No. 469. 58 of 1882. Commonwealth v. 60 — Nesbit v. Riverside Independ- Chesapeake, etc. Canal Co., 32 Md. ent District, 144 U, S. 610. 501, 35 Md. 1. 61 — ^Aurora City v. West, 7 Wall. Flagg v. MsLyor, etc. of Palmyra, 82; Town of Genoa v. Woodruff, 33 Mo. 440. A municipality having 92 U. S. 502. issued bonds, they may be corn- New Orleans Insurance Associa- pelled to raise money to pay the in- tion V. City of New Orleans, 43 La. terest. Burroughs v. Eichmond, 65 Ann. 180, 8 So. 83, construing N. C. 234. p. s.— 26 402 PUBLIC SECUBITIES Effect on the bond. In an early case in the Supreme Court of the United States,''^ it is held that the presence of past coupons on a bond was an evidence of itself of dishonor sufficient to put the purchaser on inquiry. The later cases, in that court, however, have qualified the doctrine as laid down above and the rule in the Supreme Court of the United States is substantially that overdue and unpaid interest coupons attached to bonds are not in themselves sufficient to put the purchaser on inquiry. In Cromwell v. Sac County,^'* Mr. Justice Field said: 62— Parsons v. Jackson, 99 U. S. 434; German American Bank v. City of Brenham, 35 Fed. 185; Town of Lansing v. Lytle, 38 Fed. 205; see also First National Bank of St. Paul V. County Com'rs of Scott County, 14 Minn. 59 (Gill 77). The fact that it appeared upon the face of the bonds that the interest for several years was overdue and unpaid was, we think, a circum- stance of suspicion sufficient to put the plaintiff on his guard, the bonds were thus dishonored on their face. The interest equally with the prin- cipal is a part of the debt which they are intended to secure and it does not seem to us material whether the whole or only a part of that debt was overdue. When due the plain- tiff had a right of action for the recovery of the interest as for any other installment due on the bond. * * * The law is that a negotiable instrument payable at a time set is overdue as soon as that time has passed whether pay- able generally or at a specified place and the persons who takes it by endorsement or delivery after it is due gets no better title than the party had from whom he received it. The fact that the day of pay- ment has passed before the trans- fer is of itself a ground of sus- picion and sufficient to affect the title of the transferee. 63—96 U. S. 51; Eouede v. Jer- sey City, 18 Fed. Eep. 719. Daniel on Negotiable Instruments, 5th. Ed. 1506a. ' ' 'The simple fact that an installment of interest is overdue and unpaid, disconnected from other facts, is not sufficient to affect the position of one taking the bonds and subsequent coupons before their maturity for value as a bona fide holder. To hold other- wise would throw discredit on a large class of securities issued by municipal and private corporations, having years to run, with interest payable annually or semi-annually. Temporary financial pressure, the falling off of expected revenues or income, and many other causes hav- ing no connection with the orig- inal validity of such instruments, have heretofore, in many instances, prevented a punctual payment of every installment of interest as it is matured; and similar causes may be expected to prevent a punctual payment of interest in many in- stances hereafter. To hold that a failure to meet the interest as it matures, renders them, though they may have years to run, and COUPONS 403 ' ' The nonpayment of an installment of interest when due could not affect the negotiability of the bonds or the sub- sequent coupons. Until their maturity, the purchaser for value without notice of their validity as between ante- cedent parties would take them discharged from all in- firmities. ' ' Interest on overdue coupons. Detached interest cou- pons as a rule are negotiable instruments and passing from hand to hand as such are subject to the same rules that apply to other negotiable paper. On general prin- ciples, therefore, it is commonly conceded that they should draw interest after the payment of the principal of the coupon itself has been refused.** The principal question in respect to which a contro- versy arises relates to the rate to be allowed where the legal rate of interest as provided by statute differs from that made by the parties in their contract when the bonds all other coupons dishonored paper, subject to all- defenses against the original holders, would greatly im- pair the currency and credit of such securities, and correspondingly di- minish their value. ' ' See also Mur- ray V. Lardner, 2 Wall. 110; Smith V. Sac County, 11 Wall. 139; Ind. & 111. Central Ey. Co. v. Sprague, 103 U. S. 756; Miller v. Town of Berlin, 13 Blatchf. 245. 64— Aurora City v. West, 7 Wall. 82; Clark v. Iowa City, 20 Wall. 583; Town of Genoa v. Woodruff, 92 IT. S. 502; Walnut v. Wade, 103 U. S. 683; City of Cripple Creel£ f. Adams (Colo.), 85 Pac. 184; Town Council of Lexington v. Union National Bank, 22 So. 291; Bailey \. County of Buchanan, 54 N. Y. Super. Ct. 237. McLendon v. Com 'rs of Anson, 71 N. C. 28. Coupons on county bonds bear interest from the date of maturity notwithstanding delay in demanding payment. Mills v. Town of Jefferson, 20 Wis. 50; see also cases cited in the two fol- lowing notes; but see Graves v. Sa- line County, 104 Fed. 61. Where it was held that overdue interest cou- pons do not bear interest in the absence of an express agreement to pay the same following the rule as established by the decisions of the Supreme Court of Illinois that in that state interest is recoverable in no case except upon an express agreement to pay it and can be recovered only when the statute so authorizes. Bates v. Gerber, 82 Calif. 550, 22 Pac. 1115; Davis v. City of Sacramento, 82 Calif. 562, 22 Pac. 1118; Molineux v. State, 109 Calif. 378, 42 Pac. 34; Meyer V. City and County of San Fran- cisco (Calif.), 88 Pac. 722; Town of Mt. Morris v. Williams, 38 111. App. 401. 404 . PUBLIC SECURITIES were issued. This is largely a question of local law and the cages cited in the notes will be grouped on the follow- ing basis : First, those holding that interest is allowed at the same rate as named in the contract irrespective of statutory provisions ; •*" and, second, those cases holding that interest will be allowed at the rate fixed by statute irrespective of the contract agreement.*^ The rate to be allowed on overdue coupons as affected by the place of their payment where this differs from the locality of the public corporation issuing the bonds has also been a question for decision by the courts and the weight of authority is to the effect that the rate specified at the place of payment controls.®' § 195. Demand when necessary to recover interest on unpaid coupons. To enable the holder of a matured and unpaid coupon to recover interest on the amount due, is it necessary that demand should be made and the coupon presented for 65— Brewster t. Wakefield, 22 66— Cromwell v. County of Sac, How. 118. 96 U. S. 51; Holden v. Freedmen's Cromwell v. County of Sac, 96 U. Savings & Trust Co., 100 U. S. 72; S. 51. When the rate of interest Walnut v. Wade, 103 U. S. 683; at the place of contract differs from Scotland County v. Hill, 132 U. S. the rate at the place of payment 107; Hughes County, South Dakota the parties may contract for either v. Livingston, 104 Fed. 306. rate and the contract will govern, 67 — Gelpeke v. Dubuque, 1 Wall, referring to interest on bonds. But 175. Municipal bonds with coupons the court further held in this case payable to bearer having by univer- that "with reference to interest on sal usage and consent all the quali- the bonds as after their ipaturity, ties of commercial paper, a party it can be allowed only at the rate recovering on the coupons is en- of 6% under the law of Iowa," this titled to the amount of them with rate being less than fixed in the interest and exchange at the place contract. Ohio v. Frank, 103 XJ. whereby their terms were made pay- S. 697; Commonwealth of Virginia able. Town of Genoa v. Woodruff, V. Chesapeake & Ohio Canal Co., 32 92 U. S. 502; Walnut v. Wade, 103 Md. 501; Brannon v. Hursell, 112 XJ. S. 683; Pana v. Bowler, 107 Mass. 63; Pruyn v. Milwaukee, 18 U. S. 529; Cairo v. Zane, 149 V. Wis. 367. S. 122. COUPONS 405 payment at the time it is due? The authorities differ upon this point; some holding that no demand is neces- sary to enable the coupon holder to collect interest on the amount due and payable.®* While others and notably the Illinois cases hold to the doctrine that since in any event they can only draw interest upon an express de- mand for payment, that public corporations are not bound to seek their creditors like individuals in order to make payment of their indebtedness and until demand is made there is no default which will authorize tlie col- lection of interest on the amount due."* §196. Equities considered. In Burroughs on Public Securities/" the author states in respect to the subject of this section: "What are the equities which attach to over-due or dishonored com- mercial paper? The authorities are not entirely agreed on this subject. In a leading English case it is said to be those equities growing out of the original note trans- actions, and that it does not include offset acquired be- fore or after endorsement; ^^ and the rule is confined to equities between the maker or obligor and the payee; it does not apply to equities between successive takers; as 68— Gelpcke v. Dubuque, 1 Wall. 69— Johnson v. Stark County, 24 206; Thompson v. Lee County, 3 111. 75; City of Pekin v. Eeynolds, Wall. 332 ; Town of Genoa v. Wood- 31 m. 531 ; Chicago v. People, 56 ruff, 92 U. S. 504; but see Walnut m. 327; Emlen v. Lehigh Coal & V. Wade, 103 U. S. 683. The fail- j^av. Co., 47 Pa. St. 76; North ure to present the coupon for pay- p^_ ^ ^ ^^ ^_ ^^^^^^^ 54 p^_ Sj_ ment does not prevent the running g^. ^1,^^^^^, ^_ Com'rs of Me- of interest if the town had shown Dowell County, 67 N. C. 330; Mc- Lendon v. Com'rs of Anson County, 71 N. C. 38. that it had money ready to pay the coupons at the time and place where they were payable, this would have been a defense to the claim for in- '" ^P- °°— terest but no such proof was offered 71 — Burrough v. Moss, 21 E. C. nor was it claimed that the fact L. 558; Davis v. Miller, 14 Gratt. 1. existed. 406 PUBLIC SECTJEITIES to them, there must be actual notice, as in the case of paper not dishonored/^ "So far as the rule is applicable to coupons, or coupon bonds negotiable, the difference in the views of the courts is immaterial ; the equities that affect this class of securi- ties are principally irregularities in the issue of the bonds. They grow out of the original transaction, and arise between the maker or obligor and the payee, and thus come within the stricter rulings of the courts, which exclude all equities growing out of collateral matters." § 197. Statute of limitations. Interest coupons are universally considered when de- tached from bonds as negotiable instruments and con- stitute separate and independent demands or causes of actions which can be enforced without ownership of the bond from which detached and without presentation of or possession of that bond. The maturity of the bond from which detached is generally at a far distant day and the various installments of interest as represented by the coupons become due and payable during the inter- vening period at. regular intervals. Although independ- ent and separate instruments and capable of being de- tached without destroying their negotiability they are still to be coiistrued with and held as forming a part of the bond itself. If a statute of limitations operates for a shorter period of time as against a negotiable instru- ment of a like character as a severed coupon, yet because of the reasons above stated the courts have held that that statute of limitations is to be applied which limits the right to bring an action for a longer period of time as involving the bond itself, or stated in more concise terms, the limitations of actions on interest coupons de- 72 — National Bank of Washington V. Texas, 20 Wall. 89; Danl. on Negotiable Instruments, Sec. 725. COUPONS 407 tached from bonds is the same as that which applies to the bonds and a suit is not barred except by the same lapse of time which would bar a suit on the bond J ^ This period of limitation, however, commences to run as against the coupons when severed or attached from the date of their respective maturities independent of the maturity of the bond.''* Where by the statute of limitations the collection of the amount due on a matured coupon is barred, this same in- stallment of interest cannot be afterwards collected in an action brought to recover the principal due on the bond.''^ An offer made by a municipality for a compromise of its outstanding indebtedness and which was declined by the holders of certain coupons will not be regarded as such an acknowledgment of the debt or promise to pay as will interrupt the running of the statute,'^'' and a promise to pay or an acknowledgment of the indebtedness suffi- cient 'to interrupt the running of the statute must be made by officers of the municipality duly authorized to act in this respect and to the holder of the coupons or one au- thorized to represent himJ^ 73 — The City of Kenosha v. Lam- would bar a suit on the bond to son, 9 Wall. 477. which it was attached. Clark v. City of Lexington v. Butler, 14 Iowa City, 20 WaU. 583; Clarke v. Wall. 282. It is a, well-settled law Janesville, 1 Bissel 98; Kershaw v. that a suit upon a coupon is not Town of Hancock, 10 Fed. 541 ; barred by the statute of limitations Huey \. Macon County, 35 Fed. unless the lapse of time is sufli- 481. cient to bar also a suit upon the 74 — Clark v. Iowa City, 20 Wall, bond, as the coupon, if in the usual 583; Amy v. Dubuque, 98 TJ. S. form, is but a repetition of the 470; Koshkonong v. Burton, 104 contract in respect to the interest, U. S. 668. for the period of time therein men- 75 — City of Lexington v. Butler, tioned, which the bond makes upon 14 Wall. 282; Huey v. Macon the same subject, being given for County, 35 Fed. 481. interest thereafter to become due 76 — Edwards v. Bates County, 55 upon the bond, which interest is par- Fed. 436. eel of the bond and partakes of its 77 — Lincoln County v. Lunning, nature and is not barred by lapse of 133 U. 8. 529. time except for the same period as 408 PUBLIC SECURITIES An act of the legislature providing for the registration of overdue interest coupons of county and requiring the county treasurer to pay them thereafter from designated funds will be regarded as a new provision for their pay- ment which saves the right of action thereon from the statute of limitations^* 78 — Lincoln County v. Lunning, 133 U. S. 529. OHAPTEIi IX REFUNDING RENEWAL AND COMPROMISE SECURITIES § 198. Power to issue. Subordinate civil subdivisions of the state and the state itself may have incurred during corporate existence an authorized and legal indebtedness, evidenced by negotia- ble securities or other obligations to pay and originally based upon purchases made, contract obligations in- curred, judgments rendered or moneys borrowed from time to time ; these various obligations payable at differ- ent times and bearing interest at varying rates. To se- cure uniform and usually a less rate of interest with more favorable provisions for the partial payment of the prin- cipal of the debts thus outstanding, and at times optional with the maker, it is good business policy in the adminis- tration of the corporate finances, and therefore expedient and advisable to fund or refund as it is technically termed such indebtedness by the issue of negotiable securities in exchange for the old debts which thereupon become extinguished. It is also a common practice for public corporations when unable to meet their maturing indebt- edness to issue renewal bonds and generally upon more favorable terms. In both instances the refunding upon more favorable conditions either as to time of payment or the rate of interest may be due to the improved finan- cial credit of the corporation or a lowering of the pre- vailing rate of interest received by lenders on such in- vestments. The issue of the new or refunding bonds have 409 410 PtTBLIC SECUBITIES for their purpose with the proceeds the payment of out- standing and floating corporate indebtedness.^ The legality of the refunding or renewal securities when issued by a subordinate public corporation is nec- essarily based upon a grant of authority from the state and if issued by the state upon some legislative act passed in due form in accordance with the provisions of its or- ganic law. The legal authority to issue in all cases must first exist, all other questions connected with an issue of refunding or renewal securities are consequently subor- dinate to this essential.^ This authority may either be expressly given or im- pliedly possessed though the power to issue refunding or renewal bonds is not ordinarily impliedly possessed and especially where the original authority to contract the indebtedness was not sufficiently broad to authorize the issue of bonds. If, however, the original bonded debt was legally incurred some courts hold that the power to issue refunding or renewal bonds is fairly inferable or implied from the original grant of authority.* There are also decisions to the effect that the power to borrow money carries with it the implied power to give 1— Board of Liquidation v. Mc- 2 — Merrill v. Montieello, 138 U. Comb, 92 U. S. 531, construing the S. 673; New Orleans v. Southern various funding acts of the state Bank, 31 La. Ann. 560; Opinion of of Louisiana passed on January 24, Justices, 81 Me. 602, 18 Atl. 291. 1874, and March 2, 1875; as im- 3— Whitewell v. Pulaski County, pairing the rights of various credi- 2 Dill. 249. tors affected by the legislation. Johnson v. County of Stark, 24 Schuerman v. Territory, 60 Pac. 111. 75. The power may be created 895; Veatch v. City of Moscow by ratification of the acts of county (Ida.), 109 Pac. 722. officials'. Slayton v: Rogers (Ky.), 107 S. Galena v. Corwith, 48 111. 423. W. 696. The power to fund county The power to pay debts or pro- indebtedness carries with it the vide for their payment to fund them right to employ the necessary agents and issue the necessary evidences and attorneys in executing it. Mur- thereof exists in every corporation ray v. Fay (Wash.), 26 Pac. 533; without any express authority in its Diefenderfer v. State (Wyo.), 80 charter. State v. Babcock (Nebr.), Pac. 667. 37 N. W. 645. REFUNDING BENEWAL AND COMPROMISE SECUEITIES 411 as security or as evidence of such indebtedness the usual and necessary certificates or commercial instruments which enable the corporation to exercise the power ex- pressly granted to borrow money. An application of the principle, that the grant of a power carries with it the right to use all necessary, usual and appropriate means in its execution, to the issue of negotiable bonds and which consequently stamps them with validity. It will be remembered, however, that the great weight of au- thority is against the existence of an implied power to issue negotiable securities.* It must not be understood, however, from the state- ments above made that the right to issue refunding or re- newal bonds exists independent of an original grant of power or that they can be issued without regard to the for- malities required by law in the issue of negotiable bonds by public corporations. The power to issue must have been given either directly in a specific instance or indi- rectly when derived from a prior general grant of author- ity, limited in the manner and extent of its exercise by constitutional or statutory provisions if they exist. The conditions precedent must be performed and agencies designated by law used to the same extent and in the same manner as an issue of bonds not characterized by the term renewal, funding or refunding.^ 4-^See See. 84, et seq., ante. bearing bonds and this without ex- Portland Savings Bank v. City of press authority in its charter. It EvansviUe, 25 Fed. 389. In this is an inherent power and vital, ease the Common Council of the without which such organizations City was authorized "to borrow could not live; see, however, the money for the use of the city," and later case of Hardin v. McFarlan, under this authority it issued its 82 111. 140, modifying the rule stated renewal bonds which were held in the City of Galena case. City of valid. East St. Louis v. Maxwell, 99 111. City of Galena v. Corwith, 48 111. 439; Eogan v. Watertown, 30 Wis. 423. A city being in debt which 259. is evidenced by script or by promis- 5 — Atchison Board of Education sory notes may surely change the v. De Kay, 148 U. S. 591. form of indebtedness to interest CofBn v. Board of Com'rs of 412 PUBLIC SECURITIES § 199. Refunding bonds excluded from debt limitations. In many states where limitations as to amount or man- ner of issue have been placed upon the incurrence of debts or the issue of bonds by public corporations, spe- cial constitutional provisions are to be found excluding from the operation and prohibitive effect of such limita- tions the issue of refunding bonds for the purposes indi- cated or there may be found special provisions relating particularly to the funding of existing indebtedness. The states having such provisions are given in the note below.* Kearney County, 57 Fed.. 137 C. C. A. An act whicli provided "that no bonds of any kind shall be is- sued by any county, ' ' within one year after organization was amended to provide that no bonds except for school purposes should be voted for and issued by any county within that time, the proviso in respect to popular vote was held to apply to refunding bonds which might under general laws be issued with- out a popular vote. Hinckley v. City of Arkansas City, 69 Ted. 768. Purchasers of refunding bonds must ascertain whether the statutory requirements in respect to the passage of an ordi- nance have been performed. Brown v. Ingalls Township, 81 Fed. 485. An unauthorized board has no authority to issue refund- ing bonds. Eoberta v. City of Pa- ducah, 95 Fed. 62. CofSn V. Eichards, 6 Ida. 741, 59 Pae. 562. An ordinance providing for the "funding of outstanding indebtedness other than municipal bonds" was held invalid where the statute authorizing such action pro- vided that the indebtedness to be refunded must be described in the ordinance. Edminson v. City of Abilene, 7 Kans. App. 305, 54 Pac. 568. A resolution not sufficient where the charter requires the enactment of an ordinance as necessary to the issue of refunding bonds. City of Cincinnati v. Guckenberger, 60 Oh. St. 252. 6— Ala., Art. 11, Sec. 213; Art. 12, Sees. 222, 224, 225; Ark., Art. 16, Sec. 1; CaHf., Art. 11, Sec. 18; Art. 16, Sec. 1; Colo., Art. 11, Sec. 6; Del., Art. 8, Sec. 3; Fla., Art. 9, Sec. 6; Ga., Art. 7, See. 8; Idaho, Art. 8, See. 1; Ind., Art. 10, See. 5; Ky., Sees. 50, 158; Me., Art. 9, Sees. 15, 22; Md., Xrt. 12, Sec. 7; Mich., Art. 12, Sec. 7; Mo., Art. 4, Sec. 44; Art. 9, Sec. 19; N. D., Art. 12, Sec. 182; Ohio, Art. 8, Sec. 2; Pa., Art. 9, Sec. 4; S. C, Art. 10, Sec. 7; Art. 8, Sec. 7; S. D., Art. 13, Sec. 2; Tex. Art. 3, Sec. 49; Utah, Art. 14, Sec. 1; Va., Art. 13, Sec. 184; Wash., Art. 8, Sec. 1; Wyo., Art. 16, Sec. 3; U. S. Act of Cong. 1886, 24 Stat, at L. 170 Sees. 3, 4. Sisk V. Cargile (Ala.), 35 So. 114, , • EEPUNDING RENEWAL AND COMPROMISE SECURITIES 413 In respect to the necessity for the existence of author- ity to issue, it may be stated again subject to the charge perhaps of unnecessary repetition that the weight of au- thority holds to the rule that if any doubt exists as to the power to issue negotiable securities of the character considered in this chapter, the power will be denied. The issue of negotiable bonds payable in the distant future which places a burden upon the tax payers, in many instances of the coming generation, and frequently in- curred for the construction of unnecessary 6r extrava- gant public improvements is not regarded by the courts with favor. The power to issue refunding bonds for the purpose of funding the bonded indebtedness of a public corporation must be derived from clear and undoubted legislative or constitutional authority, and this is true although such transactions usually result in a benefit or an advantage to the community and do not, as uniformly held, increase or add to the debt of the corporation but merely change its form.^ §200. Authority where expressly given. Where the authority to issue refunding bonds is ex- pressly given and in detail but few questions can arise as to the validity of bonds issued pursuant to the authority conferred. The questions that do arise involve princi- pally the execution of the authority including the ele- ments of time, place and manner. In these respects, the rules and principles of law applying are the same which apply to the issue of bonds or securities generally and will be found in the various sections of this book to which construing Const., Art. 12, Sec. 224. before or after the adoption of the City of lios Angeles v. Teed code. Gaulbert v, City of Louis- (Calif.), 44 Pac. 580. Political ville, 97 S. W. 342; see authorities Code, 1880; Sees. 4445-4449 as fully cited in Sec. 209 post, amended in 1881 authorizing the 7 — See authorities fully cited in refunding of outstanding debt ap- Sec. 209 post, plies to all cities whether organized 414 PUBLIC SECUEITIES reference may be made under tlie appropriate subject or title.s § 201. Construction of statutory authority. In Kansas under a law which provided for the compro- mising and refunding of bonded indebtedness but which directed that no indebtedness should be refunded except that actually existing or afterwards legally created, it was held ^ that power conferred upon municipalities to issue refunding bonds was limited to the amount of the 8— Valley County v. McLain, 79 Fed. 728, afarming 74 Fed. 389. The amount of refunding "bonds to be issued under Nebraska Laws of 1877-1879 is confined to the bonds to be issued under the provisions of this act without regard to bonds previously issued. Waite V. City of Santa Cruz, 89 Fed. ,619. A statute authorizing the issue of refunding bonds must be construed as giving authority to issue negotiable securities in the usual form. Yavapai County v. McCord (Ariz.), 59 Pac. 99, construing act of Congress of June 6, 1896, and holding that the power of a county to sell refunding bonds after that date is not terminated, but only obligations outstanding prior to that time can be refunded. Sharp v. Contra Costa County, 34 Calif. 284. In re Contracting of State Debt by Loan (Colo.), 41 Pac. 1110. Coquard v. Village of Oquawka (111.), 61 N. B. 660. The author- ity to refund as conferred by Act of February 13, 1865, does not ap- ply to cities organized after its passage. Carpenter v. Town of Central Covington (Ky.), 81 S. W. 919. State v. Board of Liquidation, 27 La. Ann. 660, construing the Louisiana legislation authorizing the funding of the state indebtedness by Board of Liquidators. Bogart V. Lamotte Township, 19 Mich. 249; Com 'rs of Jefferson County v. People, 5 Nebr. 127. People V. Parmerter, 158 N. Y. 385, 58 N. E. 40. Laws of 1874, c. 188, relating to the issue of renewal bonds by the village of Plattsburg is not impliedly repealed by laws of 1892, i;. 685, containing general provisions for the issue, etc. of municipal bonds. Bradshaw v. City of High Point (N. C), 66 S. E. 601. In re Menefee (Okla.), 97 Pac. 1014. Laws of 1907-08, c. 7, pro- viding for the refunding of the state debt is not invalid as not expressing the subject of the act in the title contrary to the Constitu- tion, Art. 5, Sec. 57. Conklin v. City of El Paso (Tex.), 44 S. W. 879. Power conferred by charter provision. Baker v. City of Seattle, 2 Wash, St. 576, 27 Pac. 462. 9— Kelly v. Cole (Kan.), 65 Pac. 672. ■ BEFUNDING RENEWAL, AND COMPROMISE SECURITIES 415 bonded indebtedness of the municipality actually existing at the time the act of refunding took place. In Kentucky,!" under Kentucky statutes, sees. 3228, which provided that all indebtedness of school boards existing at the time the statute took effect should continue unimpaired and that any debt of the board might be re- funded by the issuance of bonds, it was held that a school board might refund a debt created since the statute was enacted and that since it was a remedial one that con- struction must be given which would cause it to operate beneficially. The express authority may be found either in general grants of power, constitutional, statutory and charter provisions or in some special law. Where the authority to issue is based upon a special law, an examination must be had in respect to its constitutionality to determine the validity of bonds issued pursuant to its terms. If uncon- stitutional, the authority necessarily fails and the bonds issued thereunder cannot be regarded otherwise than as illegal.!! If constitutional, the reverse is necessarily true. 12 10 — Woods V. Board of Educa- v. Aetna Life Ins. Co., 90 Fed. 222 tion of City of Covington, 53 S. W. C. C. A. 517. Brattleboro Savings Bank v. 11 — Travellers Insurance Com- Trustees of Hardy Twp., 98 Fed. pany v. Tovrnship of Oswego, 55 524, citing among other cases Loeb Fed. 361 ; People v. Woods, 7 Calif. v. Trustees, 91 Fed. 37 and dis- 579; Babcock v. Middleton, 20 approving State v. Davis, 55 Oh. Calif. 643. St. 15, 44 N. E. 511. The court Anderson v. City of Trenton, 42 held that an act of the Ohio Leg- N. J. L. 486. A statute authoriz- islature authorizing a township to ing the refunding of indebtedness issue bonds for the purpose of re- by cities having a population of funding its indebtedness was not not less than 25,000 held a viola- void, not being contrary to Ohio tion of that constitutional provision Const., Art. 2, Sec. 26, requiring which forbids the passage of spe- that all laws of a general nature cial laws to regulate the internal shall have a uniform operation affairs of a town. throughout the state. The decision 12 — ^Board of Com'rs of Seward on this point was considered from 416 PUBLIC SECUEITIES § 202. Authority, when implied. The claim of an implied authority to issue refunding or renewal bonds generally rests, not upon the grant of a general power to incur indebtedness but upon the exist- ence of a general grant of power to issue bonds or other forms of negotiable instruments.^^ , It cannot rest merely upon the fact that the public corporation may be indebted and that it may be ex- pedient, advisable, or even necessary as in the case of maturing indebtedness to issue the refunding or renewal bonds." In a case ^^ from the Eighth Circuit in the United States Court of Appeals, it was said by Judge Sanborn: "Another objection to these bonds is that the city of Huron was without power to issue them. The position is not entitled to extended consideration, because the power granted by the charter of the city of Huron is plenary. It was general, not special. It was not limited to specified purposes, but was 'to borrow money, and for the legal status of a bona fide pur- v. Dunseombe et al., 106 Fed. 611; chaser for value of negotiable se- City of Quiney v. Warfield, 25 111. eurities issued under authority of 317; Morris & Whitehead v. Taylor the refunding act. Hobart v. (Ore.), 49 Pac, 660; but see Coffin Sup'rs, 17 Calif. 23; California v. City of Indianapolis, 59 Fed. 221. University v. Bernard, 57 Calif. 14 — Village of Oquawka v. 611; State v. Flanders, 24 La. Ann. Graves, 82 Fed. 568 C. C. A., "nor 57 ; Odd Fellows ' Savings, etc. does the power to issue renewal or Bank v. Quillen, 11 Nev. 109. refunding negotiable bonds exist as Herman v. Town of Gottenberg, of course, and merely because a 63 N. J. L. 616, 44 Atl. 758. Laws municipal corporation is indebted." of 1898, c. 40, providing for the Coquard v. Village of Oquawka funding of existing debts for street (111.), 61 N. E. 660. The power improvements in incorporated towns to refund outstanding bonds can- is a general law and therefore eon- not be implied merely from the stitutional. Buist v. City Council power originally conferred author- of Charleston, 77 S. C. 260, 57 S. izing the former issue. E. 862. 15 — City of Huron v. Second 13— Second Ward Savings Bank Ward Savings Bank, 86 Fed. 272 V. City of Huron, 80 Fed. 660, af- C. C. A. firmed 86 Fed. 272; City of Pierre REFUNDING EENEWAL AND COMPROMISE SECURITIES 417 that purpose to issue bonds of the city in such denomina- tions, for such length of time, not to exceed twenty years, and bearing such rate of interest, not to exceed jfeeven per cent, per annum, as the city council may deem best. ' The whole is greater than any of its parts, and includes them all. The power is to borrow money and issue bonds for all municipal purposes and includes the power to do so to pay or refund the indebtedness of the municipality. ' ' '® §203. Conditions required for issue. In a preceding section, it was said that the right to issue refunding or renewal bonds could not exist, even 16 — The court cited in support of its conclusions on this proposition the following cases: Portland Sav- ings Bank v. City of Evansville, 25 Fed. 389; Simonton Mun. Bonds, Sec. 126; City of Quincy v. War- field, 25 111. 217; Morris v. Taylor, 31 Or. 62, 49 Pac. 660; City of Galena v. Corwith, 48 111. 423; Vil- lage of Hyde Park v. IngaUs, 87 111. 13. Began v. City of Watertown, 30 Wis. 259, 268, and further held: There is nothing in the cases of PoHee Jury v. Britton, 82 U. S. (15 WaU.), 366; Merrill v. Monti- ceUo, 138 U. S. 673, 684; Heins V. Lincoln, 102 Iowa, 69, 71 N. W. 189, 191; City of New Orleans v. Clark, 95 U. S. 644; City of Waxa- hachie v. Brown, 67 Tex. 519; State V. Board of Liquidation of City Debt, 40 La. Ann. 398 ; Middle- port V. Aetna Life Ins. Co., 82 111. 565; Bogart v. Lamotte Twp., 79 Mich. 294, 44 N. W. 612; Brenham T. German American Bank, 144 U. S. 173, 182; CoflBn v. Kearney County Com'rs, 57 Ted. 137; or Shannon v. City of Huron, 9 S. D. 356, 60 N. W. 598, in conflict with p. 8.-27 this conclusiofi. No court has held in any of these cases that the un- limited power to borrow money and issue bonds for all municipal pur- poses excludes the power to do so to fund or pay municipal debts. In Police Jury v. Britton, 82 U. S. (15 Wall.) 566, no power to issue bonds was granted to the parish, and the court simply held that this power was not to be inferred from the grant of general powers of administration. In Merrill v. Monti- cello, 138 V. S. 673, a power was given to issue bonds for specified purposes, and the court held that this was not a grant of power to issue them for purposes not speci- fied, on the familiar principle, "Expressio unius est exclusio al- terius. " In Brenham v. German American Bank, 144 U. S. 173, and Heins v. Lincoln, 102 Iowa, 69, 71 N. W. 189, it was held that a mere power to borrow money without au- thority to issue bonds did not in- clude the power to emit negotiable securities to evidence the debt. In CoflSn V. Kearney County Com'rs, 57 Fed. 137, the statute expressly 418 PUBLIC SECUEITIES where the authority express or implied was to be found, without compHance with the formalities and conditions required by law for an issue of negotiable bonds by public corporations. The conditions precedent must be per- formed and the agencies designated by law used to the same extent and in the same manner as for an issue of bonds not characterized as funding, renewal o^ refund- ing.^'' The original grant of authority for an issue of nego- tiable bonds may make their validity contingent upon an affirmative vote of the electors of the taxing districts issuing them ; the affirmative action of a municipal coun- cil or administrative body; a provision through the levy of taxes for the payment of the accruing interest and the ultimate payment of the principal or other conditions noted in preceding sections.^ ^ The performance of sim- ilar conditions may be required for the legal issue of refunding or renewal bonds.^^ That an issue of refunding or renewal bonds be valid when an election was necessary to the validity of the forbade the issue of bonds at the be voted at the meeting authorizing time when they were put forth; and the indebtedness to pay it. in Shannon v. CSty of Huron, 9 S. 18 — See Sees. 120, et seq., and D. 356, 69 N. W. 598, the power 140, ante. to issue bonds was not under dis- 19 — Swan v. City of Arkansas cussion at all. The other cases City, 61 Fed. 478. Statutory re- cited are as wide of the mark. quireraents as to execution of bonds 17 — National Bank of Commerce held mandatory. V. Town of Granada, 54 Fed. 100; Eobertson Co. v. City of Paducah, Swan V. City of Arkansas City, 61 95 Fed. 62. A city council in mak- Fed. 478; City of Santa Cruz v. ing provisions for refunding may Waite, 98 Fed. 387. act by resolution rather than ordi- Edminson v. City of Abilene nance in the absence of a require- (Kans.), 64 Pac. 568. The author- ment to proceed by ordinance, ity of cities of the second class to Manley v. Board of Com'rs of issue funding bonds must be exer- Pueblo County (Colo.), 104 Pac. cised by the passage of an ordi- 1045. A proposition to refund two nance as required by statute not previous county bond issues made by resolution. in separate years was not double, Montpelier Savings Bank & within the rule requiring two Trust Co. V. School Dist, No. 5 schemes of public improvements to (Wis.), 92 N. W. 439. A tax must be submitted separately. BEFTTNDING RENEWAL AND COMPROMISE SECURITIES 419 original bonds, the cases quite uniformly hold this action unnecessary where the proper authorities refund the cor- porate indebtedness, there is no legal necessity for re- ferring the question of issue again to the people unless specifically required by the authority under which the issue of refunding bonds is made; and further in many state constitutions an issue of refunding or renewal bonds is especially excepted from the operation of provisions requiring a vote of the electors upon the question of in- curring an indebtedness.^" This is especially true where by constitutional, statutory or charter provisions public corporations are authorized to refund all matured and maturing indebtedness.^* 20 — Hill V. City of Memphis, 134 XJ. S. 198. An act which pro- vides for no vote as a prerequisite to an issue of refunding bonds con- travenes Missouri Constitution of 1865, Art. 11, Sec. 14. Brown v. Ingalls Twp., 81 Ted, 481. Notice of election held insuffi cieut. City of Pierre v. Dunscomb, et al., 106 Fed. 611; Hobart Sup'rs, 17 Calif. 23; Manley Board of Com'rs of Pueblo County (Colo.), 104 Pac. 1045. CofBn v. Bichards (Ida.), 59 Pac. 562. The indebtedness to be re- funded must be described in the ordinance calling the election. Ban- nock County V. C. Bunting & Co. (Ida.), 77 Pac. 277; Locke v. Davi- son, 111 111. 19. State V. Cornell (Nebr.), 74 N. W. 432. Under See. 134 Compiled Statutes, a majority is sufficient to carry a proposition to fund out- standing indebtedness at a, lower in- terest rate. Baker v. City of Seat- tle, 2 Wash. St. 576, 27 Pac. 462; see State Constitution as noted in Chapter XVIII, post. 21 — Howard v. Kiowa County, 73 Fed. 406. Society for Savings v. Board of Com'rs of Pratt County, 82 Fed. 573. A vote of the people is not necessary to the issue of refunding bonds under the Kansas Stats, au- thorizing counties to refund all their matured and maturing indebt- edness. Board of Com'rs of Has- kell County, Kan. v. Nat. Life Ins. Co., 90 Fed. 228 C. C. A.; Board of Com'rs of Pratt County, Kan. v. Society for Savings, 90 Fed. 233. Geer v. Ouray County (Colo.), 97 Fed. 435, C. C. A. The Const, of Colo., Art. 11, Sec. 6, which pro- hibits the creation of indebtedness by municipalities without a favor- able vote of the electors does not limit the power of the Legislature to authorize public corporations to refund their debts without a vote of the people — the refunding cre- ates no indebtedness. City of Los Angeles v. Teed (Calif.), 44 Pac. 580. To fund an existing debt is not to incur an in- debtedness. No election is there- 420 PUBLIC SECUEITIES Many of the cases cited in the preceding note involve the question of whether when a constitutional provision requires a vote of the electors to authorize the incurring of indebtedness an issue of refunding bonds requires such a vote. The authorities hold without exception that since an issue of refunding bonds does not create a debt or in- debtedness within the meaning of such statutory or con- stitutional provisions no election is necessary. §204. What can be refunded. The obligations to be refunded vary with the authority for the issue of the refunding securities. Generally, the fore necessary as required by Const., Art. 11, Sec. 18. Veateh v. City of Moscow (Ida.), 109 Pac. 722, Sec. 2316 of the Kevised Codes of Idaho does not apply to the issue of refunding bonds when by their issue an addi- tional debt or liability of the city is not created. An election in such case is not required. Eiley v. Township of Garfield (Kan.), 49 Pac. 85; Gaulbert v. City of Louis- ville, 97 S. W. 342. Culbertson v. City of Louisville (Ky.), 128 S. W. 292. Existing debt may be renewed without a vote of the electors as required under Const., Sec. 157; Smith v. Stephan, 66 Md. 381, 7 Atl. 561; Boyce v. Auditor General (Mich.), 51 N. W. 457, 52 N. W. 754; Hotchkiss v. Marion (Mont.), 29 Pac. 821. Blanton v. Board of County Com'rs, 101 N. C. 532, 85 S. E. 162. It is not necessary to submit the question of issuing refunding bonds to the voters of a county as re- quired by Constitution, Art. 7, Sec. 7. 'Ehis section having reference enly to the contraction of debts. See, also, as holding the same: McCless V. Meekins, 107 N. C. 34, 23 S. E. 99; City of Asheville v. Webb, 46 S. E. 19. Though this case holds that if a city chooses to submit the question to a popular vote it must follow the methods prescribed by statutes for holding the election. And Horton v. City of Greensboro, 59 S. E. 1043. In re Menefee (Okla.), 97 Pac. 1014. Jordan v. City of Greenville (S. C), 60 S. E. 973. A city may issue bonds to refund a bonded in- debtedness without submitting the question to a popular vote. Murray V. Fay (Wash.), 26 Pac. 533. Hunt V. Eaweett, 8 Wash. 396, 36 Pac. 318. The fact that a vote was taken on the question of an is- sue of refunding bonds when un- necessary and not required by stat- ute will not invalidate the bonds authorized at the election. Miller v. School District No. 3 of Carbon County (Wyo.), 39 Pac. 879. Under Const. Art. 16, Sec. 4, since the refunding of a bonded indebtedness is not the creation of a debt no vote of the people is necessary. EEFUNDING BENEWAL AND COMPEOMISE SECUEITIES 421 right is given to refund the maturing and matured in- debtedness of every kind, or description.^^-* Or again, the authority may provide for the refunding of certain desig- nated indebtedness.^^ Where the right to refund applies to a particular debt or forms of indebtedness, obligations not of the class or form specified cannot be taken up and refunded.** 22— West Plains Twp. of Meade County y. Sage, 69 Fed. 943, C. C. A. The authority for refunding under laws of Kansas, 1879, c. 50, does not restrict the issuance to bonds payable to the holders of the indebtedness to be refunded. Board of Com'rs of Haskell County V. Nat. Life Ins. Co., 90 Fed. 228, C. C. A. Board of Com'rs of Seward Coun- ty V. Aetna Life Ins. Co., 90 Fed. 222, C. G. A. A Kansas Statute which provided that "Every coun- ty * * * is hereby authorized and empowered to compromise and refund its matured and maturing indebtedness of every Mnd and de- scription whatsoever upon such terms as can be agreed upon and to issue new bonds with semi-an- nual interest coupons attached in payment of any sums so compro- mised ' ' authorizes the refunding of their matured or maturing debts of every kind and description whether evidenced by bonds, judgments, warrants or simple contracts. Pow- ell V. Com'rs Court of Madison County (Ala.), 51 So. 946. Heins v. Lincoln (la.), 71 N. W. 189. Refunding bonds can in turn be refunded. Slutts v. Dana (la.), 115 N. W. 1115; Territory v. Hop- kins, 9 Okla. 133, 59 Pac. 976; Thackston v. Goodwin (S. C), 60 S. E. 969. Kane v. City of Charleston, 161 111. 179, 43 N. E. 611. Where bonds are issued and provision made for their payment as required by the constitution, if the annual tax levied fails to produce suflB-Cient revenue to retire them at maturity, the amount remaining unpaid can be refunded. Smith V. Mercer County (Kan.), 47 S. W. 596. With the consent of the owners unmatured bonds may be exchanged for new refunding bonds. State V. Benton (Nebr.), 51 N. W. 140. Refunding bonds may when they in turn become payable, be refunded. City of Baltimore v. Bond (Md.), 65 Atl. 318. Lloyd V. City of Altoona, 134 Pa. 545, 19 Atl. 427. Where bonds are refunded the holder cannot be com- pelled to take the new bonds at a premium. Branch v. Sinking Fund Com'rs, 80 Va. 427. Stolen, redeemed state bonds coming into the hands of a bona fide holder for value without notice of the fact, should be replaced by refunding bonds as authorized by law. 23 — Coffin V. City of Indianapo- lis, 59 Fed. 221; Darke v. Board of Com'rs of Salt Lake County (Utah), 49 Pac. 257. 24 — Whitewell v. Pulaski County, 2 Dill. 249; Fisher v. Board of 422 PUBLIC SECURITIES If the liability is special, local improvement warrants for instance, it has been held that they cannot be re- funded by an issue of bonds so as to convert the liability from that of a special indebtedness to a general one and enforcible against all tax payers,^^ and it is too clear for argument that refunding bonds cannot include securities issued by a private corporation or other invalid indebted- ness unless the public corporation is estopped by the doc- trine of recitals or otherwise.^* Where the authority to refund is sufficiently broad, judgments, ^'' outstanding warrants, county warrants or Liquidation of New Orleans, 56 Fed. 49. Muskingum County Com'rs v. State (Ohio), 85 N. E. 562. County commissioners have no authority to issue refunding bonds in exchange for notes or other evidences of debt of the county. State V. City of Blaine (Wash.), 87 Pae. 124. Street improvement warrants having the character of a special indebtedness cannot be con- verted by the issue of funding bonds into a general liability en- forcible against all of the tax payers. 25— State v. City of Blaine (Wash.), 87 Pac. 124. 26 — Waite v. City of Santa Cruz, 89 Fed. 619. A city has no power to refund bonds issued by a Water Company and secured by a mort- gage on its plant which the city subsequently bought subject to the mortgage. City of Santa Cruz v. Waite, 98 Fed. 387. But see case of Waite v. City of Santa Cruz, 184 U. S. 302, where the court reversed the decisions above noted and held the bonds good in the hands of bona fide purchasers on the doctrine of estoppel by recitals. Leavitt v. Town of Somerville (Me.), 75 Atl. 54. If a town originally indebted to the consti- tutional limit illegally creates an additional debt and then borrows money to pay both classes indis- criminately, the whole loan becomes invalid and uncollectible. Althaffer V. Nelsonn, 18 Oh. Cir. Ct. Eeps. 145; Montpelier Savings & Trust Co. v. School District No. 5 (Wis.), 92 N. W. 439. But see Utter v. FrankUn, 172 U. S. 416. Outstanding legal indebt- edness includes bonds issued under authority of the legislature and purporting on their face to be legal obligations of a public corporation irrespective of their true character. Also, Meyers v. City of Jeffer- sonville, 145 Ind. 431, ,44 N. E. 452. Funding bonds which have passed into the hands of a bona fide holder can be enforced without regard to the legal character of the indebted- ness which they refunded. 27 — Aetna Life Ins. Co. v. Lyon County, 44 Fed. 329; Board of Com'rs of Pratt County (Kans.) v. Society for Savings, 90 Fed. 233; Stone V. City of Chicago, 207 HI. BEFUKDING EENEWAL AND COMPROMISE SECURITIES 423 orders,^* unsecured and floating indebtedness,^* can be paid, taken up and discharged by the issue of funding bonds. 492, 69 N. .E. 970; Port Huron v. MeCall, 46 Mich. 565. See, also. State v. Board of Liq- uidation of City Debt, 51 La. Ann. 1142, 26 So. 55, where it is held that a, judgment is not a "floating debt" within the act relative to the funding of the city's indebted- ness. 28 — Howard v. Kiowa County, 73 Ted. 406, 83 Fed. 296, C. C. A.; McLain v. Valley County, 74 Fed. 389; Board of Com'rs of Seward County V. Aetna Life Ins. Co., 90 Fed. 222, C. C. A. ; Chapman v. Mor- ris, 28 Calif. 393; Boyee v. Auditor General (Mich.), 51 N. W. 457, 52 N. W. 754. Hotchkiss V. Marion County (Mont.), 29 Pae. 821. Non-inter- est bearing warrants may be re- funded by the issue of coupon bonds. State V. Eose (Wash.), 86 Pac. 575. Refunding bonds cannot be issued to pay warrants where the bonds in addition to the indebted- ness of the county at the time of their issuance raise the county debt above the constitutional limit. But see Whitewell v. Pulaski County, 2 DiU. 249. Meath v. Phil- lips County, 108 U. S. 553. Drafts drawn by levee inspectors cannot be exchanged for county bonds. Hope V. Board of Liquidation, 9 So. 754. Richards v. Klickitat County, 13 "Wash. 509, 43 Pac. 647. Indebted- ness incurred prior to the adoption of the constitution may be funded by warrants issued on that day. 29— Board of Com'rs of Haskell County V. Nat. Life Ins. Co., 90 Fed. 228, C. C. A. Riley v. Twp. of Garfield, 54 Kans. 463, 38 Pae. 560. County in- debtedness of every kind and de- scription whether created before or after the passage of the act can be refunded under the laws of 1879, c. 50. City of Goodland v. Nation, 82 Kans. 200, 107 Pac. 502. Jardet v. Board of Liquidation of Public Debt, 40 La. Ann. 379, 3 So. 893. An obligation must be a legal and enforcible one in order to be included within "floating indebted- ness" as affected by legislation providing for the issue of refund- ing bonds. State v. Board of Liquidation of City Debt, 51 La. Ann. 1142, 26 So. 55. A judgment is not a "floating debt" within the act relative to the funding of the city's indebtedness. State v. Moore, 45 Nebr. 12, 63 N. W. 130. Acts of 1887, c. 9, held not to include within the term indebtedness school district war- rants or bonds. Ontario County v. Shepard, 91 N. Y. S. 611. City of Cincinnati v. Guckenber- ger, 60 Oh. St. 53, 54 N. E. 376. A contract by which the interest of the funded debt was added to the principal and the whole amount re- funded is unauthorized. Morris & Whitehead v. Taylor (Or.), 49 Pac. 660. But see MeCless v. Meekins, 117 N. C. 34, 23 S. E. 99. An act au- thorizing the refunding of county indebtedness may violate Const. Art. 7, See. 7, which provides that 424 PUBLIC SECXJBITIES §205, Formalities of issue. The formalities required for a legal issue of refunding securities including the formal execution and delivery- are controlled by precisely the same principles of law which apply to an issue of securities not thus designated and these have been sufficiently discussed and referred to in the preceding sections.^" The refunding bonds may be placed in the hands of trustees with power to deliver the new bonds when the old bonds have been delivered to the trustee and can- celled.*^ The form as refunding bonds and the manner of their issue and sale,*^ with the time and place of payment^^ municipal corporations shall not contract any debt "except for the necessary expenses thereof." 30 — See Chapter VII, ante. 31 — Heins v. Lincoln (Iowa), 71 N. W. 189. 32 — Waits V. City of Santa Cruz, 89 Fed. 619. A statute authorizing the issue of refunding bonds must be construed as giving authority to issue negotiable securities in the usual form. City of Quiney v. War- field, 25 111. 317. Rathbone v. Hopper (Kan.), 45 Pae. 610. An act authorizing the refunding of township indebtedness permits the issue of negotiable bonds. State v. Pickett, 46 La. Ann. 7, 14 So. 340. School District No. 44 of Caddo County V. Baxter (Okla.), 78 Pac. 386. The statutory authority for refunding outstanding legal war- rant indebtedness does not provide a means by which a warrant indebt- edness of a school district of $800 may be funded in bonds of $80 each. City of Tyler v. L. L. Jester & Co. (Tex.), 78 S. W. 1058. Eefund- ihg securities construed a^ notes and not bonds within the meaning of the statutes regulating the issu- ance of bonds. 33— Board of Com'rs of Kiowa County V. Howard, 83 Fed. 296. County com'rs have the power to fix the time and terms of payment of refunding bonds. City of Los Angeles v. Teed (Calif.), 44 Pac. 580. Refunding bonds cannot be made payable else- where than at the city treasury. Kane v. City of Charleston, 161 HI. 179, 43 N. W. 611. Where bonds are issued and provision made for their payment as required by the constitution, if the annual tax levy fails to produce sufScient revenue to retire them at maturity, the amount remaining unpaid can be refunded. State ex rel. Proctor v. Walker (Mo.), 92 S. W. 69. Where by in- advertence no tax is levied at the time of issuing refunding bonds as required by statute, the effect of which is to defer payment for more BEFTJNDING EENEWAL AND COMPEOMISE SECURITIES 425 may be especially designated by law and the rules in- volving such, conditions and formalities are those apply- ing to the issue of negotiable securities in general.^* §206. Invalidity of old debt as affecting the new. The authority to issue refunding or renewal bonds may exist and all of the conditions required for a legal exer- cise of the power conferred performed, the validity of the bonds thus issued considered from the viewpoint of an original issue independent of its purpose being there- fore unimpeachable. The question has been raised, how- ever, in many cases of the validity of such securities because of the fact that the obligations in renewal of which or in exchange for which they are issued are invalid for one or more of the many reasons which may be urged as against the validity of negotiable securities. Some of these reasons may be suggested, namely, an issue in excess of the constitutional limitation, the absolute lack of power to issue in other respects and the existence of irregularities or informalities in the exercise of a power conferred. The validity of negotiable securities may be attacked upon two basic grounds, namely: the absolute than twenty years from that time, Bichmond Cemetery Co. v. Sulli- the bonds will not be invalidated. van (Ky.), 47 S. W. 1079. Eefund- 34 — City of Cadillac v. Woon- iag bonds liiay be issued to the full socket Institute for Savings, 58 amount of the old bonds called in Fed. 935. Securities which purport though the new bonds bear a pre- to be refunding bonds and issued mium. Smith v. Mercer County to take up former bonds falling (Ky.), 47 S. W. 596. due sufficiently comply with the Cass County v. Wilbarger Coun- Michigan statutes requiring each ty (Tex.), 60 S. W. 988. A sub- municipal bond to show upon its stantial compliance with the stat- faee the class of indebtedness to ute in respect to denomination and which it belongs. maturity of refunding bonds is suf- Parmers National Bank v. Jones, ficient. 105 Fed. 459. The state debt board Baker v. City of Seattle, 2 Wash, have no authority to issue new St. 576, 27 Pac. 462. A proposi- bonds in lieu of old ones which tion submitted to the voters to issue have been lost or destroyed even refunding bonds will as to amount though they are erroneously de- be limited by the statutory au- stroyed by officers of the state. thority. 426 PUBLIC SBCUEITIES want of authority to issue and the irregular or informal exercise of an existant power.^^ The cases quite generally hold that the invalidity of the old debt will not affect the legal status of the new obli- gations as legal and enforcible demands, both on the grounds of estoppel which will be considered in a subse- quent chapter and also on the ground of collateral attack,^" and this principle especially applies to the old securities, the invalidity of which is urged because of informalities or irregularities in their issue. The courts uniformly hold that where a public corporation has for its own benefit destroyed old bonds and issued new securities in their place, it will not be permitted to urge the defenses which it might have asserted against the surrendered and 35 — Steines v. Franklin County, 48 Mo. 167. The defense of an absolute want of power is available against a bona fide bolder although there be a recital of compliance with statutory provisions but the legislature may validate in effect such bonds by authorizing an issue in lieu of them. See cases cited in the immediately following notes. 36— See Chapter XII, post. County of Cass v. Shores, 95 XJ. S. 375. A county is bound by its assumption of indebtedness. Utter V. Franklin, 172 U. S. 416. Act of Congress of June 6, 1896 authorizing the funding of out- standing bonds of the territory of Arizona and its municipalities was intended to apply to bonds issued under the authority of the legis- lature and purporting on their face to be legal obligations whether in fact legal or not. Merchants Na- tional Bank v. Little Eoek, 5 Dill. 299; Cummins v. District Township, 42 Fed. 644, reversed in Doon Twp. V. Cummins, 142 U. S. 366; City of Huron v. Second Ward Savings Bank, 86 Fed. 272; Board of Com'rs of Seward County, Kansas V. Aetna Life Ins. Company, 90 Fed. 222; Lyon County, Iowa v. Keene 5-Cent Savings Bank, 100 Fed. 337, affirming 97 Fed. 159; City of Pierre v. Dunscomb, 106 Fed. 611; Village of Bradford v. Cameron, 145 Fed. 21. Board of Com 'rs of Lake County v. Standley (Colo.), 49 Pac. 23. The validity of a refunding bond as exchanged for an outstanding and valid warrant will not be affected by the fact that other bonds of the same series were exchanged for invalid warrants. Meyers v. City of Jeffersonville, 145 Ind. 431; City of Catlettsburg v. Self (Ky.), 74 S. W. 1064. Smith V. Stephan, 6 Md. 381. Where a city is authorized to fund its debts by issuing bonds, if the debt was contracted without legal authority such legislative approval will give it validity. REFUNDING RENEWAL AND COMPROMISE SECtTKITIES 427 cancelled obligations. These defenses it will be assumed have been waived through the surrender and cancella- tion of the old securities and the issue of new bonds in their place.^^ The question of invalidity based upon a want of power, as in the case of an issue in excess of a constitu- tional or statutory limitation will be again considered in a subsequent section ; independent of the cases there cited the authorities following the rule stated in this section generally support the validity of an issue of refunding bonds in connection with which may be involved a viola- tion of a statutory or constitutional provision fixing a maximum amount of bonds which can be legally issued. These rulings are sustained upon the ground of bona fide holding,^^ and also the doctrine of estoppel.^® 37 — County of Jasper v. Ballou, 103 U. S. 745; Rich v. Town of Mentz, 18 Fed. 53; City of Cadillac V. Woonsoeket Institution for Sav- ings, 58 Fed. 935; Ashley v. Board of Sup'rs, 60 Ped. 55; Brown v. Ingalls Twp. 81 Ted. 485; Thaxton V. Goodwin (S. C), 60 S. E. 969. 38 — Amey v. Allegheny County, 24 How. 364; Board of Com'rs of Gunnison County (Colo.), v. E. H. Rollins & Sons, 173 U. S. 255; Pot- ter V. Chaffee County, 33 Fed. 614; Aetna life Ins. Co. v. Lyon County, 44 Ped. 329; Jamison v. Independ- ent School District of Eock Rapids, 90 Ped. 387; Board of Com'rs of Lake County v. Keene 5-Cent Sav- ings Bank, 108 Ped. 505 C. C. A.; Powell V. City of Madison, 107 Ind. 106, 8 N. E. 31; Sioux City & St. Paul Ry. Co. v. Osceola County, 52 la. 26; Opinion of Justices, 81 Me. 602, 18 Atl. 291; State v. Wilkin- son, 20 Nebr. 610. Erskine v. Nelson County (N. D.), 58 N. W. 348. Legislative au- thority to issue refunding bonds validates county warrants thereto- fore issued in excess of authority. In re State Warrants, 6 S. D. 518, 62 N. W. 101; National Life In- surance Co. of Montpelier v. Mead (S. D.), 82 N. W. 78, re-hearing de- nied, 83 N. W. 335; Walling v. Lummis (S. D.), 92 N, W. 1063; Darke v. Board of Com'rs of Salt Lake County (Utah), 49 Pac. 257; but see Shaw v. Independent Dis- trict of Riverside, 77 Ped. 277; Brown v. City of Atchison (Kan.), 17 Pac. 465. Leavitt v. Town of Somerville (Me.), 75 Atl. 54. The burden of proof rests upon the holder of a refunding bond to show that the charge which his bond represents in part was not in excess of the con- stitutional limitation of 5 per cent. Birkholz v. Dinnie, 6 N. D. 511, 72 N. W. 931; see Chapters XII and XIII, post. 39 — See Sees. 274, et seq., post. 428 PUBLIC SECUEITIES Some cases, however, hold to the theory that a debt cannot change its character through a mere change in its form and hold consequently that the validity of the re- funding or renewal securities will be based upon the legal character of the old debt.*" § 207. Invalidity of new debt as affecting the old. The refunding securities issued may be invalid for lack of authority or because of irregularities in their issue and after an exchange of the old securities for them the question presents itself of the status of the owner. He has exchanged a vahd obligation for an invalid one. The courts are uniform in their holding that a valid debt cannot be paid or extinguished by its exchange for a form of obligation the invalidity of which is afterwards successfully maintained.*^ The holder of the new securities is either subrogated to the rights of the holders of the old and valid ones,*^ or 40— Eeynolds v. Lyon County, 97 yo v. Otoe County, 37 Fed. 246; Fed. 155; Graham v. City of Tus- County of Jefferson v. Hawkins cumbia (Ala.), 42 So. 400; Swan- (Fla.), 2 So. 362; Morris v. Taylor, son V. City of Ottumwa (la.), 106 31 Or. 62, 49 Pae. 660; Martin N. W. 9; Brown v. City of Atchi- County v. Gillespie County (Texas), son (Kan.), 17 Pae. 465. 71 S. W. 421; Cause v. Clarksville, Mutual Benefit Life Ins. Co. v. 1 McCrary Cir. Ct. 78. Elizabeth, 42 N. J. L. 235. Where See also Merrill v Town of the refunded bonds are invalid the Monticello, 138 U. S. 673. Nego- substitutes are made valid by the tiable paper issued by a city with- legislative act from which they out express authority is not ren- proceed. City of Tyler v. Tyler dared valid because issued to take Bldg. & Loan Association (Texas), up previous securities lawfully is- 82 S. W. 1066, reversed, however, sued, in 86 S. W. 750. 42— Irvine v. Board of Com'rs of De Mattos v. City of New What- Kearney County, 75 Fed. 765; com, 4 Wash. 127, 29 Pae. 933. Brown v. City of Atchison (Kan.), Refunding bonds to a certain excess 17 Pae. 465; see, also Aetna Life held invalid. Ins. Co. v. Lyon County, 82 Fed. 41 — Merchants National Bank v. 929; but see Coquard v. Village of County of Pulaski, 2 Fed. 545; De- Oquawka (111.), 61 N. E. 660. EEPUNDING EBNEWAL AND COMPEOMISE SECURITIES 429 the return of the securities exchanged if not destroyed can be compelled.** §208. Estoppel. Public negotiable securities usually contain upon their face a recital of the authority under which issued, the purpose of issue and the performance of the conditions required by the grant of authority, if and when required ; refunding bonds constitute no exception to this usual custom. The doctrine of recitals as affecting the validity of negotiable securities will be fully considered in a subsequent chapter.** In this place without attempting to explain or discuss the doctrine, some cases will be referred to because in- volving an issue of refunding or renewal bonds and which fall within the application of general principles relating to recitals. The doctrine of estoppel arising through recitals is applied to the same extent to refunding and renewal securities as to others not coming within these terms, and the courts uniformly hold that where refunding bonds contain the customary recitals of fact; that they are issued for the purpose of funding and retiring certain legal obligations of the public corporations outstanding and unpaid; that all the requirements of the refunding act have been fully complied with in the issue and that they are issued in due conformity to law, that the public corporation is estopped from repudiating and falsifying its own representations of fact contained in the recitals as against a bona fide holder for value.*® The corpora- ls — See in general but not ex- 184 U. S. 302, reversing 98 Fed. actly in point, O'Connor v. Bast 387. City of Cadillac v. Woon- Baton Eouge Pariah, 31 La. Ann. socket Institute for Savings, 58 221; Plattsmouth v. Fitzgerald, 10 Fed. 935, distinguishing Barnett v. Nebr. 401. Denison, 145 TJ. S. 135. 44 — See Chapter XII, post. Ashley v. Presque Isle County 45— Waite v. City of Santa Cruz, Sup'rs, 60 Fed. 55 C. C. A. The 430 PUBLIC SECUBITIES tion is estopped to set up as against the validity of the refunding bond the existence of certain conditions which if allowed as a defense might make it invalid.*® The doctrine of estoppel by recitals, it has been held in some cases, will apply to a issue of bonds in excess of a constitutional or statutory limitation.*^ The recitals, however, inust be made by those officials charged by law with the duty of ascertaining the performance of and determining the existence of the conditions in respect to which they certify. This question will be found consid- ered at length in subsequent sections.** court in this case as well as the one last cited from the Fed. Eep. held that a purchaser is not bound to investigate the matter of the re- funded indebtedness where refund- ing bonds recite upon their face that they are issued in conformity to law. Brown v. Ingalls Twp., 81 Fed. 485; Board of Com'rs of Ki- owa County V. Howard, 27 C. C. A. 531; City of Huron v. Second Ward Savings Bank, 86 Fed. 272; Wesson V. Town of Mt. Vernon, 98 Fed. 804; Board of Com'rs of Barber County (Kan.) v. Society for Sav- ings, 101 Fed. 767; Hughes County V. Livingston, 104 Fed. 306; Board of Trustees v. Brattleboro Savings Bank, 106 Fed. 986 C. C. A.; Meyer V. Brown, 65 Calif. 583, 26 Pac. 281; City of Tyler v. Tyler Bldg. & Loan Association (Tex.), 86 S. W. 750, reversing 82 S. W. 1066. 46 — Graves v. Saline County, 116 U. S. 359; Ashley v. Board of Sup'rs of Presque Isle County, 60 Fed. 55. City of Cadillac v. Woonsocket Institution for Savings, 58 Fed. 935. The court here said: "The recitals in the bonds as to the fact of old bonds falling due and that the new bonds were issued to take up the old debt would well lull an intending purchaser into security. The defense it might have made against its old bonds it elected not to make. It should not now be permitted to set it up as against a bona fide holder of its refunding bonds." 47 — City of Pierre v. Dunscomb, 106 Fed. 611. Salmon v. Bural Independent School District of Allison, 125 Fed. 235. In the absence of a recital, a school district is not estopped to deny the validity of bonds. But see Hamilton County v. Montpelier Savings Bank & Trust Co., 157 Fed. 19. 48 — City of Huron v. Second Ward Savings Bank, 86 Fed. 272. City of Pierre v. Dunscomb, 106 Fed. 611. The recitals of officers of a municipality who are invested with authority to perform a prece- dent condition to the issue of nego- tiable bonds, or with authority- to determine when that condition has been performed, that the bonds have been isued "in pursuance of," or "in conformity with," or "by virtue of;" or "by authority REFUNDING RENEWAL AND COMPROMISE SECURITIES 431 § 209. Creation of new debt. In previous sections,*^ has been considered the exist- ence and the application of constitutional and statutory provisions relative to the incurrence of debts by public corporations; these provisions almost uniformly fix a maximum limit of legal indebtedness. The objection has been raised that through or by the issue of refunding or renewal bonds, an "indebtedness" or a "debt" within the meaning of these constitutional or statutory limita- tions has been created and if in excess of the maximum limit fixed is therefore void. The purpose of the issue of renewal or refunding bonds is to pay with their pro- ceeds outstanding and floating corporate indebtedness, the intention being to effect this through either a sale of the refunding securities and with the moneys so de- rived pay the outstanding obligations, or by exchange of the old securities for the new, effect their payment and cancellation.^" The objection that through the issue of renewal or refunding bonds a new debt is created has been repeatedly decided by the courts as not well taken, for the reason that the proceeds of such bonds are used not for the purpose of adding to the indebtedness or the obligations of the corporation but of paying outstand- ing ones, which immediately upon the exchange or pay- ment become cancelled and extinguished and incapable of enforcement as corporate obligations, the only legal in- of," the statute precludes inquiry, the bonds. See Sec. 274, et' seq., as against an innocent purchaser post. for value, as to whether or not the 49 — See Sees. 92, et seq., and 199, precedent conditions had been per- ante. formed when the bonds were de- 50 — Board of Com'rs of Seward livered. Such recitals estop the County, Kansas v. Aetna Life Ins. municipal body from denying the Co., 90 Fed. 222. The refunding performance of every act and the of indebtedness by the issue of discharge of every duty which un- bonds is not the creation of a new der the law its officers were re- debt but a matter of fiscal admin- quired to do or discharge before istration. and at the time when they delivered 43? PUBLIC SECURITIES debtedness existing against the public corporation as a result of the process being the new refunding or renewal bonds.^i Bonds issued to fund a valid indebtedness neither create any debt nor increase the debt but merely change the form of the indebtedness.^^ 51 — Maish v. Territory of Ari zona, 164 U. S. 599; Gorman v. Sinking Fund Com'rs, 25 Fed. 647 Cummins v. Doon Twp., 42 Fed 644, reversed in 142 U. S. 366; Board of Com'rs of Lake County V. Piatt, 79 Fed. 567; Com'rs of Ouray County v. Geer, 97 Fed. 435. Lyon County v. Keene 5-Cent Sav- ings Bank, 100 Fed. 337. Refunding bonds in the hands of bona fide pur- chasers will be presumed to have been issued in exchange for valid outstanding indebtedness and not to have increased the county debt. City of Los Angeles v. Teed (Calif.), 44 Pac. 580, disapproving Dopn Twp. V. Cummins, 142 U. S. 366; Board of Com'rs of Lake County v. Stand- ley (Colo.), 49 Pac. 23; Manly v. Board of Com'rs of Pueblo County (Colo.), 104 Pac. 1045; Heins v. Lincoln, 102 la. 69. Brown v. Milliken, 42 Kan. 769, 23 Pac. 167. A city formed from a part of a township is liable for its proportional share of refunding bonds issued to take up railroad aid bonds issued by the township and before the organization of the city. The refunding bonds are merely new evidences of the orig- inal debt. And, see, also, Mont- gomery County V. Taylor, 142 Ky. 547, 134 S. W. 894, holding to the same principle where a county has been divided. Farson, Leach & Co. v. Board of Com'rs, etc. (Ky.), 30 S. W. 17; Eiehmond Cemetery Co. v. SuUivau (Ky.), 47 S. W. 1079; Hotehkiss v. Marion (Mont.), 28 Pac. 821; Palmer v. City of Helena (Mont.), 47 Pac. 209; Town of Solon v. Wil- liamsburgh Savings Bank, 114 N. Y. 122; City of Poughkeepsie v. Quintard, 136 N. Y. 275, 33 N. E. 764, affirming 19 N. Y. S. 944; Blanton v. Board of County Com'rs, 101 N. C. 532, 8 S. E. 162; State v. West (Okla.), 118 Pac. 146; Morris v. Whitehead & Taylor (Ore.), 49 Pac. 660; Snyder v. Kantner, 190 Pa. 440; Hirt v. City of Erie, 200 Pa. 223, 49 Atl. 796; City of Mitchell v. Smith (S. D.), 80 N. W. 1077; City of Tyler v. L. L. Jester & Co. (Tex.), 78 S. W. 1058; Miller v. School Dist. No. 3, Carbon County, 5 Wyo. 217, 39 Pac. 879; but, see, Bickerdike v. State (Calif.), 78 Pac. 270. 52 — City of Huron v. Second Ward Savings Bank, 86 Fed. 272; Board of Com'rs of Lake County v. Keene 5-Cent Savings Bank, 108 Fed. 505, C. C. A. Independent School District of Sioux City v. Kew, 111 Fed. 1; Opinion of Justices, 81 Me. 602, 18 Atl. 291. The issue of renewal bonds is merely a, substitution for and in a payment of the old bonds exchanged. In re Menefee (Okla.), 97 Pac. 1014; Jones v. City of Cam- den, 44 S. C. 319, 23 S. E. 141; see, also, cases cited in preceding note. EEFTJNDING RENEWAL AND COMPEOMISE SBCUEITIES 433 §210. Doon Township v. Cummins. This case in the Supreme Court of the United States ** involved the question of the validity of an issue of re- funding honds where the total indebtedness of the cor- poration including such refunding bonds exceeded the constitutional limitation as fixed in Iowa, constitution, art. 11, sec. 3, which forbids municipal corporations, in- cluding townships, from becoming ' ' indebted in any man- ner or for any purpose" in excess of the designated amount. The Iowa legislature passed an act that a dis- trict township might issue "bonds to fund its outstand- ing indebtedness, the bonds to be issued upon a vote of the district electors. This act expressly provided that the bonds thereby authorized should be issued for no other purpose than the funding of outstanding bonded in- debtedness. Under this act the Township of Doon which was already in debt to the constitutional limit issued its refunding bonds and in a suit on the bonds by the holders the township defended on the ground that the bonds were invalid as being issued in excess of the constitutional limitation. The court held that the refunding bonds issued under authority of law for the purpose of funding the outstanding bonded indebtedness of the corporation but which were devoted in a large measure to the pay- ment of miscellaneous obligations not the payment of out- standing bonds as designated were not enf orcible even in the hands of a bona fide holder where the total indebted- ness of the corporation including such refunding bonds exceeded the constitutional limit. Justices Brown, Har- lan and Brewer dissented from the majority opinion of the court. The Supreme Court in holding the bonds invalid in 53—142 V. S. 366. See, also, HoUiday v. Hildebrandt, 97 la. Lake County v. Graham, 130 U. S. 177, 66 N. W. 89; Reynolds v. Ly- 662; Shaw V. Independent School on County (Iowa), 96 N. W. 1096. District of Eiverside, 77 Fed. 277; p. s.— 28 434 PUBLIC SECUKITIES part said: "The prohibition (of the Constitution) ex- tending to debts contracted "in any manner, or for any purpose, ' ' it matters not whether they are in every sense new debts contracted for the purpose of paying old ones, so long as the aggregate of all debts, old and new, out- standing at one time, and on which the corporation is liable to be sued, exceeds the constitutional limit. The power of the Legislature in this respect being restricted and controlled by the constitution, any statute which pur- ports to authorize a municipal corporation to contract debts in any manner or for any purpose whatever in excess of that limit is to that extent unconstitutional and void." The legislative act provided either for a sale of the refunding bonds and the application of their proceeds to the payment of outstanding indebtedness or the exchange of such bonds for outstanding bonds, par for par. On this point, the court said: "There is a wide difference in the two alternatives which this statute undertakies to authorize. The second alternative of exchanging bonds issued under the statute for outstanding bonds, by which the new bonds, as soon as issued to the holders of the old ones, would be a substitute for and an extinguish- ment of them, so that the aggregate outstanding indebted ness of the corporation would not be increased, might be consistent with the constitution. But under the first alternative by which the treasurer is authorized to sell the new bonds and to apply the proceeds of the sale to the payment of the outstanding ones, it is evident that if (as in the case at bar) new bonds are issued without a cancel- lation or surrender of the old ones, the aggregate debt outstanding, and on which the corporation is liable to be sued, is at once and necessarily increased, and, if the new bonds equal in amount to the old ones are so issued at one time, is doubled; and that it will remain at the in- creased amount until the proceeds of the new bonds are EEFUNDING EENEWAL AND COMPKOMISE SECURITIES 435 applied to the payment of the old ones, or until some of the obligations are otherwise discharged. It is true that if the proceeds of the sale are used by the municipal officers, as directed by the statute, in pay- ing oif the old debt, the aggregate indebtedness will be ultimately reduced to the former limit. But it is none the less true, that it has been increased in the interval; and that unless those officers do their duty, the increase will be permanent. It would be inconsistent alike with the words, and with the object of the constitutional pro- vision, framed to protect municipal corporations from being loaded with debt beyond a certain limit, to make their liability to be charged with debts contracted beyond, that limit depend solely upon the discretion or the honesty of their officers." In the opinion by the dissenting justices is to be found the following language: "Had the proceeds of these bonds been properly applied, no question could have arisen as to the indebtedness of the township having been increased by their issue. If the district township had the right to issue the bonds, which it certainly had, if the statute under which they were issued be constitutional, the purchaser of such bonds was under no obligations to see that the money he paid for them was applied to extin- guishing the existing indebtedness. He was entitled to act upon the presumption that the officers charged with the execution of the law would not betray their trust, and would deal fairly with the people who had put them forward to represent them. In my view this is simply an attempt to saddle the holders of these bonds with the derelictions of the officials chosen by the electors of this township to act for them in this transaction, and who were alone entitled to receive the money. ' ' This case, however, has been so distinguished and crit- icized in respect to the question under discussion that its value as authority has been much modified, if not entirely 436 PUBLIC SECUKITIES destroyed.^* Judge Sanborn in a case already cited ^'^ referred to the Doon case and said: "In Doon Tp. v. Cummins, 142 U. S. 367, 372, 378, 12 Sup. Ct. 220, the plaintiff did not buy the bonds for value, in good faith, and without notice of any defect from one to whom they had been issued by the corporation, as the bank did in this case; but he was himself the person to whom they were originally issued, and he knew when he took the first ten bonds that the district exceeded the constitu- tional limit of its indebtedness in issuing them, and that" it intended to exceed that limit still more. The opinion of the majority of the court in that ease was that, where the debt of a municipal corporation already exceeded the constitutional limitation, the exchange of new bonds for the old, bond for bond, would not increase the debt of the corporation, and would not be inconsistent with the con- 54 — City of Huron t. Second Ward Savings Bank, 86 Fed. 278 C. C. A., 49 L. E. A. 534; City of Los Angeles v. Teed, 112 Calif. 319, 44 Pac. 582. City of Poughkeepsie v. Quintard, 136 N. Y. 275, 32 N. E. 764. This was a case where the validity of re- funding bonds was questioned aa being contrary to a charter provision prohibiting the contracting of debts not to be paid in the current year. The court of appeals held that the issue of refunding bonds did not constitute the creation of or an increase of debt forbidden by the charter and said in part: "It must be conceded that the transaction in form may be a borrowing of money but in substance it is the very different case of refunding an existing debt. There is a new cred- itor and a reduced rate of interest but the same old debt." In pass- ing upon the charter provision, the court said that it "had an obvious purpose and meaning, it was to re- strain the creation of a debt not the extension of one already existing; to prevent a new liability not to postpone the payment of an old one; to shield the taxpayer from the waste and danger of extrava- gant and needless appropriations and not to obstruct the convenient and beneficial extension of a proper debt lawfully incurred. ' ' National Life Ins. Co. v. Mead, 13 S. D. 37, 82 N. W. 78. The court in this case said: "Doubt- less, the constitutional provision under discussion was designed to confine municipal indebtedness within prescribed limits but it could hardly have been intended or expected to prevent embezzlement or misappropriation of public funds. ' ' 55 — City of Huron v. Second Ward Savings Bank, 86 Ped. 272 C. C. A., 49 L. E. A. 534. BEFUNDING KBNEWAL AND COIMPEOMISE SECURITIES 437 stitutional limitation, but that if the new bonds were sold, and their proceeds were subsequently used to pay the old bonds, there would be a temporary increase of the debt, which would violate the limitation and invalidate the new securities. The distinction seems to be more nice than real, and, in view of the vigorous dissent which is recorded with the opinion, we may be permitted to doubt whether it will ever be made again." §211. Compromise bonds. The authority may be conferred by the legislature, sub- ject to constitutional limitations, upon public corpora- tions to issue not only refunding and renewal bonds but also to compromise and adjust their outstanding obliga- tions and to issue in payment of the indebtedness thus adjusted and compromised what may be characterized by the term of compromise bonds. It is generally held neces- sary to the legality of these securities that the debts compromised or adjusted should at least bear the char- acter of a colorable validity. Where the legality of the old debt is not denied the right to compromise if con- ferred by statute clearly exists.^'^ There are cases hold- 56 — Desha County v. State Carpenter v. Hindman, 32 Kan. (Ark.), 84 S. W. 625. Compromise 601. A substantial compliance with bonds together with just proportion statutory authority for issue of of expenses resulting from litiga- compromise bonds is sufficient. tion may be apportioned by the legis- Falkenstein Twp. v. Pitch (Kan.), lature among the several counties 43 Pac. 276. New bonds cannot formed from one subsequent to the be issued in lieu of indebtedness issue of the bonds compromised. represented by bonds where both People V. Morse, 43 Calif. 534. warrants and compromise bonds The creditors of a county cannot representing them have been can- be compelled to surrender their celled and destroyed. Brown v. evidences of indebtedness and ac- Tinsley (Ky.), 21 S. W. 535; cept new ones different in terms Sparks v. Bohannan (Ky.), 61 S. from the old. Sullivan v. Walton, W. 260. 20 Fla. 522; Eailroad Company v. Dugas v. Donaldsonville, 33 La. Com'rs of Paola Twp., 16 Kan. Ann. 668. Where compromise bonds 302. have been issued as against out- 438 ftJBLIC SECURITIES ing that in the absence of an original power to issue the bonds compromised or so to be adjusted defects in that issue or the bonds outstanding cannot be cured or the bonds rendered valid by the consent of the officers of the corporation to a compromise judgment, even though for a smaller amount, the question of the power of the cor- poration not being involved in or determined by the judgment,"^ but there are cases holding that if the power has been conferred to compromise, outstanding debts of a questionable validity may be adjusted and new bonds issued therefor which will be valid and in respect to which the corporation issuing them will be estopped to set up as against their legality the invalidity of the old securities for the payment of which they are issued,^* and it has further been held that when the power to com- promise exists that where the old securities have been in part adjudicated but others have never been involved, in an action brought to determine their validity that the corporate officials are given discretionary powers to include within the issue of compromise bonds all of the outstanding securities, whether adjudicated and in the form of judgments or otherwise, and where they have the power to make the compromise and to determine on behalf of the corporation that the unadjudieated bonds were valid and subsisting obligations that their recital of such fact in the compromise bonds will estop the cor- poration as against a bona fide holder of the new securi- standing claims their validity can- North Carolina v. Union Bank of not be afterwards raised in a suit Eiehmond, 96 Fed. 293 C. C. A., on the bonds. citing Norton v. Shelby County, 118 State v. Moore (Nebr.), 63 N. U. S. 425; Kelly v. Milan, 127 U. W. 130. The issue of compromise S. 139; and Boon Twp. v. Cummins, bonds must be limited to the in- 142 U. S. 366. debtedness, the authority to com- 58 — Dugas v. DonaUlsonville, 33 promise and adjust which exists. La. Ann. 668; State v. HoUaday, See, also Com'rs of Leavenworth 72 Mo. 499; State v. Hannibal & County V. Hamlin, 31 Kan. 105. St. Jo. E. E. Co. (Mo.), 11 S. W. 57— Board of Com'rs of Oxford, 746. BEPUNDING RENEWAL AND COMPEOMISE SEOUEITIES 439 ties to deny their validity on the ground that any or all of the obligations refunded were invalid either on con- stitutional or statutory grounds.^* 59 — Hamilton County v. Mont- pelier Savings Bank & Trust Co., 157 Fed. 19. CHAPTER X NEGOTIABILITY OF PUBLIC SECURITIES AND BONA FIDE HOLDING §212. Definition of negotiable instrument. "An instrument is called negotiable when the legal title to the instrument itself and to the whole amount of money expressed upon its face may be transferred from one to another by endorsement and delivery by the holder, or by delivery only. The peculiar equities which attach to negotiable paper are the growth of time and were acceded for the benefit of trade. ' ' "The term 'negotiable,' in its enlarged signification, is used to describe any written security, which may be transferred by indorsement and delivery, or by delivery merely, so as to invest in the indorsee the legal title, and thus enable him to bring a suit thereon in his own name. But in strictly commercial classification, and as the term is technically used, it applies only to those instruments, which, like bills of exchange, not only carry the legal title with them by indorsement, or delivery, but carry as well, when transferred before maturity, the right of the trans- feree to demand the full amounts which their faces call for."i "By negotiability is meant the right of a holder of a written instrument for the payment of money to transfer it by either endorsement and delivery, or delivery, so as to vest in the transferee a legal title therein unaffected by equities, and when necessary, to bring suit thereon in his 1 — Daniel on Neg. Instruments, 5th Ed., Sec. 1, la. 440 NEGOTIABILITY OF PUBLIC SECUKITIES 441 own name to enforce payment. And the very object of making bonds negotiable is that they may pass from hand to hand like money, and the holder thereof may acquire a perfect title thereto."^ The peculiar rights of negotiable paper and the holder thereof as stated by Daniel ^ are : First, In respect to title. " If a negotiable instrument be stolen and transferred by the thief to a third person in the usual course of business before maturity and for a valuable consideration, the person so acquiring it may hold it against the world. ' ' Second, In .respect to the amount. "But negotiable pa- per carries the right to the whole amount it secures on its face, and is subject to none of the defenses which might have been made between the original and intervening parties, against any one who acquired it in the usual course of business before maturity. It is a circulating credit like the currency of the country, and, before matur- ity, the genuineness and solvency of the parties are alone to be considered in determining its value. It has been fitly termed 'a courier without luggage,' " and, Third, In respect to the consideration. "But when a bill of exchange or negotiable note has passed to a bona fide holder for value, and before maturity, no want or failure of consideration can be shown. Its defects perish with its transfer; while, if the instrument be not a bill of exchange or negotiable note, they adhere to it in whoso- ever hands it may go. ' ' As distinguished from negotiable paper these rights and rules do not accrue in favor of or apply to the holder of non-negotiable instruments.* 2 — Simonton'a Munic. Bonds, coupons on which a recovery is now See. 111. sought are commercial instruments, 3 — Daniel Neg. Instruments, 5th payable at a future day and trans- Ed., Sec. 1. ferable from hand to hand. Such 4 — Police Jury of Texas v. Brit- instruments transferred before ma- ton, 15 Wall. 566. The bonds and turlty to a bona flde purchaser leave 442 PUBLIC SECURITIES §213. Public securities regarded as negotiable instru- ments. If securities as issued by public corporations comply in tlieir form and issue to the requirements of a negotiable instrument, they are universally regarded as such under the law-merchant and subject to all the principles of law regulating, controlling and protecting the rights of bona fide holders. This doctrine is so fully established that it will not be necessary to cite more than a few of the leading cases.^ behind them all equities and in- quiries into consideration and the conduct of parties; and become, in the hands of an innocent holder, clean obligations to pay, without any power on the part of the mu- nicipality to command any inquiry as to the justice or legality of the original claim, or to plead any cor- rupt practice of the parties in ob- taining the security. City of Nash- ville y. Bay, 19 Wall. 468. 5 — Amey v. Mayor, etc. of Alle- ghany City, 24 How. 364. "Cer- tificates of Loan ' ' so-called, circu- lated for ten years and acknowl- edged by the city as its bonds for the purpose for which they were is- sued, held valid in the hands of bona fide transferees. Moran et al. V. Com'rs of Miami County, 2 Black, 722; Gelpcke v. City of Du- buque, 1 Wall. 175; Humboldt Twp. V. Long, 92 V. S. 642; Cromwell v. County of Sac, 96 U. S. 51; Kosh- konong v. Burton, 104 V. S. 668; New Providence v. Halsey, 117 U. S. 336; Carter County v. Sinton, 120 U. S. 517. City of Cripple Creek v. Adams (Colo.), 85 Pac. 184. Municipal bonds possess the attributes of com- mercial paper and pass by delivery or endorsement and are not subject to equities in the hands of a, holder for value before maturity and without notice. Gardner v. Haney, 86 Ind. 17; Bloomington v. Smith, 123 Ind. 41. Maddox v. Graham, 2 Mete. (Ky.), 56. Bonds although not commercial paper in the sense of a law-merchant yet are negotiable by endorsement or delivery and the person who takes them bona fide in the course of business can enforce their payment though they be not valid as between the original par- ties. Smith V. New Orleans, 27 La. Ann. 286; Savings Bank v. Nation- al Bank, 19 Vroom. (N. J.) 513; Boyd V. Kennedy, 38 N. T. L. 146; Borough of Montvale v. Peoples Bank (N. J.), 67 Atl. 67; Common- wealth V. Com'rs, etc., 37 Pa. St. 237; Ehrlich v. Jennings (S. C), 58 S. E. 922. Winston v. City of Ft. Worth (Tex.), 47 S. W. 740. Bonds are not inv&lid because made negotiable when issued under Pt. Worth city charter, Sees. 87-87a. Stratton v. Com'rs Court of Kinney County (Tex.), 137 S. W. 1170. But see Garvin v. Wiswell, 83 111. 215, which holds that a county KEGOTIABILITY OF PUBLIC SECURITIES 443 As illustrating the doctrine, a reference may be had in the text to a case from the Supreme Court of the United States.^ ' ' This species of bonds is a modem invention, intended to pass by manual delivery, and to have the qualities of negotiable paper, and their value depends mainly upon this character. Being issued by states and corporations, they are necessarily under seal. But there is nothing immoral or contrary to good policy in making them nego- tiable, if the necessities of commerce require that they should be so. A mere technical dogma of the courts or the common law cannot prohibit the commercial world from inventing or using any species of security not known in the last century. Usages of trade and commerce are acknowledged by courts as part of the common law, although they may have been unknown to Bracton and Blackstone. And this malleability to suit the necessities and usages of the mercantile and comniercial world is one of the most valuable characteristics of the common law. When a corporation covenants to pay to bearer and gives a bond with negotiable qualities, and by this means ob- tains funds for the accomplishment of the useful enter- prises of the day, it cannot be allowed to evade the pay- ment by parading some obsolete judicial decision that a bond, for some technical reason, cannot be made payable to bearer. That these securities are treated as negotiable bond payable to a person therein maker. Such bonds not having, named or bearer cannot be trans- however, at that time the quality ferred so as to vest the legal title of commercial paper in Pennsyl- except by endorsement of the vania. "We will not treat bonds payee; the equitable title, however, like these as negotiable securities; rnay pass by sale and mere delivery ; on this ground we stand alone. All and also Diamond v. Lawrence the courts, American and English, County, 37 Pa. 353, as an early are against us." This holding has case holding that a county bond is since been reversed. See Mason v. subject, even in the hands of inno- Frick, 105 Pa. 162. cent holders, to equities existing 6— Mercer County v. Hackett, 1 against them in favor of the WaU. 83s 444 PUBLIC SECUEITIES by the commercial usages of the whole civilized world, and have received the sanction of judicial recognition, not only in this court but of nearly every state in the Union, is well known and admitted. ' ' In another case in the same court '' it was said : "Bonds of the kind executed by a municipal corporation to aid in the construction of a railroad, if issued in pursuance of a power conferred by the legislature, are valid commercial instruments, and, if purchased for value in the usual course of business before they are due, give the holder a good title, free of prior equities between antecedent parties, to the same extent as in the case of bills of ex- change and promissory notes. " " Possession, even with- out explanation, is prima facie evidence that the holder is the proper owner or lawful possessor of the instru- ment. ' ' In an Iowa case,^ it was said in accordance with the universal rule: "Coupon bonds of municipal and busi- ness corporations were at first regarded by the courts as non-negotiable, because they were sealed instruments; but subsequently, they came to be acknowledged as nego- tiable instruments, and the holders of them were pro- tected to the same extent as the holders of negotiable notes and bills under the law-merchant. Still later, they came to be recognized as negotiable in as full and com- plete a manner as bank bills or the national currency of the country; and now they stand not only equal before the law to the negotiable paper and to our circulating medium, but they are also regarded as chattels, in so far as to relieve them from defenses and burdens incident to choses in action merely, and give to them a merchant- able and vendible quality. Thus the modern rule holds such bonds salable, free of equities between the original parties ; also, exempt from the defense of usury founded 7 — Com'rs of Marion County v. 8 — Griffith v. Burden, 35 Iowa Clark, 94 U. S. 278. 138. NEGOTIABILITY OF PUBLIC SECUKITIES 445 on the fact that they may have been issued and sold be- low par value; also, subject to the rule of damages in an action for conversion, which applies to chattels, rather than to that which applies to private evidences of debt. ' ' ® The absence of a recital in public securities that the conditions precedent to their issue have been complied with does not deprive them of the character of negotiable instruments nor of the benefit of the ordinary presump- tions which follow such instruments,^" and it has also been held that even though they do not contain the words required by a statute relative to negotiable instruments to render commercial paper negotiable, yet if they import a consideration and possess the ordinary elements of negotiable instruments, they cannot be subjected in the hands of an innocent purchaser for a valuable considera- tion to equities between the original maker and the original payee. ^^ §214. Essentials of negotiable paper. That public securities fall within the class of commer- cial paper known as negotiable instruments it is neces- sary that they contain or bear in form the essentials of such instruments as established by a long line of deci- sions. These essentials are : First, that the instruments should be open, that is, un- 9 — ^Woods V. Lawrence County, 1 68; Huntington v. Texas, 16 Wall. Black (IT. S.) 386; Kichardson v. 402. Lawrence County, 154 XT. S. 536; National Bank of Washington t. Meixwell v. Kirkpatrick, 33 Kan. Texas, 20 Wall. 72, passing upon 282; Murray v. Stanton, 99 Mass. the validity as affected by different 345. phases of legislation of the so- 10 — Quinlan v. Greene County, called Texas indemnity bonds, and 157 Fed. 33. especially the doctrine of whether ll — ^Barrett v. County Court of the state as owner of negotiable Schuyler County, 44 Mo. 197; see, paper payable to it or bearer might also, Texas v. White, 7 Wall. 700; by a legislative enactment restrict Texas v. Hardenburgh, 10 Wall. or destroy the negotiability of such paper. 446 PUBLIC SECUEITIES sealed ; however, in respect to the bonds of public corpor- ations the courts now hold after some varying decisions upon the question that although they, the bonds, are gen- erally under the seal of the corporation, they are to be placed on an equality with promissory notes and bills of exchange and controlled and governed by the law- merchant — in other words, — that the affixing of the cor- porate seal does not destroy their character as negotiable instruments.^^ Second, the promise to pay must be certain. As illus- trating this principle the case of Humboldt Township v. Long,!^ can be cited, involving the validity of railroad aid bonds. The bonds in question contained upon their face the following statement: "This bond is issued for the purpose of subscribing to the capital stock of the Fort Scott & Allen Eailroad and for the construction of the same through said township in pursuance and in ac- cordance with" the act of the legislature there named. The objection was raised against the character of the bonds as negotiable instruments that they were lack- ing in one of the essentials of such instruments, namely, that the engagement to pay must be certain. It was claimed that by the express terms of the bonds, it was made payable with the accruing interest on the perform- ance of the condition that the railroad in question should be constructed through Humboldt Township, a condition that might never happen. The court on this point said : ' ' Eelying upon this clause of the certificate, the Township contends that the construction of the railroad through the township was a condition upon which the payment was 12 — Mercer v. Hackett, 1 Wall. exchanged for bonds of the county 83; Koshkonong v. Burton, 104 XT. of Saline whenever the injunc- S. 668; Eondot v. Eogerg Twp., 99 tion * * * shall he finally dis- ced. 202, 92 U. S. 642. solved and bonds issued under said 13 — See also Merriwether v. Sa- ' order" is not negotiable and lino County, 5 Dill. 565, holding where the consideration for it has that a township bond which recited failed no action will lie upon it. that "it is to be converted and NEGOTIABILITY OF PUBLIC SECUEITIES 447 agreed to be made. We think, however, this is not the true construction of the contract. The construction of the road, as well as the subscription for stock, were men- tioned in the recital as the reasons why the township entered into this contract, not as conditions upon which its performance was made to depend. It was for the pur- pose of subscribing and to aid in the construction of the road, that the bond Was given. The words, 'upon the performance of the said condition,' cannot then refer to anything mentioned in the recital, for there is no condi- tion there. A much more reasonable construction is, that they refer to a former part of the bond, where the annual interest is stipulated to be payable at a banker's 'on the presentation and surrender of the respective in- terest coupons.' Such presentation and surrender, is the only condition mentioned in the instrument. But that stipulation presents no such contingency as destroys the negotiability of the instrument. It is what is always implied in every promissory note or bill of exchange that it is to be presented and surrendered when paid. As well might it be said that a note payable on demand is payable upon a contingency, and therefore non-negotiable, as to affirm that one payable on its presentation and surrender is for that reason destitute of negotiability." Third, the fact of payment must be certain, that is, the instrument must be payable unconditionally and at all events.** This essential eliminates under some of the authorities those securities payable only from a special fund and which never become under any conditions a charge upon the general revenues of the corporation or a general charge or obligation of the corporation issuing them, if the special fund or source of revenue which is 14 — Parsons v. Jackson, 99 U. S. 687; Daniel Neg. Instruments, 5th 434; National Bank of La Crosse v. Ed. Sec. 41 et seq., 50. Petterson, 200 111. 215, 65 N. E. 448 PUBLIC SECUBITIES the sole means of payment becomes insufficient and inade- quate. A recent case in the United States Circuit Court of Appeals for the Eighth Circuit is illustrative of this line of authorities.^^ Railroad aid bonds were issued by Washington county, Nebraska, which acknowledged an indebtedness in a certain sum and which contained the promise to pay the same to the payee or bearer from a special fund to be raised by the annual levy of a specified rate of tax on the taxable property of the county — such funds to be applied pro rata on such bonds : first, to the payment of the interest and then to the payment of the principal. The court held in its opinion by Judge Thayer: "Yet we are of opinion that the obligations in suit are not negotiable bonds, within the rules of the law-merchant, and that a purchaser of the same for value in the open market cannot invoke for his protection the doctrine of estoppel by recitals, as it is generally applied upon actions upon negotiable municipal bonds. To render a written promise to pay money negotiable in the sense of the law-merchant, it is essential that it should be an unconditional promise to pay a certain sum of money at some future time, which must be ' certainty as to the fact of the payment. ' If by the terms of the contract the sum promised to be paid, or a portion thereof, may never become payable, as where the sum promised is not to be paid unconditionally and at all events, but only out of a special fund derived from certain sources, which may not prove adequate to meet the demand in full, the instrument, according to the great weight of authority, cannot be deemed negotiable, and entitled, in the hands of a third party, to the immuni- ties which belong to that class of instruments.* * * We have no reason to suppose and it has never been decided, 15 — ^Washington County, Nebras- ka V. Williams, 111 Fed. 801. NEGOTIABILITY OF PUBLIC SECUEITIES 449 that section 2968 of the Consolidated Statutes of Nebras- ka, which defines negotiable instruments, was designed to modify the doctrine aforesaid in any respect, or to declare that an instrument might be negotiable even though it was uncertain as to the fact of payment. The statute, like many other statutes of a similar character, was designed to place bonds and promissory notes on the same plane of negotiability as foreign bills of exchange, provided they possess the requisite words of negotiability and contain an unconditional promise to pay a certain sum of money at some future time, which is sure to arrive. Now, while the obligations in suit acknowledge an indebt- edness is on the part of the county of Washington to a certain amount, y.et the promise made to pay this indebt- edness is not a promise to pay it unconditionally and at all events, but is a promise to pay it only out of a fund to be raised by a levy of one mill per dollar on the taxable property of the county, which fund is to be apportioned pro rata among all of the obligations, and applied first to the interest, and next to the indebtedness." Fourth, the amount to be paid must be certain, the contract must be only for the payment of money and the medium of payment must be money. The reason for these essentials clearly appears, without the citation of author- ity. In respect to a medium of payment other than money, the cases hold that if any agreement of a different character be engrafted upon the instrument, it then becomes a special contract, involved with other matters, and thereby loses its character as a commercial or nego- tiable instrument.^® 16— Parsons v. Jackson, 99 U. S. York Exchange, it was held that 434; Hopper v. Town of Covington, the amount to be paid was ren- S Fed. 777, Id. 118 U. S. 148. clered uncertain and the instrument Flagg V. School Dist. No. 70 therefore made non-negotiable. Gity (Minn.), 58 N. W. 499. Where of Memphis v. Brown, 11 Am. Law bonds provided that they should be Beg. (U. S.), 629; Daniel on Neg. paid at a certain place with New Inst., 5th Ed., Sec. 53, et seq. 59. p. S.— 29 450 PUBLIC SECUEITIES Fifth, the last essential to establish the character of a public security as a negotiable instrument is that delivery must be made; this subject has been previously consid- ered.^^ § 215. The time of payment; payee. In order to make a promissory note or other obliga- tion for the absolute payment of a sum certain on a cer- tain day negotiable it is not essential that it should be in terms payable to bearer or order. Any other equivalent expression demonstrating the intention to make it nego- tiable will be of equal force and validity ; if the purpose of the maker is clear that it should be negotiable, this re- sult is accomplished.^* § 216. Time of payment as affecting negotiability. The time of payment of public securities considered generally will be discussed in a later section and one principle only stated here applying to the payment of the securities as affecting their negotiability. While one of the essentials of a negotiable instrument is that it must contain a promise to pay on a certain date, its negotia- bility is not destroyed by the insertion of provisions to 17 — See Sec. 176, ante. The purpose of the plaintiff in 18— White V. Vermont & Mass. error that the bonds on which the E. B. Co., 21 How. 575; Roberts v. suit is brought should be negotiable Bolles, 101 U. S. 119. is perfectly clear. Ottawa v. Na- County of Wilson v. Nat. Bank, tional Bank, 105 U. S-. 342; Farr 103 U. S. 770. In order to make v. Town of Lyons, 13 Fed. 377; a promissory note or other obliga- Lyon County, Iowa v. Keene 5-Cent tion for the absolute payment of a Savings Bank of Keene, N. H., 100 sum certain on a certain day nego- Fed. 337; Gamble v. Rural Inde- tiable, it is not essential that it pendent School District of Allison, should in terms be payable to 132 Fed. 514. bearer or order. Any other equiva- But see Cronin v. Patrick County, lent expressions demonstrating the 4 Hughes 524. Where a bond pay- intention to make it negotiable will able to a person named and his be of equal force and validity. assigns was held non-negotiable. ' NEGOTIABILITY OP PUBLIC SECUBITIBS 451 the effect that it is made payable at the pleasure of the maker at any time before due. The negotiability of pub- lic securities is not affected by provisions for optional payment.^® §217. Registration; effect of. It is customary in connection with the issue of public securities to insert provisions for the registration of the principal of the bond in the name of the then holder by a designated official and at a specified place. The purpose of such registration being to protect the holder of the bond, for upon registration, the payment of the princi- pal and interest as it accrues from time to time can only be made to the person whose name appears as the regis- tered holder upon the official records of the corpora- tion. Eegistration of the character indicated is dissimi- lar from that required by law in many cases as a step in the validation of bonds and which has been considered in a preceding section to which reference must be made.^" The later decisions are uniform in their holding that the registration of public securities for the purpose indi- cated in this section does not deprive them of their char- acter as negotiable instriunents. It affects the manner of transfer only as between vendor and vendee, not the right of a bona fide holder in enforcing payment.^^ 19— Ackley v. Hall, 113 U. S. Benwell v. City of Newark, 55 N. 135; Hughes County v. Livingston, J. Eq. 260, 36 Atl. 668; Whann v. 104 Fed. 306 ; see, Sec. 352 et seq., Coler, 159 N. Y. 535, 53 N. E. 1133, post. affirming 58 N. Y. S. 5; Manhattan 20 — See Sec. 173, ante. Savings Institute v. New York 21 — West Plains Twp., Meade National Bank, 59 N. Y. 51. County V. Sage et al., 69 Fed. 942 But see Oelrich v. Pittsburg, 1 C. C. A. The record required by Pittsburg 522; Bunch's Executors the statute of bonds issued does v. Fluvanna County (Va.), 10 S. not affect their negotiability. This E. 532 and Simonton's Munie. case does not involve the registra- Bonds, Sec. 115. This authority tion of bonds in the technical sense states that "registered bonds are of the text above. D'Esterre v. not negotiable, in fact, the object City of Brooklyn, 90 Fed. 586; in registering them is to render 452 PUBLIC SECURITIES Registered bonds may ordinarily upon the perjformance of certain conditions be changed into those transferable by delivery at the option of the holder. The effect of registration is to prevent a transfer without the written consent of the owner directly or by power of attorney.^^ § 218. Bona fide holding. The question of who is a bona fide holder of negotia- ble securities issued by public corporations is an impor- tant one, for upon the existence of such a condition de- pends the application not only of the doctrine of estoppel by recitals and otherwise but other principles suggested and to be suggested throughout the text of this work. It is a general principle of the law-merchant relating to negotiable instruments that as between the immediate and original parties to the transaction, that is, those be- tween whom there is a privity, all of the facts relative to their issue including the question of consideration, the purpose for which issued though not apparent upon the face of the instrument, irregularities and informalities in the issue and all other defects affecting the validity of the instrument of which the purchaser or payee had notice, actual or constructive, may be inquired into. All equities existing between the parties and affecting the character of the instrument as a legal and enforcible claim may be urged by the maker as a defense in an action upon the instrument.^* them non-negotiable and after they mandamus will not issue to compel are registered, they are transferable registration where it is shown the only upon the books of the corpora- fee was not paid or tendered, tion, ' ' citing no eases, however ; 23 — Doon Twp. v. Cummins, 142 and BurroUgh's Public Securities, V. S. 366. Nor did the plaintiff pp. 250, et seq. buy the bonds for value, in good 22 — People v. Parmerter, 158 N. faith, and without notice of any Y. 385, 53 N. B. 40, reversing 46 defect, from one to whom they had N. y. S. 1098. Where the statute been issued by the district. He authorizes a village clerk to collect was himself the person to whom a fee for registering village bonds they were originally issued by the NEGOTIABILITY OF PUBLIC SECURITIES 453 The original purchaser of the securities is held not to occupy the position of the bona fide holder because he takes them subject to all irregularities or defects in the transactions to which he is a party, but a greater degree of care is not required of him than any subsequent pur- chaser.^* The doctrine of estoppel through recitals in the bonds or in the records of the public corporation will apply in his favor as against the public corporation issuing them equally and to the same extent as if held by a second or subsequent purchaser, except those defenses which are held available as between the immediate parties to all negotiable paper. §219. Definition of a bona fide holder. Chief Justice Waite in a case in the Supreme Court of the United States^" defines a bona fide holder as "a purchaser for value without notice or the successor of such purchaser." In another case in the same court,^® it was said : ' ' One who purchases railroad bonds in the open market sup- posing them to be valid and having no notice to the con- trary will be deemed a bona fide holder," In a text book upon this subject^'' it was said: "To constitute a bona fide holder, it is necessary that one district, and knew, when he took v. Ottawa, 24 Fed. 546; Gamble y. the first ten bonds, that the dis- Eural Independent School District trict, in issuing them, exceed,ed the of Allison, 132 Fed. 514; Madison constitutional limit, as appearing County v. Paxton, 57 Miss. 701. by public records of which he was 24 — Griffith v. Burden, 35 la. bound to take notice, and that it 143. intended still further to exceed that 25 — McClure v. Township of Ox- limit. Under such circumstances, ford, 94 U. S. 429. he had no right, to rely on the 26 — Galveston, etc. B. E. Co. v. recitals in the bonds, even if these Cowdry, 11 Wall. 459. could otherwise have any effect as 27 — Abbott's Munic. Corps., Sec. against the plain provision of the 213. Constitution of the State. Carter 454 PUBLIC SECUBITIES should have purchased the bond before maturity, have given value for it and have no legally competent knowl- edge of defects or irregularities in the manner of issue ■which as against one having such knowledge does not pre- clude the municipality from setting them up." And in another test book upon the subject of municipal securi- ties, a bona fide holder is defined as:^^ "A bona fide holder I of a negotiable bond or other negotiable paper is a second or other subsequent holder of it who takes it for value in good faith and such a holder obtains a per- fect title and may hold it against the world. It becomes his absolutely with the right to demand payment of it for himself and, ii necessary, to enforce its collection in his own name and his privys for the same rights. ' ' § 220. Presumption in favor of bona fide holder. The presumption of bona fide holding operating as a protection against prior equities is universally held to exist. When there is legal authority for the issue of pub- lic securities and they have been issued pursuant to au- thority there is prima facie presumption that the holder acquired them before they were due, that he paid a valua- ble consideration for same and that he took them with- out notice of any defect which would render the instru- ments invalid.^® 28 — Simonton Munie. Bonds, Sec. v;ould render the instruments in- 116. valid. Holders of such instruments, 29— City of Lexington v. Butler, if the same are indorsed in blank 14 Wall. 282. When there is legal or are payable to bearer, are as authority for the issuance of munic- effectually shielded from the de- ipal bonds, and such bonds have fense of prior equities between the been issued purporting to have original parties, if unknown to been issued by authority of such them at the time of the transfer, law, there is a prima facie presump- as the holders of any other class tlon that the holder acquired them of negotiable instruments. Com'rs before they were due, that he paid of Douglas v. BoUes, 94 TJ. S. 104; a valuable consideration for the San Antonio v. Mahaffy, 96 U. S. same, and that he took them with- 312. out notice of any defect which Montelair v. Eamsdell, 107 U. S. NEGOTIABILITY OF PUBLIC SECURITIES 455 The docrine as stated above has been recently stated in a case in the Supreme Court of the United States,^" "where the court said: "Our conclusion on this branch of the case is that the county of Presidio is estopped by the recitals in its bonds to deny, as against a legal holder of the bonds, that they were issued conformably, in all respects, with the acts of legislation referred to. It is, however, contended that this principle only affords pro- tection to bona fide purchasers for value. But clearly the plaintiff is to be taken, upon the present record, as belonging to that class ; for there was no evidence that he had knowledge or notice of any facts impeaching the validity of the bonds, or that were inconsistent with their recitals, nor was there any evidence showing that the plaintiff was not a bona fide purchaser for value of these bonds. In the absence of such proof the presump- tion was that the plaintiff obtained the bonds underdue, or before maturity, in good faith, for a valuable consid- eration, without notice of any circumstances impeach- ing their validity. The production of a negotiable instru- ment sued on, with proof of iis genuineness, if its genu- ineness be not denied, makes a prima facie ease for the holder. In other words, the possession of the bonds in this case, their genuineness not being disputed, made a prima facie case for the plaintiff. These views are in ac- 147. A holder of negotiable munic- an issue of bonds and by proof of ipal bonds is presumed to have ac- the due appointment of commission- quired them in good faith and for ers and their execution of the bonds value. It was not necessary that with recitals of compliance with the he should in the first instance statute. County of Presidio v. prove either that he paid value or Noel-Young Bond & Stock Co., 212 that the conditions preliminary to U. S. 58; Pickens Twp. v. Post, 99 the exercise by the commissioners Ped. 659; Walker v. State, 12 S. of the authority conferred by stat- C. 200; Martin County v. Gillespie ute were in fact performed before County (Tex.), 71 S. W. 421. the bonds were issued. The one was 30 — County of Presidio v. Noel- presumed from the possession of Young Bond & Stock Co., 212 U. the bonds; and the other was es- S. 58. tablished by the statute authorizing , 456 PUBLIC SECTJEITIES cordance with accepted doctrines of the law relating to negotiable securities." §221. Rights of bona fide purchaser. Negotiable bonds issued by public corporations pur- suant to authority legally conferred are valid commer- cial instruments, and if purchased for value in the usual course of business before they are due give the holder a good title free from all prior equities between the orig- inal parties to the same extent as in the case of bills of exchange and promissory notes.^* The attitude of the Federal courts in sustaining the validity of negotiable bonds in spite of irregularities and informalities in their issue and even in some cases a questionable authority to issue has been persistent and continuous. As illustrating this position a quotation from one of the leading cases,'^ is pertinent here: "Al- though we doubt not the fact stated as to the atrocious frauds which have been practiced in some counties, in issuing and obtaining these bonds we cannot agree to overrule our own decisions and change the law to suit hard cases. The epidemic insanity of the people, the folly of county officers, the knavery of railroad 'specu- lators ' are pleas which might have just weight in an ap- plication to restrain the issue or negotiation of these 31 — Com'rs of Marion County v. Daniel Neg. Instruments, 5th Ed., Clark, 94 XT. S. 278; McClure v. Sec. 769, et seq. Twp. of Oxford, 94 U. S. 429; But see Com'rs of Madison Coun- Wood V. Alleghany County, 3 Wall. ty v. Brown, 28 Ind. 161. The fact Jr. 367; State v. Montgomery, 74 that county bonds not transferable Ala. 226; School Dist. No. 47 of by delivery have passed into the Pinney County v. Cushing (Kan.), hands of an innocent purchaser will 54 Pae. 924; State v. Clinton, 28 not deprive the county of any de- La. Ann. 219; Lane v. Schomp, 2 fense which was available against N. J. Eq. 82. the first holder. See, also, 29 Am. Law Reg. (N. 32 — Mereer County v. Hackett, 1 S.) 380, with note by C. H. Ohilda WaU. 83. on the rights of bona fide holders. NEGOTIABILITY OP PUBLIC SECURITIES 457 bonds but cannot prevail to authorize their repudiation, after they have been negotiated and have come into the possession of bona fide holders." If the essentials of bona fide holding exist as subse- quently stated, the purchaser or holder of negotiable se- curities has a title unaffected by antecedent facts and may recover on the instrument although it may be with- out any validity as between the original parties. By a holder or j)urchaser as the words are used above is in- tended to include anyone who has acquired it in good faith for a valuable consideration from one capable of transferring it.^^ The title of a bona fide holder may be defeated by a want of authority as well as other reasons to be noted in a subsequent section.** § 222. Conditions necessary to constitute a bona fide holder. The authorities are agreed that to constitute a bona fide holder one must be a purchaser or holder who has acquired the negotiable instrument in good faith and for a valuable consideration in the ordinary course of busi- ness ; before maturity or without notice of its dishonor ; and finally without notice of facts which would impeach its validity as between the original parties to the transac- tion.*^ 33 — Murray v. Lardner, 2 Wall. v. BoUea, 94 U. S. 104; Town of 110. Orleans v. Piatt, 99 U. S. 676; City of Gladstone v. Throop, 71 Montelair Twp. v. Eamsdell, . 107 U. Fed. 341. It is no defense as S. 147; Sayles v. Garrett, 110 U. against a bona fide holder of bonds S. 288; Sioux City, etc. R. R. Co. that the original purchaser from y. City of Osceola, 45 la. 168, 52 the city agreed to pay a commis- la. 26; Taylor v. Daviess County sion to the city treasurer. (Ky.), 32 S. W. 416; Pugh v. 34 — See Chapters XII and XIII, Moore, 44 La. Ann. 209; State- v. post. Hart, 46 La. Ann. 40; City of 35 — Town of Venice v. Murdock, Elizabeth v. Force, 29 N. J. Eq. 92 U. S. 494; Com'rs of Douglas 587; Cooper v. Jersey City, 44 N. 458 PUBLIC SECUEITIES In a leading case,^' in the Supreme Court of the United States in passing upon the question of whether the plain- tiffs below in that case were, on the facts presented, bona fide holders, the court said: "Do, then, the plaintiffs be- low stand in the position of bona fide holders for value paid, and without notice of any defect or irregularity in the proceedings anterior to the issue of the bonds? In view of the findings of the Circuit Court, very plainly they do. They are the holders of the coupons in suit taken from those bonds, some of which they purchased without notice of any defense. The residue of those held by them are owned by other persons, who deposited them with the plaintiffs for collection, taking a receipt. There is no evidence when or for what consideration those other persons purchased, and no evidence of actual notice to them or to the plaintiffs of any of the facts anterior to the issue of the bonds. The findings of the court exhibit no fraud in the inception of the contracts, nor anything that casts upon the holders of the bonds or coupons the burden of showing that they are bona fide holders for value. The legal presumption therefore is that they are. But the plaintiffs are not forced to rest upon mere pre- sumption to support their claim to be considered as hav- ing the rights of purchasers without notice of any de- fense. They can call to their aid the fact that their pred- ecess-ors in ownership were such purchasers. To the rights of those predecessors they have succeeded." Questions of good faith, consideration and manner in which acquired rarely arise in connection with litigation concerning public securities. These as well as the other essential conditions to bona fide holding, are questions J. L. 634; Borough of Montvale v. following notes. Daniel Neg. In- Peoples Bank (N. J.), 67 Atl. 67; struments, Sec. 769a. see, also, eases cited generally un- 36 — Com'rs of Douglas County v. der the immediately preceding and BoUes, 94 U. S. 104. NEGOTIABILITY OF PUBLIC SECUEITIES 459 of fact to be determined from the evidence presented in a particular case.^" 37 — Mobile Savings Bank v. Ok- tibbeha County Sup'rs, 22 Fed. 580. One is not the less a bona fide hold- er for value of municipal bonds because he took them for antecedent debts. Tracy v. Phelps, 32 Fed. 634. In a suit on municipal bonds fraudu- lently issued, the plaintiff must show himself a bona fide holder for value. Briggs v. Town of Phelps, 70 Fed. 29. Gamble v. Eural Independent School District of Allison, 132 Fed. 514. Applying Iowa Code 1897, Sec. 3070, relative to failure of consideration and excepting ne- gotiable paper in the hands of in- nocent purchasers with the proviso that "if such paper has been pro- cured by fraud upon the maker, no holder thereof shall recover thereon of the maker a greater sum than he paid therefor with interest and costs, ' ' and holding that this section with the proviso applies to negotiable bonds issued by an Iowa school district. This decision, however, was reversed by the United States Circuit Court of Ap- peals for the Eighth Circuit in 146 Fed. 113, which held that the stat- ute could not affect the right of an innocent purchaser for value who although the bond was fraudulently issued was protected by the recitals therein and both by the law-mer- chant and the state statute was en- titled to recover the full face value and these rights of the bona fide purchaser would be transferred to one who acquired the bond for less than its face. Town of Greenburg v. Interna- tional Trust Co., 94 Fed. 755 C. C. A. The rights of a subsequent bona fide purchaser are not de- feated by the fact that the munic- ipal authorities gave a credit to the original purchaser of bonds instead of selling them for cash as required by statute. City of Cripple Creek v. Adams (Colo.), 85 Pac. 184. Failure of consideration for bonds will not affect the rights of a purchaser for value without notice and before maturity. Adams v. Lawrence County, 2 Pitts. 60. Bonds in the hands of bona fide holders who have obtained them at their market value are not affected by that provision of the act authorizing their issue which prohibits their sale at less than par. Kennicott v. Sup'rs of Wayne, 6 Biss, 138. The fact that the rail- road company to whom the bonds were issued delivered them in pay- ment for goods in good faith and for value will not deprive the hold- ers of their rights as bona fide pur- chasers. Thompson v. Tillage of Mecosta, 127 Mich. 522, 86 N. W. 1044. Where plaintiffs received a village bond in payment of a debt owed them by the previous holder, they were purchasers for value. Schmidt v. Village of Frankfort (Mich.), 91 N. W. 131. The ques- tion of good faith is for the jury and where bonds are fraudulently issued it is incumbent on the plain- tiff to show that he was a bona fide purchaser for value; see, also, the same case, Village of Frankfort v. Schmidt, 118 N. W. 961 where 460 • PUBLIC SECURITIES Cases involving the time of purchase whether before or after maturity and that of acquirement without notice of its dishonor are more frequently found and these are also largely matters of fact, the rights of the parties to be determined upon a determination of whether on the facts as presented in the case fall within the application of the general and controlling prineiples.^^ The greater number of cases decided involve the ques- tion of notice of facts which impeach or tend to impeach the validity of the negotiable instrument as between the original parties. § 223. Rights of the transferee of a bona fide holder. A holder of negotiable securities is entitled to and succeeds to the rights of any prior bona fide holder. As said by the Supreme Court of the United States : ^^ "The rule has been too long settled to be questioned now, that whenever negotiable paper has passed into the hands of a party unaffected by previous infirmities, its character as an available security is established, and its holder can transfer it to others with the like immunity. His own title and right would be impaired if restrictions were placed upon his power of the disposition. 'This doc- it was held that the evidence in the 39 — County of Sac v. Cromwell, case was sufficient to establish bona 96 V. S. 51; see, also, Comm'rs fides. . of Douglas County v. Bolles, 94 XT. 38— Texas v. White, 7 Wall. 700; S. 104; Com'rs of Marion County Town of Grand Chute v. Winegar, v. Clark, 94 U. S. 278; Twp. of 15 Wall. 355; Croitiwell v. Sac New Buffalo v. Cambria Iron Co., County, 96 V. S. 51; First National 105 U. S. 73; Montelair v. Eamg- Eank v. Scott County, 14 Minn. 77. dell, 107 V. S. 147; Scotland Coun- Belo V. Com'rs, 76 N. C. 489. ty v. Hill, 132 U. S. 107; Town of Municipal bonds unpaid at matur- Fletcher v. Hickman, 165 Fed. 403; ity are dishonored like other com- Jefferson County v. Burlington & mercial paper and the purchaser Missouri Eiver E. E. Co., 66 la. after maturity holds them subject 385; City of Jefferson v. Jennings to all defects which would invali- Banking & Trust Co. (Tex.), 79 date them in the hands of the origi- S. W. 876. nal purchaser. NEGOTIABILITY OF PUBLIC SECURITIES 461 trine, as well as the one which protects the purchaser without notice,' says Story, 'is indispensable to the se- curity and circulation of negotiable instruments, and it is founded on the most comprehensive and liberal prin- ciples of public policy.' Story Prom. Notes, sec. 191. The only exception to this doctrine are those where the paper is absolutely void, as when issued by parties hav- ing no authority to contract; or its circulation is forbid- den by law from the illegality of its consideration, as when made upon a gambling or usurious transaction. ' ' The bona fide holder of negotiable securities is entitled to transfer to others all of the rights with which he is vested and the title so acquired by his transferee cannot be affected by proof that the transferee was acquainted with defenses existing as against the paper, or as said by the Supreme Court of the United States in a recent case,*" "A purchaser of negotiable bonds from a bona fide holder takes all of the rights and title of such' holder without regard to any knowledge which the purchaser may himself have affecting the validity of the bonds." " 40 — Board of Com'rs of Gunni- the fact that he received the paper son County, Colo. v. E. H. Eol- as a gift, after its maturity, and lins & Sons, 173 U. S. 255. with notice of alleged defenses to 41 — Com'rs of Douglas County v. its collection. Pickens v. Post, 99 BoUes, 94 V. S. 104; Board of Fed. 659, citing Goodman v. Sim- Com'rs of Gunnison County v. E. ends, 20 Howard, 343; Brown v. H. Eollins & Sons, 173 U. S. 255; Spofford, 96 U. S. 474; Gunnison E. H. Eollins & Sons v. Board of County v. E. H. Eollins & Sons, 173 Com'rs of Gunnison County, 80 U. S. 255; Hughes County, South Fed. 692; Eathbone v. County Dakota t. Livingston, 104 Fed. Com'rs of Kiowa County, 83 Fed. 306; Gamble v. Eural Independent 125. District of Allison, 146 Fed. 113, Board of Com'rs of Lake County, reversing 132 Fed. 514. Colorado v. SutlifE, 97 Fed. 270. Town of Grant v. Twp. of Eeno The indorsee who takes from a bona (Mich.), 72 N. W. 18. The burden fide purchaser of negotiable paper of proof held, in this case on the stands in the shoes of his indorser, facts, to rest upon the complainant and may invoke every presumption to show a bona fide holding. Lynch- and estoppel which buttressed the burg v. Slaughter, 75 Va. 57. claim of the latter, notwithstanding 462 PUBLIC SECURITIES These rights of a subsequent purchaser are not af- fected by the fact that he may have acquired them from his vendor after maturity if his vendor was a bona fide holder having purchased them before maturity. On this point the United States Circuit Court of Appeals for the > Sixth Circuit held in a recent case : ** ' ' But it is pressed upon the court that the plaintiff does not occupy the position of bona fide purchaser, because he became their owner after their maturity. It is con- ceded that the People's Savings Bank purchased these bonds before their maturity, and paid full value for them, without knowledge of any defect in the proceedings re- sulting in their issue, but the contention is that one who acquires negotiable paper after its maturity from one who bought it in good faith before its maturity may not enjoy the same immunity from equitable and other de- fenses as his transferor. The contention cannot be sus- tained. The assignee of a bona fide purchaser before ma- turity takes the same rights as his assignor had, no mat- ter when the assignment was made." In brief, the doctrine relating- to the rights of the trans- feree is that the transferee of a bona fide purchaser of negotiable securities acquires the rights of the transferor and may invoke every presumption and estoppel arising from their negotiability and from their recitals in sup- port of their validity which the transferor might have relied upon, even though the transferee takes them after maturity with notice of all of the alleged defenses. The bona fide holder of negotiable securities is entitled as an incident to his ownership to transfer his title to another with all the rights with which he is vested and this right once acquired is one of contract which cannot be de- stroyed or impaired by subsequent legislation.*^ 42 — Rondot v. Sogers Twp. 99 43 — Gamble v. Eural Independ- Fed. 202; see, also Hughes County, ent School District of Allison, 146 South Dakota v. Livingston, 104 Fed. 113 and many cases there Fed. 306. cited. NEGOTIABILITY OF PUBLIC SECURITIES 463 § 224. Bona fides; consideration; manner of acquirement. As already stated, the cases are few involving the three essentials named above of a bona fide holding of negotiable securities. The holder must have acquired the securities in good faith from his vendor, the element of fraud vitiates all transactions.** The question of consideration rarely affects the valid- ity of public securities. The presumption exists that the transfer has been made for a valuable consideration and the particular amount is one which as involving this element is a matter for agreement between the immediate parties to the transaction. It is possible, however, that the securities may be offered at a price so low as to raise a suspicion, actual or constructive, in the mind of the purchaser in respect to the actual character of the bonds from the standpoint of their validity or to create a pre- sumption of bad faith in the purchaser.*^ 44^Siinon v. Independent School ties for a loan of money to the District of Allison, 125 Fed. 235. owner is entitled to protection as The burden of proof is upon the a bona fide holder only to the ex- holder of bonds illegally issued by tent of his claim so secured, a- school district and without con- D'Esterre v. City of Brooklyn, sideration that he acquired the same 90 Fed. 586. One who receives for value and without notice of their municipal bonds as collateral se- invalidity. See also as holding the curity for an antecedent debt is a same Gamble v. Eural Independent bona fide purchaser. School District of Allison, 132 Fed. Board of Com'rs of Lake County, 514, reversed on other points in 146 Colo. -i. Sutliflf, 97 Fed. 270. In Fed. 113. this case although the plaintiff be- Madison County v. Paxton, 57 low received the coupons as a gift. Miss. 701. The president of a rail- some of them past due when he road company is not an innocent obtained them and he knew that purchaser for value of bonds issued the county was defending an action in aid of his railroad, even though upon other coupons of the same he as president sold them to a cred- issue on the grounds relied upon itor and as a private individual in the pending action yet he was bought them back. held a bona fide purchaser having 45 — Lytle v. Lansing, 147 U. S. obtained them from one who sua- 59. One who holds negotiable tained that relation to the county municipal bonds as collateral securi- issuing the bonds. Borough of 464 PUBLIC SECURITIES That negotiable securities be acquired in the ordinary or usual course of business is understood a transfer ac- cording to the ordinary usages and customs of commer- cial transactions.** § 225. Purchase before maturity and without notice of dishonor. Other essentials to a bona fide holding are that the holder or purchaser must have acquired the negotiable securities before maturity and without notice of their dis- honor. The ordinary rule,*'^ however, applies that if the purchaser has acquired the securities after their ma- turity from his vendor who purchased before maturity, he will not by the fact of his purchase after maturity be deprived of his position as a bona fide holder for value. The cases on this point have been cited in the immedi- ately preceding sections.*^ §226. Notice. The last essential to a bona fide holding is that the holder or purchaser of negotiable securities must have acquired them without notice of antecedent facts which might make them invalid. A large number of cases in- volving public securities will be found upon investigation i' Montvale v. Peoples Bank (N. J.), 46 — Borough of Montvale v. Peo- 67 Atl. 67. pies Bank (N. J.), 67 Atl. 67. In Walker v. State, 12 S. C. 200. tluB case the bonds were deposited However entire may have been the with the bank as collateral to a failure of consideration promised loan made to the depositor before by parties receiving bonds, this will maturity and for value, it was held not affect the title of subsequent that the bank was a holder, in due bona fide purchasers for value be- course, of the bonds, fore maturity or the liability of the 47 — Borough of Montvale v. Peo- state issuing the bonds. pies Bant (N. J.), 67 Atl. 67. Martin County v. Gillespie County 48 — See Sec. 224, ante. (Tex.), 71 S. W. 421. It is pre- sumed that county bonds rest upon a valuable consideration. NEGOTIABILITY OF PUBLIC SECTJEITIES 465 to involve this essential. The notice which is deemed the equivalent of knowledge may be either constructive or actual. Constructive notice or knowledge is that which is imputed to a person of matters which he necessarily ought to know or which by the exercise of ordinary dili- gence he might know.** The notice to affect the holder must exist at the time he acquires the negotiable securities, for it is at that time that his relation as a bona fide holder or otherwise, is fixed and established. The knowledge may be acquired subsequent to this time without in any way affecting his rights as a bona fide holder and he may transfer his secur- ities to a subsequent holder who will acquire them without any knowledge of the defects or informalities which may be attached to them or, in other words, his rights as a bona fide holder may be subsequently transferred without regard to the knowledge which he may have acquired in the interim."*" § 227. Constructive notice. ' Notice to a trustee named in a mortgage executed by a railroad company, of irregularities in issuing bonds by a county to aid in the construction of the road when such aid bonds are included in the lien of that mortgage, will not affect the bona fides of the holders of such bonds.'^^ The recital of facts placed in the corporate records of the township which are not properly a part of the official records do not charge the purchaser with constructive 49 — See as involving negotiable only be so at the time of a con- paper, Murray v. Lardner, 2 Wall. tract or conveyance but at the time 110. of the payment of the purchase 50 — Dresser v. Missouri & Iowa money. See also Daniel on Neg. In- Ey. Construction Co., 93 U. S. 92. struments, Sees. 789, et seq. It is a settled rule in equity that 51 — Com'rs of Johnson County a purchaser without notice to be v. Thayer, 94 U. S. 631. entitled to protection must not P. s,— 30 466 PUBLIC SECUEITIES notice of their contents.^^ The purchaser of negotiable bonds in the open market before any question as to their validity had been raised is not chargeable with construc- tive notice of their invalidity so as to deprive him of the right in equity to a payment from the county issuing them, all of the parties concerned acting in good faith and in belief that the statute under which the authority to is- sue was claimed was valid.^^ Where the authority to is- sue fixed the amount at $86,000, the fact that some of the bond numbers ran beyond 86 will not operate as construc- tive notice of the invalidity of such bonds, there being nothing in the statute to show that the bonds should have been numbered from one to eighty-six.^* But there were other facts which appeared in connection with the issue of the bonds in this case which the court held would operate as constructive notice. On the contrary, where facts existed which raised a legal presumption of notice, negligence and bad faith, the third holders of negotiable bonds of a parish issued by the police jury in exchange for illegal parish warrants it was held would have no better right than the original holders,^^ and it has also been held that want of notice as to the vahdity of a bond which though valid on its face was invalid because issued and delivered for a private purpose should not be presumed from mere evidence of a purchase for value,^^ and where the ininutes of a school district affirmatively showed that the bonds were not refunding bonds as they appeared to be and it could have been ascertained from them that the bonds were illegally issued, the purchaser was held not a bona fide 52 — West Plains Township of 54 — Ball v. Presidio County Meade County v. Sage, 69 Ped. (Tex.), 27 S. W. 702. 943. 55 — Johnson v. Butler, 31 La. 53— New York Life Ins. Co. v. Ann. 770. Board of Com'rs of Cuyahoga 56 — Thompson v. Village of Me- County, 106 Fed. 123. costa (Mich.), 86 N. W. 1044. " NEGOTIABILITY OF PUBLIC SECTJBITIES 467 holder and therefore not protected by the recitals in the bonds.^^ §228. Constructive notice; lis pendens; judgments. As a general rule the holder of a negotiable security before maturity is not affected by any pending litigation to which he is not a party and in which the securities that he holds or the issue of which he is the owner in part is involved. In one of the leading cases on this point in the Supreme Court of the United States,^^ the court said : "Was the commencement and pendency of the suit for having the proceedings of the supervisors declared void, and preventing the issue of the bonds, such notice to all persons of their invalidity, as to defeat the title of a pur- chaser for value before maturity, having no actual notice of the suit, or to the objection to the bonds?" "It is a general rule that all persons dealing with property are bound to take notice of a suit pending with regard to the title thereto, and will, on their peril, purchase the same from any of the parties to the suit. But this rule is not of universal application. It does not apply to negotiable securities purchased before maturity, nor to articles of ordinary commerce sold in the usual way. This excep- tion was suggested by Chancellor Kent, in one of the leading cases on the subject in this country, and has been confirmed by many subsequent decisions." * * * "Whilst the doctrine of constructive notice arising from lis pendens, though often severe in its application, 57 — llontpelier Savings Bank & Woolw. 69; Thompson v. Perrine, Trust Co. V. School District No. 5 103 U. S. 806; Phelps v. LewiS' (Wis.), 92 N. W. 439. ton, 15 Blatchf. 131; Pickens Twp 58 — County of Warren v. Marcy, v. Post, 99 Fed. 659; School Dist 97 TJ. S. 96. See also Warren No. 11, Dakota County, Nebr. v, County v. Marey, 97 TJ. S. 96; Chapman, 152 Ted. .887; State v, Nauvoo ^. Better, 97 TJ. S. 389; Wichita County, 59 Kan. 512; Mur City of Lexington v. Butler, 14 ray v. Ballou (N. T.), 1 Johns Wall. 282; Orleans v. Piatt, 99 U. Chanc. 566. S. 676; Durand v. Iowa County, 1 468 PUBLIC SECUKITIBS. is, on the whole, a wholesome and necessary one, and founded on principles affecting the authoritative admin- istration of justice, the exception to its application is demanded by other considerations equally important, as affecting the free operations of commerce, and that con- fidence in the instruments by which it is carried on, which is so necessary in a business community." The application of this principle has been extended to non-resident bond holders ^^ where the court said : "It could not affect the rights of non-resident holders of bonds and coupons proceeded against by constructive service, such service as to them was ineffective for any purpose whatever. ' ' The principle has also been applied to injunction proceedings,'^" and to constructive service. In an action brought to determine the validity of bonds issued by the town of Pana, Illinois,®^ it appeared that the plaintiffs in the case were citizens of the state of 59 — Brooklyn v. Insurance Com- pany, 99 TJ. 8. 362; see also En- field V. Jordan, 119 U. S. 680. The subject of notice by lis pendens in relation to negotiable securities was considered by this court in the cases of Warren County v. Marey, 97 U. S. 96, and Carroll County v. Smith, 111 TJ. S. 556, and needs no further discussion. The general rule announced in those cases is, that the pendency of a suit relating to the validity of negotiable paper not yet due is not constructive notice to subsequent holders thereof before maturity. This general rule can- not be changed by state laws or decisions so as to affect the rights of persons not residing and not being within the state, any more than publication of suit can be made constructive service of process upon such persons. Eights to real property and personal chattels within the jurisdiction of the court. and subject to its power, may be affected by lis pendens, but not those acquired by the transfer of negotiable securities, or by the sale of articles in market overt in the usual course of trade. 60— County of Cass v. Gillett, 100 TJ. S. 585. The question of lis pendens as applicable to negotiable securities was fully considered by us in the case of County of Warren v. Marcy (97 TJ. S. 107), and we there held that a bona fide purchaser before maturity is not affected vrith constructive noti«e of a suit respect- ing such paper. That decision ap- plied to the present case, and the objection cannot prevail to invali- date the plaintiff's title. Thomp- son V. Perrine, 103 TJ. S. 806; Car- roll County V. Smith, 111 TJ. S. 556. • 61— Pana v. Bowler, 107 U. S. 529; see also Brooklyn v. Insurance Co., 99 TJ. S. 362 ; Enfield v. Jordan, 119 U. S. 680. NEGOTIABILITY OF PUBLIC SECTJEITIES 469 Maine and it was sought to bind them by a decree of the Circuit Court of Christian county, Illinois, in which the bonds in question were declared void. It was contended that that decree was binding on the plaintiffs in the case in the Federal Court and a bar to an action brought by them upon coupons cut from the bonds in question, the court said: "It is sought to bind them (the coupon- holders) by a decree rendered in a proceeding purely in personam in a case in which they were not named as parties, when there was no personal service upon or appearance by them, and when the only pretense of notice to them of the pendency of the suit was a publica- tion addressed to the 'unknown holders and owners of bonds and coupons issued by the town of Pana.' " "It is contended that, under the statutes of Illinois, parties may be thus brought in and a valid personal decree ren- dered against them. Whatever may be the effect of such a decree upon the citizens of the State of Illinois, this court has held that as to non-residents, it is absolutely void. ' ' The rule as to pending litigation in operating as con- structive notice of defects and infirmities in the bonds is necessarily modified and operates as such when the bonds or coupons involved in that litigation and the questions raised are the identical ones involved in subsequent liti- gation. The cases hold that under such circumstances a previous judgment will operate as a bar to recovery.®^ 62 — ^Block V. Com'rs, 99 U. S. court operated aa a bar to recovery. 686. In an action in the state courts Lewis v. Brown, 109 TJ. S. 162 ; see inToMng the validity of the bonds also County of Mobile v. Kimball, judgment was rendered in favor of 102 U. S. 691. A dismissal of a the county and thereafter the in- cause without prejudice will not terest coupons involved in that pro- operate as a bar. The court held ceeding were transferred to another that the two suits though seeking person to be collected for the bene- the same relief rested upon a dif- fit of the transferrer. In an action ferent state of facts and that the by him to recover on such coupons, adjudications in the one constituted, it was held in the case in the federal therefore, no bar to a recovery in court that the judgment in the state the other. 470 PUBLIC SECUElTlES §229. Constructive notice; overdue coupons. The subject of overdue coupons as affecting the valid- ity of negotiable bonds to which they are or have been attached has already been discussed in a preceding sec- tion,*^ and the rule was there stated that the presence of overdue coupons on the bond or the existence of them when detached was insufficient to excite suspicion of any illegality or irregularity in the issue of the bonds.'*'' The authorities are uniform in holding that this condition can- not operate as constructive notice except where the facts are of such a character that the presumption of bad faith will arise. The general rule in respect to constructive notice as applied generally when taken in connection with the subject of negotiable bonds must be modified to fol- low the rule laid down in an early case in the Supreme Court of the United States and followed without dissent from that time. The case referred to is that of Murray V. Lardner,®° where in discussing the rights of a holder of negotiable paper acquiring title thereto by endorsement before maturity and for value, the court said : ' ' Suspi- cion of defect of title or the knowledge of circumstances which would excite such suspicion in the mind of a pru- dent man, or gross negligence on the part of the taker, at the time of the transfer, will not defeat his title. That result can be produced only by bad faith on his part.* * * Such is the settled law of this court, and we feel no disposition to depart therefrom. The rule may perhaps 63 — See Sec. 194 ante. antecedent equities. Burnham v. 04 — Morgan v. United States, 113 Brown, 23 Me. 400; National Bank TJ. 8. 476. of North America v. Kirby, 108 Pickens Twp. v. Post, 99 Fed. Mass. 497; Grafton Bant v. Doe, 659. But if they were (past due) 19 Vt. 463; Boss v. Hewitt, 15 failure to pay interest alone is not Wis. 260 sufficient in law to throw discredit 65 — 2 Wall. 110; see also First upon negotiable paper upon which National Bank v. Moore, 148 Fed. it is due to subject the holder to 953. the full extent of his security to NEGOTIABILITY OF PUBLIC SECURITIES 471 be said to resolve itself into a question of honesty or dis- honesty, for guilty knowledge and willful ignorance alike involve the result of bad faith. They are the same in effect. Where there is fraud there can be no question. ' ' And the rule was again stated in the following language in Cromwell v. Sac county,^** where the precise question involved in this section was before the court: "What- ever fraud the officers authorized to issue them may have committed in disposing of them, or however entire may have been the failure of the consideration promised by parties receiving them, these circumstances will not affect the title of subsequent bona fide purchasers for value be- fore maturity, or the liability of the municipalities. As with other negotiable paper, mere suspicion that there may be a defect of title in its holder, o¥ knowledge of cir- cumstances which would excite suspicion as to his title in the mind of a prudent man, is not sufficient to impair the title of the purchaser. That result will only follow where there has been bad faith on his part. Such is the decision of this court, and substantially its language, in the case of Murray v. Lardner, reported in the second of Wallace, where the leading authorities on the subject are consid- ered." §230. Actual notice or knowledge. The doctrine of bona fide holding, it will be remembered, does not apply to one purchasing bonds direct from the corporate body issuing them, and the courts further hold that one cannot be a bona fide holder if at the time the bonds were first acquired he had actual notice or knowl-. edge of defects and irregularities affecting their validity. One acquiring negotiable securities under such circum- stances has no right to rely upon the doctrine of estoppel through recitals in the bonds or otherwise.®^ 66—96 U. S. 51. tibbeha County Sup'ra, 22 Fed. 580. 67— Mobile Savings Bank v. Ok- Briggs v. Town of Phelps, 70 Fed. 472 PUBLIC SECURITIES This rule as to actual notice or knowledge is modified by and subject to the general principle applying to all negotiable instruments upon the question involved, namely : that the test of whether a purchaser of a negoti- able instrument is deprived of his character of a pur- chaser in good faith is not by proof that at the time he purchased he had notice of facts and circumstances such as to put an ordinary prudent man on inquiry, but whether he had at the time of the transfer knowledge of such facts that would impeach the title as between the antecedent parties to the instrument or knowledge of such facts that his failure to make further inquiry would be presumptive evidence of bad faith on his part."^ 29. Evidence held sufficient to es- tablish the character of the bona fide holding. Sage V. Fargo Twp., 107 Fed. 383. Kansas laws, 1886, p. 123, provide that a new county shall not issue bonds of any kind within one year after the organization and it was held that where a township is- sues bonds in aid of a railroad with- in the year and the date of the elec- tion appears on the face of the bonds, the purchasers are charged with actual notice of their invalid- ity. D 'Bsterre v. City of Brooklyn, 90 Fed. 586. Where bonds are issued with the name of the payee left blank the omission is not sufficient to charge a subsequent purchaser with notice of defenses but is merely an irregularity which would at most only put him on inquiry as to whether they had in fact been issued to the person through whom he acquired them. Hancock v. Chi- cot County, 32 Ark. 575; Lindsey V, Eottaker, 32 Ark. 619; Leeman v. Perris Irrigation pistrict (Calif.), 74 Pac. 24; Bissell v. Kankakee, 64 111. 249; Eyan v. Lynch, 68 lU. 160; Hewitt V. School District, 94 111. 528; Henshaw v. Christian, 143 111. App. 558. Sehmid v. Town of Genoa, 23 N. Y. 439. One who purchases bonds from a railroad company at a dis- count with knowledge that they were illegally issued by a municipal corporation in exchange for stock of the company, instead of being issued for money borrowed to be used in building the company's road as prescribed by the statute author- izing them, is not a bona fide holder. Coler V. Board of Com 'rs of Santa Fe County (New Mex.), 27 Pac. 619. Facts were held not sufficient to charge purchaser with actual no- tice under the controlling rules. Montpelier Savings Bank & Trust Co. V. School District No. 5, Town of Ludington (Wis.), 92 N. W. 439; see also Sees. 255, et seq., post. 68 — Murray v. Laidner, 2 Wall. 110. The leading case on this point and which has been followed with- out dissent. First National Bank V. Moore, 147 Fed. 953; Clark v. Evans, et al., 66 Fed. 263 C. C. A.; NEGOTIABILITY OF PUBLIC SECUBITIES 473 There is no question as to the principles to be applied, the cases found involve a determination of the facts or of facts alleged sufficient or otherwise to bring them within their application. In regard to the existence of pending litigation as affecting the status of a bona fide holding, it was stated in the preceding section that the mere pendency of litiga- tion would not operate as constructive notice. An actual knowledge of the existence of litigation or of a judgment rendered raises a different question and there are author- ities which hold that while purchasers of negotiable secur- ities are not chargeable with constructive notice of the pendency of an action affecting the title or the validity of the securities, it has never been doubted that those who buy such securiti,es from litigating parties with actual notice of a suit do so at their peril and must abide the result the same as the parties froin whom they got their title. No rule of law, it has been held, protects a pur- chaser who willfully closes his ears to information or re- fuses to make inquiry when circumstances of great suspi- cion imperatively demand it.'^ Murray v. Beckwith, 81 111. 42; would have been merely a question Thompson v. Village of Mecosta of law of which we have seen he (Mich.), 104 N. W. 694; Borough is bound to take notice at all of Montvale v. Peoples Bank (N. events and which is now for ad- J.), 67 Atl. 67. judication in this case." 69— Lytle v. Lansing, 147 U. S. Scotland County v. Hill, 112 U. 59; see also Carroll County v. S. 183. A decree in the suit brought Smith, 111 U. S. 556. In this case by the tax payers of a county to the court although it held that the enjoin an issue of bonds is binding pendency of a suit to enjoin the upon those who buy the bonds from issue of bonds did not affect the the litigating parties with actual title of a bona fide holder of such notice of the suit, bonds, said: "It is not alleged School District No. 11, Dakota in the plea that the defendant in County, Nebr. v. Chapman, 152 error had actual notice of the liti- Fed. 887. Under the facts in this gation or on the grounds on which case a finding was sustained that it proceeded or that any injunction the purchaser was not chargeable was served upon the Board of with actual notice of the pendency Sup'rs; and if he had that notice of the suit. 474 PUBLIC SECURITIES § 231. Title of bona fide holder; how defeated. As against a bona fide holder of negotiable bonds for value and without notice there are some defenses which are available to the corporation issuing the bonds. These defenses are those which go to establish the character of the instrument as absolutely void, and not merely void- able ; because of an absolute want of power or by reason of some positive prohibition of law. This principle was well stated in a case in the Supreme Court of the United States '"' where the court said: "We have held that there can be no bona fide holding where the statute did not in law authorize the issue of the bonds. The objection in such case goes to the point of power. There is an entire want of jurisdiction over the subject. It is not the case of an informality, an irregularity, fraud or excess of authority in an authorized agent. Where there is total want of authority to issue the bonds, there can be no such thing as a bona fide holding" and the authorities are unanimous in holding that negotiable bonds issued by pubhc corporations without legislative or constitutional authority are void even in the hands of bona fide purchasers. If issued without authority although in the form of negotiable securities the holder acquires no right to enforce the payment of the securities. There cannot be a bona fide holder of public securities issued by the corporation without power.''^ And the 70 — Township of East Oakland v. v. Howard County, 50 Fed. 44; Ed- Skinner, 94 U. S. 255. minson v. City of Abilene (Kan.), 71— Mayor of Nashville v. Eay, 54 Pac. 568. 19 Wall. 468; Town of So. Ottawa Cagwin v. Town of Hancock, 84 V. Perking, 94 U. S. 260; County N. Y. 532. There can be no bona of Dallas v. MacKenzie, 94 U. S. fide holder of bonds within the 660; Farmers Loan & Trust Co. v. meaning of the law applicable to City of Galesburg, 133 V. S. 156; negotiable paper which have been Brenham v. German American Bank, issued without authority. A town 144 U. S, 173, 144 U. S. 549; Lewis has no general authority to issue V, Shreveport, 3 Woods 205; Smith such bonds. It can issue them only V. Ontario, 15 Blatchf. 267; Francis by virtue of special authority ooft- NEGOTIABILITY OP PUBLIC SECUBITIES 475 courts further hold that a negotiable form will not impart validity even in the hands of a bona fide holder for value to an obligation of a corporation which it had not the power to incurJ^ § 232. Knowledge with which a holder of bonds is charged. In the preceding section, it has been stated that total absence of authority to issue is sufficient to defeat the title of even a bona fide holder of municipal securities, or as has been stated by some authorities, there cannot be a bona fide holding where there is a complete want of authority to issue the securities in question.'* As bearing on the question of knowledge therefore in a bona fide holding, the courts hold that a purchaser for value of public securities is charged with notice of the power or authority to issue. He is conclusively presumed to know the law of the state, both constitutional and statu- tory, bearing upon the power of a public corporation to issue bonds and the public corporation cannot be estopped even by recitals in the bonds to deny as against bona fide purchasers the power of the corporation to issue them.'^* ferred by some statute. Unless see San Antonio v. Lane, 32 Tex. issued in the way pointed out by 405. statute they cannot bind the town. 72 — Wilson v. Shreveport, 29 La. The statute specifies the powers of Ann. 673. the agents of the town and the 73 — Mercer County v. Provident precise conditions upon which the Life & Trust Co., 72 Fed. 623; Noel- bonds could be issued; and all per- Young Bond & Stock Co. v. County sons taking the bonds are charge- of Mitchell, 21 Tex. Civ. App. 638, able with knowledge of the statute 54 S. W. 284. But see same case, and they must see to it that the 212 TJ. S. 58. statute has been complied with be- 74 — Travellers Insurance Co. v. fore they can with absolute safety Township of Oswego, 55 Fed. 361; take the bonds. Such is the law see also Mygatt v. City of Green as laid down in this state. Oswego Bay, 8 Am. L. Eeg. 271. Dealers County Savings Bank v. Town of in municipal bonds are chargeable Genoa (N. Y.), 65 N. E. 1120, af- with notice of public statute as af- firming 72 N. Y. S. 786; Duke v. fecting their right to recover ex- Brown (N. C), 1 S. E. 873; but change; National Bank of Com- 476 PUBLIC SECUKITIES Every man is chargeable with notice of that which the law requires him to know and of that which after being put upon inquiry he might have ascertained by the exer- cise of reasonable diligence. Every purchaser or holder of public securities which upon their face refer to the statute under which they are issued is bound to take notice of that statute and of all its requirements.''^ He is bound to take notice, for example, that the origi- nal bonds, where the issue which he holds are refunding securities, exceeded the constitutional limitation as shown by the listed value of the property of the district,''''^ and this rule also applies as to original securities.'''^ The purchaser is also charged with knowledge that public corporations are organizations of express and lim- ited powers and that the officers representing them are agents having equally limited and restricted capacity to act for their principal ;''* he is bound further to note that the purpose for which the issue was made is a public and a valid one especially if the bonds recite upon their face the purpose for which issued.''^ In view of the cases and principles stated above, the importance of the preliminary discussion in this book of the character and nature of public corporations and the powers of officers and agents representing them cannot be overestimated.®" merce v. Town of Granada, 48 Fed. (Pa.), 7 Atl. 156; see also See. 252 278; Trancis v. Howard County, 50 post. Fed. 44; Travellers Insurance Co. 78 — Trayellers Ins. Co. v. Town V. Town of Oswego, 55 Fed. 361; of Oswego, 55 Fed. 361; MePher- and Sec. 248, et seq., post. son v. Foster, 43 la. 48; Halstead 75 — McClure v. Township of Ox- v. Mayor, etc. of New York, 5 Barb, ford, 94 X7. S. 420. 218; Noel- Young Bond & Stock Co. 76 — Shaw V. Independent School t. Mitchell County, 21 Tex. Civ. App. District of Riverside, 62 Fed. 911; 638, 54 S. W. 284; see also Sees. see Sec. 252, et seq., post. 248 and 249 post. 77— Nesbit v. Eiverside School 79— Slifer v. Howell, 9 W. Va. District, 25 Fed. 635; Geer v. 391; see also See. 261 post. School District No. 11, 97 Fed. 732 ; 80— See Sees. 52 and 65, et seq., Borough of Millerstown v. Frederick ante. NEGOTIABILITY OF PUBLIC SECUKITIES 477 § 233. What a purchaser is not bound to ascertain. On the contrary, however, a bona fide purchaser for value of public securities is only required to ascertain that there was power to issue such bonds, and where the constitution or the act under which they are issued pre- scribes the public record which furnishes the test of com- pliance with the constitutional or statutory limitation, the purchaser is charged only with* notice of its contents, he is not required to look beyond it; and if that record fails to show a violation of the limitation he may rely upon the presumption that the officers faithfully dis- charged their duty when they issued the bonds and upon the recitals which appear therein when made by officials charged by law with such authority and duty.^^ The recitals, however, if made by officials in excess of their authority or not charged with the duty of making them will not operate as an estoppel. This subject will be fully considered in a later section under the chapter on validity of public securities.*^ Where the legal authority of the corporation to issue the securities is sufficiently comprehensive and where the recitals made by those having authority and within that authority show upon their face that they have been issued in pursuance of law and under the contingencies and conditions required by law, the bona fide holder of the bond or coupons is not required to go back and ex- amine all the intermediate steps taken to determine whether there has been any flaw or irregularity in their issue. The only question for him is one of power. If this has been given and might be exercised under certain circumstances and the bonds have been issued and bought 81— Board of Com'rs of Lake 82 — See See. 312, et aeq., post. County V. SutliflP, 97 Ted. 270 C. C. A.; see Sees. 276, et seq^, post and generally the subject of recitals. 478 PUBLIC SECUKITIES in good faith, the courts must assume in aid of the holder that the facts exist as recited in the securities.^* This rule applies to all intermediate irregularities in- cluding the use to which the proceeds of the bonds were put,^* failure to comply with required conditions,®' or acts of public authorities in excess of their authority in connection with the issue of the bonds.®^ § 234. Stolen and lost bonds or coupons. The rule universally obtains that if negotiable instru- ments issued by public corporations are stolen or lost by their owner before maturity and find their way into the hands of an innocent purchaser for value, such purchaser obtains good title as against all the world and can en- force their collection.®'^ 83— Pollard v. Pleasant Hill, 3 Dill. 195; Pickens Twp. v. Post, 99 Fed. 659; Davis v. Kendallville, 5 Bissel 280; Nicolay t. St. Clair €ounty, 3 Dill. 163; Miller v. Town of Berlin, 13 Blatchf. 245; City of Pierre v. Duuseomt, 106 Ped. 611; Independent School District of Sioux City v. Eew, 111 Fed. 1; Salmon v. Rural Independent School District of Allison, 125 Fed. 235; School District No. 11 y. Chapman, 152 Fed. 887. Leeman v. Perris Irrigation Dis- trict (Calif.), 74 Pac. 24. Knowl- edge of facts, however, sufficient to make bonds invalid by purchaser will defeat his claim to bona fide holding. Sioux City, etc. K. R. Co. V. County of Osceola, 45 la. 168; Coler v. Board of County Coram 'rs of Santa Fe County (N. Mex.), 27 Pac. 619; City of Jefifer- son V. Jennings Banking & Trust Co., 79 S. W. 876; First National Bank v. Town of Concord, 50 Vt. 257; see also Sec. 255, et seq., post. 84 — City of IJvalde v. Spier, 91 Fed. 594; Cook v. Lyon County, 6 Ky. L. Eeps. 360; see Sees. 262 and 263 post. 85 — Grand Chute v. Winegar, 15 Wall. 255 ; Town of Coloma v. Eaves, 92 TJ. S. 484; Warren County v. Marey, 97 IT. S. 96; Flagg v. Pal- myra, 33 Mo. 440; Nelson v. Hay- wood County, 3 Pickle, 781, 11 S. W. 885; see generally the subject of recitals. Sec. 276, et seq., post. 86 — County of Macon v. Shores, 97 V. S. 272; Dana v. Bowler, 107 U. S. 529; Town of Clifton Forge v. Brush Electric Co. (Va.), 23 S. E. 288. 87 — Gilbough v. Norfolk, etc. Co., 1 Hugh 410; State v. Wells, 15 Calif. 336; Consolidated Association of Planters v. Avegno, 28 La. Ann. 552; Spooner v. Holmes, 102 Mass. 503; Boyd v. Kennedy, 38 N. J. L. 146; Force v. Elizabeth, 27 N. J. NEGOTIABILITY OF PUBLIC SECURITIES 479 It is generally held that the owner of lost bonds or coupons is entitled to recover upon them from the public corporation where an offer is made of indemnification in favor of the corporation issuing the bond against any- future liability upon the same and this offer is supported by giving approved security.^® The rule as given in a preceding paragraph was stated in a Pennsylvania case as follows : ^^ " The latest decisions both in England and in this country have set strongly in favor of the principle that nothing but clear evidence of knowledge or notice, fraud or mala fides, can impeach the prima facie title of a holder of negotiable paper taken before maturity. ' ' This rule, however, it has been held will not apply where the securities have been purchased or acquired after maturity; thus in a Minnesota case involving lost bonds where it appeared from their face that the interest for several years was overdue and unpaid, this was held a suspicious circumstance sufiicient to put the plaintiff on his guard. The bonds, the court said, were thus dis- honored on their face. The interest equally with the principal was a part of the debt which they were intended to secure and it was not material whether the whole or only a part of that debt was overdue. An instrument payable at a certain time is overdue as soon as that time has passed whether payable generally or at a speci- Eq. 403, 29 N. J. Eq. 408; People Bank v. Baltimore, 63 Md. 6. The V. Otis, 90 N. Y. 48; Eveitsen v. latter case passing upon rights of National Bank of Newport, 4 Hun. parties where a loan had been made 692, 66 N. Y. 14. with a certificate of city stock as Manhattan Savings Institution v. collateral, the endorsement of the East Chester, 44 Hun. (N. Y.) 537. transfer on which had been forged. A town may be required to pay lost 88— City of Bloomington v. Smith, negotiable bonds on receiving a 123 Ind. 41; Eales v. Eussell, 16 proper bond of indemnity. Dutchess Pick. 315; Thayer v. King, 15 Ohio County Ins. Co. v. Hachfield, 73 242; Manhattan Savings Institution N. Y. 226; Ehrlich v. Jennings (S. v. East Chester, 44 Hun. (N. Y.) C), 58 S. E. 922; see also Com'rs 537. of Marion County v. Clark, 94 U. 89— Battles & Webster v. Lauden- S. 278, and Metropolitan Savings slager, 84 Pa. St. 446. 4:80 PUBLIC SECTJEITIES fied place, and he who takes it by endorsement or de- livery when overdue has no better title than the one from whom he received it.^" §235. Non-negotiable instruments. The rule has also been held not to apply in the case of non-negotiable instruments or where the instrument is incomplete in an essential part and is afterward filled in by the thief or a subsequent holder. In the case of Ledwick v. McKim,^^ where a corporation executed its bonds conditioned for the payment in either of two speci- fied kinds and amounts of national currency to be deter- mined by the place to be fixed for their payment and con- taining a clause authorizing the president of the corpora- tion to fix by his endorsement such place. They were endorsed in blank without inserting the place and stolen while still in the possession of the corporation, it was held that a bona fide holder was not authorized to fill the blank, and that thus he acquired and could convey no title to the bonds; that upon a sale there was an implied warranty as to the issue and upon failure of title he was liable. The court further held that the rule that the bona fide holder of an incomplete instrument, negotiable but for something capable of being supplied, has an implied authority to supply the omission and to hold the maker thereon only applies where the latter has by his own act or the act of another duly authorized put the instrument in circulation as negotiable paper. As to the character of bonds in question, it was held that the uncertainty as to the amount payable and as to the place of payment 90 — First National Bank v. Scott 91 — 53 N. Y. 307; see also Jack- County, 14 Minn. 77; see also Gil- son v. Vieksburg, etc. B. E. Co., 2 bough V. Norfolk, etc. Co., 1 Hugh. Woods 141. 410; Wylie v. Speyer, 62 How. 107; see also Sec. 194 ante on overdue coupons. NEGOTIABILITY OF PUBLIC SECXTEITIES 481 deprived the bonds of the character of negotiable instru- ments. But in a New Jersey case,^^ the court held that a bond issued with a blank for the name of the payee has the same quality of negotiability as a bond complete when issued, and that the authority for a subsequent bona fide holder to write his own name in the blank space, thus making the instrument complete was implied from the act of the obligors in putting it in circulation in that condition. Under these circumstances where such a bond was stolen from the owner, in an action of replevin by the true owner it was held that he could not recover the bond from one who had subsequently bought it in the market bona fide and for a valuable consideration. §236. Illustrative miscellaneous cases. The time of the theft or who was the thief is generally immaterial, thus the fact that negotiable municipal bonds were issued by one with whom they had been deposited in escrow by the municipality without authority cannot affect their validity in the hands of a purchaser who had no knowledge of the conditions under which they were held,^^ and it is no defense to municipal bonds in the hands of a bona fide purchaser that the corporation treasurer charged with the duty of negotiating them ab- sconded with them and fraudulently put them into cir- culation,"* but it has been held that a village is not liable on bonds stolen and put on the market before they are issued by the village officers even in the hands of a bona fide purchaser for value.®^ 92— Boyd v. Kennedy, 38 N. J. L. 95— Germania Savings Bank v. 146. Village of Suspension Bridge, 26 93 — Pickens Twp. v. Post, 99 Ted. N. Y. S. 98. 659, C. C. A. 94 — Cooper v. Jersey City, 15 Vroom. 634. p. s.— 31 482 PUBLIC SECURITIES A purchaser of bonds payable to bearer is not bound to make inquiries of one offering to sell as to bis right or title thereto or to take special precautionary measures to ascertain or protect the interest of others. One who has bought stolen bonds does not lose the protection afforded a bona fide purchaser upon proof merely of a failure on his part to examine notices of theft left at his place of business, there being no fraudulent collusion and he having no actual notice or knowledge of the theft.86 In a Tennessee case,"^ it was held that the payment and cancellation of county railroad aid bonds effected an ab- solute extinguishment of them, and that they could not be vitalized by theft and fraudulent re-circulation. An advertisement of the theft will not affect the title of a purchaser in good faith,^^ but the liability of a city to the true owner continues where he has notified the city that his bonds have been stolen even though it pays the cou- pons attached to the bonds after maturity to a bona fide purchaser.^'' The fact that the number of a stolen bond was changed by a thief will not affect the bond in the hands of a subse- quent bona fide holder.' The question of delivery as affecting the title of the bona fide holder of stolen nego- tiable instruments involved in some of the cases noted here has already been considered in a preceding section.^ 96 — Seybel v. National Currency 07 — Richardson v. Marshall Bank, 54 N. Y. 388; see also Mur- County, 45 S. W. 440. ray v. Lardner, 2 Wall. 110. Where 98 — Consolidated Association of negotiable bonds payable to bearer Planters v. Avegno, 28 La. Ann. were stolen from the owner and pur- 552. chased by a broker doing business 99 — Bainbridge v. City of Louis- in New York in the usual course ville, 83 Ky. 285. of his business, the court held that 1 — City of Elizabeth v. Perce, 27 actual mala fides was necessary to N. J. Eq. 403, 29 N. J. Bq. 408. overthrow the title of the purchaser 2 — See Sec. 176 ante, and that gross negligence did not constitute mala fides. CHAPTER XT SALE OF NEGOTIABLE SECURITIES §237. General statements. The manner or time of a sale of securities issued by public corporations may be irregular or in violation of some express statutory provision, which condition is con- sidered of so grave a character as not only to invalidate the sale but also to raise a serious question of the validity of the bonds, even though in all other respects they are legal. Circumstances to be considered involved in a sale may be the medium of the purchase price whether cash, securities or credit ; the mode of sale, whether after public advertisement and to the best bidder or through private negotiations; disposal at a price less than par when pro- hibited by law in this respect; or the time of their sale considered with reference to their formal and legal issue or delivery. These questions together with the rights of the buyer as affected by their validity or otherwise; the right of the corporation to act directly through its own officers or through financial agents; the payment of commissions; the knowledge with which the buyer is charged both as to the issue of the bonds and the use of their proceeds by the public corporation will be con- sidered in the following sections. It might be said that after securities have passed into the hands of bona fide purchasers that they become so far as their sale and delivery is concerned choses in action, and so far as consideration and delivery is concerned subject to private negotiation and neither their validity 483 484 PUBLIC SECUBITIES or negotiability will be affected by acts of subsequent owners in connection with their disposal. § 238. Authority to sell. The authority to sell bonds in the market is an incident attendant upon and growing out of the power to issue. The objects sought to be effected would clearly remain unaccomplished if when acting under a grant of authority the public corporation had proceeded in the performance of all conditions precedent to the point of sale without being able to go further.^ Although the authority to sell is implied from a grant of power to issue; statutory or charter provisions may direct the manner of the sale and one made contrary to such requirements if they exist will be void.* § 239. Medium of payment. It has been held by the Supreme Court of the United States ^ that when a statute provided that railroad bonds should be sold and the stock of the railroad company which had been subscribed and for which the proceeds of the bonds were intended to pay, where the town ex- 3 — Griffith v. Burden, 35 la. 143; personally liable to the purchaser see also City of St. Petersburg v. who acquired them with notice of English (Fla.), 35 So. 483. In the the act under which they were absence of intervening rights of issued; Butler v. Boatmen's Bank third parties the legislature can pro- (Mo.), 44 S. W. 1047. One dealing hibit the sale of bonds by a munic- with a financial agent appointed by ipality unless ratified by vote of the county court pursuant to law the electors though at the time of is not charged with limitations on the provision, the bonds may have his authority imposed by the court been physically issued under valid in the exercise of its discretion, legislative authority previously 4 — iElyria Gas & Water Co. v. granted and authorizing a sale with- City of Elyria, 53 Oh. St. 374, 49 out such ratification ; Powell v. Heis- N. E. 335. ler, 45 Minn. 549, 48 N. W. 411. 5— Scipio v. Wright, 101 TJ. S. The agents of a town who sell bonds 665; see also Roberts & Co. v. Taft, issued under a void statute are not 109 Fed. 825, 48 C. C. A. 681. SALE 5f negotiable sectjeities 485 changed its bonds directly for the stock, contrary to the statute, the exchange was a material departure from the requirements of the law and a holder of the bonds did not stand in a relation of a bona fide owner and was not entitled to recover. i There are decisions, however, which hold to the con- trary. A Georgia decision holds to the effect that the one mode was substantially the equivalent of the other.® Sale on credit. The fact that the municipal authorities gave a credit to the purchaser instead of selling them for cash as required by the statute has been held not to oper- ate as a defense against a subsequent bona fide pur- chaser in an action on the bonds,'' and this is true even where the municipality never received payment therefor.^ A bid of a stated amount of dollars for county bonds is to be construed as meaning that if the bid is accepted, it is to be paid in current money and not in evidences of indebtedness against the county.* The purchase by a municipal corporation of its own bonds, it has been held, although in appearance a sale amounts merely to a loan to the corporation of the pur- chase price of the bonds. ^^ Where stock of a railroad company is to be paid for by bonds of a county, the rail- road company to receive them at par as cash, the stock is a full equivalent for the bonds and the county issuing them does not occupy any better position than other stockholders, 11 6 — Jlayor, etc. of Griffin v. In- 8 — ^D'Esterre v. City of New man, 57 Ga. 370; see also Common- York, et al., 104 Fed. 605, 44 C. C. wealth V. Town of Williamstown A. 75. (Mass.), 30 N. E. 472; St. Paul Gas 9— Potter v. Lainiart (Pla.), 33 Light Co. V. Village of Sandstone So. 251. (ilinn.), 75 N. W. 1050; Germania 10 — Hoag v. Town of Greenwich, Savings Bank v. Town of Darling- 133 N. Y. 152, 30 N. E. 842. ton, 50 S. C. 337, 27 S. E. 846. 11— Pittsburg, etc. R. E. Co. v. 7 — Town of Greenburg v. Inter- Allegheny County, 29 Pa. St. 210. national Trust Co., 94 Fed. 755, 36 C. C. A. 471. 486 PUBLIC SECURITIES § 240. Time of issue. The fact that bonds are dated July 1st, 1890, and are not negotiated until several months after will not invali- date them, there being nothing in the statute which re- quires the bonds to be actually sold and negotiated on the date of their issue. ^^ §241. The manner of sale: by public advertisement. It is customary to provide in the grant of power that the bonds authorized thereunder shall be sold to the high- est and best bidder at not less than par after a certain designated notice of advertisement to be published for the time and in the manner prescribed. Or stated differ- ently, the correct rule as based upon a sound public pol- icy requires a public sale of securities rather than their disposal in private. Where statutory provisions of the character noted exist it is necessary to the legality of the sale that its provisions be strictly followed. Such statutes are regarded as mandatory though the validity of the bonds necessarily is not affected by an illegal sale in this respect ^^ and may apply to refunding bonds equally with other securities." 12 — Gaddis v. Eichmond County, 26 So. 346; Hughson v. Crane, 113 92 111. 119; Attorney General v. Calif. 404, 47 Pae. 120; Cox v. City of Salem, 103 Mass. 138; At- Borough of Connelsville, 22 Pa. torney General v. Burrell, 31 Mich. County Court Eep. 657; Duryea v. 25. Priars, 18 Wash. 55, 50 Pae. 583. Carlson v. City of Helena A bill was passed by the legisla- (Mont.), 102 Pae. 39. If a munic- ture of Massachusetts in 1904, di- ipality proceeds to sell the bonds recting the treasurer of the state with reasonable diligence, it is suffi- to advertise all future sales of state cient. People v. Booth, 32 N. Y. bonds instead of disposing of them 397; Yesler v. Seattle, 1 Wash. at private sale as had been the prac- 308; see also Sec. 176 ante, on tice for several previous years. Acts "Delivery." of 1904, Chap. 263, See. 1. 13— Eoberts & Co. v. Taft, 109 14— Guckenberger v. Dexter, 17 Fed. 825; Williams v. Board of Oh. St. Cir. Ct. Eeps. 115. Eevenue of Butler County (Ala.), SALE OP NEGOTIABLE SEOUKITIES 487 Prospective bidders in response to proposals for the sale of bonds are usually required to accompany their bids with a certified check or security in some other form as evidence of their good faith in making the bid and to afford a means of reimbursement to the public corpora- tion for expenses it may have incurred in the proceeding should the bidder fail to perform his contract upon an acceptance of his bid. In the latter case the deposit is generally forfeited to the public corporation as liquidated damages. ^^ Irregularities committed in the performance of this condition or in requiring its performance do not affect as a general rule the legality of a sale, the per- formance of the conditions required being generally op- tional with the officers in charge of the sale if this be within their discretionary powers. ^^ The form of the advertisement and the time and man- ner of pubhcation are necessarily controlled by the spe- cific charter or statutory provisions and these vary.''' If there are irregularities in connection with the man- ner or time of sale, the agreement or contract for such sale may be held void without affecting the validity of the bonds.'^ 15— City of San Antonio v. B. H, Eollins & Sons (Tex.), 127 S. W, 1166, second hearing denied, Id, on a city's failure to furnish prO' ceedings convincing the bidders ' at torneys of the legality of the bonds Farmer v. City of Cincinnati, 11 Oh. S. & C. Decisions, 58. Sale in- valid when advertisement not pub- 1199. Action to recover a deposit lished for the time required by statute. Lampreeht Bros. & Co. v. Williamsport, 22 Pa. Cir. Ct. Eeps. 603. 16— Potter V. Lainhart (Fla.), 33 Richards v. Klickitat County, 13 So. 251. Wash. 509, 43 Pac. 647. A mistake 17— Mills V. Bellmer, 48 Calif. 124. in the notice as to the total amount Gibbons v. Hillsborough County of bonds is harmless. (Pla.), 45 So. 88. . A notice of sale 18— Eoberts & Co. v. Taft, 109 need not state the medium of pay- Fed. 825; Village of Ft. Edward ment required by the bidders. v. Fish, 156 N. Y. 353; Elyria Gas Franklin v. Baird, 7 Oh. N. P. & Water Co. v. City of Elyria, 57 571. An immaterial variation from Oh. St. 374. the terms of sale as advertised will not render a sale void. 488 PUBLIC SECUEITIES § 242. At private sale. By statutory or charter provisions the authority to dispose of bonds may be placed in the hands of certain representative bodies or officials and the familiar doctrine applies that authority thus delegated cannot in turn be delegated to others ; as illustrating this rule a case from Texas is pertinent, which held that where the charter of the municipality committed to the city council the ex- clusive control of the city's finances, it could not dele- gate authority to the mayor to sell the bonds of the city in his discretion as to the price and thereby bind the city.^" In the absence of statutory or charter provisions requiring a sale after public advertisement, public offi- cials may in their discretion dispose of bonds on the best terms.^" A sale of them, however, to the members of a municipal council or to other public officials connected with the is- sue and sale is void irrespective of the principles of equity as applying to persons acting in a fiduciary or trust capacity and independent of the fact that the sale may be the part of a scheme to divert the property of the corporation from its legitimate municipal purposes to private ends.^' § 243. The rights of the buyer. Where a bid duly made as required by law has been accepted and if the sale is in other respects legal, the bid- der is not obliged to receive the bonds unless in the form prescribed by the statute even though in all other re- 19 — Blair, et al. t. City of Waco, mere showing that it was consum- 75 Fed. 800. mated with haste but at a price not 20 — Smalley v. Yates, 41 Kans. so low as to indicate moral tur- 550. pitude in the officials making the Vadakin v. Crilly, 73 Oh. St. 380, sale. 78 N. E. 1140. A private sale will 21— Sherlock t. Winnetka, 59 111. not be disturbed by the court on the 389. SALE OP NEGOTIABLE SECUBITIES 489 pects they may be valid.^* Where bids for bonds have been advertised and received and the bonds have been awarded to the highest bidder, the proceedings not being fraudulent or irregular or illegal in any respect, it is not within the power of the public officials so advertising to rescind their action in making the award even though a higher price might have been obtained. The bidder can enforce his rights and compel a delivery of the bonds.^* If they have been delivered to other parties he can recover the damages which he can prove he has sustained.^^ There are authorities, however, which hold that the con- tract involved in proceeding by advertisement and the making of bids is incomplete until the proposal is ac- cepted, and the corporation inviting the proposal is not liable for damages in refusing to accept an offer even though it be the highest regular offer made,^" and the same rule will apply if the public authorities are vested with the power of selling the bonds in such a manner and upon such terms as they deem best for the interests of the corporation for which they are acting. ^^ § 244. Validity of bonds as affecting sale. It is customary for bidders, especially when they are regular dealers in municipal securities, to make their 23 — Merced v. California Univer- contract. State v. Allison, 8 Oh. N. sity, 66 Calif. 25. P. 170; Diefenderfer v. State City of Ironwood v. Wickes, 87 (Wyo.), 80 Pac. 667. N. Y. S. 554. One purchasing bonds 25 — Bobinson-Humphrey v. Wilcox from a city is not entitled to a County (Ga.), 58 S. E. 644. There rescission of the 'contract of pur- is no liability where the county has chase unless he restores all the no authority to enter into an execu- bonds delivered to Mm. tory contract for the sale of bonds. 24— May v. Cass County (N. D.), 26— Coquard v. School District of 96 N. W. 292. A contract for the Joplin, 46 Mo. App. 6; see also sale of bonds made pursuant to the Moses v. City of Key West, 157 terms of the statute then in force N. Y. 689, 51 N. E. 1092; Austin cannot be impaired by subsequent v, Valle (Tex.), 71 S. W. 414. legislation, even though passed be- 27 — Hansard v. Green (Wash.), fore the bonds were actually signed 103 Pac. 40. and delivered under the original 490 PUBLIC SECtrBITIES bids conditional upon the Validity of the issue and the respective rights of the parties then will depend upon the character of the securities in this respect.^^ Where, however, no such condition is made it is questionable if a bidder can be compelled to accept bonds in respect to the legality of which there is a doubt. Where the mar- ketable value of public securities is impaired or destroyed by questions affecting their legality in connection with the authority to issue or the manner of its exercise, a prospective buyer or bidder cannot be compelled to take such bonds or in case of refusal he is not liable for dam- ages which the corporation may sustain by reason of his action. This rule holds true even where there is a subsequent decision passing upon the questions raised and establishing the validity of the bonds.^" In a recent case in the Federal Court in Montana,^" the court, after discussing the business customs of brok- ers in bonds, said in passing upon the principle stated above: "In view of these well-known facts and in ac- cordance with the usages of the country in such transac- tions, it is necessary in order to give effect to the inten- tions of the parties, to read into the contract an implied condition that the buyers should not be bound to take the bonds unless the proceedings of the city government had been conducted in substantial conformity with the laws, and proper records had been made so that competent lawyers of good reputation would be able to certify to the 28 — Finn v. Board of Sup'rs of tional bid. City of San Antonio v. Bay County (Mich.), 32 N. W. 558. E. H. EoIIins & Sons (Tex.), 127 A contract in this case held not S. W. 1166; second re-hearing de- conditioned upon the approval of nied, Id. 1199; Diefenderfer v. the issue by the plaintiff's attor- State (Wyo.), 80 Pac. 667. ney. 29— City of Great Palls v. Theis, Trowbridge v. City of New York, 79 Fed. 943; see also Alessandro 53 N. Y. S. 616. A bid for bonds Irrigation District v. Savings & containing the . clause ' ' our bid is Trust Co. of Cleveland, 88 Fed. 928. to be subject to the legality of the 30 — City of Great Falls v. Theis, issues by our counsel" is a condi- 79 Fed. 943. SALE OF NEGOTIABLE SECUEITIES 491 validity of the bonds. In every contract to sell land and give a good and sufficient warranty for a marketable title the vendor cannot enforce the contract against his ven- dee when there is an apparent flaw in his title, for in such a case the court will not hazard an opinion as to whether or not the title can be sustained if it should become the subject of litigation. For the same reasons the courts must, in such cases as the one under consideration, refuse to adjudge a party liable to pay daniages for refusing to accept municipal bonds without marketable value where the value is destroyed or impaired by questions of legal- ity arising from facts shown by or omissions in the plain- tiff's own records." The validity of the organization of the corporation is- suing the bonds cannot be attacked if it had at the time of issue a de facto existence,^^ and where a county issuing bonds is subsequently divided, such segregation does not relieve either portion from a liability on the bonds and one who has already contracted for them cannot repudi- ate his contract on the ground that the security has been impaired.^^ Since the general validity of bonds from the standpoint of the buyer is not affected by the use to which the proceeds are put by the corporation, a bidder is not justified in refusing to accept them on this ground.^^ Where authority is given to issue refunding bonds to re- deem certain designated outstanding indebtedness, a bid- der cannot set up as a defense in an action against him for a breach of contract to purchase the refunding bonds 31— Metcalfe & Merrit (Calif.), Central Irrigation District (Calif.), in Pac. 505. One who bids for 49 Pac. 354, and See. 266 post, bonds on condition that they are 32 — Finn v. Board of Sup'rs of legal and valid can question any pro- Bay County (Mich.), 132 N. W. eeeding connected with their issue 558. but oa,nnot attack the validity of 33 — ^Moses v. City of Key West, the organization of the district if 157 N. Y. 689, 51 N. E. 1092; see it had a de facto existence when also Sees. 262 and 263 post. it issued the bonds; see also In re 492 PUBLIC SECUEITIES a want of power on the part of the public corporation to issue the original bonds.^* § 245. Bonds sold at less than par. As already stated, it is customary for the statutory authority conferring the power to issue securities to re- quire them to be sold at a price not less than the par value. This term is frequently used in the commercial world and means value for value. In connection with a sale of bonds, it conveys the idea that the corporation issuing the bonds shall receive in lawful currency a dol- lar in money for ever3r dollar of obligations issued.^^ The cases involving the legality of the sale or the va- lidity of bonds consider in arriving at their decision the effect of the prohibitive character of such a statute or charter provision. The purpose of such prohibitive pro- visions is clear and the reasons sound. Contracts for the sale of securities at less than par when this is prohibited are usually held void.^® And the same principle necessarily follows where nominally the bonds are sold for par but where there has been a viola- , 34 — ^Board of Com'rs of Carbon scribed by a town with its bonds County V. Rollins (Wyo.), 62 Pac. at par for par is not a sale for less 251. than par although the stock it re- 35 — ^Williams v. Board of Revenue eeives in return has no negotiable of Butler, 123 Ala. 432, 26 So. 346; value. Hughson v. Crane, 15 Calif. Duval County v. Knight (Pla.), 29 404, 47 Pac. 120; Jones v. Macon, So. 408; Prantz v. Jacob, 88 Ky. etc. E. E. Co., 39 Ga. 138. A citi- 525, 11 S. W. 654; State v. City zen may restrain an illegal sale of of Elizabeth, 37 N. J. L. 142; Dela- bonds below a lawful price. Porter field V. Illinois, 2 Hill (N. Y.) 158. v. City of Tipton (Ind.), 40 N. E. 36 — National Life Insurance Co. 802; City of Atchison v. Butcher, 3 V. Board of Education of Huron, Kan. 104. No implied authority 62 Fed. 778 C. C. A. A sale in to sell below par. this case under the conditions held Bell v. City of Shreveport (La.), not to amount to a sale at less than 53 So. 928. An ordinance provision the prescribed amount. that bonds should not be sold for Atlantic Trust Co. of New Tork less than par for cash would not V. Town of Darlington, 63 Fed. 76. affect the validity of the issue but A payment for railroad stock sub- related merely to their disposition. SALE OF NEGOTIABLE SECURITIES 493 tion of the law through an agreement to pay a commis- sion to the purchaser or otherwise evade its provision.^^ Where the statutes do not prohibit the sale of public securities at less than par, it is generally held that they may be sold at such prices as they may bring in the Village of Ft. Edward v. Fish, 156 N. Y. 363, 50 N. E. 973, affirming 33 N. Y. S. 784; Neuse Eiver Navi- gation Co. V. Com'rs of Newbern, 7 Jones, Law, 275; Jones v. Madi- son County Com'rs (N. C), 50 S. E. 291, reversing 47 S. B. 753; NaUe V. City of Austin (Tex.), 21 S. W. 375; City of Lynchburg v. Norvell, 20 Gratt. 601; but see Epping v. City of Columbus (Ga.), 43 S. E. 803. That bonds have been con- tracted to be sold at much less than they are worth is no reason for re- fusing to enter judgment validating the issue; see also Sec. 224 ante on "Consideration." 37— Village of Ft. Edward v. Fish, S3 N. Y. S. 784, 86 Hun. 548, aflSrmed 156 N. Y. 363, 50 N. E. 973. A sale at face value plus sev- eral months accrued interest is in effect a sale at less than par and therefore void. Edward C. Jonea Co. V. Board of Education, 51 N. Y. S. 950. Whelan's App. 108 Pa. St. 162. A commission cannot be allowed to a purchaser of bonds from the city at par. Hunt V. Fawcett, 8 Wash. 396, 36 Pae. 318. A contract to sell bonds nominally at par but to pay commission to the purchaser is void violating act of March 21, 1890, Sec. 5, providing that county bonds shall not be sold at less than par. But see Town of Manitou v. First National Bank (Colo.), 86 Pac. 75. A commission can be paid to a broker making a sale of bonds where sold at their face value with- out violating Mills Annotated Stats. Sec. 4548b, which provides that re- funding bonds issued by a town shall not be sold at less than their face value. In re Taxes Delinquent of St. Louis County (Minn.), 78 N. W. 115. A contract by which it was stipulated that a broker should receive 10% of the face value of an issue of bonds for printing them and for all services incident to their sale including legal advice doet not violate Laws of 1895, e. 28B, Sec. 4, forbidding a sale at less than par. Citizens' Savings Bank v. Town of Greenburg, 173 N. Y. 215, 65 N. E. 978, reversing 65 N. Y. S. 554. A sale of bonds without taking into account the accrued interest which in effect is a sale for less than par and forbidden by statute though an illegal exercise of the power to dispose of the bonds would not af- fect their validity in the hands of innocent holders for value. Evans v. Tillman (S. C), 17 S. E. 49. A contract for sale of bonds by which they are to be paid for after their issue and at the amount expressed on their face only and without including the accrued in- terest is not a violation of a statu- tory provision that the bonds in question should be sold "at not loss than par or face value." 494 PUBLIC SECURITIES market.^^ And it is also generally held that a donation of bonds to a railroad corporation when so authorized by statute will not conflict with provisions relative to a sale at less than par.^® Recitals, There are cases, however, which hold that where bonds contain recitals to the effect that all condi- tions precedent have been complied with including those relating^to a sale of bonds at not less than par and have passed into the hands of bona fide holders that the cor- poration issuing them is estopped to set up as a defense the fact that they have been sold for less than par.*° On the point of a sale less than par in a case in the Supreme Court of the United States,*^ it appeared that 38— Griffith v. Burden, 35 Oh. 143; Orchard v. School District No. 70, 14 Nebr. 378; City of Memphis V. Bethel (Tenn.), 17 S. W. 191. 39 — Town of Queensbury v. Cul- ver, 19 Wall. 83; Foote v. Town of Hancock, 15 Blatohf. 343. 40 — Mercer County v. Hackett, 1 Wall. 83; Sherlock v. Winnetka, 68 111. 530. Atchiaon v. Butcher, 3 Kans. 104. As between the parties the validity of boftds will be affected by a sale below par but after they have passed into the hands of an innocent holder, the defense cannot be made. St. Paul Gas Light Co. v. Sandstone, 73 Minn. 225. Delafield v. Illinois, 29 Wendell 192. Bonds sold at less than par contrary to the statute when in the hands of a bona fide holder are un- affected by such sale whatever may be the original equities between the immediate parties to the transaction. State V. Perryaburg, 27 Oh. St. 96. Whelan v. City of Pittsburg, 108 Pa. St. 162. Bonds sold at less than par but subsequently passing into the hands of bona fide pur- chasers held valid. 41 — Richardson v. Lawrence County, 154 U. S. 536; Bk. 17 L. Ed. p. 558; Woods v. Lawrence County, 1 Black 386, affirmed and applied; see also Mercer County v. Hackett, 1 Wall. 83. The bonds in question in this case were sold at ».bout two-thirds their par value contrary to the statute which pro- vided that under no pretense should they be sold or transferred by those to whom they were issued at less than the par value thereof, the court held the bonds good in the hands of a bona fide holder. Woods V. Lawrence County, 1 Black 386; National Life Insurance Co. v. Board of Education of City of Huron, 62 Fed. 778 C. C. A.; Knapp V. Newtown, 3 Thompson & C. 751, 1 Hun. 268. A sale by the original holder to subsequent ones at the rate of 90% will not prevent a judgment in their favor at the par value of the bonds although the law requires that the bonds shall not be sold for less than par. SALE OF NEGOTIABLE SECUEITrBS 495 the bonds were issued by the Comity of Lawrence under statutory authority to the effect that the corporation to which they were to be given in payment of a subscription to its stock should not sell the same at less than par value. The bonds in fact were sold by the railroad company at the rate of sixty-four cents on the dollar to the contrac- tors constructing the railroad. The court held that the right of the holder of the bonds and coupons to recover principal and interest at par was not affected by the sale as above noted. § 246. Usury, when involved in a sale less than par. Not only has the prohibitive effect of a statute provid- ing for a sale of public securities at less than par been considered in determining the legality of the transaction and possibly the validity of the bonds but also the ques- tion of the effect of such a sale as involving the subject of usury ; whether a sale by a public corporation of their securities at such a price below par as will make the rate of interest to be received upon the actual investment usurious and render the securities consequently void. There has been in some of the cases a suggestion that if the price at which sold would make the rate usurious, the bonds might be rendered invalid or make them at least subject to the penalties for usury imposed by the laws of the different states which in most cases is simply a forfeiture of the excess of the interest or of the whole interest.*^ But see to the contrary Law- bonds the sum paid by the first pur- renee County v. N. W. E. E. Co., chaser with interest thereon. Law- 32 Pa. St. 144 and Armstrong v. rence County's Appeal, 67 Pa. St. Brinton, 47 Pa. St. 267. In the 87; see, however, the Lawrence latter case it was held that where County cases in the U. S. Supreme bonds were sold below par in viola- Court cited above, tion of a statute authorizing their 42 — Sherlock v. Winnetka, 68 111. issue, the county court could by pro- 530. Bonds held valid though sold ceeding in equity compel the holder at a price making them usurious, to receive in satisfaction of the Clark v. Des Moines, 19 la. 199. 496 PUBLIC SECUBITIBS §247. Commissions. The mode of sale and delivery is usually fixed by the law conferring the authority to issue the bonds and pub- lie officials are generally required to make the negotia- tions and effect a sale without the intervention of a finan- cial agent or other representative of the corporation to whom under a contract of employment compensation must be made commonly in the form of a commission on the sale.*^ Where such statutory requirements are not to be found, the employment by the proper public officials of financial representatives or brokers will not invalidate the sale, the bonds or the proceedings in any way,** and See however, the ease of City of Memphis v. Bethel, 17 S. W. 191, where the bonds bearing interest at the rate of 6% were sold at the rate of 85 cents on the dollar, the court said in part: "Assuming that these authorities establish the entire negotiability of the city bonds and the right of the city officers to sell them in the market as chattelSj it is clear that under the authority to sell them at their value although that might be a greater discount than legal interest, the transaction would be neither usurious nor illegal and therefore, the city can neither raise a question of usury or scaling." Nalle V. City of Austin (Tex.), 21 S. W. 875. Bonds are not in- valid because sold below par if the discount added to the rate expressed does not make the rate usurious. Lynchburg v. Norvell (Va.), 20 Gratt. 601. 43 — Smith v. Los Angeles County, 99 Calif. 628, 34 Pao. 439. Sidway v. South Park Com'rs (111.), 11 N. B. 852. One of the officials charged by law with nego- tiating a sale of bonds cannot re- cover any commission for negotiat- ing such a loan. Butterfield v. Mel- rose, 6 Allen (Mass.), 187; Suffolk Savings Bank v. City of Boston, 149 Mass. 364. Citizens Savings Bank v. Town of Greenburgh, 173 N. Y. 215, 65 N. E. 978. An innocent purchaser is not chargeable with any fraud or irregularities in the conduct of officers or agents of the town in the negotiations for the sale of munic- ipal bonds. Street v. Craven County Com'rs, 70 N. C. 644; Theis v. Board of County Com 'rs of Beaver County (Okla.), 97 Pac. 973; see also City of Gladstone v. Throop, 71 Fed. 341 C. C. A. It is no de- fense- to an action on bonds of the city by an innocent holder that when they are sold by the city an agree- ment in violation of law was made with the treasurer of the city to pay him a commission for making such sale. 44 — Town of Manitou v. First Na- tional Bank (Colo.), 86 Pac. 75; SALE OF NEGOTIABLE SECURITIES 497 the compensation to be received by them will be deter- mined by the contract of employment.*^ § 248. Purchaser to ascertain authority for issue. In a preceding section,*^ attention has been directed to a number of cases holding that there cannot be a bona fide holding of negotiable securities in the absence of the authority to issue them. In this and the following sec- tions, the attention of the reader will be called to cases which involve the same principle but which further con- sider the questions of what legal authority and records a purchaser is bound to examine and to what extent he is charged with a knowledge of them in the absence of such Eeed v. Town of Orleans (Ind.), 27 N. E. 109. Owensboro Water Works Co. v. City of Owensboro (Ky.), 96 S. W. 867. But eommissions paid cannot be deducted from proceeds of the bonds. State ex rel. Board of Liquida- tion of City Debt v. Briede (La.), 41 So. 487. Members of a Board of Liquidation interested in a busi- ness way in a bank are not quali- fied to act in selecting that bank as the board's fiscal agent. Cush- man v. Comm'rs of Carver County, 19 Minn. 295; Lyons v. Chamber- lain, 89 N. Y. 578; City of New York V. Sands (N. Y.), 11 N. E. 820; Brownell v. Town of Green- wich, 114 N. Y. 518, 22 N. E. 24. Armstrong v. Village of Ft. Ed- ward, 129 N. Y. 315, 53 N. E. 1116, reversing 32 N. Y. S. 433. The im- plied authority to employ persons to procure a purchaser for bonds follows from the grant of an ex- press power to issue them. Whelan's App., 108 Pa. St. 162. A commission cannot be allowed to p. S.— 32 a purchaser of bonds from the city at par. 45 — City of Syracuse v. Eeed, 46 Kans. 520. Public officials can not withhold a part of the proceeds as compensation for their services. Any claim by them must be made in writing and allowed in the man- ner prescribed by statute. Theis V. Board of Com'rs of Beaver County (Okla.), 97 Pac. 973. Where county commissioners have no power to contract with a broker to sell bonds, a contract made by them is void and no liability is created against the county, however beneficial the broker 's services may ■ have been. State V. Buchanan (Tenn.), 62 S. W. 287. A reasonable compen- sation although not expressly author- ized will be allowed. See also Town of Sheridan v. Stahl (Wyo.), 102 Pac. 660, on the question of a per- centage allowed on moneys passing through the hands of a town treas- urer where involving a sale of bonds by the town. 46— See Sec. 231 ante. 498 PUBLIC SECT7KITIES an examination. The questions to be considered involve the subject of estoppel by recitals which will be discussed in the following chapter where these and the principles applying to them will be considered in detail. In brief, a purchaser should ascertain and with few exceptions he is required to know that the public corpora- tion issuing the securities has had this power expressly conferred upon it, that the power as conferred is not con- trary to the constitution of the state or of the United States; that the purpose for which the bonds have been issued when the same appears upon their face is a public one ; that the securities on their face are regular in form and that the recitals therein, if such exist, import a full compliance with the conditions imposed by the grant of authority and, finally, that the officers executing and is- suing these securities have this power. § 249. Legal authority to issue. Every purchaser of public securities is bound to take notice of the statute under which they are issued, if it gives no power the corporation is not bound and the se- curities are void even in the hands of innocent purchasers regardless of the other recitals contained therein.*^ The power to issue must be expressly, or as has been held in 47 — McClure v. Township of Ox- Board of Com'rs of Canyon County ford, 94 ir. S. 429; Merchants Bank (Ida.), 49 Pac. 409. V. Burgan County, 115 U. S. 384; Bissell v. City of Kaniakee, 64 Katzenberger v. City of Aberdeen, 111. 249. The authority of a munic- 121 U. S. 172; Lake County v. ipal corporation is derived from Graham, 130 U. S. 674; Citizens public laws, and the avenues to such Savings & Loan Association v. Perry information in regard to the law County, 156 XT. S. 692; Mygatt v. and ordinances of such corporations Green Bay, 1 Bissell 292; National being open to public inspection, the Bank of the Eepublic v. City of St. holder of such securities will be pre- Joseph, 31 Fed. 216; National sumed to have examined them, and Bank of Commerce v. Town of to have known whether the corpora- Granada, 54 Fed. 100; GoflSn v. tion had the requisite power to Board of Com'rs of Kearney issue the bonds. He has no such County, 57 Fed. 137; Dunbar v. opportunity in regard to private SALE OF NEGOTIABLE SEOUBITIES 499 some few and exceptional cases, indirectly conferred. This subject has been already considered in preceding sections.*® If the authority to issue appears and if the securities contain recitals of the compliance by the public corpora- tion duly and properly made by the public officials charged with that power and duty the purchaser is not bound to examine further, for as to the irregularities or defects in the execution of a granted power, the corpora- corporations. Their by-laws are not open to inspection by those who deal in securities issued by them, and hence the reason for the distinction that has been taken. The holder of the bonds involved in this action had every opportunity to know whether the city had any lawful right to issue them for the reason that its authority, if any existed, was to be found in the public statutes, and if he did not in fact examine them, as it was his privilege to do, before buying them, he will be pre- sumed to have done so, and to have known they were issued without au- thority of law and therefore void in the hands of any holder, either with or without notice. Aurora v. Wpst, 22 Ind. 89; McPherson v. Foster, 43 la. 48 ; Swanson v. City of Ottumwa (la.), 106 N. W. 9; Mitchell County v. City National Bank (Tex.), 43 S. W. 880, revers- ing 39 S. W. 628; Lewis v. Com'rs, 12 Kans. 186; Union Pac. Ey. Co. V. Smith, 23 Kan. 745; Common- wealth V. Chesapeake, etc. Canal Co., 32 Md. 501. Woodruff V. Okolonaj 57 Miss. 806. Where a statute authorizes a municipal corporation to issue bonds payable not later than ten years thereafter, an issue payable in twenty years is void even though there is a recital of compliance with the statute. Claybrooke v. Board of Com'rs of Eockingham County (N. C), 19 S. E. 593; Union Bank of Eichmond v. Com'rs of Town of Oxford, 119 N. C. 214, 25 S. E. 966, 34 L. E. A. 487; Peoples Bank V. School District No. 52 (N. D.), 57 N. W. 787; State v. School Dis- trict No. 50 (N. D.), 120 N. W. 555; City of Tyler v. Tyler Bldg. & Loan Association (Tex.), 82 S. W. 1066; City of Austin v. Cahill (Tex.), 88 S. W. 542; Gray Limita- tions of Taxing Power, Sec. 2177. Cooley Constitutional Limitations, p. 215. Where it is said: "While mere irregularities of action, not going to the essentials of power, would prevent parties who had acted in reliance upon the securities en- forcing them, yet as the doings of these corporations are matters of public record, and they have no general power to issue securities, any one who becomes a holder of such securities, even though they be nego- tiable 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. ' ' See also Chap. XIII post. 48 — See Sees, 84 and 85 ante. 500 PUBLIC SECXTEITIBS tion will be estopped to set them up as defenses in the hands of a bona fide holder.^" §250. Constitutionality of act granting authority. Not only is the purchaser bound to ascertain the exist- ence of a grant of authority but he is further required to determine its constitutionality, and this whether the act is referred to in the bonds or where there are no recitals of lawful authority. The act so far as its form is con- cerned and its mode of passage must comply with the provisions of organic law. The purchaser cannot rely upon the doctrine of estoppel founded upon recitals in the bonds of the law in respect to its passage.^" As illustrating one phase of this principle, the cases of the town of South Ottawa v. Perkins, and Post v. Board of Supervisors of Kendall County,^ ^ can be read with profit. In the case first cited the question of the validity of certain railroad aid bonds was at issue and the ob- jection was made that the law relied on for the authority to issue the bonds was never passed ; no entry of its pas- 49 — Meyer v. Muscatine, 1 Wall. anoe Co., 99 XJ. S. 362; Montclair 384; Nugent v. Sup'rs, 19 Wall. v. Eamsdell, 107 U. S. 144; Rath- 241; County of Moultrie v. Eock- bone v. Board of Com'rs of Kiowa ingham, Ten Cent Savings Bank, 92 County, 73 Fed. 395; Independent XT. S. 331; Marey v. Oswego Twp., School District of Sioux City v. 92 V. S. 637; Town of Coloma v. Eew, 111 Fed. 1; Fidelity Trust & Eaves, 92 U. S. 579. Guaranty Co. v. Fowler Water Co., Com'rs of Douglas County v. 113 Fed. 560; but see Cagwin v. Bolles, 94 IT. S. 104. Behind such Hancock, 84 N. Y. 532; Veeder v. a recital a bona fide holder for value Lima, 19 Wis. 298, holding contrary paid is bound to look for nothing to the doctrine of recitals as stated except legislative authority given in Knox County v. Aspinwall, 21 for the issue of municipal bonds to How. 539, and the cases following, railroad companies, he is not re- 50 — Board of Com'rs of Stanley quired to examine whether the con- County v. Snuggs, 121 N. C. 394, 28 ditions upon which such authority S. E. 539, 39 L. E. A. 437; Witt- may be exercised have been ful- kowsky v. Board of Com'rs of Jaek- filled. He may rely upon the de- son County (N. C), 63 S. E. 275. cision made by tribunals erected by 51—94 U. S. 260, 105 V. S. 667. the legislature. Brooklyn v. Insur- SALE OF NEGOTIABLE SECUEITIES 501 sage appearing upon the journal of the Senate of Illinois as required by the Constitution. The court held that a municipal corporation could not issue bonds without leg- islative authority and that all persons dealing with such corporation must take notice of a want of power at their peril; that the decisions of the state courts on questions as to what are the laws of the state are binding upon those of the United States and further that a town can- not be estopped to Seny the existence of a law under which its bonds purport to have been issued. On the question of estoppel, the court in the majority opinion by Mr. Justice Bradley, said: "We cannot assent to this view. There can be no estoppel in the way of ascertain- ing the existence of a law. That which purports to be a law of a state is a law or it is not a law, according as the truth of the fact may be, and not according to the shift- ing circumstances of parties. It would be an intolerable state of things if a document purporting to be an Act of the Legislature could thus be a law in one case and for one party, and not a law in another case and for another party; a law to-day, and not a law tomorrow; a law in one place, and not a law in another in the same State. And whether it be a law or not a law is a judicial ques- tion, to be settled and determined by the courts and judges. The doctrine of estoppel is totally inadmissable in the case. It would be a very unseemly state of things, after the courts of Illinois have determined that a pre- tended statute of that State is not such, having not been constitutionally passed, for the Courts of the United States, with the same evidence before them, to hold other- wise." Four judges, including the Chief Justice, dissented from the majority opinion. In the minority opinion written by Chief Justice Waite, the following language appears : ' ' The question then is, whether, under the circumstances of this case, the defendant can be permitted to make proof of the failure to make entry of the passage of 502 tUBLtC SECUElTIES the law as required by the constitution. This does not depend upon the construction of the constitution, but upon the general principles of commercial law applicable to the constitution as construed. The issue is made upon the fact of the passage of the law. Prima facie it was passed, and it was apparently in force. Both parties act- ing upon this prima facie case, and supposing it to be true in fact, have become bound; one has borrowed and the other lent. The lender has performed his part of the contract and delivered the money, and the simple ques- tion to be' determined now is, whether, under such cir- cumstances, the borrower can refuse to pay, because, upon further investigation, he has ascertained that the legislative journals do not contain the necessary evidence to establish the fact of the due enactment of the law. * * * It must be remembered that this is not a case of construction. The question is not whether a law ad- mitted to be in force confers the necessary power, but whether a law which does confer the power, and is ap- parently in force, can be shown to have been in fact passed according to the requirements of the Constitu- tion, after parties have acted upon the faith of it and changed their condition. When the question is one of construction alone, all parties stand upon an equal foot- ing, and each can judge for himself. If a mistake occurs, it is one of law and not of fact. Here it is one of fact. The bonds on which this suit is brought are prima facie valid ; and, as between these parties, I think the law will not admit the testimony offered to show that they are void. In the absence of proof they stand. The ques- tion is one of evidence. It is not whether the law was passed, but whether testimony can be introduced to show that it was not. I think it cannot. To admit it would ignore a principle of commercial honor upon which we have a long line of decisions. I am not prepared to do so." The grant of authority must not contravene consti- SAl^ OF NEGOTIABLE SECUKITIES 503 tutional provision relative to the passage of special leg- islation.^^ § 251. Organization of corporation and manner of acting. The purchaser is also bound to ascertain the validity of the organization of the public corporation issuing the securities but it is not necessary that there should be established a de jure existence. Bonds issued by de facto corporations are invariably regarded as valid if in other respects they are legal. This subject will be fur- ther considered in a subsequent section.^ ^ If the bond refers on its face to an ordinance or reso- lution pursuant to which the securities were issued, it is essential that the purchaser ascertain the legality of this mode of action by the corporation issuing the securities for if it is necessary that they act by ordinance a mere resolution is insufficient to confer authority.^'' The legality of the mode of action must not only be de- termined but many authorities go further and hold that where an ordinance or resolution is recited as authority for an issue of securities the purchasers are bound at their peril to ascertain the terms of the ordinance."^ 52— See See. 439 post and 33 N. W. 74; Town of Klamath Falls ante. v. Sachs (Ore.), 57 Pac. 329. Young V. Board of Com'ra of City of Tyler v. Tyler Bldg. & Tipton County (Ind.), 36 N. B. Loan Ass'n (Tex.), 86 S. W. 750, 1118. Law involved held not con- reversing 82 S. W. 1066. But a trary to the constitutional provision purchaser is not charged with no- relative to special legislation. tice of other parts of the record 53 — See Sec. 266 post. not connected with the issue of 54 — Eoberts & Co. v. City of Pa- bonds; but see Wygatt v. Green ducah, 95 Fed. 62. Bay, 1 Bissell 292, where it is held 55 — Hiukley v. City of Arkansas that a holder of a city bond is not City, 69 Fed. 768 C. C. A.; Town bound to examine the record of a of Brewton v. Spira, 106 Ala. 229, city to ascertain whether the resolu- 17 So. 606; Illinois Trust & Sav- tion of the council for issuing the ings Bank v. City of Pontiac, 112 bonds corresponds with the resolu- 111. App. 545; Portsmouth Savings tion recited in the bonds. Bank v. Ashley, 91 Mich. 670, 52 504 PUBLIC SECXJKITIES There are eases, however, and the better authority which hold to the doctrine that a recital on the face of bonds that they were issued in pursuance of certain ordi- nances of the corporation issuing them will not put a purchaser upon inquiry as to the terms of the ordinances under which the bonds were issued.*^ § 252. Issue in excess of constitutional limitation. Some authorities also hold that where the bonds recite on their face that they are issued under the provisions of a certain statute the purchaser is chargeable with notice that their issue is or may be in excess of the constitutional limitation on indebtedness.^^ And this is especially true where upon the facts as they appear on the face of the bonds and from the public records, a knowledge of which the purchaser may be charged, this fact clearly appears.^^ The bond may contain a recital to the effect that the issue of which it is a part does not exceed the constitu- tional or statutory limitation or there may be an absence of a recital to this effect. There are cases which hold that in view of the absolute limitation placed upon the incur- 56 — Hackett v. Ottawa, 99 U. nances would disclose nothing in S. 86; Evansville v. Dennett, 161 conflict with the recitals in the TJ. S. 434. bonds. Eisley v. Village of Howell, Waite v.'City of Santa Cruz, 184 64 Fed. 453, reversing 57 Fed. 544, TJ. S. 302. As there was power and following Hackett v. Ottawa, in the city to issue refunding bonds 99 XJ. S. 86. to be used in discharging its out- 57 — City of Kearney v. Woodruff, standing indebtedness of a specified 115 Fed. 90. A bona fide purchaser kind, purchasers were entitled to is only bound to ascertain when the rely upon the truth of the recitals issue is in excess of the ten per in the bonds that they were of the cent limit authorized. Beyond this, class which the act of 1893 author- he is entitled to rely upon the re- ized to be refunded. They were citals in the bonds that all ante- under no duty to go further and ex- cedent steps necessary to the valid- amine the ordinances of the city ity of the bonds have been taken, to ascertain whether the recitals 58 — Burlington Savings Bank v. were false. On the contrary, pur- City of Clinton, 111 Fed. 439; see chasers could assume that the ordi- Sec. 255, et seq., post. SALE OP NEGOTIABLE SECURITIES 505 ring of indebtedness by public corporations tbrougli con- stitutional provisions that the legislature has no power to defeat or avoid it by authorizing public officials to make findings or recitals in securities which shall be con- clusive that they are within the limit and that a purchaser is not eiititJed to rely upon them in that the debt thereby created does not exceed the constitutional limit. This rule is clearly the sound one to apply where there is an absence of a recital to that effect.^" There are cases hold- ing contrary to the rule stated above and which maintain the doctrine that a recital that the debt does not exceed the constitutional limit operates as an estoppel under certain conditions. The cases on this question will be discussed in a subsequent section."" In the absence of recitals relative to the fact that the debt represented by the bonds does or does not exceed the constitutional limit, and that other conditions imposed by statutory or constitutional provisions have been com- plied with, the authorities are uniform in maintaining that a purchaser of securities is charged with the duty of ascertaining the facts relative to the issue of the bonds which might affect their validity. This question will be further considered in a subsequent section under the sub- ject of recitals."' § 253. Recitals of fact. The purchaser is further charged with an examination of recitals of fact appearing upon the face of the bonds 59— Dixon County v. Field, 111 V. 61— See Sec. 296 post; Buchanan S. 83; Hedges v. Dixon County, 150 v. Litchfield, 102 TJ. S. 278; Citi- U. S. 182; Fairfield v. Rural Inde- zens' Savings Ass'n v. Perry pendent School District of Allison, County, 156 TJ. S. 692; First Na- 111 Fed. 453. tional Bank v. Doon Township, 86 60— See See. 295, et seq., post; la. 330, 53 N. W. 301; Doon Twp. Chaffee County v. Potter, 142 U. S. v. Cummins, 142 TJ. S. 366. 355; Gunnison County v. E. H. Rol- lins & Sons, 173 U. S. 255. 506 PUBLIC SECURITIES to ascertain whether they are regular in form and import a full compliance with precedent conditions required by the statute authorizing their issue in order that they may operate in his favor as an estoppel against the corpora- tion issuing them where irregularities or defects exist in the performance of the required conditions or where there may have been a total failure to comply with them. Such an examination is necessary because of the resul- tant effect of the existence of a recital as to a particular fact upon the character of the holder as one bona fide or upon the validity of the bonds. The definition of a recital will be given in a subsequent section and also the principles of law relating to the effect of a statement of facts contained therein and the authority of public officials to make one.^^ §254. Authority of officers to act. The purchaser is also bound to determine whether the public authorities issuing and executing public securities are acting within the actual scope and Hmits of their authority as conferred either by a special law or as com- ing within the terms of their authority generally con- ferred.^^ No public corporation can be estopped by the declarations or acts of public officials involving or in respect to either the character or the extent of their authority. This principle is well-stated in a case decided by Mr. Justice Bradley in the Circuit Court of the United States,'^'* where he said: "Public officers cannot acquire authority by declaring that they have it. They can not thus shut the mouth of the public whom they represent. The officers and agents of private corporations, entrusted by them with the management of their own business and 62 — See See. 276, et seq., post. 670; Goodnow v. Com'rs of Eam- 63 — Bissell v. Spring Valley Twp., sey County, 11 Minn. 31 ; Ledwieli 110 V. S. 162; Lewis v. Com'rs, 12 v. MeKim, 53 N. Y. 315. Kaus. 186; Portsmouth Savings 64 — Chisholm v. Montgomery, 2 Bank v. Village of Asbley, 91 Mich. Woods, 584. SALE OP NEGOTIABLE SECtTKITIES 507 property may estop their principals, and subject them to the consequences of their unauthorized acts. But the body pontic can not be thus silenced by the acts or declar- ations of its agents. If it could be, unbounded scope would be given to the peculations and frauds of public offi- cers. I hold it to be a sound proposition, that no munici- pal or political body can be estopped by the acts or dec- larations of its officers from denying their authority to bind it." The discussion relative to the power and authority of pubhc officials to bind the corporation for which they pur- port to act and which they assume to represent will be re- membered.^* Genuineness of official signatures. The purchasers of public securities are charged as already stated with notice of the official capacity and power of the officials issuing and executing public securities and they also always take the risk of the genuineness of the official signature of those who execute the paper they buy. This rule includes not only the genuiness of the signature itself, but the offi- cial character of the one who makes it.^" § 255. Examination of records. The purchaser may not only be charged with a knowl- edge of constitutional, statutory and charter provisions apparently conferring the power to issue securities but he is often by law charged with the duty of examining certain designated public records. This duty may be imposed by a specific requirement of the law granting the authority to issue or it may follow from the adoption and applicajtion of general rules or principles of law by the courts.*^ 65 — See Sees. 52 and 65, et seq., 67 — The Ployd Acceptances, 7 ante. Wall. 674; Marsh v. Fulton County, 66 — Anthony v. Jasper County, 10 Wall. 683; Coffin v. Board of 101 tr. S. 693; Merchants Bank v. Com'rs of Kearney County, 57 Fed. Bergen County, 115 TJ. S. 384. 137; Quaker City National Bank v. 508 PUBLIC SECURITIES While the constitution or the act under which munici- pal bonds are issued may prescribe a public record, which furnishes the test of compliance with a constitutional lim- itation for illustration, the purchaser of bonds while charged with notice of its contents is not required to look beyond it and if that record fails to show a violation of the limitation he may rely upon the presumption that the officers satisfactorily discharged their duty when they issued the bonds and upon the recitals which they contain and the corporation will be estopped from proving other records or facts to overthrow them.**^ The validity of securities will depend in these instances not only upon the terms of the law granting the authority but upon the facts found in the records which may relate Nolan, 59 JTed. 660, affirmed 66 Fed. 883 C. C. A.; City of Santa Cruz V. Waite, 98 Fed. 387 C C. A., re- versed in part in Waite y. City of Santa Cruz, 184 U. S. 302. Board of Education of City of Pierre v. McLean, 106 Fed. 817. If the laws are such that there might, under any state of facts or circumstances, be legal authority in a municipality or quasi municipal- ity to issue its bonds, it may by recitals therein estop itself from denying that those facts or cir- cumstances existed, and that it had lawful power to send them forth, unless the constitution or act under which the bonds are issued pre- scribes some public record as the test of the existence of some of those facts or circumstances. In- dependent School District of Sioux City V. Eew, 111 Fed. 1. Paulkenstein Twp. v. Fitch, 2 Kans. App. 193, 43 Pac. 276. Pur- chasers must take notice of public records and are bound to inquire into the legality of an election. Citizens Bank v. City of Terrell, 78 Tex. 456, 14 S. W. 1003. Where the authority to create the debt at all, or beyond a given amount, is made to depend upon evidence fur- nished by official records, the same rule in regard to recitals contained in bonds given for the debt should not be applied. Every holder of such bonds is charged with a knowl- edge of the provisions of the law relating to their issuaneCj and if the law points to the records as evi- dence of the existence of the facts required to authorize their issuance, or to limit the amount of the debt the city may create, such records and not the recitals in the bonds must be looked to by every one who proposes to deal in the bonds. 68— Board of Com'rs of Lake County, Colo. v. Sutliff, 97 Fed. C. C. A.; Suffolk Savings Bank v. Boston, 149 Mass. 364; Claybrooke V. Com'rs of Rockingham County, 117 N. C. 456, 23 S. E. 360; State V. Fayette County Com'rs, 37 Ohio St. 526; De Vos v. City of Eieh- mond, 98 Am. Decisions, 646. SALE OF NEGOTIABLE SECUKITIES 509 to the conditions imposed by statutory or constitutional provisions. The rule obtains that public records open for inspection to the public are conclusive and that evidence cannot be admitted of their falsity or lack of accuracy in an action upon securities the validity of which is depen- dent upon the facts as estabhshed by them.*^ The further rules also obtain that if duly certified copies of the records are exhibited to the purchasers of the bonds at the time they receive them showing to a demonstration that a further examination upon the sub- ject would have been useless and where there is nothing to indicate any irregularity or even to create a suspicion that the bonds had not been issued pursuant to lawful authority, that the holders have a right to assume that the certified transcript was trueJ" A recital in public securities that they are issued 69— Bissell, et al. v. City of Jef- fersonville, 24 How. 288. Mathis V. Eunnells, 66 Fed. 494 C. C. A. The plaintiflf 's proposition is that the records of the proceed- ings of a municipal corporation when they are required by law to be kept by such corporation im- port absolute verity and in a col- lateral proceeding after the rights of the third parties have accrued cannot be impeached by parol. The court held that as against an innocent purchaser, it would be error to permit parol testimony to prove that certain jurisdictional facts which appeared in the record did not occur until after the date as set forth in the record. McLean v. Valley County, Nebr., 74 Fed. 389, affirmed 79 Fed. 728 C. C. A. The abstract of assess- ment of property in Valley County for the year 1879, made by the county clerk, and by him certified and transmitted to the auditor of the state, was a public record of the assessment which the statute re- quired to be so made and trans- mitted, after the assessment-books had been equalized and corrected by the county board. A purchaser of bonds, in determining whether the aggregate issue exceeded the statu- tory limit of 10 per cent, of the assessed valuation, had the right to rely upon this abstract as a public record, authorized by statute to be made, as showing the amount of the assessment as finally corrected and established by the board of equali- zation, and was not required to look through the books of the precinct assessors, and minutes of the board of equalization, if such minutes were kept, to verify such public record. Belo v. Comm'rs, 76 K. C. 481; First National Bank v. Con- cord, 50 Vt. 257. 70 — Bissell, et al., v. City of Jef- fersonville, 24 How. 287. 510 PUBLIC SECIIBITIES "pursuant to an order of the county court" puts all prin- cipals dealing in the bonds, even purchasers, for value, in the open market, upon inquiry as to the terms of the orderJi §256. Assessment rolls and other records. In determining the validity of an issue of securities the question involved being its issue in excess of a consti- tutional or statutory limitation, the courts hold that where by law statements of public indebtedness and ex- penditures are required to be published and entered on public records open to the inspection of the pubHc at all times that an owner of although a purchaser for value and before maturity is charged with the duty of examin- ing this record of indebtedness in order to ascertain whether the bonds increased the indebtedness beyond the constitutional limit and that recitals in them do not estop the public corporation to prove by the records of assess- ment and indebtedness that the bonds were issued in violation of the constitutional debt limit.''^ Official assessment rolls. The purchaser of bonds is also charged with the facts as they may be disclosed by official and public assessment rolls or records of the assessed valuation of the taxable property in the corpora- tion as disclosed by the public records open to all and the contents of which all are bound to take notice.''^ 71_Eich V. Mentz Twp., 134 TJ. 130 U. S. 674, but distinguishing S. 632; Post V. Pulaski County, 49 Chaffee County v. Potter, 142 U. Fed. 629; Ball v. Presidio County S. 355; Thornburgh v. School Dis- (Tex.), 29 S. W. 1042; Mitchell trict, 175 Mo. 12, 75 S. W. 81. County V. City National Bank 73 — Buchanan v. Litchfield, 102 TJ. (Tex.), 43 S. W. 880, reversing 39 S. 278; Dixon County v. Field, 111 S. W. 628; but see Wesson v. Sa- U. S. 83; Lake County v. Graham, line County, 20 C. C. A. 227. 130 U. S. 674; Doon Twp. v. Cum- 72— Sutliff V. Lake County mins, 142 TJ. S. 366. Com'rs, 147 TJ. S. 230, following Nesbitt v. Ei-»erside Independent Dixon County v. Field, 111 TJ. S. District, 144 TJ. S. 610, affirming 25 83- and Lake County v. Graham, Fed. 635. If not charged with the SALE OP NEGOTIABLE SECXJKITIES 511 This rule is modified in those cases where the duty was imposed upon the officials issuing the bonds to determine from the records whether the constitutional limit had been exceeded and to make recitals to such effect,^* or where there were no statutes requiring the assessment rolls or statements of public indebtedness to be made a matter of public recordJ^ The rule further does not apply in those cases where there has been neglect or failure of public officials to make in the precise form required by statute the records, an examination of which the purchaser is charged by law or where they are insufficient so far as the facts are dis- closed by them to furnish the necessary information.^® knowledge of prior indebtedness she was with the fact that, independent of such indebtedness, these bonds alone were an over-issue and be- yond the power of the district for she was bound to take notice of the value of taxable property within the district as shown by the tax list. Francis v. Howard County, 54 Fed. 487 C. C. A. Springfield Safe De- posit & Trust Co. V. City of Attica, 85 Fed. 387 C. C. A.; St. Lavrrence Twp. V. Furman, 171 Fed. 400 ; iUl- ler V. Hixson (Ohio), 59 S. E. 749; National Life Insurance Co. of Montpelier, Vt. v. Mead (S. D.)', 82 N. W. 78, re-hearing denied 83 N. W. 225; Nolan County v. State (Tex.), 17 S. W. 823; Jlerrill v. Smith County (Tex.), 33 S. W. 899. 74 — Marcy v. Town of Oswego, 92 U. S. 637; Humboldt Twp. v. Long, 92 tr. S. 642; Dixon County v. Field, 111 TJ. S. 83; Lake County v. Gra- ham, 130 TJ. S. 674. Gunnison County Com'rs v. E. H. EoUins & Sons, 173 IT. S. 255. Here, by virtue of the statute under which the bonds were issued, the county commissioners were to determine the amount to be issued, which was not to exceed the total amount of the indebtedness at the date of the first publication of the notice requesting the holders of county warrants to exchange their warrants for bonds, at par. The statute, in terms, gave to the commissioners the determi- nation of a fact, that is, whether the issue of bonds was in accord- ance with the Constitution of the state and the statute under which they were issued, and required them to spread a certificate of that deter- mination upon the records of the county. The recital in the bond to the effect that such determination has been made, and that the con- stitutional limitation had not been exceeded in the issue of the bonds, taken in connection with the fact that the bonds themselves did not show such recital to be untrue, un- der the law, estops the county from saying that it is untrue. 75 — City of Huron v. Second Ward Savings Bank, 86 Fed. 272 C. G. A.; Ball v. Presidio County (Tex.), 27 S. W. 702. 76 — Dudley County v. Board of 512 PUBLIC SECURITIES Tlie rule is also modified to the extent that even if a purchaser is bound to ascertain from the public records the amount of the public indebtedness that where the records show or would show, if examined, no over-issue, he is not bound to examine further as to the verity or sufficiency of such recordsJ'^ It has been held that where the limit of an issue of bonds is to be ascertained from records or data which are peculiarly within the knowledge and control of the officers of the public corporation or where they have better access to the information than other persons and can ascertain the amount with more certainty than strangers then the bonds will be held valid in the hands of bona fide hold- ersJ* § 257. Extent of search required of purchaser. A buyer of public securities is not required to search the proceedings of the county commissioners and through all of the books of the clerk of their board to ascertain the indebtedness of a county when the statute points him to a specific record for his guidance and the officials of the county have failed to make that record and have certified upon the face of their bonds that the hmitation has not been violated, the minutes of the meetings of commis- sioners, the register of the bonds and the warrants of Com'rs of Lake County, Colo., 80 City of Newburyport, 169 Fed. 766; Fed. 672 C. C, A. Coler v. Board of Com'rs of Santa Board of Com'rs of Lake County, Fe County (N. Mex.), 27 Pao. 619. Colo. V. SutliflE, 97 Fed. 270 C. C. A. 77— Sherman County v. Simons, Where the record of indebtedness 109 U. S. 735, 27 L. Ed. 1093. In required by statute was not kept this case it appears that an express as required by statute and the bonds record though false was made of contained recitals that they were public indebtedness in order to al- issued in conformity to law, a pur- low the issue of the bonds in ques- chaser is authorized to rely on such tion. recitals and the county is estopped 78 — Chilton v. Town of Grattan, to contradict them by other rec- 82 Fed. 873. ords. Citizens Savings Bank v. SALE OF NEGOTIABLE SECTJEITIES 513 the county constitute no notice of the county indebtedness to a bona fide purchaser. He is not required to look beyond the public record which furnishes the test of com- pliance with a constitutional limitation and if that record fails to show a violation of the limitation he may rely upon the presumption that the officers faithfully dis- charged their duty when they issued the bondsJ® § 258. Dixon County v. Field; Chaffee County v. Potter. One of the leading cases upon the duty of a purchaser of bonds to examine the public records and upon the question that he is charged by law with a knowledge of the facts which such record discloses is that of Dixon County V. Field,^" where it was held that an assessment roll required by law to be kept by the public officials as a matter of public record takes precedence over any recital as to the same. In a later case in the same court,*^ the court held that as against a bona fide holder the maker of bonds which in themselves afford no data by which the total of the amount could be determined and which contained recitals that all the requirements of the act authorizing their issue have been fully complied with and that the whole amount of the issue did not exceed the limit of the indebtedness as prescribed by the constitution, is estopped by the recitals from questioning their validity on the ground that the percentage of the indebtedness fixed by the con- stitution was exceeded. The court distinguished the case of Dixon County v. Field cited above and said in part: "We held in that case (Lake County v. Graham, 130 U. S. 674), that the county was not estopped from pleading the constitutional limitation, because there was 79 — Board of Com'rs of Lake 81 — Chaffee County Com'rs v. County V. SutUff, 97 Fed. 270 C. C. Potter, 142 IT. S. 355; see also A. Gunnison County v. Eollina, 173 U. 80—111 U. S. 83. S. 255. p. S.— 33 i 514 PUBLIC SJiCUKITIES no recital in the bonds in regard to it and because, also, the bonds' showing upon their face that they were issued to the amount of $500,000. The purchaser having that data before him was bound to ascertain from the records the total assessed valuation of the taxable property of the county, and determine for himself, by a simple arith- metical calculation, whether the issue was in harmony with the constitution; and that the bonds, having been issued in violation of that provision of the constitution, were not vahd obligations of the county. Our decision was based largely upon the ruling of this court in Dixon County v. Field, 111 U. S. 83. To the views expressed in that case we still adhere; and the only question for us now to consider, therefore, is : Do the additional recitals in these bonds, above set out, and the absence from their face of anything showing the total number issued of each series, and the total amount in all, estop the county from pleading the constitutional limitation? In our opinion these two features are of vital importance in distinguish- ing this case from Lake County v. Graham and Dixon County v. Field, and are sufScient to operate as an estop- pel against the county. Of course, the purchaser of bonds in open market was bound to take notice of the constitu- tional limitation on the county with respect to indebted- ness which it might incur. But when, upon the face of the bonds there was an express recital that that limitation had not been passed, and the bonds themselves did not show that it had, he was bound to look no further. An examination of any particular bond would not disclose, as it would in the Lake County case, and in Dixon County V. Field, that, as a matter of fact, the constitutional limi- tation had been exceeded, in the issue of the series of bonds. The purchaser might even know, indeed it may be admitted that he would be required to know, the assessed valuation of the taxable property of the county, and yet he could not ascertain by reference to one of the bonds and the assessment roll, whether the county had ' SALE OF NEGOTIABLE SECUEITIES 515 exceeded its power, under the constitution, in the prem- ises. True, if a purchaser had seen the whole issue of each series of bonds and then compared it with the assess- ment roll, he might have been able to discover whether the issue exceeded the amount of the indebtedness limited by the constitution. But that is not the test to apply to a transaction of this nature. It is not supposed that any one person would purchase all of the bonds at one time, as that is not the usual course of business of this kind. The test is — ^What does each individual bond disclose? If the face of one of the bonds had disclosed that, as a matter of fact, the recital in it, with respect to the con- stitutional limitation, was false, of course the county would not be bound by that recital, and would not be estopped from pleading the invalidity of the bonds in this particular. Such was the case in Lake County v. Graham and Dixon County v. Field. But that is not this case. Here, by virtue of the statute under which the bonds were issued the County Commissioners were to determine the amount to be issued which was not to exceed the total amount of the indebtedness as the date of the first publi- cation of the notice requesting the holders of county war- rants to exchange their warrants for bonds, at par. The statute, in terms, gave to the commissioners the determi- nation of a fact, that is, whether the issue of bonds was in accordance with the constitution of the state and the statute under which they were issued, and required them to spread a certificate of that determination upon the rec- ords of the county. The recital in the bond to the effect that such determination has been made, and that the con- stitutional limitation had not been exceeded in the issue of the bonds, taken in connection with the fact that the bonds themselves did not show such recital to be untrue, under the law, estops the county from saying that it is untrue. ' ' 516 PUBLIC SECUBITIES §259. Purchaser charged with knowledge of public records only. That a purchaser be charged with the facts contained in a record whether it relates to the amount of indebted- ness, the assessed valuation of the public corporation, or otherwise, it is necessary that the record be one which is prescribed by the constitution or the act under which the bonds were issued as a test of the limitation or condi- tion ; *^ and further that it be kept by those officers charged by law with that duty.^^ A personal account book kept by a public official not pursuant to the requirements of any statute is not competent evidence in favor of the public corporation on the question involved in this section.** m § 260. Performance of conditions. A purchaser of public securities is not bound according to the great weight of authority to make examination in respect to the performance of conditions required by law as pertinent to the authority to issue the bonds, where they contain recitals to that effect and when the authority to issue exists. The public corporation is estopped against a bona fide purchaser to deny the facts therein set forth.*^ It does not follow that because a legislative 82— Town of Darlington v. At- v. Atlantic Trust Co., 78 Fed. 849 lanta Trust Co., 68 Fed. 849 C. C. C, C. A. A.; Chilton v. Town of Grattan, 82 85 — See See. 289, et seq., post. Fed. 873; Board of Education of Brooklyn v. Insurance Co., 99 TJ. S. City of Pierre v. McLean, 106 Fed. 362; Evansville v. Dennett, 161 IT. 817. S. 435; Marion County v. Coler, 14 83 — Board of Com'rs t. Keene C. C. A. 301; Chilton v. Town of Five-Cent Savings Bank, 108 Fed. Grattan, 82 Fed. 873; Danielly v. C. C. A.; Board of Com'rs of Lake Cabaniss, 52 Ga. 211; Town of County, Colo. v. Sutlifif, 97 Fed. 270. Cherry Creek v. Becker, 123 N. Y. 84 — Board of Com'rs v. Keene 161; but see Mercer v. Provident Five-Cent Savings Bank, 108 Fed. Life & Trust Co., 72 Fed. 623 C. 505 C. C. A.; Town of Darlington C. A. Where railroad aid bonds SALE OF NEGOTIABLE SECtTBITIES 517 body has required certain steps to be taken before bonds can be issued tbat they can be avoided in the hands of an innocent purchaser by proof that the conditions pre- scribed have not been done or have been insufficiently performed. He may assume that the conditions have been performed as set forth in the recitals.®" §261. Purchaser bound by what the bonds disclose on their face. The purchaser of public securities is clearly charged with the knowledge of ail the facts which the bonds dis- close upon their face in respect to acts or conditions that affect their validity and if the facts as thus appearing are sufficient to make the securities invalid, they are void even in the hands of an otherwise bona fide pur- chaser for value.^^ are deposited in escrow the pur- chaser is not absolved from the necessity of ascertaining whether the road has been constructed as required, even though there be re- citals in them that they are issued pursuant to authority. Cagwin v. Hancock, 84 N. Y. 532; Oswego County Savings Bank v. Town of Genoa, 59 N. Y. S. 829; Town of Eagle v. Kohn, 84 111. 292. 86 — See Sec. 276, et seq., post. Pendleton County v. Amy, 13 Wall. 297; Town of Coloma v. BoUes, 94 IT. S. 104; County of Henry v. Nicolay, 95 U. S. 619; Moultrie County V. Fairfield, 105 U. S. 370; see also Wade v. Travis County, 174 XT. S. 499, as to compliance with constitutional provision requiring a tax levy before issue of bonds. 87 — Harshman v. Bates County, 92 V. S. 569. Where statutory au- thority provided for the issue of railroad aid bonds to a corporation designated by name and before their issue this road was consoli- dated with another under another name, bonds issued reciting on their face all these facts, were held void in the hands of a bona fide pur- chaser. Bates County v. Winter, 97 U. S. 83; Scipio v. Wright, 101 U. S. 665; Anderson County Com'rs V. Beal, 113 U. S. 227; Gilson v. Dayton, 123 U. S. 59. Peoples Bank v. School District No. 52, 57 Fed. 787. Bonds held void when made payable eleven days less than ten years where the statute required them to be made payable in less than ten years from date. Springfield Safe Deposit & Trust Co. V. City of Attica, 85 Fed. 387, C. C. A.; Wright v. East Eiverside Ir- rigation District, 138 Fed. 313 C. C. A. Clagett V. Duluth Twp., 143 Fed. 824. Where the act authorizing bonds shows on its face that it is 518 PUBLIC SECUKITIES This principle applies to all those cases, for illustra- tion, where it appears that certain conditions were per- formed pursuant to the authority conferring the power to issue and from that authority it further appears that it is impossible that the steps required could have been legally taken within the dates as given upon the face of the bonds.^^ Illustrative of this principle and line of authorities, a case in the Supreme Court of the United States may be re- ferred to.*^ The statute granting the power to issue was not to go into effect until after being published in a cer- tain designated newspaper of date March 21st, 1872. Bonds were issued and bore date April 15, 1872, and recited that they were "issued pursuant to the above statutory act and by reason of a vote of election taken April 8th. ' ' By statute a notice of election was required to be given for thirty days, the bonds therefore on their fac6, it was held, gave notice of their invalidity with which a bona fide holder was chargeable. The court said : "Every man is chargeable with a notice of that which the law requires him to know and of that which upon being put upon inquiry he might have ascertained by in violation of the constitutional than $50 or more than $500. Mont- provision relative to the title of acts pelier Savings Bank & Trust Co. v.. as passed by the legislature, the School District No. 5 (Wis.), 92 bonds issued thereunder are invalid. N. W. 493. Louisiana State Bank v. Orleans 88 — Anderson County Com'rs v. Navigation Co., 3 La. Ann. 297; Beal, 113 U. S. 227; Crow v. Ox- Woodruff V. Okolona, 57 Miss. 806; ford, 119 U. S. 215; Gileon v. Day- Horton v. Town of Thompson, 71 ton, 123 V. S. 59; Coffin v. Board N. T. 513; George v. Oxford Twp., of Com'rs of Kearney County, 57 16 Kan. 72; Wilbur v. Wyatt Fed. 137; Eathbone v. Board of (Nebr.), 88 N. W. 499. Com'rs of Kiowa County, 73 Fed. Livingston v. School District No. 395; Manhattan Co. v. City of Iron- 7 (S. D.), 69 N. W. 15. A school i^ood, C. C. A., 74 Fed. 535, follow- district bond for more than $500 ing MeClure v. Township of Ox- is void when it recites that it is ford, 94 U. S. 429. issued pursuant to authority which 89 — MeClure v. Township of Ox- authorizes bonds to the amount of ford, 94 U. S. 429. $2,000 in denominations of not less SALE OP NEGOTIABLE SECURITIES 519 the exercise of reasonable diligence. Every dealer in municipal bonds which upon their face refer to the stat- ute under which they are issued is bound to take notice of the statute and of all its requirements." In another case in the United States Court of Appeals from the Eighth Circuit,"" the bonds were held invalid in the hands of a bona fide purchaser upon the following facts: A statute of Kansas provided that "no bonds except for the erection and furnishing of school houses shall be voted for and issued for any county and town- ; ship within one year after the organization of such new county under the provisions of this act." Bonds were voted for by a township in the county within a year after the organization of the county but were actually issued after the expiration of the year in satisfaction of a sub- scription by the township to the capital stock of a rail- road company. The court held that the bonds were issued without legal authority and were therefore void and further that, the date of election appearing upon their face, purchasers were charged with notice of this in- validity. The principle further applies to the purpose for which the bonds were issued when the same appears upon their face, if this is one which under the law is either considered not public or as one not coming within the special author- ity conferring the power to issue the bonds, they will be held invalid even in the hands of a bona fide purchaser and he is charged with notice that the purpose of the issuance is unauthorized by statute.*' 90 — Sage v. Fargo Twp., 107 Fed. Tided in the ordinance of said vil- 483. lage" ddes not comply with Eevised 91 — ^Lewis V. City of Shreveport, Statutes of Ohio, Sec. 2703, which 108 TJ. S. 282. requires that ' ' all bonds issued un- united States Trust Co. v. Vil- der authority of this chapter shall lage of Mineral Eidge, 104 Fed. express upon their face the purpose 851, C. C. A. A recital that the for which they were issued and un- bends were issued to take up former der what ordinance. ' ' State v. School bonds of a certain date "as pro- District, 16 Nebr. 182; Johnson 520 PUBLIC SECUEITIES The principle also applies to one who buys public se- curities of one issue in such a number as to exceed in amount the limit of the issue as authorized by law either a general statutory or constitutional limitation or one appearing in the act especially conferring authority. The purchaser under these circumstances is chargeable with notice of the violation of law and the public corporation is not estopped by its recitals or otherwise to plead the excessive issue.*^ And even where the purchaser has but a part of a series if they contain recitals from which it can be imported that other bonds were outstanding of the same issue and for the same amount the purchaser will be charged with notice of this fact, and also that from the numbers upon the bonds there has been an aggregate amount issued far exceeding the limit placed upon the indebtedness of the corporation by the state constitution.^^ § 262. Use of proceeds by the public corporation. The proceeds of securities lawfully issued belong to the public corporation issuing the same and cannot be law- fully diverted or appropriated for other purposes than those designated in the grant of authority.®* A taxpayer City V. Charleston, etc. E. K. Co., 94 — Cunninghain v. Gity of 44 S. W. 670. Cleveland (Tenn.), 152 Fed. 907 C. 92 — Francis v. Howard County, C. A. 54 Fed. 487, C. C. A., aflSrming 50 Leeman ?. Ferris Irr. Dist. Fed. 44; Burlington Savings Bank (Calif.), 74 Pac. 24. Where the V. City of Clinton, 111 Fed. 439. authority is to issue bonds for the 93 — IDixon County v. Field, 111 purpose of acquiring property for V. S. 83; Lake County v. Graham, and constructing a,n irrigation sys- 130 U. S. 674; Geer v. School Dis- tem, those issued in payments of trict, 97 Fed. 732 C. C. A.; Fairfield \yarrants drawn for salaries of offi- V. Independent School Dist. of Alii- cers are void. Jenkins v. Williams son. 111 Fed. 453; St. Lawrence (Calif.), Ill Pac. 116; People v. Twp. V. Furman, 171 Fed. 400; but Hummel (111.), 74 N. E. 68; Rog- see County of Presidio v. Noel- ers t. Independent School District Young Bond & Stock- Co., 212 U. S. of Colfax (la.), 69 N. W. 544. 58. MeArthur v. City of Cheboygan SALE OF NEGOTIABLE SECUBITIES 521 may maintain a suit to enjoin the public officials from using the moneys for any other purpose,''^ although it has been held that where a reasonable discretion is vested in the public authorities the incidental use of such moneys or a portion of them as may not be inconsistent with the main purpose for which acquired will not be disturbed.^^ If through error or inadvertence a larger sum of money is raised than required for the purpose calling for the issue of securities, such excess of funds belongs to the corpora- tion issuing the bonds and not to the state.^^ (Mich.), 120 N. W. 575. Funds raised by the sale of bonds for park purposes cannot be transferred to the general fund. Horsefall v. School District (Mo.), 128 S. W. 33. The proceeds of bonds issued to erect a high school building cannot be used to purchase a site or pay an existing indebted- ness. Keith County v. Ogalalla Power & Irrigation Co. (Nebr.), 89 N. W. 375; People v. IngersoU, 58 N. T. 1; Mayor v. Aldan Borough, 209 Pa. 247, 58 Atl. 490; Ecroyd V. Coggeshall (E. I.), 41 Atl. 260. State V. Young, 66 S. C. 115, 44 S. E. 586. A committee of public works selected by the town coun- cil have no right to the possession and control of sewerage bonds or the proceeds thereof as against a town council, construing act of March 2, 1896, and Feb. 27, 1902. City of Bluefield v. Johnson (W. Va.), 69 S. E. 848.; see also City of Geneseo v. General, etc. Mineral Co. (Kan.), 40 Pac. 655. A city may recover the proceeds of bonds issued by it to a corporation in payment for an unauthorized sub- scription by it to the capital stock of the corporation, and City of Akron v. Dobson (Ohio), 90 N. E. 123, relative to certificate of cor- porate auditor required under Ee- vised Statutes, Sec. 1536-205; but see Board of Sup 'rs of Queens County V. Phipps, 51 N. Y. S. 203. Under statutory authority, a sur- plus from one highway fund may be transferred to meet a deficiency in another. 95 — Fazende v. City of Hous- ton, 34 Fed. 95; Chamberlain v. City of Tampa (Fla.), 43 So. 572; Tukey v. City of Omaha, 54 Nebr. 370. Hope V. Dykes (Tenn.), 93 S. W. 85. Ultimate relief, however, will depend upon the evidence ad- duced upon the hearing; see also Missouri Eiver, etc. E. E. Co. v. Miami County, 12 Kan. 230. 96 — Baker v. City of Cartersville (Ga.), 56 S. E. 249; Sugar v. City of Monroe (La.), 32 So. 961; Ham V. Board of Levee Com'rs for Yazoo Mississippi Delta (Miss.), 35 So. 943; Audrey v. Zang (Tex.), 127 S. W. 1114. 97 — Paye v. Grosse Pointe Twp. (Mich.), 96 N. W. 1077; People v. Ingerson, 58 N. Y. 1; People v. Dakin, 43 Hun. (K. Y.), 382. 522 PUBLIC SECXJEITIES § 263. Use of proceeds as affecting validity of bonds. An interesting question is suggested by the title of this section. Where authority has been granted to issue se- curities for a particular purpose and the proceeds thereof are used by public officials for another and different one or for perhaps illegal purposes, does this fact affect in any way the validity of the bonds in the hands Of bona fide purchasers, and especially where there has been a false recital of compliance with conditions? The great weight of authority sustains the validity of the se- curities.^^ The principle universally obtains that the corporation is estopped to deny that the bonds were issued for an- 98 — lAnderson County Com'rs v. Beal, 113 U. S. 227; West Plains Twp. V. Sage, 69 Fed. 943; City of Gladstone v. Throop, 71 Fed. 341 C. C. A.; City of Huron v. Second Ward Savings Bank, 86 Fed. 272. Lyon County v. Keene Five-Cent Savings Bank, 100 Fed. 337, affirm- ing 97 Fed. 159. The validity of bonds in the hands of a bona fide pur- chaser cannot be impeached by show- ing that the county officers used the proceeds in the payment of warrants which were invalid and not enforci- ble. Northwestern Savings Bank v. Town of Centreville Station, 143 Fed. 81 C. C. A.; Piatt v. City and County of San Francisco (Calif.) 110 Pac. 304; Maxey v. County Court of Williamson County, 72 111. 207; Blanchard v. Village of Benton, 109 111. App. 569. Gardner v. Haney, 86 Ind. 17. Bonds issued for money to build a sehoolhouse are not necessarily void because it was not built within the corporate limits. Aberdeen v. Sykes, 59 Miss. 236; Town of Orleans v. Union Bank, 47 N. Y. S. 927; High- tower V. City of Ealeigh (N. C), 65 S. E. 279; Jones v. Camden, 44 S. C. 319, 23 S. E. 141. Town of Clifton Forge v. Alle- ghany Bank (Va.), 23 S. E. 284. The rule applies although the pur- chaser was aware of such intended and unauthorized use of the pro- ceeds. Lynchburg v. Slaughter, 75 Va. 57. Bonds held valid in the hands of a bona fide purchaser although the holder had knowledge of the unlawful use of the proceeds, he having purchased them from a bona fide holder for value without such knowledge; but see Noel- Young Bond & Stock Co. v. Mitchell, 21 Tex. Cir. App. 638, 54 S. W. 284; Doon Twp. V. Cummins, 142 U. S. 366. In this case, however, the bond holder was an original pur- chaser of the bonds and had knowl- edge of the use to which the pro- ceeds were put; see also Sec. 289 post on recitals as to proceeds. SALE OP NEGOTIABLE SECURITIES 523 otlier purpose tlian that wMcli appears in the recitals of fact upon the face of the bonds and in the grant of authority for their issue, and that the bonds are valid in the hands of bona fide purchasers.^® ^ Though, unquestionably the public corporation would have a right of action against the public officers for di- verting to unlawful or unauthorized purposes the pro- ceeds of the securities.^ The purchasers of public securities are only bound to inquire whether the power to issue them has been con- ferred, they are not required to see that the proceeds are properly applied.^ One of the leading cases on this question is from the United States Court of Appeals in the Eighth Circuit.^ The board of education of the city of Huron in South Dakota, in pursuance of legal authority issued $60,000 of its negotiable bonds containing a recital that they were issued for a lawful purpose, namely, to raise funds 99 — See cases cited in preceding tion by an innocent purchaser to note and also the following : Francis collect its negotiable bonds which V. Howard County, 50 Fed. 44. recite that they were issued for the National Life Insurance Co. of purposes of funding the bonds, MontpeUer v. Board of Education warrants, or floating debt of the of City of Huron, 62 Fed. 778. The corporation either on the ground defendant was estopped to assert the that the warrants or bonds which falsity of recitals to defeat the they were issued to satisfy were void bonds; that, having authority to or that the apparent debt which pass an ordinance or resolution to they were issued to pay was fie- provide for the collection of the titious. Independent School Dis- neeessary taxes, their recital was triet of Sioux City v. Eew, III Fed. conclusive that the necessary pro- 1 C. C. A.; Nolan County v. State vision had been made; and, further, (Tex.), 175 S. W. 823. the bonds having been issued os- 1 — flightower v. City of Baleigh tensibly for a legal purpose, it was (N. C), 65 S. E. 279. no defense to urge that they had 2 — Citizens Savings Bank v. City been in fact issued for an illegal of Newburyport, 169 Fed. 766 C. purpose, in an action brought by a C. A.; Smith v. Town of Belhaven bona fide holder of the bonds. (N. C), 63 S. C. 610; Mills v. City of Pierre v. Dunscomb, 106 Gleason, 11 Wis. 470; but see Fed. 611. A municipal corporation Eozier v. St. Francois, 34 Mo. 395. is estopped from defeating an ac- 3 — National Life Insurance Co. 524 PUBLIC SBCUBITIES for the purchase of a school site and for the erection of a school building thereon. It appeared from the record in the case that the proceeds of these bonds were used not for the purpose as recited but for the unlawful pur- pose of conducting a campaign in the state legislature for securing the selection of the city of Huron as the state capital of South Dakota. The opinion by Judge Sanborn is replete with sound reasoning on the questions involved. On the question of the unlawful use of the pro- ceeds the court said: "It is no defense to these bonds, against innocent purchasers for value, before maturity, that the defendant (the board of education) loaned $59,- 500 of the proceeds of the sale of them to the city of Hu- ron for city warrants that were never paid, and that can- not be legally enforced, so that it has actually realized but $500 from the sale of its bonds. That a municipal corporation has given away or squandered the proceeds of negotiable securities which it placed upon the market cannot affect the rights of bona fide purchasers, who had no knowledge of, nor part in, the gift or waste. They are in no way responsible for the wise and economical use by the corporation of the funds it borrows. ' ' "Nor is it any defense to such bonds, as against bona fide purchasers, that the citizens and officers of a munic- ipal corporation, with the intention to use the proceeds of the bonds for an unlawful purpose, took the necessary steps to issue them for a lawful purpose, certified on the face of the bonds that they were issued for such lawful purpose, and then appropriated the proceeds to the un- lawful purpose. Corporations are as strongly bound to an adherence to truth in their dealings with mankind as are individuals, and they cannot, by their representations or silence, induce others to part with their money or property, and then repudiate the obligations for which the money was expended, and which their statements represented to be valid. ' ' And on the general doctrine of recitals, though the quo- SALE OF NEGOTIABLE SECURITIES 525 tation from the opinion is anticipating somewhat the treatment of this subject, the court said: "Upon reason and authority, therefore, our conclusion is that an estop- pel may arise in a proper case upon a recital that an act has been performed which was required by a constitu- tion, as well as upon a recital of the performance of an act required by statute. "From the decisions to which we have referred, we think the following rules are fairly deducible: "Recitals in municipal bonds, by the representative body that issues them, to the effect that all the require- ments of the laws with reference to their issue have been complied with, will not estop the municipality from prov- ing, as against a bona fide purchaser, that the representa- tive body had no power to issue them, where no act of the representative or constituent body could make the issue lawful at the time it was made, and this fact appears from the constitution and statute under which the bonds were issued, the public records referred to therein, and the bonds the purchaser buys. Dixon County v. Fields, supra, and cases cited thereunder. ' ' Such a recital may constitute an estoppel in favor of a bona fide purchaser, even where the body that issued the bonds had no power to issue them, and could not, by any act of its own or of its constituent body, make a law- ful issue of bonds, if that fact does not appear from the bonds the purchaser buys, the constitution and statutes under which they were issued, and the public records referred to therein. Chaffee County v. Potter, supra. "Another rule that is established by a long line of decisions of the Supreme Court is that: Where the municipal body has lawful authority to issue bonds or negotiable securities, dependent only upon the adoption of certain preliminary proceedings, and the adoption of those preliminary proceedings is certified on the face of the bonds by that body to which the law intrusts the power, and upon which it imposes the duty, to ascertain, 526 PUBLIC SECTJKITIES determine, and certify this fact before or at the time of issuing the bonds, such a certificate will estop the munic- ipality, as against a bona fide purchaser of the bonds, from proving its falsity to defeat them." §^64. Warrants of transferrer. The transferrer of a negotiable bond by its delivery warrants that the paper is what it purports to be; that the signatures are genuine and that the instrument is not tainted with usury,* although there are authorities which hold to the contrary on this last proposition.^ If the securities are the genuine paper of the public corporation issuing them and what they purport to be but are void for want of the power to issue, there is no warranty of their validity unless by express stipulation. The trans- feree cannot recover from the transferor the consider- ation paid on the sole ground of invalidity .° The leading cases on the points involved in this section are those of Otis v. CuUum, 92 U. S. 447 and Meyer v. Eichards, 163 U. S. 358. In the former case, an action was commenced in the court below by the plaintiffs in error for moneys had and received. The facts presented were as follows : Under authority of an act of the legis- lature of Kansas, the city of Topeka issued certain bonds payable to the parties named or bearer. They became the property of the First National Bank of Topeka, which put them upon the market and disposed of them. Eight- een were sold to the plaintiffs in error and the residue of Montpelier v. Board of Educa- pect a stone, if he bargains for tion of Huron, 62 Fed. 778. fish, he is not satisfied with a ser- 4 — Daniel on Neg. Instruments, pent. Parmelee v. Knox, 24 Kans. 5th Ed. Sec. 730, et seq. This au- 113. thor also states that the vendor 5 — Daniel on Negotiable Inat. 5th warrants the validity and legal ope- Ed. See. 533, et seq. ration of the negotiable instruments 6 — Otis v. CuUum, 92 U. S. 447; sold. ^66 ^Iso Meyer v. Eichards, 163 U. Smith V. McNair, 19 Kan. 330. If S. 358; Eogers v. Walsh, 12 Nebr. one buys bread, he does not ex- 28. SALE OF NEGOTIABLE SECTJKITIES 527 to another party. There was a default in the payment of interest and the other party brought suit. The court in that case held that the legislature had no power to pass the acts and that the bonds were therefore void.^ The present suit was brought by the plaintiffs in error to recover from the receiver of the bank the amount paid to the bank for the bonds and the ground relied upon was a failure of consideration. It was not alleged that there was any fraud on the part of the bank in selling the bonds in question but on the contrary its good faith was ex- pressly admitted. No recovery was therefore sought upon the theory of bad faith. The representations made by the bank through its agents as to the bonds were made in good faith and were not understood by either party to constitute a warranty. The points of fraud and war- ranty were therefore eliminated from the case ; the court held that as the bank gave no warranty it could not be charged with a liability it did not assume and that the vendor of such securities is only liable on proof of bad faith and the implied warranty that the bonds belonged to him and were not forgeries, and further, where there was no express stipulation, there was no liability beyond this. The court in its opinion by Mr. Justice Swayne, said: "Here also the plaintiffs in error got exactly what they intended to buy, and did buy. They took no guaranty. They are seeking to recover, as it were, upon one, while none exists. They are not clothed with the rights which such a stipulation would have given them. Not having taken it, they cannot have the benefit of it. The bank cannot be charged with a liability which it did not as- sume. "Such securities throng the channels of commerce which they are made to seek and where they find their market. They pass from hand to hand like bank notes. 7 — Loan Assoeiation v. Topeka, 20 Wall. 655. 528 PUBLIC SECUEITIES The seller is liable ex delicto for bad faith; and ex con- tractu, here is an implied warranty on his part that they belong to him and that they are not forgeries. Where there is no express stipulation, there is no liability be- yond this. If the buyer desires special protection, he must take a guaranty. He can dictate its terms and refuse to buy unless it be given. If not taken, he cannot occupy the vantage ground upon which it would have placed him. "It would be unreasonably harsh to hold all those through whose hands such instruments may have passed liable according to the principle which the plaintiffs in error insist shall be applied in this case. ' ' In the latter case, i. e. Meyer v. Richards, the court held that an implied warranty of state bonds as existing obligations arose on a sale of such bonds having the genuine signatures of state officers and the seal of the state thereon, and appearing on their face to be valid but which had been stricken with nullity through the operation of the constitution of the state. The vendor, however, as alleged in his answer, admitted that at the time of delivery of the bonds to his vendee, he repre- sented the same to be good and legal obligations and bonds of the state of Louisiana. The court also held that the implied warranty of the existence of the things sold on the sale of a credit or incorporeal right created by Louisiana civil code , section 2646, applied on a sale of bonds negotiable in form and included the warranty that they were existing obligations. There existed there- fore in this case both the representation of the vendor that the bonds were valid and also a provision of the Louisiana Code on the question of warranties which the court held applicable to a sale of negotiable bonds. The court in its opinion by Mr. Justice White, now Chief Justice, referred to the case of Otis v. Cullum and distinguished it from the case at bar in the following SALE OF NEGOTIABLE SECITEITIES 529 language: "This is Otis v. CuUum. But it is not the case at bar since it is here admitted that both parties, in enter- ing into the contract of sale, contemplated valid securi- ties, of which there were many outstanding, and those de- livered were void, not because of a want of power to enact the law under which they were issued, or because they were ultra vires for some other legal cause, but because they were stricken with nullity, by a constitutional pro- vision adopted after the act authorizing the issue of the securities, and where nothing on the face of the bonds indicated that they were illegal. The distinction pointed out by the foregoing statement not only illustrates the correctness of the decision in Otis v. CuUum, but also demonstrates the error of attempting to extend it to a state of facts presented in the case under consideration, ' ' and further said : ' ' The foregoing analysis of the prin- ciples and review of the authorities governing the law of sale of negotiable paper, transferred without recourse, as between vendor and vendee, clearly demonstrates the unsoundness of the position upon which the defendant in error relies, since it affirmatively establishes that there is no peculiar warranty in a sale of commercial paper, and that the reasoning by which it is attempted to prove its existence is a mere misconception of the principles of the common law relating to the sale of goods and chat- tels." CHAPTER XII THE VALIDITY OF PUBLIC SECURITIES §265. Presumption of validity. The presumption of law exists in favor of the validity of negotiable securities, both as to the sufficiency of the power to issue and the existence of all conditions and requirements necessary to and attendant upon their for- mal issue and delivery.' 1 — Gelpcke, et al., v. City of Du- buque, 1 Wall. 175. The court here said ' ' when a corporation has power under any circumstances to issue negotiable securities ' ' and followed by stating the rule. San Antonio v. Mehafty, 96 U. S. 312. The rule in such cases is that if the municipality could ha-sa had the power under any circumstances to issue the securities, the bona fide holder has a right to presume they were issued under the circumstances which give the authority. County of Macon v. Shores, 97 TJ. S. 272. This court has repeat- edly held that where a corporation has power under any circumstances to issue such securities, the bona fide taker has a right to presume, etc. National Life Ins. Co. of Montpelier v. City of Huron, 62 Fed. 778. B. H. Rollins & Sons v. Com'rs of Gunnison County, 80 Fed. 692. If upon any theory the bonds might have been valid a purchaser was entitled to presume that such was the fact, that the recitals were true and that the constitution had not been violated. City of Pierre v. Dunscomb et al., 106 Fed. 611. If upon any theory the bonds of a municipality can be valid, an innocent purchaser has the right to presume that they are so. Board of Com'rs of Lake County v. Keene Five-Cent Savings Bank, 108 Fed. 505. Where the facts and conditions might have been such under the law that any part of the excessive debt funded might have been valid, the legal presumption is in an action on the bond that these facts and conditions existed and that the bond in action was issued to fund a valid portion of the debt. Washington County v. WUliams, 111 Fed. 801. German Savings & Loan Society v. Eamish, 138 Calif. 120, 69 Pac. 89, 70 Pac. 1067; Lake County Com'rs v. Standley, 24 Colo. 1, 49 Pac. 23; Brand v. Town of Lawreneeville, 104 Ga. 486, 30 S. E. 954; City of Eome v. Whitea- 530 THE VALIDITY OF PUBLIC SBCTJEITIES 531 The doctrine of a presumption of power to issne is necessarily modified where the securities show upon their face an absolute want of such power and also where there is a total absence of recitals as to the power to issue, otherwise, the rule as repeatedly stated by the Supreme Court of the United States and followed invariably by other courts is that when a corporation has the power under any circumstances to issue negotiable securities the bona fide holder has the right to presume that they are issued under the circumstances which give the necessary authority and that they are no more liable to be im- peached for any infirmity in the hands of such a holder than any other commercial paper.^ town Water Works Co., 100 N. Y. S. 357, affirmed 80 N. E. 1106; Cox v. Com'rs of Pitt County (N. C), 60 S. E. 516. 2 — Gelpcke, et al. v. City of Du- buque, 1 Wail. 175; Seybert v. City of Pittsburg, 1 Wall. 272; Meyer v. City of Muscatine, 1 Wall. 384; Eogers v. Burlington, 3 Wall. 654 ; Marshall County Sup 'rs. v. Sehenok, 6 Wall. 772; Pendleton County V. Amy, 13 Wall. 297; City of Lexington v. Butler, 14 Wall. 282; Com'rs of Marion County v. Clark, 94 TJ. 8. 278; San Antonio V. Mehaffy, 96 U. S. 312; County of Macon v. Shores, 97 TJ. S. 272; Orleans v. Piatt, 99 U. S. 676; Pompton V. Cooper Union, 101 V. S. 196; County of Dallas v. Mc- Kenzie, 110 U. S. 686; Board of Com'rs of Gunnison County v. E. H. Rollins & Sons, 173 U. S. 255; Hughes County v. Livingston, 181 U. S. 623, 45 L. E. 1053, 104 Fed. 306; Waite v. City of Santa Cruz, 184 U. S. 302; Presidio County v. Noel- Young Bond & Stock Co., 212 U. S. 58; National Life Ins. Co. of Montpelier v. Board of Education of City of Huron, 62 Fed. 778 C. C. A.; E. H. Eollins & Sons v. Com 'rs of Gunnison County, 80 Fed. 692. Keene Five-Cent Savings Bank V. Lyon County, 90 Fed. 523. The presumption is in favor of the valid- ity of negotiable bonds and the facts necessary to prove that they are issued in excess of the constitutional limitation of indebtedness must be clearly proven. Clapp v. Otoe County, 104 Fed. 473 C. 0. A.; Pierre v. Dunscomb et al., 106 Fed. 611; City of San Antonio v. Lane, 32 Tex. 405. But see Board of Com'rs of Stan- ly County V. W. N. Coler & Co., 190 U. S. 437, 23 Sup. Ct. Eep. 811. Bond holders are not entitled to assume for the purpose of sus- taining the validity of county aid bonds, that a railroad had been be- gun before the adoption of the North Carolina Constitution of 1868 which antedated the charter of the railroad company. 532 PUBLIC SECUEITIES The presumption also exists that the holder of public securities acquired them before maturity for a valuable consideration, in other words, his holding is presumed to be a bona fide one with all the facts existing necessary to constitute and establish that relation as between him- self and the corporation issuing the securities. The subject of bona fide holding has already been considered in a previous chapter.^ The presumption of validity especially applies to the' performance, in conjunction with recitals, of the required statutory or constitutional conditions and which give the necessary authority under the law conferring the power. Such conditions commonly relate to a vote of the electors upon the question of an issue, the levying of a tax to meet payments required on account of accruing interest, and eventually the liquidation of principal and others which have been noted from time to time in preceding sections to which a reference must be made under the appropriate subject head. The doctrine has been repeatedly and em- phatically stated by the Supreme Court of the United States that where a corporation has lawful power to issue negotiable securities and does so, the bona fide holder has a right to presume the power was properly exercised and is not bound to look beyond the question of its existence, and that where the bonds recite on their face the circumstances which give the requisite authority or bring them within a power to issue, the corporation is estopped to deny the truth of the recitals. If the legal authority is sufficiently comprehensive, the bona fide pur- chaser has a right to presume that those having the power to act and acting under it had complied with all its requirements.* 3 — See Chap. X, ante. Fed. 449 C. C. A.; Union Bank of 4 — Pendleton County v. Amy, 13 Richmond v. Oxford County Com 'rs, Wall. 297; City of Gladstone v. 90 Fed. 7; Burlington Savings Throop, 71 Fed. 341 ; City of South Bank v. City of CHnton, 106 Fed. St. Paul V. Lampreeht Bros., 88 269; Lake County Com'rs v. Keene THE VALIDITY OP PUBLIC SECUEITIES 533 The presumption of validity also applies to the author- ity of officers or agents of the public corporation in acting under authority granted and the proper performance of the duties required of them. As said by the Circuit Court of the United States,^ "It is a rule of very general appli- cation that where an act is done which can be done legally only after the performance of some prior act, proof of the latter carries with it a presumption of the due perform- ance of the prior act. The same presumptions are, we think, applicable to corporations. Persons acting pub- licly as officers of the corporation are to be presumed rightfully in office; acts done by the corporation which presuppose the existence of other acts to make them legally operative are presumptive proofs of the latter. If officers of the corporation openly exercise a power which presupposes a delegated authority for the purpose, and other corporate acts show that the corporation must have contemplated the legal existence of such authority, the acts of such officers wiW be deemed rightful, and the dele- gated authority will be presumed. In short, we think that the acts of artificial persons afford the same pre- sumptions as the acts of natural persons. Each afford presumptions, from acts done, of what must have pre- ceded them, as matters of right or matters of duty. And there is no distinction in this respect as to the authority of officers and agents between officers of a corporation having general powers to represent it in its fiscal trans- Kve-Cent Savings Bank, 108 Fed. so, Dallas v. JIcKenzie, 110 U. S. 505; AMn v. Ordinary of Barto 686; Town of Andes v. Ely, 158 County, 54 Ga. 59; City of Tyler U. S. 646; Board of Com'rs of V. Tyler Bldg. & Loan Association Lake County Colo. v. SutlifE, 97 Fed. (Tex.), 81 S. W. 2. 270; Board of Com'rs of Lake See, also, SeCj 276, et seq., post. County v. Keene Five-Cent Savings on the subject of recitals and cases Bank, 108 Fed. 505; Schneck v. cited under notes 1 and 2 of this City of Jeffersonville, 52 N. B. 212; section. Slutts v. Dana (la.), 109 N. W. 5 — Knox County v. Ninth Na- 794. tional Bank, 147 U. 8. 91; see, al- 534 tTJBLIC SECURITIES action and those acting under a special power in a par- ticular transaction. ' ' ^ Under these circumstances the securities in the hands of a bona fide holder are prima facie evidence of a legal debt and possession with ostensible title makes a prima facie case in an action to enforce the payment of the obli- gation. The existence of the presumption stated above throws upon the party attacking the validity of the nego- tiable securities the burden of proof as to all the ques- tions raised. If conditions and circumstances might have existed under which the bonds might have been lawful under the law, the presumption is that they are so. The presumption of validity goes with the bond to the end and must prevail unless overcome by a preponderance of competent evidence that it is an unauthorized obligation.'' In Illinois in 1870, a constitutional provision was adopted which prohibited the issue of railroad aid bonds except where they had been authorized before such adop- tion by a vote of the people under existing laws. The Illinois cases hold that where railroad aid bonds were issued after the adoption of this constitutional provision, the burden of proof was upon those asserting their valid- ity to show that they came within the proviso noted.^ The 6 — See, also, Miller y. Berlin, 13 to the rule stated which follows Blatchf. 245. necessarily from the existence of a 7 — National Life Ins. Co. v. presumption in favor of the validity Board of Education of City of of bonds. Huron, 62 Fed. 778 C. C. A. ; Board But see Hannibal v. Fauntleroy, of Com'rs v. Keene Five-Cent Sav- 105 U. S. 408. Where it is held ings Bank, 108 Fed. 505; Independ- in the absence of recitals the bur- ent School District v. Eew, 111 Fed. den of proof is upon the holder of 3 ; see, also, Seybert v. City of Pitts- the bonds. burg, 1 Wall. 272; Nealy v, York- 8— Williams v. People (111.), 24 ville, 10 S. C. 141 ; Walker v. State, N. E. 647 ; Choisser v. People, 140 12 S. C. 200; City of Memphis v. III. 466, 29 N. E. 546. Bethel (Tenn.), 73 S. W. 191; See, however, the later case of Galbraith v. City of Knoxville, 105 Hutchinson v. Self, 153 111. 542, Tenn. 453, 58 S. W. 643. holding contrary to the cases cited The cases cited under notes 1 and above. 2 of this section hold also generally THE VAUDITY OF PUBLIC SECUEITIES 535 principles applying have been stated in Daniel on Nego- tiable Instruments as follows : ^ " The mere possession of a negotiable instrument, produced in evidence by the indorsee, or by the assignee where no indorsement is necessary, imports prima facie that he acquired it bona fide for full value, in the usual course of business, before maturity, and without notice of any circumstances im- peaching its validity; and that he is the owner thereof, entitled to recover the full amount against all prior par- ties. In other words, the production of the instrument, and proof that it is genuine (where indeed such proof is necessary), prima facie estabhshes his case ; and he may there rest it. Bills and notes payable to bearer do not differ in this respect from others, and the bearer is en- titled to all the presumptions that apply to an indorsee in his favor. But the presumption of bona fide ownership does not apply where the instrument is not payable to bearer, unless it be indorsed specially to the holder, or in blank." The subject of burden of proof will be considered later in the chapter on actions on negotiable securities and also the circumstances and conditions under which there may arise a shifting and a reshifting of the burden of proof.^" § 266. De facto corporations. The validity of public securities is not affected by the fact that the corporation issuing them may have had only a de facto existence at the time the power was esercised.^^ 9 — Daniel on Neg. Inst., 5th Ed., liability on the bonds when after- Sec. 812. wards reorganized by the legisla- 10 — See Sec. 400 et seq., post, ture since no change of political 11 — Board of Com 'rs of Comanche organization nor change of form is County V. Lewis, 133 U. S. 198, sufficient to release a county from aflBrming 35 Fed. 343. Where its just debts theretofore con- a de facto organization after hav- tracted. Andes v. Ely, 158 TJ. S. ing issued bonds is subsequently 312; Shapleigh v. City of San An- abandoned and treated as unorgan- gelo, 167 V. S. 646; Judson v. City ized, it is not released from a of Plattsburg, 3 Dill. 181; AHer v. 536 PUBLIC SECURITIES This rule is based upon two principles relating to the existence of de facto corporations and the respective rights of parties dealing with them. A corporation, whether public or private, is a distinct artificial person created by the state or under its authority, exercising Town of Cameron, 3 Dill. 198; City of Lampasas v. Talcott, 36 0. C. A. 318, 94 Fed. 457. National Life Ins. Co. v. Board of Education of City of Huron, 62 Fed. 778 C. C. A. The same rule applies to a de facto board of education "when a municipal body has assumed under color of author- ity and exercised for any consider- able period of time with the con- sent of the state, the powers of a public corporation of a kind recog- nized by the organic law neither the corporation nor any private party can in private litigation ques- tion the legality of its existence." Cornell University v. City of Mau- mee, 68 Fed. 418. Miller v. Ferris Irrigation Dist., . 99 Fed. 143. A de facto corpora- tion may legally do and perform every act which it could do were it a de jure corporation. Its acts are valid as to third persons except where challenged by the state in direct proceedings; bonds issued, therefore, by a de facto corpora- tion, are valid even where the state subsequently in a direct proceeding attacking the validity of the or- ganization of such corporation se- cures a judgment declaring it void; citing with other cases in this note, Havemeyer v. Iowa Co., 3 Wall. 294, 18 L. Ed. 38 ; Ashley v. Board, 8 C. C. A. 455, 60 Fed. 55; Perun V. aeveland, 43 Oh. St. 481, 3 N. B. 357. Clapp V. Otoe County, 104 Fed. 473 C. C. A. There is another rea- son why the defense which we have been considering cannot be sus- tained. It is that the general ac- quiescence by the inhabitants of a political subdivision organized un- der compliance of law and by the departments and officers of the state and county having official re- lations with it gives to the acts and contracts of those officers on its behalf as a subdivision de facto all the force and validity of their acts in its behalf as a subdivision de jure. Hamilton v. San Diego County, 108 Calif. 273, 41 Pac. 305; School District v. State, 29 Kan. 57; Eiley v. Township of Garfield, 54 Kan. 463, 38 Pac. 560; State v. School Dist. No. 7 (Nebr.), 33 N. W. 266; Morton v. Carlin, 51 Nebr. 802, 70 N. W. 966; State v. Bacon (S. C), 9 S. E. 765; Bradford v. Westbrook (Tex.), 88 S. W. 382; see, also, Oswego v. Anderson, 44 Kan. 214, 24 Pac. 486; St. Paul Gas Light, etc. Co. v. Village of Sandstone (Minn.), 75 N. W. 1050. But see Geo. D. Barnard v. Board of Com'rs of Polk County (Minn.), 108 N. W. 294; Euohs v. Town of Athens, 91 Tenn. 20, 18 S. W. 400. In this case the court held that where the attempted organization of a municipality was absolutely void, this fact may be pleaded as a defense to a suit brought on its bonds since it had no power to issue them. THE VALIDITY OF PtTBUC SECUElTIES 537 powers and possessing capacities not belonging to nat- ural persons or a group of persons other than a corpora- tion. The state alone has the authority to create a cor- poration and by statutory enactment prescribes the con- ditions and manner in which it may be organized. When these conditions have been substantially complied with there results a corporation de jure which can successfully defend its right to exist in a corporate capacity even against the state unless it has done acts sufficient under the law to warrant a forfeiture of its charter. Those organizing a corporation on the other hand may fail to comply with statutory conditions to such an extent as to defeat its legal existence, not against a third person raising the question but against the state in a proper proceeding brought by it for that purpose. Such a cor- poration is known as one de facto. In respect to the legality of corporate organization, the courts almost uni- versally hold that where a body of men act as a corpora- tion and in the ostensible possession of corporate powers, it will be conclusively presumed that they are a corpora- tion in all cases except in a direct proceeding against them by the state to vacate their charter. The question of their right to corporate existence cannot be raised except by the state. The other reason which sustains the validity of securities issued by public corporations is an application of the doctrine of estoppel. This prin- ciple so far as the subject in hand is concerned may be briefly stated as : that persons who transact business or assume contractual relations with what purports to be a corporation are equally with the corporation estopped to deny the validity of the incorporation in actions brought to enforce liabilities growing out of such transac- tions. This rule applies to those holding themselves out as a corporation, the corporation itself, and third per- sons dealing with the corporation.'* The reasons noted 12 — See Chap. 3, Abbott's Elliott on Private Corporations, 4th Ed. 538 PUBLIC SECUEITIES above as well as, the rule itself in respect to the validity of securities issued by de facto corporations have been stated in a number of cases notably those in the Federal coujts. In one, from Kansas, Speer v. Board of County Com'rs of Kearney County, Kansas, ^^ the court held that a county though not legally organized if it acts in a cor- porate capacity as such with the acquiescence of the state authorities and of the people of such county, is bound by its contracts the same as though it had been legally or- ganized. The court said: "And may this county retain the benefits and improvements it has thus obtained, and yet deprive those who furnished them, or those who sub- sequently purchased its warrants, of all right to a return of the money which they invested in them? We think not. In our opinion, there is an established rule of juris- prudence which prevents results so unjust and deplor- able. That principle is that the acts of ordinary mu- nicipal bodies into which the people have organized them- selves under color of law depend far more upon general acquiescence than upon the legality of their action or the existence of every condition precedent prescribed by the statutes under which they organize and act. It is that general acquiescence by the inhabitants of the political sub-division so organized, and by the departments and officers of the State having official relations with it, gives to the acts and contracts of a municipal or quasi-munic- ipal corporation de facto, all the force and vitality of the acts of a corporation de jure. The interests of the public which depend upon such municipalities, the rights and the relations of private citizens which become vested and fixed in reliance upon their existence, the intolerable in- justice and confusion which must result from an ex post facto avoidance of their acts, commend the justice, and demand the enforcement, of the rule, that 'when a mu- nicipal body has assumed, under color of authority, and 13—88 Fed. 749 CCA. THE VAI/IDITY OP PUBLIC SECUBITIES 539 exercised, for any considerable period of time, with the consent of the State, the powers of a public corporation, of a kind recognized by the organic law, neither the cor- poration nor any private party can, in private litigation, question the legality of its existence.' " And in this same case, the question of whether there could be a de facto organization under an unconstitutional law was also raised, the court on this point said : "We are unable to yield our assent to the broad proposition that there can be no de facto corporation under an unconstitutional law. Such a law passes the scrutiny and receives the ap- proval of the attorney-general, of the lawyers who com- pose the judiciary committee of the State legislative bod- ies, of the legislature, and of the governor, before it reaches the statute book. When it is spread upon that book, it comes to the people of a State with the presump- tion of validity. Courts declare its invalidity with hesi- tation and after long deliberation and much considera- tion, even when its violation of the organic law is clear, and never when it is doubtful. Until the judiciary has declared it void, men act and contract, and they ought to act and contract on the presumption that it is valid ; and where, before such a declaration is made, their acts and contracts have affected public interests or private rights, they must be treated as valid and lawful. The acts of a de facto corporation or officer under an unconstitutional law before its invalidity is challenged in or declared by the judicial department of the government, cannot be avoided, as against the interests of the public or of third parties who have acted or invested in good faith in re- liance upon their validity, by any ex post facto declara- tion or decision that the law under which they acted was void. This proposition is not without the support of eminent authority. Indeed, we believe it is founded in reason, and sustained by the general current of the de- cisions of the courts that have considered it." And in another case also in the Federal Courts from 540 PUBLIC SECUBITIES Michigan/* in discussing the powers of a de facto cor- poration, the court said: "Assuming that, under the doctrine of People v. Maynard, above referred to, the courts of the United States would be bound to hold that such organization was unlawful and void in its inception, it does not, in our opinion, follow that if the county, as- suming it to be valid, went on as such, acquired the ca- pacity to be a county, and exercised for years, with the acquiescence of the State government, the functions and privileges of a county^ its status and the validity of its acts are to be tested by such rules as would have been applicable in a direct and prompt challenge by the State when those powers and privileges were assumed. In the latter case the public interests are best subserved by speedy reformation, and no private interest is harmed. In the former, the public interests have been adjusted to the actual condition of things, and private interests have become settled upon the foundations which local author- ity has laid, with the consent of the State, whose busi- ness it was to interfere and prevent the mischief, if any such were feared. It is a matter peculiarly within the province and duty of the State to watch over and pre- vent the development of political growths which are like- ly to be prejudicial to the public interests. When it does not interfere private individuals are justified in assum- ing that there is nothing obnoxious in the organization, and that they may treat with it in the character it has assumed. In the case of a county, after it has gone on for years as such, taxes have been levied and collected under its authority ; deeds and mortgages have been reg- istered in its records, and titles have been gained or lost by such registration ; the estates of deceased persons have been settled and distributed by its courts of pro- bate; the rights of parties have been adjudicated and 14 — Ashley v. Board of Sup'rs of Presque Isle County, 8 C. C. A. 455, 60 Fed. 55. THE VALIDITY 0¥ PUBLIC SECUEITIES 541 remedies awarded, by the Circuit Court, in session at its county seat, and accused persons have been tried, con- victed, and sentenced to imprisonment by that court. We do not know that, in this instance, all these particular incidents have happened, but it is reasonable to suppose all may have occurred, and many others of kindred char- acter. May the foundation on which all these things rest for their security or authority be repudiated and denied by the municipality which assumed the character, has been allowed to act in it, and, agreeably to the law gov- erning it in that character, has pledged its faith to repay what it has received and applied to its advantage, and thus disappoint the expectations of those who have trusted in its representations? "But it is needless to multiply authorities. They are substantially, if not altogether, agreed upon the proposi- tion that when a municipal body has assumed, under color of authority, and exercised for any considerable period of time, with the consent of the State, the powers of a public corporation of a kind recognized by the organic law, neither the corporation nor any private party can, in private litigation, question the legality of its exist- ence. "But counsel for the defendant lays principal stress upon the doctrine that there cannot be a county de facto where there can be none de jure; and it is argued that because the law of 1871 was void when enacted, and gave no authority for organization, there was no law under which Presque Isle county could become de jure a county, and therefore it could not become de facto such. The general proposition is no doubt correct as a statement of a doctrine of law. But we do not think that proposition, as applied to the case before us, is sound. We doubt whether the premise of the proposition founded on it is true. We have already given some reasons for thinking it is not. But we also think the premise is insuflScient. The supreme law of the State recognizes counties as poll- 542 PUBLIC SECURITIES tical bodies corporate.. Their existence is not only per- mitted, but is essential to the government which is or- ganized. Their corporate character is not given by the legislature. That body, if it deems the organization con- sistent with public policy, prescribes a method of organ- ization in form. This law, whether operative or not, signified the approval of the legislature of the forma- tion of the new county, and in so far was in execution of its authority under the Constitution; and we apprehend the rule to be that an unconstitutional and void law may yet be color of authority to support, as against anybody but the State, a public or private corporation de facto, where such corporation is of a kind which is recognized by, and its existence is consistent with, the paramount law, and the general system of law in the State." Independent of the principles stated above, it is clear that the defense of de facto corporation cannot be inter- posed against the validity of an issue of bonds where there has been a subsequent recognition by the state of the corporation in its corporate capacity. The courts hold universally that original defects are cured by the subsequent action and this recognition relates back to the original inception of the corporation and legalizes all acts done by it.^^ This principle was stated in a case in the Supreme Court of the United States,^® where a county having a de facto organization was afterwards abandoned but subsequently organized by the legislature as such. The court held that the validity of the organization of a coun- ty could not be collaterally attacked in an action on its bonds issued under its de facto organization, and said: 15 — ^Board of Com'rs of Com- 16 — Board of Com'rs of Com- anehe County v. Lewis, 133 XJ. S. anohe County v. Lewis, 133 U. S. 198; Lewis v. Comanche County, 35 198. Fed. 343, aflSrmed 133 U. S. 198; Eiley v. Township of Garfield, 54 Kan. 463, 38 Pao. 560. THE VALIDITY OF PtTBLIC SECURITIES 543 "It is universally affirmed that when a legislature has full power to create corporations, its act recognizing as valid a de facto corporation, whether private or mu- nicipal, operates to cure all defects in steps leading up to the organization, and makes a de jure out of what was before only a de facto corporation. "And this is no mere technical ruling. It rests on foundations of substantial justice. It is true that the present inhabitants have been wronged by the fraudulent acts of these conspirators in 1873-74, and it is a hardship for them to be bound for debts they did not contract, and from which they received no benefit; but, on the other hand, it would be an equal hardship to the plaintiff to lose the money he has invested in securities placed on the market, whose validity was attested to the fullest ex- tent by both the executive and legislative departments of the State. When both of those departments give notice to the world that a county within the territorial limits of the State has been duly organized and exists with full power of contracting, can it be that a purchaser cannot in open market safely purchase the securities of that coun- ty? Does the duty rest on him to traverse the limits of the county and make personal inspection of the number of inhabitants I If any wrong has been done to the coun- ty through the want of attention on the part of the State authorities, equity would suggest that the State should bear the burden, and not cast it upon an innocent party residing far from the State and acting in reliance upon what it has done. ' ' §267. Validity as affected by adverse decisions of a state court. The Federal authorities have adopted without dissent the rule that where a public corporation under authority of law has issued its bonds, negotiable in their character and payable to bearer at a future date, and which under 544 PUBLIC SECUEITIES the judicial decisions of the state are valid at the time .of issue, that their validity before maturity, in the hands of bona fide purchasers, cannot be affected by subsequent decisions of the state courts holding the law, under au- thority of which the bonds were issued, unconstitutional or void." The leading decision on this point is that of Gelpcke v. 17 — Havemeyer v. Iowa City, 3 Wall. 294; Thompson v. Lee Coub- ty, 3 Wall. 327; Lee County v. Rog- ers, 7 Wall. 181; City of Kenosha V. Lamson, 9 Wall. 477; Calloway County V. Foster, 93 U. S. 567; Block V. Com'rs of Bourbon Coun- ty, 99 U. S. 686 ; Douglas v. County of Pike, 101 U. S. 677; Thompson V. Perrine, 103 XT. S. 806; Stewart V. Lansing, 104 U. S. 505. Louisiana v. Pilsbury, 105 V. S. 278. The statute as thus ex- pounded determines the validity of all contracts under which a subse- quent change in its interpretation can affect only subsequent con- tracts. Taylor v. Ypsslanti, 105 U. S. 60; Twp. of Buffalo v. Cambria Iron Co., 105 XT. S. 73; Carroll County V. Smith, 111 TJ. S. 556; Anderson v. Santa Anna, 115 TJ. S. 356; Scotland County v. Hill, 132 TJ. S. 107; Pleasant Twp. v. Aetna Life Ins. Co. 138 TJ. S. 67; Knox County V. Ninth National Bank, 147 TJ. S. 91. Wade V. Travis County, 174 TJ. S. 499. The court after stating the rule that the decisions of the highest courts of the state constru- ing their statutes and constitutions would be followed then said: "An exception has been admitted to this rule, where, upon the faith of state decisions affirming the validity of contracts made or bonds issued under a certain statute other con- tracts have been made or bonds is- sued under the same statute before the prior cases were overruled. Such contracts and bonds have been held to be valid, upon the principle that the holders upon purchasing such bonds and the parties to such con- tracts were entitled to rely upon the prior decisions as settling the law of the state. To have held otherwise would enable the state to set a trap for its creditors by in- ducing them to subscribe to bonds and then withdrawing their own security. ' ' United States v. Thompson, 2 Biss. 77; Smith v. Tallapoosa County, 2 Woods, 574; Wesson v. Saline County, 73 Fed. 917; Com'rs of Columbia v. King, 13 Pla. 451; State v. Saline County Court, 48 Mo. 390; Lewis v. Taylor, 18 Oh. Cir. Ct. Eep., 443; Germania Savings Bank v. Town of Darling- ton, 50 S. C. 337, 27 S. E. 846; Stallcup V. City of Taeoma, 13 Wash. 141, 42 Pae. 541. But see Zane v. Hamilton County, 189 U. S. 370, where it was held that a purchaser of county railroad aid bonds has no contract rights protected by the Federal constitu- tion against impairment because the purchase was made on faith of prior proceedings that municipal subscriptions to railroad stock were so far germane to railroad incor- poration as not to require specific mention in the title of an act pro- THE VALIDITY OF PUBLIC SECUKITIES 545 City of Dubuque.^® The case involved the validity of cer- tain bonds as against which certain grounds of defense were asserted by the city of Dubuqlie. These objections had been previously fully considered and repeatedly over-ruled by the Supreme Court of Iowa, however in a later case, State v. County of Wapello,^® the Supreme Court of Iowa had over-ruled by unanimous opinion for- mer decisions of that court sustaining the validity of the bonds and holding the law under which they were au- thorized unconstitutional and the bonds void. The opin- ion of the United States Supreme Court was delivered by Mr. Justice Swayne, who said in part, after noticing the claims asserted by the city as grounds of defense to the bonds involved in the suit: "All these objections have been fully considered and repeatedly over-ruled by the Supreme Court of Iowa (citing cases) : "The bonds were issued and put upon the market be- tween the periods named. These adjudications cover the entire ground of this controversy. They exhaust the ar- gument upon the subject. We could add nothing to what they contain. We shall be governed by them, unless there be something which takes the case out of the established rule of this court upon that subject. It is urged that all the decisions have been overruled by the Supreme Court of the State, in the later case of the State of Iowa ex rel. V. The County of Wapello, and it is insisted that in cases involving the construction of a State law or Con- stitution, this court is bound to follow the latest adjudica- tion of the highest court of the State. Leffingwell v. War- ren is relied upon as authority for the proposition. In Tiding for the incorporation of a Court of a state was changed by a railroad, affirming 104 Fed. 63. subsequent decision of the same Board of Com'rs of Oxford t. court when both decisions were Union 'Bank of Eichmondj 96 Fed. made after he acquired his bonds. 293, reversing 90 Fed. 7. A holder See, also, Graves v. Moore County of municipal bonds has no ground Com'rs (N. C), 47 N. W. 134. of complaint that a rule of deci- 18 — 1 Wall^ 175. sion announced by the Supreme 19 — 13 la. 390. ' p. s.— 3 5 546 PUBLIC SECUEITIES that case this court said it would follow 'the latest settled adjudications.' Whether the judgment in question can, under the circumstances, be deemed to come within that category, it is not now necessary to determine. It cannot be expected that this court will follow every such oscil- lation, from whatever cause arising, that may possibly occur. "However we may regard the late case in Iowa as af- fecting the future, it can have no effect upon the past. The sound and true rule is, that if the contract, when made, was valid by the laws of the State as then ex- pounded by all departments of the government, and ad- ministered in its courts of justice, its validity and obliga- tion cannot be impaired by any subsequent action of legis- lation, or decision of its courts altering the construction of the law. The same principle applies where there is a change of judicial decision as to the constitutional power of the legislature to enact the law. To this rule, thus enlarged, we adhere. It is the law of this court. It rests upon the plainest principles of justice. To hold other- wise would be as unjust as to hold that rights acquired under a statute may be lost by its repeal. The rule em- braces this case. "We are not unmindful of the importance of uniform- ity in the decisions of this court, and those of the highest local courts, giving constructions to the laws and Con- stitutions of their own States. It is the settled rule of this court in such cases, to follow the decisions of the State courts. But there have been heretofore, in the ju- dicial history of this court, as doubtless there will be hereafter, many exceptional cases. We shall never im- molate truth, justice, and the law because a State trib- unal has erected the altar and decreed the sacrifice." Such decisions may affect the validity of bonds not is- sued, but all persons into whose hands bonds already is- sued may come have the right to consider the constitu- THE VALIDITY OF PUBLIC SECURITIES 547 tionality of such autliority conclusively established.^" The validity of coupon bonds in the hands of innocent holders, it has even been held, will not be affected by the pendency of suits brought to test the question of their legality where the bonds were purchased during the pen- dency of such suit.^^ If, however, the holders of such bonds are made parties to such litigation or, as a few cases hold, have actual knowledge of its pendency, this rule would not apply.^^ The doctrine stated in this sec- tion applies to the validity of negotiable bonds, not only under the conditions already named, but also to acts ratifying or attempting to ratify a void issue of bonds although the judicial policy of the state may be against the constitutionality of the ratification act, yet before such decision, if bonds ratified by a legislature have passed into the hands of bona fide purchasers, such sub- sequent decision by the courts of the state cannot affeet their validity. ^^ §268. Validity as affected by subsequent legislation. If there exists a reason for the doctrine as stated in a preceding section in regard to subsequent adverse deci- sions of the courts as affecting the validity of bonds, good at the time of issue, there is an irrefutable reason for the principle followed by all courts, state as well as Fed- eral, that the validity of bonds, corporate indebtedness 20 — Stewart v. Lansing, 104 U. But see Diamond v. Lawrence S. 505; see, also, eases cited in the County, 37 Pa. 353. The purchaser preceding note. of bonds pendente lite and all sub- 21 — See Sec. 228, et seq., ante; sequent purchasers are affected by Warren County v. Marcy, 97 TJ. a decree of the court in a suit S. 96; Town of Orleans v. Piatt, pending at the time of purchase. 99 U. S. 676; Cass County v. Gil- Such bonds, however, not having lett, 100 U. S. 585; Carroll County the quality of commercial paper in V. Smith, 111 tr. S. 556. Pennsylvania at that time under 22 — Stewart v. Lansing, 104 U. the state decisions. S. 505; Durant v. Iowa County, 1 23 — See Sec. 321, et seq., post. Woolw. 79, Fed. Cas. 4,189. 548 PUBLIC SECUEITIES or obligations is determined by laws in force at the time when such bonds were issued or obligations incurred.^* They cannot be affected by changes subsequently made and this rule will apply in the case of bonds authorized but not yet formally executed and delivered.^ This rule also applies to legislation which impairs or destroys the power of a public corporation to levy taxes for the pay- ment of either principal or interest of bonds legally is- sued when at the time of such issue the power to levy taxes for a specific purpose existed. The power to levy taxes, it is held, is a part of the contract between the corporation and the holder of negotiable bonds which cannot be impaired by subsequent action in violation of that provision of the Federal constitution forbidding the passage of laws impairing the obligation of a contract.^* The principle also prevents the passage of legislation or other action diverting funds or property which was at the time of the issue of the bonds either devoted or to 24 — Calloway County v. Foster, tin, 100 U. S. 47; Rails County v. 93 tJ. S. 567; County of Scotland Douglas, 105 U. S. 728; County of V. Thomas, 94 XT. S. 682; County Dallas v. MeKenzie, 110 TJ. S. 686; of Henry v. Nioolay, 95 U. S. 619; Board of Com'rs of Henderson County of Bay v. Van Sycle, 96 U. County v. Travellers Ins. Co., 128 S. 675; County of Macon v. Shores, Fed. 817. 97 U. S. 272; Louisiana v. Pils- Chicago, etc. Ey. Co. v. Pinckney, bury, 105 XJ. S. 278; Board of 74 111. 277, construing the proviso Com'rs of Henderson County v. of that provision of the Illinois Travellers Ins. Co., 128 Fed. 817; Constitution as adopted in 1870 Clark V. City of Los Angeles prohibiting the granting of railroad (Calif.), 116 Pac. 722; People v. aid bonds. Board of Education v. Peck, 62 Barb. (N. Y.), 545; Bolton, 104 ID. 220. Marsh v. Little Valley, 4 Thomp. But see Wade v. LaMoille, 112 & C. (N. Y.) 116; Dodge v. Piatt 111. 79. Eailroad aid bonds issued County, 16 Hun (N. Y.), 285; by an Illinois town the day on City of Mitchell i. Smith, 12 S. D. which the constitutional amendment 241, 80 N. W. 1077; Stallcup v. becomes operative are void even in City of Taeoma, 13 Wash. 141; the hands of bona fide purchasers but see State v. Garronte, 67 Mo. for value. 445. 26 — See Sec. 37, ante, and Sec. 25_Pairfield v. County of Galla- 358, et seq., post. THE VALIDITY OF PUBLIC SECUEITIES 549 be devoted to the payment of their principal or interest.^'' The general tendency of all courts, both Federal and state, is to protect the contract obligation existing in favor of the bona fide purchaser of negotiable securities issued by public corporations. The clause of the Federal constitution prohibiting a state from passing any law impairing the obligation of a contract affords a real and substantial protection to the investor. § 269. Validity, by what court decided. The decisions bearing upon the question considered in this section upon analysis are found to involve the ap- plication and pertinency of state laws as affecting the validity of bonds ; the decisions of state courts upon ques- tions of general commercial law whether controlling or not upon the Federal courts ; the violation of or interfer- ence with a Federal law or exclusive right or privilege and whether in all cases the Federal courts will follow state decisions which do not coincide with their views as to the merits of a particular question or the soundness of a particular principle. The rule was stated in a preceding section that the Federal courts were not bound to follow the latest adjudi- cated decisions of the state courts on constitutional ques- tions affecting the validity of bonds where there had been rulings in favor of the validity followed by subsequent adverse decisions.^* § 269a. Construction of state statutes. The rule announced by the Supreme Court of the United States, and therefore binding upon all Federal 27— See Sec. 371, post. 677; MoCall v. Hancock, 20 Blatehf. 28— Talcott V. Twp. of Pine 324; Taylor v. Ypsilanti, 105 U. Grove, 19 Wall. 666; Town of Elm- S. 60; Rondot v. Eogera Twp., 99 wood V. Marcy, 92 U. S. 289; Bob- Ped. 202; see Sees. 267 and 268, erts V. Bolles, 101 V. S. 119; Doug- ante, las V. County of Pike, 101 IJ. S. 550 PUBLIC SECURITIES courts, is to the elfect that the construction of the statutes of a state by its highest courts is to be regarded as a de- termination of their meaning and generally as binding upon United States courts.^^ It has also been held that when the construction of a 29 — Amy v. The Mayor, etc. of Alleghany City, 24 How. 362; Sup'rs V. United States, 18 Wall. 71; Chambers County v. Clews, 21 Wall. 317; County of Leavenworth V. Barnes, 94 U. S. 70; Township of East Oakland v. Skinner, 94 U. S. 255; County of Cass v. Johnson, 95 U. S. 360; Morgan County v. Allen, 103 U. 8. 498; Fairfield v. County of Gallatin, 100 U. S. 47; Scipio V. Wright, 101 U. S. 665; Taylor v. Ypsilanti, 105 U. S. 60; Amoskeag Bank v. Ottawa, 105 U. S. 667; Burgess v. Seligman, 107 U. S. 20; Claiborne County v. Brooks, 111 U. S. 400; Meriwether V. Muhlenberg County Court, 120 U. S. 354; German Savings Bank v. Franklin County, 128 U. S. 526; Barnum v. Okolona, 148 U. S. 393; Fall Brook Irrigation Dist. v. Brad- ley, 164 U. S. 112. Wade V. Travis County, 174 U. S. 499. In determining what the laws of the several states are, which will be regarded as rules of deci- sion, we are bound to look, not only at their Constitutions and statutes, but at tbe decisions of their high- est courts giving construction to them. If there be any inconsisten- cy in the opinions of these courts, the general rule is that we follow the latest adjudications in prefer- ence to the earlier ones. The court then stated as an exception to this rule the principle laid down sus- taining the validity of bonds as based upon decisions at the time of their issue, as noted in Sec. 267, ante. Loeb. V. Trustees of Columbia Twp., 179 U. S. 472. The rights of parties arising under contracts not involving questions of a Federal nature are to be determined in ac- cordance with the settled principles of local laws as maintained by the highest court of the state at the time such rights accrued. Board of Com'rs of Wilkes County v. Color, 180 U. S. 506; Francis v. Howard County, 50 Fed. 44. City of Evansville v. Woodbury, 60 Fed. 718, 9 C. C. A. 244, fol- lowing Eailroad Company v. Evans- ville, 15 Ind. 395. This rule founded upon respect for property rights as well as of comity had its early expression by Chief Justice Marshall and has been upheld by an unbroken line of decisions. West Plains Twp. of Meade County v. Sage, et al., 69 Fed. 943; Braz- oria County V. Youngstown Bridge Co., 80 Fed. 10, C. C. A. Eathbone V. Board of Com'rs of Kiowa Coun- ty, 83 Fed. 125 C. C. A.; Spring- field Safe Deposit & Trust Co. v. City of Attica, 88 Fed. 387; Board of Com'rs of Haskell County v. National Life Ins. Co., 90 Fed. 228 C. C. A.; Board of Com'rs of Seward County v. Aetna Life Ins. Co., 90 Fed. 222; Zane v. Hamilton County, 104 Fed. 63 C. C. A.; but see Town of Venice v. Murdoch, 92 U. S. 494. THE VALIDITY OP PUBLIC SECUEITIES 551 state law has been settled by a series of decisions of the highest state court differently from that given to the stat- ute by an earlier decision of the Federal courts, the con- struction given by the state courts vrill be adopted al- though it might not in all cases accord with the opinion of the Supreme Court of the United States. This rule is especially applicable in the consideration of statutes de- fining the duties of state officers.^" Some quotations from opinions of the Supreme Court of the United States will best illustrate the rule and its application. In one case,^^ involving the constitutional- ity of an act of the legislature as affected by objections to its mode of passage, the Supreme Court said: "It is declared by the Judiciary Act as a fundamental principle 'that the laws of the several States, except where the Constitution, treaties, or statutes of the United States shall otherwise require or provide, shall be regarded as rules of decision in trials at common law in the courts of the United States in the cases where they apply.' And this court has always held that the laws of the States are to receive their authoritative construction from the State courts, except where the Federal Consti- tution and laws are concerned; and the State Constitu- tions, in like manner, are to be construed as the State courts construe them. This has been so often laid down as the proper rule, and is in itself so obviously correct, that it is unnecessary to refer to the authorities. As a matter of propriety and right, the decision of the State courts on the question as to what are the laws of the State, is binding upon those of the United States." And in another case ^^ it was said, calling attention to 30 — Norton v. Comm'rs of Shel- of Com'rs of Stanly County v. by County, 118 U. S. 425; O'Brien, Col(^, 96 Fed. 284 C. C. A. et al. V. Wheelock, et al., 95 Fed. 31 — Town of South Ottawa v. 883; Board of Com'rs of Oxford Perkins, 94 IT. S. 260. County V. Union Bank of Eich- 32 — Weightman v. Clark, 103 U. mond, 96 Fed. 293 C. C. A.; Board 8. 256. 552 PUBLIC SECUEITIES an exception to the universal rule: "As a rule, we treat the construction which the highest court of a State has given a statute of the State as part of the statute it- self. It is only when, by giving such construction a retroactive effect, it will invalidate contracts which in our opinion were lawfully made, that we disregard them. ' ' And in another case ^^ where the court held that upon a construction of the Constitution and laws of a state, this court as a general rule follows the decisions of her highest courts unless they conflict with or impair the effi- cacy of some principle of the Federal Constitution or of a Federal statute, or a rule of commercial or general law, and said: "It would lead to great confusion and dis- order if a State tribunal, adjudged by the State Supreme Court to be an unauthorized and illegal body should be held by the Federal courts, disregarding the decision of the state court, to be an authorized and legal body and thus make the claims and rights of suitors depend, in many instances, not upon settled law, but upon the con- tingency of litigation respecting them being before a State or a Federal court. Conflicts of this kind should be avoided if possible by leaving the courts of one sover- eignty within their legitimate sphere to be independent of those of another, each respecting the adjudications of the other on subjects properly within its jurisdiction. On many subjects the decisions of the courts of a State are merely advisory, to be followed or disregarded, ac- cording as they contain true or erroneous expositions of the law, as those of a foreign tribunal are treated. But on many subjects they must necessarily be conclusive; such as relate to the existence of her subordinate trib- unals ; eligibility and election or appointment of their offi- cers; and the passage of her laws. No Federal court should refuse to accept such decisions as expressing on 33 — Norton v. Shelby County, 118 IT. S. 425. THE VALIDITY OF PUBLIC SECUEITIBS 553 these subjects the law of the State. If, for instance, the Supreme Court of a State should hold that an act appear- ing on her statute-book was never passed and never be- came a law, the Federal courts could not disregard the decision and declare that it was law and enforce it as such. ' ' § 270. When state decisions will not be followed. The rule laid down in the preceding section will not be followed by the Federal courts when the decisions of the highest courts of a state impair the efficacy of some principle of the Federal constitution or a Federal stat- ute or in other words, where a Federal question is raised.** The right is insisted upon by the Supreme Court of the United States to reverse all judgments of a state court when the determination or judgment of that court could not have been given without deciding upon a right or authority claimed to exist under the constitution, laws or treaties of the United States and deciding against that right. It was said in a case in that court,^^ that "very little importance has been attached to the inquiries whether the Federal question was formerly raised, the true test, is not whether the record exhibits an express statement that a Federal question was presented but whether such a question was decided and decided adverse- ly to the Federal right." And this rule also follows where the state decisions construe a state law as valid which limits or affects the operation of the process or proceedings in the Federal courts. The Federal constitution, so it has been held, 34^Van Hoffman v. City of 164 U. S. 112; see also Loeb v. Quiney, 4 Wall^ 535; Butz v. City Trustees of Columbia Twp. 179 U. of Muscatine, 8 Wall. 575; Mur- S. 472. ray v. Charleston, 96 XT. S. 432; 35 — Murray v. Charleston, 96 U. Fall Brook Irr. District v. Bradley, S. 432. 554 Public securities would become a mockery if the state legislatures might at will annul the judgments of the Federal courts and the nation would be deprived of the means of enforcing its own laws by the instrumentality of its tribunals ; ^° and where a state has authorized a public corporation to con- tract, the right to exercise the local power of taxation to the extent necessary to meet the power thus given cannot be withdrawn until the contract is satisfied. The construction of such laws as valid by the state courts operates clearly as a violation of that provision of the Federal constitution prohibiting the passage of any law impairing the obligation of a contract.^^ §271. State decisions not followed. The Federal courts further will not be bound by state decisions but reserve the right to exercise their indepen- dent judgment when compelled to do so by reasons so obviously sound that to refuse to follow them to their 3G — Eiggs V. Johnson County, 6 of harmony and to avoid confusion Wall. 166. the Federal courts will lean towards 37 — See See. 362, post. an agreement of views with the Butz V. City of Muscatine, 8 Wall. state courts, if the question seems 575. to them balanced with doubt. ' ' Board of Liquidation of City Clapp v. Otoe County, 104 Fed. 373. Debt of New Orleans v. State of But see Zane v. Hamilton County, Louisiana, 179 U. S. 622. When 189 U. S. 370. Where it was held the jurisdiction of this court is in- that a purchaser of county railroad voked because of the asserted im- aid bonds has no contract rights pairment of contract rights, arising protected by the Federal Constitu- from the effect given to subsequent tion against impairment because legislation, it is our duty to exer- the purchase was made on faith of cise an independent judgment as prior proceedings that municipal to the nature and scope of the subscriptions to railroad stock were contract. Nevertheless, when the so far germane to railroad incorpo- contract which, it is alleged, has ration as not to require specific been impaired, arises from a State mention in the title of act provid- Statute, as said in Burgess v. Selig- ing for the incorporation of a rail- man, 107 TJ. S. 34, 2 Sup. Ct. Hep. road, affirming 104 Fed. 63. 10, 27 L. Ed. 365, "for the sake THE VALIDITY OF PUBLIC SECURITIES 555 logical conclusion would be an absolute denial of jus- tice.^** §272. Absence of state decisions. The Federal courts also will exercise their own inde- pendent judgment as to the construction of state statutes in the absence of state decisions construing and applying them.39 When a Federal question is involved as said by one decision: *" "If, when the acts in question were passed, the general assembly was without power, under the Con- stitution, as interpreted by the highest court of Tennes- see, to enact a special law authorizing a designated number of counties, without a previous vote of the people, to make subscriptions of stock to a particular railroad running through such counties, our duty is to accept 3fi— O'Brien et al. v. Wheelock, et al., 95 Ted. 883 C. C. A. See also Block v. Com'rs, 99 V. 8. 686. To those views expressed by the state court we cannot as- sent. They are not in harmony with many rulings of this court, made and repeated through a long series of years, and they are not such as in our opinion would ad- minister substantial justice if ap- plied in this case. Bolles v. Brim- field, 120 U. S. 759. 39 — Town of Queensbury v. Cul- ver, 19 Wall. 83; Pine Grove Twp. V. Talcott, 19 Wall. 666. Claiborne County v. Brooks, 111 XT. S. 400. It is undoubtedly a question of , local policy with each State, what shall be the extent and character of the powers which its various political and municipal or- ganizations shall possess; and the settled decisions of the highest courts on this subject will be re- garded as authoritative by the courts of the United States; for it is a question that relates to the in- ternal constitution of the body politic of the State. But as all, or nearly all of the States of the Union, are subdivided into political districts similar to those of the country from which our laws and institutions are in great part de- rived, having the same general pur- poses and powers of local govern- ment and administration, we feel authorized, in the absence of local State statutes or decisions to the contrary, to interpret their general powers in accordance with the an- alogy furnished by their common prototypes, varied and modified, of course, by the changed conditions and circumstances which arise from our peculiar form of government, our social state and physical surround- ings. Anderson v. Santa Anna, 116 U. S. 35«; Bolles v. Brimfield, 120 U. S. 759. 40 — County of Tipton v. Locomo- tive Works, 103 U. S. 523. 556 ^^ PUBLIC SECUEITIES that construction of the fundamental law of the state. But if there was no such contemporaneous or fixed con- struction, this court, as was the court of original juris- diction, is under a duty imposed by the Constitution of the United States, from the performance of which it is not at liberty to shrink, to determine for itself, what were the legal rights of parties at the time the bonds in suit were issued." § 273. Decisions of state courts not controlling on general questions of commercial law. While it has been held that the Federal courts will follow the construction of a state constitution or law as settled by the decisions of state courts except under the circumstances noted, and will as a general rule accept such decisions as evidence of what the local law is even thoug'h against their own judgTuent, yet if the question is one which falls within the general principles and doc- trines of commercial jurisprudence, the Federal courts hold that it is their duty to form an independent judgment in respect to which they are under no obligations to follow implicitly or otherwise the conclusions of any other court however learned or able it may be. The attention of the reader will be called to two decisions as particularly illus- trative of this rule and in addition to the others cited in the notes : One from the Supreme Court of the United States *^ where the court said : ' ' Our attention has been 41 — Pana v. Bowler, 107 U. S. 527. tions of general justice and equi- See also Sup 'rs v. Schenck, 5 Wall. table consideration in the taxing 772; Town of Venice v. Murdoek, of property should be submitted to 92 U. S. 494; but see Seipio v. this court for this determination. Wright, 101 U. S. 665. County of Presidio v. Noel- Fall Brook Irrigation Dist. v. Young Bond & Stock Co., 212 XJ. Bradley, 164 U. S. 112. It was S. 58. After referring to litigation never intended that this court in the Texas state courts in re- should as the effect of the amend- spect to the validity of the bonds ment be transformed into a court involved in the pending suit (Ball of appeals where all decisions of Hutchins & Co. v. County of Presi- Btate courts involving merely ques- dio, 88 Tex. 60, 29 S. W. 1042) THE VALIDITY OF PUBLIC SECURITIES 557 called to the decision of the Supreme Court of Illinois in the case heretofore mentioned and reported as Lippin- cott V. Town of Pana, 92 111. 24, in which it was held that the election relied on in this case as the authority for the issue of the bonds was absolutely void, and the issue of them was, therefore, without authority. Our attention is also called to People v. Town of Santa Anna, 67 id. 57, and People v. Town of Laenna, id. 65, where similar elections under a like statute were held void. These last two cases were decided before the bonds in this case were issued. They were, however, suits brought to restrain the issue of bonds by the township officers, on account of the irregularities in the election. The rights of bona fide holders could not, therefore, arise, and were the court said: "It is apparent that the supreme court of Texas proceeded in part upon grounds in- consistent with the decisions of this court in eases involving the rights of the holders of commercial paper. We allude here particularly to that part of its opinion holding that, whatever the import of the recitals in the bonds, a purchaser was bound to ascertain what were the provisions of the order of February 9th, 1886, under and by virtue of which the bonds purport to have been issued. In that view, we do not concur, as what has been said in this opinion sufficiently indicates. Since the decision in Swift v. Ty- son, 16 Pet. 1, 19, 10 L. Ed. 865, 871, it has been the accepted doc- trine of this court, that, in respect to the doctrines of commercial law, and general jurisprudence, the courts of the United States will exercise their own independent judgment, and, in respect to such doctrines, will not be controlled by decisions based upon local statutes or local usage, although, if the question is balanced with doubt, the courts of the United States, for the sake of harmony, "will lean to an agreement of views with the state courts. ' ' City of Huron v. Second Ward Savings Bank, 86 Fed. 272. Clapp V. Otoe County, 104 Fed. 473. The court here after stating the rule that Federal courts fol- low decisions of the state courts in construing their statutes and con- stitutions said that there was an exception to this rule, namely ' ' that conceding that the action of a njunicipal or quasi municipal body was illegal, as held by a state court, still the question whether or not the illegal action of such a body, in the exercise of a power granted to it, constitutes any defense to bonds issued or contracts made pur- suant to such action, and held by a bona fide purchaser, is a question of general jurisprudence, which it would be a dereliction of duty for a federal court to decline to con- sider and determine for itself." 558 PUBLIC SECUEITIES not passed on in those cases. But in the case first men- tioned the bonds had been issued, and were presumptively in the hands of the bona fide holders. Nevertheless, the Supreme Court of Illinois held the bonds to be void in whosesoever liand^ they might be. "It is insisted that this court is bound to follow this decision of the Supreme Court of Illinois and hold the bonds in question void. We do not so understand our duty. Where the construction of a State Constitution or law has become settled by the decision of the State courts, the courts of the United States will, as a general rule, accept it as evidence of what the local law is. Thus, we may be required to yield against our own judgment on the proposition that, under the charter of the railway company, the election in this case, which was held under the supervision of a moderator chosen by the electors present, was irregular and therefore void. But we are not bound to accept the inference drawn by the Supreme Court of Illinois, that in consequence of such irregularity in the election the bonds issued in pursuance of it by the officers of the township, which recite on their face that the election was held in accordance with the statute, are void in the hands of bona fide holders. This latter proposi- tion is one which falls among the general principles and doctrines of commercial jurisprudence, upon which it is our duty to form an independent judgment, and in respect of which we are under no obligation to follow implicitly the conclusions of any other court, however learned or able it may be. ' ' And another from the Circuit Court of Appeals of the Eighth Circuit,*^ where Judge Sanborn in writing the opinion for the court said: "But the question that has been under consideration here is not one of the construction of the constitution or of the stat- utes of the state of Iowa. It simply involves the con- 42 — Inclependent School District of Sioux City v. Eew, 111 Fed. 1 C. C. A. THE VALIDITY OP PXIBLIO SECURITIES 559 struction and^ effect of recitals in negotiable instruments. It is a question of commercial, and not of constitutional law ; upon whicli the decisions of the state courts are not controlling in the Federal tribunals. It is not only the privilege, but the duty, of the Federal Courts, imposed upon them by the Constitution and statutes of the United States, to consider for themselves, and to form their independent opinions and decisions upon questions of commerdal or general law presented in cases in which they have jurisdiction, and it is a duty which they cannot justly renounce or disregard. Jurisdiction of such cases was conferred upon them for the express purpose of securing their independent opinions upon the questions arising in the litigation remitted to them. And a citizen of the United States who has the right to prosecute his suit in the national courts has also the right to the opinions and decisions of those courts upon every crucial question of general or commercial law or of right under the constitution or statutes of the nation which he pre- sents."** §274. Validity of negotiable securities; the doctrine of estoppel. Since it is universally held that securities issued by public corporations and negotiable in form partake of the character and are regarded as negotiable paper according to the strict meaning of the word as used in the law-mer- chant, we have for the protection of the bona fide holder the well-established principle applying to all negotiable 43 — See, however, the earlier statute authorizing the issue of cases of Town of Venice v. Mur- railroad aid bonds. In this ease, dock, 92 U. S. 494, where the Su- contrary to the New York eases preme Court of the United States it held the affidavit conclusive but refused to follow New York deci- subsequently this decision was re- sions relative to the effect to be versed pro tanto in Scipio v. given to affidavits of town officials Wright, 101 U. S. 665. as to conditions required under a 560 - PUBLIC SECITEITIES paper that a bona fide and innocent purcl^ser for value before maturity and without notice takes an absolute title and is not affected by equities whicli are good as between the original parties. The doctrine of estoppel has been held to apply to the maker in respect to the existence of certain conditions or circumstances which might relieve it from its obligation by recitals in the bonds, acquiescence, course of dealing and the payment of interest.** A public corporation, for illustration, that has as such voted for and issued bonds, is estopped from setting up as a defense against an innocent holder defects in its incorporation. *^ So also one having authority to issue bonds for one purpose is estopped from setting up as a defense against a bona fide purchaser of such bonds the fact that the moneys derived from their sale were used for a different purpose, perhaps an illegal one, from that from which they purported or were authorized to be issued or that such moneys were never expended for the benefit of the corporation. *^ It has also been held that where the statutory authority exists and bonds are issued, the maker will be estopped from denying their execution when it has received and it 44 — Pompton v. Cooper Union, also cases cited under See. 266, 101 U. S. 196. If any error or ante on de facto corporations, wrong was committed in issuing 46 — See Sees. 262 and 263, ante these bonds, it was the acts of the and Sec. 289, post. Hackett v. City agents of the plaintiffs in error; of Ottawa, 99 V. S. 86; Portland where one of two innocent persons Savings Bank v. City of Evansville, must suffer a, loss and one of them 25 Fed. 389; Nat. Life Ins. Co. of has contributed to the injury the Montpelier v. . Board of Education law throws the burden upon him of Huron, 62 Fed. 778 C. C. A. and not upon the other party. See Borough of Freesport v. Marks, 59 generally cases cited under the fol- Pa. 253; Jones v. City of Cam- lowing sections. den, 44 S. C. 319; Nolan County v. 45— AUer v. Cameron, 3 Dill. State, 83 Tex. 182 17 S. W. 823; 188 ; Nat. Life Ins. Co. of Mont- Town of Clifton Forge v. Alleghany pelier v. Board of Education of Bank, 92 Va. 283, 23 S. E. 284. Huron, 62 Fed. 778 C. C. A. See, THE VALIDITY OF PUBLIC SECURITIES 561 has retained the benefit of the money evidenced by the bonds.*^ §275. Estoppel by delivery. The principle of estoppel through a decision of one to whom the determination of certain facts has been com- mitted has been applied to the mere fact of a delivery of the bonds. This, even in the absence of a recital to the effect that conditions precedent have been complied with, being regarded as tantamount to a decision to this effect. In Knox County v. Aspinwall, *^ the court said : ' ' The right of a board to act in an execution of the authority is placed upon the fact that a majority of the votes had been cast in favor of the subscription and to have acted without first ascertaining it would have been a clear viola- tion of duty ; and the ascertainment of the fact was neces- sarily left to the inquiry and judgment of the board itself, as no other tribunal was provided for the purpose. This board was one from its organization and general duties fit and competent to be the depositary of the trust thus confined to it. The persons composing it were elected by the county and it was already invested with the highest functions concerning its general ^police and fiscal interest. * * * The purchaser of the bonds had a right to assume that the vote of the county which was made a condition to the grant of the power had been obtained from the fact of the subscription by the board to the stock of the railroad company and the issuing of the bonds." In a later case, Provident Trust Company v. Mercer County, *** the bonds had been issued and placed in escrow to be deliver- ed upon the condition that the railroad in whose aid they 47— See See. 319, post; Mobile v. Palmyra, 33 Mo. 440; Mutual V. Sands, 127 Ala. 493; Oswego Life Ins. Co. v. Elizabeth, 42 N. Twp. V. Anderson, 44 Kan. 214, 24 J. L. 401; Cotton v. New Provid- Pac. 486. enee, 47 N. J. L. 401. 48—21 How. 539; see also, Ftegg 49—170 U. S. 593. p. S.— 36 562 PUBLIC SECUEITIBS had been issued should be completed through the county. The bonds were delivered before the fulfillment of the condition. The Supreme Court held them valid saying in part: "It is said that the bonds were placed in es- crow and that when an instrument is so placed there can be no vahd delivery until the condition of the es- crow has been performed, and if without performance the instrument passes out of the hands of the one hold- ing it in escrow it is not enforcible against the maker and that in a suit upon the instrument the inquiry is always open whether the condition of the escrow had been performed. Whatever may be the rule in case the instrument so placed in escrow be a deed or non-negotiable contract we are of the opinion that a different rule obtains when the instrument is a negotiable obligation. ' ' ^° The non-performance of con- ditions required to be done by the one entitled to the bonds, if acquiesced in by the corporation, is not suffi- cient to render the bonds invalid.^ ^ The doctrine of equit- able estoppel also is applied for the protection of the bona fide holder of public securities where public corpor- ations with full knowledge of defects in the manner of issue after having received and retained the benefits of the proceeds of their bonds, recognize directly, or indirectly the vahdity of them by the levying of a tax for their payment or the payment of interest ; ^^ 50 — But see Buchanan v. Litch- wall, wherein he said: "He has a field, 102 TJ. S. 278. Where the right to rely upon the statements Supreme Court upon full considera- as a determination of the question tion held that the mere fact that but a mere execution and issue of the bonds were issued without any the bonds without such recital is recital of the circumstances bring- not in my judgment conclusive, it ing them within the power granted may be prima facie sufficient but was not in itself conclusive proof the contrary may be shown." in favor of a bona fide holder that 51 — See Sec. 318, et seq., post; the circumstances existed which au- Augusta Bank v. City of Augusta, thorized them to be issued, and the 49 Me. 507; Shurtleff v. Inhabi- dissenting opinion of Mr. Justice tants of Wiscasset, 74 Me. 130. Bradley in Knox County v. Aspin- 52 — See Sec. 318, et seq., post. THE VALIDITY OF PUBLIC SECUBITIES 563 exercise stockholders' rigMs on stock purchased with the proceeds;"^ acknowledge through their public officials or otherwise the validity of the securities is- sued ; °* retain the consideration,^" or issue renewal or refunding bonds to replace them ; ^^ under these circum- stances, public corporations will not be heard to raise the question of irregularities as a defense in an action against them to enforce the obligations incurred. These as well as the application of the doctrine of recitals will be considered in the immediately following sections. §276. The doctrine of recitals. The principle of estoppel as stated in the preceding section also appHes to recitals in public securities which are statements of the constitutional or legislative author- ity for their issue ; the performance or compliance with all of the conditions required by such authority necessary to be done or performed as precedent to a valid issue; and the existence of jurisdictional or essential facts ; the doctrine as applied to recitals is substantially this, that where legislative authority has been given to a public corporation to issue bonds upon the performance of some precedent condition such as the assent of the votors at an election or a particular manner in which the election is to be held,^'' the necessity of making provision for a tax levy to meet the interest and provide for a sinking fund to pay off the bonds,^* the prohibition of an issue in excess 53 — See Sec. 318, et seq., post. and discussed in the later sections 54 — See Sec. 318, et seq., post. on elections as affected by recitals 55 — See Sec. 318, et seq., post. and Sec. 292, et seq. 56 — See Sec. 208, ante and Sec. 58 — National Life Ins. Co. of 318, et seq., post. Montpelier v. Board of Education 57 — Oom'rs of Knox v. Aspin- of the City of Huron, 62 Fed. 778 wall, 21 How. 539; Lynde v. Win- C. C. A.; Hughes County v. Living- nebago County, 83 TJ. S. 6; County ston, 104 Fed. 306 C. C. A.; see of Moultrie v. Fairfield, 105 U. S. Sec. 120, ante and Sec. 373, et seq., 370. post. But see Brazoria County v. See the cases on this point cited Youngstown Bridge Co., 80 Fed. 10. 564 PUBLIC SECUKITIES of certain limitations of indebtedness," the performance of certain conditions by the payee named in the bond,*" or the existence of some essential fact and where it might be gathered from the legislative enactment that certain officials of the corporation are vested with the power to decide whether the conditions precedent have been com- plied with or the required facts existed, their recitals or statement in the bonds issued by the public corporation that they have been so complied with or that certain facts and conditions exist, is conclusive of the matter so stated and recited and binding on the corporation for, as said by the Supreme Court of the United States : "The recital is itself a decision of the fact by the appointed tribunal. ' ' ®^ Such a recital or ' ' decision " as it is termed is conclusive upon the corporation as to bonds in the hands of a bona fide holder who it is held as to the facts recited is not bound to look for further evidence of a com- pliance with the conditions of issue.^^ In Burroughs on 59 — City of Gladstone v. Throop, had pursued all the regular steps 71 Fed. 341 C. C. A. necessary to entitle it to receive Eeis V. State (Calif.), 65 Pae. the bonds. Its agents, that is, the 1102, reversing 59 Pac. 298. Un- agents of the branch road had them der Code of Civil Procedure, Sec. for sale and he had a right to pre- 1093, recitals in a public statute sume that they were lawfully en- are conclusive evidence of the titled to them. See Sec. 289, et facts recited for the purpose of seq., post. carrying it into effect and the state 61 — Town of Coloma v. Eaves, in an action on coupons attached 92 U. S. 484. to bonds issued under the "Indian 62 — Grand Chute v. Winegar, 15 War Bond Act" so-called, was es- Wall. 355, reversing previous cases topped from urging a defense that in the Supreme Court of the United the statute was in violation of the States. Lynde v. Winnebago Coun- constitutional provision limiting the ty, 16 Wall. 6; Town of Coloma v. indebtedness of the state. City of Eaves, 92 V. S. 484; Com'rs of Eome V. Whitestown Water Works Douglas County v. Bolles, 94 U. S. Co., 100 N. Y. S. 357, affirmed 80 N. 104; Orleans v. Piatt, 99 U. S. 676; E. 1106; see Sec. 295, et seq., post. Pompton v. Cooper Union, 101 U. 60— County of Henry t. Nicolay, S. 196; City of Menasha v. Haz- 95 U. S. 619. It was incumbent on zard, 102 U. S. 81; Barter Twp. v. him (a bona fide holder) to in- Kernoehan, 103 U. S. 562; Clay quire whether the railroad company County v. Society for Savings, 104 THE VALIDITY OS PUBLIC SECXJBlTlES 565 Public Securities page 305, the author states what he de- duces as the three leading points of the municipal deci- sion: ' ' I. The power of the officers to decide that the condi- U. S. 579; Am. Life Ins. Co. v. Town of Bruce, 105 U. S. 328 County of Moultrie v. Fairfield 105 U. S. 370; Town of Pana v Bowler, 107 U. S. 529; New Prov idence v. Halsey, 117 U. S. 336 Chaffee County v. Potter, 142 U. S. 355. Andes v. Ely, 158 IT. S. 312. The court after stating the rule say ' ' see the many eases beginning with Com'rs of Knox County v. As- pinwall, 21 How. 529 and ending with Citizens Savings Bank v. Perry County, 156 U. S. 692." City of Evansville v. Dennett, 161 U. S. 434; Board of Com 'rs of Gunnison County V. E. H. Eollins & Sons, 173 U. S. 255; County of Presidio v. Noel-Young Bond & Stock Co., 212 V. S. 58; Marshall v. Elgin, 3 McCrary Cir. Ct. 488; Deland v. Piatt County, 54 Fed. 823; Na- tional Life Ins. Co. v. Board of Education of City of Huron, 62 Fed. 778 C. C. A.; Eisley v. Village of Howell, 64 Fed. 453 C. C. A.; City of Columbus v. Denison, 69 Fed. 58. Wesson v. Saline County, 73 Fed. 917. The recitals are indisputable proofs of the facts essential to the validity of the bonds. E. H. Eol- lins & Sons V. Board of Com'rs of Gunnison County, 80 Fed. 692, af- firmed on this point in Board of Com'rs of the County of Gunnison V. E. H. EolKns & Son, 173 V. S. 255; Chilton v. Town of Grattan, 82 Fed. 873, affirmed 97 Fed. 145; Brown v. Ingalls Twp., 86 Fed. 261; City of Huron v. Second Ward Savings Bank, 86 Fed. 272; Town of Ninety-Six v. Polsom, 87 Fed. 304; Speer v. Board of Com'rs of Kearney County, Kan. 88 Fed. 749; Waite v. City of Santa Cruz, 89 Fed. 619, afSrmed on this point in 184 U. S. 302 ; Lake County Cora 'rs V. Sutliff, 97 Fed. 270 C. C. A.; Wesson v. Town of Mt. Vernon, 98 Fed. 804, citing many cases ; Pickens Twp. V. Post, 99 Fed. 659 C. C. A.; Cowley County Com'rs v. Heed, 101 Fed. 768; Independent School Dis- trict of Sioux City v. Eew, 111 Fed. 1; Board of Com'rs of Hen- derson County V. Travellers Ins. Co., 128 Fed. 817; Gamble v. Eu- ral Independent School District of Allison, 132 Fed. 513; Northwest- ern Savings Bank v. Town of Cen- treville Station, 143 Fed. 81; Vil- lage of Bradford v. Cameron, 145 Fed. 21; State v. City of Mont- gomery, 74 Ala. 226; Danielly v. Cabaniss, 52 Ga. 211; Chicago, K. & W. E. Co. v. Chase County Com'rs, 49 Kan. 399, 30 Pac. 456, following Hutchinson & S. E. Co. V. Kingman County Com'rs, 48 Kan. 70, 28 Pac. 1078, 15 L. E. A. 401; State v. Wichita County Com'rs, 62 Kan. 494, 64 Pac. 45; City of South Hutchinson v. Bar- num, 63 Kan. 872, 66 Pac. 1035; Gibbs V. School Dist. No. 10, 88 Mich. 334, 50 N. W. 294; Spitzer V. Village of Blanehard, 82 Mich. 234; St. Paul Gas Light Co. v. Vil- lage of Sandstone, 73 Minn. 225; Lane v. Schomp, 20 N. J. Eq. (5 C. E. Green) 82; Mutual Benefit Life Ins. Co. V. Elizabeth, 42 N. J. L. 566 Public secueities tions of issue have been fulfilled, is an implied one, deduced from the supposed necessity of the case that some one must decide before issue. II. The evidence of the decision of the officers is to be found in the recital in the bond. This is the record of the decision, and a general recital that the law under which the bonds have been issued, has been complied with, is a decision that the precedent conditions have been fulfilled. III. Such a decision is conclusive upon the municipality as to a bona fide holder of its bonds, who is not bound to look for further evidence of compliance with the condi- tions of issue. The recitals or statements work no estop- pel, however, except where made by those officials or that tribunal especially designated by law or having the gen- eral power to perform such acts. If made by those hav- ing no authority to decide and assert the facts which con- stitute the conditions precedent to the legal issue of bonds, the recitals will not be accepted as a substitute for proof.®* 235; Cotton v. New Providence, 47 bonds recited that they were issued N. J. L. 401 ; Belo v. Porsythe under an ordinance ' ' adopted ' ' by County Com'rs, 76 N. C. 489; Coler the city council. V. Dwight School Twp. 3 N. D. 64 — See Sec. 312, et seq., post; 249, 55 N. W. 587, 28 L. E. A. Knox County Com'rs v. Aspinwall, 649; Flagg v. School Dist. No. 70 21 How. (U. S.) 539; Bissell v. (N. D.) 58 N. W. 499; State v. City of Jeffersonville, , 24 How. (TJ. Board of Education of Perrysburg, S.), 287. ' 27 Ohio St. 96; Kerr v. City of Chisholm v. City of Montgomery, Corry, 105 Pa. 282; Coler v. Ehoda 2 Woods, 584 Fed. Cas. No. 2686. School Twp. 6 (S. D.), 640, 63 N. Public officers cannot acquire au- W. 158; Wilson v. Board of Educa- thority by declaring that they have tion of Huron, 12 S. D. 535, 81 N. it. They cannot thus shut the W. 952; City of San Antonio f. mouth of the public whom they rep- Lane, 32 Tex. 405; Cumberland resent. The officers and agents of County Sup'rs v. Randolph, 89 Va. private corporations, entrusted by 614, 16 S. E. 722. them with the management of their But see National Bank of Com- own business and property, may meree v. Town of Granada, 44 Fed. estop their principals, and subject 262. A city is not estopped to show them to the consequences of their that an ordinance Was never pub- unauthorized acts. But the body lished as required by law where the politic cannot be thus silenced by THE VALIDITY OP PUBLIC SECUEITIES 567 It is axiomatic that the doctrine of recitals will not apply where there are none or to other matters than those included in the recitals.®^ Neither will the doctrine apply to recitals of legal authority to issue for in this respect it is held that every purchaser of bonds acquires and holds them charged with the full notice of the possession of power in the first instance on the part of the public corporation to issue them. The question of legislative authority in a public corporation to issue negotiable securities cannot be con- cluded by mere recitals even when the bonds have passed into the hands of bona fide holders for value."® the acts or declarations of its agents. If it could be, unbounded scope would be given to the pecula- tions and frauds of public otiieers. I hold it to be sound proposition, that no municipal or political body can be estopped by the acts or dec- larations of its officers from deny- ing their authority to bind it. Town of Goloma v. Eaves, 92 U. S. 484; Warren County v. Marcy, 97 U. S. 95; Bourbon County Com'rs v. Block, 99 U. S. 686; Dixon County V. Field, 111 U. S. 84; Merchants Bank v. Bergen County, 115 U. S. 384; Town of Oregon v. Jennings, 119 TJ. S. 74; Bernards Twp. v. Morrison, 133 TJ. S. 523; Eich v. Mentz Twp., 134 V. S. 632; Brown V. Bon Homme County, 1 S. D. 216, 46 N. W. 173; Williams v. Town of Eoberts, 88 111. 11 ; City of Vicksburg v. Lombard, 51 Miss. Ill; Hudson v. Inhabitants of Winslow, 35 N. J. L. 437; Com. V. Common Councils of Pittsburgh, 88 Pa. 66; De Voss v. City of Eich- mond, 18 Grat. (Va.) 338. 65 — Hannibal v. Fauntleroy, 105 U. S. 408. Carl-olI County v. Smith, 111 U. S. 556. Lake County v. Graham, 130 U. S. 674. It is therefore no estoppel as to the constitutional question be- cause there is no recital in regard to it. 66 — See Sees. 231, et seq., and 248, ante, and Sec. 330, et seq., post. Daviess County v. Huidekoper, 98 U. S. 98. In this case, Mr. Justice Hunt said: "These bonds are se- curities which pass from hand to hand with immunity given by the common law to bills of exchange and promissory notes. The persons who execute and deliver them — • officers of the county court in this instance — are the agents of the municipal body authorizing their issue and not of the persons who purchase or receive them. If these agents exceed their authority as to form, manner, detail or circum- stance, if they execute it in an ir- regular manner, it is the misfortune of the town or county and not of the purchaser; the loss must fall on those whom they represent and not on those who deal with them. There must indeed be power which, if formally and duly exercised, will bind the county or town; no bona 568 PUBLIC SECUEITIES The distinction, however, is to be observed between a total want of power under any circumstances to issue and irregularities or informalities or conditions. This ques- tion will be considered in a subsequent section.®'^' The questions suggested have been considered or will be developed in detail in the following sections. § 277. In whose favor the doctrine of estoppel applies. It is only to the bona fide holder for value before matur- ity and without notice that the doctrine of estoppel by recitals is of importance for to the original holder or a subsequent one not holding in good faith, no recitals can act as an estoppel against the public corporation issuing securities to set up irregularities in compliance with con- ditions precedent necessary for a legal issue.**" Public securities have acquired their large popularity fides can dispense with this and no recital can excuse it. ' ' Northern Bank v. Porter Twp., 110 XT. S. 608. The question of legislative authority in a municipal corporation to issue bonds in did of a railroad company cannot be concluded by mere recitals, but the power existing, the municipality may be estopped by recitals lo prove irregularities in the exercise of that power or when the law pre- scribes conditions upon the exer- cise of the power granted and com- mits to the officers of such munici- pality the determination of the question whether those conditions have been performed the corpora- tion will also be estopped by recitals which import such performance. But see National Life Insurance Co. of Montpelier v. Board of Edu- cation of the City of Huron, 62 Fed. 778. Eecitals in municipal bonds, by the representative body that issues them, to the effect that all the requirements of the laws with reference to their issue have been complied with * » * may con- '5titute an estoppel in favor of a bona fide purchaser, even when the body that issued the bonds had no power to issue them, and could not, by any act of its own or of its con- stituent body, make a lawful issue of bonds, if that fact does not ap- pear from the bonds the purchaser buys, the Constitution and statutes under which they are issued, and the public records referred to therein. 67— See Sec. 331, post. 68 — Pendleton County v. Amy, 13 Wall. 297. Chambers County v. Clews, 21 Wall. 318. As between the immedi- ate parties the doctrine of estoppel through recitals will not apply. See Chap. X, ante on bona fide holding. THE VALIDITY OP PUBLIC SECTJBITIBS 569 and pre-eminent standing as forms for investment througli the establishment of their character as nego- tiable paper under the law-merchant and by the applica- tion of the doctrine of estoppel through recital and other- wise. § 278. Legal effect of recitals. The doctrine of estoppel operates two ways : First, it acts equitably. Where a public corporation has received the full benefit of an issue of securities with a full knowl- edge of defects in the manner of issue or has acquiesced in the issue and acknowledged their validity it cannot subsequently be heard to set up as a defense the irregu- larities or defects of which it had fuU knowledge actually or constructively without placing the holder of the bonds in statu quo. The doctrine of estoppel through recitals especially acts in the form of a municipal decision, that is, "where certain officers have authority to issue bonds of their municipality on the performance of certain conditions named in the statute, and the power is vested in them to determine whether the conditions have been comphed with, and they do so determine, their decision that, the conditions have been complied with is final and conclu- sive upon the municipality, although it may be true in point of fact that the conditions have not been complied with.«9 §279. Leading and illustrative cases. The first, and one of the leading cases in the Supreme Court of the United States is that of Knox County v. Aspinwall,^" where it was held that when bonds on their face import a compliance with the law under which they 69 — Bronson on Eeeitala, p. 41; 70 — 21 How, 539. see the authorities cited generally in the following sections as well as those dted under section 276, ante. 570 PUBLIC SECUBITIES were issued, the purchaser is not bound to look further for evidence of a compliance with the conditions of a grant of the power. The defect involved was a failure to properly hold an election required by law as a requisite to the issue of bonds. It was held by the Supreme Court that the power to determine this question was vested in the board of commissioners of Knox county and that if they had acted by subscribing for the stock of the rail- road and issuing bonds in the hands of bona fide holders, it would be too late even in a direct proceeding to call their decision in question, much less, the court said, could it be called in question to the prejudice of a bona fide holder of the bonds in a collateral way. The question was raised again in Town of Coloma v. Eaves,'' ^ when the court held that where a state statute confers authority to issue municipal bonds upon a certain condition and certain officers are vested with power to decide whether the condition precedent had been complied with and to issue the bonds, and there are recitals in the bonds issued by them that, it has been complied with these will in favor of the bond holder for value bind the corporation and be conclusive of the fact. Mr. Justice Strong deliv- ered the opinion of the court and said in part: "In the present case, the person or persons whose duty it was to determine whether the statutory requisites to a subscrip- tion and to an authorized issue of the bonds had been per- formed were those whose duty it was also to issue the bonds in the event of such performance. The statute required the supervisor or other executive officer not only to subscribe for the stock, but also, in conjunction with the clerk, to execute the bonds to the railroad company in the name of the town for the amount of the subscrip- tion. The bonds were required to be signed by the super- visor or other executive officer, and to be attested by the clerk. They were so executed. The supervisor and the 71—92 U. S. 484. THE VALIDITY OF PUBLIC SECUBITIES 571 clerk signed them; and they were registered in the office of the auditor of the state, in accordance with an act, requiring that, precedent to their registration, the super- visor must certify under oath to the auditor that all the preliminary conditions to their issue required by the law had been complied with. On each bond the auditor certified the registry. It was only after this that they were issued. And the bonds themselves recite that they 'are issued under and by virtue of the act incorporating the railroad company,' approved March 24, 1869. 'And in accordance with the vote of the electors of said town- ship of Coloma, at a regular election held July 28, 1869, in accordance with said law. ' After all this, it is not an open question, as between a bona fide holder of the bonds and the township whether all the prerequisites to their issue had been complied with. Apart from and beyond the reasonable presumption that the officers of the law, the township officers, discharged their duty, the matter has passed into judgment. The persons appointed to de- cide whether the necessary prerequisites to their issue had been completed have decided, and certified their de- cision. They have declared the contingency to have hap- pened, on the occurrence of which the authority to issue the bonds was complete. Their recitals are such a deci- sion; and beyond those a bona fide purchaser is not bound to look for evidence of the existence of things in pais. He is bound to know the law conferring upon the municipal- ity power to give the bonds on the happening of a con- tingency; but whether that has happened or not is a question of fact, the decision of which is by the law con- fided to others — to those most competent to decide it^ and which the purchaser is, in general, in no condition to decide for himself. ' ' The principles stated in the above cases have been fol- lowed consistently by the Supreme Court of the United States, the doctrine being re-stated in a very recent deci- 572 PUBLIC SECUEITIES sion,''^ where it was held that recitals in county bonds which fairly import a compliance in all respects with the statutes specified therein relieve a purchaser from the necessity of examining an order of the court referred to in the bonds as authorizing the issue and estop the county to assert as against the bona fide holder that his bonds were issued in excess of the authorized amount or were not issued for the purposes contemplated by the statutes. Reference to a recent decision/^ by the United States Court of Appeals of the Eighth Circuit can also be made of value to the reader. The question of whether there could be an estoppel by recitals in the absence of lawful authority to issue and the operative effect of recitals on questions of fact were among the many propositions raised and decided. The court in its opinion by Judge Sanborn on the first point suggested above, said: "Their argument ignores the vital distinction between that total want of power which no act or recital of the municipality can remedy, and the total failure to exercise or the inade- quate exercise of a lawful authority. It ignores the essen- tial difference between a total lack of power under the laws under all circumstances, and a lack of power which results merely from the absence of some precedent facts or acts which condition either the existence or the exer- cise of the power. The former, it is true, cannot be af- fected by the estoppel of recitals, but the latter may be. A municipality or a quasi-municipality may not, by the recitals in its bonds, estop itself from denying that it is without power to issue them when the laws are such that there can be no state of facts or of eonditions under which it would have authority to emit them. But if the laws are such that there might, under any state of facts or cir- cumstances, be lawful power in the municipality or quasi- 72— County of Presidio v. Noel- 73— Hughes County (S. D.) v. Young Bond & Stock Co., 212 U. Livingston, 104 Fed. 306 C. C. A. S. 58. THE VALIDITY OF PUBLIC SECUEITIES 573 municipality to issue its bonds, it may by recitals therein estop itself from denying that those facts or circum- stances existed, and that it had lawful power to send them forth, unless the constitution or act under which the bonds are issued prescribes some public record as the test of the existence of some of those facts or circumstances. ' ' And on the second point suggested above the court said: " * * * Recitals are inserted in municipal bonds for the express purpose of inducing buyers to pur- chase them in rehanco upon the truth of the certificates they contain. Purchasers universally do so. Then the salutory rule steps in, that one who by his acts or repre- sentations, or by his silence when he ought to speak out, induces another to change his situation in reliance upon those acts or representations or upon that silence, so that a denial of their plain meaning or effect will injure the latter, is estopped from making such a denial, and that rule forbids the inequitable defense that the recitals in such bonds were not true. If the legal effect of recitals is merely to declare that a state of facts or circumstances existed under which the municipality had the power to issue the bonds, this is a just and a reasonable rule, and it is and ought to be uniformly applied and enforced, because such facts and circumstances are peculiarly within the knowledge of the municipality and its officers, and without the knowledge of the purchasers of the bonds. On the other hand, if the laws are such that there can be no facts or circumstances under which the municipality could have the power to issue the bonds, the purchasers are charged with the knowledge of this state of the law. They cannot be deceived by recitals that the bonds were regularly or legally issued, because they must know that there was no way in which they could have been so issued, and in such a case recitals of this character con- stitute no estoppel in their favor against the munici- pality. ' ' 574 PUBLIC SECURITIES "Another argument of counsel is that the board of county commissioners of this county was its agent, with authority clearly limited by the terms of the act and the general laws of the state; that an agent with limited authority may not by recital or certificate that he has authority, create or enlarge his power ; and that the board could not, by its certificate that a fundable debt existed, extend or enlarge its authority, and thereby estop the county. But this argument ignores the great principle upon which the effect of recitals in municipal bonds is based. That principle is that one may not vest in his agent the power io determine whether or not he has authority in a given case, and silently take the benefit of his decision and his act as agent, and then deny his authority, to the detriment of strangers who have inno- cently acted in the belief that his power was ample. It is that when a municipal body had lawful authority to issue bonds on the condition that certain facts ex^st or certain acts have been done, and the law intrusts the power to, and imposes the duty upon, its officers to ascer- tain, determine, and certify the existence of these facts at the time of issuing the bonds, their certificate will estop the municipality, as against a bona fide holder of the bonds, from proving its falsity to defeat them " (citing many cases) * * * "In the consideration of the validity of contracts of municipalities, the fact must not be overlooked that muni- ieipal officers are not the agents of the purchasers of bonds. They are the agents of the municipalities. They are not selected by the creditors of the city or of the country they represent, nor by the courts, but they are chosen by the municipalities themselves. If there is danger that such officers will violate their oaths, and corruptly barter away the rights of the people whom they represent, through the abuse of rules of action which have been es- tablished for the guidance of honest men and faithful officials, the remedy is not the punishment of innocent THE VALIDITY OP PITBLIC SECTJBITIBS 575 creditors who have purchased the negotiable securities of municipalities upon the faith of the acts of their of- ficers, which were generally known to and acquiesced in by their citizens. It is in the election by those citizens of honest men and faithful officials. ' ' §280, The doctrine in the state courts. The state courts have quite generally followed the rule as to recitals stated in the preceding section although not to the same extent nor to the full effect as noted in the Federal courts. The doctrine that recitals in bonds may preclude the public corporation from setting up ir- regularities in the issue is admitted but they differ with the Federal courts upon the question as to what consti- tutes an irregularity. The state courts holding to the construction of certain conditions as absolute and there- fore the recitals without operative effect while the Fed- eral courts construe the same conditions as not essential to the existence of power to issue but the failure to per- form which will be regarded as a mere irregularity in the exercise of a granted power, or stated differently, the state courts have given some precedent conditions im- posed by statute an absolute force where the non-per- formance of the same would be treated by the Federal courts as mere irregularities.''* Illustrating this difference of holding, in Wisconsin it has been held that the lack of proper notice of election could not be regarded as a mere irregularity but such a defective compliance with the statute as to create a want of power which even a recital of a legally held election could not cure.''^" 74 — State v. Board of Com'rs of 52 Ga. 211. A bona fide purchaser Wichita County (Kan.), 64 Pac. is not bound to ascertain that all 45; Spitzer v. Village of Blanchard, the details directed have been ob- 82 Mich. 234, 46 N. W. 400. served where the bonds contain re- State V. Commissioners, 37- Oh. St. citals. 526 ; but see Danielly v. Cabaniss, 75 — Veeder v. Lima,- 19 Wis. 298 ; 576 PUBLIC SECURITIES In Missouri and Illinois, no recital of a legally held election requiring a majority vote or two-thirds can be substituted for an election in fact, hence the defense of no election is always available.'^® In Nebraska a defective petition for or notice of elec- tion renders bonds invalid^'' New York requires that all the precedent steps leading up to an election be strictly complied with,^* and many of the state courts hold that the condition imposing a legal limitation of indebtedness is an absolute one and therefore that no recital will preclude the defense of an over-issueJ** Although as to this point the Federal authorities ex- cept under the conditions noted in a preceding section *" hold the same.^^ In some of the states the bona fide pur- Bishop V. Milwaukee, 21 Wis. 257; see also Sec. 292, et seq., post. 76 — Carpenter v. Lathrop, 51 Mo. 483; Steines v. Franklin County, 48 Mo. 167; Heard v. Calhoun School District, 45 Mo. App. 660; Marshall County V. Cook, 38 111. 52; Wiley V. Silliman, 62 111. 170; Town of Eagle V. Kohn, 84 111. 292 ; Williams V. People, 132 111. 574. 77 — State v. Babcock, 21 Neb. 187; FuUerton v. School Dist. 41 Neb. 593; Hosie v. Scott, 45 Neb. 199. 78 — Starin v. Town of Granada, 23 N. Y. 439; Cagwin t. Town of Hancock, 84 N. Y. 532; Craig v. Town of Andes, 93 N. Y. 405; On- tario V. Hill, 99 N. Y. 324; Town of Ontario v. Union Bank of Eo- chester, 47 N. Y. S. 927; but see Town of Venice ¥. Murdock, 92 U. S. 494, subsequently over-ruled pro tanto in Seipio v. Wright, 101 U. S. 665; see also See. 126, ante. 79_Sutro V. Rhodes, 92 Calif. 117: Board of County Com'rs v. Standley, 24 Colo. 1; National State Bank v. Independent School Dist., 39 Iowa 490; HolUday v. Hilde- brandt, 97 Iowa 177; Kane v. In- dependent School Dist. 82 Iowa 5 Allen T. City of Davenport, 107 Iowa 90; Lewis v. Commissioners, 12 Kan. 186; Catron v. Lafayette County, 106 Mo. 659; Hoffman v. Gallatin County, 18 Mont. 224; Sutton City v. Babcock, 24 Neb. 640; Millerstown v. Frederick, 114 Pa. St. 435 ; Fritsch v. County Com- missioners, 15 Utah 83; but see Eeis V. State (CaUf.), 65 Pac. 1102, reversing 59 Pac. 298. 80 — See Sec. 295, et seq., post; Chaffee County v. Potter, 142 U. S 355; Board of Com'rs of Gunnison County V. E. H. Eollins & Sons, 173 U. S. 255; City of Huron v. Sec- ond Ward Savings Bank, 86 Fed. 272. 81— Dixon County v. Field, 111 U. S. 83. Lake County v. Graham, 180 U. S. 674. It is therefore no estoppel THE VALIDITY OF PUBLIC SECUEITIBS 577 chaser is required to know all the public records pertain- ing to an issue and the courts give to such records pre- cedence over any recitals.^^ In North Carolina, North Dakota and Ohio, however, the authorities seem to hold as strongly to the doctrine of recitals as the Federal courts.^'* The rulings of the Federal courts are practically to the same effect when by statute the facts contained in cer- tain designated records are made a test of the validity of the bonds.** §281. Absence of recitals. The securities as issued may contain no recitals either in respect to the power to i§sue or a compliance, com- plete or otherwise, with the conditions required by law to be performed as precedent to their legality. The ef- fect of the absence of recitals is to put the bona fide pur- chaser upon inquiry both as to the existence of lawful authority to issue and further he is bound to ascertain at his peril whether the conditions required by law have been performed.®^ as to the constitutional question be- 85 — Buchanan v. Litchfield, 102 cause there is no recital in regard U. S. 278; Katzenberger v. Aber- to it. SutlifE V. Lake County Com 'iB, deen, 121 U. S. 172; Town of Con- 147 U. S. 230. cord v. Eobinson, 121 U. S. 165; 82 — Lewis v. Bourbon County, 12 Hannibal v. Fauntleroy, 105 U. S. Kan. 186; State v. Com'rs, 37 Oh. 408; Merchants Bank v. Bergen St. 526; Town of Eagle v. Kohn, County, 115 U. S. 384. 84 111. 292; Veeder v. Lima, 19 BoUes v. Perry County, 92 Fed. Wis. 298; see Sec. 255, et seq., ante. 479 C. 0. A. The fact that the 83 — Belo V. Com'rs of Forsyth bonds were registered under a law County, 76 N. C. 485; Color v. u, strict compliance with which was Dwight School Twp. of Eichland essential in this respect to their County (N. D.), 55 N. W. 587; validity will not in the absence of Flagg V. School District No. 70 recitals that they were issued in (N. D.), 58 N. W. 499; State v. accordance with the requirements of Board of Education, 27 Ohio State the statutes preclude the county 96. from showing failure to perform 84 — See Sec. 255, et seq., ante conditions required. Lewis v. and Sec. 299, et seq., post. Com'rs, 12 Kan. 186; Green County p. s.— 37 578 . PUBLIC SECURITIES This principle has been announced in a number of cases and attention will be called in this text to some decided by the Supreme Court of the United States. In County Commissioners v. Block,®® where the bonds simply recited that they were "issued by order of the Board of County Commissioners," etc., the court said: "The bonds, it is true, contain no recitals. If they did contain a recital that an election had been held, and that a majority had voted for the issue of the bonds, the re- cital would have been conclusive upon the county, and a purchaser would have needed to look no further than to the act of the legislature. This is according to all our decisions, but in the absence of any recital, it may be conceded he was bound ta inquire whether a majority vote had been returned for the issue of the bonds." In Carroll County v. Smith,*^ the court in its opinion in discussing the effect of recitals and what they should contain as applied to the case before it held that the plaintiff in error in the case was not precluded from rais- ing certain questions by any recitals in the bonds since they contained no statement of any election called or held or of the vote by which the issue of the bonds was au- thorized. That they did not embody even a general state- ment, that the bonds were issued pursuant to the statutes referred to. The utmost effect the court said that can be given to them is : " That of a statement, that a sub- scription to the capital stock of the railroad company was authorized by the statutes mentioned, and that the sum mentioned in the bonds was part of it. They serve sim- ply to point out the particular laws under which the transaction may lawfully have taken place. They say nothing whatever as to any compliance with the require- ments of the statute in respect to which the board of su- V. Shorten (Ky.), 75 S. W. 251; 86—99 U. S. 686. Claybrooke v. County Com'rs, 114 87—111 U. S. 556. N. C. 453; Hubbell v. Town of Custer City (S. D.), 87 N. W. 520. THE VALIDITY OF PUBLIC SECTJEITIES 579 pervisors were authorized and appointed to determine and certify. They do not, therefore, within the rule of decision acted on by this court, constitute an estoppel, which prevents inquiry into the alleged invalidity of the bonds." In a later case. Hopper v. Covington,^* the court held that where the bonds recited the special authority to issue and further did not contain any recital of matters in pais special authority to issue must be both alleged and proved and that no estoppel of any kind could arise. In a still later case, Citizens Savings & Loan Association v. Perry County,** where the law authoriz- ing the bonds prescribed certain conditions to be per- formed as precedent to the issue and the bonds as issued failed to recite their performance, the court said: "But it is urged that the bonds having been executed and is- sued by those whose duty it was to execute and issue them whenever that could be rightly done, the county is estopped to plead their invalidity as between it and a bona fide purchaser for value. This argument would have force, if the material circumstances bringing the bonds within the authority given by law were recited in them. In such a case, according to the settled doctrines of this court, the county would be estopped to deny the truth of the recital as against bona fide holders for value. But this court, in Buchanan v. Litchfield, 102 U. S. 278, 292 (26 L. Ed. 138), upon full consideration held that the mere fact that the bonds were issued, without any recital of the circumstances bringing them within the power granted was not lq itself conclusive proof in favor of a bona fide holder, that the circumstances existed which au- thorized them to be issued. In the bonds here in question there are no recitals precluding inquiry as to the per- formance of the conditions upon which the people, after 88—118 TJ. S. 148. 89—156 V. S. 692, 580 PUBLIC SECUEITIES the passage of the act of April 16, 1869, voted in favor of a suhscription to be paid by bonds of the county. ' ' §282. Recitals contrary to statutory provisions. The rule has been already stated that purchasers of public securities are charged with notice of what the bonds disclose upon their face and this principle is ap- plied to those cases where the recitals in the bonds show in themselves that statutory provisions have not been complied with, the bona fide purchaser under such cir- cumstances is afforded no protection by the doctrine of estoppel as applied to recitals but the recitals in them- selves act as conclusive evidence of the invalidity of the bonds and consequently render them void.""* This rule is based as well upon the doctrine that purchasers of bonds are charged with notice of the provisions of the statutes under which they purport to be issued.^^ Many of the cases bearing upon the question involved in this section have already been cited.^^ §283. Express and general recitals. The character of a recital whether express or general has an important bearing upon the effect to be given to the recital in operating as an estoppel in respect to the facts stated therein. A recital, it will be remembered, is a statement of the constitutional or statutory authority under which the bonds are issued together with asser- tions in respect to the performance of required condi- tions or the existence of particular facts.^^ An express 90 — See Sec. 261, ante. Ironwood, 20 C. C. A. 642; Horton 91— MoClure v. Oxford Twp., 94 v. Town of Thompson, 71 N. Y. U. S. 429; Anthony v. Jasper 513; see also Sec. 248 et seq., ante. County, 101 TJ. S. 693; Dixon 92^ee Sees. 231, et seq., and County V. Field, 111 V. S. 83 ; Lake 248, et seq., ante. County V. Graham, 130 TJ. S. 674; 93— See Sec. 276, ante. Manhattan, etc. Co. y. City of THE VALIDITY OF PUBLIC SECTJEITIES 581 recital is the express and exact statement in the bonds itself of the authority under which the bonds are issued, the performance of conditions precedent and the exist- ence of essential facts. A general recital is a statement couched in broad language of the authority to issue and of the performance of the conditions required or a gen- eral statement of the existence of certain facts. The dif- ference between the two may be best illustrated by the statement that a general recital would state that the bonds have been issued in pursuance of or in conformity to the authority therein stated while in case of an elec- tion as one of the precedent conditions, an express recital would state that on a certain day an election was held pursuant to law and that at said election a majority of the legal or qualified voters determined that the bonds should be issued. The effect of many cases is to hold that a g-eneral re- cital that bonds were issued in conformity with or pur- suant to a specified law operate as an estoppel in favor of a bona fide holder as to all the precedent conditions of the statute and a full compliance therewith.^* Some decisions, however, consider a general recital more in the nature of a formality and require in order that the doctrine of estoppel should apply that the bonds contain express recitals in respect to the different condi- tions required as precedent to legal issue and the exist- ence of facts which may be made the test of validity.^^ 94 — ^Knox County v. Aspinwall, Waite v. Santa Cruz, 184 U. S. 302; 21 How. 539; Mercer County v. Huron v. Second Ward Savings Haekett, 1 Wall. 83; Meyer v. Mus- Bank, 86 Fed. 272 C. C. A.; Inde- catine, 1 Wall. 384; Town of Coloma pendent School Dist. of Sioux City V. Eaves, 92 TJ. S. 484; Humboldt v. Eew, 111 Fed. 1; Com'rs of Hen- Twp. V. Long, 92 XJ. S. 642 ; Com 'rs derson County v. Travellers Ins. Co., of Douglas County v. Bolles, 94 TJ. 128 Fed. 817; Coler v. Dwight Twp., S. 104, 24 L. Ed. 46; School Dis- 8 N. D. 249, 55 N. W. 587. trict V. Stone, 106 TJ. S. 183; Ander- 95 — Citizens Savings & Loan son County v. Beal, 113 TJ. S. 227; Assoc 'n v. Perry, 166 TJ. S. 689. Cairo v. Zane, 149 TJ. S. 122; Evans- In this case there was no recital ville V. Dennett, 161 TJ. S. 434; as to a material condition required 582 PUBLIC SECUEITIES If they do contain express recitals they are conclusive of the facts recited and every contrary defense is estopped."* This difference in holding is well-illustrated by the cases considering the question of the vahdity of an issue as in excess of constitutional or statutory limitations of indebtedness, the Supreme Court of the United States holding in several cases that where there is an express recital to the effect that the issue in question does not exceed the constitutional or statutory limit, the corpora- tion will be estopped to set up as a defense that the issue was in excess of such limit and this is especially true where the purchaser is not charged with notice of certain designated public records which are made the test of the existence of certain facts bearing upon the question of an excess or where these are insufficient to afford the necessary information to enable the purchaser to determine the facts of an excessive issue or other- wise.*^ A late case on this question in the Supreme Court of the United States "^ holds, after reviewing all of the cases by statute and the court held that County v. Potter, 142 TJ. S. 355; the county was not estopped to set Nesbit v. Independent Dist. 144 U. up a non-compliance with this condi- S. 611; Evansville v. Dennett, 161 tion as a defense. U. S. 434; Board of Com'rs of Gun- Ninth Nat. Bank v. Knox County, nison County v. E. H. Eollins & 37 Fed. 75; see also Nugent v. Sons, 173 U. S. 255; National Life Sup'rs of Putnam County, 19 Wall. Ins. Co. of Montpelier v. Board of 241, reversing 3 Biss. 105. Where in Education of City of Huron, 62 a dissenting opinion Mr. Justice Fed. 778; Dudley v. Board of Bradley while concurring in the de- Com'rs of Lake County, Colo., 26 eision lays down the principle that C. C. A. 82; see generally all cases a general recital of an "issuance cited under the various sections dis- under the statute" should not be cussing the subject of recitals, conclusive of a performance of the 97 — County of Chaffee v. Potter, necessary conditions but that full 142 V. S. 355; see also Board of credence should be given to spe- Com 'rs of Gunnison County v. E. cific recitals. H. Eollins & Sons, 173 U. S. 255. 96— Grand Chute v. Winegar, 82 98— Board of Com'rs of Gunni- U. S. 355; Nugent v. Putnam son County v. E. H. Eollins & Sons, County, 86 U. S. 241; Lake County 173 TJ. S. 255. V. Graham, 130 U. S. 674; Chaffee THE VALIDITY OF PUBLIC SECUEITIES 583 in the Supreme Court involving the question of estoppel by recitals as applied to an issue of bonds in excess of the constitutional limitation that where a bona fide holder had no knowledge nor was chargeable with knowledge or notice that the debt created by the bonds exceeded the constitutional limit he was entitled to rely upon the direct recitals contained in them and that a recital in county bonds that the debt thereby created did not exceed the limit prescribed by the state constitution estopped the county from asserting as against such bona fide holder for value that the contrary is the fact, the court then say: "It is insisted with much earnestness that the principles we have announced render it impossible for a state by a constitutional provision to guard against excessive municipal indebtedness. By no means. If a State Constitution, in fixing a limit for indebtedness of that character, should prescribe a definite rule or test for determining whether that limit has already been ex- ceeded, or is being exceeded by any particular issue of bonds, all who purchase such bonds would do so subject to that rule or test, whatever might be the hardship in the case of those who purchased them in the open market in good faith. Indeed, it is entirely competent for a state to provide by statute that all obligations, in whatever form executed by a municipality existing under its laws, shaU be subject to any defense that would be allowed in cases of non-negotiable instruments. But for reasons that everyone understands no such statutes have been passed. Municipal obligations executed under such a statute could not be readily disposed of to those who in- vest in such securities. ' ' On the other hand, there are de- cisions which maintain the doctrine that a general recital either as to debt limitations or conditions cannot be relied upon and that the purchaser is charged with no- 584 PUBLIC SECUEITIES tice of all public records bearing upon the questions involved;*^ § 284. Recitals, to contain what, and their construction. As a rule it is not necessary that recitals should contain a full and minute detail of all the proceedings involved or necessary to an issue of bonds. If they fairly import a compliance in all substantial respects with the statute giving authority to issue the securities, it is sufficient.^ Where the holder relies for protection upon mere re- citals they should, however, at least be clear and unam- biguous in order to estop a municipal corporation in whose name the securities have been made from showing that they were issued in violation or without authority of law.^ The rule of strict construction of recitals contained in bonds where it is proposed by mere recitals upon the 99— Buchanan v. Litchfield, 102 XT. S. 278; Dixon County v. Field, 111 U. S. 83. Katzenberger v. Aberdeen, 121 U. S. 172. The court here held that a general recital that "this bond is issued under and pursuant to the constitution and laws of the state of Mississippi Charter of the City of Aberdeen and Ordinances passed by the mayor and selectment of the City of Aberdeen on the 26th day of April, 1870," and which refers to no specific legislative authority, was mra'ely a recital of law and did not estop the defense of want of vote to issue the bonds. Lake County V. Graham, 130 U. S. 674; SutlifE V. Lake County Cpm'rs, 147 TJ. S. 230; Francis v. Howard County, 4 C. C. A. 460; Town of Eagle V. Kohn, 84 111. 292; Lewis V. Bourbon County Com'rs, 12 Kan. 188; George v. Oxford, 16 Kan. 72; State V. Com'rs, 27 Oh. St. 526; Veeder v. Town of Lima, 19 Wis. 298. 1 — Comanche County v. Lewis, 133 XT. S. 198. Board of Liquidation of City Debt V. State of Louisiana, 179 U. S. 622. Liquidation bonds issued under constitutional provisions and as a result of a judgment can in- clude in their recitals the facts that they were issued by virtue of the constitution and as a result of a judgment. Cleveland v. Calvert, 31 S. E. 871. It is not necessary to the validity of municipal bonds that they recite that the issue did not exceed the constitutional limit of the city's debt. Coler v. Dwight School Twp., of Eichland County (N. D.), 55 N. W. 587. 2^McClure v. Twp. of Oxford, 94 U. S. 429. THE VALIDITY OF PUBLIC SECURITIES 585 part of officers of public corporations to exclude inquiry as to whether the securities issued in its name were made in violation of the constitution and of a statute of the provisions of which all must take notice should not apply where the recitals show fairly a substantial compliance with the authority to issue the bonds. The main thing to be determined is that under existing authority, the public corporation has issued its obligations to pay and that the conditions required have been performed.^ § 285. Recitals as to lawful authority, constitutional provisions. The recital that the securities are issued pursuant to or under the authority of a constitutional provision puts 3— School Dist. v. Stone, 106 V. S. 183, Eisley v. Village of Howell, 64 Fed. 453 C. C. A. In order to de- termine what effect should be given to this part of the recitals in the bonds, reference must be had to the whole instrument under the just and familiar rule of construction. The court after referring to the various recitals then goes on to say: "Bringing all of the recitals in the bonds together they amount to a representation, that they were issued to raise money to defray the expenses of a public improvement of a kind to be determined by the common council, that the require- ments of the law had all been com- plied with, and that an ordinance in conformity with the law had been passed directing their issu- ance; for if the ordinance was not in conformity with the law, inas- much as it preceded the issue of the bondSj it falsified the pre- ceding statement that the bonds were issued in conformity with the statute. And we can enter- tain no doubt whatever but that this was precisely the way in which the framers of these bonds intended -the recitals to be con- strued. They were inserted to for- tify the bonds, and give assurance of their legal validity to purchasers, and invite their confidence. * * ' The general rule of construction applies, that in determining the in- tent and meaning of any part the general purpose of the whole is to be regarded. And it would seem a very just rule also that the mean- ing which the maker of an instru- ment intends and expects the other party to put upon it should be adopted if the other has accepted it in that sense, and the words will bear that construction. ' ' Kirkpatriek v. Van Cleave (Ind.), 89 N. E. 913. Constructions of public securities, which unsettle confidence in their value will not be made except where the terms of a statute compel. 586 PUBLIC SECUEITIES the purchaser upon inquiry as to the terms of the pro- vision referred to. A distinction was made in some of the earlier cases between the effect of a recital of a constitutional and a statutory provision and holding that under no circumstances could recitals operate as an estoppel in respect to constitutional provision and re- quirements but not holding so strictly in respect to stat- utory provisions.* This rule cannot be said under the leading authorities to operate as a controlling principle where the distinction is merely based upon the fact that the one condition or requirement is to be found in a state constitution and another in some state statute. The character of the con- stitutional provision as either conferring or withholding power or prescribing conditions upon the performance of which the power will arise marks the true liae for court decisions. Where the constitutional provision is to the effect that at the time the bonds are issued a tax must be levied to provide for the payment of the accruing in- 4 — Lake County v. Graham, 130 thorized to determine whether its XJ. S. 674. In this ease the standard action had been complied with and of validity is created by the consti- that its findings was conclusive to tution. In that standard two fac- a bona fide purchaser, and Oregon tors are to be considered, one the v. Jennings, 119 U. S. 74, where amount of assessed value and the the condition violated was not one other the ratio between that as- imposed by the constitution but one sessed value and the debt proposed, fixed by the subscription contract these being exactions of the con- of the people; but see Gamble v. stitution itself, it is not within the Eural Independent School Dist. of power of a legislature to dispense Allison, 132 Fed. 514, where it is with them either directly or indi- held that a recital in bonds that reetly by the creation of a minis- they were issued in pursuance and terial commission whose finding in accordance with a certain named shall be taken in lieu of the facts. statute which is printed thereon is See also Sherman County v. in effect a certification by the oflGt- Simons, 109 U. S. 735. Where eers that all provisions of law, the question was one of estoppel as statutory as well as constitutional against an exaction imposed by the have been complied with and estops legislature, the holding was that the district issuing them as against the legislature being the source of a bona fide holder to deny the facts exaction had created a bodrd au- there stated. THE VALtDITY OF PUBLIC SECUKITIES 587 terest and to create a sinking fund for the payment of the principal or a part of it when it becomes due or prescribing some other condition to be performed by the corporation issuing the bonds or incurring the indebted- ness, recitals in respect to the performance of these con- ditions will operate as an estoppel when in fact the con- ditions have not been performed if the recitals are made under the circumstances required for the operation of the doctrine of estoppel.^ However, the cases passing upon the validity of bonds containing a reference to constitutional provisions in- volve in nearly every instance the question of an issue in excess of a debt limitation. The principle controlling under the later authorities is determined from the char- acter of the recital as general or express or the necessity for an examination of public records by the purchaser of the bonds. These questions have been sufficiently considered in previous sections.® It is sufficient to state 5 — National Life Ins. Co. v. Board of Education of the City of Huron, 62 Fed. 778, 10 C. C. A. 637. It is, however, insisted that there is something in constitutional pro- vision so sacred that no certificate of a compliance with its terms can estop the corporation that makes it from proving its falsity. The remark of Mr. Justice Jackson in Hedges v. Dixon Co., 150 U. S. 187, 14 Sup. Ct. 71, that, when municipal bonds are issued in vio- lation of a constitutional provision, no estoppel can arise by reason of any recitals contained in the bonds, and his reference to Lake Co. v. Eollins, 130 U. S. 662, 9 Sup. Ct. 651; Lake Co. v. Graham, 130 U. S. 674, 9 Sup. Ct. 654; and Sutlife V. Commissioners, 147 U. S. 230, 13 Sup. Ct. 318, are cited in support of this position. But there was no question of the effect of such re- citals before the court in Hedges V. Dixon Co., and the remark was entirely unnecessary to the decision of the case. The bonds there in question had been adjudged void in Dixon Co. v. Field years before, and the question then before the court was whether, inasmuch as only a part of the issue was beyond the constitutional limit of indebted- ness, a court of equity would scale down the amount, and permit a recovery for such a sum as was within the limit. * * * Upon reason and authority, therefore, our conclusion is that an estoppel may arise in a proper case upon a re- cital that an act has been performed which was required by a constitu- tion, as well as upon the recital of the performance of an act required by statute. 6 — See Sees. 255, et seq. and 297, et seq., ante. 588 PUBLIC SECURITIES here that the authorities hold that a general recital may work no estoppel/ but that where the securities ex- pressly and in detail recite that a constitutional limita- tion of indebtedness has not been exceeded, such a recital will operate as an estoppel.* §286. Recitals of authority; legislative. The doctrine has already been stated and discussed in detail that recitals of legislative authority put the purchaser upon inquiry as to all of the terms and condi- tions of the same. He is bound to ascertain that the stat- ute to which reference is made confers authority for the issue of the securities.® The further rule also obtains that where by statute facts contained in certain public records are made a test or one of the tests of the validity of the bonds, the purchaser will be charged with a knowl- edge of all of the facts contained in them.^'' In a recital of legislative authority, however, whether general or express, the great weight of the authority is to tiie effect that the question of a compliance with the conditions required as precedent to the issue or the ex- istence of essential facts need not be settled by the bona fide purchaser. He is entitled to assume and can pre- sume from the recitals of a compliance with statutory authority as to conditions precedent that they have been performed as required and that the facts exist if the re- citals are made by those public officials charged by law with this duty." 7 — Buchanan v. Litchfield, 102 U. nison County, 80 Fed. 692 C. 0. A.; S. 278; Dixon County v. Field, 111 see Sec. 295, et seq., post. V. 8. 83; Lake County v. Graham, 9 — See Sees. 232, et seq. and 248, 130 U. S. 674; SutlifC v. Lake et seq., ante. County Com'rs, 147 U. S. 230. 10— See Sec. 255, et seq., ante. 8 — Chaffee County v. Potter, 142 11 — See the cases under the gen- V. S. 355; Board of Com'rs of Gun- eral subject of recitals in this chap- nison County v. E. H. Eollins & ter cited under the particular sub- Sons, 173 U. S. 255; E. H. Eollins ject heading for which authorities & Sons V. Board of Com'rs of Gun- are desired. THE VALIDITY OF PTTBLIC SECURITIES 589 Under these general principles the cases are numerous to the effect that where bonds recite that they were "is- sued under the authority of certain acts,"^^ "in pur- suance of," or "pursuant to," ^^ "in conformity with the provisions of an act," " "by virtue of and in accordance with," ^° and other familiar phrases, further coupled in some instances with the recital "that all conditions and things required to be done have been done, ' ' or language of similar import,^ ^ that such recitals are conclusive upon the performance of the conditions required or the facts required to exist as precedent to the validity of the bonds and will operate as an estoppel against the cor- porations issuing them as to the existence of the jurisdic- 12 — Eisley v. Village of Howell, 64 Fed. 453 C. C. A. City of South St. Paul V. Lamprecht Bros. Co., 88 Fed. 449, C. C. A. ; Grattan Twp. V. Chilton, 97 Fed. 145 C. C. A. 13 — Com'rs of Knox County v. Aspinwall, 21 How. 539; Moran v. Miami County Com'rs, 2 Black 722; Mercer County v. Hackett, 1 Wall. 83; Grand Chute v. Winegar, 15 Wall. 55; Sup'rs v. Galbraith, 99 XT. S. 214; Pompton v. Cooper Union, 101 TJ. S. 196; Bonham v. Needles, 103 IT. S. 648; Ottawa V. National Bank, 105 TJ. S. 342; Granada County Sup'rs v. Brogdon, 112 U. S. 261; Bernard's Twp. t. Morrison, 133 U. S. 523; Miller v. Berlin, 13 Blatchf. 245; Twp. of Ninety-Six v. Folsom, 87 Fed. 304; Gamble v. Eural Independent School District of Allison, 132 Fed. 514; Kerr v. Corry, 105 Pa. St. 282; but see Kelly v. Milan, 21 Fed. 842. 14 — St. Joseph V. Eogers, 16 Wall. 44; County of Moultrie v. Eocking- ham, Ten-Cent Savings Bank, 92 TJ. S. 631. 15 — Com'rs of Johnson County V. January, 94 TJ. S. 202; City of Evansville v. Dennett, 161 TJ. S. 134. 16 — Waite v. City of Santa Cruz, 184 TJ. S. 302; KimbaU v. Town of Lakeland, 41 Fed. 289; Board of Com'rs of Kingman County t. Cor- nell TJniv., 57 Fed. 149; National Life Ins, Co. v. Board of Educa- tion of City of Huron, 62 Fed. 778 ; City of Columbus v. Dennison, 69 Fed. 58 C. C. A.; Brown v. Ingalls Twp., 86 Fed. 261 C. C. A.; Twp. of Ninety-Six v. Folsom, 87 Fed. 304; Board of Com'rs of Haskell County V. National Life Ins. Co., 90 Fed. 228; Miller v. Ferris Ir- rigation Dist., 99 Fed. 143; Hughes County, S. D. V. Livingston, 104 Fed. 206; Clapp v. Otoe County (Nebr.), 104 Fed. 473; Ind. School Dist. of Sioux City (la.) v. Eew. Ill Fed. 1; City of Defiance v. Schmidt, 123 Fed. 1, afirming 117 Fed. 702; City of Superior v. Marble Savings Bank, 148 Fed. 7; State v. Board of Com'rs of Wichita County (Kan.), 64 Pac. 45; but see Evans V. McFarland (Mo.), 85 S. W. 873. 590 PUBLIC SBCXJEITIES tional facts and conditions. It must be noted, however, that the doctrine of estoppel is at all times subject to the principle that the officers making them must be charged by law with this duty.^'^ §287. Recitals of authority; ordinances, court orders. In a preceding section ^^ it was stated that a purchaser of public securities was charged with the terms and con- ditions of ordinances, reference to which was made in the recitals contained in the bonds. .This principle is true in so far as it applies to the grant of authority to be found in the ordinance. It does not limit the doctrine of estoppel by recitals in respect to the performance of conditions required by the ordinance.^" The bona fide purchaser is afforded the same protection as to conditions precedent or existing facts required in ordinances when authority for the issue of bonds to which he is entitled when the recitals refer to legislative or constitutional au- thority.^^ The principle further does not apply to the form of the ordinance or the conditions imposed by statute as precedent to its passage, when prescribed by law. The 17 — See Sec. 312, et seq., post. Commerce v. Granada, 4 C. C. A. 18 — See Sec. 255, et seq., ante. 212. Eecitals in municipal bonds 20— City of Evansville v. Dennett, that they were issued under an ordi- 161 U. S. 434. nance does not estop the town from 21— Meyer v. Muscatine, 1 Wall. showing that the ordinance was 384; Mitchell v. Burlington, 4 Wall. never published as provided by the 270; Haekett v. Ottawa, 99 U. S. Colorado statutes and they are 86; Waite v. City of Santa Cruz, therefore void. Since the ordinance 184 U. S. 302; Wesson v. Saline was never published or recorded as County, 73 Fed. 917; Ashman v. required by law, it never went into Pulaski County, 73 Fed. 927. effect and hence the authority was Board of Com'rs v. Nat. Life Ins. void, overruled pro tanto. Board Co., 90 Fed. 228, 32 C. C. A. 591, of Com'rs of Haskell County v. overruling pro tanto National Bank National Life Ins. Co., 90 Fed. 228, of Commerce v. Granada, 4 C. C. A. 32 C. C. A. 591; Town of Klamath 212, and Hinkley v. Arkansas City, Falls v. Sachs, 35 Ore. 325, 57 Pac. 16 C. 0. A. 395; bu|t see Eank of 329. tse validity of public securities 591 bona Me holder is entitled to act upon the assumption that the ordinance or ordinances comply in all respects with the provisions of the statute under which passed.^^ 22— Hackett v. Ottawa, 99 U. S. 686. Either such representations were made inadvertently or with the intention by the use of inac- curate titles of ordinance to avert inquiry as to the real object in issu- ing the bonds and thereby facilitate their negotiation in the money mar- kets of the country, in either case the city both upon principle and authority is cut off from any such defense. City of Evansville v. Dennett, 161 U. S. 434; Waite v. City of Santa Cruz, 184 U. S. 302. National Bank of Commerce v. Town of Granada, 54 Fed. 100 C. C. A., affirming 44 Fed. 262, 48 Fed. 27SV' In this ease it was held that a recital in a bond that it Was issued under an ordinance does not estop the town from showing that the ordinance was never published as required by law since neither the mayor nor the clerk who signed the bonds had any duty in relation to publishing ordinances or determin- ing whether they had been published according to law. Overruled pro tanto in Board of Com'rs of Haskell Co. V. National Life Ins. Co., 90 Fed. 228 on the authority of City of Evansville v. Dennett, 161 U. S. 434. Wesson v. Saline County, 73 Fed. 917. The only reason for saying that a reference to an ordinance puts a party upon inquiry into the contents thereof is because the refer- ence conveys knowledge of the ex- istence of the ordinance. But com- mon councils, boards of commis- sioners, and like municipal bodies can act only by order, ordinance, or resolution, as every one is bound to know; and, when a municipal bond is offered upon the market, it needs no mention in a recital to give a proposed purchaser notice that the bond was issued in pur- suance of an ordinance, or resolu- tion, or , ordinance. The existence of the bond implies that much, and when there is a recital to the effect that the bond was issued in pur- suance of a statute, the necessary import is that there was an ordi- nance, and a proper one, whether express mention is made of it or not. To say "In pursuance of a statute and an ordinance ' ' is equiv- alent to an express statement that the ordinance is in conformity with the statute, and the purchaser of a bond containing that recital is not bound in that particular to look for further information. Evans- ville v. Dennett, 73 Fed. 966. Village of Kent v. Dana, 100 Fed. 56. But lastly, it is recited in the bond ' ' that all acts, condi- tions and things required to be done precedent to and in the issuing of said bonds have been properly done, happened and performed in regular and due form as required by law." If, as contended, the passage and publication of the ordinance was a condition precedent to the issuing of the bonds, this recital represented that these things had been done. But see Barnett v. Denison, 145 U. S. 135, which holds that a negotiable bond which merely gives the date of an ordinance authorizing its issue without stating the contents or the title thereof will not cut off an 5Q2 PUBLIC SECUBITIES A recent case in the Supreme Court of the United States ^^ is illustrative of this principle, where the court said: "But the bonds issued on account of subscription to the stock of the Evansville, Henderson & Nashville Railroad Company recite that the subscription was 'made in pursuance of an act of the legislature and ordi- nances of the city council passed in pursuance thereof. ' This imports not only compliance with the act of the legislature but that the ordinances of the city council were in conformity with the statute. It is as if the city had declared in terms that all had been done that was required to be done in order that the power given might be exercised. ' ' § 288, Mis-recitals of legal authority. Through inadvertance or carelessness, public securi- ties in their recitals of authority whether a legislative act or some municipal ordinance may contain a mis-state- ment of the authority, refer to a statute as conferring au- thority which has been repealed, or cite two or more statutes as authority for the issue. The authorities un- der such circumstances hold without any dissen-t that the sole question to be determined is the existence of a law- ful grant of power and that it is immaterial and will not affect the validity of the bonds if as a matter of fact authority for their issue does exist though an erroneous recital or a mis-recital has been made.^* A recital, as stated in one case, is valuable as affordiag equitable defense where the charter announced in the Dennett case is requires all bonds issued by the followed. city to specify the purpose for 24 — Johnson County v. January, which they are issued. Mr. Justice 94 IT. S. 202; Crow v. Twp. of Ox- Brewer dissenting. ford, 119 U. S. 215; Board of Edu- 23 — City of Evansville v. Dennett, cation of Atchison v. De Kay, 148 161 IT. S. 434; see also the later IT. S. 591; D'Esterre v. City of case of Waite v. City of Santa Cruz, New York, 104 Fed. 605 C. C. A.; 184 IT. S. 302, where after a full Board of Com'rs of Clark County review of all of the cases the rule (Kan.) v. Woodbury, 187 Fed. 412 THE VALIDITY OF PUBLIC SECUKITIES 593 a basis of estoppel when it is alleged by the public cor- poration that conditions precedent to the exercise of the power of issuing bonds as prescribed by statute have not been complied with but otherwise it is of no significance. If the power to issue the securities exists, their validity would not have been affected by the total absence of a recital of authority. An erroneous recital is inocuous.^^ , The recital in bonds of a repealed statute as authority for their issue will not invalidate them when it also ap- pears from statements in theru that the terms of an exist- ing act under which they might be issued had been com- plied with.^® So where two statutes are recited in the bonds as authority for their issue, the bondholder has a right to treat the bonds as if issued under authority of the act most favorable to him and is entitled to all of the remedies given thereunder, and if two are recited one conferring power and the other not the bonds will be held valid under the statute actually conveying a grant of power.^ An error in copying the title of the act into the bonds cannot affect in any way the validity of the obligation. The use of the word "organize" instead of "incorpo- rate" in the bond, the latter being the one used in the statute was held by the Supreme Court of the United States as a trifling error having no effect whatever upon C. C. A. ; Board of Com 'rs of Wilkes 202; Gilson v. Dayton, 123 XJ. S. County v. Coler, 113 Fed. 725; Allen 59; Board of Com'rs of Wilkes V. City of Davenport (la.), 77 N. County v. Coler, 113 Fed. 725 C. C. W. 532; Starin t. Genoa, 23 N. Y. A. The same rule will apply where 439; Smith v. Clark County, 54 Mo. the act recited is unconstitutional. 58; Dawson County v. McNamar, See Central Branch Union Pacific 10 Nebr. 276; but see Board of Ey. Co. v. Smith, 23 Kan. 745. Com'rs of Wilkes v. Call, 123 N. 27 — Knox County v. Ninth Na- C. 308, 31 S. E. 481. tional Bank, 147 U. S. 91, afBrm- 25— D'Esterre v. City of New ing 37 Fed. 75; City of Evans- York, et al., 104 Fed. 605. ville v. Dennett, 73 Fed. 966 C. C. 26— Anderson County Com'rs v. A.; Smith v. County of Clark, 54 Beals, 113 U. S. 227; see also John- Mo. 58. son County v. January, 94 U. 8. P. s.— 3 8 594 PUBLIC SECUEITIES the validity of the bond,^^ and further illustrating the principles of this section, it has been held that the in- sertion of additional and unnecessary recitals, though to an act conferring no authority, would not affect the validity of the securities where the power to issue ex- isted.29 §289. Recitals on matters of fact; purpose for which issued. When the other conditions exist necessary to set in operation the doctrine of estoppel through recitals, the principle has been held by a long line of cases to apply to recitals in public securities concerning the purpose for which issued. Briefly stated, the rule is that a public corporation having the power to issue bonds and if when issued they recite that they were issued in conformity with the law and that all statutory or constitutional requirements have been duly complied with and further that the facts precedent exist, it cannot deny these obli- gations as against a bona fide holder who has purchased the bonds for value before maturity and defeat a recov- ery thereon by showing that the recitals in respect to purpose as well as to other matters are false even when in fact they were issued for an unauthorized and an illegal purpose.^" 28— Atchison Board of Education Sage, et al., 69 Fed. 943 C. C. A.; V. De Kay, 148 XJ. S. 591. Wesson v. Saline County, 73 Ted. 29 — City of Evansville v. Den- 917, 20 C. C. A. 227, over-ruling nett, 161 tJ. S. 434; Fernald v. Post v. Pulaski County, 1 C. C. A. Town of Gilman, 123 Fed. 797. 405; Ashnian v. Pulaski County, 73 30 — Lewis v. Sherman County Fed. 927 C. C. A.; Second Ward Com'ra, 1 MeCrary 377; Guernsey Savings Bank v. City of Huron, 80 V. Burlington Twp., 4 Dill. 372; Fed. 660; City of Huron v. Second National Life Ins. Co. v. Board of Ward Savings Bank, 86 Fed. 272; - Education of City of Huron, 62 Fed. Board of Com 'rs of Haskell County 778 C. C. A. A leading ease. Eis- v. National Life Ins. Co., 90 Fed. ley V. Village of Howell, 64 Fed. 228 C. C. A.; Clapp v. Otoe County, 453 C. C. A., reversing 57 Fed. 544 ; 104 Fed. 473; Clapp v. City of West Plains Twp., Meade County v. Marice, 111 Fed. 103; Perris Irr. THE VALIDITY OP PUBLIC SECUKITIES 595 One of the earlier cases in the Supreme Court of the United States ^^ held when the recitals' stated that the bonds were "issued by the City of Ottawa by virtue of the charter of said city" and in accordance with a cer- tain ordinance entitled "an ordinance to provide for a loan for municipal purposes" the defense that the bonds were issued as a donation and not for municipal purposes was unavailing in the face of these recitals. Following this decision will be found others ^^ in the same court, the latest being one ^^ where the court said after referring to various recitals in the bonds involved in the case which fairly imported a compliance in all respects with the statutes specified therein as conferring authority: "Whether the commissioners' court, which had statutory authority to issue such bonds as were necessary for courthouse and jail purposes, had pre- viously made the requisite order therefor, was a matter peculiarly within the knowledge of its officers. They knew whether they had or had not directed bonds to be issued for such purposes. They knew, or ought to have known, whether the bonds ordered to be issued were in Dist. ' them but in the method by which they may raise the money to discharge the obligation. In the former case noted it has been held that the county may levy the taxes upon the property in the precinct or township which voted their issue; in the latter case upon all the property in the county. The obligation of the county to pay them is as sacred and effective in the one case as in the other.*"* The legislature, it will be remembered, has the power to compel a subordinate public corporation to incur lia- bilities or to provide for the payment of certain indebted- 68— Grosse Pointe Twp. v. Finn (Nebr.), 104 Fed. 473; Davenport (Mich.), 96 N. W. 1078. v. County of Dodge, 105 V. S. 237. 69 — Clapp V. Otoe County Blair v. Cuming County, 111 U. THE PAYMENT OF PUBLIC SECUKITIES 723 ness. Following this principle it has been held that in disputed cases it is competent for the legislature to arbitrarily make an issue of public securities an ob- ligation of some designated subordinate civil subdi- vision.'" §348. Medium of payment. A negotiable security is a particular form of contract and the medium of payment is established by its terms, provided, however, that it is not of such a nature as to contravene one of the essentials of a negotiable instru- ment in respect to the medium of payment which, it will be remembered, is money.^^ The promise to pay bonds in gold coin of the United States of the present standard of weight and fineness is construed as a money obligation and not a promise to S. 363. An action was properly brought against a county to collect railroad bonds issued by the county board on behalf of a precinct of such county. Menasha County v. Frank, 120 U. S. 41. FoUowing the ease just cited and holding that in Nebraska an action is properly brought against the county on preeinet bonds. Breckenridge County v. Mc- Cracken, 61 Fed. 191, C. C. A. A county is liable in actions on pre- cinct bonds but the judgment against it is to be satisfied out of a tax levied upon the precincts alone. See, also, People v. Porter, 18 Mich. 101. People V. Sup'rs of Livingston, 42 Barb (N. Y.), 298. County bonds are county obligations though a por- tion of the money derived from their sale is distributed to various towns within the county for the purpose of paying bounties. Neale v. County Court of Wood County (W. Va.), 27 S. E. 370. 70 — New York Life Insurance Co. V. Board of Com'rs of Cuyahoga County, 106 Fed. 123. It is within the province of the legislature to determine as between a state and a county on which the moral obliga- tion rests to discharge a debt. Eice V. Shealy, 71 S. C. 161, 50 S. E. 868. Express legislation au- thorizing the issue of bonds may establish the obligation to pay. See Sees. 31 and 32, ante. See also Van Pelt v. Bertilrud et al., 117 Minn. 50, where it is held that drainage bonds issued under the provisions of chap. 230, Laws 1905, are the direct obligation of the county issuing them. 71— Tipton V. Smythe (Ark.), 94 S. W. 678; Opinion of the court, 49 Mo. 216. See sec. 214, ante. 724 _ PUBLIC SECURITIES deliver a specific article which would otherwise destroy their negotiability^^ The authority for the issue may be silent in this re- spect and it is then perfectly competent for the parties to agree upon a payment in "gold coin of the United States" or "gold coin of the United States of the present standard of weight and fineness" or "in gold coin or lawful money of the United States." The obligation of the maker is then fixed to pay in the medium designated by the contract.''^ Illustrative of this line of authorities, a case from Ken- tucky may be more particularly referred to.^* The leg- islature by an Act of March 30, 1880, authorized the city of Louisville to refund its floating indebtedness and for that purpose and imder this authority the general council of the city issued and delivered to the Board of Commis- sioners of the Sinking Fund of the city coupon bonds, payable both principal and interest in gold coin of the United States. The Act authorizing the issue and sale was silent as to the meditun m which they were to be made payable. The plaintiffs in error were sued by the Sinking Fund Commissioners to enforce a contract for 72— Winston v. City of Fort 65 S. E. 451; Wood v. Boss (S. C), Worth, 475 S. W. 740. 67 S. B. 449; Bond v. Greenwald, 73— Woodruff v. State of Missis- 51 Tenn. 453; Winston v. City of sippi, 162 U. S. 291; Moore v. City Fort Worth, 47 S. W. 740; Pack- of Walla Walla, 60 Fed. 961; Pol- wood v. Kittitas County, 15 Wash, lard V. City of Pleasant Hill, 3 DUl. 88, 45 Pac. 640; Kenyon v. City of 197; Judson v. City of Bessemer, 87 Spokane, 17 Wash. 57. But see Ala. 240; Lane v. Gluckauf, 28 Cal. Skinner v. City of Santa Eosa, 107 289; Murphy v. City of San Luis Calif. 464, 29 L. E. A. 512; City of Obispo, 119 Calif. 624; Hillsborough Cincinnati v. Anderson, 10 Ohio St. County V. Henderson (Fla.), 33 So. C. C. Eeps. 265; Burnett v. Maloney, 997; Atkinson V. Lanier, 69 Ga. 460; 97 Tenn. 697, 37 S. W. 689, Snod- Heilbron v. City of Cuthbert, 96 Ga. grass, C. J., and Beard, J., dissent- 312; Churchman v. Martin, 54 Ind. ing. 380; Farson v. Sinking Fund Com'rs 74 — Farsou, Leach & Co. v. Board of LouiBvUle, 97 Ky. 119; Opinion of Com'rs of Sinking Fund of City of the Court, 49 Mo. 216 ; Carlson v. of Louisville, 97 Ky. 119, 30 S. W. City of Helena (Mont.), 102 Pac. 17. 39; Boss v. Lipscomb, 83 8, C. 136, THE PAYMENT OP PUBLIC SEOUEITIBS 725 the purchase of bonds of this issue and one of the de- fenses urged was that the bonds were made payable in gold coin of the United States. The contention was' not sustained, the court saying in its opinion: "Looking now at the power granted in the case before us, and the objects and purposes of the same, we find that they were, among other things, and mainly, to issue its negotiable securities, running over a period of twenty years for the purpose of borrowing money by the sale thereof at their face value and carrying a low rate of interest. These bonds were to be offered on a market in which there is current more than one circulating medium, but one which is regarded as more stable and less subject to fluctuations than any other, which is the recognized stand- ard of value, and which is the equivalent of and corre- sponds in value with that which the borrower is to receive from its bonds. Can there be any legal reason why the borrower, in case it should be seen, in the exercise of a •sound discretion, both prudent and advantageous, to stip- ulate for the payment of the loan in that particular me- dium of circulation, so that the exact measure of the con- tract — what is to be paid by the borrower on the one hand, and what is to be received by the lender, on the other — may be fixed and understood by both the contracting par- ties, should not be allowed to so contract? It seems to us, that this is purely a matter of contract which should be and is entrusted to the discretion of the borrower who is then authorized to go into the open market to negotiate the desired loan, and who might under some circum- stances be seriously embarrassed, or possibly rendered wholly unable to negotiate his security, if denied this privilege of contracting as to these details, as an indi- vidual might do. We, therefore, see no valid objection to these bonds by reason of their having been made payable in gold coin." The authority, however, may prescribe the medium of payment and a disregard of mandatory provisions in this 726 PUBLIC SECUKItlES respect leads to the invalidity of the securities issued, al- though the tendency of the court is to hold such pro- visions directory merelyJ^ Where a corporation debtor has an option to pay in money or to fund in bonds or to pay by sale of bonds it should be granted an opportunity to exercise that op- tion/^ A city cannot compel a holder of old bonds to receive refunding bonds issued in lieu thereof at a prem- ium although that is the market price.''^ As an illustration of the rule of strict construction un- der the conditions just noted, a case from California can be cited.'® The city of Santa Eosa duly authorized, is- sued bonds for the purpose of constructing a system of water works and other public improvements. The ordi- nance provided that the bonds to be issued should be pay- able, principal and interest, "in gold coin or lawful money of the United States." This ordinance was passed pursuant to legislative acts, some of which pro-' vided "that such bonds shall be payable in gold coin or. lawful money of the United States. ' ' The city, unable to negotiate the bonds containing the clause as above quoted, passed a new ordinance rescinding the old and making the bonds payable "in gold coin of the United States of the present standard of weight and fineness with interest at four per cent, payable semi-annually in like gold coin." The court held the bonds invalid, stating in ef- 75 — Bannock v. Bunting & Co. them. But see Murphy v. San Luis (Calif.), 37 Pac. 277. Obispo, 119 Calif. 624, 48 Pac. 974. Murphy v. City of San Luis 76 — United States ex rel. Baer v. Obispo (Calif.), 51 Pac. 1085, 39 City of Key West, 78 Fed. 88, C. L. E. A. 444. Under a statute C. A. which provides that "all municipal 77 — Lloyd v. City of Altoona bonds for public improvements shall (Pa.), 19 Atl. 675. be payable in gold coin or lawful 78 — Skinner v. City of Santa Eosa money of the United States " bonds (Calif.), 40 Pac. 742. See, also, of a city may be payable in either Murphy v. City of San Luis Obispo, gold coin of the United States or 119 Calif. 624, 48 Pac. 974; Murphy lawful money of the United States v. City of San Luis Obispo (Cal.), at the option of the officials issuing 51 Pae. 1085. THE PAYMENT OP PUBLIC SECUEITIES 727 feet that the statute which provided that the bonds of the class named should be made payable in gold coin or lawful money of the United States was a mandatory pro- vision and intended to restrict the power of public cor- porations to contract with reference to the medium of payment. In a case in the Supreme Court of the United States,'^* which involved the validity of bonds they recited that the maker was "indebted to the bearer in the sum of One Thousand Dollars in gold coin of the United States of America," etc. The coupons attached were made pay- able in "currency of the United States." The Supreme Court of the State of Mississippi,^" construed the bonds as obligations to pay in gold coin and held that the power conferred to borrow money on the maker did not author- ize that corporation to borrow gold coin or issue bonds acknowledging the receipt thereof and agreeing to pay therefor in the same medium and that the bonds were void for want of power in that particular. The Supreme Court of the United States, however, reversed this de- cision and held that the power to borrow money was ex- pressly granted unaccompanied by any definition of word "moneys" which might operate as a restriction on the power. At the time the bonds were issued the money of the United States consisted, under the decisions of the Supreme Court of the United States, of gold and silver coin and United States notes, gold being in every re- spect unlimited in its legal tender capacity, but all were equally valid as money of the United States. It was fur- ther held that the bonds were legally solvable in money of the United States whatever its description, and not in any particular kind of that money, for there was no agree- ment to pay the obligation in any particular kind of money. Mr. Justice Field in a concurring opinion said 79— Woodruff v. State of Mis- 80— Woodruff v. State, 66 Miss.| sissippi, et al, 162 U. S. 291. 298. 728 PUBLIC SECURITIES in referring to the decision of the Supreme Court of Mis- sissippi: "I cannot concur in the decision of that court, in my judgment no transaction of commerce or business, or obligation for the payment of money, that is not im- moral in its character and which is not, in its manifest purpose, detrimental to the peace, good order, and gen- eral interest of society, can be declared or held to be in- valid because enforced or made payable in gold coin or currency when that is established or recognized by the government. And any acts by state authority impairing or lessening the validity or negotiability of obligations thus made payable in gold coin are violative of the laws and Constitution of the United States." The acceptance, however, by a creditor of payment in any other medium than that provided by the contract, even though it may be depreciated currency, where the obligation calls for a payment in gold coin extinguishes the debt and he has no right in a subsequent action to recover the difference.*^ § 349. The legal tender cases. No case involving the payment of public securities has been rendered in which the effect of the legal tender cases, so-called, has been directly raised. As a matter of historical interest and also because involving possi- bilities, a brief reference to these cases may not be out of place. The Constitution of the United States, Article 1, Section 10, provides that: "No state shall * * * coin money ; emit bills of credit ; make anything but gold or silver coin a tender in payment of debts." It is also provided that Congress shall have power "to coin money and regulate the value thereof" but no power is directly conferred upon it to make anything but coined money I 81— Pollard, v. City of Pleasant Hill, 3 DiU. 195; Gilman v. County of Douglas, 6 Nev. 27. THE PAYMENT OF PUBLIC SECXJKITIES 729 legal tender in discharge of debts nor is anything said on that subject. During the Civil War as a means of rais- ing revenue for its prosecution, Congress on February 25, 1863, passed an Act providing for the issue of treas- ury notes and declared that they "should be receivable in payment of all taxes, internal duties, excises, debts and demands of every kind due to the United States except duties on imports and of all claims and demands against the United States of every kind whatsoever, except for interest upon bonds and notes which shall be paid in coin; and shall also be lawful money and a legal tender in payment of all debts, public and private, within the United States except duties on imports and interest, as aforesaid. ' ' In the first case before the Supreme Court of the United States in which the constitutionality of the Legal Tender Act was raised, the court held that Congress had no power to make anything but coined money a legal tender in payment of debts contracted before the passage of the Legal Tender Act and that accordingly the note involved in the action which was payable in dollars could not be discharged by tender of Treasury Notes.^^ The decision was written by Chief Justice Chase, Justices Miller, Swayne and Davis dissenting. Before the next case came up for its decision on this question, the per- sonnel of the court had changed through the resignation of Justice Grier and the appointment of two new mem- bers. Justices Strong and Bradley, the court having been meantime increased by an Act of Congress from eight to nine members. Two cases then came up for decision,^^ 82— Hepburn v. Griswold, 8 Wall. 298, and Eailroad Company v. John- 603. son, 15 Wall. 195. Justices Strong 83 — Knox V. Lee and Parker t. and Bradley delivering an opinion Davis, noted in 11 Wall. 682, and re- in which a majority of the court ported in full in 12 Wall. 457, and concurred, Justices Field, Clifford re-affirmed in Dooley v. Smith, 13 and Nelson with Chief Justice Chase Wall. 605; Bigler v. Waller, 14 WaU. dissenting. 730 PtrBLlC SECtrSlTIES and the court reversed its former decision, over-ruling Hepburn v. Griswold. §350. To whom payable. Negotiable bonds in common with other instruments of a like character are usually made payable to bearer or order with provisions for endorsement in blank and reg- istration. "When payable to bearer or endorsed in blank by the one to whom originally payable, such bonds are payable to bearer and the holder is entitled to payment.^* Where provision is made for registration, when reg- istered in the required manner and by the proper offi- cials, they then become payable only to the party in whose name they stand upon the registration books of the trustee or municipality.*^ But a provision for reg- istration does not prevent the holder of unregistered bonds from recovering interest.®® The fact that a rail- 84 — Amey v. Alleghany City, 24 How. (U. S.) 364; Strong v. Dis- trict of Columbia, 4 Maekey (D. C.) 242 ; Calhoun County Sup 'rs v. Gal- braith, 99 tJ. S. 214; City of Ottawa V. First Nat. Bank of Portsmouth, 105 V. S. 342; Sinton v. Carter County, 23 Fed. 535; City of Cad- illac V. Woonsocket Inst, for Sav- ings, C. C. A., 58 Fed. 935; Ash- ley V. Presque Isle County Supr's, C. C. A., 60 Fed. 65; West Plains Twp. V. Sage, 60 Fed. 943. Pacific Imp. Co. v. City of Clarks- dale, C. C. A., 74 Fed. 528. A bond negotiable in form when not so authorized is not void but simply non-negotiable. D 'Esterre v. City of Brooklyn, 90 Fed. 586; Edwards v. Bates County, C. G. A., 99 Fed. 905; Evans v. Cleveland & P. E. Co., Fed. Cas. No. 4,557; Carpenter v. Greene County, 130 Ala. 613, 29 So. 194. Blackman v. Lehman, 63 Ala. 547. Under Ala. Code, See. 2098, the legal title to municipal bonds payable to bearer passes only by indorse- ment. Clapp V. Cedar County, 5 Iowa 15; Sioux City v. Weare, 59 Iowa 95; School District No. 40 V. Gushing, 8 Kan. App. 728; Town of Lexington v. Union Nat. Bank, 75 Miss. 1; Manhattan Sav. Inst. v. Town of East Chester, 44 Hun. (N. Y.), 537; Com. v. Allegheny County Com'rs, 37 Pa. 237; Qty of Austin T. Nealle, 85 Tex. 520. See, also. Sec. 186, ante. 85 — Chapman v. City Council of Charleston, 30 S. C. 549, 3 L. E. A. 311, 28 S. C. 373, 13 Am. St. Eep. 681. See, also, Sec. 173, ante. 86 — St. Louis County Com'rs v. Nettleton, 22 Minn. 356. A statute required the registration of bonds ' and the point was made that interest could not be paid on those unregis- THE PAYMEN'T OP tUBLIC SfiCUEITIES 731 road corporation to whom aid bonds are originally voted may become consolidated with another corporation does not usually release the public corporation issuing such bonds from its obligations, and this is especially true where there is a statutory authority permitting the con- solidation of railroad corporations at the time of the is- sue of such bonds. It has been held that such statutory authority must be considered as a "silent factor" in determining the legal rights of the parties to such a trans- action. The bonds then become payable to the consoli- dated company instead of that company to whom the aid was originally granted.^^ §351. Amount recoverable. A bona fide holder of negotiable securities acquiring the same in the open market is entitled to recover the tered because it provided that "all bonds heretofore issued and still un- paid shall be registered by the holder thereof. ' ' The court said : ' ' Al- though the language is in form im- perative when we consider that con- struing it strictly would render the act of doubtful validity we think it was not intended to require a regis- tration of the bonds as a condition of the holder's right to demand the interest but was intended only for the convenience of those bondhold- ers who may choose to avail them- selves of it and consequently that it was not intended to take from the county commissioners the authority to provide for paying the interest on bonds not registered. The com- missioners still provide for raising, by tax, the amount required to pay all the interest on the county debt, the county treasurer pays to the state treasurer the amount which has been certified by the state audi- tor to the county auditor, and the balance remains in the county treas- ury to pay the interest according to the terms of the bonds or contracts under which the debts exists. The levy of the $12,000 for railroad bond interest was valid and the court be- low will sustaiu the same. ' ' 87 — See See. 109, et seq., ante. Pope V. Lake County Com'rs, 51 Fed. 769. Any person or corpora tion subscribing for stock in a rail- road company in aid of its construc- tion does so with the knowledge that such company may become merged into a new consolidated railroad cor- poration. It must be held to have been in the contemplation . of such subscriber that such a consolidation might occur. The law enters as silent factor into every contract. The subscriber by his contract im- pliedly authorizes the railroad com- pany fox whose stock he has sub- scribed to consolidate with any other 732 PUBLIC SECUKITIES full or face value of the bonds, although they may have been originally issued at less than par in violation of some statutory provision and this rule will also apply in the absence of such a limitation. The leading case on this question is County of Sac v. Cromwell,^* where the court held that a payment of the par value of the securi- ties was not necessary to the right of a bona fide holder to recover the full amount, the court said on this point: "But independently of the fact of such full payment, we are of opinion that a purchaser of a negotiable security before maturity, in cases where he is not personally chargeable with fraud, is entitled to recover its full amount against its maker, though he may have paid less than its par value, whatever may have been its original infirmity. We are aware of numerous decisions in con- flict with this view of the law; but we think the sounder rule, and the one in consonance with the common under- standing and usage of commerce, is that the purchaser, at whatever price, takes the benefit of the entire obliga- tion of the maker. Public securities, and those of private corporations, are constantly fluctuating in price in the market, one day being above par and the next below it, and often passing within short periods from one-half of their nominal to their full value. Indeed, all sales of such securities are made with reference to prices current in the market, and not with reference to their par value. It would introduce, therefore, inconceivable confusion if bona fide purchasers in the market were restricted in their claims upon such securities to the sums they had paid for them. This rule in no respect impinges upon the doctrine that one who makes only a loan upon such paper, or takes it as collateral security for a precedent railroad company. He is not thereby occupied with the company for whose released from liability, but with his stock he subscribed, implied consent he is brought into 88 — 96 U. S. 51. See, also, Sec. the same contractual relations with 245, et seq., ante, citing authorities, the consolidated company which he THE PAYMENT OF PUBLIC SECUEITIES 733 debt, may be limited in his recovery to the amount ad- vanced or secured." There is, however, some authority to the contrary.^® § 352. Time of payment. For economically sound reasons in a number of states by constitutional provision the life of an issue of securi- ties either state or municipal or both has been limited to a specific number of years : To five as applied to state bonds in Wisconsin; "" to ten in South Dakota; ^^ to not less than ten nor more than fifteen in Colorado ; ^^ to fif- teen in Maryland; ^^ to twenty in Idaho,^* lUinois,^^ lowa,^^ Missouri,^^ Washington,"* and West Virginia, state securities ; "" to twenty-five in Oklahoma ; ^ to thirty in Georgia,^ North Dakota,^ and Pennsylvania ; * to thir- ty-four years in respect to municipal securities in West Virginia ; ° to thirty-five in New Jersey ; * to forty in Cali- fornia,'^ Kentucky,® and South Carolina ; * to fifty years 89 — County of Armstrong v. Brin- cient to pay the interest on such ton, 47 Pa. St. 357. At the time indebtedness and to constitute a this decision was rendered, municipal sinking fund for the payment of bonds were not regarded as nego- the principal within twenty-five tiable instruments in Pennsylvania. years should be construed as clearly 90 — Art. VIII, Sec. 6. meaning that the bonds issued shall 91 — Art. XI, Sec. 1. not run for a period of more than 92 — Art. XI, Sees. 4, 6, 8. twenty-five years. See, also, Arizona 93— Art. Ill, Sec. 34. Const., Art. IX, Sec. 3. 94— Art. VIII, Sees. 1, 3. 2— Art. VII, See. 7, Pars. 2 and 95— Art. IX, Sec. 12. 11. 96— Art. VII, Sec. 5. 3— Art. XII, Sec. 182. 97— Art. X, Sec. 12, 12a Art. IV, 4— Art. IX, See. 10. Sec. 44. State debt, thirteen years. 5 — Art. X, Sec. 8. 98— Art. VII, See. 1 and Art. 6— Art. IV, See. 6, Par. 4. VIII, Sec. 3. 7— Art. XI, Sec. 18. 99 — Art. X, Sec. 4. Brook v. City of Oakland (Calif.), 1— Art. X, Sees. 25, 26, 27. 117 Pac. 433. Case held not to in- State V. Millar (Okla.), 96 Pac. volve the question of whether the, 747. A constitutional provision that bonds ran longer than forty years, a city on incurring indebtedness for 8 — Sec. 159. the construction of public utility 9 — Art. X, See. 11. must provide an annual tax suffi- 734 PUBLIC SECUEITIES in New Mexico/" and New York," but an exception is here made in respect to water bonds which are limited to a term of twenty years. In Texas and Arizona no definite period is set al- though Texas achieves the same result by requiring the levy of a tax at the time the debt is incurred sufficient to meet the accruing interest and provide a sum for the sink- ing fund equivalent to two per cent of the par of the loan.^2 See also the constitutions of Maine/^" Minne- sota/^* Nevada/^" and Wisconsin,^ ^* which contain pro- visions either fixing arbitrarily the maturity of a debt to be incurred or requiring provisions for payment within a specified time. § 353. Certainty in respect to time of payment. Since certainty of the time of payment is one of the essentials of the negotiable instrument, it follows that public securities to fall within the class designated must contain this essential and the time of payment must be definitely and certainly fixed,^^ although it has been held that bonds are not deprived of the character of a ne- gotiable instrument by being made payable on or before 10— Const. Art. IX, Sees. 8, 10, 12. Arizona Const. Art. IX, Sec. 3. 11 — Art. VII, Sec. 4. Provision must be made to pay loan City of Eocliester v. Quintard, 136 within twenty-five years. N. Y. 221, 32 N. E. 760. Laws of See, also, Georgia Const. Art. VII, 1892, Chap. 350, authorizing the See. 7, Par. 2. Thirty years, city of Bochester to issue water 12a — Art. IX, Sec. 15. State debt, bonds for a term of fifty years does twenty-one years, violate Constitution, Art. VIII, Sec. 12b — Art IX, Sees. 5; 14a. State 11, relative to the incurring of in- debt either 15 years or 10-30 years, debtedness and issuing of bonds for 12c — Art. IX, Sec. 4. State debt, a limited period of time. twenty years. 12— Texas Const. Art. IX, Sees. 4, 12d— Art. VIII, Sec. 6. State 5, 7. debt, five years. Art. XI, Sec. 3. Bagley v. Bateman, 50 Tex. 446. City debt, twenty years. The constitutional provision does not 13 — See Sec. 214, et seq., ante, prevent making a debt payable in ten years. THE PAYMENT OF PUBLIC SECUBITIES 735 a certain date at the option of a public corporation issuing them." This rule was announced and stated in an early case in the Supreme Court of the United States," where the court held that a municipal bond, issued under the authority of the law to a named person or order for a fixed sum of money payable at a designated time therein limited, is a negotiable security within the law-merchant. The bonds involved in this case were issued pursuant to lawful au- thority which provided that the same "shall be payable at the pleasure of the district at any time before due." The contention was made that this provision deprived the securities of their negotiability in not complying with that well established essential of negotiable instruments, that the time of payment must be certain. The court said on this point: "But it is contended that the word 'ne- gotiable,' in the Iowa statute, is qualified by that clause, in the same enactment, which provided that the bonds issued under it shall 'be payable at the pleasure of the district at any time before due. ' These words were not in- corporated into the bond. But if the holder took, subject to that provision, as we think he did, it is clear that this option of the district to discharge the debt, in advance of its maturity, did not affect the complete negotiability of the bonds; for, by their terms, they were payable at a time which must certainly arrive; the holder could not exact payment before the day fixed in the bonds; the debtor incurred no legal liability for non-payment until that passed." In the absence of a constitutional or statutory require- ment in respect to the time of payment, the courts are uniform in holding that where a public corporation has the lawful authority to borrow money and issue bonds it 14— See See. 215, et seq., ante; of Aekley v. Hall, 113 U. S. 135. see, also, Sec. 355 post. See, also, Union Cattle Co. v. Intcr- 15 — Independent School District national, etc., Co., 149 Mass. 492. 736 PUBLIC SECUKITIES may make the principal and tlie interest payable at its pleasure and no question can be raised in respect to their validity on this point.^^ The general tendency of court decisions is to require a substantial compliance only with legal requirements as to the maturity of the bonds or the rule can be stated in another way, namely, that the pro- visions relative to the maturity of public securities will when there has been a substantial compliance with them be construed as directory rather than mandatory.^^ As illustrative of this rule the case of Township of Rock Creek v. Strong,^^ can be cited. The claim was made that the bonds were void for the reason that they were made payable in thirty years and thirty -five days from the date of their execution, drawing interest, however, only for the last thirty years of said time. The second section of the act authorizing their issue provided that the bonds issued thereunder should be payable in not less than five nor more than thirty years from the date thereof. The bonds issued were dated September 10, 1872, made payable thirty years from the 15th of October, 1872, with interest 16 — Com'rs of Marion County v. Town of Blmwood, 34 Fed. 114; Clarke, 94 V. S. 278; Board of Twp. of Washington v. Coler, 51 Com'rs of Kiowa County v. Howard, Fed. 362, C. C. A. 83 Fed. 286, C. C. A. ; Chicago, etc., City of Alma v. Guaranty Sav- E. B. Co. V. City of Aurora, 99 111. ings Bank, 60 Fed. 203. Bonds 205 ; Peoples National Bank of Brat- made payable in ' ' twenty years after tleboro v. Ayer, 24 Ind. App. 212; date" complied with the require- Flagg V. City of Palmyra, 33 Mo. ments of a law that bonds "shall 440; Board of Sup'rs v. Simmons be payable in not less than ten years (Mich.), 62 N. W. 292; Singer Mfg. nor more than twenty years from Co. V. City of Elizabeth, 42 N. J. the date of their issue." Roberts L. 249; Syracuse Savings Bank v. & Co. v. City of Padueah, 95 Fed. Seneca Falls, 21 Hun. 304. See, 62; Kemp v. Town of Hazlehurst also, Knox County v. Ninth Nsi- (Miss.), 31 So. 908; Singer Mfg. tional Bank, 147 U. S. 91; Tyson v. Co. v. Elizabeth, 52 N. J. L. 249; City of Salisbury (N. C), 86 S. E. Brownell v. Town of Greenwich, 114 532. N. Y. 518; 22 N. E. 24; Hoag v. 17 — Township of Eock Creek v. Town of Greenwich, 133 N. Y. 152, Strong, 96 U. S. 271; Gilchrist v. 30 N. E. 842. Little Eock, 1 Dill. 261; Dews v. 18—96 U. S. 271. THE PAYMENT OF PUBLIC SECUBITIES 737 thereon from the latter date at the rate of seven per cent. When they were delivered to the railroad company, be- ing railroad aid bonds, did not appear in the case al- though they were not registered by the auditor of the state until October 17, 1872. The court held that the provisions in respect to time of maturity were obviously directory and not of the essence of the power and that under the conditions noted they were practically thirty years bonds. Their legal effect, so far as interest pay- ments were concerned, were the same as if October 15th had been inserted in the bonds as the date of execution instead of September 10th. The legislative direction was substantially followed and the bonds held good. There are some authorities, however, holding contrary to the views expressed in the case just cited and which incline to a strict construction of statutory provisions of the character noted. They in effect require the public corporation to follow strictly statutory or constitutional provisions relative to the dates of maturity, the penalty for a disregard of such provisions being the invalidity of the securities involved. These cases save some excep- tional ones have generally been decided upon what might be termed a material departure from the terms of the authority granting the power and it might be suggested that if in any one of them there had been a substantial compliance the ruling of the court might perhaps have been different.^' In Norton v. Dyersburg,^'' an act of Tennessee author- 19— ^arniim v. Town of Okolona, Mo. 659, 17 S. W. 577. Under stat- 148 U. S. 393; City and County of utory authority to issue bonds to Denver v. Hallett (Colo.), 83 Pac. run not exceeding twenty years, — 1066 ; Cairo, etc., E. E. Co. v. City of bonds running for one year without Sparta, 77 lU. 705; McMullen v. In- coupons are vaUd. Hoag v. Town ghram, Circuit Judge, 102 Mich. 608, of Greenwich, 15 N. Y. S. 743, fol- 61 N. W. 260 Board of Sup'rs of lowing Potter v. Greenwich, 92 N. Alpena County v. Simmons (Mich.), Y. 662. 62 N. W. 292. 20—127 U. S. 160. Catron v. Lafayette County, 106 738 PUBLIC SECURITIES ized the Town of Dyersburg to subscribe to the capital stock of a certain named railroad company not to exceed $50,000 in amount, payable in not exceeding four years by annual assessments. The act further provided that bonds of the town might be issued in anticipation of such collections. The court held that this statute gave no authority to the town to issue bonds payable in ten years but only authorized short term bonds to be paid as the assessments were collected. In City of Brenham v. Ger- man American Bank,^i a city ordinance authorized the issuance of bonds payable twenty years after date but redeemable at the city's option at any time after five years from date. This ordinance the court held conferred no authority to issue bonds redeemable after the expira- tion of ten years from the date of the bonds. In Bamum v. Town of Okolona,^^ a statutory grant authorized the issue of bonds payable at such time as the makers might deem best but "not to extend beyond ten years from the date of issuance." The court held that bonds issued for a longer period of time than ten. years were void. An extreme case holding to the rule just stated is from North Dakota,^^ where a statute authorized the issue of bonds payable in not less than ten years from date, and the court held that bonds issued and payable in eleven days less than ten years were void even in the hands of a bona fide purchaser. In determining the date of maturity of public securities for the purpose of ascertaining whether there has been a compliance with the law in respect to maturity, the courts hold as in the Eock Township case just cited that the date of commencement is to be determined by the interest period,^* and also that the time when the ma- 21—144 V. a. 173. 24:— City of South St. Paul v. 22—148 U. S. 393. Lamprecht Bros. Co., 88 Fed. 449, 23— Peoples Bank v. School Dis- C, C. A. trict No. 7, 3 N. D. 496, 57 N. W. 787. THE PAYMENT OF PUBLIC SECUEITIES 739 turity period commences to run should be calculated from the actual date of issuance and delivery rather than when the bonds were authorized or voted.^^ §354. Order of payment and preference. The debt represented by an issue of securities for pur- poses of payment is considered as an entirety and in- divisible. There can be therefore no priority or prefer- ence in the payment of individual bonds when the whole issue falls due. The holder of bond No. 1, for illustra- tion, is not entitled to a preference over the holders of bonds bearing a sequent number. The order of presen- tation determines the order of payment.^^ When a default in interest occurs the question of whether the entire debt both principal and interest be- comes due is dependent upon the tenns of the contract contained in the bonds. If these include provisions to the effect that upon default in an interest payment the entire debt, both principal and interest then becomes due and payable, the rights of the parties will be determined and established by these recitals.^'^ 25 — ^Dows V. Town of Elmwood, his proportionate share only of 34 Fed. 114; Syracuse Twp., Ham- moneys coUeoted by the eity. Uton County v. Kollius, 104 Fed. Baker v. Meacham, 18 Wash. 958, C. C. A.; Brownell v. Town of 319, 51 Pac. 404. District improve- Greenwich, 114 N. T. 518, 22 N. E. ment bonds maturing during the 24. year are entitled to payment out of 26 — Ranger v. New Orleans, 2 the special assessments of that year Woods 128. Where bonds irregu- although bonds maturing in pre- larly issued passed into the hands ceding years have not been paid in of bona fide holders the owners of fuU. prior securities cannot claim a pref- 27 — Mayor, etc., of Griffin v. erence in order of payment over City Bank of Mason, 58 Ga. 584; the irregularly issued securities. Moore v. Jefferson, 45 Mo. 202. SheUy v. St. Charles County Court, See, also, Washington County, 21 Fed. 699. Nebraska, v. WilUams, 111 Fed. JeweU v. City of Superior, 135 801. Upon a failure of county au- Fed. 19. Holder of local improve- thorities to levy taxes and make ment bonds secured by pledge of payments on bonds the holder has special assessments is entitled to no right to recover a judgment for 740 PUBLIC SEOITEITIES § 355. Right of corporation to call for payment. The right of the public corporation to call for pay- ment outstanding bonds before their maturity again will depend upon the terms of the contract contained in them. If -the payment of the bonds is made optional within a cer- tain designated period, clearly the public corporation has this right but otherwise not,^* although the court held in the full amount of the bonds and accrued interest but is limited to the amount due. under the terms of the contract. Jewell v. City of Su- perior, 135 Fed. 19. 28 — National Bank of the Ee- publie V. City of St. Joseph, 31 Fed. 216; Stewart v. Henry County, 66 Fed. 127; Roberts & Co. v. City of Paducah, 95 Fed. 62; City and County of Denver v. Hallett (Colo.), 83 Pac. 1066; Town of Essex V. Day, 52 Conn. 483. Tarpin v. Madison County Fiscal Court (K?.), 48 S. W. 1085. The time of redemption of bonds should be fixed before they are issued un- der a statutory provision to the ef- fect that bonds are "to run not more than thirty years and to be redeemed within that time at the pleasure of the court." Suffolk County Savings Bank v. City yyi Boston, 149 Mass. 364, 21 N. E. 65. A bona fide subsequent purchaser is not bound, however, by a contract made by a city with the original purchaser of bonds for the annual redemption of some of the issue. Kemp v. Town of Hazle- hurst (Miss.), 31 So. 908. Town of Pontotoc v. Fulton (Miss.), 31 So. 102. A provision in a bond reserving the right of payment after ten years is void but this fact will not afEeot its validity. The statutes providing that no part of the principal of a municipal bond issue shall be called in until its maturity. Colbert v. State (Miss.), 39 So. 65. State ex rel City of Carthage v. Gordon (Mo.), 116 S. W. 1099. Where bonds are issued payable in not less than five years nor more than twenty years from the date of issue at the option of the city, such exception is intended for its benefit and may be waived. Carlson v. City of Helena (Mont.), 102 Pac. 39. A provision in respect to redemption at the op- tion of the city before maturity is mandatory. State V. McBride (Nev.), 99 Pac. 705. Construing particular terms of redemption as involving exercise of taxing power. Brownell v. Town of Greenwich, 114 N. Y. 518, 22 N. E. 24; Hoag v. Town of Greenwich, 133 N. y. 152, 30 N. E. 842; Terri- tory v. Hopkins, 9 Okla. 133, 59 Pac. 976. City of Memphis v. Memphis Sav- ings Bank (Tenn.), 42 S. W. 16. Under the legislation referred to in the case it was held that a bond issued without any stipidation thereon as to redemption was not subject to call after the lapse of six years. Nolan County v. State, 83 Texas 182. THE PAYMENT OP PUBLIC SECUEITIES 741 a particular case that as between two public corporations, one holding bonds of the other, no vested right existed to defeat a call for pajrment made before the maturity of the bonds.29 A subsequent bona fide holder of municipal securities is not bound by a contract between the municipality and the original purchaser whereby the municipality agrees to annually redeem a certain portion of the issue, neither will such a contract bind a subsequent purchaser with notice of the contract who has himself purchased from a bona fide purchaser without notice.^" § 356. Option in favor of holder. In a Pennsylvania case,^^ the bonds were payable twenty-five years after date with interest and each con- tained this recital: "This bond will be redeemed if desired twelve years after date." The school district issuing the bonds at the expiration of twelve years ten- dered the principal and accrued interest, in full to date to the holder, which was refused and in an action brought to recover subsequently accruing interest the court held that the provision noted was intended for the benefit of the holder only, and not for the benefit of the maker. The court said: "The bonds, on their face, purport to have been issued as security for a twenty-five years ' loan. The semi-annual interest for that entire period is pro- vided for by the coupons attached to and forming part of each bond; and there is nothing to indicate that the school district has any right to pay the principal before the expiration of the time named. The declaration at the close of each bond, that it 'will be redeemed, if de- sired, twelve years after date, ' is evidently intended for 29— Little Eiver Township, Eeno of Boston, 149 Mass. 364, 21 N. E. County, V. Board of Com'rs of Eeno 665. County (Kan.), 68 Pac. 1105. 31 — Allentown School District v. 30— Suffolk Savings Bank v. City Derr, 115 Pa. St. 449. 742 PUBLIC SECURITIES the benefit of the holder alone, giving him the option of demanding payment of the principal at the expiration of twelve years. If he the^ desired payment, the school district was bound, on his demand, but not of its own motion, to redeem the bonds by paying the principal and accrued interest. ' ' The courts have also held in a particular case ^^ that the obligation of a contract was not impaired by Arkansas Laws of 1901 (p. 262), which required the state treas- urer to make a call for valid outstanding state bonds for payment, and declaring that unless the bonds were pre- sented within the time specified they should be invalid although at the date of the issuance of the bonds no authority existed in law for peremptorily calling in the bonds for payment. This case also held that a contract obligation was not impaired by that provision in the act referred to when the bonds in question had been made by their terms receivable in payment of the purchase price of certain designated real estate for as the court said : ' ' There can be no higher method of discharging a past due obligation than by payment in money." §357. Place of payment. In the absence of statutory or constitutional provis- ions to the contrary, it is the universal holding that the validity of the bonds is not affected by the fact that they in terms are made payable, either the interest or the principal or both, at some designated place outside the geographical limits of the public corporation issuing them.^^ 32— Tipton v. Smythe (Ark.), 94 Galbraith, 99 TJ. S. 214; Lynde v. S. W. 678. Winnebago County, 16 Wall. 6; 33 — ^Meyer v. City of Muscatine, Town of Enfield v. Jordan, 119 U. 1 Wall. 384; City of Lexington v. S. 680; City of Cairo v. Zane, 149 Butler, 14 Wall. 282; Com'rs of U. S. 122. Marion County v. Clark, 94 TJ. S. Mygatt v. City of Green Bay, 1 278; Sup'rs of Calhoun County v. BisseU 292. Where bonds are made THE PAYMENT OP PUBLIC SECUEITIES 743 In California, by constitutional provision, Article XI, Section 13 1-2, adopted in 1905, it is provided that noth- ing in this constitution shall be construed as prohibiting the state or any subordinate corporation issuing bonds under the laws of this state ' ' to make said bonds payable at any place within the United States designated in said bonds." The principle clearly applies, however, that if in the grant of power the place of payment is designated, this controls although the validity of the bonds is not affected by a disregard of such a requirement. The only result is that payment cannot be compelled at any place other than that provided by law. The Illinois decisions are uniform in holding that under the laws of that State public securities cannot be made payable at any place other than the office of the treasurer of the corporation issuing them. Provisions for payment elsewhere are re- garded as illegal. The rule, however, affects merely the validity of the provision and does not avoid the bonds.^* The decisions in Ilhnois further hold that the rule followed in that state applies even where the statute which gives the authority to issue the bonds is silent as to the place of payment.^^ In the case of People v. County of Tazewell, cited above, the court held that public corporations were not obliged to seek their creditors in order to discharge their indebtedness and that when payment is desired a demand should be made at the treasury of a corporation. To do payable in New York City without 34 — Town of Enfield v. Jordan, express authority of law they are not ]]9 U. S. 680; City of Los An- void for this reason but the maker geles v. Teed, 112 Calif. 319; John- is not bound to transport funds to son v. Stark County, 24 111. 75; New York for their payment. Sherlock v. Village of Winnetka, 68 Hughes County, South Dakota, v. 111. 530; Tlagg v. School District, Livingston, 104 Fed. 306; City of 4 N. D. 30. Vicksburg v. Lombard, 51 Miss. 35 — People v. Tazewell County, 111; Kunz v. School District No. 22 111. 147; City of Pekin v. Eey- 28, 11 S. D. 578; Austin v. Gulf, nolds, 31 111. 529; Sherlock v. VU- etc, E. E. Co., 45 Tex. 236. lage of Winnetka, 68 111. 530. 744 PUBLIC SECUEITIES otherwise would impose an obligation on the fiscal officer of the corporation to provide funds for the payment of the securities, or their interest or accruing interest, in some other state or country at a considerable expense and risk of loss. The fact that bonds were made pay- able at the office of Weare & Allison in Sioux City, Iowa, instead of at the office of the Treasurer of the County as tlie law directed, was held in an Iowa case in the Federal Courts ^® to be an immaterial deviation, both places being within the same county. In the absence of any recital of the place of payment of securities, the treasurer's office of the corporation issuing the securi- ties is held to be the proper place,^^ although the case just cited also holds that where no limitations are placed upon a county in the grant of authority to issue refund- ing bonds, except in respect to the rate of interest and the term of the loan, the power to designate in the bonds a place of payment beyond the limits of the county is im- plied. § 358. The power to tax. The courts have upheld in many cases the validity of public securities issued in violation of the plain provi- sions of the law, in some cases those issued in excess of the constitutional or statutory limitation of indebtedness or those issued in violation of other constitutional require- ments, but as it has been said : "But that court is power- less when it reaches the question of remedies if the stat- utes of the state fail to provide a sufficient tax levy or when they especially restrict the levy to such an amount as will not be sufficient to pay the- validated bonds and interest. One cannot read the municipal bond cases in the United States Supreme Court Reports of the seven- 36— Independent School District 112 Mo'. 332, 20 S. W. 613. See, of Sioux City v. Eew, 111 Fed. 1. also, Friend v. City of Pittsburg, 37— Sbinker v. Butler County, 131 Pa. St. 305, THte PAYMENT 6F PUBLIC SECUEITIES 745 ties and eighties without being impressed with the belief that the legality of bonds is of less importance than the power of taxation behind them." It is seldom that public securities are secured by a pledge of particular property for their payment, and the question of financial competency therefore resolves it- self into a determination of the extent and character of the power existing in the pubhc corporation issuing securities to levy taxes for the payment of the principal and accruing interest.** In many states constitutional limitations are to be found either expressly limiting the tax rate or author- izing legislation to the same purpose — a reference to these win be found in the subjoined note.^'' In other states general legislation exists fixing the rate of tax levy for special purposes and providing a maxi- mum amount. There are also other limitations not found in any constitutional or statutory provisions relating to the purposes of taxation and the manner of its exercise in respect to equality and uniformity which are equally imperative. The reader is referred to general works on taxation for a full consideration of questions involved in 38 — See See. 343, et. seq., ante. Nev., Art. X, Sei. 1; N. J., Art. 39— Ala., Art. XI, See. 214, et IV, Sec. 7, Par. 12; N. Y., Art. seq.; Ark., Art. XII, Sec. 4, Art. XII, Sec. 1; N. C, Art. V, Sees. XVI, Sec. 9, and Sec. 8 as amended 1, 3, 6; N. D., Art. VI, Sec. 130; in 1906; Colo., Art. X, Sec. 11; Ohio, Art. XII, Sec. 2; Okla., Art. Fla., Art. IX, See. 1, Art. XII, X, Sees. 9, 10; Ore., Art. IX, Sec. Sees. 10, 11; Ga., Art. IV, See. 1; 1; Pa., Art. IX, Sec. 1; S. C, Art. Idaho, Art. VII, Sec. 9; 111., Art. VIII, Sec. 3, Art. X, Sec. 1; S. D., XIV, Sees. 8, 10 ; Ind., Art. X, Sec. Art. X, Sec. 2, Art. XI, Sec. . 1 ; 1; Kan., Art. XI, Sec. 1, Art. XII, Tenn., Art. 2, Sec. 28; Texas, Art. See. 5; Ky., Sec. 157, et seq.; La., VIII, Sec. 9.; Utah, Art. XIII, Arts. 232, 281; Minn., Art. IX, Sees. 3, 7; Va., Art. XIII, Sees. Sees. 1, 2, 3; Miss., Art. IV, See. 188, 189; Wash., Art. VII, Sec. 2; 112, Art. XI, See. 236; Mo.,' Art. W. Va., Art. X, Sees. 1, 7; Wis., X, Sees. 1, 11; Mont., Art. XII, Art. VIII; Wyo., Art. XV, Sees. See. 9; Nebr., Art. IX, Sec. 1; 4, 5, 6. 746 PUBLIC SECUBITIES the exercise of power of taxation.'"' The abihty of the public corporation to pay its obhgations is necessarily limited by these provisions. Legislative enactments on the question are changing almost constantly and for this reason cannot be considered in detail here as such a dis- cussion might be of little value within a few months. § 359. The implied power to levy taxes for the payment of interest or principal. On the creation of a valid obligation there arises the legal duty on the part of the public corporation creating it to levy taxes or to make other provisions for its pay- ment. The doctrine is well established by the Supreme Court of the United States as well as state courts that when authority is granted for the issue of interest bear- ing negotiable securities there is impliedly granted at the same time the power to levy taxes for the payment of both principal and interest.** 40 — Cooley on Taxation. Gray's force at the time, clearly manifests Limitations of Taxing Power and a contrary legislative intention. Public Indebtedness. East St. Louis c. Amy, 120 TJ. S. 41 — Citizens Savings & Loan 600. Assoc 'n V. Topeka, 20 Wall. 655; Scotland County Court v. United United States ex rel v. New Or- States ex rel Hill, 140 U. S. 41. The leans, 98 U. S. 381; Wolff '/. New authority to tax implied from the Orleans, 103 U. S. 358. grant of authority "to take proper Balls County Court v. United steps to protect the interest and States, 105 U. S. 733. It must be credit of the county." Ex parte considered as settled in this court. Parsons, 1 Hugh 282; Sibley v. that when authority is granted by City of Mobile, 4 Am. Law Times, the legislative branch of the gov- N. S. 226. ernment to a municipality, or a Breckinridge County v. Me- subdivision of a state, to contract Cracken et al., 61 Fed. 191, C. C. A. an extraordinary debt by the issue The purpose that this debt shall be of negotiable securities, the power paid by taxation is made clear, that to levy taxes sufficient to meet, at no general authority exists to levy maturity, the obligation to be in- an ad valorem tax for general county curred, is conclusively implied, un- purposes is not important. The less the law which confers the au- power to assess and levy a special thority, or some general law in ad valorem tax is by implication THE PAYMENT OF PUBLIC SECURITIES 747 This doctrine was well stated in an early case in the Supreme Court of the United States and one frequently cited when occasion requires,*^ where the court said in discussing the question of the authority to tax as implied from the grant of authority to incur obligations : ' ' The number and variety of works which may be authorized, having a general regard to the welfare of the city or of its people, are mere matters of legislative discretion. All of them require for their execution considerable expendi- tures of money. Their authorization without providing the means for such expenditures would be an idle and futile proceeding. Their authorization, therefore, im- plies and carries with it the power to adopt the ordinary means employed by such bodies to raise funds for their execution, unless such funds are otherwise provided. And the ordinary means in such cases is taxation. A municipality without the power of taxation would be a body without life, incapable of acting, and serving no useful purpose. "For the same reason, when authority to borrow money or incur an obligation in order to execute a public clearly inferred in See. 14, to say 496; State v. Baron (S. C), 9 S. B. nothing of the implication which re- 765; State v. City of Bristol suits from the granting of power to (Tenn.), 70 S. W. 1031; see, also, create the debt and issue the bonds. Meade v. Turner, 112 N. Y. S. 127. United States ex rel. Baer v. City But see Board of Cohi'ts of of Key West, 78 Fed. 88; United Grand County v. King, 67 Fed. 202, States V. Saunders, 124 Fed. 124, C. C. C. A. There is no connection C. A.; Eose v. MeKie, 145 Fed. 584, between the power to contract debts affirming 140 Fed. 145; Young v. and the power to levy taxes. The Board of Com'rs of Tipton County, power to contract a debt does not 137 Ind. 323, 36 N. E. 1118; Coy imply the power to levy taxes to V. Lyon City, 17 la. 1; Ellis v. pay it. Trustees of Graded School of Ox- Hightower v. City of Raleigh (N. ford (N. C), 72 S. E. 2; Vallely v. C), 65 S. E. 279. A special tax Board of Park Com'rs of city of cannot be levied without legislative Grand Forks (N. D.), Ill N. W. authority. 615; Commonwealth of Allegheny 42 — United States et al. v. New County Com'rs, 32 Pa. 218; Com- Orleans, 98 U. S. 381. monwealth v. Pittsburg, 34 Pa. St. 748 PUBLIC SECUEITIES work is conferred upon a municipal corporation, tlie pow- er to levy a tax for its payment or the discharge of the obligation accompanies it; and this, too, without any special mention that such power is granted. This arises from the fact that such corporations seldom possess — so seldom indeed, as to be exceptional — any means to dis- charge their pecuniary obligations except by taxation. ' It is therefore to be inferred, ' as observed by this court in Loan Association v. Topeka (20 Wall. 660), 'that when the legislature of a State authorizes a county or city to. contract a debt by bond, it intends to authorize it to levy such taxes as are necessary to pay the debt, unless there is in the act itself, or in some general statute, a limitation upon the power of taxation which repels such an infer- ence. ' "Indeed, it is always to be assumed, in the absence of clear restrictive provisions, that when the legislature grants to a city the power to create a debt, it intends that the city shall pay it, and that the payment shall not be left to its caprice or pleasure. When,- therefore, a power to contract a debt is conferred, it must be held that a corresponding power of providing for its payment is also conferred. The later is implied in the grant of the former, and such implication cannot be overcome except by express words excluding it. ' ' The doctrine as announced in this case has been re- peatedly followed and so emphatically stated and re- stated by both the Federal and state courts that further discussion is unnecessary. A reference to leading cases has been made in a preceding note. The decisions also take cognizance of the rule stated which operates as a modification of the power to tax, namely, the existence of constitutional or statutory limitations upon that power for, as was said by the United States Circuit Court of Appeals:*^ "The relators have been deprived of no 43 — United States ex rel. Spitzer also United States ex rel. the County V. Town of Cicero, 50 Fed. 147; see, of Macon, 99 V. S. 582; Stryker v. THE PAYMENT OF PUBLIC SECURITIES 749 right. They were bound to take notice of the limitations upon the power of the respondent to levy and collect taxes for the prompt payment of the interest and prin- cipal of the debt, and they must be held to have bought their bonds knowing just what provision had been made for their payment. They took the chance of that pro- vision being ample, and it is their misfortune that it is not. U. S. V. County of Macon, 99 U. S. 582." §360. When not implied. The cases have been noted in the preceding section which hold that when a public corporation has been em- powered to borrow money and issue bonds, the power will be implied to levy a tax for an amount adequate to discharge such obligations, although no such power ap- pears to have been express^ granted when the debt was authorized, but when the laws of a state prescribe the method of paying an indebtedness which a public cor- poration has contracted and further limit the rate of taxation for that purpose, this method of payment is ex- clusive. No court has the power to vary the mode of payment or to increase the rate of taxation, although it may be that the means provided by the legislature for cancelling the indebtedness are defective or insufficient.** Where a provision has been made to enable a public cor- poration to discharge its debts, the fact that this is in- adequate will not authorize a court to devise a different Board of Com'rs of Grand County Com'rs of Pitt County v. MacDon- (Colo.), 77 Fed. 567; United States aid, McKay & Co. (N. C), 61 S. E. ex rel. Baer v. City of Key West, 643 ; see, also, Sec. 418, et seq., post 78 Fed. 88. on right of bond holder to writ of t Brown v. City of Lakeland mandamus to compel the levy of (Fla.), 54 So. 716. When special taxes. < sources of revenue are provided the 44 — Stryker v. Grand County general power to tax will not be (Colo.), 77 Fed. 567, C. C. A; see,; implied. Coggeshall v. City of Des also City of Cleveland v. United Moines (la.), 41 N. W. 617; State States ex rel., Ill Fed. 341; see,j V. Macon County Court, 78 Mo. 29; also. Sec. 426 et seq., post. 750 PUBLIC SECTJEITIES plan or to compel a larger exercise of the power of taxa- tion. § 361. The direct power to tax. When the power is directly given in the grant of au- thority to levy taxes for the payment of the principal of and the interest on public securities it is generally con- strued as of a mandatory character and although the lan- guage may be permissive in form, it is usually held per- emptory in effect.*^ The extent to which the decisions go in sustaining this rule is illustrated by a case in the Supreme Court of the United States,*^ where an act of the State of Illinois pro- vided that boards of supervisors in such counties as may be owing debts when their current revenue under exist- ing laws was not sufficient to pay the same, "may, if deemed advisable, levy a special tax," etc. This lan- guage was declared to be peremptory in its character and not merely permissive, the court said : "The counsel for the respondent insists, with zeal and ability, that the au- thority thus given involves no duty; that it depends for its exercise wholly upon the judgment of the supervisors, and that judicial action cannot control the discretion with which the statute has clothed them. We cannot concur in this view of the subject. Great stress is laid by the learned counsel upon the language, 'may, if deemed ad- visable,? which accompanies the grant of power, and, as he contends, qualifies it to the extent assumed in his argument. ' ' The conclusion to be deduced from the authorities is, that where power is given to public officers, in the lan- guage of the act before it, or in equivalent language — whenever the public interest or individual rights call for 45 — City of Little Eoek v. United County v. United States ex rel., etc., States, 103 Fed. 418, C. C. A. 4 Wall. 435. 46 — Sup'rs of Eock Island THE PAYMENT OF PUBLIC SECUBITIES 751 its exercise — the language used, though permissive in form, is in fact peremptory. What they are empowered to do for a third person the law requires shall he done. The power is given, not for their benefit but for his. It is placed with the depositary to meet the demands of right, and to prevent a failure of justice. It is given as a remedy to those entitled to invoke its aid, and who would otherwise be remediless. In all such cases it is held that the intent of the legislature, which is the test, was not to devolve a mere discretion, but to impose 'a positive and absolute duty.' "The line which separates this class of cases from those which involve the exercise of a discretion, judicial in its nature, which courts cannot control, is too obvious to require remark. This class clearly does not fall with- in the latter category. ' ' The power to directly authorize public corporations to levy taxes for the payment of their obligations, it has been held, is not an illegal delegation of the taxing power as residing in the legislature.*^ Such a grant moreover, it has been held, is not exclusive in its character and ad- ditional powers in respect to the levy of taxes or further sources of payment may be added by subsequent legisla- tion without impairing the obligation of any contract that may be included in the direct grant of the power to tax or provide means of payment. So long as the granted sources of payment are not lessened or impaired the rights of the creditor clearly are not interfered with through provisions for additional sources of payment.*^ § 362. Contract obligation, how impaired. The Constitution of the United States in article 1, sec- tion 10, clause 1, prohibits any state from passing a 47— English v. Sup'rs, 19 Calif, v. State (Ark.), 84 S. W. 625; Carl- 172. son V. City of Helena (Mont.), 102 48 — Cape Girardeau County Court Pac. 39 ; Daughlin v. County Com 'rs, V. HiU, 118 IT. S. 68; Desha County 3 New Mex. 420. 752 PUBLIC SECTJEITIES "law impairing the obligation of contracts." This pro- vision has been repeatedly applied to attempts by state legislatures to defeat the payment of public securities. The Federal courts have held without dissent that the power to levy taxes for the payment of the interest or principal of negotiable securities, whether directly or in- directly given or to provide in other ways for their pay- ment, constitutes a contract between the bondholders and the corporation which cannot be impaired or destroyed until the contract is satisfied. The public corporation may be compelled to levy the necessary taxes for the pay- ment of either the interest or principal notwithstanding the fact that a legislative body may have assumed or at- tempted to repeal or vary the authority to levy the taxes or provide other sources of payment. In United States ex rel. Von Hoffman v. City of Quincy,*^ it was held that as the bonds had been issued and sold the power given to the corporation by the statute authorizing the issue to levy taxes for their payment was a contract within the meaning of the Constitution and could not be repealed until the contract was satisfied. This doctrine has been repeatedly re-stated in substantially the same language in all subsequent decisions, the cases holding that the con- tract rights cannot be affected by subsequent legislation or by attempts at the repeal of laws granting the power to tax and which were in force at the time of the issue of the securities.®'* 49 i Wall. 535. resvilt would leave nothing of the 50 Von Hoffman v. City of contract, but an abstract right of Quincy, 4 Wall. 535. As to the no practical value — and render the validity of a subsequently enacted protection of the constitution a statute restricting the city's power shadow and a delusion." Eiggs v. of taxation the court said, "the act Johnson County, 6 Wall. 166; Balls of 1863 is so far as it affects these County Court v. United States ex bonds a nulUty. It is the duty of rel., etc., 105 U. S. 753; United the city to impose and collect the States ex rel., etc., Jefferson County taxes in all respects as if that act Court, 1 McCrary 356; Maenhaut v. had not been passed. A different New Orleans, 3 Woods 1; Hicks THE PAYMENT OF PUBLIC SECTJEITrES 753 The rule has been extended to those cases where sub- sequent laws have effected a change in the manner of levying taxes for providing sources of payment. If the later legislation provides a materially different proce- dure not so prompt and efficacious as the former the change in the law will be regarded as an impairment of the contract obligation and unconstitutional.^' County et al. v. Cleveland, 106 Fed. 459 s Padgett et al. v. Post, 106 Fed. 600, C. C. A. Ex parte Folsom, 131 Fed. 496. Certain South Carolina townships under authority of law had stipu- lated for stock of a certain railroad company and issued bonds there- for. A constitutional amendment was subsequently passed provided that the "corporate existence of such townships be and the same is hereby destroyed and all officers of such townships are abolished and all corporate agents removed." The court held that this constitutional amendment was intended to impair the means provided by law for the payment of the bonds so issued and to that extent contravened that pro- vision of the federal constitution prohibiting a state from passing a law impairing the obligation of a contract. City of Fort Madison v. Fort Madison Water Company, 134 Fed. 214; Merchants National Bank V. Escondido Irrigation District (Calif.), 77 Pac. 937; In re opinion of the Justices (Mass.), 77 N. E. 1038; Fremont, etc., E. E. Co. v. Pennington (S. D.), 116 N. W. 75. Bassett v. City of El Paso (Tex.), 30 S. W. 893. A city ordinance pro- viding for the payment of the in- terest and principal of bonds issued pursuant thereto is a part of the contract between the city and the p. s.— 48 holder of the bonds. City of Austin V. Cahill (Tex.), 80 S. W. 542. State V. Byrne (Wash.), 73 Pac 394. If no contract rights are impaired subsequent legislation changing the manner of levying taxes will be sustained. But see New York Guaranty Company v. Board of Liquidation, 105 U. 8. 622. Construing a particular leg- islative act and holding that it did not impair the obligation of the con- tract; State ex rel. Saunders v. Kohnke (La.), 33 So. 793; State V. Braxton County Court, 60 W. Va. 39, 55 S. E. 382. In this case al- though on its face it holds contrary to the doctrine stated in the text yet the proceedings were not in- stituted by one of the bond hold- ers affected by a change in the man- ner of levying taxes. This point is directly noted in the application for writ of certiorari in the same case in the supreme court of the United States, 208 U. S. 192, which was there denied. 51— WolfE V. City of New Orleans, 103 U. S. 358; Louisiana v. Pils- bury, 105 U. S. 278. Louisiana ex rel. Nelson v. Police Jury of St. Martin's Parish, 111 U. S. 716. The rule applied to leg- islation changing the rate of tax ap- plicable to the payment of a judg- ment when based on a contract ob- 754 PUBLIC SECTJKITIES On this point, the case of Siebert v. Lewis,^^ is instruc- tive. When the bonds involved in the suit were issued, the laws of Missouri provided in substance that the bonds and interest thereon should be paid by a special tax to be levied from time to time "in the same manner as county taxes." This provision was subsequently re- pealed and another enacted providing for the levy of such taxes in a materially different manner. It was held that the change in the law impaired the creditor 's remedy and was unconstitutional, the court said : " It is in this vital point that the obligation of the contract with the relator has been impaired by the section of the law under which the respondent seeks to justify his disobedience of the mandate of the Circuit Court. Those sections provide one mode for the collection of county taxes by the direct action of the County Court ; they provide another mode for the collection of the special tax for the payment of obligations such as those held by the relator and merged in his judgment. They expressly declare that he shall not be entitled to a tax collected in the same manner as county taxes, but add limitations and conditions which, whatever may have been the legislative motive, compared with the original remedy provided by the law for the sat- isfaction of his contract, cannot fail seriously to em- barrass, hinder, and delay him in the collection of his debt, and which make an express and injurious discrimi- nation against him. ' ' In a very recent case in the Supreme Court of the United States the doctrine was again applied,^^ where it was held that creditors were unconstitutionally deprived of the right of taxation by the City of New Orleans for the payment of their claims by an act of the legislature which provided that the payment of these claims might ligation. State of Louisiana v. City 53 — State of Louisiana v. City of of New Orleans, 215 TJ. S. 170. . New Orleans, 215 TJ. S. 170. 52—122 U. S. 284. THE PAYMENT OF PUBLIC SECURITIES 755 be indefinitely postponed until such time as the city was ready and willing to make the payment. The court in its opinion reviewed its former decisions upon the point in question and also those involving the constitutionality of the acts of the legislature of the State of Louisiana in question, referring expressly to the cases of Louisiana v. New Orleans, 102 U. S. 203, and Wolff v. New Orleans, 103 U. S. 359. It quoted with especial ap- proval from the opinion of Mr. Justice Field in Louisiana V. New Orleans to the following effect : ' ' The obligation of a contract, in the constitutional sense, is the means provided by law by which it can be enforced, — by which the parties can be obliged to perform it. Whatever leg- islation lessens the efficacy of these means impairs the obligation. If it tend to postpone or retard the enforce- ment of the contract, the obligation of the latter is, to that extent, weakened. The Latin proverb. Qui cito dat bis dat, — he who gives quickly gives twice, — has its counter- part in a maxim equally sound, — Qui serius solvit, minus solvit, — he who pays too late pays less. Any authoriza- tion of the postponement of payment, or of means by which such payment may be effected, is in conflict with the constitutional inhibition. ' ' Where a special source of revenue or specific property is pledged for the payment of the principal and interest of bonds issued this cannot be diverted or lessened with- out impairing the contract obligation created by the orig- inal transaction. This rule has been applied in Massa- chusetts where in the construction of a subway, certain tolls were pledged for the payment of the principal and interest of the bonds issued to pay the cost. The Su- preme Court of Massachusetts held that there was there- by a contract created and that the tolls could not be sub- sequently diminished without impairing its obligation."* 54 — In re opinion of the Justices, rel. Saunders v. Kolinke (La.), 33 77 N. E. 1038; see, also. State ex So. 793; City of Fort Madison v. 756 PUBLIC SECUBITIES As recognizing the principle involved in the constitu- tional prohibition against the impairment of a contract obligation, several states in their constitutions have de- clared that provisions for the levy of taxes or means of payment made at the time of the incurment of a debt are irrevocable and irrepealable. The language of the New Jersey Constitution is typical,^^ where in limiting the power of the state to create debt it is stated "which law shall provide the ways and means exclusive of loans to pay and discharge the principal of such debt or liabil- ity within thirty-five years of the time of the contract- ing thereof, and shall be irrepealable until such debt or liability and the interest thereon are fully paid and dis- charged. ' ' §363. Sources of payment. Negotiable securities as issued by public corporations may have provision made for their payment in the grant of authority from a special fund or by a special tax levy upon specific property, or they may constitute a general obligation of the corporation and payable from its gen- eral revenues from whatever source derived. In the former case the general ru4e obtains that the securities are not an indebtedness coming within the meaning of the constitutional provisions in respect to the incurring of debt,"* but simply an assignment of the rights of the public corporation in and to certain sources of revenue and further do not constitute a general obligation of the maker. The holder of such a security is limited in his recovery either of principal or interest in or to the reve- nue or funds specifically designated. A complication Fort Madison Water Company, 134 12; Pa., Art. XV, Sec. 3; S. D., Ted. 214. But see Sinclair v. Art. XIII, Sees. 2, 5; Wis., Art. Brightman (Mass.), 84 N. B- 453. VIII, Sec. 6. 55— Art. IV, Sec. 6, Par. 4. See, 56 — See Sec. 78, ante, also N. Y. Const., Ait. VII, Sees. 4, THE PAYMENT OF PUBLIC SECUEITIES 757 arises in some cases where the particular tax levy or assessment may be invalid; where by the language of the security it may be payable out of the general revenues of the corporation, in the event of an insufficiency of funds derived from special sources, or again a question may arise as to the character of the obligation whether it is in fact a general one or limited so far as the pay- ment is concerned to the particular sources designated. These three phases of the question, namely, the character of the securities as a general obligation, its established character as a special charge only and those instances where the security may be both, and cases of doubt, will be considered in the order named. Securities a general charge. Where the language of the grant of authority or of the security itself is clear and unquestioned in establishing its character as a general charge or obligation upon the revenues of the public corporation issuing it, questions relating to its payment are necessarily based upon other conditions than its character as a general or a special obligation. ^'^ § 364. Payable from either special or general sources of revenue. In many instances the indebtedness may be incurred for special purposes but the security by its wording or absence of apt phrasing may constitute a charge upon both special sources of payment and the general revenues of a corporation. If negotiable securities are phrased as general obligations of the public corporation or the language denoting a special charge is ambiguous, al- though they may contain provisions for their payment from a special fund or tax upon specific property, as in the case of local improvement bonds, the authorities are quite uniform in holding that upon the exhaustion of 57 — Durrett v. Davidson (Ky.), 93 S. W. 25. m Public secueities such special fund or tax levy the general revenues of the corporation can be drawn upon to meet the obligations. The promise to pay is the primary contract, the obliga- tion on the part of the public corporation to raise a special fund or levy special taxes is a separate and in- dependent one, the failure to perform which does not or cannot affect the right of the holder to enforce the security according to its terms and against the maker.^® §365. United States v. Fort Scott. In this case,^* the city of Foi't Scott under authority of law passed an Ordinance providing for the improve- .58— United States v. Clark Comity, 96 U. S. 211; Kimball v. Grant Co., 21 Fed. 145. Vickrey v. Sioux City, 115 Fed. 437. Street improvement bonds. Board of Com'rs of Franklin County (Ohio), v. Gardiner Savings Institution, 119 Fed. 36. Street im- provement bonds. United States v. Saunders, 124 Fed. 124. District bonds of the city issued for internal improvements. City of Superior v. Marble Sav- ings Bank, 148 Fed. 7. Construc- tion of sewers. Simons v. City of Eugene, 159 Fed. 307. Lighting and power plant. Birmingham Trust & Savings Co. V. Jefferson County (Ala.), 34 So. 398. Construction and maiitenance of sanitary and water system. Slutts V. Dana (la.), 109 N. W. 794; State v. Board of Com'rs of Shawnee County, 83 Kan. 199, 110 Pac. 92; Sinclair v. Brightman (Mass.), 84 N. E. 453. State V. Traumel (Mo.), 11 S. W. 747. Necessary county expenses have a preference for payment out of the ordinary funds as against warrants issued to pay railroad aid bonds. State ex rel. City of Jophn v. Wilder (Mo.), 116 S. W. 1087. So held as to the levy of taxes for the construction of sewers. Mutual Benefit Life Ins. Co. v. Elizabeth, 42 N. J. L. 235. Horton v. Andrus, 191 N. T. 231, 83 N. E. 1120. Construction of sewers. People V. City of Buffalo (N. Y.), 89 N. E. 1109. Improvement of navigation in Buffalo Eiver. Gable v. City of Altoona, 200 Pa. 15, 49 Atl. 367. Even when a spe- cial tax is provided, the holder is not limited to such a, tax, unless it is provided the bonds shall not be paid in any other manner. Such bonds are the debts of the cor- iporation and after the application of the proceeds of a special levy the holder is entitled to have the balance paid out of the general funds of the corporation. Avery v. Job, 25 Ore. 512, 36 Pac. 293; City of Eugene v. Willamette Valley Co. (Ore.), 97 Pac. 817. 59 — United States ex rel. etc. v. City of Ft. Soott, 99 U. S. 152. THE PAYMENT OF PUBLIC SECUEITIES 759; ment of one of its streets and for the payment of the cost of work by the issue of special improvement bonds of the city. The ordinance in its terms provided that the bonds "shall be paid, principal and interest, solely from spe- cial assessments to be made npon and collected solely from the plots and pieces of ground fronting upon or ex- tending along the street the distance improved." Each of the bonds as issued recited that it was "a special im- provement bond of the city of Fort Scott, Kansas" and that the city "for value received acknowledges itself to owe and promises to pay to the holder" the amount thereof. Further, the statute under which the ordinance was framed authorized the council to pay the cost of the special improvement by issuing ' ' the bonds of the city. ' ' The bonds also contained upon their face a reference to the city ordinance under which they were issued. In a suit brought by a bona fide holder the city sought to avoid payment on the ground that the bonds stated on their face that they Were issued in pursuance of such ordinance and that therefore they were to be paid only such special assessments. The court in its opinion by Mr. Justice Harlan said: "The general reference, upon the margin of the bonds, to the ordinance under which the improvement was projected should not, in view of the general powers of the council, as declared in the statute, be held as qualifying or lessening the uncondi- tional promise of the City, set forth in the body of the bonds, itself to pay the bonds, with their prescribed in- terest, at maturity. The agreement is, that the City shall pay the interest and principal. at maturity. There is no reservation, as against the purchasers of the bonds, of a right, under any circumstances to withhold payment at maturity or to postpone payments until the City should obtain, by special assessments upon the improved prop- erty, the means with which to make payment, or to with- hold payment altogether, if by the special assessment 760 PUBLIC SDCtTEITIES should prove inadequate for payment. Experience in- forms us that the City would have met with serious, if not insuperable obstacles in its negotiations, had the bonds upon their face, in unmistakable terms, declared that the purchaser had no security beyond the assess- ments upon the particular property improved. If the corporate authorities intended such to be the contract with the holders of the bonds, the same good faith which underlies and pervades the Statute of March 2, 1871, required an explicit avowal of such purpose in the bond itself, or, in some other form, by language, brought home to the purchaser, which could neither mis- lead nor be misunderstood." The court also in construing the statute under which the ordinance was passed and in answer to the claim that the special assessment was the bond holder's sole security said : "To that interpretation of the contract we cannot yield our assent. It is true that section 17 de- clares that 'for the payment of said bonds' assessments shall be made 'upon the taxable property chargeable therewith,' that is, 'on all lots and pieces of ground to the center of the block, extending along the street or avenue, the distance improved.' But it is neither ex- pressly nor by necessary implication provided that the holder of the bonds may not be paid in some other mode, or that the city will not, under the authority derived from other sections of the statute, comply with its promise to pay the bonis, with interest, at maturity. As between the city and its taxpayers, it was certainly its duty, through the council, to provide, if practicable, payment by taxa- tion upon the property improved, rather than upon all the taxable property within its corporate limits. But the duty to make such distribution of the burden of special improvements did not lessen its obligation, in accordance with its express agreement, to pay the interest and principal of the bonds at maturity. Hitch- cock V. Galveston, 96 XJ. S. 341." THE PAYMENT OF PUBLIC SECtTBITIES 761 §366. Payment from general funds though special tax provided. In other cases the grant of authority for the issue of securities contains provisions for the levy of a specific tax "with which to meet the accruing interest and alti- mately pay the principal of the bonds. The claim has been made that the holder of the security is limited in his right to recovery to the proceeds of the tax thus levied and that if this proves insufficient for the purposes con- templated that he is without a remedy. The authorities generally hold on this proposition that although a spe- cial tax may be levied at the time the securities are issued either under special statutory provisions or otherwise that the bonds thus issued are not to be regarded as pay- able only from this special tax from the special fund thus derived but are general charges upon the revenues of the corporation and if the special tax provided proves insufficient for the purpose contemplated the authorities can be compelled by mandamus to levy additional taxes for the payment of the principal and the accruing interest provided such additional taxes do not exceed a consti- tutional or a statutory limitation on the rate of taxation, if such exists.^" One of the earliest and a leading case on this proposi- tion was decided by the Supreme Court of the United States in 1887,®^ The County of Clark subscribed for the stock of a railroad company and issued bonds in pay- ee — United States ex rel. v. Clark S. W. 593. But see Howard County County, 96 IT. S. 211; Knox County Court, 1 McCrary 218; United Court V. United States ex rel. States ex rel. Baer v. City of Key Harshman, 109 U. S. 229; United West, 78 Fed. 88; City of Cleve- States, etc., ex rel. v. Knox County, land v. United States ex rel., Ill 51 Fed. 880; Louisiana ex rel. Nel- Fed. 341; State v. Trammel (Mo.), son V. Police Jury of St. Martin's 11 S. W. 747, affirmed in 106 Mo. Parish, 111 U. S. 716; MorriU v. 510, 17 S. W. 502. Smith County (Texas), 33 S. W. 61 — United States v. Clark 899; Kennedy v. Birch (Tex.), 74 County, 96 U. S. 211. 762 ttlBLlC SEOUEITIES ment therefor pursiiaiit to a law which authorized the levy of a special tax to pay them "not to exceed one- twentieth of one per cent upon the assessed value of tax- able property for each year. ' ' This act contained no pro- vision that the funds so derived should be the only ones to be applied to the payment of the bonds and the accru- ing interest. The court held that the bonds as issued were debts of the county as fully as any other of its liabilities and that for any balance remaining due on account of the principal Or interest after the application of the proceeds of such tax thereto, the holders of them were entitled to payttient out of the general funds of the county. This decision has been followed by others in the same court and elsewhere."^ In a later case °^ the city of Fort Madison contracted with a Water Company for the erection of water works and the furnishing of water for public use. Under Mc- Clain's Code,"'' the city was authorized to pay therefor such sum or sums of money as might be agreed upon by the contracting parties and the code further provided in Section 643 that the city could levy each year and cause to be collected a special tax sufficient to pay the water rents so agreed to be paid but providing that the said tax should not exceed the sum of five mills on the dollar for any one year. The court held that the latter provision was not a limitation upon the power to contract conferred upon the city by the statutory provisions re- ferred to but merely arranged for a special fund to be applied on the rentals to be paid by the city and that the application of the fund raised from this tax if insuffi- cient to discharge the contract obligation in full did not release the city from further liability. 62— United States ex rel., etc., States v. Knox County, 51 Fed. 880. V. Macon County, 99 TJ. S. 582; Ma- ' 63— Fort Madison Water Co. v. con County Court v. United States City of Fort Madison, 110 Fed. 901. ex rel., etc., 109 U. S. 229; United 64— Iowa, Section 641. iHte PAYMiENT OP PtTfiLIC SEOUBITIES 763 §367. Securities a general charge when special tax or assessment invalid. The authorities also hold that when a special tax or assessment is provided for the payment of securities and this either because levied under a void law or invalid because of irregularities in the levy, cannot be collected, the obligations so issued then become a general charge upon the maker. The parties, so it has been held, re- peatedly contemplate only valid charges on the property. As said in one case,"" "If a municipal corporation which has the power to make a contract for street improvement contracts for them, and stipulates in the contract that the agreed price of the improvements shall be paid to the con- tractor out of funds realized or to be realized by assess- ments upon abutting property, the city is primarily and absolutely liable to pay the contract price itself, if it has no power to make such assessments, or if the assess- ments it attempts to make are void." 65 — ^Barber Asphalt Paving Co. fies it. It Was such assessments the V. City of Denver, 72 Fed. 336 C. plaintiff agreed to accept, and as- C. A., citing the following author- sumed the risk of collecting. The ities: City of Memphis v. Brown, parties were mutually mistaken re- 20 Wall. 289; Hitchcock v. Galves- speoting the authority to pay in ton, 96 tj. S. 341;Bucroft v. City of the special manner designated; but Council Bluffs, 63 la. 646, 19 N. this does not relieve the defendant W. 807; Seofield v. City of Council from its obligation to pay. Denny Bluffs, 68 la. 695, 28 N. W. 20; v. City of Spokane, 79 Fed. 719; City of Chicago v. People, 56 111. Burlington Savings Bank v. City of 327; Maher v. City of Chicago, 38 Clinton (Iowa), 106 Fed. 269; 111. 266; Miller v. City of Milwau- Board of Com'rs of Franklin kee, 14 Wis. 699; Fislier v. City of County, Ohio v. Gardiner Savings St. Louis, 44 Mo. 482; Commercial Institute, 119 Fed. 36. The uncon- National Bank v. City of Portland, stitutionality of a method provided 24 Ore. 188, 33 Pac. 532. by law for making special assess- See also Barber Asphalt Paving ments to pay road improvement Co. V. City of Hartisburg, 64 Fed. bonds does not affect their validity 283. The parties contemplated valid as obligations of the county; Gable charges on the property. The term v. City of Altoona, 200 Pa. 15, 49 "assessment" clearly implies this; Atl. 367; but see O'Brien v. Wheel- nothing short of a lawful assessment ock, 95 Fed. 883; Chicago, etc. E. — one capable of enforcement, satis- K. Co. v. Aurora, 99 111. 205. 764 PUBLIC SECUEITIES §368. Payment from special fund by special tax. Negotiable securities issued by public corporations in many cases are specially payable not out of the general revenues of the corporations but from a special fund raised through the imposition of taxes or special assess- ments upon certain property or in a certain manner and having for its purpose the reduction and ultimately the payment of such obligations. This contention is espe- cially true where the debt whether evidenced by ne- gotiable bonds or in other forms was incurred for the especial purpose of constructing works of local improve- ment, namely, bridges, highways, and, in municipal cor- porations for the grading, paving or general improvement of streets, the construction of sewers, the acquirement of public parks and other objects of a similar nature. Where the indebtedness in its terms is clearly and unquestion- ably a charge of the character noted, the holder is limited in his recovery to the revenues or funds thus provided or set apart, the obligation is not regarded as a general charge upon the revenues of the public corporation but simply an assignment of its rights in and to certain sources of payment. The securities when in their terms made payable from a fund raised in a specific manner or from taxes levied upon specific property and not so phrased as to constitute a general obligation of the public corporation issuing it are payable only from such funds or taxes and the general rule is that the liability of the public corporation issuing them is limited to the proper collection and application of the special taxes, assess- ments or funds pledged for their payment.®® 66 — United States ex rel. etc. v. bonds; following Strieb v. Cox, 111 City of Macon, 99 U. S. 582; Maen- Ind. 299, 12 N. E. 481; Washing- haut V. New Orleans, 3 Woods 1; ton County, Nebr. v. Williams, 111 United States v. Knox County, 51 Fed. 801; Mather v. City and Conn- Fed. 880 ; Braun v. Board of Com 'rs ty of San Francisco, 115 Fed. 39 ; of Benton County, 66 Fed. 476, 70 Viokrey v. Sioux City, 115 Fed. 437 ; Fed. 369 C. C. A., gravel road Jewell v. City of Superior, 135 Fed. THE PAYMENT OP PUBLIC SECUBITIBS 765 In a recent case in the United States Circuit Court of Appeals from Wisconsin, the court held that a city issu- ing municipal improvement bonds and pledging assess- ments levied on the property benefited for their payment was not a guarantor of the bonds but a mere statutory trustee for the collection of the assessments and that it was required only to exercise due diligence to collect the same according to law and enforce the lien thereof when 19; White Eiver Savings Bank v. City of Superior, 148 Fed. 1; Sehmitz v. Special School District of City of Little Eock (Ark.), 75 S. W. 438; Davis v. County of Yu- ba (Calif. )> 13 Pae. 874; City of Eedondo Beach v. Cate (Calif.), 68 Pae. 586; German Savings & Loan Society v. Eamish (Calif.), 69 Pae. 89; Meyer v. City and County of San Francisco (CaUf.), 88 Pae. 722; Street improvement bonds. Fox V. Workman (Calif.), 100 Pae. 246; Brook v. City of Oakland (Calif.), 117 Pae. 433; Hawkins v. Mitchell, 34 Fla. 40, 16 So. 311; Wilson V. Mitchell (Fla.), 30 So. 703; McGilvary v. City of Lewis- ton (Ida.), 90 Pae. 348; Blackwell V. Village of Coeur D'Alene (Ida.), 90 Pae. 353; Pettibone v. West Chi- cago Park Com'rs, 215 111. 304, 74 N. E. 387; Ewing v. Same, 215 111. 357; West Chicago Park Com'rs v. City of Chicago, 216 111. 54, 74 N. E. 771; City of Chicago v. Brede, 218 111. 528, 75 N. E. 1044; North- ern Trust Co. V. Village of Wil- mette, 220 111. 417, 77 N. E. 169; Whittemore v. People, 227 111. 453, 81 N. E. 427; Spring Creek Drain- age District v. Elgin, etc. Ey. Co., 249 111. 260, 34 N. E. 529; Walker V. Board of Com'rs of Monroe County (Ind.), 38 N. E. 1095; Kirsch v. Braun (Ind.), 53 N. B. 1082. Town of Windfall City v. First National Bank (Ind.), 87 N. E. 984. A town making street improve- ments in pursuance of Barrett Law so-called and issuing bonds therefor incurs no personal liability on the bonds. Sisson v. Board of Sup 'rs of Buena Vista County (la.), 104 N. W. 454; Silva v. City of Newport (Ky.), 104 S. W. 314; Sinclair v. Brightman (Mass.), 84 N. E. 453; State, etc. v. Hodapp (Minn.), 116 N. W. 589; Kelly v. City of Minneapo- lis, 63 Minn. 125; State ex rel. Wright V. Hortsman, 149 Mo. 290, 50 S. W. 811. State V. Eice (Mont.), 83 Pae. 874. Laws of Montana 1905, page 5, authorizing the issue of Normal School Bonds and providing for a special fund for their payment from the sale of certain lands and timber held to be a violation of Constitution, Article XI, Section 12. Baker v. Meacham, 18 Wash. 319, 51 Pae. 404; State v. Eathbun, 22 Wash. 651, 62 Pae. 85; Smith v. City of Seattle (Wash.), 65 Pae. 612. State V. Moss (Wash.), 86 Pae. 1129. A special indebtedness irreg- ularly created cannot by ratification be converted from a special to a general liability. See Abbott Mu- nicipal Corporations, Sec. 162 and authorities cited. 766 PUBLIC SECTJEITIES unpaid for the benefit of the bond holders and further that it was liable only for a failure to perform such duty or to pay over the moneys collected.®^ §369. Taxing districts. Somewhat allied to question discussed in the preced- ing section is that of the establishment of separate tax- ing districts, the purpose of which is to conduct or carry on some phase of municipal or governmental activity. It is unquestionably within the power of the state to establish local and subordinate civil subdivisions even if the same are wholly or partially co-extensive in territory. The subject of the right to tax of these separate districts where co-extensive in territory has already been con- sidered in a previous section.®^ There is practically no limit to the creation of separate districts except the public functions for which they may be formed. The frequency of the creation of these dis- tricts may affect in many cases considered from the stand- point of the investor, the financial competency of the pub- lic corporation in the ultimate payment of the securities they issue. The liquidation of their obligations is depend- ent upon the taxes they are authorized to levy, generally limited in extent and purpose. Securities issued by such subordinate taxing districts cannot be regarded as the general obligation of a city or county within the limits of which they may be included.®' 67 — Jewell v. City of Superior, indebtedness of the city within the 135 Fed. 19; see, also, Olmstead v. meaning of the statutory provisions City of Superior, 155 Fed. 172; Hnjiting the indebtedness of cities. Hayden v. Douglas County, Wis. The certificates were given in pay- 170 Fed. 24. ment of the purchase price of land 68 — See Sec. 144, ante. for park purposes and secured by 69 — Kelly v. City of Minneapo- a mortgage on the land purchased, lis, 63 Minn. 125. Certificates call- the court said: "The board has no ing for the payment of money and power to make these certificates a issued by the park board of the city lien generally upon all the parks of Minneapolis were held not an of the city, and the record shows THE PAYMENT OF PUBLIC SECURITIES 767 The purpose of their organization has been well-stated by a recent author/" "What may be the necessity for Poor Districts it is hard to see, especially when the divis- ions are co-extensive with cities or counties. Their exist- ence, especially when they are co-extensive, suggests the circumvention of such laws as those limiting the amount of debt or tax that may be levied by a municipality. The town of *X' may wish to buy a poor farm, or more probably, build a school, or own waterworks. But the town does not wish to exhibit its true debt for fear of hurting its commercial rating; or it may be prohibited from further debt incurrence by having reached its debt limit. What, then, could be more beautifully simple than to incorporate the same property and population into a Poor, School, or Water District, as the case might be? Not all fiscal sleight-of-haud has been left for private corporations. ' ' §370. Duty to levy taxes. Whether the means of payment are derived from either general or special funds or sources of revenue, the legal duty exists to levy the taxes or assessments provided for and this duty can be enforced in the proper action, a subject to be considered in the following chap- ter.''^ Neither will the vahdity of the securities issued that no attempt has been made to realized from asessments on prop- secure their payment by the orea- erty benefited on account of the ac- tion of such a lien. * * * The quisition of the land purchased for debt of the city is neither increased park purposes. In no event, nor or diminished by the transaction. under any circumstances, is the city No revenues of the city which must liable except as a trustee, to pay be raised or replaced by taxation over to the certificate holder the are pledged for the payment of the amount actually realized from the certificates. The statute expressly assessments." See, also cases cited provides tha,t the park board cannot in note— in the preceding section, create any personal or general lia- Daviess v. Des Moines, 75 Iowa 500. biUty on the part of the city by 70 — Chamberlain Principles of any certificates they may issue, ex- Bond Investment, cept to pay such amounts as may be 71 — Sisk v. Cargile (Ala.), 33 So. 768 PUBLIC SECUEITIES be impaired or destroyed by the failure of public offi- cials to levy the tas or make the assessments authorized by law for the purpose of making the payment due. The payment of bonds when their validity is established is obligatory upon the corporation and its officers and where discretionary powers are not vested in the officials either as to the time or the manner of payment if there are revenues which can be devoted to the purpose such officials cannot refuse payment. Mandamus will invari- ably lie against them in case of refusal to enforce the per- formance of non-discretionary duties imposed upon them by law. So far as the means of payment is concerned, the courts will not consent to a willful and dishonest repudiation of legal or even moral obligations and a fail- ure on the part of public officials to provide for the payment of either the principal or interest of a debt is no defense in an action brought by security holder to enforce such obligations. The corporation can 114. An act authorizing an extra liable, the only remedy of the in- levy of taxes for the payment of jured person being to compel the road bonds it to be distinguished board to perform its duty, from an act providing for "the Berky v. Board of Com'rs of assessment and collection thereof" Pueblo County (Colo.), 110 Pac. and therefore does not contravene 197^ construing certain legislation Const., Sec. 104, Subd. 15, prohibit- relative to the time of the levy and ing the legislature from passing collection of taxes for the payment special laws regulating the assess- pf county railroad aid bonds, meut or collection of taxes. Mather Basnett v. Jacksonville, 19 Fla. 664. V. City and County of San Fran- Buck v. People, 78 111. 560, con- cisco, 115 Fed. 37. struing order of Board of Sup'rs Union Trust Co. of San Fran- for levy of taxes. Cisco V. State (Calif.), 99 Pac. People v. Chicago, etc. E. E. Co. 183. The failure of the board of (m.)^ 93 n. E. 410. Under Const, public works to levy and collect Art. IX, Sec. 12, requiring pro- assessments provided for the pay- vision to be made for a direct annual ment of street improvement bonds tax for the payment of bonds, the as required by the act authorizing voters after authorizing the issue their issue is the default of officers have no further authority in respect in administering governmental to the levy of taxes. Murdock v. functions for which the state is not Aiken, 29 Barb. (IST. Y.) 59; Mc- THE PAYMENT OF PITBLIC SECXJBITIES 769 not be released from its liability by failure to provide a means of payment when such is within its power.'^ § 371. Diversion of funds. In the preceding sections, attention has been called to public securities, provision for the payment of which has been made by special tax levies or the creation of special funds or sources of revenue. The courts invariably hold that the legality of the securities cannot be affected and neither can creditors be deprived of their sources of pay- ment by the diversion of money from such funds or the failure to levy and collect the taxes which the corpor- ation may be legally authorized to do in this behalf.''^ Clesa V. Meekins, 117 N. C. 34, 23 S. E. 99; City of Austin v. CahiU (Tex.), 88 S. W. 542. 72 — See Sec. 418, et seq., post; Denny v. City of Spokane, 79 Fed. 719 C. C. A. ; Shepard v. Tulare Irri- gation District, 94 Fed. 1; Farson v. Sioux City, 106 Fed. 278; Mather v. City and County of San Francisco, 115 Fed. 37; Meyer v. City and County of San Francisco (Calif.), 88 Pac. 722; Gray v. State, 72 Ind. 567; liittle Biver Twp. v. Eeno County Com'rs, 65 Kan. 9, 68 Pac. 1105; Elliott County v. Kitchen, 4 Bush (Ky.), 289; McMullen v. Person, 102 Mich. 608; Hammond v. Place, 116 Mich. 628; Town of Pontotoc V. Fulton, 79 Miss. 511, 31 So. 102; Kemp V. Hazlehurst, 80 Miss. 443, 39 So. 908; Marsh V. Town of Lit- tle Valley, 64 N. Y. 112; Territory V. Hopkins, 9 Okla. 133; Dime De- posit & Discount Bank v. City of Scranton, 208 Pa. 383, 57 Atl. 770; City of Memphis v. Memphis Sav- ings Bank, 99 Tenn. 104, 42 S. W. Thornburgh v. City of Tyler, 16 Tex. Civ. App. 439, 43 S. W. 1054; P. S.— 49 City of Tyler v. L. L. Jester & Co. (Tex.), 74 S. W. 359, affirmed 78 S. W. 1058; City of Austin v. CahiU (Tex.), 88 S. W. 542; but see Jewell v. City of Superior, 135 Fed. 19. 73 — Fazende v. City of Houston, 34 Fed. 94. A municipal corpora- tion under an ordinance authorized by its charter, issued bonds to pro- vide a fund for building a market house. By their terms the revenue of the market was to be devoted to the payment of the interest on the bonds and to the formation of a sinking fund to redeem them. "As the ordinance was authorized by the charter and therefore valid, it constituted a contract between the holders of the bonds and the city and subsequent ordinances mak- ing other disposition of the market revenue were void and so much of a charter granted the city after the issue of the bonds as authorized the city council to divert any of such revenue from the special fund created in the ordinance under which the bonds were issued was in- 770 PUBLIC SECURITIES Security holders who are entitled to have the amount owing them paid from revenues collected in this way usually have the right to compel an accounting of the funds in the case of a wrongful diversion and to main- tain proceedings against the city or public officials where through such action they have suffered an injury. Their -rights cannot be defeated by the illegal acts of public officials appropriating and using these funds for other purposes.'^* operative, as impairing the obliga- tion of a contract in violation of the constitution." White v. City of Decatur (Ala.), 23 So. 9999; City of Anniston v. Hurt (Ala.), 37 So. 220 ; City of Ensley v. Simpson ' (Ala.), 52 So. 61; Lee County ». Robertson, 66 Ark. 82, 48 S. W. 901. Keech v.' Joplin (Calif.), 106 Pae. 222. But the entire tax col- lection cannot be arbitrarily trans- ferred by a treasurer to the bond fund where the amount collected in- cludes a certain rate of tax for the bond, fund and an additional rate for the general fund. Butts County v. Jackson Banking Co. (Ga.), 71 S. E. 1065. A sur- plus may be applied to any legiti- mate county liability; State v. Board of Liquidation (La.), 4 So. 122; Bobo v. Board of Levee Com'rs (Miss.), 46 So. 819. In re Village of Kenmore, 110 N. Y. S. 1008. A village can be re- strained from using a local assess- ment fund for any purpose except for the retirement of bonds. Ulster County V. State, 177 N. Y. 189, 69 N. E. 370. Brockenborough v. Board of Wa- ter Com 'rs of City of Charlotte (N. C), 46 S. E. 28. Facts examined and held not to constitute a diver- sion of funds. Southern Ey. Co. v. Board of Com'rs of Mecklenburg County (N. C), 61 S. E. 690; Freeport v. Marks, 59 Pa. St. 253; Bailey v. City of Philadelphia, 184 Pa. St. 594, 39 Atl. 494, 39 L. E. A. 837. Facts examined and held not sufficient to hold that a special fund had been created. WolfiE Chemical Co. v. City of Phil- adelphia (Pa.), 66 Atl. 344. State V. Cardozo, 8 S. C. 71. When the state borrows money on bonds issued by it for that purpose, and pledges a, certain fund for the payment of the interest to accrue thereon, such pledge is a part of the contract with the holders of the bonds, and the state has no right, under Article I, Sec. 10 of the Con- stitution of the United States to impair the obligation of the con- tract by diverting the fund to other purposes. City of Houston v. Vor- ■hees (Tex.), 8 S. W. 109; Morrill V. Smith Co. (Tex.), 36 S. W. 56; City of Austin v. Cahill (Tex.), 88 S. W. 536. 74 — City of New Orleans v. Fiaher, 91 Fed. 574 C. C. A. Vickrey v. City of Sioux City et al., 104 Fed. 164 C. C. A. This was a case involving the collection of special aesessments for street improvements where the bill al- THE PAYMENT OF PUBLIC SECURITIES 771 The courts hold further and to the effect that if through a willful or otherwise diversion of special funds to other uses there has been created a deficiency in them for the purpose for which created, this deficit can be col- lected by the security holder from the corporation to be paid by it from its general funds or revenues. leged mis-applieation of funds raised for the special purpose of paying street improvement bonds. The court held "that the bill re- sented a case properly cognizable by the court, that the city was charged with the duty of levying and collecting the assessments and making proper payment thereof to bond holders which duty amounted to a trust and that the bond hold- ers had a right to call the city to account for the manner in which that trust had been performed." Farson v. Sioux City, 106 Fed. 278; Village of Kent v. United States, 113 Fed. 232; Olmstead v. City of Superior, 155 Fed. 172. Hayden v. Douglas County (Wis.), 170 Fed. 24 C. C. A. The court here held that a holder of im- provement bonds was entitled to maintain a suit in equity against a county to require it to account for special assessments levied to pay bonds and collected by its treasurer on tKe delinquent tax list. Bates v. Post, 74 Calif. 224, 15 Pac. 732. Barton v. Minnie Creek Drainage District, 112 111. App. 640. Where moneys have been expended for other purposes the remedy of a bond holder is upon the bonds of the officials who have wrongfully appropriated moneys properly ap- plicable to the payment of drainage bonds to other purposes. People v. Hummel (111.), 74 111. 78. City of Atchison v. Friend (Kan.), 96 Pac. 348. Where a city purchased a lot which had thereto- fore been assessed for street im- provement and against which spe- cial assessment bonds had been is- sued it became liable to the bond- holders for the amount which would otherwise have been a Hen upon the lots. Worth V. City of Paducah (Ky.), 76 S. W. 143. Where moneys have been raised to pay bonds by the collection of taxes it does not constitute a trust fund for the pay- ment of the bonds, suit on which is barred by a statute of limitations. Owensboro Water Works v. City of Owensboro (Ky.), 96 S. W. 867; Hope V. Board of Liquidation (La.), 9 So. 754. Town of Walton v. Adair, 89 N. Y. S. 230. A town entitled to cer- tain special funds available for the payment of bonds is entitled to recover the same from the county treasurer unless it had received the profit thereof. See, also, People v. Slaytou (Ky.), 108 S. *W. 903. State ex rel. v. Board of Liquida- tion, etc. (La.), 51 So. 283. Facts considered and held not to con- stitute a depletion of special fund. 772 PUBLIC SECUEITIES §372. Moneys appropriated for current expenses not available. In some cases, however, the rule has been applied that where a special tax levy for the payment of interest and the establishment of a sinking fund is limited and the amount of the general tax levy is also limited that the holder of bonds cannot insist upon the application of more than the amount provided by law to the payment of his interest although this be insufficient, from the gen- eral funds of the city raised by the levy of the maximum rate for all purposes allowed. The court in one case,^" held that it could not control the general expenditures of a city so as to establish a surplus fund in excess of the amount allowed by law for the payment of interest and the establishment of a sink- ing fund for the payment of certain bonds outstanding. The court in its opinion, said : ' ' But the question, what expenditures are proper and necessary for the munic- ipal administration is n6t judicial. It is confided by law to the discretion of the municipal authorities. No court has the right to control that discretion much less to usurp and supersede it." There are other cases, however, holding to the contrary under certain circumstances on this proposition and these will be noted in a subsequent section on the subject of mandamus when issued to en- force tax levy. § 373. Payment of securities by sinking fund provisions. The charter of a particular municipality, the statutes or constitution of the state may provide that before a public corporation can incur an indebtness either evi- denced by an issue of negotiable securities or otherwise, 76 — East St. Louis et al. v. United States ex rel. Zebley, 110 V. 8. 321. THE PAYMENT OF PUBLIC SECUEITIES 773 it must provide for the ultimate payment of the principal or a portion of it through the creation of a sinking fund, so-termed. This fund to be raised by the imposition of a certain annual tax either general in its character or levied upon specific property the accumulations of which it is calculated will at the time the indebtedness falls due be sufficient to either partially or wholly liquidate the debt. In theory a sinking- fund is based upon sound economic principles and represents an admirable finan- cial policy. As a matter of fact, however, sinking funds are often used for purposes other than that intended and legal requirements for the same should be so worded as to prevent a use of the funds for any purpose other than the payment of the debt it was intended to accomplish. The safer method to accomplish the purpose of sinking fund requirements would be the issue of serial bonds, the payment of a certain proportion of which would be obli- gatory from year to year. It has been said that "if a sinking fund is invested in the debtor's own bonds or obligations, its existence is not of the least advantage to the creditor. It gives him no additional security, legal, equitable or honorary. It is a worthless device so far as he is concerned,'''^ and the same author also states that "the creditors legal rights are very little if at all streng- thened by a sinking fund invested in outside securities so long as they remain under the control of the debtor him- self or within reach of his general creditors." So far as the investment of the sinking fund is concerned, fol- lowing the same idea, a recent author,''^ has said: "If 77 — Browne. The Sinking Fund. E. T. Lewis Co. v. City of Win- 78 — Chamberlain on Principles cheater, 140 Ky. 244, 130 S. W. of Bond Investment. 1094. Any deficiency arising in a See also McGinnis v. Board of sinking fund on account of losses Trustees, 108 S. W. 289. Trustees or otherwise will not affect the val- are authorized to provide out of idity of bonds. the sinking funds for the redemp- City of Austin v. CahiU (Tex.), tion of bonds instead of investing 88 S. W. 542. Legal title to a sink- it at interest as it accumulates. ing fund is in the city raising the 774 PUBLIC SECXJKITIES the object of a sinking fund is to lay aside money year by year toward tbe payment of a debt at some .future time, the money in the sinking fund is more safely dis- posed for accumulation until that time and the creditors are best secured by disbursing it in the purchase of vari- ous strong securities which to the least possible extent are subject to the control of the debtor corporation." The same author is also of the opinion that a public cor- poration should not be permitted to purchase its own securities with proceeds of a sinking fund tax. "For a municipality to sell its bonds to the sinking fund is the same thing as for the municipality to borrow money from the sinking fund." In Minnesota it was held in a com- paratively recent case that a city could not sell its bonds to a board of sinking fund c(5mmissioners although no statute prohibited it. The court in its opinion saying that "such a purpose is so radically inconsistent with a sinking fund and so destructive of the purposes to be con- served by its maintenance that it must be held that the prohibition is implied." ^^ § 374. Provisions for payment at time debt was incurred. This subject has already been fully considered in pre- vious sections and references there made to constitu- tional provisions found in various states which provide that before a debt can be incurred or securities issued the public corporations issuing them must make provision for the payment of the accruing interest and the ultimate payment of the principal or a portion of it by the levy same which has the right to manage tion of a proposed issue of bonds and invest it and defend for the to be used as a sinking fund for bond holders against any attempted the retirement of the whole is in- depletion of the fund. valid. Murphy v. City of Spokane 79 — Kelly v. City of Mirmeapolia, (Wash.), 117 Pac. 478. That por- 63 Minn. 125, 135, 65 N. W. 115. THE PAYMENT OF PUBLIC SECURITIES 775 of a tax or other means sufficient in amount to accom- plish this purpose.*" §375, Constitutional provisions when self -executing. The difference between a constitutional provision which is self-executing and one which requires legisla- tive action in order that its provisions may be effective is well understood. The question of whether constitu- 80 — See Sec. 120, et seq., ante. Com'rs of Sinking Fund of Louis- ville V. Zimmerman (Ky.), 41 S. W. 428. The eonstitutional provision, Sec. 159, will apply to refunding bonds issued under legislative grant of authority. 'Bryan v. Owensboro (Ky,), 68 S. W. 858. The council of a city of the third class has statutory au- thority to create the sinking fund required by Const., Sec. 159. E. T. Lewis Oo. v. City of Win- chester, 140 Ky. 244, 130 S. W. 1094. The sinking fund required by Const., Sec. 159, provided for the benefit of the bond holders. Walters v. Dorian (Ky.), 129 S. W. 92. Passing upon the proper method of handling and transfer- ring sinking funds. Muskegon Traction & Light Com- pany V. City of Muskegon (Mich.), 132 N. W. 1060. Action of the city council of Muskegon under its char- ter in creating a sinking fund' in excess of its requirements held not irregular. City of Eome v. Whitestown Wa- ter Works Co. (N. T.), 80 N. E. 1106, New York Const., 'Art. VIII, Sec. 10; does not apply where the ten per cent, limit of indebtedness fixed by the constitution has not been reached. McDermott v. Sinking Fund Com'rs of Jersey City (N. J.), 55 Atl. 37. A sinking fund of Jersey City is not pledged to the redemp- tion of any specific bonds. City of Cincinnati v. Ferguson, 11 Ohio S. & C. P. Decs. 101. An issue of bonds for terminal facili- ties for a railroad owned by a city with provisions for sinking fund should be submitted to the people for approval. State v. Millar (Okla.), 96 Pac. 747; Grennan v. Carson (Okla.), 107 Pac. 925. Galbreath v. Board of Alderman of Knoxville (Tenn.), 59 S. W. 178. Denial in an answer of sinking fund for a particular bond does not estop the city to deny the issuance of that particular bond. Conklin v. City of El Paso (Tex.), 44 S. W. 879. The provi- sions of the charter of the city of El Paso relative to the establish- ment of sinking fund and Texas constitutional provision to the same effect construed together. City of Austin v. McCall (Tex.), 68 S. W. 791, reversing 67 S. W. 191. A contract by which the city agrees to pay a certain sum for a water plant creates a debt, pro- vision for the payment of which must be made by the establishment of a sinking fund as required by Texas Const., Art. XI, Sec. 5. 776 PUBLIC SECUBIMES tional provisions relative to the levy of taxes for the pay- ment of the interest on public securities and the creation of a sinking fund looking to the ultimate payment of the principal are self -executing has been raised in a number of cases. The tendency of the Federal decisions which is in conformity with their avowed policy of sustaining the validity of public securities is to hold constitutional provisions of the nature suggested self-executing. On this point a case in the Supreme Court of the United States construing a provision of the Illinois Constitution well illustrates the doctrine followed by the Federal courts.®^ A judgment had been recovered against the City of East St. Louis on certain of its outstanding bonds and the judgment creditors prayed for a writ of mandamus requiring the levy and the collection of a tax to pay the same. The question involved was the amount of tax the city council was authorized to levy for the payment of the judgment. The court held that the constitutional pro- vision gave the city authority to levy and collect a suffi- cient tax to pay the accruing interest and the principal within twenty years. The constitutional provision upon which this decision was passed was to the following effect, that "any county, city," etc., incurring indebtness must at the time of so doing "provide for the collection of a direct annual tax sufficient to pay the interest on such debt as it falls due and also to pay and discharge the principal thereof within twenty years from the time of contracting the same. ' ' The court said in support of its decision above noted: "In this case the Constitution limited the power of the legislature of Illinois in respect to the grant of authority to municipal corporations to incur debts, but it declared in express terms that, if a debt was incurred under such authority, the corporation should provide for its payment by the levy and collection 81— East St. Louis v. Amy, 120 U. S. 600. 9?SI! PAYMENT OF PUBLIC SECUBITIES 777 of a direct annual tax sufficient for that purpose. Under this provision of the Constitution, no municipal corpora- tion could incur a debt without legislative authority, express or implied, but the grant of authority carried ■with it the constitutional obligation to levy and collect a sufficient annual tax to pay the interest as it matured and the principal within twenty years. This provision for the tax was written by the Constitution into every law passed thereafter by the legislature allowing a debt to be incurred ; and, in our opinion, it took the place in exist- ing laws of all provisions for taxation to pay debts there- after incurred under old authority which were inconsis- tent with its requirements. It was made by the people a part of the fundamental law of the State, that every debt incurred thereafter by a municipal corporation, under the authority of law, should carry with it the con- stitutional obligation of the municipality to levy and col- lect all the necessary taxes required for its payment." This rule has also been followed in other cases.*^ These provisions are sometimes held mandatory in their character so far as the levying of the sinking fund tax depends upon the independent action of subordinate officials from time to time. A failure to follow the plain provisions of the law in this respect it is held will render the securities invalid.^^ § 376-. Securities when not held void. The better authorities hold contrary to the rule just stated and announce the doctrine that the fact of a fail- 82— People v. Chicago, B. & Q. rell, 60 Fed. 193, C. C. A,, citing R. E. Co. (111.), 93 N. E. 410; Ap- and following Texas decisions in- peal of City of Wilkesbarre (Pa.), eluding Citizens Bank v. City of 9 Atl. 308. Terrell, 78 Texas 450, 14 S. W. 83— Quaker City National Bank 1003; Biddle v. City of Terrell, 82 V. Nolan County, 59 Fed. 660, af- Tex. 335, 18 S. W. 690; Nolan firmed 66 Fed. 8«3, C. C. A.; Knox County v. State, 83 Tex. 182, 17 V. Baton Rouge, 36 La. 427. S. W. 823. See also Millsaps v. City of Ter- 778 PUBLIC SECURITIES ure to follow a constitutional or statutory provision whicli may require the levy of a tax to pay .the accruing interest and provide a sinking fund for the ultimate retirement of the securities will not necessarily affect the validity of the bonds or of the securities issued. In a recent case in the Supreme Court of the United States,^* the court in sustaining the validity of bonds held that in determining what laws of a state would be regarded as rules of decision that it would look not only to its con- stitution and statutes but at the decisions of its highest court giving construction to them and that if there was any inconsistency in the opinion of such highest court the United States Supreme Court would follow the latest settled adjudications in preference to earlier ones unless such earlier decisions sustained the validity of bonds while later ones declared them invalid in which case the earlier decisions would be followed. The Supreme Court announced its readiness to follow that line of decisions sustaining the validity of the bonds irrespective of the time rendered. The court also held that it would follow the law of Texas as settled by the decisions of its Supreme Court that the provisions of the State Consti- tution, Article XI Section 7, to the effect that "no debt for any purpose shall ever be incurred in any manner by any city or county unless provision is made at the time of creating the same for levying and collecting a sufficient tax to pay the interest thereon and to provide at least two per cent as a sinking fund," are complied with as to bonds issued by a county under the authority of an act of the legislature which by its provisions also imposed the duty on the county authorities of levying and collecting an annual tax sufficient to pay the in- terest on such bonds and to create a sinking fund of 84 — ^Wade v. Travis County, 174 and referring to the Texas cases IT. S. 499, reversing 72 Fed. 985 involving the application of the and 81 Fed. 742, C. C. A. Citing constitutional provision referred to. THE PAYMENT OP PUBLIC SECXIEITIES 779 not less than four per cent of the full sum for which bonds have been issued and further that the actual levy by the county of the required tax at the time a con- tract for a bridge to be paid for in bonds is en- tered into is not essential to their validity. The de- cision held quoting with approval from a Texas case,^° "we understand that the provision required by the Constitution means such fixed and definite arrange- ments for the levying and collecting of such tax as will become a legal right in favor of the bond hold- ers of the bonds issued thereon or in favor of any person to whom such debt might be payable." In a case from the Eighth Circuit,*" where the claim was made that the bonds were void because the maker failed to comply with that section of the South Dakota Consti- tution which states that provision must be made for the collection of an annual tax sufficient to pay the interest and also the principal of the debt at the time that it is incurred, the court conceded without deciding that this provision was both self-executory and mandatory, and held the bonds valid saying in the opinion on the point involved: "An ordinance or resolution of this board passed at or before the issuance of the bonds pro- viding for the collection of such an annual tax until the bonds and coupons are paid would have complied with the provision of the Constitution. If this was not passed it was not for lack of power in the board but from a fail- ure on its part to exercise the power with which it was vested in the manner provided by the Constitution." This case illustrates and states well the principle that securities issued under constitutional or statutory pro- visions to the effect noted and legal in other respects can- 85 — Mitchell County v. City Na- Montpelier v. Board of Education tional Bank of Paducah, 91 Tex. of the City of Huron (S. D.), 62 361. Fed. 778, C. C. A. 86 — National Life Ins. Co. of 780 PUBLIC SECTJEITIES not be rendered void by the neglect of the public duty devolving upon the officials of public corporations. §377. Duty to levy sinking fund taxes. The duty of levying sinking funds taxes or a general tax for the payment of bonds may be compelled by the proper writ directed against the proper officials,^'' though this right on the part of a bond holder except in the case of constitutional provisions for sinking funds will be restricted by statutory limitations on the power to 87— County of Galena v. Amy, 5 Wall. 705. Haumeister v. Porter (Calif.), 16 Pac. 187, ■following Bates v. Por- ter, 15 Pac. 732, construing Cali- fornia Act of 1858, Sec. 35, which provides that the city and county of Sacramento shall set apart fifty- five per cent of the revenue derived from water rents to an interest and sinking fund which shall be applied to the payment of the annual in- terest and the final redemption of bonds issued — determining espe- cially the meaning of the word ' ' revenue ' ' as used in that act. Wilkins v. City of Waynesboro (Ga.), 42 S. E. 767, Georgia Const., Art. VII, Sec. 7, Par. 2, controls provisions for sinking fund. A special act in contravention of this is void. Wooley V. City of Louisville (Ky.), 71 S. W. 893. Sinking fund commissioners should certify to tax levying body any insufficiency in sinking funds, arid the validity of taxes levied pursuant to such modi- fication is not affected by the fact that they 'were made payable to the sinking fund commission. Mor- gan V. Board of Councilmen of City of Frankfort (Ky.), 121 S. W. 1033. E. T. Lewis Co. v. City of Win- chester, 140 Ky. 244, 130 S. W. 1094. The amount of the tax re- quired by Const., Sec. 159, should take into consideration the accu- mulations on the sinking fund by reason of interest earned, it being assumed that the fund will be in- vested in some safe way — so as to produce a return in order to lessen the burden of the tax payers. State ex rel. City of Carthage v. Gordon (Mo.), 116 S. W. 1099. A tax levy providing for the payment of semi-annual interest on water works bonds and a semi-annual por- tion of the sinking fund does not invalidate the bonds since the levy required under the sinking fund provisions of the Const., Art. X, Sec. 12a, may be made at any time. Hightower v. City of Ealeigh (N. C), 65 S. E. 279. Legislative authority is necessary for the levy of a special tax to create a sinking fund for municipal indebtedness. Appeal of City of WUkesbatre (Pa.), 9 Atl. 308. Barr v. City of Philadelphia, 8 Pa. Dist. Eeps. 19. A city incurring THE PAYMENT OF PUBLIC SECUBITIES 781 tax.*^ A provision for the establishment and mainte- nance of a sinking fund has been held to constitute a con- tract between the bond holder as a creditor and the pub- lic corporation, and one which cannot be impaired or destroyed by subsequent legislation or municipal action. It is a contract within the meaning of that term as used in the Federal constitution.^* § 378. What constitutes a sufficient provision. The question of the sufficiency of legislative or mu- nicipal action in respect to the creation of the sinking fund where such is required by a constitutional provision has been raised in a number of cases. The case of Wade v. Travis County, cited above, con- siders and discusses this question. The Supreme Court of Texas held in an early case,*" that the language and purpose of the constitution were satisfied by an order for the annual collection by taxation of a "sufficient sum to pay the interest thereon and create a sinking fund," etc., although it did not fix the rate or per cent of taxation for each year by which the sum was to be collected but left indebtedness is to determine what 89 — Von Hoffman v. City of tax shall be sufficient to satisfy Quiney, 4 Wall. 535; State v. Car- interest and sinking fund obliga- dozo, 8 S. C. 71; see, also, author- tions. ities cited under Sec. 362, ante. Chicago & N. W. Ey. Co. v. Faulk 90— Bassett v. City of El Paso, County (S. D.), 90 N. W. 149. A 88 Tex. 168, 30 S. W. 893; see, also, sinking fund tax authorized by laws 28 S. W. 554; see, also. Wade v. of 1897, Chap. 28, Sec. 71, does Travis County, 174 U. S. 499, 43 not apply to ordinary county war- L. Ed. 1060, reversing 72 Fed. 985; rants. Rowland v. San Joaquin County, J'remont, etc. E. E. Co. v. Pen- ' 109 Calif. 152, 41 Pac. 864. nington County (S. D.), 116 N. W. Boise City v. Union Bank & Trust 75. County tax rate fixed by Laws Company, 7 Ida. 342, 63 Pac. 107. of 1899, Chap. 41, includes sinking It was here held a sufficient corn- fund levies. pliance with a constitutional pro- 88 — See Sec-. 418, et seq., post, vision where the levy of the tax on right of bondholder to compel by was made to commence ten years writ of mandamus the levy of after the issue of the bonds, taxes. 782 PUBLIC SBCUEITIES the fixing of such rate for each successive yea,r to the commissioners ' court or to the city council. The conten- tion was made in this case that the ordinance which pro- vided for the issue of water works bonds was void be- cause it did not levy the tax but delegated to the assess- ing and collecting officers the power to make such levy from year to year. The contention was not sustained but the court held as above stated.''^ This case also held that the city ordinance which au- thorized the issue of bonds payable in thirty years and which provided for the collection by taxation annually of a sinking fund equal to one-thirtieth of the principal and the amount of the annual interest sufficiently complied with the requirements of the Texas Constitution, Article Xi, Sections 5 and 7. In a later case in the same court,^^ it was held that a Texas law of 1887 which provided after authorizing the issuance of bonds that the commissioners court should levy an annual ad valorem tax "not to exceed fifteen cents on the hundred dollars valuation" sufficient to pay the interest on and create a sinking fund for the redemp- tion of said bonds ' ' and that the sinking fund herein pro- vided for shall be not less than four per cent on the full sum for which the bonds are issued ' ' sufficiently complied with the provision of the Texas Constitution. That this law had been enacted for the purpose of putting into force that provision and that it was the duty of the courts 91 — See, alsOj Pettibone v. West tutional provision, under General Chicago Park Com'rs, 215 111. 304, Laws of 1881, p. 5, which authorizes 74 N. E. 387; State ex rel. Colum- bonds for the erection of court bia V. Allen, 183 Mo. 283, 82 S. W. houses and which provides in sec- 103. tion 2 that "the commissioners' 92 — Mitchell County v. City Na- court of the county shall levy an tional Bank of Paducah, 91 Tex. annual ad valorem tax » * * 361, 43 S. W. 880, reversing 39 S. and create a sinking fund for the W. 628. The actual rate considered redemption of such bonds not to and decided which should be levied, exceed one-fourth of one per cent in order to comply vrith the consti- for one year." THE PAYMENT OF PUBLIC SBCTJEITIES 783 to SO construe it as to make it valid and give it effect. The court came to the conclusion that this law would make such provision for the levying and collecting of a tax as was required by the constitution and that in case the court had refused to levy the tax after the bonds were issued and sold, the bond holders would have been en- titled to a mandamus to compel the commissioner's court to levy such tax as a purely ministerial duty. § 379. Debts to which sinking fund provisions apply. Sinking fund provisions whether statutory or consti- tutional do not as a rule apply to debts incurred for the payment of ordinary expenses and which are to be liquidated from current revenues.®^ They ordinarily ap- ply to debts imposed by contract obligations outside of the current expenses for the year and especially to obli- gations represented by long term bonds, although in some cases even as to the latter the provisions do not apply to all classes of public corporations or those not having an indebtedness in excess of a specified amount.^* § 380. The rule as to the payment of void bonds. When public securities are held void either for want of authority or some other reasons, the corporation is- suing them may be released from the obligation to pay according to their terms. This condition, however, does not relieve it from its obligation to pay the debt which may arise through the transaction. The authorities are substantially unanimous in holding that where bonds have been issued, sold and the proceeds arising from such sales appropriated by the public corporation to its 93— City of Tyler v. L. L. Jester 8; Austin v. McCall, 95 Tex. 565, & Co. (Tex.), 74 S. W. 359, 78 S. 68 S. W. 791; Sweet v. City of W. 1058. Syracuse, 129 N. Y. 316, 27 N. E. 94— McNeal v. City of Waco, 89 1081, 29 N. E. 289; CahOl v. Ho- Tex. 83; Howard v. Smith, 91 Tex. gan, 180 N. Y. 304, 73 N. E. 39. 784 PUBLIC SBCUEITIES proper purposes, there exists a debt or obligation due and owing from the corporation to the party advancing the moneys (by paying for the void bonds)' which can be enforced generally in an action for money had and received.^^ This principle is based upon a fundamental rule or principle of equity and right dealing. The subject has already been considered at length in previous sections upon the implied power of the state to compel the pay- ment of a debt technically illegal by the corporation.®® The doctrine was clearly stated by Judge Field when on the Supreme bench of the state of California,''^ in the following language : ' ' The doctrine of implied municipal liability applies to cases where money or other property of a party is received under such circumstances that the general law, independent of express contract, imposes the 95 — Marsh v. Fulton County, 10 Wall. 676; Draper v. Springport, 104 17. S. 501, 26 L. Ed. 812 ; Chap- man V. Douglas County, 107 TJ. S. 348, 27 L. Ed. 378; Wood v. Louis- iana, 5 Dill. 122; Bangor Savings Bank v. City of Stillwater, 49 Fed. 721; Pacific Imp. Co. v. City of Clarksdale, C. C. A. 74 Fed. 528; Pernald v. Town of Oilman, 123 Fed. 797; Chelsea Savings Bank v. City of Ironwood, 130 Fed. 410, C. C. A.; Incorporated Town of Gilman v. Fernald, 141 Fed. 941, C. C. A.; AUen v. Intendant of La- fayette, 89 Ala. 641, 8 So. 30, 9 L. E. A. 497; San Francisco Gas Com- pany V. City of San Francisco, 9 Calif. 453; Jefferson County v. Hawkins, 23 Fla. 223, 2 So. 362; Butts County v. Jackson Banking Co. (Ga.), 60 S. E. 149; White Eiver School Twp. of Johnson Coun- ty V. Caxton County (Ind.), 72 N. E. 185; Eeynolds v. Lyon Coun- ty (la.), 96 N. W. 1096. Martin Strelau Co. v. City of Du- buque (la.), 127 N. W. 1013. Ordi- nary indebtedness. City of Bardwell v. Southern En- gineering & Boiler Works (Ky.), 113 S. W. 97. The vendor of an engine sold the city has a lien on the same for deferred payments and can enforce it. People ex rel. v. Porter & Calvin Twps., 18 Mich. 101; State v. Dickerman (Mont.), 40 Pac. 698; City of Plattsmouth V. Fitzgerald, 10 Nebr. 401; Bor- ough of Eainsburgh v. Eyan, 127 Pa. St. 74, 17 Atl. 678, 4 L. B. A. 336; Livingston t. School District No. 7 (S. D.), 76 N. W. 201; Paul V. City of Kenosha, 22 Wis. 666; see, also, 60, ante. 96 — See Sec. 60, ante. 97 — Argenti v. City of San Fran- cisco, 16 Calif. 25; San Francisco Gas Company v. City of San Fran- cisco, 9 Calif. 453, 470. J THE PAYMENT OF PUBLIC SECUEITIES 785 obligation upon the city to do justice with respect to the same. If the city obtain money of another by mis- take, or without authority of law, it is her duty to re- fund it — not from any contract entered into by her on the subject, but from the general obligation to do justice which binds all persons, whether natural or artificial. If the city obtain other property which does not belong to her, it is her duty to restore it ; or if used by her, to ren- der an equivalent to the true owner, from the like general obligation. In these cases she does not, in fact, make any promise on the subject, but the law, which always intends justice, implies one; * * *." In an early case in the Supreme Court of the United States,"® the City of Louisiana having legal authority to issue bonds issued and sold securities which were in- valid because antedated to avoid compliance with a law recently passed requiring registration. The purchaser was a bona fide holder, he offered to return the bonds and demanded re-payment of the money paid for them. The court held that he was entitled to recover and said by Waite, Chief Justice: "There was no actual sale of bonds, because there were no valid bonds to sell. There was no express contract of borrowing and lending, and consequently no express contract to pay any rate of in- terest at all. The only contract actually entered into is the one the law implies from what was done, to wit, that the city would, on demand, return the money paid to it by mistake, and, as the money was got under a form of obligation which was apparently good, that interest should be paid at the legal rate from the time the obliga- tion was denied. That contract the plaintiffs seek to en- force in this action, and no other. "It would certainly be wrong to permit the city to repudiate the bonds and keep the money borrowed on 98 — City of Louisiana v. Wood, 102 U. S. 294. 786 PUBLIC SECUBITIES their credit. The city could lawfully borrow. The ob- jection goes only to the way it was done. * * * While, therefore, the bonds cannot be enforced because defectively executed, the money paid for them may be recovered back." In another case from the Eighth Circuit in the United States Court of Appeals, the court held that there could be a recovery for money loaned when the bonds received were void and it expressed its opinion in the following vigorous language: "We think the case under consid- eration has now been reduced to about the following proposition: Can the school district, which had ample power to create a general indebtedness for the purpose of erecting school houses, which exercised the power, by voting at an election duly called, to create such indebted- ness in the sum of $10,000, which borrowed the money for the purpose of erecting, and with the money so borrowed actually erected, the school house, which it has ever since, used and enjoyed, escape payment of the same because, forsooth, it persuaded the lender to unwittingly accept void bonds therefor? In our opinion, it cannot. Any other conclusion would be a sad commentary on the effi- ciency of courts of justice to do justice. The authorities, in our opinion, fully sustain this conclusion. ' ' ^^ And in another case in which the opinion was written by Judge Thayer,^ it was held that where negotiable in- struments are issued by a municipal corporation without authority of law and are void as negotiable instruments that a suit could not be maintained upon them as non- negotiable instruments, citing several cases.^ But he added: "They show, no doubt, that when a municipal 99 — Geer v. School District No. veston, 96 TJ. S. 350; Town of Lit- 11, 111 Fed. 682, C. C. A. tie Eock v. Merchants National 1— Dodge V. City of Memphis, Bank, 98 U. S. 308; Hill v. City of 51 Fed. 165. Memphis, 134 U. S. 198; Merrill v. 2— Mayor of Nashville v. Bay, 19 Monticello, 138 U. S. 673. Wall. 468 ; Hitchcock v. City of Gal- THE PAYMENT OP PUBLIC SECURITIES 787 corporation sells bonds whicli are void, and received the money, it may be compelled to restore it in an action for money had and received. So when a municipal corpora- tion is authorized to purchase property for any purpose, or to contract for the erection of public buildings or for any other public work, and it enters into such authorized contract, but pays for the property acquired or work done in negotiable securities which it has no express or implied power to issue, it may be compelled to pay for that which it has received in a suit brought for that pur- pose. In no case, however, does it appear that a suit has been sustained on a void bond, treating it as non-nego- tiable, and as something entirely different from what the parties intended it should be. As the court understands the cases, suit must be brought on the implied promise which the law raises to pay the value of that which the municipality has received, but has in fact not paid for, because the securities issued in pretended payment were void." The same rule obtains in the state courts. In a case from Kansas,^ it was said: "Where a Contract is en- tered into in good faith between a corporation, public or private, and an individual person, and the contract is void, in whole or in part, because of a want of power on the part of the corporation to make it or enter into it in the manner in which the corporation enters into it, but the contract is not immoral, inequitable or unjust, and the contract is performed in whole or in part by and on the part of one of the parties, and the other party receives benefits by reason of such performance over and above any equivalent rendered in return, and these benefits are such as one party may lawfully render and the other par- ty lawfully receive, the party receiving such benefits will be required to do equity towards the other party by either 3 — Brown v. City of Atchison, 39 Kan. 37. 788 PUBLIC SECXTBITrES rescinding the contract and placing the other party in statu quo, or by accounting to the other party for all benefits received, for which no equivalent has been ren- dered in return; and all this should be done as nearly in accordance with the terms of the contract as the law and equity will permit. ' ' In a New York case,* bonds were issued payable in twenty years instead of thirty as provided by statute, it was held: "That the bonds were void as such but as the commissioners had the authority to borrow the money which the bonds were meant to secure, they, by doing so, bound the town to repay it; and it appearing that the parties, both borrower and lender, acted in good faith and with the intention to comply with the statute, a pro- vision on the part of the town to repay the loan at the time and in the manner prescribed by the statute would be implied and an action thereon against the town was maintainable. ' ' In several cases, where the courts held the bonds void and refused enforcement of the obligation, it wa,s ex- pressly stated that the question of the bonds was the only one involved in the case and that the security holder unquestionably had a right of recovery against the public corporation for the moneys advanced upon the doctrine stated in this section. In Norton v. Shelby County,^ where the bonds were held void for want of the authority in the county officials to issue them, the court proceeded to say : ' ' The original invalidity of the acts of the commissioners has never been subsequently cured. It may be, as alleged, that the stock of the railroad company, for which they sub- scribed, is still held by the county. If so, the county may, by proper proceedings, be required to surrender it 4 — Hoag V. Town of Greeawich, 5 — 118 U. S. 425. 133 N. T. 152j 30 N. E. 842, mod- ifying 15 N. Y. S. 743. TS^ PAYMENT OF PUBLIC SECXJBITIES 789 to tlie company, or to pay its value ;•£ or, independently of all restrictions upon municipal corporations, there is a rule of justice that must control them as it controls in- dividuals. If they obtain the property of others without right, they must return it to the true owners, or pay for its value. But questions of that nature do not arise in this case. Here it is simply a question as to the validity of the bonds in suit. ' ' § 381. City of Litchfield v. Ballou to the contrary. In this case,® the bonds were issued by the city of Litch- field for a legal purpose but in excess of the constitutional limitation. It was held, therefore, that they were invalid. The claim was also made in that case that a recovery could be had on the ground of an implied contract to repay the money. The court said on this proposition: "But there is no more reason for a recovery on the im- plied contract to repay the money, than on the express contract found in the bonds. The language of the Consti- tution is that no city, etc., ' shall be allowed to become in- debted in any manner or for any purpose to an amount, including existing indebtedness, in the aggregate exceed- ing five per centum on the value of its taxable property. ' It shall not become indebted. Shall not incur any pecun- iary liability. It shall not do this in any manner. Neither by bonds, nor notes, nor by express or implied promises. Nor shall it be done for any purpose. No matter how ur- gent, how useful, how unanimous the wish. There stands the existing indebtedness to a given amount in relation to the sources of payment as an impassable obstacle to the ■creation of any further debt, in any manner, or for any purpose whatever. If this prohibition is worth anything it is as effectual against the implied as the express prom- ise, and is as binding in a court of chancery as a court 6— City of Litchfield v. Ballou, 114 V. 8. 190. 790 PUBLIC SECXJEITIES of law. ' ' This decision is one of the few which holds con- trary to the rule first stated in the preceding section/ §382. Recovery not allowed; continued. Attention should be called to another case,* in which no recovery was allowed upon void bonds. The case in- volved the question of whether a bona fide holder of nego- tiable bonds issued by a municipal corporation to a rail- road company to which it had no power to issue them in payment of an unauthorized subscription to that com- pany's stock could recover from the municipal corpora- tion the money paid by him in the open market for the bonds on the ground that the amount had been expended in conferring upon the city the benefit of the railroad and the depot constructed by the railroad company. The court held that the question should be answered in the negative. The cause of action was for money had and received to the use of the city. The court said: "Such an action is based not on an express or implied contract, but on an obligation which the law supplies from the circumstances, because, ex aequo et bono, the defendant should pay for the benefit which he has derived at the expense of the plaintiff. It is an obligation which the law supplies because otherwise, it would result in the unjust enrichment of the defendant 7 — Norton v. Dyersburg, 127 U. for want of power a recovery could S. 160, 8 Sup. Ct. Eep. 1111, 32 L. not be had thereon as non-nego- Bd. 85; Morton v. City of Nevada, tiable instruments. 41 Fed. 582, affirmed 52 Fed. 350. McCurdy v. Shiawasse County F. C. Austin Mfg. Co. v. Smith- (Mich.), 118 N. W. 625. Money field Twp., 52 N. E. 1011. Ques- borrowed without authority cannot tion of negotiable bonds not in- be recovered in an action for money volved in the case. had and received. Town of Milan Swanson v. City of Ottumwa v. Tenn. Central E. E. Co., 79 (la.), 106 N. W. 9. The rule in Tenn. 329. the text followed and the court 8 — Travellers Insurance Company also further held that where nego- v. Mayor, et al., 99 Fed. 663, C. C. tiable municipal bonds were void A., 49 L. B. A. 123. THE PAYMENT OF PUBLIC SECTJEITIES 791 at the cost of the plaintiff. It is an obligation which arises only when the defendant has received money or property from the plaintiff and appropriated the same to his own use, either when he might have elected not to take it, or, having the power to do so, might return the bene- fit thus conferred to the plaintiff, and fails to do so. * * * The other benefits said to have been conferred upon the city were the construction of the railroad and the building of the depot. As the railroad and the depot were constructed on the land of the railroad company, they did not go into the possession of the city as its prop- erty. Had the railroad company, without any subscrip- tion by the city, built its railroad through the city, and erected its station there, it certainly could not be claimed that this would have given the railroad company a right of action against the city for the value of the benefits con- ferred on the city by such construction, however great those benefits might have been in adding to the prosper- ity of the city and its inhabitants. In the absence of an express agreement to pay for such a benefit, no tacit agreement to do so can be inferred. Where the confer- ring of the benefits was induced by an express agreement which is void, the law will not supply an obligation to pay on the ground of unjust enrichment as a quasi- contract, unless, in the absence of the express agreement, a real, but tacit, contract could have been inferred from the circumstances. The benefit indirectly conferred on one man's property by the improvement of the land of another is not an unjust enrichment of the other. Hence, ex Eequo et bono, no obligation in law to pay it arises." §383. Statute of limitations on impJied promise to re- pay money received for void bonds. The City of Nevada, Missouri, issued bonds which were afterwards by decision of the Supreme Court of the United States held void as violating that clause of the 792 PUBLIC SECTJEITIES Missouri Constitution of 1865, Article XI, Section 14, which provided that the General Assembly should not authorize any city to loan its credit to any corporation unless two-thirds of the qualified voters assented thereto. The plaintiff brought an action for money had and re- ceived to recover the amount paid to the city for the bonds. The Circuit Court held ^ that the plaintiff could not recover. It also held that though the illegal bonds of city be regarded as voidable only at the will of the city an action for money had and received was barred by Revised Statutes of Missouri, Section 3980, limiting ac- tions on implied promises to five years. The present ac- tion was barred by that statute. And, further, that an action upon an implied promise by a city to re-pay money received for void bonds accrues at the time the payment was made not from the time that the bonds were ad- judged void or from the discovery of its mistake by plain- tiff in the absence of fraudulent concealment by defend- ant or from the time of demand. This decision was af- firmed in 52 Fed. 350, Judge Caldwell in writing the opin- ion said that it was not necessary to consider in this ease the question of the liability of the defendant to the plain- tiff for money received for the void bonds as the statute of limitations prevented any recovery. 9 — Morton v. City of Nevada, 41 tain of its refunding bonds alleged Fed. 585, following City of Idtch- to be invalid it was held that the field V. Ballon, 114 U. S. 190. statute of limitations did not be- See, also, Aetna Life Ins. Co. v. gin to run as to the principal until Lyon County, 82 Fed. 929. Where the date fixed in the bonds for their in an action brought to recover payment, money paid to the county for cer- CHAPTER XV ACTIONS ON PUBLIC SECURITIES § 384. Jurisdiction of Federal courts. The bona fide holder of valid public securities, negotia- ble in their character has the unquestioned right to main- tain an action against the corporation issuing them upon its failure to comply with the terms of the contract they contain. Such an action may be brought at the option of the plaintiff in state courts where jurisdiction of the de- fendant can be acquired or in the Federal courts when that court has jurisdiction of the cause of action by rea- son of some one or more of the conditions named in the Constitution of the United States or various Acts of Con- gress conferring jurisdiction on them. One of the con- ditions giving to litigants the right of trial in the Federal courts is that based upon diversity of citizenship and residence. Owing to the fact that bond holders as a rule are citizens of and residing in some one or more of the Eastern states and that the public corporations is- suing securities are located in other sections of this country, the great bulk of the litigation involving public securities has been decided and determined in the Fed- eral courts. Another reason also appears for this in that these courts have been unif onnly favorable to the policy of sustaining the validity of the public securities and if conditions required for jurisdiction of the parties exist the bondholder naturally favors those courts which do not favor repudiation and where the substantial equities are with the investor. It is not to be inferred, however, from this statement that all of the state courts counten- 793 794 PUBLIC SECURITIES ance municipal dishonesty, some equally with the Federal courts seek to protect the innocent purchaser of public securities. Where a state court has rendered a final judg- ment if a Federal question is involved under the Federal Judiciary Acts the case can be removed to the Supreme Court of the United States by writ of error when the decision of the state court is against the plaintiff in error. In order that a writ of error will lie it is necessary that a Federal question must have been presented and decided adversely as above noted. In case of the insufficiency of presentation of a Federal question, the Supreme Court of the United States,^ held : "It is sufficient if it appears by clear and necessary intendment that the question must have been raised and must have been decided in order to have induced the judgment and it is not sufficient to show that a question might have arisen or been applicable to the case unless it is further shown on the record that it would arise, and was also applied by the state court to the case." The jurisdiction of the Federal courts cannot be im- paired or annulled by state laws where under the consti- tution of the United States or Acts of Congress that juris- diction is clearly established in favor of the litigants. The Supreme Court of the United States in a recent case,^ said on this point: "But this court has repeatedly de- cided that the jurisdiction of the courts of the United States over controversies between citizens of different States cannot be impaired by the laws of the States, which prescribe the modes of redress in their courts, or which regulate the distribution of their judicial power. In many cases State laws form a rule of decision for the courts of the United States, and the forms of proceeding in these courts have been assimilated to those of the 1 — New Orleans Water Works 2 — Chicot County v. Sherwood, Co. V. Louisiana Sugar Eefining Co., 148 U. S. 529. 125 U. S. 18; see, also, Spencer v. Merchant, 125 U. S. 345. ACTIONS ON PUBLIC SECURITIES 795 States, either by legislative enactment or by their own rules. But the courts of the United States are bound to proceed to judgment and to afford redress to suitors be- fore thein in every case to which their jurisdiction ex- tends. They cannot abdicate their authority or duty in any case in favor of another jurisdiction." This case also held that Federal courts have jurisdiction of any action which by the law obtaining in a state can be main- tained in a state court if the jurisdictional facts in respect to citizenship exist. In Andes v. Ely,^ the jurisdiction of the trial court was challenged on the ground that by Act of Congress of March 3, 1887, Chapter 374, 24 Stats, at Large, 552 ; as amended a subsequent holder of negotiable paper pay- able to the bearer could not invoke the jurisdiction of the Federal courts unless the original holder was also entitled to sue thereon. This statute excepted from its provisions instruments made by a corporation and the court held that a town under the laws of the state of New York is a corporation so far as the making of contracts is con- cerned and the right to sue and the liability to be sued. The Federal courts have jurisdiction of an action against a county on its warrants by the assignee when a non-resident of the state in which the county is situated, the warrants being made payable to the persons therein named or bearer.* In a California case,^ it was held that the owner of municipal bonds containing a direct promise to pay could maintain an action at law in a Federal court to recover 3—158 U. S. 312. Halsey, 117 U. S. 326, 29 L. Ed. 4 — ^Board of Com'rs of Kearney 904; Lyon County v. Keene Five- County V. MeMaster, 68 Fed. 177, Cent Savings Bank, 100 Fed. 337, 0. C. A.; see, also, Chickaming v. C. C. A.; Independent School Dis- Carpenter, 106 U. S. 603, 27 L. Ed. triet of Sioux City v. Eew, 111 307. Fed. 1. See, also, on the question of a 5 — ^City of Santa Cruz v. Waite, right of the assignee to sue in the 98 Fed. 387, C. C. A. federal courts: New Providence v. 796 PUBLIC SECURITIES a judgment thereon where the requisite jurisdictional facts appeared although under the laws of the state the bonds or coupons are payable only out of a special fund Avhieh the statute requires the officers of the defendant to create by the levy of taxes for that purpose. The jurisdiction of the Federal courts under the acts of Congress depends upon the amount involved in the ac- tion as well as other conditions and in a recent case on county bonds it was held that the amount claimed in the declaration and not the amount of the recovery was the test of jurisdiction and although the judgment was less than the jurisdictional amount where the amount claimed was in excess the jurisdiction of the Federal courts would be sustained.*^ It has also been held that the joining of nonjurisdictional causes of action with those of which the Federal courts have jurisdiction does not deprive the court of its right to try the action if the claim is sufficient in amount and other jurisdictional facts exist/ Where the jurisdiction prima facie conferred by a statute was invoked by a county, the court held that it was not in a position to maintain its lack of jurisdiction because the statute was unconstitutional.^ § 385. Removal of cases to Federal courts. The removal of cases from state to Federal courts de- pends upon the existence of the jurisdictional facts and where the question of the residence of parties was some- what involved the court in maintaining jurisdiction said: "He, alone of all the parties, is in a legal sense, interested in the enforcement of the liability upon the township. It is therefore a suit in which there is a single controversy 6 — WasMngton County v. Wil- 8 — Skinner v. Franklin County, liams, 111 Fed. 801, C. C. A. 179 Fed. 862. 7 — Independent School District of Sioux City v. Rew, 111 Fed. 1 C. C. A. ACTIONS ON PUBLIC SECURITIES 797 embracing the whole suit, between citizens of different states, one side of which is represented alone by Ker- nochan, a citizen of Massachusetts and the other by citi- zens of Illinois. ' ' ^ Original jurisdiction cannot be ac- quired by a Federal court merely by removal of the cause to that court from the state courts.'" In Chickaming v. Carpenter,' ' it was held that municipal corporations of Michigan could be sued in an action at law in the Circuit Court of the United States for that district. §386. Equitable relief; when afforded. The right of a holder of public securities to equitable relief in the Federal courts has been raised in a number of cases. Void bonds. In Parkersburg v. Brown,' ^ the city of Parkersburg issued its bonds under an unconstitutional act to aid the establishment of manufacturing concerns which were loaned to one of them, the city taking mort- gage security for their payment. This concern failed and in a suit in equity between the holders of the bonds against the city, the manufacturing concern and others, it was held that the holders were entitled to have the mortgaged property subjected to the payment of their bonds and that they and the city respectively were en- titled to rents, etc. Reformation of bonds. In another case,'=' bond hold- ers prosecuted a suit in equity for the reformation of bonds issued by the defendant township to which no seal had been affixed. Bonds belonging to other persons 9— Eemoval Cases, 100 U. S. 457; ning, 133 U. S. 529, 33 L. Ed. 766. Barter v. Kernoehan, 103 TJ. S. 562, 12—106 U. S. 487; see, also, 26 L. Ed. 411; Wilson v. Oswego Board of Com'rs of Kearney Twp., 151 TJ. S. 56, 38 L. Ed. 70. County v. Irvine, 126 Fed. 689, (3. 10 — Eosenbaum v. San Francisco, C. A. 120 U. S. 450. 13^ernard's Twp. v. Stebbins, 11—106 U. S. 663, 27 L. Ed. 307; 109 V. S. 341. see, also, Lincoln County v. Lvm- 798 PUBLIC SECUBITIES who could, not have invoked the jurisdiction of the Fed- eral court and which had been assigned to the plaintiff for purpose of collection were also included. The court held that those bond holders who resided outside of New Jersey and were citizens of other states could maintain the suit, others could not. Collection of assessments. The courts have held in a number of cases that where a city has chosen to under- take the improvement of its streets through the sale of improvement bonds which are to be paid from assess- ments levied upon property benefited that it thereby obligates itself to impose, collect and disburse the taxes provided for in the transaction for the benefit of the persons purchasing the bonds, and a trust relation thus existing the equitable jurisdiction of the courts cannot be questioned to afford the creditor relief." See also, Burlington Savings Bank v. City of Clinton,'^ which holds that a bill in equity will lie to enforce the collection of assessments after the consolidation of two cities. The same rule will apply in respect to a fund received by a city and in which bond holders claim an equitable interest,^° but the equitable relief may be denied where bond holders have been guilty of laches in enforcing their claims.^'' §387. Equitable relief denied. The right of a holder of public securities or a jud^g- ment creditor to equitable relief as against a public corporation has been denied in a number of cases and under interesting conditions. 14 — Farson, Leaah & Co. v. City 16 — Chelsea Savings Bank v. City of Sioux Caty, 105 Fed. 278; see. of Ironwood, 130 Fed. 410. also, Sees. 3S3, et seq., and 371, 17 — Eddy v. City and County ofi ante. San Francisco, 148 Fed. 272. 15—196 Fed. 269. ACTIONS ON PUBLIC SECUBITIES 799 That mandamus futile no ground for equitable re- lief. The city of Watertown, Illinois, issued its securities under due authority of law and then repudiated. Several judgments were recovered by the plaintiff in error against the city upon which executions were issued and returned wholly unsatisfied. He obtained from the court in which the judgments were rendered writs of manda- mus from time to time directed to the proper city officials and commanding the levy of taxes for the payment of the judgments. A constant succession of resignations oc- curred and these various writs proved ineffectual to se- cure a levy of taxes. In the present case/* the aid of the court was asked to subject the taxable property of the city to the payment of its judgments and that the marshal of the district might be empowered to seize and sell so much of it as might be necessary and to pay over to him the proceeds of such sale. The court denied the relief. In another case," the court said: "The appropriate remedy of the plaintiff was and is a writ of mandamus. This may be repeated as often as the occasion requires. It is a judicial writ, a part of a recognized course of legal proceedings. In the present ease it has been thus far unavailing and the prospect of its future success is, per- haps, not flattering.. However, this may be, we are aware of no authority in this court to appoint its own officer to execute the duty thus neglected by the city in a case like the present. ' ' Receiver not appointed. In several cases where the appointment of a receiver has been prayed for to take charge of the collection of the taxes when writs of man- damus have proved unavailing, relief has been denied. In Thompson v. Allen,2o the court held that where on ac- count of the hostility of citizens and the inability to find 18— Bees v. City of Watertown, 20—115 U. 8. 550. 19 Wall. 107. 19 — Heine v. Levee Cona'rs, 19 Wall. 655, 22 L. Ed. 223. 800 PUBLIC SECTJEITIES any one who would perform the duty of collector, the levy and collection of taxes to pay a judgment recovered on an issue of railroad aid bonds was impossible even after the issuance of writs of mandamus, a court of equity was without power to grant relief to the complainant through the appointment of a receiver with power to levy and col- lect taxes with which to pay the existing judgment. An irrigation district duly organized, issued and sold bonds under California Act of March 7, 1887, p. 29, Chap- ter 34, as amended, which provided for the organization of irrigation districts and authorized them to issue bonds for the construction of necessary works, funds for the payment of which and the accruing interest were to be derived from annual assessments upon the real property of the district. A bond holder recovered judgment against an irrigation district and upon a writ of execu- tion unsatisfied against the property of the district asked for the appointment of a receiver to aid him in the col- lection of his judgment. This relief was denied and the court held that his proper remedy was by writ of man- damus to levy an assessment against the property of the district as provided by law.^^ In Litchfield v. Ballou,^^ the city of Litchfield issued bonds to construct water works which were invalid be- cause in excess of the constitutional limitation of in- debtedness. Ballon, the owner of certain of these bonds, brought a suit in equity alleging that the proceeds of the bonds had been used by the city in the construction of its water works and praying for a decree against the city for the amount of his claim and further that if not paid asking that the water works be sold to satisfy the debt on the ground that the city was bound in equity and good faith to return the money it had received for them 21— Marra v. San Jacinto & P. 22—114 U. S. 190, 29 L. Ed. 132. V. Irrigation Dist., 131 Fed. 780; Bee, alao, Boskowitz v. ThompsoB (Calif.), 78 Pac. 290. ACTIONS ON PUBLIC SBCUBITIES 801 although the bonds were void. The court denied the relief prayed for, for want of equitable jurisdiction and further held that the plaintiff could not recover under any circumstances. This case has already been referred to and a quotation made in a previous section.^* Scaling down of excess issue. In the case of Hedges V. Dixon County ,2* an attempt was made through equit- able proceedings to have the excess issue of bonds held void in Dixon County v. Field (111. U. S., 83), scaled down and that portion within the constitutional limit held good and separated from that portion in excess. The court denied the relief and said: "Where a contract is void at law for want of power to make it, a court of equity has no jurisdiction to enforce such contract, or, in the absence of fraud, accident, or mistake to so modify it as to make it legal and then enforce it. Courts of equity can no more disregard statutory and constitutional require- ments and provisions than can courts of law. They are bound by positive provisions of a statute equally with courts of law, and where the transaction, or the contract, is declared void because not in compliance with express statutory or constitutional provision, a court of equity cannot interpose to give validity to such transaction or contract, or any part thereof." §388. Equitable subrogation. Involving the doctrine of equitable subrogation the Su- preme Court of the United States,^^ denied relief where aid bonds had been issued by the Town of Middleport, and which were subsequently held void, to a railroad company which in turn sold them to the plaintiff in error. 23 — Sec. 381 ante. Washington County v. Williams, 24—150 U. 8. 192; see, also. Ill Fed. 801, C. C. A. Wade V. Travis County, 81 Fed. 25 — Aetna Life Ins. Co. v. Town 742, C. C. A. However, this case of Middleport, 124 U. S. 534, 31 L. was reversed in Wade v. Travis, 174 Ed. 537. TJ. S. 499, 43 L. Ed. 1066; see, also, p. s.— 5 1 802 PUBLIC SECTJEITIES While the bonds were held void in the state court the validity of an appropriation by the town was impliedly admitted. The contention was made in favor of the In- surance Company that when it purchased the bonds it thereby paid the debt of the Town of Middleport to the Railroad Company as voted by it and that because it paid its money to that company on bonds which were void it should be subrogated to the right of the company against the town. An extended discussion of the doctrine will be found in the opinion. In another case,^^ involving the application of the same doctrine where the relief was denied when invalid bonds of a county were voluntarily paid by it from the proceeds of other invalid bonds which were subsequently repudi- ated, the court held that no equities thereby arose in favor of the holders of the latter issue of bonds entitling them to subrogation to the equities of the holders of the former so voluntarily paid off. § 389. Right of action on each separate bond and coupon. The doctrine is well established that a right of action accrues to the holder of each separate bond and coupon since each is regarded as a separate and independent promise to pay the obligation according to its terms. The subject of a right of recovery on coupons has been considered in a preceding section. In a late case in the Supreme Court of the United States,^'^ it was held that bonds and coupons were capable of separate ownership and of separate suits. That a suit on coupons and a suit on bonds are based on different causes of action and further that judgment might be rendered on coupons without producing the bonds to which they were origin- ally attached. The court in its opinion by Mr. Justice 26 — Lyons County v. Ashuelot 27 — County of Presidio v. Noel- National Bank of Keene, 87 Fed. Young Bond & Stpck Co., 212 U. 137, C. G. A. S. 58; see. Sec. 193, ante. ACTIONS ON PUBLIC SECURITIES 803 Harlan said, quoting from Nesbitt v. Independent Dis- trict of Eiverside (144 U. S. 610; 36 L. Ed.562) : "E'ach matured coupon is a separable promise, and gives rise to a separate cause of action. It may be detached from the bond and sold by itself. Indeed, the title to several ma- tured coupons of the same bond may be in as many differ- ent persons, and upon each a distinct and separate action be maintained. So while the promises of the bond and of the coupons in the first instance are upon the same paper, and the coupons are for interest due upon the bond, yet the promise to pay the coupon is as distinct from that to pay the bond as though the two promises were placed in different instruments, upon different paper. ' ' This right of action is so unquestioned that the citation of any authorities is unnecessary.^* §390. Right of bondholder to maintain action. A bond holder is not limited to the remedy provided by statute authorizing the issue of bonds but may main- tain an action at law to determine the liability of the maker of the negotiable security and to ascertain the amount due him,^^ although it has been held,*" that the omission from county bonds purporting to be issued under a specific act of the Kentucky Legislature of a stipulation in respect to certain extraordinary remedies for their collection would deprive the holder of his right to take advantage of them. A bond holder is not required to present either the bonds or coupons thereto attached when due to the 28 — ^Edwards v. Bates County, 163 30 — Hubbert v. CampbellsTille IT. S. 269, 41 L. Ed. 155; Eleanor Lumber Co, 191 U. S. 70, affirming Nesbitt V. Independent District of Campbellsville Lumber Co. v. Hub- Eiverside, 144 U. S. 610. bert, 112 Fed. 718. 29 — Town of Queensbury v. Cul- ver, 19 Wall. 83. 804 PUBLIC SECUEITIES court of county commissioners in Alabama before com- mencing suit to enforce their payment.^^ Eights of action existing at the time of the issuance of the securities cannot be impaired by subsequent legis- lation,^^ and where the obligation to pay is unconditional an action can be maintained although the statute may pro- vide that the bonds can be made payable through the agency of certain state officials.^^ It is not necessary that holders of public securities resort to mandamus to compel the levy of assessments or taxes to pay them as they become due but an action may be maintained to recover judgment for the amount due.^* It has been, however, held that under the Missouri laws, townships not being incorporated and bonds having been issued in aid of railroads in the name of a county on behalf of the township voting the aid that the owner of the bonds thus issued has no remedy by action against the township or the taxable inhabitants therein but must resort to mandamus to the county court to levy the tax as a means of payment or that the owner could sue the county and recover judgment.^' The acceptance of in- terest represented by a coupon has been held no bar to the prosecution of an action then pending for the prin- cipal of a bond; the right of action for the principal arising on a clause contained in the bond which authorized the holder on default in interest to sue for the principal. It is not necessary that negotiable instruments be pre- 31 — Greene County v. Daniel, 102 Waite v. City of Santa Cruz, 79 IT. S. 187; Hughes County v. Liv- Fed. 967. Where it was held that ingston, 104 Fed. 306. a holder of municipal bonds was 32 — ^Bates v. Gregory (Calif.), not prevented from maintaining an 22 Pac. 683. action at law to enforce their col- 33 — Toothaker v. City of Boulder lection although they were payable (Colo.), 22 Pac. 468. out of a special fund. 34 — Hammond v. Place (Mich.), 35 — Jordan v. Cass County, 3 74 N. W. 100; Marsh v. Little Val- Dill. 185. ley, 64 N. Y. 112. ACTIONS ON PUBLIC SSCtTBITlBS 805 sented for audit or allowance before a right of action will accrue.^® § 391. Questions raised. The doctrine of estoppel by recitals and otherwise has been fully considered in preceding sections and the effect of its application is to prevent the public corporation from raising many questions in actions brought on public se- curities which otherwise could be presented as a defense. This rule especially applies to recitals in bonds and its efficacious and complete operation is indicated by a refer- ence to the many cases cited under that subject. In a leading case,^^ it was said : ' ' Eecitals are such a decision ; and beyond those a bona fide purchaser is not bound to look for evidence of the existence of things in pais. He is bound to know the law conferring upon the municipal- ity power to give the bonds on the happening of a con- tingency ; but whether that has happened or not is a ques- tion of fact the decision of which by the law confided to others — to those most competent to decide it — and to which the purchaser is in general in no position to decide for himself. ' ' Questions of form merely or irregularities or fraud or misconduct on the part of the agents of public corpora- tions cannot ordinarily be considered in a suit by a bona fide holder against it to recover on bonds or coupons.^^ The doctrine of estoppel by recitals, it will be remem- bered, from the many cases previously cited will not apply where the face of the bonds discloses their invalid- ity.^^ It has also been held that a county can not plead 36 — Martin County v. Gillespie 38 — Town of East Lincoln v. County (Tex.), 71 S. W. 421. Davenport, 94 U. S. 801. 37 — Town of Coloma v. Eaves, 39 — McClure v. TownsMp of Ox- 92 XJ. S. 484, 23 L. Ed. 579; see, ford, 94 IT. S. 429, 24 L. Ed. 129; also, Millar v. Town of Berlin, 13 see, also. Sec. 261, ante. Biatchf. 245; Independent School District of Sioux City v. Eew, 111 Fed. 1. 806 PUBLIC SECURITIES that to pay the bonds an assessment would have to be levied greater than that permitted by the constitution although this holding is contrary to the general rule.*" The question of set-Off arising through the reception of misappropriated funds in violation of law can be raised in an action on the bonds where there has been a pay- ment of interest though none could be recovered.*^ In an action on railroad aid bonds the question of whether the railroad company has a valid legal exist- ence cannot be raised. This fact can only be tested in quo warranto proceedings on the part of the state.*^ Where bonds are issued to refund outstanding indebted- ness, the audit and allowance of the indebtedness as legal by duly authorized officials will prevent the question of validity as bearing upon the consideration for the bonds from being raised/^ and a tax payer sued for taxes levied to pay water works bonds cannot set up as a defense irregularities in their issue.** §392. Parties plaintiff. Negotiable securities made payable to bearer or to or- der and duly authorized are transferred by delivery and an action may be maintained thereon in the name of the holder.*^ The holder by such a delivery becomes the le- gal owner of the bonds and coupons and is entitled to maintain an action upon them irrespective of the con- sideration passing between himself and his vendor hold- ing them; by legal transfer from the former bona fide 40 — Moultrie County v. Fairfield, 45— Eolierts v. Bolles, 101 U. S. 105 V. S. 370. 119, 25 L. Ed. 880; City of Otta- 41 — Packard v. City of Mobile wa v. National Bank, 105 TJ. S. (Ala.), 43 So. 963. 342, 26 L. Ed. 1024; Augusta Bank 42 — Smith v. County of Clark, v. Augusta, 49 Me. 507; Bank of 54 Mo. 58; see, See. 266, ante. United States v. McAllister, 9 Pa. 43 — Flagg V. School Dist. No. 70 St. 475; see Chapter X, ante. (N. D.), 58 N. W. 499. 44 — City of Tyler v. Tyler Bldg. & Loan Assoc 'n (Tex.), 81 8. W. 2. ACTIONS ON PUBLIC SECTJEITIES 807 holders for value he succeeds to all the rights of the for- mer holders.*® Bonds payable to blank or order are in legal effect pay- able to the holder or bearer. They have every attribute of that class of commercial paper which the bearer can enforce in the Federal courts without proof that his as- signor could have done so and he can maintain an action upon them irrespective of the rights of his assignor in this particular.*'^ In the Eew case just eited^ the court after referring to Act of Congress of August 13, 1888, 25 Stats, at Large, 434, relative to the jurisdiction of the Federal courts in respect to actions on promissory notes, etc., said: "Under this statute an action can not be maintained in the circuit court upon an assigned instrument made by a corporation, which is not payable to bearer, unless such an action could have been maintained by the assignor. If, however, the assigned instrument is payable to the bearer, the assignee may recover in the federal court, whether his assignor could have done so or not. In the ease now in hand the bonds were payable to the order of a citizen of the state of the defendant, and, because he could not have maintained an action in the federal court, no subsequent holder could do so. But the coupons, on the other hand, were payable to bearer, and were- made by a municipal corporation, so that they fell within the ex- press terms of the exception to the prohibition of the statute; and any holder of them who was a citizen of a different state from that of the plaintiff in error could lawfully maintain his action upon them in the national courts." 46 — Dudley v. Board of Com'rs on County v. Keene Five-Cent Sav- of Lake County (Colo.), 80 Fed. ings Bank, 100 Fed. 337 C. C. A. 672 C. C. A. Independent School District of 47 — New Providence v. Halsey, Sioux City v. Eew, 111 Fed. 1. 117 U. S. 336, 29 L. Ed. 904; Ly- 808 PUBLIC SECUBITIES §393. Bonds transferred for collection only. Where bonds or coupons have been transferred to one for the purposes of collection only, in so far as it involves the jurisdiction of United States courts the cases hold that if the true owner of the bonds could not maintain his action in the Federal courts neither can the one to whom the bonds have been transferred for collection so far as the particular bonds or coupons are concerned. This rule applies either to actions for their collection or for their reformation.** §394. Bonds transferred; when action may be main- tained. Where the question of jurisdiction of the Federal courts is not involved the cases are uniform in holding that a transfer of bonds or coupons for purposes of col- lection gives to the transferree full right of action, that he can sue in his own name and maintain his litigation to the same extent as if he were both the legal and equitable owner although the equitable ownership remains else- where though the same defenses are admissible against him as would be admissible against the true owner.*^ § 395. Injunction as bar to right of action. In Hawley v. Fairbanks,^" it was held that the re- lator in mandamus proceedings having for their pur- pose the levy of a tax for the payment of a judgment se- cured was not barred from bringing these proceedings because of an injunction rendered in another suit to which 48 — Bernard's Twp. v. Stebbins, Ted. 56 C. C. A.; Carpenter v. 109 U. S. 341, 27 L. Ed. 957; New Greene County (Ala.), 29 So. 194; Providence v. Halsey, 117 U. S. Jennings Banking & Trust Co. v. 336, 39 L. Ed. 904; Farmington v. City of Jefferson (Tex.), 70 S. W. Pilsbury, 114 tJ. S. 138, 29 L. Ed. 1005; see, also. Chapman v. City of 114. Charleston, 30 S. C. 549, 9 S. E. 591. 49— VUlage of Kent v. Dana, 100 50—108 U. g. 543, 27 L. Ed. 820. ACTIONS ON PUBLIC SECUKITIES 809 he was not a party although involving the identical issue of bonds. §396. Parties defendant. In Nebraska where under the law boards of county commissioners can issue bonds on behalf of a precinct of the county to aid in the construction of railroads, an ac- tion to recover on these bonds is properly brought against the county and not the precinct,^* and the same rule ob- tains in Missouri where bonds have been issued by the county court on behalf of a township of the county, town- shipe not constituting corporate bodies under the laws of that state.^^ § 397. Bonds payable from specific taxes or property. The discussion in a previous section will be remem- bered relative to the obligation of a public corporation to pay bonds issued generally for local improvements and which by their terms are payable by special tax levies or from specific property set aside as a source or means of payment and the further discussion relative as to whether such securities are to be regarded as a general obligation of the corporation issuing them or whether the bond holder is limited in his recovery to the special sources set aside and provided. The principles applying to these questions vary as noted in different states based upon specific statutory provisions or the lan- guage of the securities issued. Where actions are brought upon such securities or proceedings commenced to com- pel the levy of the special taxes or assessments the ques- tion of proper parties defendant depends upon the prin- ciples already referred to and discussed.^^ 51 — Davenport v. Dodge County, 52 — County of Cass v. Johnson, 105 U. S. 237; Blair v. Cumming 95 XT. S. 360, 24 L. Ed. 419. County, 111 IT. S. 363, 28 L. Ed. 53— See Sec. 363, et seq., ante. 457; Nehama County v. Frank, 120 tr. S. 41, 30 L. Ed. 584. 810 PUBLIC SECUEITIES In Iowa, for illustration,^* it was held that the proper- ty owners of the city of Lyons (consolidated with the City of Clinton) on whose property the taxes were to be as- sessed for the payment of the debts were not necessary parties. And in California, it has also been held,^^ that a plaintiff is not required to join as defendants the own- ers of property upon which the taxes for the payment of bonds are required to be levied, although it was held in this state in an action in the state courts,'* that where judgments had been obtained by the owners of property against which a special tax was levied perpetually en- joining the tax collector of the city from collecting the tax levied, in a subsequent action against the city to en- force the payment of the bonds payable out of these spe- cial tax levies the question of the binding effect of the judgments obtained upon the city and the bond holders neither of whom were parties to the action in which the judgments were rendered could not be decided except when the owners of the property affected by the judg- ments were made parties. In Indiana,^^ it was held that under the Indiana statutes relative to the issue of street improvement bonds the collection of assessments for the payment thereof and the lien thereon on the property af- fected, a holder of bonds cannot make the town a party defendant, it not being in any sense the owner of the prop- erty affected by the assessment. In Texas it is held that in a suit for taxes a tax payer may defend on the ground of invalidity of the bonds without making the bond hold- 54 — Burlington Savings Bank v. relative to proper parties defendant City of Clinton, 106 Fed. 269; see, in case of a division of corporate also, Town of Kettle Kiver v. Town organizations. of Bruno (Minn.), 118 N. W. 63, con- 55— Mathej- v. City of San Fran- struing General Laws of 1895, Chap. Cisco, 115 Fed. 7 C. C. A. 227, relative to the enforcement of 56 — Meyer v. City and County of liabilities upon a division of a San Francisco (Calif.), 88 Pac. 722. town. 57— Town of Windfall City t. Southold Savings Bank f. Board First National Bank (Ind.), 87 N. of Education, etc., 89 N. Y. S. 714, E. 984. ACTIONS ON PUBLIC SECUEITIES 811 ers parties.^* And the holders of refunding bonds are not necessarily parties in mandamus proceedings to com- pel a city to enforce and apply the provisions of Texas statutes relative to sinking funds.^® §398. Pleadings. The consideration of the subject of pleadings in ac- tions brought upon pubiic securities necessarily must be brief as the scope of this work does not include even a casual treatment of questions relating to pleading and practice. In an action on negotiable securities issued by a public corporation in pursuance of legal authority, it is not necessary to plead as a rule the performance by the corporation of all precedent conditions and this unques- tionably holds true where the securities issued contain full recitals in respect to matters in pais, as the court said in one case : ' ' The township had authority by law to issue its bonds by way of donation to a railroad. It did issue its bonds. They got into circulation as com- mercial securities, and were purchased by the plaintiff. All the plaintiff had to do in case of nonpayment was simply to sue on the bonds. If there was any defense to them by reason of want of performance of any of the requisites necessary to give them validity, or for any other cause, it was for the defendant to show it. A bond, especially a negotiable bond, is a prima facie obligation of the obligor, if he has capacity to make it ; and is bind- ing according to the terms and conditions apparent on its face until the contrary be shown. Whether an alleged defense, when set up, is or is not good against the particu- lar holder, it is to be determined by the court in each case." ^° 58 — City of Tyler v. Tyler Bldg. 60— Lincoln v. Iron County, lOS & Loan Association (Tex.), 82 S. U. S. 412, 28 L. Ed. 518. W. 1066. Board of Education of Eidgefield 59 — City of Austin v. Cahill Twp. v. Board of Education, etc. (Tex.), 88 S. W. 542. (N. J.), 53 Atl. 1124. No aver- 812 PUBLIC Securities The pleader should aver the preliminary facts requisite to the exercise of the power granted by the legislator and if there is no general authority to issue negotiable securi- ties the special authority relied upon by the plaintiff should be shown in the declaration.^^ If there is any defect in the steps preliminary to the exercise of the power granted it is for the defendant to plead and show such irregularity in the performance or non-performance of acts requisite to the valid exercise of the power. These are matters of defense.^^ A declaration need not allege especially that in issuing bonds there was a compliance with the constitutional pro- vision limiting the amount of indebtedness which the mu- nicipality could incur. An excessive issue of bonds is a matter of defense."^ If by statute or rule of the court, the plakitiff in a suit is required to file with his declaration a copy of the instrument sued upon this must be done and the bonds then become a part of the pleadings in the case,^* and if the copy of the bonds as set out in the declaration with all the recitals show that the bonds were irregularly is- sued and not binding upon a township, it follows that the declaration does not set forth a good cause of action against the defendant and a demurrer is properly sus- tained.^^ In a petition to enforce taxes for the payment of the bonds of a school district, an allegation that the Board of ments are necessary in respect to C. A.; Barber Asphalt Paving Co. the authority of the agents of the v. City of Denver, 72 Fed. 336. municipal corporations issuing the Hopper v. Covington, 118 U. S. bonds. 148. McCless V. Meekins, 117 N. C. 34, 62 — Breckenridge County v. Mc- 23 S. B. 99. An allegation that Oracken et al., 61 Fed. 191 C. C. A. bonds issued vf ere ' ' valid and over- 63 — Brown v. Town of Point due" is suflScient without stating Pleasant (W. Va.), 15 S. E. 209. that they were issued for debts in- 64 — Nauvoo v. Eitter, 97 U. S. curred for necessary expenses. 389. 61 — Kennard v. Cass County, 3 65 — McClure v. Township of Ox- Dill. 147; Breckenridge County v. ford, 94 XJ. S. 429, 24 L. Ed. 129. MeCracken et al., 61 Fed. 191 G. ACTIONS ON PUBLIC SECUEITIES 813 Trustees "in conformity with the provisions and con- ditions of the said act ' ' levied the tax is insufficient. The detailed steps of the levy must be set forth as well as the proceedings leading to the authorization of the bonds."® §399. Demurrers. Objections to pleadings on the ground of lack of ex- plicitness must be made by special demurrer and cannot be raised subsequently.®^ A demurrer filed by defend- ant to a petition will be waived by proceeding to trial with an answer on the merits.®^ The demurrer only admits matters of fact well pleaded not conclusions of law."* Demurrer; when sustained. In Nauvoo v. Eitter,^" the bonds upon their face referred to the ordinance of the city council authorizing their issue printed on the back. This ordinance distinctly recited that the election required by law was held pursuant to notice given in ac- cordance with the provisions of the act authorizing a sub- scription and that upon a canvass of the votes it appeared a large majority of the votes of said city had been cast in favor of the proposition and a much larger vote than required by the act to authorize it. The court held that it was proper to sustain a demurrer to pleadings which simply tendered an issue as to the authority of the city to issue the bonds. In another case,^^ the plaintiff alleged that the defend- ant had issued certain bonds which recited that they were issued pursuant to an order of the county court made on a date named pursuant to legislative authority (named) and that he was the owner for value of the coupons of said bonds and entitled to recover thereon. 66 — Commonwealth v. Louisville ton County v. Sherwood, 64 Fed. & Nash. E.E. Co. (Ky.), 33 S. W. 103 C. C. A. 204. 69 — Chicot County v. Sherwood, 67— Lippitt V. City of Albany 148 IT. S. 529. (Ga.), 63 S. E. 33. 70—97 U. S. 389, 24 L. Ed. 1050. 68 — Hopper v. Covington, 118 U. 71— County of Dallas v. McKen- S. 148; Board of Com'ra of Hamil- zie, 94 U. S. 660, 24 L. Ed. 182. 814 PUBLIC SECUBITIES The answer denied the promise to pay the coupons or bonds and that the plaintiff was the owner for value. It further alleged that no order for their issuance was made by the county board but that two of the members of that court fraudulently and corruptly made the orders set forth and upon conditions that were not complied with. A general demurrer was filed to this answer. The court held this was in effect an admission that the county court had never exercised its power. The court below sus- tained the demurrer and judgment was rendered for the plaintiff. The Supreme Court reversed the judgment with directions to enter judgment upon the demurrer for the defendant below unless the plaintiff below should withdraw his demurrer and proceed to trial within such time and upon such terms as the Circuit Court might direct. The court in discussing the effect of the demurrer upon the complaint and answer, said: "The plaintiff's case is not aided by the allegation that he is a holder for value of the coupons. A holder for value is not affected by any irregularities or frauds or unfounded assumption of authority on the part of the agents of the town or county. But good faith is unavailing where there is an entire want of authority in those who profess to act. If A forge the name of B to a promissory note, or without any authority A signs a note as his agent, and there be no ratification, no amount of good faith in the holder will enable him to recover upon it. Good faith to the person who does not authorize the use of his name re- quires that he should be protected against a holder who pays his money for a forged or unauthorized note. And again, the answer expressly denies that the plaintiff is a holder for value of the coupons. The language is, that it 'denies that plaintiff was at the institution of this ac- tion, or now is, the owner for value of any of the bonds or coupons in said petition declared on. ' Instead of meet- ing this allegation by an issue of fact, the plaintiff by ACTIONS ON PUBLIC SECUKITIBS 815 demurring admits its truth ; and we do not see how, upon the pleadings, he can be deemed a holder for value. ' ' In another case,''^ the Supreme Court of the United States held that a court will not by mandamus compel the county officers of the state to do what they were not authorized to do by the laws of the state and that in man- damus proceedings to compel the levy of taxes if from the answer to the alternative writ it appears that the county is not in default on demurrer to the answer, this was admitted and the peremptory writ would be denied. The court, however, say: "In thus deciding we are not to be understood as maintaining all that is averred in the defendant's writ to the alternative writ. We do not as- sert that the relator is without remedy against the county or that his remedy is restricted to a resort to the pro- ceeds of a special tax. It is enough for this case that the judgment of the Circuit Court was correct on the plead- ings. ' ' § 400. Burden of proof. Assuming the existence of authority to issue the secu- rities in connection with the condition that they do not show upon their face facts sufficient to charge the holder with notice of their invalidity or of irregularities in their issue, the possession of negotiable securities then in due form establishes in favor of the holder a prima facie case in an action upon them and throws the burden of proof upon the one attacking their validity in respect to ownership, bona fide holding, consideration, proper exe- cution, notice and the existence of all conditions neces- sary to enable him to maintain the action. This rule does not dispense with all evidence but upon the production of the bonds or coupons and proof of authority to issue the 72 — United States v. Clark Coun- ty, 95 U. S. 769, 24 L. Ed. 545. 816 PUBLIC SECUBITIES plaintiffs case is established^^ The rule has been well stated in a leading text book on negotiable instruments/* in the following language: "The mere possession of a negotiable instrument, produced in evidence by the indorsee, or by the assignee where no indorsement is necessary, imports prima facie that he acquired it bona fide for full value, in the usual course of business before maturity, and without notice of any circumstances impeaching its validity; and that he is the owner there- of, entitled to recover the full amount against all prior parties. In other words, the production of the instru- ment and proof that it is genuine (where indeed such proof is necessary), prima facie establishes his case; and he may there rest it. Bills and notes payable to bearer do not in this respect differ from others, and the bearer is entitled to all the presumptions that apply to an indorsee in his favor. But the presumption of bona fide owner- ship does not apply where the instrument is not payable to bearer, unless it l3e indorsed specially to holder, or in blank." This rule has been repeatedly stated by the courts and it is intimately involved in the discussion of the presump- tion which arises in favor of the validity of negotiable securities to be found in the chapter on that topic,^^ and 73 — County of Chambers v. plaintiff at the trial was sufficient Clews et al., 21 Wall. 317, 22 L. proof in the absence of countervail- Ed. 517. ing evidence to determine this issue 74 — Daniel, 5th Ed., Sec. 812. in his favoi. Grattan Twp. v. 75— Chapter X, ante; see, also, Chilton, 97 Fed. 145 C. C. A.; Anderson County Com'rs v. Beal, Board of Com'rs of Lake County 113 TJ. S. 227, 28 L. Ed. 966. (Colo.), 68 Pac. 839; Thompson v. Edwards v. Bates County, 99 Fed. Village of Mecosta (Mich.), 104 905. The bonds and coupons were N. W. 694; Town of Ontario v. payable to bearer and at the trial Union Bank of Rochester, 47 N. Y. the plaintiff produced and read S. 927; Second National Bank v. them in evidence. Possession of School District of Connellsville, 23 commercial securities is evidence of Pa. County Ct. Reps. 636. ownership and the production of City of Jefferson v. Jennings these bonds and coupons by the Bank & Trust Co. (Tex.), 79 S. W. ACTIONS ON PUBLIC SECURITIES 817 also that part of this work relating to the subject of cou- pons and the right of the holder to maintain an action upon themJ" In respect to bona fide holding, the doctrine will be remembered,''^ that although securities may be invahd as between the maker and the original holder a subse- quent bona fide purchaser without notice or one deriv- ing title through him can maintain an action upon them. 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/® In speaking of coupons as prima facie evidence of their own validity the United States Circuit Court of Appeals held in a comparatively recent case,'^' that coupons were prima facie evidence of their own va- lidity and required no proof aliunde to sustain it. If they were void because of the failure to comply with condi- tions or for other reasons, this would be an affirma- tive defense incumbent upon the defendant to plead and prove. That contracts of pubhc corporations formally executed will in the absence of proof to the contrary be presumed to be valid and to have been made with due authority. If acts were required to be done or condi- tions required to exist before valid contracts of the char- acter noted could be made the contracts themselves raise 876. Evidence in respect to con- 59, 37 S. B. 78, citing Douglas sideration received as sufficient. County Com'rs v. Bolles, 94 U. S. But see Venice v. Breed, 65 Barb. 104; Montclair v. Eamsdell, 107 U. (N. Y.), 597, as to application of S. 147; Scotland County v. Hill, 132 Sub-div. 5, Sec. 19, N. Y. Code in U. S. 107; see, also, Eathbone v. an action by a town to compel sur- Board of Com'rs of Kiowa County, render and cancellation of bonds 83 Fed. 125 C. C. A.; Board of issued by it. Com'rs of Haskell County v. Na- 76 — See Chapter VIII, ante; see, tional Life Insurance Co., 90 Fed. also, Board of Com'rs of Lake 228 C. C. A.; Hughes County (S. County V. Piatt, 79 Fed. 567 C. D.) v. Livingston, 104 Fed. 306 C. A. C. C. A. 77— See Sec. 223, ante. 79 — Grattan Twp. v. Chilton, 97 78— Lytle v. Lansing, 147 U. S. Fed. 145 C. C. A. p. S.— 52 818 PUBLIC SECTJEITIES the presumption and present the evidence that such acta were performed and such conditions existed. Acts done or contracts made by a public corporation which presup- poses the existence of other acts or conditions in order to make them valid and legally operative are presumptive proof of the latter. It is not necessary for the plaintiff to negative the existence of facts limiting a liability imposed by statute or otherwise in an action on public securities,*" and neither is it necessary to introduce proof of the due ■exe- cution of the securities unless this question is put in issue.^i Neither is proof of bona fides necessary where an allegation to this effect is not denied by the answer and even in such cases the courts have held that such proof is unnecessary on account of the presumption of law already stated but if offered, it is clearly compe- tent.«=' § 401. Issues raised by general denial. An answer containing a general denial in substance or form in addition to affirmative matters of defense puts upon the plaintiff the proof of every fact necessary to 80 — United States v. Saunders, jeetion was not valid for either of 124 Fed. 124. the reasons mentioned. There was 81 — Chambers v. Clews et al., no issue upon the execution of the 21 Wall. 317, 22 L. Ed. 517. On bonds. County of Balls v. Douglas, the trial the plaintiffs produced the 105 U. S. 728, 20 L. Ed. 957. bonds and coupons and offered to 82 — County of Macon v. Shores, read the same in evidence. To this 97 U. S. 272. the defendants objected, for the Buchanan v. Litchfield, 102 U. reason that there was no evidence S. 278, 26 L. Ed. 138. Under an that the bonds were authorized to allegation of ownership evidence of be issued by the defendants, and bona fides is admissible. County that there was no evidence that the of Balls v. Douglas, 105 U. S. 728, oeal annexed was the seal of the 26 L. Ed. 957; Anderson County Brobate judge, or of the defendants. Com'rs v. Beal, 113 U. S. 227, 28 We have already considered this L. Ed. 966. point, and have shown that the ob- ACTIONS ON PUBLIC SECUKITIES 819 constitute the cause of action set out in his complaint including the validity and legality of the bonds and the lawfulness of their issue and delivery. It requires him to show by competent proof that he is the owner of the securities sued on, that they are in fact executed by the defendant issued in accordance with law and delivered to a party competent to receive the title. A general denial permits proof on the part of the defendant of every fact which tends to establish the illegality of the securities. But the rule as to the presumption of validity stated in section 265 still operates and the burden of proof is not shifted.®^ In County of Chambers v. Clews, et al,®* which was an action at law brought to compel the payment of three hundred seventy-two coupons attached to bonds issued by the County of Chambers, the defendants pleaded the general issue and two special pleas. Special demurrers were interposed to the special pleas and the demurrers were sustained. The cause was then tried on the general issue, a verdict rendered and judgment given for the plaintiffs to the amount of their claim. On the question of proof the court held that the issue of bona fides and notice was presented by the special pleas as well as the general issue tendered, and said as to the procedure upon trial after holding that in assumpsit any matter which shows that the plaintiff never had a cause of action may be proved under the general issue. "The logical and orderly mode of a trial, where it was intended to investi- gate the issue we have been considering, would be this: to sustain ■ their claim the plaintiffs produce the bonds and coupons. The execution not being put in issue, this establishes the plaintiff's case, and establishes presump- tively that they are holders for value before maturity 83— Smith v. Sac County, 11 84—21 WaU. 317, 22 L. Ed. 517. Wall. 139, 20 L. Ed. 102; County of Nehama v. Frank, 120 IT. S. 41, 30 L. Ed. 584. 820 PUBLIC SECURITIES without notice (citing many eases). The defendant then produces such proof as it may possess that the plaintiffs were not holders for value, or that they received the cou- pons after maturity, or that they had notice of the defects alleged. If it establishes either of these points the question of authority in the agent is open. "The question and the order of proof in these respects would be the same, whether the trial was had upon the general issue or upon the special plea. It seems quite clear that the judgment upon the demurrer to this plea worked no harm to the defendant. ' ' § 402. Effect of recitals: affirmative defenses. The securities may contain recitals in respect to the performance of conditions and the existence of facts necessary to the validity of the securities and which will estop the maker from setting up as a defense irregulari- ties and informalities in connection with their issue and even in some cases the failure to comply with constitu- tional provisions. This subject has been thoroughly treated in preceding sections.®* In the absence of recitals the question may arise of the extent of proof necessary to establish the right of action. In a case decided by the Supreme Court of the United States,®" where the question of ratification of a sub- scription to railroad stock and the issue of bonds by the tax payers was raised the objection was made that the proof offered was insufficient to establish the fact of such ratification by a majority of the tax payers of the city, the official records of the election not showing the character of the voters as tax payers or otherwise. The court said that the objection could not be sustained, that to allow it to prevail would require the plaintiff not only 85— See Sec. 276, et seq., ante. 86 — ^Hannibal v. Fauntleroy, 105 V. S. 408, 26 L. Ed. H03, ACTIONS ON PUBLIC SECX7BITIES 821 to show that the persons failing to ratify the stock sub- scriptions were all tax payers but also that they had all the other requisite qualifications of persons entitled by law to vote. "In our opinion, the law imposes no such unreason- able burden upon the owner of such bonds. He is bound to show, in the absence of recitals that prevent its denial, that the corporation issued them, in the exercise of a power conferred by law; and where that can arise only in consequence of the performance of a condition prece- dent, such as the result of an election by a public vote, he has the burden of proof to show the fact. That fact, as in the present case, is fully proven by an exhibition of the record, which shows on its face the result claimed. He is not bound to sustain the truth of the record, as if it were the case of a contested election, and prove that the majority, on the existence of which his rights rest, con- sisted of persons, all of whom possessed the qualification of voters." In County of Macon v. Shores it was held,®'' that proof, that the proposed railroad enterprise was of a wild and visionary character and of meetings of tax payers de- nouncing the issue of bonds, was clearly incompetent for any purpose in the case. The official book of record of ordinances of the city is competent evidence in respect to the fact of the passage of an ordinance when put in issue.®* Affirmative defenses. Where bonds create a debt in excess of the constitutional limitation it is an affirmative defense and the burden of proof is on the public corpora- tion claiming this condition to plead and prove it by a preponderance of the evidence.®^ 87—97 U. S. 222, 24 L. Ed. 889. 89— Lyon County v. Keene Five- 88 — Hinkley v. City of Arkansas Cent Savings Bank et al., 100 Ted. City, 69 Fed. 768 C. 0. A. ' 337 C. C. A. 822 Public secueities § 403. Burden when shifted. • Proof of irregularity or fraud in the inception of nego- tiable paper shifts the burden of proof upon the holder to establish his bona fide holding. The mere possession of the paper under such circumstances is not enough. While bonds and coupons payable to bearer or endorsed in blank or to holder are negotiable paper and protected to the fullest extent the circumstances noted will throw upon the holder the burden of proof to establish that he acquired them for a consideration before maturity and without notice."" In one case the court said: "The bonds are negotiable though the name of the payee, and the word 'order' or 'bearer' are left in blank, * * * having been fraudulently issued though they were nego- tiable, the burden is upon the complainant to show that he is a bona fide holder thereof for value before due without notice of any informality therein or that the per- sons from whom he obtained them was such a holder." Parol evidence is inadmissible to show fraudulent con- spiracy between the mayor of a city and certain trustees in pursuance of which bonds were issued where it was admitted that the plaintiff was a bona fide purchaser, of the coupons cut from them, in open market and without any knowledge of invalidity except such as appeared on the records of the towns which disclosed no facts tending to show a conspiracy or any fraudulent act done in con- nection with the execution and delivery of the bonds.®^ Murray v. Lardner. The conditions have been noted in a preceding paragraph which occasion a shifting in 90 — Smith v. County of Sac, 11 dependent School Dist. of Allison, Wall. 139, 20 L. Ed. 102; Collins 132 Fed. 514; but, see, Id. 146 Fed. V. Gilbert, 94 TJ. S. 758, 24 L. Ed. 113; Daniel on Negotiable Instru- 170; Stewart v. Lansing, 104 U. S. ments, 5tli Ed., Sec. 815. 505, 26 L. Ed. 866 ; Salmon v. Kural 91— Town of Fletcher v. Hick- Independent School District of Alii- man, 136 Fed. 568. son, 125 Fed. 235; Gamble v. In- ACTIONS ON PUBLIC SECXJEITIES 823 the burden of proof. In the case cited,®^ where the ques- tion of ownership of a negotiable instrument was in- volved, the court said on the question of "burden of proof" and the evidence necessary to shift this in cases of fraud : * ' The possession of such paper carries the title with it to the holder: The possession and title are one and inseparable. The party who takes it before due for a valuable consideration, without knowledge of any defect of title, and in good faith, holds it by a title valid against all the world. Suspicion of defect of title or the knowl- edge of circumstances which would excite such suspicion in the mind of a prudent man, or gross negligence on the part of the taker, at the time of the transfer, will not defeat his title. That result can be produced only by bad faith on his part. The burden of proof lies on the per- son who assails the right claimed by the party in posses- sion. Such is the settled law of this court, and we feel no disposition to depart from it. The rule may perhaps be said to resolve itself into a question of honesty or dishon- esty, for guilty knowledge and willful ignorance alike in- volve the result of bad faith. They are the same in ef- fect. Where there is no fraud, there can be no question. The circumstances mentioned, and others of a kindred character, while inconclusive in themselves, are admiss- ible in evidence, and fraud established, whether by direct or circumstantial evidence, is fatal to the title of the holder. ' ' §404. Illinois cases. The Constitution of 1870, prohibited the granting of municipal aid to corporations except in those cases where the aid had been authorized under existing laws by a vote of the people of the municipality prior to its adoption. The cases hold in this state that where railroad aid bonds 92 — Murray v. Lardner, 2 Wall. 110, 17 L. Ed. 857. 824 PXJBLIC SBCTJKITIES were issued subsequent to the adoption of the Constitu- tion in 1870, the burden of proof is upon the party assert- ing the validity of bonds to show not only the fact that such an election or vote was had as required by the ex- ception in the Constitution but also the legality of that election.^^ §405. Findings of fact. Special findings of fact are like a special verdict or an agreed statement of facts when considered on appeal. These should not be a mere recital of the testimony on which the ultimate findings to be based nor leave a part of the material issues of fact raised by the pleadings un- decided. They should be so framed as to indicate clearly that the trial court intended them not merely as an opinion containing a decision on questions of law and fact but as a special finding embodying his ultimate opinions on mooted questions of fact only.®* In the case just cited, the court in its opinion said : ' ' Plaintiffs purchased these bonds from Spitzer & Co. who were innocent holders and all the rights passed to plaintiffs (citing cases). Plain- tiffs are therefore entitled to all the protection which the law gives to holders of this class of securities who pur- chased them without notice and for value. ' ' The appel- late court held that this was not a special finding of fact which it could accept and be governed by as such. The court added: "In legal contemplation a special finding of fact as distinguished from a general finding is one in which the trial judge states succinctly his ultimate con- clusion upon each material issue of facts raised by the pleadings. ' ' A special finding should not be embodied in 93— Town of Middleport v. Aet- People (lU.), 30 N. E. 781; see, Da Life Ins. Co., 82 111. 562; Le- also, Jeffries v. Lawrence, 42 la. mont V. Singer & Talcott Stone Co., 498; Thornburgh v. School District 98 111. 96; Lippineott v. Pana No. 3 (Mo.), 75 S. W. 81. Town, 92 111. 24; Town of Prairie 94 — Hinkley v. City of Arkansas T. Lloyd, 97 111. 179; Sampson v. City, 69 Fed. 768. ACTIONS ON PUBLIC SECUKITIES 825 a bill of exceptions but is like a verdict or general find- ing a part of the record and should be complete in itself unaided by references to bills of exceptions though docu- ments set out in the pleadings or otherwise in the record may be referred to without re-copying."^ They are not open to dispute by an appellate court, must be accepted as conclusive.®" §406. Practice; when jury unnecessary. If no material facts are at issue or where they are ad- mitted in the pleadings and on trial in the court below a jury is unnecessary "' a jury may be waived and where a general finding is made by the lower court no errors in giving or refusing instructions asked for with a view to controlling such general finding can be reviewed by the appellate court.®® Charge to jury. If the testimony is all one way and conclusive in its effect, a party has no right to ask a charge which assumes that it is otherwise. It would tend to create a doubt where none existed or ought to exist and might mislead the jury.*® §407. Directed verdict. It is well settled that if the facts are clearly established and undisputed it is competent for the court to direct a verdict. The practice has been commended and in one case it was remarked that "it gives the certainty of apply- ing the science of law to the results of judicial investiga- tion." 1 And in another case it was held that "Judges 95 — Wesson v. Saline County, 73 98— Board of Com'rs of Kearney Fed. 917 C. C. A. County v. McMaster, 68 Fed. 177 96 — Lamprecht Bros. Co. v. City C. C. A. of South St. Paul, 80 Fed. 449 C. 99— Orleans v. Piatt, 99 XT. S. C. A. 676, 25 L. Ed. 404. 97— iMarion County et al. v. Col- 1 — Orleans v. Piatt, 99 IT. S. 676, er et al., 75 Fed. 352 C. C. A. 25 L. Ed. 404; Stewart v. Lansing^ 826 PUBLIC SECUEITIES are no longer required to Submit a case to the, jury merely because some evidence has been introduced by some party having the burden of proof unless the evidence be of such a character that it would warrant the jury to pro- ceed in finding a verdict in favor of the party introducing such evidence. ' ' ^ However on the question of directed verdict a rule obtains that it is only when the evidence is free from conflict or so clear and convincing that all rea- sonable men who exercise an honest judgment upon it are compelled to reach the same conclusion that the court is justified in withdrawing a question from the jury.^ But the Supreme Court of the United States in an early case,* said, quoting from Herbert v. Butler (97 U. S. 319) : "Although there may be some evidence in favor of a party, yet if it is insufficient to sustain a verdict, so that one based thereon would be set aside, the court is not bound to submit the case to the jury, but may direct them what verdict to render. It is true that, in the above cases, the verdict was directed for the defendant. But where the question, after all the evidence is in, is one entirely of law, a verdict may, at the trial, be directed for the plaintiff, and, where the bill of exceptions, as here, sets forth all the evidence in the case, this court, if concurring with the court below in its views on the questions of law presented by the bill of exceptions and the record, will affirm the judgment." § 408. Errors on trial. A reviewing court will not reverse a judgment for tech- nical errors of the trial court when they are not preju- dicial to the party complaining.^ On the exclusion of 104 TJ. S. 505, 26 L. Ed. 866; Coun- Com'rs of Kearney County, 88 Fed. ty of Balls v. Douglas, 105 U. S. 749 C. C. A. 728, 26 L. Ed. 975. 4 — Com'rs of Anderson County v. 2— Com'rs of Marion County v. Beal, 113 U. S. 227, 28 L. Ed. 966. Clark, 94 U. S. 278, 24 L. Ed. 59. 5 — Grand Chute v. Winegar, 15 3— Speer v. Board, of County Wall. 355, 21 L. Ed. 170. ACTIONS ON PUBLIC SEOUBITIES 827 evidence as an error in Orleans v. Piatt,® tlie proceedings of the county judge in respect to the issue of bonds and the bonds themselves were sought to be excluded. The court held that this was a misconception of the law of evidence that the plaintiff had a right to exhibit his case and that this evidence according to his view were links in his chain of title to recover. ^To shut them out would have been to condemn him unheard and would be to give a judgment against him without trial. The admissibility of testimony under such circumstances and its effect if it is admitted and all the other evidence in are very differ- ent questions. §409. Appeal; bill of exceptions. A ruling in the Circuit Court in sustaining or over- ruling a demurrer to a declaration and rendering judg- ment for the wrong party may be examined in an appel- late court by a writ of error without any formal bill of exceptions. The reason for the rule as stated by the Su- preme Court is that the error is apparent on the record and it is generally true that where this condition exists a bill of exceptions is unnecessary .'' In Walnut v. Wade,^ it was held that under Section 700 of the Eevised Statutes in force at the time the de- cision was rendered the only use of a bill of exceptions when there was a special finding of facts was to present the rulings of the court in the progress of the trial upon questions of law. If a bill of exceptions fails to disclose that it contains all the evidence the action of the lower court in directing a verdict cannot be reviewed nor can exceptions be taken to a charge which although somewhat 6—99 U. S. 576, 25 L. Ed. 404. chell v. Burlington, 4 Wall. 270, 18 7— Sogers v. Burlington, 3 Wall. L. Ed. 350. 654, 18 L. Ed. 79, followed in Mit- - 8—103 U. S. 683, 26 L. Ed. 526. 828 PUBLIC SECUEITIBS lengthy was in effect a peremptory direction to the jury to return a verdict for the defendant.^ § 410. Review on appeal. A review on appeal of findings of fact is permitted under Section 649 of the United States Revised Statutes as in force at the time of this decision, for this section declares that the effect of a finding whether general or special is the same as that of the verdict of a jurj,^^ but in a later case," it was said that "there is no special find- ings of facts ; and the general finding of the issues for the plaintiff is not open to review by this court." ^^ When a case is tried by a Federal court without a jury and the resulting judgment is brought by writ of error to an appellate court for revision, it is only the rulings of the court in the progress of the trial of the case and the sufficiency of the facts found to support the judgment that can be reviewed.^* When a trial court to which a cause has been submitted makes a special finding of facts, the appellate court has no authority to inquire whether the evidence supports the findings but only whether the facts found support the judgment.^* § 411. Scope of inquiry on appeal. .On appeal to the Supreme Court of the United States from a lower Federal court the appellate court is not confined in its review of the decision of the lower court within the same limits that it would be if the case had 9— E. H. KoUins & Sons v. Board 13^Grattan Twp. v. Chilton, 97 of Com'ra of Gunnison County Fed. 145 C. C. A.; Syracuse Twp., (Colo.), 80 Fed. 692 C. C. A. Hamilton County, Kan. v. Eollins, " 10— Walnut V. Wade, 103 U. S. 104 Fed. 958 C. C. A. 683, 26 L. Ed. 526. 14— Syracuse Twp. v. Eollins, 11— Santa Anna v. Frank, 113 104 Fed. 958 C. C. A. 17. S. 339, 28 L. Ed. 978. 12— U. S. Kev. Stats., Sec. 700, 1899. ACTIONS ON PUBLIC SBCXJEITIES 829 been brought to that court on error from the judgment of a state court. ^^ The appellate court is limited in its in- quiry on review to errors assigned. The plaintiff in error cannot be permitted to present for the first time in an appellate court questions to which no objections were made on the trial or which are not raised by assignment of error.^® So also held in respect to pleadings not filed in compliance with Equity Eule 31. Exceptions must be taken to adverse rulings in order that they may be considered by the appellate court. In a late case/'' the records disclosed that certain assess- ment lists were objected to purely for immateriality when they were offered but as no exception was saved when they were admitted, for this reason the objection to them was waived and could not be noticed on review by the appellate court. In an action at law the appellate court is one for the correction of the errors of the court below exclusively. Questions therefore which were not presented to or de- cided by that court are not open for review because, as it has been said, the trial court cannot be guilty of error in a ruling that it has never made upon an issue to which its attention was never called,^ ^ and in a later case than the one just cited, ^^ on the same point, the United States Circuit Court of Appeals said: "No objection to the sufficiency of the petition was taken by demurrer or otherwise in the court below, and the answer of the de- fendants did not deny the allegation of the petition that 15 — Fall Brook Irrigation Dis- Board of Com'rs of Gunnison Coun- triot V. Bradley, 164 U. S. 112, 41 ty, 80 Fed. 692 C. C. A. L. Ed. 369. 18— Board of Com'rs of Lake 16— Hinkley v. City of Arkansas County, Colo. v. Sutliff, 97 Fed. 270 City, 69 Fed. 768 C. C. A.; Speer C. C. A. V. Board of County Com'rs of Kear- 19 — Mayor, etc. of the City of ney County, 88 Fed. 789 C. C. A.; Helena v. TTnitpd States ex rel. Brazoria County v. Touugstown Helena Water Works Co., 104 Fed. Bridge Co., 87 Fed. 10 C. C. A. 113 C. C. A. 17— B. H. Eollins & Sons v. 830 PUBLIC SECURITIES the relator was the owner and holder of the judgment. The objection that the relator does not show title by as- signment, not having been made in the court below, cannot be taken here. To hold otherwise would involve the exercise of original instead of appellate jurisdiction. This is not permitted to us." § 412. Judgment; necessity for. The general rule obtains that in case of non-payment of negotiable securities a mandamus will lie against a state court to compel the assessment and levy of the necessary taxes to pay them or interest due. The holder who resorts to the United States Courts must have re- duced his claim either upon the bonds or the coupons to a judgment before he is entitled to that remedy.^" The appropriate proceeding, so it has been held re- peatedly, is to sue at law and by judgment of the court establish the validity of the claim and the amount due and then by the return of an ordinary execution ascer- tain that no property of the corporation can be found liable to such execution and sufficient to satisfy the judgment; then if the corporation has the authority to levy and collect taxes for the payment of that debt a mandamus will issue to compel it to raise by taxation within its authorized limitations, if such exist, the amount necessary to satisfy the debt.^^ 20 — County of Greene v. Daniel, was made whether arising from 102 U. S. 187, 26 L. Ed. 99. laches or default of its officials or County of Mobile v. Kimball, 102 repealing legislation, this cannot be V. S. 691, 26 L. Ed. 283. So here, secured, an alternative and com- the court will grant the relief which pensatory decree, that is, one for the complainants, under their con- a money equivalent in the form of tracts, are entitled to have, if such damages, will be directed, relief can be obtained from the 21 — Heine v. Levee Com'rs, 19 county; but if by reason of inter- Wall. 655, 22 L. Ed. 223; Shepard vening obstacles since the contract v. Tulare Irrigation Dist. 94 Fed. 1. ACTIONS ON PUBLIC SECTJKITIES 831 § 413. Amount of judgment. The extent of recovery has been considered at length in other sections,^^ and the amount of the judgment will depend in some instances, it has been held upon the terms of the contract embodied in the bonds. In a Nebraska case,** where negotiable bonds were payable from an- nual levies of taxes at a definite rate, the county issuing them repudiated and refused to make further levies or payments after making such levies and applying the pro- ceeds to the payment of the obligations for a series of years. The court held that the holder of the bonds could not maintain an action at law to recover a judg- ment against the county for the full amount and interest but only for that sum which was due according to the terms of the bond. §414. Collection of judgment. A judgment has the effect of a judicial determination of the validity of a demand and of the amount that is due but ordinarily it gives the judgment creditor no ad- ditional rights of taxation which he did not have before he secured his judgment. It gives him no new rights in respect to the means of payment,** but where statutes have been passed conferring powers and imposing duties on public officials to levy taxes to pay judgments they 22— See Sec. 351, ante. Macon, 95 V. S. 582, 25 L. Ed. 331; Pfirman v. Dist. of Clifton (Ky.), Stryker v. Board of Com'rs of 96 S. W. 810. See this case as to Grand County (Colo.), 77 Fed. 567 interest to be included in judgment C. C. A. against property owners when sued United States v. King, 74 Fed. for delinquent taxes levied to pay 493. A holder of warrants entitled street improvement bonds. to payment from a special fund, it 23 — Washington County v. Wil- was held in this case, did not lose liams. 111 Fed. 801 C. C. A.; see, through reducing them to a judg- also City if Asutin v. Cahill (Tex.), ment the special remedy incidental 88 S. W. 542. to them. 24 — ^United States v. County of 832 PUBLIC SECXTEITIES supersede statutory powers in respect to the levy of taxes less extensive in their character existing at the time when the latter legislation was passed.^' §415. Discretionary power to order judgment paid in installments. A number of cases are to be found in which the ques- tion suggested by the title of this section has been raised and involving the discretionary powers of the courts to require a judgment to be paid all at once or in install- ments. It seems to be the rule that this lies within the discretion of the court. In an early case in the Supreme Court of the United States,^^ on an application for a writ of mandamus to compel the city of East St. Louis, to levy and collect a tax with which to pay a judgment obtained by the relator on bonds and interest coupons issued by that city; the objection was made that the city could not levy and collect a tax sufficient in amount to pay the entire judgment at once. The court held for the reasons stated in its opinion that this should not be done in this case but suggested that it was at one time a question resting in the sound discretion of the court in ordering the collection. The court in its opinion by Chief Justice Waite, said: "The judgment is for interest in arrears and a small amount of principal. The law required a tax to be levied annually sufficient to pay all interest as it accrued, and the principal when due. This was neglected, and con- sequently there is now a large accumulation of a debt which ought to have been paid in installments. Thus far the inhabitants have been allowed to escape taxation at the times it ought to have been laid, and to which they were under constitutional obligations to submit. The accumulation of the debt was caused by their own neg- 25 — United States v. Saunders, 26 — East St. Louis v. Amy, 120 124 Fed. 124 C. C. A. U. S. 600, 30 L. Ed. 798. ACTIONS ON PUBLIC SECUEITIES 833 lect as members of the political community whieli had incurred the obligation. Such being the case, we see no reason why it was not in the power of the court to order a single levy to meet the entire judgment which was all for past due obligations. Whether such a tax would be so oppressive as to make it proper not to have it all collected at one time was a question resting in the sound discretion of the court in ordering the col- lection. There is nothing here to show that there ought to have been a division." In other cases it has been held that the court might exercise a sound discretion in the matter and require full satisfaction to be made by a levy for one year when within statutory or constitutional limitations or to dis- tribute the burden over a reasonable number of years.*^ § 415a. Judgment as affecting character of debt or spe- cial remedy. Where interest coupons, bonds or warrants are reduced to judgment, this fact does not affect the character of the debt,^* and it has also been held that where war- rants were entitled to payment from first moneys accruing from special taxes that the subsequent reduction of them 27 — United States ex rel. Baer v. miniatration of the' financial afEaira City of Key West, 78 Fed. 88 C. of the city should be caused which C. A. was not necessary to the protection City of Little Eock v. United and enforcement of the right of the States ex rel. etc., 103 Fed. 418 relator. The direction to issue nu- C. C. A. The number of the war- merous warrants in convenient ante that should be issued, their re- amounts, instead of one warrant spective amounts, and the time when for the entire amount, was a wise they should be sent forth, were mat- and salutary exercise of the discre- ters intrusted to the legal discre- tion of the' court. It made the tion of the court below. It was un- remedy it administered more effi- doubtedly the duty of that court bo cient and helpful to the relator, to exercise that discretion that the without loss, injury or inconven- right of the relator to the warrants ience to the city or its officers, should not be denied or impaired, 28 — ^Ward v. Piper (Kan.), 77 and that no disturbance in the ad- Pac. 699. p. S.^53 834 PUBLIC SECUEITIES to a judgment will not deprive the holder of the special remedy incidental to the debt.^" §,416. Interference by state courts. A state court cannot by injunction, nor can a state by action, legislative or otherwise, prevent the Federal courts from executing their processes or enforcing their judgments by mandamus for their payment.^" In Eiggs V. County of Johnson, cited above, a judgment was rendered by the Federal courts upon certain bonds held invalid by decisions of the Supreme Court of the State of Iowa. In one of the state courts at the suit of tax payer, an injunction was issued perpetually enjoin- ing the corporation issuing the bonds from levying the special tax provided for payment of the bonds. Mr. Justice Clifford in delivering the opinioji of the court said: "Process subsequent to judgment is as essential to jurisdiction as process antecedent to judgment other- wise the judicial power would be incomplete and entirely inadequate to the purposes for which it was conferred by the Constitution. * * * Authority of the Circuit courts to issue process of any kind which is necessary to the exercise of jurisdiction and agreeable to the prin- ciples 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 the state legislature." * * * And after discussing the powers of the Federal courts to issue writs of mandamus under the conditions as found in the case, he proceeded to say : "Repeated decisions of this court have also determined that state laws whether general or enacted for the par- 29_United States v. King, 74 6 Wall. 166; Sup'rs, etc. v. Durant, Fed. 493; but see State ex rel. Hop- 9 Wall. 415; Hawley v. Fairbanks, per V. Cottengin (Mo.), 72 S. W. 108 U. S. 543; Holt County v. Na- 498. tional Life Ins. Co. of Montpelier 30— Eiggs V. County of Johnson, (Vt.), 80 Fed. 686. ACTIONS ON PUBLIC SECURITIES 835 ticular case cannot in any manner limit or affect the operation of the process or proceedings in the Federal courts. 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 desti- tute of all power to restrain either the process or pro- ceedings in the national courts." § 417. Inquiry into previous judgment. This subject has already been considered and the lead- ing cases referred to.^^ It may not be inappropriate, however, to refer again to the case of Brownsville Taxing District v. Loague,^^ where it was held that in mandamus proceedings to com- pel the levy of a 1?ax to pay a judgment rendered on bonds, the basis of the original judgment could be in- quired into and if the bonds were void the court would consider this fact in determining the rights of the par- ties in the mandamus proceedings, the court said: "The power invoked is not the power to tax to pay judgments but the power to tax to pay bonds considered as direct and independent, and therefore when the relator is obliged to go behind his judgments as money judgments merely to obtain the remedy pertaining to the bonds the court cannot decline to take cognizance of the fact that the bonds are void and that no such remedy exists. ' ' Dissolution of public corporation. The rights of creditors on the division or dissolution of public corpora- tions in respect to the payment of existing obligations, has already been considered at length in preceding sec- 31 — See Sees. 315, at seq., ante. Wetumpka v. Wetumpka Wharf 32—129 U. S. 493; see, also, Go., 63 Ala. 611, 836 PUBLIC SECUEITIBS tions, ^^ as well as a full discussion of sources of payment and the rights of the judgment creditor to seize the prop- erty of public corporations upon execution.^* § 418. Mandamus as a remedy. The modern writ of mandamus has been defined by a well-known author,^^ as "a command issuing from a com- mon law court of competent jurisdiction in the name of the state or sovereign directed to some corporation offi- cer or inferior court requiring the performance of a par- ticular duty therein specified, which duty results from the official station of the party to whom the writ is directed or from operation of law." The same author in stating the specific relief which it affords says that a mandamus operates much in the nature of a bill in Chancery for specific performance, the principal difference being that the latter remedy is used for the redress of purely private wrongs or for the enforcement of contract rights, while the former generally has for its object the performance of obligations arising out of official station or specially im- posed by law upon the respondent. It is not a preventa- tive remedy like injunction but a remedial one. It is used to compel action and to coerce the performance of a pre-existing duty.^^ It can only issue when there is a clear and undoubted legal right to be enforced or a duty which can be performed and where there is no other specific and adequate remedy. The Supreme Court of the United States in an early case,^'' in holding that a writ of mandamus would lie to enforce an existing official 33 — See Sec. 917, et seq., ante. 37 — Board of Svip'rs of Carroll 34 — See See. 343, et seq., ante. County v. United States, ex rel. etc., 35— High Extraordinary Legal 18 Wall. 71, 21 L. Ed. 771. Eemedies, Section 1. 36 — High Extraordinary Legal Eemedies, Sec. 1, et seq. ACTIONS ON PUBLIC SECUEITmS 837 duty, said: "It is very plain that a mandamus will not be awarded to compel county officers of a State to do any act which they are not authorized to do by the laws of the State from which they derive their powers. Such officers are the creatures of the statute law, brought into exist- ence for public purposes, and having no authority beyond that conferred upon them by the author of their being. And it may be observed that the office of a writ of manda- mus is cot to create duties, but to compel the discharge of those already existing. A relator must always have a clear right to the performance of a duty resting on the defendant before the writ can be invoked. Is it, then, the duty of the board of supervisors of a county in the State of Iowa to levy a special tax, in addition to a county tax of four mills upon the dollar, to satisfy a judgment recovered against the county for its ordinary indebted- ness? The question can be answered only by reference to the statutes of the State." The language of this de- cision has been repeatedly used. ' ' Mandamus lies to com- pel a party to do that which it is his duty to do without it ; it confers no new authority and the party to be coerced must have the power to perform the act. ' ' *® 38 — Com'rs of Taxing District of powers except such as have been Brownsville v. Loague, 129 U. S. conferred upon them by the laws 493, 32 L. Ed. 780. of the state. They cannot be armed Stryker v. Board of Com'rs of by the mandate of any court with Grand County (Colo.), 77 Fed. 567 an authority which they do not al- C. C. A. Equally well settled is ready possess; and no court, state the further proposition that a writ or federal, can compel a municipal of mandamus will not be issued re- corporation to levy a tax which the quiring a state officer to levy a tax laws of the state do not authorize or to do any other specific act, un- it to levy. Moreover, it is not the less authority for the doing of that office of a writ of mandamus to act can be found either in the ex- create rights or impose duties; its press or implied provisions of some sole function is to compel the per- local statute. As was said in sub- formance of those duties which al- stance, by the Supreme Court ready exist. City of Little Boek in * * * state officers have no v. United States, 103 Fed. 419. 838 PUBLIC SECUEITIES § 419. Mandamus not available to control judgment or discretion. The writ cannot issue in a case where discretion and judgment are to be exercised by the one to whom it is directed for it is well settled ' ' that in all matters requir- ing the exercise of official judgment or resting in the sound discretion of a person to whom a duty is confided by law mandamus will not lie either to control the exer- cise of that discretion or to determine the decision which shall be finally given. " It is elementary law that a writ will only lie to enforce a ministerial duty as contradis- tinguished from a duty which is purely discretionary.^^ § 420. Available as a remedy for the enf or^cement of a judgment or to compel the payment of corporate bonds. Where there has been a failure to levy taxes as required by law for the payment of the interest or principal of negotiable securities, or where there has been a judg- ment rendered in cases of default in payment of either principal or interest, the authorities are uniform in hold- ing that the appropriate remedy against a public cor- poration is a writ of mandamus to compel the levy and collection of a tax and the appropriation of the proceeds in liquidation of the established claim.*" 39— Board of Com'rs of Grand 6 WaU. 481, 18 L. Ed. 930; Wash- County V. King, 67 Fed. 202; ington County v. United States ex Heine v. Board of County Com'rs, rel. etc., 9 Wall. 415, 19 L. Ed. 732; 19 Wall. 655; High Extraordinary United States ex rel. Butz v. Musca- Legal Remedies, Sec. 42 and eases tine, 8 Wall. 575, 19 L. Ed. 490; cited; Stryker v. Board of Com'rs Eees v. City of Watertown, 19 Wall, of Grand County, 77 Fed. 567 C. 107, 22 L. Ed. 72 ; United- States ex C. A. I'el- Johnston v. County Court of 40— Von Hoffman v. City of Clark County, 95 U. S. 769, 24 L. Quincy, 4 Wall. 535; 18 L. Ed. 403; Ed. 545; Davenport v. County of United States ex rel. Eiggs v. John- Dodge, 105 U. S. 237, 26 L. Ed. son County, 6 Wall. 166, 18 L. Ed. 1018; United States ex rel. Chand- 768; Walkley v. City of Muscatine, ler v. County Com'rs of Dodge ACTIONS ON PUBLIC SECUEITIES 839 In an early case in the Supreme Court of the United States,*^ the court held that this was the proper remedy and that the Federal courts had jurisdiction to issue the writ. The county of Knox in Indiana had issued bonds under authority of an act which made it the duty of th^ county board to assess a special tax each year to realize the amount of the interest upon the bonds to be paid for that year. The board had not only failed in this duty but also refused to perform it. The Supreme Court held as above stated that a writ of mandamus was the proper remedy to compel performance of the clear and unques- tioned duty resting upon the county board. County, 110 V. S. 156, 28 L. Ed. 103 ; Louisiana ex rel. Nelson v. St. Martin's Parish, 111 U. S. 716, 20 L. Ed. 574; New Orleans Board of tiquidation v. Hart, 118 U. S. 136, 30 L. Ed. 65; East St. Louis v. Amy, 120 V. S. 600, 30 L. Ed. 798; Sog- ers V. Keokuk, 154 TJ. S. 546, 18 L. Ed. 74; United States ex rel. V. Lincoln County, 5 Dill. 184; United States ex rel. Baer v. City of Key West, 78 Fed. 88, C. C. A. Holt County v. National Life Ins. Co., 80 Ped. 886, C. C. A. A de- termination in a final mandamus proceeding is concluaive. Fleming v. Trowsdale, 85 Fed. 190, C. C. A.; Little Rock v. United States, 103 Fed. 425, C. C. A.; Cleveland v. United States, 111 Fed. 347, C. C. A.; Washington County v. Wil- liams, 111 Fed. 812, C. C. A.; Thompson v. Perris Irrigation Dis- trict, 116 Fed. 770; United States ex rel. etc., v. Saunder, 124 Fed. 124, C. C. A4 ; Marra v. San Jacinto, etc., Irrigation Dist., 131 Fed. 780; Miller v. Mc Williams, 50 Ala. 429; Vance v. Little Eock, 30 Ark. 441. Board of Com'rs of Gunnison County V. Sims (Colo.), 74 Pac. 457. It is here held that under the pro- visions of Mills Annotated Stats., Sec. 941, the appropriate remedy of a bond holder to enforce the pay- ment of interest is by mandamus against the proper officials to com- pel the levy of the tax, provided an action for money judgment will not He. Columbia County v. King, 13 Fla. 447; People v. C, B. & Q. E. E. Co. (111.), 93 N. E. 410; Badger V. New Orleans, 49 La. Ann. 839, 21 So. 870, 37 L. E. A. 554; Dar- ling V. Baltimore, 51 Md. 15; State V. Thorn, 9 Nebr. 458 ; Atlantic City Water Works v. Eead, 50 N. J. L. 672, 15 Atl. 10; Theis v. Washita County, 9 Okla. 653, 60 Pac. 505; Commonwealth ex rel. Whelan, Pittsburg, 88 Pa. 83. Cass County v. Wilbarger County (Tex.), 60 S. W. 988. Sufficiency of tax considered. Gay v. New What- com, 26 Wash. 396, 67 Pac. 88; Wells y. Mason, 23 W. Va. 459; State ex rel. Pfister v. Manitowoc County, 52 Wis. 428, 9 N. W. 607. 41- — Com'rs of Knox County v. Aspinwall, 24 How. 376, 16 L. Ed. 735. S40 PUBLIC SECURITIES The court said: "Now, it is not alleged nor pretended but that, if this judgment had been obtained against the corporation in a State court, the remedy now sought could have been obtained; for it must be admitted, fhat, according to the well-established principles and usage of the common law, the writ of mandamus is a remedy to compel any person, corporation, public func- tionary, or tribunal, to perform some duty required by law, where the party seeking relief has no other legal remedy, and the duty sought to be enforced is clear and indisputable. That this case comes completely within the category is too clear for argument; for, even assuming that a general law of Indiana permits the public property of the county to be levied on and sold for the ordinary indebtedness of the county, it is clear that the bonds and coupons issued under the special provisions of this act were not left to this uncertain and insufficient remedy. The act provides a special fund for the payment of these obligations, on the faith and credit of which they were negotiated. It is especially incorporated into the con- tract, that this corporation shall assess a tax for the special purpose of paying the interest on these coupons. If the commissioners either neglect or refuse to perform this plain duty, imposed on them by law, the only reiliedy which the injured party can have- for such refusal or neglect is the writ of mandamus." The question then was considered of the right of the Federal courts to issue the writ, and after an examina- tion of the various statutes relative to the powers and jurisdiction of these courts, the opinion recited that "the jurisdiction of the court to give the judgment in this case was not disputed nor can it be denied that by the Con- stitution, Congress has the power to make laws necessary for carrying into execution all its judgments." ACliONS ON PUBLIC SECUElTiES 84l § 421. What petition for mandamus should show. Where the question of the repeal of a statute as affect- ing the right to levy a tax is involved, the petition should show the nature of the judgment upon which the writ of mandamus is based so that it can be determined whether a contract obligation has been impaired.*^ A provision for the payment of the principal and in- terest on duly authorized public securities becomes a part of the contract on the issuance of the bonds which cannot be impaired by any subsequent legislation, and notwithstanding the attempted repeal of the provisions for payment by the legislature a Federal court which has rendered a judgment on the bonds or the coupons may compel the levy of a tax for its payment by man- damus.^^ The case of Padgett v. Post, just cited, in stating the doctrine of the impairment of a contract obligation, as noted in the preceding paragraph, further and decisively held that the fact that subsequent legislation had been passed depriving the public corporation of its power to levy certain taxes could not be urged as a defense in the mandamus proceedings in the Federal courts. § 422. Rights of parties. The rights of creditors not before the court cannot be considered in mandamus proceedings to compel the levy and collection of taxes. The claim in one case,** that the city owed a large amount of other debts and that if the tax sought to be collected in the present proceedings were 42 — Brownsville Taxing Dist. v. 44 — City of Galena v. Amy, 5 Loague, 129 TJ. S. 493; Board Of Wall. 705, 18 L. Ed. 560; see, also, Com'rs of Grand County v. King, Mayor, etc., of New Orleans v. 67 Fed. 202, 0. C. A. United States ex rel. Stewart, 49 43— Hicks V. Cleveland, 106 Fed. Fed. 40, C. C. A. 459; Padgett ^. Post, 106 Fed. 600, 0. 0. A.; see, also. See. 3.62, ante. 842 PUBLIC SECXJEITIES SO collected that the other creditors would be entitled to share in the distribution of the proceeds was not held tenable; the court said: "When any other creditor com- plains in a proper proceeding and asks that the funds be marshaled, it will be time enough to consider the sub- ject." If the parties in mandamus proceedings are entitled to relief they are clearly entitled to that action by the officials which will set in motion all of the machinery nec- essary for the levy, the assessment and the collection of the taxes sought to be levied and collected. Bonds and coupons are entitled to payment out of the general funds of the town and county raised for general, use, after exhausting a special fund directed to be levied for their payment, and if the power to levy a tax suffi- cient to pay the debt exists the town may be compelled to do so by writ of mandamus,*^ and it has also been held that where a municipality and its Officers have the power to pay a judgment against the city by the issue to the owner of the judgment of city warrants which are re- ceivable for city taxes and have no other way to pay it, it is their duty to issue the warrants and a writ of man- damus will be issued to compel them to discharge that duty.*" Necessity for demand. Where the duty of a munici- pality in respect to the levy of taxes to pay bonds is un- conditional, a specific demand and refusal by the city is not necessary to entitle a holder to the issuance of a writ of mandamus compelling the city officials to make the levy required.*^ Since a writ of mandamus is based upon a default of 45— Town of Darlington v. At- 46— City Of Little Eock v. United lantic Trust Co., 78 Fed. 596, 0. 0. States ex rel., etc., 103 Fed. 418. A.; Sibley v. Mobile, 4 Am. Law 47 — City of Austin v. Cahill Times N. S. 226. (Tex.), 88 S. W. 542. ACTIONS ON PUBLIC SECTJEITIES 843 duty the levy of taxes, the time for which has not yet arrived, cannot be directed.*^ § 423. Mandamus as an ancillary remedy. The writ of mandamus is considered in. the nature of an execution and its object is to enforce the payment in some way provided by law of the judgment which has been recovered. It is ordinarily not an original action in the Federal courts but a writ issued in aid of already acquired jurisdiction, and in such cases becomes the sub- stitute for the ordinary process of execution to enforce the judgment.*^ § 424. Right of Federal courts to issue writ. It was early urged in connection with bond litigation that the Federal courts had no right to entertain appli- cations for a writ of mandamus, and this point was made with special force in some states where by the laws of the state such applications could only be made before state courts. It was early settled, however, in respect to this contention that the Federal courts might issue writs of mandamus to compel the levy of taxes to pay judg- ments on public securities rendered against public cor- porations, when by the laws of the state it either expressly or impliedly was made the duty of designated public officials to make provision for the payment of such obli- gations or of such judgments by the exercise of the power of taxation. Of the existence. of the right of the Federal court to issue the writ, as said in one case, "At 48— City of Austin v. Cahill 105 TJ. S. 733, 25 L. Ed. 723; (Tex.) J 88 S. W. 542. Striker v. Board of Com'rs of Grand 49— United States ex rel. Eiggs County (Colo.), 77 Fed. 567, C. C. V. Johnson County, 6 WaU. 166 Weber v. Lee County, 6 Wall. 210 Bath County v. Amy, 13 Wall. 244 Balls County Court v. United States, 387, C. C. A. A.; Lafayette County Co. v. Wun- derlich, 92 Fed. 313, C. C. A.; City of Santa Cruz v. Waite, 98 Fed. 844 PUBLIC SECUEiTifig the present time there can be no reasonable doubt. ' ' ^* The jurisdiction of the Federal courts in respect to the issue of the writ of mandamus necessarily cannot be regulated or affected by state statutes." All the ques- tions arising in mandamus proceedings as to the issue of the writ and the practice to be followed as involving a process of the Federal courts is peculiarly within the province of these courts to decide. ^^ Injunction by state court. In United States ex rel. Riggs V. Johnson County,^ ^ it was held in most em- phatic terms that a state court could not issue an injunc- tion perpetually enjoining a public corporation from levying special taxes devoted to the payment of bonds and coupons which could control in any way the coercive effect of a writ of mandamus issued by the Federal courts. Any proceeding of this kind is necessarily futile in respect to an action in the national courts against a debtor by holders of bonds or against a mandamus to en- force a judgTuent rendered, in such an action.^* In the Riggs case, there was suggested on behalf of the defendants that if the writ of mandamus should issue and they should obey its commands they would be exposed to suit for damages or to attachment for con- 50 — Von Hoffman v. City of of Liquidation v. United States ex Quincy, 4 Wall. 535; United States rel., 108 Fed. 689, C. C. A. ex rel. Eig^s v. County of Johnson, 52 — Butz v. City of Muscatine, 8 6 Wall. 166; Butz v. City of Mus- WaU. 575, 18 L. Ed. 490. catine, 8 Wall. 575; United States 53—6 Wall. 166. ex rel. etc. v. Clarke County, 96 54 — See also United States ex rel. U. S. 216; Wolff V. New Orleans, Webber v. Lee County, 6 Wall. 210, 103 U. S. 358; Stryker v. Board of 18 L. Ed. 781. State courts can- Corn 'rs of Grant County, Colo., 77 not enjoin the process of proeeed- Eed. 567; Duell County, Nebr. v. ings in the Circuit courts; not on First National Bank of Buchanan account of any paramount jurisdie- County (Mo.), 86 Fed. 263, C. C. A. tion in the latter, but because they 51 — United States ex rel. Eiggs &re entirely independent in their V. Johnson County, 6 Wall. 167, 18 sphere of action. Clapp v. Otoe L. Ed. 768; Eosenbaum v. Bauer, County (Nebr.), 104 Fed. 473, C. 120 U. S. 450, 30 L. Ed. 743; Board C. A. ACTIONS ON PUBLIC SECURITIES 845 tempt or imprisonment, having violated the terms of the injunction issued by the state courts. The court in that case said on this point: "No such apprehensions are entertained by the court, as all experience shows that the state courts at all times have readily acquiesced in the judgments of this court in all cases confided to its determination under the Constitution and laws of Con- gress. Guided by the experience of the past, our just expectations of the future are that the same just views will prevail. Should it be otherwise, however, the de- fendants will find the most ample means of protection at hand. The proper course for them to pursue, in case they are sued for damages, is to plead the commands of the writ in bar of the suit, and if their defence is overruled, and judgment is rendered against them a writ of error will lie to the judgment under the twenty-fifth section of the Judiciary Act." § 425. Parties in mandamus proceedings. In determining the proper parties in mandamus pro- ceedings to compel the levy of taxes for the payment of a judgment on bonds or coupons or their direct payment and to whom the writ should be directed, it is necessary to consider the nature of the writ and the official duties which are required of the persons through whom the writ is sought. The writ should be directed to those offi- cials who are by law charged with the performance of the duty sought to be required of them. The question is also involved of whether the relator has a legal right to its performance from them either by virtue of a judg- ment he has already obtained or through his ownership of the bonds and coupons. If such officials have the legal duty to perform which is required of them and the relator has the legal right to its performance from them, he is clearly entitled to the writ,^^ and it is not necessary that 55— Heine v. Levee Com'rs, 19 City of Watertown, 19 Wall. 107, Wall. 655, 22 L. Ed. 223; Eees v. 22 L. Ed. 72; Labette County 846 PUBLIC SECURITIES they or any of them be parties to any of the original pro- ceedings, or that they should have been filling the official positions at the time when the public corporation through its legal representatives first failed in the performance of the legal duty required of it.^^ It has also been held that the relator is entitled to an effective writ and if he can have it only by joining in its commands, all those whose coercion is by law required, even though it be by separate and successive steps in the performance of those legal duties which are necessary to secure to him his legal right, all these officials are proper parties, otherwise, it was held in a case in the Supreme Court of the United States that the whole proceeding is liable to be rendered nugatory and abortive.®^ Where the boundaries of a county were changed so as to place a township which had issued railroad aid bonds within the limits of another county, the officials of this county upon whom devolved the duty of levying and col- lecting taxes for the payment of them, were proper par- ties defendant in mandamus proceedings.^® Under the decision of Labelle County Commissioners V. United States ex rel., etc., cited above, it is proper to direct a writ of mandamus not only to existing officials, but also to their successors.^" In Quincy v. Jackson,"" the court in considering the question of to whom the writ should be directed, said: "We have only to inquire whether the corporate au- thorities of the city have the power under the laws of Illinois to levy and collect such a tax, ' ' and further held Com'rs V. XJmted States ex rel. United States ex rel. Moulton, 112 Moulton, 112 U. S. 217, 28 L. Ed. U. S. 217, 28 L. Ed. 698. 698; Guthrie v. Sparks, 131 Fed. 58 — Folsom v. Greenwood County, 443, C. C. A. ; Fleming v. Trousdale, 137 Fed. 449, C. C. A., reversing 85 Fed. 189, C. C. A. 130 Fed. 730. 56 — Board of Liquidation v. 59 — Hicks County Auditor et al. United States ex rel., etc., 108 Fed. v. Cleveland, 106 Fed. 499. 689, C. C. A. 60—113 U. S. 332; 28 L. Ed. 57— La Belle County Com'rs v. 1001. ACTIONS ON PUBLIC SEOUEITIES 847 that when the legislature of Illinois granted the power to the City of Quincy to subscribe to the stock of certain railroads and issue bonds in payment, the implied au- thority was given to levy taxes for their payment and "in giving authority to incur obligations for such extraor- dinary expenses the legislature did not restrict its cor- porate authority to the limit of taxation provided for or- dinary debts and expenses." In Board of County Com- missioners, Leavenworth County v. Sellew,*^ it was held by Chief Justice Waite that in the State of Kansas, coun- ties are bodies corporate and politic, capable of suing and being sued. Their powers are exercised by boards of county commissioners chosen by the electors. The name by which they can site or be sued is the board of county commissioners of the county of . Under the Kansas statutes in legal proceedings process is served on the clerk of the board and when a copy of a writ of mandamus is served on the clerk of the board, it is service on the corporation and equivalent to a command that the persons who may be members of the board should do what is required. A peremptory writ of mandamus is properly directed to the board in its corporate capacity "if the members failed to obey, those guilty of disobedi- ence may, if necessary, be punished for contempt." Where it was made to appear that the office of presi- dent of a township issuing bonds and on which a judg- ment had been obtained was vacant when the judgment was rendered and had been continuously so since that time, the Supreme Court of the United States held that the relator was entitled to a writ of mandamus directing the county to levy a tax upon the taxable property of the township for the payment of the judgment."^ 61—99 U. S. 624, 25 L. Ed. 333. County v. WUaon, 109 U. 8. 621, 27 62 — County Com'rs of Cherokee L. Ed. 1053. 848 PUBLIC SECURITIES § 426. Mandamus not a creative writ. Mandamus, as already suggested, is not a creative writ. Its office is not to create new duties nor powers but to compel the discharge of those already imposed by the law of the state and the exercise of those already ex- isting. This principle has been stated by a distinguished legal author as foUows,^^ "An important feature of the writ of mandamus, and one which distinguishes it from many other remedial writs, is that it is used merely to compel action and to coerce the performance of a pre- existing duty. In no case does it have the effect of cre- ating any new authority, or of conferring power which did not previously exist, its proper function being to set in motion and to compel action with reference to pre- viously existing and clearly defined duties. It is there- fore in no sense a creative remedy, and it is used only to compel persons to act when it is their plain duty to act without its agency. ' ' A writ therefore cannot be awarded to compel a public corporation to levy any taxes which are not authorized by law ; ** and the fact that in past years a city has failed to make the maximum levy author- ized by its charter will not justify a levy in any year in excess of its charter limitations. The remedy afforded by the writ of mandamus is prospective."' In a case from Colorado,"® on this point the court said: "A court has no taxing powers, and can impart none to the county authorities. It has no jurisdiction to coerce 63 — High Extraordinary Legal pel a municipal corporation to levy Eemedies, Sec. 7. a tax which the law does not author- 64 — Sup 'rs, etc., v. United States, ize. We cannot create new rights or 18 Wall. 71, 21 L. Ed. 771; City of coofer new powers. All we can do Cleveland v. United States, 111 is to bring existing powers into Fed. 341; Balls County Court v. operation. United States, 105 U. S. 733, 26 L, 65— City of Cleveland v. United Ed. 1220. States $x jel., etc.. Ill Fed. 341. United States ex rel., etc., v. 66 — Board of Com'rs of Grant County of Macon, 99 U. S. 582. We County v. King, 67 Fed. 202, C. have no power by mandamus to com- C. A. ACTIONS on' PUBLIC SECtJEITIES 849 the levy of a tax except where the law has made it the clear and absolute duty of the proper authorities of the county to levy such a tax. When the law has made it the duty of the levying court or board to levy a tax to pay a specified class of indebtedness, the Federal court in which a judgment has been rendered on that class of indebtedness may, by mandamus, compel the assessment, levy, and collection of a tax to pay such judgment ; but this, say the Supreme Court, is the limit of its power." If the power, however, exists to levy taxes at the time bonds were issued the corporate authorities can be re- quired to levy taxes for the payment of a judgment ren- dered on the bonds although legislation has been subse- quently passed attempting to repeal the power to tax as originally conferred.®' The power to levy taxes for the payment of bonds or of judgments necessarily depends in many instances upon the grant of special authority, and the bond holder or judgment creditor may be limited in his right to compel the levy of taxes by the special authority thus conferred.®^ Heine v. Board of Levee Commissioners, This was a suit in Chancery, ^^ brought by the holders of certain levee bonds issued by a quasi-corporation, under the laws of the State of Louisiana, a Board of Levee Commis- sioners, having the power to issue bonds and provide- for the payment of interest and principal by taxes, to be levied upon the taxable property within the levee district. The bill alleged failure to levy the taxes to pay the inter- est and further that the persons duly appointed as levee commissioners had pretended to resign their offices for the purpose of evading the duty of levying taxes for the 67 — Von Hoffman v. City of 68 — United States ex rel, etc., v. Quiney, 4 Wall. 535, 18 L. Ed. 403; County of Macon, 99 U. S. 582, 25 Balls County Court v. United States L. Ed. 331. ex rel., etc., 105 U. S. 733, 26 L. Ed. 69— Heine v. Levee Oom'rs, 19 1220; see, also, Sec. 358, et seq.. Wall. 655; 22 L. Ed. 223. ante. p. s.— 64 850 PUBLIC SECUEITIES payment of the bonds in question and the interest. The relief sought was that the levee commissioners be re- quired to assess and collect the taxes necessary to pay the bonds and interest and if after a reasonable time they should fail to do so that the district judge be au- thorized to do the same. No judgment had been recov- ered at law on the bonds or any of them, nor had any attempt been made to collect the money due by action in the common law courts. A demurrer to this bill was sustained in the Circuit Court and the plaintiffs appealed from the decree of dismissal rendered on that demurrer. The decree of the Circuit Court was affirmed. The court in its opinion by Mr. Justice Miller in part said : ' ' The question thus presented by the present case is not a new one in this court. It has been decided in numerous cases, founded on the refusal to pay corporation bonds, that the appropriate proceeding was to sue at law and by a judg- ment of the court establish the validity of the claim and the amount due, and by the return of an ordinary execu- tion ascertain that no property of the corporation could be found liable to such execution and sufficient to satisfy the judgment. Then, if the corporation had authority to levy and collect taxes for the payment of that debt a mandamus would issue to compel them to raise by taxa- tion the amount necessary to satisfy the debt." And on the rights of the Federal Courts in respect to the exercise of the power of taxation the court further said: "The power we are here asked to exercise is the very delicate one of taxation. This power belongs in this country to the legislative sovereignty, State or National. In the case before us the National sovereignty has nothing to do with it. The power must be derived from the legislature of the State. So far as the present case is concerned, the State has delegated the power to the levee commissioners. If that body has ceased to exist, the remedy is in the legislature either to assess the tax by special statute or to vest the power in some other ACTIONS ON PUBLIC SECUEITIES 851 tribunal. It certainly is not vested, as in the exercise of an original jurisdiction, in any Federal court. It is un- reasonable to suppose that the legislature would ever select a Federal court for that purpose. It is not only not one of the inherent powers of the court to levy and collect taxes, but it is an invasion by the judiciary of the Federal government of the legislative functions of the State government. It is a most extraordinary request and a compliance with it would involve consequences no less out of the way of judicial procedure, the end of which no wisdom can foresee. ' ' §427. Same subject; writ denied. The writ will therefore be denied as indicated in the cases cited under the preceding section where the au- thority to tax does not exist either because in excess of a constitutional or statutory limit or because conferred by an unconstitutional law.''" A public corporation cannot be compelled to levy a tax in excess of the limit prescribed by legal authority, and if the respondent in mandamus proceedings has exer- cised the full power conferred upon it by the statutes in force when the relator's bonds were issued and its power has not been enlarged by subsequent statutes the writ must be denied.''^ § 428. Control of municipal discretion. It frequently happens that the amount of taxes author- ized for public purposes is limited by law and the appro- priation or use of the proceeds has been committed by law to public officials to be disbursed in their discretion 70— O'Brien et al. v. Wheelock, Court, 35 Fed. 483; State v. Short- et al., 95 Fed. 883 C. C. A.; Terri- ridge, 56 Mo. 129. tory V. Board of Com'rs of Santa 71 — United States ex rel. Spitzer Fe County (N. Mes.), 89 Pae. 252; v. Town of Cicero, 50 Fed. 147, United States v, Macon County 852 PUBLIC SECUBITIES in the payment of current expenses of the corporation and for other purposes. The question of the extent to which a court will attempt to interfere or control this discretion has been raised in a number of cases. In some it has been held that the courts will not control such dis- cretion except to the extent of compelling the appropria- tion of any surplus that may remain after the payment of current expenses to the payment of the judgment.''^ In one case/^ an attempt was made to compel the ap- propriation . of moneys from a fund raised for general purposes to the payment of a judgment, in addition to the funds derived from a special tax authorized for the purpose of paying interest on bonds and providing a sinking fund to liquidate the same, the court held that this could not be done and said: "That fund (provided for general expenses), by the terms of the charter of the city, under which the bonds were issued, is authorized for the purpose of paying the necessary current expenses of administration, not including payments on account of the bonds of the municipal corporation. And admitting that any surplus of such fund, in any year, remaining after payment of such expenses, ought to be applied to the payment of the interest and principal of the bonds, that could only be required when such surplus should have been ascertained to exist. In the present judgment the court has undertaken to foresee it, and by mandamus to compel the city, by limiting its expenditures for its general purposes, to create the surplus which it appro- 72 — Butz V. City of Muscatine, 8 of assessment necessary to raise the Wall. 575; Clay County v. McAleer, interest on its outstanding bonds, 115 TJ. S. 616; 29 L. Ed. 482; City its action was subject to the control of Cleveland v. United States ex rel. of the judiciary in case of an abuse etc., Ill Fed. 341 C. C. A.; Bosko- of that discretion. Moore v. New witz V. Thompson (Calif.), 78 Pac. Orleans, 32 La. Ann. 726; State v. 290. The court here held, however, Trammel (Mo.), 11 S. W. 747. that while a Board of Directors of 73 — East St. Louis et al. v. United an election district had a certain States ex rel. Zebley, 110 U. S. 321, discretion in determining the amount 28 L. Ed. 162. ACTIONS ON PUBLIC SECUEITIES 853 priates. But the question, what expenditures are proper and necessary for the municipal administration, is not judicial; it is confided by law to the discretion of the municipal authorities. No court has the right to control that discretion, much less to usurp and supersede it." § 429. When courts will control discretion in respect to current expenses. While the general rule in respect to the control by the courts of municipal discretion in expenditures for the payment of current expenses is as stated in the preceding section, yet in some instances the courts have held that the authorities of public corporations do not possess an un- limited discretion in respect to municipal expenses as against creditors. In one case it was decided that it was an entirely just and reasonable view that boards of county commissioners under the laws of Nebraska were not vested with such an absolute control over the disposi- tion of the county revenues as would enable them to defeat the claims of judgment creditors by swelUng the estimate for county expenses to such a sum as would exhaust the entire county revenue for a given year or for a series of years, that a board of commissioners should make a fair effort to pay a judgment by cutting down to some extent the outlay for current expenses. The court said : ' * Such expenses by judicious management are usu- ally capable of being reduced to some extent without injury to the public service; and when they can be so reduced and a portion of the current revenues applied to the payment of judgment creditors that course should be pursued and the courts may properly require that it should be pursued," ''* and in another case where it was claimed that the entire revenues of the city had been 74 — ^Duell County, Nebr. v. First National Bank of Buchanan County, Mo., 86 Fed. 264 C. C. A. 854 tUBLlC SECtJHlTIES appropriated and were necessary for the running ex- penses, the court held that while it was not within its province to interfere with the distribution of the reve- nues of a city when the plain duties of its officers are performed, yet it was vested with the power to examine a budget when made and to determine therefrom the compliance or non-compliance with a plain and positive duty in respect to the payment of a judgment,^^ and that it was not within the discretion of the city council to exhaust the entire revenue with one class of disburse- ments and leave the other to accumulate. The court said: "In truth it seems to be the plainly expressed intention of both the legislative and judicial branches of the government to protect the city of New Orleans from the shoals and quicksands of financial embarrassment on account of any further accumulation of unfunded indebtedness." §430. Mandamus; defenses. The absence of authority to levy taxes has been consid- ered in previous sections and the rule there stated that it is a sufficient defense in mandamus proceedings. The fact that a judgment has become not only dormant but dead affords a defense and no suit can be maintained upon it where a writ of mandamus was issued and served but no other steps were taken for more than six years. The court held that it could not be said that a mandamus suit was pending during that time within the rule that the statute of limitations does not run against a party while he has a suit pending to enforce his claim.'" Distress to debtor, no defense. The right of a credit- or to the payment of the debt and the enforcement of that payment by all the legal remedies which the law gives 75 — Mayor etc. of New Orleans 76 — Dempsey v. Twp. of Oswego, V. United States ex rel. Stewart, 49 51 Fed. 97 C. 0. A. Ted. 40 C. C. A. ACTIONS ON PUBLIC SBCUEITIES 855 Mm cannot be stricken down or impaired because the enforcement of the writ may embarrass the debtor. Man- damus will not be refused therefore on account of dimin- ished resources, or distress of debtor J^ § 431. Failure to perform duty no defense. The fact that there has been a default in the payment of the interest will not serve as a defense ''^ to excuse the payment of interest, otherwise because it was not paid at the proper time would enable a public corporation to profit by its own wrong. In general, the failure of public officials to levy and collect taxes or to make reports required of them by law as a basis for a tax assessment cannot be urged as a valid defense.''^ § 432. Statutes of limitation as a defense. The provisions of a statute of limitations may be pleaded as a bar to an action brought on negotiable securities or on coupons which may be attached to them. The questions involved in an action on coupons have been fully considered in previous sections.^" Such provi- sions vary in the different states and an examination of the particular statutes will be necessary to establish the time within which the action can be commenced.®^ 77 — City of Galena v. Amy, 5 226; Denny v. City of Spokane, 79 Wall. 705, 18 L. Ed. 560; Kees v. Fed. 719 C. C. A. City of Watertown, 19 WaU. 107; 80— See Sec. 194, et seq., ante. 22 L. Ed. 72; City of Little Eock 81— Tipton v. Smythe (Ark.), 94 V. United States ex rel., etc., 103 S. W. 678; Coquard v. Village of Fed. 418. Oquawka (111.), 61 N. E. 660. 78— Hicks County Auditor et al. Davis v. Board of Com'rs of Lin- V. Cleveland, 106 Fed. 459 ; Padgett coin County (Nev.), 45 Pac. 982. et al. V. Post, 106 Fed. 600. Bonds payable from special fund. 79— Hawley v. Fairbanks, 108 U. Gould v. City of Paris (Tex.), 4 S. S. 543, 27 L. Ed. 820; Sibley v. W. 650; Thornburgh v. City of Ty- Mobile, 4 Am. Law Times N. S. ler (Tex.), 43 8. W. 1054; City of 856 PUBLIC SECUKITIES The fact that a tax has never been levied for the pay- ment of bonds will not prevent such a plea.^^ Where bonds have been held invalid an action brought on an im- plied obligation is properly commenced within the stat- utory period after the repudiation of the securities,^^ and where warrants were exchanged for void county bonds, it was held that the statute of limitations did not begin to run against an action by a holder of the bonds to rescind the transaction and enforce the warrants until the bonds are repudiated by the county.^* Limiting pro- visions will not be given a retroactive effect.^^ It is entirely competent however, for a legislature to pass a statute reducing the time for the commencement of ac- tion from that period which applied at the time the liability was incurred or the contract was made. This power, however, is subject to the fundamental condition that a reasonable time, taking all of the circumstances into consideration, be given by the new law for the com- mencement of an action before the bar takes effect. Un- der this rule a state legislature was held authorized to reduce a statute limitation on an existing obligation from twenty to six years.®^ A legislature may pass a law providing that municipal indebtedness shall be valid not- withstanding the date of issue. Such a law would oper- ate to validate securities theretofore issued and upon which an action was barred by existing statute of limi- tations,®^ and the running of a statute of limitations upon Tyler v. L. L. Jester & Co., 77 S. W. 84 — Board of Com 'rs of Kearney 1058. County v. Irvine, 126 Fed. 689 C. But see Brown v. Milliken, 42 C. A. Kan. 769, 23 Pae. 167. As to effect 85 — Waples v. City of Dubuque of mutual mistake in respect to fail- (la.), 89 N. W. 194. ure to levy taxes before due. 86 — Koshkonong v. Burton, 104 82— Eobertson v. Blaine County, V. S. 668, 26 L. Ed. 886. 85 Fed. 735. 87— O 'Neil v. City of Hobokeu 83— Geer v. School District, 111 (N. J.), 63 Atl. 986. Fed. 682 C. C.A. ACTIONS ON PUBLIC SECUKITIES 857 public securities may be suspended by acts of the cor- poration in recognizing the debt.^^ § 433. Creditor's remedy, change of. The rule has already been stated that remedies for the collection of a debt are essential parts of the contract of indebtedness and those in existence at the time it is incurred must be substantially preserved to the cred- itor.89 In a leading case in the Supreme Court of United States,*" a statute was passed which prohibited the courts of that state to issue a mandamus for the levy of a tax for the payment of the interest or principal of any bonds except those issued under a premium bond plan. This, it was held, was a clear impairment of the means for the enforcement of the contract with the holders of the con- solidated bonds involved in the case, and therefore null and void. When the contract was made the court held the writ of mandamus was the usual and the only effec- tive means to compel the city authorities to do their duty in respect to the levy of taxes in case of their failure to provide in other ways the required funds. There was no other adequate and complete remedy. "The only ground on which a change of remedy, existing when a contract was made, is permissible without impairment of the contract, is that a new and adequate and efficacious remedy be substituted for that which is superseded. Here, no remedy whatever is substituted for that of man- damus, the holders are denied all remedy." The court further held in this case that an act requiring judgments 88 — TJnderhill v. Sonora, 17 Calif. 90 — Louisiana v. Pilsbury, 105 U. 173. S. 278; 26 L. Ed. 1090; see, also, 89 — City of Galena v. Amy, 5 Louisiana v. New Orleans, 102 tJ. Wall. 705, 18 L. Ed. 560; Eees v. S, 203, 207; Chicot County v. Sher- City of Watertown, 19 Wall. 107, wood, 148 U. S. 529, 37 L. Ed. 546. 22 L. Ed. 72; see Sees. 37 and 362, ante. 858 PUBLIC SECURITIES to be registered with the city comptroller before being paid was not an impairment of the creditor's remedy, as "we are not able to see anything in the requirement which impedes the collection of the relator's judgments or prevents his resort to other remedies if their payment be not obtained." CHAPTER XVI VALIDITY OF LEGISLATION; TAXATION OF SECURITIES § 434. General observations. To the law-making branch of a state government has been committed under our universally adopted system of a three-fold division of the powers of government the sole power and authority of making laws. Legislative authority is necessary in all instances for the incurring of debt by public corporations or the issue of their securi- ties, negotiable or otherwise. Constitutional provisions restricting the incurring of a debt or the issuance of securities do not confer authority. Affirmative action is necessary by the legislature as the law-making body to accomplish this purpose. Since legislative action is es- sential it follows that the validity of an act under which the power to incur indebtedness or to issue securities is claimed must first be established from the standpoint of its validity as a law. If void as such it cannot confer the power claimed although if passed in proper form, in so far as the particular subject-matter involved is con- cerned, it would be valid. No attempt will be made to discuss or to suggest in detail, the various points to be considered and investi- gated to establish the validity of a particular act as a law. The reader is necessarily referred on account of the limited scope of this work to the authorities on con- stitutional law and statutory construction. Some few suggestions however, will be made merely to serve as a reference to subjects for investigation. 859 860 PUBLIC SECTJEITIES § 435. Validity of legislation. The validity of an act extending railway aid or au- thorizing an issue of bonds may be also affected by constitutional provisions establishing a special procedure for the passage of such legislation. Eequirements of this character are based upon the subject of the legislation and afford another illustration of the restrictions which are constantly imposed, for the purpose of limiting the incurring of indebtedness by public corporations and especially that of the character noted.^ Presumption of validity. The presumption of law exists in favor of right acting and right thinking. This principle in criminal law finds expression in the familiar phrase that one is presumed innocent until he is proven guilty. In corporation law the courts adopt the prin- ciple that an act of an incorporated body is presumed to be within its legal powers until its character to the contrary is established. The burden of proof ordinarily is upon the one who attacks the validity of a contract and this doctrine of presumption operates in the deter- mination of nearly every legal question. The ■ courts apply the same doctrine to the acts of law making bodies and the presumption exists in favor of their validity and the regularity of their proceedings. It applies to the manner in which their meetings are called, the time and place of meeting, character of the business trans- acted and the particular manner in which the business may have been transacted as affected by the existence of rules of order, provisions for a quorum and mode of passage and the like. All required formalities are pre- sumed to have been complied with in the passage of the l_Eender v. City of Louisville, of Jensen County (N. C), 63 S. E, 142 Ky. 409, 134 S. W. 458; Com'rs 275. Constitutional provisions rela- of Buncombe County v. Payne, 123 five to the passage of acts allowing N. C. 432, 31 S. E. 711. counties to issue bonds are man- Wittkowsky v. Board of Com'rs datory. VALIDITY OF LEGISLATION; TAXATION OP SECURITIES 861 law, and further that it is legal in respect to both its form, subject-matter and general characteristics. The burden of proof therefore is shifted to the one attacking the validity of a law.^ § 436. Legality of legislative body; meetings, quorum, etc. In order that the acts of a legislative body operate as authority it must have been regularly and legally con- stituted and elected pursuant to constitutional and stat- utory provisions. Its meetings must have been called by notice pursuant to legal authority and under the regulations and provisions of the law with respect to them. They must be held at the place designated by law and at regular or stated intervals and cannot be secret either as to time or place. If not prohibited by law adjournments can be taken from time to time and the power of the legislative body at the adjourned meet- ings will be full and ample to accomplish the work or transact the business, which could legally have been done at the meeting from which the adjournment was taken.^ The power to legislate at a special session or meeting may be limited by constitutional provisions and it fol- lows that action other than that authorized will be void.* 2 — Keene v. Jefferson County stitutional Limitations, 7th Ed., pp. (Ala.), 33 So. 435; Ex parte Has- 195, 236, 237, and cases cited; kell, 112 Calif. 416, 32 L. E. A. Lewis' Sutherland Stat. Construe- 527; Parker v. Catholic Bishop of tion, 2nd Ed., Sec. 497. Every pre- Chieago, 146 111. 158; 34 N. E. 473; sumption is in favor of the validity City of Indianapolis v. Consumers' of legislative acts and they are to Gas Trust Co., 140 Ind. 246; AUen be upheld unless there is a substan- V. City of Davenport, 107 la. 90, tial departure from the organic law, 77 N. W. 532; City of Lead v. citing many cases. Clatt, 13 S. D. 140 ; Stafford v. Chip- 3— State v. Smith, 22 Minn. 218 ; pewa Valley Electric Ey. Co., Ill State v. Sogers, 107 Ala. 444, 19 Wis. 331; Wood v. City of Seattle, So. 909, 32 L. E. A. 520; Stock- 23 Wash. 1, 62 Pac. 135, 52 L. E. ton v. Powell, 29 Pla. 1, 15 L. E. A. 369. A. 42. Abbott's Munic. Corps., pp. 1293, 4 — Eylands v. Pinkennan, 63 1315, cases cited; Cooley Con- Conn. 176, 22 L. E. A. 653; Walker 862 PUBLIC SECUEITIES To prevent hasty or corrupt action, constitutional pro- visions may require the presence of a required number of the total members of the body, and further the af- firmative action of a designated number of either the whole body or those present. This number is commonly designated a quorum." A legislative body must act in the passage of legisla- tion as such, it must have met in its legal capacity and transacted business in that capacity and according to law. § 437. Form of law. The form of a legislative act, unless prescribed by the constitution or the general laws of a state, may take any phraseology or form which the experience or the taste of the writer may determine. The technical essentials of a law as provided in some states and as commonly held by the courts include a title, an enacting clause, the body or the substance of the law, a repealing clause, the oper- ative clause and the proper and necessary signatures and approvals, although the repealing clause is frequently omitted.® It is not necessary, ordinarily, to recite the authority for its passage or the reason for the passage of the act in question. V. Inhabitants of West Boylston, 2nd Ed., Sec. 80; Cooley Const. 128 Mass. 550; Smith %'. Tobenor, Limitations, 2nd Ed. p. 201. 32 Mo. App. 601; In re City of 6— Aikins v. PMlUps, 26 Pla. 281, Pittsburgh (Pa.), 66 Atl. 348. 10 L. E. A. 158. 5 — People V. Harrington, 63 Calif. Hamilton v. State, 61 Md. 14. 257; City of Chariton v. Holliday, The great seal of the state is nee- 60 la. 891; Cascaden v. City of essary to the authenticity of a bill. Waterloo, 106 la. 673; Pence v. Pope v. Town of Union, 32 N. J. City of Frankfort, 101 Ky. 534; L. 343; Galveston, etc. E. E. Co. v. Pournier v. West Bay City, 94 Mich. Harris (Tex.), 36 S. W. 776; State 463; Hutchinson v. Borough of Bel- v. Fountain, 14 Wash. 236; 44 Pac. mar, 61 N. J. L. 443, 39 Atl. 643; 270; State v. Nohl, 113 Wis. 15, 88 State V. Orr, 61 Ohio St. 394; Lewis' N. W. 1004. Sutherland Statutory Construction, VALIDITY OF LEGISLATION; TAXATION OF SECURITIES 863 § 438. The title. To prevent ill-considered or corrupt measures, the con- stitutions of nearly all states contain numerous provi- sions relative to both the form and mode of passage of a law, its general characteristics, and the subject matter capable of enactment. A constitutional provision most frequently found in respect to the legislation of state legislative bodies is, that no law shall deal with more than one subject, which shall be expressed in its title. Such a requirement has for its purpose the prevention of legislation as introduced from dealing with more than one subject, while the title refers to one alone, a serious reflection upon the care and attention which legislators give to those matters upon which their action is expected.'^ This constitutional provision has also for its purpose the simplification of legislation by preventing incon- gruous and many subjects to be regulated or dealt with in the same bill, and it also operates in preventing members of legislative bodies and the people from being misled upon reading the title.* 7— Beard v. Wilson, 52 Ark. 290; Hall, 113 U. S. 135, 28 "l. Ed. 954; Village of Hinsdale v. Shannon, 182 Carter County v. Sinton, 120 U. S. 111. 312; City of Tarkio v. Cook, 517, 30 L. Ed. 701; West Plains 120 Mo. 1. Twp., Meade County v. Sage et al., 8— Louisiana v. Pilsbury, 105 U. 69 Fed. 943. S. 278; 26 L. Ed. 1090. Its object Andrews v. Board of Com'rs of is to prevent the practice common in Ada County (Ida.), 63 Pac. 592. all legislative bodies where no such An act authorizing the construction provision exists of embracing in the of bridges but which was entitled same bill incongruous matters hav- "An Act providing for the issuance ing no relation to each other or to of negotiable coupon bonds," etc., the subject specified in the title by held void as not expressing the sub- which measures are often adopted ject of legislation contained in the without attracting attention, but act. Walker v. Caldwell, 4 La. Ann. which, if noticed, would have been 298; People v. Mahaney, 13 Mich, resisted and defeated. It thus 481; Sun Mutual Insurance Co. v. serves to prevent surprises in legis- Mayor, etc., of New York, 8 N. Y. lation; Ackley School District v. 239; State v. County Debt of Davis 864 PUBLIC SECTJEITIES The language of the Minnesota constitution is typical of this class of constitutional provisions: "No law shall embrace more than one subject which shall be expressed in its title. "3 The purpose of a constitutional provision of this char- acter has been briefly noted above. In Cooley's Consti- tutional Limitations/" that author said: "It may there- fore be assumed as settled that the purpose of these pro- visions was: first, to prevent hodge-podge or 'log-roll- ing' legislation; second, to prevent surprise or fraud upon the legislature by means of provisions in bills of which the titles gave no intimation, and which might therefore be overlooked and carelessly and unintention- ally adopted; and, third, to fairly apprise the people,, through such publication of legislative proceedings as is usually made, of the subjects of legislation that are be- ing considered, in order that they may have opportunity of being heard thereon, by petition or otherwise, if they shall so desire." It is not necessary that the title should specify in detail all of its sections or provisions, but it should contain suffi- cient to comply with the rule as fixed in the constitution of a particular state. If the title fairly describes the general purposes of the act it is ordinarily held sufficient. In the notes are cited cases involving the validity of an issuance of securities or the incurring of a debt, depend- ing upon the validity of a law considered from the effect of this constitutional provision upon it.^ ^ County, 2 la. 280; City of Chester Montclair v. Eamsdell, 107 TJ. S. V. Bullock, 187 Pa. 544; Yesler v. 147, 27 L. Ed. 431. It is not in- City of Seattle, 1 Wash. State, 308. tended by the Constitution of New 9 — Article IV, Section 27. Jersey that the title of an act 10 — Seventh Edition, p. 205. should embody a detailed statement, 11 — San Antonio v. MehafEy, 96 it need not be an index or abstract U. S. 312, 24 L. Ed. 816; Unity v. of its contents. Jonesbpro City v. Barrage, 103 IT. S. 447, 26 L. Ed. Cairo & St. Louis E. B. Co., 110 V. 405, S. 192, 28 L. Ed. 116; Otoe County VALIDITY OF LEGISLATION; TAXATION OF SECUEITIES 865 The title as expressing the object of the act, it has been held, embraces and expresses any lawful means to achieve the object. ^2 V. Baldwin, 111 U. S. 1, 28 L. Ed. 331. Carter County v. Sinton, 120 TJ. S. 517, 30 L. Ed. 701. This pro- vision should receive a reasonable and not a technical construction; and looking to the evil intended to be remedied it should be applied to such acts of the legislature alone as are obviously within its spirit and meaning. Geer v. Board of Com'rs of Ouray County, 97 Fed. 435. A bill which provided for the .refunding of county debts evidenced by bonds and also the refunding of county debts evidenced by judgments was here held not to violate the consti- tutional provision. The court said: "The deliberate enactments of leg- islatures cannot be whistled down the wind on such frivolous pin points as this. The object of this con- stitutional provision was two-fold. It was to prevent surreptitious leg- islation, the insertion of enactments in bills which were not indicated by their titles, and to forbid the treat- ment of incongruous subjects in the same act. It never was intended to prevent the legislature from treat- ing all of the various branches of the same general subject in one law, or from inserting in a single act all the legislation germane to its principal subject." Citing many cases. School District No. 11, Da- ]*ota County v. Chapman, 152 Fed. 887 C. C. A.; Chostkov et al. v. City of Pittsburgh, 177 Fed. 936. Alabama Great Southern R. E. Co. V. Eeed (Ala.), 27 So. 19. Con- stitution, Art. IV, Sec. 32, relative to appropriation bills applies only to legislative appropriations from the state treasury, not to acts au- thorizing the issue of bonds. The section requires appropriations to be made by separate bills each embrac- ing a single subject. City Council of Montgomery v. Moore (Ala.), 37 So. 291. City of Los Angeles v. Hance (Calif.), 54 Pae. 387. Under the constitutional provision an act may be void in part only. Hayes v. Walker (Fla.), 44 So. 1147. An act entitled "An Act to extend the corporate limits of the city of Tampa" included a pro- vision that added territory should not be liable for nor taxed to pay any existing indebtedness of the city of Tampa. It was held that this was germane to the subject ex- pressed in the title. Smith v. City of Macon (Ga.), 58 S. E. 713; White V. City of Atlanta (Ga.), 68 S. E. 103. Beaner v. Lucas (Kan.), 112 N. W. 772. An act authorizing cer- tain designated cities "to erect a city hall," etc., held suflSciently broad to include provisions for an issue of bonds in anticipation of taxes. Board of Education of City 12 — Antonio v. Mehaffy, 96 U. S. 2i2, 24 L. Ed. 816; Louisiana v. Pilsbury, 105 U. S. 278; Mahomet p. s.— 55 V. Quackenbush, 117 XJ. S. 508, 29 L. Ed. 982. 866 PUBLIC SECURITIES § 439. Subject matter. The legislative act must also be valid having in view constitutional provisions relative to its subject-matter, its general characteristics and its uniformity of operation throughout the state. In many of the states constitu- tional provisions are to be found, which require that all laws passed shall have a uniform and general operation. "All such laws shall be uniform in their operation throughout the state," "Laws of a general nature shall have a uniform operation throughout the state," and ' ' All laws shall be general and of a uniform operation, ' ' are phrases which are constantly found in state constitu- tions. It follows necessarily that if in the passage of a law authorizing an issue of public securities such a con- stitutional provision has been violated, the power at- tempted to be conferred will not become operative.*^ Provisions relative to uniformity in operation are coup- led in many instances with a positive prohibition against of lola V. Fronk, 82 Kans. 782, 109 stitution, Article II, Section 17, Pac. 415. which provides that no bill shall State V. Gunn (Minn.), 100 N. W. embrace more than one subject. 97. An act authorizing county com- Ransom v. Eutherford County missioners to issue certificates of (Tenn.), 130 S. W. 1057; see, also, indebtedness held valid. Abbott Municipal Corps., Sec. 523; City of Elmira v. Seymour, 97 N. Gray's Limitations of Taxing Pow- Y. S. 623. Legislation authorizing er. Sec. 1815, et seq. ; Cooley's Con- the construction of bridges and the stitutional Limitations, 7th Ed., pp. issuance of bonds held not to con- 202-214; Lewis' Sutherland Stat, iliet with constitutional provision Construction, 2nd Ed., Chapter 4. that no private or local bill shall 13 — Wagner v. Milwaukee County embrace more than two subjects (Wis.), 88 N. W. 577. An act which shall be expressed in its title. authorizing the building of viaducts Buist V. City Council of Charles- and the issue of bonds held not to ton, 77 S. C. 260, 57 S. E. 862. Act violate Constitution, Article IV, authorizing the city of Charleston Sec. 18, which provides that no local to issue bonds to pay maturing bill shall embrace more than one sub- bonded debt held constitutional. ject which shall be expressed in its City of Knoxville v. Gas (Tenn.), title. City of Belleville v. Wells 104 S. W. 1084. Authority for an (Kan.), 88 Pac. 47; State v. Lyt- issue of bonds for various purposes ton (Nov.), 99 Pac. 855. held not unconstitutional under Con- VALIDITY OF LEGISLATION; TAXATION OF SECUKITIES 867 the passage of so-called special legislation. The cases involved under this subject have been generally referred to and discussed in a previous section," upon the limita- tions on the power of the legislature to regulate and con- trol public corporations and the subject of classification of cities or towns has been also previously considered.^ ^ § 440. Introduction of bills; form and mode of passage. Many of the state constitutions also contain provisions relative to the introduction of bills and limiting in some instances the time within which they can be introduced before the end of the session.^'' It is a customary provision also that revenue bills shall originate in the House of Representatives.^^ That a bill must be read a certain number .of times, usually three, and on different days, is also a common requirement.^® 14 — See see. 33, ante. 15 — See see. 33, ante. See, also, Waite V. City of Santa Cruz, 89 Fed. 619; Alexander v. City of Duluth (Minn.), 80 N. W. 623; Thomas v. City of St. Cloud (Minn.), 97 N. W. 125; Dickinson v. Board of Chosen Freeholders of Hudson Coun- ty (N. J.), 58 Atl. 182; Baker v. City of Seattle, 2 Was-h. St. 576, 27 Pac. 462. 16— Cox V. Com'rs of Pitt County (N. C), 60 S. E. 516. Baltimore & D. P. E. E. Co. v. Pumphrey (Md.), 21 Atl. 599. That provision of the Maryland Consti- tution, Art. Ill, Sec. 54, is manda- tory which provides that the act of assembly vrhich authorizes railroad aid "shall be published for two months before the next election for members of the House of Delegates in the newspapers published in said counties." Keene v. Jefferson County (Ala.), 33 So. 435; Sackrider V. Board of Sup'rs of Saginaw County, 79 Mich. 59. 17— Board of Com'rs of Ouray County, 97 Fed. 435 C. C. A. The Act of the Colorado legislature of April 17, 1869, authorizing coun- ties to refund their judgment and bonded debts is not one for rais- ing revenue within the meaning of that provision of the Colorado Con- stitution requiring that such bills shall originate in the house. Its validity is not therefore affected by the fact that it originated in the Senate. 18— Weill v. Canfield, 54 Calif. Ill; Weyand v. Stoner, 35 Kan 545; People v. McBlroy, 72 Mich, 446; Chatham County Com'rs v. F. M. Stafford & Co. (N. C), 50 S. E. 862 ; Miller v. Town of Pulaski (Va.), 63 S. E. 880; Cooley Consti tutional Limitations, 7th Ed., pp, 116-117; Lewis' Sutherland Stat, Construction, 2nd Ed., Sees. 54-55 868 PUBLIC SECUKITIES The calling of the ayes and nays and a record of the vote or an entry of it upon the legislative journal is an- other provision frequently found.^° In the case of South Ottawa v. Perkins,^ ^ just cited, the bonds in question were held void because of the in- validity of the act under which authority to issue was claimed, as based upon a constitutional provision of Illi- nois, to the effect that "on the final passage of all bills the votes shall be by ayes and noes and shall be entered on the journal; and no bill shall become a law without a concurrence of a majority of all of the members elect in each House." The bill was not passed in the manner required and was therefore held unconstitutional. § 441. Publication and record. It is a just and salutary principle that requires the leg- islative action of a law-making body to be promulgated or published in some manner before it can become effec- tive. The principle requires not only that this should be done but also that the publication shall be made in that manner which shall best bring it to the attention of those whose actions and property it is designed to con- trol or affect. The time therefore of publication may be material equally with the fact of publication itself, the language and medium. English is the official and na- tional language in this country and it is scarcely neces- 20— Lutterloh v. City of Payette- third readings of said bill had been ville (N. C), 62 S. E. 758; Town entered, the bill did not become a of South Ottawa v. Perkins, 94 TJ. law. S. 260, 24 L. Ed. 154. 21—94 U. S. 260, 24 L. Ed. 154; Board of Com 'rs of Stanley see, also, Amoskeag v. Town of South County et al. v. Coler et al., 96 Fed. Ottawa, 105 U. S. 667, 26 L. Ed. 284 C. C. A. This ease followed the 1024. Whether a seeming act of decisions of the Supreme Court of the legislature is, or is not, a law, North Carolina which held that is a judicial question to be deter- where the journals of the two houses mined by the court and not a ques- did not show affirmatively that the tion of fact to be tried by a jury, yeas and nays on the second and VALIDITY OP LEGISLATION; TAXATIOlT OF SECtJBlTIES 869 sary to add that a law published in a language other than this will not be binding. General laws or consti- tutional provisions designate usually the requirements in respect to these matters.^^ Record of proceedings. It is common for all law-mak- ing bodies to keep a full and complete record of their proceedings, including necessarily the various steps taken and which may be essential to the passage of a valid law, and containing a recital of all the facts and acts which are necessary to constitute legal action by them. A fail- ure to properly record and enter as required by consti- tution or statutory provisions, or by the rules which a legislative body may have adopted for its own govern- ment, may invalidate a law. The question has frequently arisen of the presumptive or conclusive effect of the record of the passage of a law as officially made by a legislative body. The pre- sumption exists that the records are correct and state accurately and truthfully the facts therein recited.^* 22 — Baltimore & D. P. E. E. Co. its proceedings. If a certain act re- V. Pumphrey (Md.), 21 Atl. 599. ceived the constitutional assent of Act providing for railroad aid must the body, it will so appear on the be published two months before next face of its journal. And when a election for members of the house contest arises as to whether the act of delegates in the newspapers pub- was passed, the journal may be ap- lished in the counties proposing to pealed to to settle it. It is the evi- extend aid. National Bank of Com- denee of the action of the house, and merce v. Town of Granada, 54 Fed. by it the act must stand or fall. 100 C. C. A. Marshall Field & Co. v. Clark, Col- 23 — Town of South Ottawa V. Per- lector, 143 TJ. 8. 649; 36 L. Ed. kins, 94 TJ. S. 260, 24 L. Ed. 154. 294; Lyons v. Wood, 153 U. S. 649; The Constitution requires each house Wilkes County v. Color, 180 U. S. to keep a journal and declares that 506, 45 L. Ed. 642; County of Yolo certain facts made essential to the v. Coglan, 132 Calif. 265, 64 Pac. passage of a law, shall be stated 403; Evans v. Brown, 30 Ind. 514; therein. If those facts are not set Honey v. State, 119 Ind, 395; Laf- forth the conclusion is that they did ferty v. Huffman, 99 Ky. 80, 35 S. not transpire. The journal is made W. 123, 32 L. E. A. 203; Weeks v. up under the immediate direction of Smith, 81 Me. 538; Carr v. Coke, the house, and is presumed to con- 116 N. C. 223, 22 S. E. 16, 28 L. tain a full and complete history of B. A. 737; Cox v. Com'rs of Pitt 870 PUBLIC SECURITIES But this presumption is not conclusive and it has been held in many cases that questions of fact relating to the entry of certain acts may be inquired into by the courts for the purpose of determining the truth.^* There are cases, however, which hold that the certifi- cate of legislative officers that a law was regularly passed is conclusive upon the courts in respect to statutory or constitutional requirements. In a New Jersey case, it was said: "My conclusion then is that, both on the ground of public policy and upon the ancient and well-settled rules of law, the copy of the bill attested in the manner mentioned and filed in the office of the secretary of state is the conclusive proof of the enactment and contents of a statute of this state and that such attested copy cannot be contradicted by the legislative journals or in any other mode. ' ' ^^ And in another case from Pennsylvania, it was said: "If every law could be contested on the ground of in- formality in its enactment the flood gates of litigation would be opened so widely that society would be deluged in the flood." 26 In another case from the Supreme Court of the United States, the question was exhaustively considered and in the brief of the Attorney General as found on pages 298- 301 of Book 36, Lawyer's Edition, is a complete reference County (N. C), 60 S. E. 516; Port- 882; People v. Stern, 35 111. 121; land V. Yiek, 44 Ore. 439, 75 Pae. Koehler v. HiU, 60 la. 543, 14 N. 706; State v. Bacon, 14 S. E. 394, W. 738; Bait. & D. P. R. E. Co. v. 85 N. W. 605; see, also, Gray's Lim- Pumphrey (Md.), 21 Atl. 599; Peo- itations of Taxing Power, Sec. 1804, pie v. Sup 'rs of Chenango, 8 N. Y. et seq. 317; Rodman v. Town of Washing- 24— Walnut v. Wade, 103 V. S. ton, 122 N. C. 39, 30 S. E. 118; 683, 26 L. Ed. 525. A mere clerical Com'rs of Buncombe County v. error in keeping the journal, held Payne, 123 N. C. 432, 31 S. E. 711; not to invalidate a biU authorizing State v. Swan, 7 Wyo. 166, 51 Pac. a grant of railway aid. Montgom- 209, 40 L. R. A. 195. ery Beer Bottling Works v. Gaston, 25 — Pangborn v. Joving, 32 N. 126 Ala. 425, 28 So. 497; Clydewell J. L. 29. V. Martin, 51 Ark. 559, 11 S. W. 26— Kilgore v. Magee, 85 Pa. 401. VALIDITY OF LEGISLATION; TAXATION OP SECURITIES 871 in detail to the decisions and holdings of the courts of the different states of the Union bearing upon point involved. The case involved the validity of certain portions of the tariff act of October 1st, 1890; the court held that the signing by the Speaker of House of Eepresentatives and by the President of the Senate in open session of the enrolled bill is an official attestation by the two houses, that such bill has passed Congress and when the bill thus attested receives the approval of the President and is deposited in the public archives, its authentication as a bill that has passed Congress is complete and unim- peachable. An enrolled act thus authenticated is suffi- cient evidence of itself that it has passed Congress. The court said: "As the President has no authority to ap- prove a bill not passed by Congress, an enrolled act in the custody of the Secretary of State, and having the official attestations of the Speaker of the House of Repre- sentatives, of the President of the Senate, and of the President of the United States, carries, on its face, a solemn assurance by the legislative and executive de- partments of the government, charged, respectively, with the duty of enacting and executing the laws, that it was passed by Congress. The respect due to co-equal and in- dependent departments requires the judicial department to act upon that assurance, and to accept, as having passed Congress, all bills authenticated in the manner stated; leaving the courts to determine, when the ques- tion properly arises, whether the act so authenticated, is in conformity with the constitution." The objection was further urged in this case that the bill in question could not be regarded as a law of the United States if the journal of either House failed to show that it was passed in the precise form in which it was signed by the presiding officers of the two Houses and approved by the President. The court said on this point : "The evils that may result from the recognition of the principle that an 872 PUBLIC SECUEITIES enrolled act, in the custody of the Secretary of State, at- tested by the signatures of the presiding officers of the two houses of Congress, and the approval of the Presi- dent is conclusive evidence that it was passed by Con- gress, according to the forms of the Constitution, would be far less than those that would certainly result from a rule making the validity of Congressional enactments de- pend upon the manner in which the journals of the re- spective houses are kept by the subordinate officers charged with the duty of keeping them. ' ' ^'^ § 442. Repeal of prior legislation. The validity of an act conferring authority to issue ne- gotiable securities may be dependent upon the repeal of prior legislation and the general rule obtains that a re- peal to be effective should be made directly and in ex- press terms,^^ for while the power to legislate carries with it by implication, except as especially prohibited, the right to repeal or amend such legislation by subsequent action of the same body, the courts are disinclined to effect a repeal by implication, and unless it clearly ap- pears, from the attendant circumstances and conditions that it was the intent of the legislative body to amend or repeal, or unless the legislation is so clearly inconsistent or repugnant that all cannot stand, the doctrine of repeal by implication will not be applied.^" 27— Marshall Field & Co. v. Clark, ings, 90 Fed. 233 ; Sisk v. Cargile Collector, 143 U. S. 649, 36 L. Ed. (Ala.), 35 So. 114; Snell v. Bridge- 294. water, etc., 41 Mass. 296. 28 — City of Galena v. Amy, 5 Molyneaux v. City of Minneapolis Wall. 705, 18 L. Ed. 560. Eepeal (Minn.), 31 N. W. 1015. Certain by implication when the prior and acts authorizing cities of first-class later act can consistently stand to- to sell bonds for park purposes held gether is never admitted. Eed Eoek cumulative. State ex rel. Chillicothe V. Henry, 106 TJ. S. 596, 27 L. Ed. v. Gordon (Mo.), 135 S. W. 929; 251; Board of Com'rs of Kingman Town of WaynesvUle v. Satterthwait County V. Cornell Univ., 57 Fed. 149 (N. C), 48 S. E. 661. C. C. A. ; Board of Com 'rs of Pratt 29— City of Savannah v. Kelly, County, Kan; v. Society for Sav- 108 U. S. 184, 27 L. Ed. 696; City VALIDITY 01' LEGISLATION; TAXATION OF SECUEITIES 873 §443. Ordinances as legislation. An ordinance passed by the legislative body of some municipal corporation is regarded universally as a law although limited in its scope and operation; though local in its effects it is nevertheless a law. The general requirements therefore in respect to the authority to pass, the mode and form of passage and the subject-mat- ter and general characteristics of a law will equally ap- ply to this special form of a law. Ordinances passed pur- suant to legislative authority and which confer or deal with the issue of public securities must be tested, so far as their validity is concerned, by the requirements above noted in respect to general legislation. The subordinate local legislative body must have authority m the first place to deal with the subject-matter of the ordinance in question.^" The ordinance or resolution must comply with charter and general requirements as to form;^^ it must have of Gladstone v. Throop, 71 Fed. 341 eily the purpose of proposed bond C. C. A.; Board of Com'rs of Pratt issue. County, Kans. v. Society for Sav- State ex rel. City of Chillicothe, ings, 90 Fed. 233; Town of MiU v. Gordon (Mo.), 135 S. W. 929. Valley v. House (Calif.), 76 Pac. The city was authorized by a stat- 658; Wichman v. City of Placerville ute to erect an electric lighting (Calif.), 81 Pac. 537; Monioal v. plant. The ordinance providing for Heise (Ind.), 94 N. E. 232. the issuance of bonds used the word 30 — State v. Salt Lake City "construct" instead of "erect," (Utah), 99 Pac. 255; Abbott Munic. held an immaterial variation. Carl- Corps. Sees. 513, et seq. son v. City of Helena (Mont.), 102 31 — City of Santa Barbara t. Pac. 39; Bew v. Ventnor City (N. Davis (Calif.), 92 Pac. 308. Suf- J.), 80 Atl. 28; Village of Canan- ficiency of resolution calling special daigua v. Hayes, 85 N. Y. 488. election considered. Stern v. City of Fargo (N. D.), City of San Diego v. Potter 122 N. W. 403. A resolution pro- (Calif.), 95 Pac. 146. Sufficiency viding for the issuance of bonds of ordinance calling election for is- should state the amount to be voted sue of bonds passed upon. upon as required by revised codes Corker v. Village of Mountain of 1905, otherwise the proceedings Home (Ind.), 116 Pac. 108. Ordi- are invalidated. The purpose for nance and notice held to state prop- which the bopds are to be issued 874 Public secueities been passed in the mode prescribed in its charter, and must be regularly signed and approved,^^ and published in the manner designated by law.^^ A proper consideration of these details as affecting the legality of a particular issue of securities or the incur- ring of indebtedness will depend upon the charter pro- visions of different and numberless public corporations and no consideration of the subject in detail would be of service owing to the great variety and difference of pro- visions and the constant change in them. §444. Taxation. The power of a public corporation to tax the securities issued by it or those of other organizations exists in all must also be stated in the resolu- tion. HefEner v. City of Toledo (Ohio), 80 N. E. 8. An ordinance should comply with the statutory provision that no ordinance shall contain more than one subject which shall be ex- pressed in its title. Conklin v. City of El Paso (Tex.), 44 S. W. 879. City of Cheyenne v. State (Wyo.), 96 Pac. 244. Provision as to inter- est rate, held sufScient. Hansard v. Green (Wash.), 103 Pac. 40. Ordinance held insufficient. 32- — German Insurance Co. of •Freeport v. Manning, 95 Fed. 597; Ryan v. Mayor, etc., of Tuscaloosa (Ala.), 46 So. 638; Goodyear Rub- ber Co. V. City of Eureka, 135 Calif. 613, 67 Pac. 1043. Chase v. Trout (Calif.), 80 Pac. 81. Power to act at adjourned meeting involved. Wrought-Iron Bridge Co. v. City of Arkansas City (Kan.), 52 Pac. 869; Fiscal Court of Breckinridge County V. Board of Trustees, etc. (Ky.), 118 S. W. 298; Vossen v. City of St. Clair (Mich.), 112 N. W. 746 ; State ex rel. Town of Can- ton V. Allen (Mo.), 77 S. W. 868; Board of Com'rs of Town of Salem V. Wachovia Loan & Trust Co. (N. C), 55 S. E. 442. Shattuck V. Smith (N. D.), 69 N. W. 5. Not necessary to caU yeas and nays. Heffner v. City of Toledo (Ohio), 80 N. E. 8; see, also, Ab- bott Munic. Corps., Sees. 525-6. 33 — Amey v. Mayor, etc. of Alle- ghany City, 24 How. 364. Publica- tion of ordinance unnecessary when not required by statute. National Bank of Commerce v. Town of Granada, 54 Fed. 100 C. G. A. Iglehart v. City of Dawson Springs, 143 Ky. 140, 136 S. W. 210. Publication of an ordinance before the bonds are issued is in- sufficient; Chamberlain v. City of Hoboken, 38 N. J. L. 110. Herman v. City of Oconto, 100 Wis. 391, 76 N. W. 364. The pro- visions for the publication of an ordinance at a stated time is manda- tory. See, also, Abbott Munic. Corps., Sec. 528, et seq., with many cases cited. VALIDITY OF LEGISLATION; TAXATION OP SECUEITIES 875 cases except where by statutory or constitutional provi- sions or tlie special terms of a particular contract they are made exempt.^* Negotiable securities are uniformly regarded as per- sonal property and the place of taxation is dependent upon the legal residence of the owner as established by the general statutes of a particular state or locality.^^ In a leading case in the Supreme Court of the United States,^" the court held that public securities might be separated from the domicile of the owner and taxed as property where actually located, and said: "It is un- doubtedly true that the actual situs of personal property which has a visible and .tangible existence, and not the domicile of its owner, will in many cases determine the state in which it may be taxed. The same thing is true of public securities consisting of state bonds and bonds of municipal bodies, and circulating notes of banking in- stitutions; the former by general usage, have acquired the character of and are treated as property in the place where they are found, though removed from the domicile of the owner; the latter are treated and pass as money wherever they are. But other personal property, con- sisting of bonds, mortgages and debts generally, has no situs independent of the domicile of the owner, and cer- tainly can have none where the instruments, as in the present case, constituting the evidences of debt, are not separated from the possession of the owners. ' ' 34 — People v. Home Insurance wealth of Pennsylvania, 15 WaU. Co., 29 Calif. 533. As to the power 300, 21 L. E. 179. of a municipal corporation to tax 36— Cleveland, Paynesville & Ash- state securities, see, Miller v. Wilson, tabula E. E. Co. v. Pa., 15 Wall. 300, 60 Ga. 505; City Council of Augusta 21 L. E. 179; see, also Scottish V. Dunbar, 50 Ga. 387; see the fol- Union & National Insurance Co. v. lowing section for some special ex- Bowland as Treasurer, etc., 196 U. emptions. S. 611, 49 L. Ed. 619; State v. 35— Matter of Bronson, 150 N. Y. PideUty, etc. Co. (Tex.), 80 S. W. 1, 44 N. E. 707, 34 L. E. A. 238; 544. C, P. & A. E. E. Co. v. Common- 876 PUBLIC SECUEITIES Where bonds or securities are in the hands of an ex- ecutor or an administrator for administration pursuant to legal appointment their situs for taxation is usually held to be the place where the administration proceedings are pending, although their actual physical location may be elsewhere.^' The securities of the Federal government and of the territories are exempt from taxation by the different states or any of their subordinate civil subdivisions. No special exemption is necessary as this rule is based upon well-known constitutional principles.^^ A recent case in Minnesota, however, holds that bonds issued by a municipal corporation organized under the laws of a Territory are subject to taxation in the hands of a savings bank when located within the state of Minne- sota.^** In an early case in the Supreme Court of the United States,*" it was held in an action brought by the owner of certain interest coupons to recover their full value from the city that no municipality could by its own ordi- nances under the guise of taxation relieve itself from performing to the letter all that it has expressly prom- ised to its creditors; that any attempt as in the case in question to deduct from the amount due on an interest coupon a certain sum for taxes was an impairment of a 37 — Gray's Limitations of Taxing Grether v. Wright, 75 Fed. 742 C. Power, Sec. 109, et seq. C. A. ; Howard Savings Inst. v. Ul- 38— MeCuUough v. Maryland, i wark, 63 N. J. L. 547, aflf. 139 Calif. Wheat. 316; Osborn v. Bank, 9 205, rev. 63 N. J. L. 65. Wheat. 738; National Bank v. Rhode Island Hospital Trust Co. Yankton, 101 U. S. 129; Pollock v. v. Armington, 21 E. I. 33, 41 Atl. Farmers Loan & Trust Co., 157 U. 570. Construing Act of Congress S. 429. of July 14, 1870, Chap. 256. Shively v. Bowlby, 152 U. S. 1. 39— State of Minnesota v. Farm- A treasury check for the payment ers and Mechanics Savings Bank of interest on bonds may be taxed. (Minn.), 130 N. W. 445. Hibernian Savings & Loan Assoc. 40 — Murray v. Charleston, 96 U. V. City and County of San Francisco, S. 432, 24 L. Ed. 760. 200 U. S. 310, 50 L. Ed. 495; VALIDITY OF LEGISLATION; TAXATION OF SECUEITIES 877 contract obligation and therefore unconstitutional and void. If the property in question was subject to tax- ation, that power must be exercised in the usual way upon the property within the jurisdiction of the city for pur- poses of taxation and not in the manner attempted. § 445. Special state exemptions. In Arizona bonds issued by the state and its subdivi- sions are exempt from taxation.*^ In California an amendment was adopted to the state Constitution in 1902 which provided that all bonds here- after issued by the State of California or by any county, city and county, municipal corporation or district, in- cluding school, reclamation and irrigation districts with- in said state, should be free and exempt from taxation.*^ In Connecticut exemption from taxation has been ac- corded by general statutes to certain bonds issued by cities and towns to aid in the construction of certain named railroads and the exemption is extended to refund- ing or renewal bonds issued for the purpose of redeeming those issues. These bonds, however, are not exempt from taxation under Revised Statutes, Chapter 147, Sec- tion 2424, the tax being paid by the railroads. "^ In Indiana by legislation passed in 1903 and 1911, it was provided that all bonds, notes and other evidences of indebtedness thereafter issued by the state of Indiana or by municipal corporations within the state upon which the said state or said municipal corporations pay interest, should be exempt from taxation. The legislation of 1911 provided that bonds thereafter authorized by any county or township for the purpose of building, constructing and paying for the construction of, any free gravel, macad- 41 — Const, adopted 1910, Art. IX, 43— Eevised Stats., 1902, pp. 600- Sec. 2. 2, Chap. 144, Sec. 2315; see, also, p. 42— Art. 13, Sec. 1, %. Henning, 628, Sec. 2424. Gen. Laws Calif., p. xcviii. 878 PUBLIC SECUBITIES amized or other improved roads should be exempt from taxation, provided said bonds should not bear a greater rate of interest than four and one-half per cent per an- num payable semi-annually.** In Iowa in 1909, the legislature passed an act provid- ing for the exemption from taxation of municipal, school and drainage bonds or certificates thereafter issued.*^ In Kansas by a law passed in 1907, all bonds or other evidences of indebtedness thereafter issued by the state or any county, city or school district within the state were made exempt from taxation.*® In 1909, in Maine, the legislature passed an act exempt- ing from taxation all bonds issued after February 1st, 1909, by the state or any county, municipality, village cor- poration or water district therein. Banks and trust com- panies were by the same law allowed to deduct the bonds made exempt from the assessment of their shares.*^ In Massachusetts in 1909, the following securities were made exempt from taxation: '* Bonds or certificates of indebtedness of the commonwealth issued since the first day of January in the year nineteen hundred and six and bonds, notes and certificates' of indebtedness of any county, fire district, water supply district, city or town in the commonwealth which may be issued on or after the first day of May in the year nineteen hundred and eight, stating on their face that they are exempt from taxation in Massachusetts." *^ May 13th, 1909, the legislature of Michigan passed an act that bonds thereafter issued by any county, township, city, village or school district in the State of Michigan should be exempt from all taxation.*® 44^-Laws of 1903, p. 179; Laws, 47— Laws 1909, p. 51, Chap. 49. 1911, p. 337, Chap. 138. 48— Acts of 1909, p. 542-3, Chap. 45 — Laws 1909, p. 75, Chap. 81, 490, Part 1, Sec. 5, Clause 15. amending. Sec. 1304 of Code Supp. 49— Laws 1909, p. 167, No. 88. 1907. 46— Chap. 408, Sec. 15, Laws of 1907. VALIDITY OF LEGISLATION; TAXATION OF SECURITIES 879 In 1911 the Minnesota legislature passed an act by which bonds and certificates of indebtedness thereafter to be issued by the State of Minnesota or by any county, city or village of said state or any township, or any com- mon or independent school district of said state, or any governmental board of said state or county, city or vil- lage thereof, were made exempt from all taxation, ex- cept the inheritance tax provided by law.^" In Mississippi an act was passed in 1908 by the legis- lature providing that in addition to the property already exempt from taxation the bonds of drainage districts of the State of Mississippi should be exempt from taxes of any character whatever.^ ^ In New Hampshire the sanitarium bonds of 1909, the highway bonds of 1909 and 1911, the hospital bonds of 1907, 1909 and 1911 are exempt from taxation on indi- vidual holders and bond issues bearing three and one- half per cent and under are also exempt when held by savings banks.^^ In 1903 in New Jersey, a general statute was passed which rendered exempt from taxation bonds, securities and other evidences of indebtedness of municipal cor- porations. The statute covered not only bonds to be thereafter but also those that had been previously is- sued.^^ In New York under the Consolidated Laws of 1909,^^ certain state and municipal bonds are made exempt from taxation and in 1911, the legislature of New York also passed a bill providing for a tax of one-half of one per cent on bonds and other obligations secured by property 50 — Laws of Minnesota, 1911, 1907, Chap. 55, p. 54, providing that Chap. 242, p. 340. cities, etc., in issuing bonds may ar- 51 — Laws of 1908, Chap. 141. range for a tax exemption when 52 — Laws 1907, p. 60, Chap. 61; owned by a citizen of that city, etc. Laws 1909, p. 404, Chap. 101; p. 53— CompUed Stat. New Jersey, 507, Chap. 133; p. 535, Chap. 155; 1910, Sec. 3, p. 5077. p. 544, Chap. 161; Laws 1911, p. 55— Chapter 60, Art. 1, Sec. 4, 249, Chap. 189. See, also, Laws Clause 6. 880 PUBLIC SECUEITIES located outside of the state, and also unsecured debts of the same character and for the exemption of the same from the annual tax in New York State on personal prop- erty. '^^ In Ohio by constitutional amendment adopted in 1905, which took effect January 1st, 1906, municipal bonds were exempted from taxation.^^ In Pennsylvania by a law passed in 1911, school dis- tricts were required to deduct the amount of the tax on their local school district bonds from the remittance of interest, putting these corporations in the same position with municipalities and- counties. The holder of these securities is therefore not required to make any return or payment of taxes to local assessors. If bonds are issued tax free by a school district it pays the tax.^* In South Carolina an act was approved February 14, 1908, which exempted from taxation all bonds thereafter issued by school districts for the erection of school build- ings their equipment or maintenance or for paying the in- debtedness of such districts.^'' In Texas bonds issued by cities and towns are exempt from taxes levied by such cities or towns.*" " In Vermont a law was passed in 1908, that notes, bonds or orders issued after February 1, 1907, as evidences of obligations for money loaned to a town, village, incor- porated school or fire district at a rate of interest not ex- ceeding four per cent per annum for the purpose of con- structing, purchasing or repairing water, sewer or light- ing systems, permanent highways, bridges, works, or public buildings or for the purpose of refunding a debt contracted for any of the foregoing purposes, should be exempt from taxation.*' 56— Laws 1911, p. 2121, Chap. 802. 60— Sayles Tex. Civil Stat. 1898, 57— Constitution, Art. XI, Sec. 2, Art. 473. as amended. 61 — Public Statutes, 1906, Sec. 58 — Laws 1911, p. 236. 496, Subd. 12, as Amended by Laws 59— Laws 1908, p. 1051, No. 473. of 1908, Act 23, p. 21. VALIDITY OF legislation; TAXATION OF SECUEITIES 881 In Washington the legislature of 1907 amended the laws relating to revenues and taxation by exempting mu- nicipal securities from all taxation as personal prop- erty. The constitutionality of this act was sustained by the state supreme court in 1908.®^ In Wisconsin by a law passed in 1911, bonds thereafter issued by municipalities were made exempt from tax- ation.''^ In Wyoming in 1905, by an act of the legislature, cou- pon and registered interest bearing bonds issued by the State of Wyoming or by any county, school district or municipality of the state, were made exempt from tax- ation when owned by actual residents of the state. It was provided further in the law that the owner or owners of such securities should list the same annually on their assessment schedule, describing such bonds and the amount thereof and marking opposite thereto on such schedule the word 'exempt.' " ^* In Porto Eico, all public bonds are exempt from the insular and municipal taxes of the island, and under vari- ous acts of Congress certain land purchase and public improvement bonds issued by the Philippine Islands and all issues of the government of the Philippine Islands or those made under its authority are exempt from all tax- ation in the Islands or in the United States.®^ 62— Laws 1907, p. 69, Chap. 48 ; 64— Laws of 1905, Chap. 17, Wyo. State ex rel. Wolfe v. Parmenter, 50 Comp. Stat. 1910, Sec. 2323, p. 614. Wash. 164. 65 — Act of Congress of July 1, 63— Laws 1911, p. 629, Chap. 516. 1902, Sees. 64 and 67. P. S.-B9 CHAPTER XVII WARRANTS AND MISCELLANEOUS EVIDENCES OF INDEBTEDNESS §446. Warrants: Definition; by whom drawn. A public corporation may contract an indebtedness, wbicb either at the time of its incurment or upon the mak- ing of an appropriation for its payment, is evidenced by an obligation or written promise to pay, commonly called a warrant. This is an instrument in writing executed by the proper officers acknowledging the debt and directing the officials in charge of the fund from which it is pay- able to pay the same on demand or at some specified date.^ The grant of authority to make a contract, it has been held, carries with it the implied power to issue warrants 1 — City Council of Nashville v. collected. City of Alpena v. KeUey, Eay, 86 V. S. (19 Wall.) 468; City 97 Mieh. 550; Warren County Sup'rs of Little Eock v. United States (C. v. Klein, 51 Miss. 807; AuU Sav. C. A.), 103 Fed. 418; People v. Bank v. City of Lexington, 74 Mo. Munroe (Calif.), 33 Pac. 776; City 104; Slingerland v. City of Newark, of Springfield v. Edwards, 84 111. 54 N. J. Law, 62; State v. Parkin- 626; Law v. People, 87 111. 385; son, 5 Nev. 15; City of Terrell v. Shawnee County Com'rs v. Carter, Dessaint, 71 Tex. 770. 2 Kan. 109. Daggett v. Lynch, 18 Utah, 49. Burrton v. Harvey County Sav. But there is an implied power to is- Bank, 28 Kan. 390. Cities of the sue interest-bearing warrants. Ivin- third class may anticipate the reve- son v. Hance, 1 Wyo. 270. nues of the year, and in payment of HefBeman v. Pennington County, a debt, whether antecedent or one 3 S. D. 162. The warrant is a presently contracted, issue time war- formal and deliberate aeknowledg- rants, payable at such time during ment by the county of such indebted- the current year as the revenues ness. may reasonably be expected to be 882 MISCELLANEOUS EVIDENCES OF INDEBTEDNESS 883 or orders in payment of its obligations.^ The power to issue in anticipation of revenues for the necessary cor- porate expenses is usually implied,^ this is not so when issued in anticipation of taxes levied but uncollected and where the expenses are of such a character as to be con- sidered under the circumstances, a ' ' debt " or " indebted- ness. ' ' The issue of warrants is the method by which the ordinary and current expenses of a public corporation are paid from current revenues ; funds for their payment are usually immediately available; they are commonly drawn pursuant to direct charter or statutory authority, which may or may not specify the required details pre- liminary to their issue. Without such charter or statu- tory provisions it is clear that public officials have no power to bind their principal in this respect.* 2 — Kearney County Com'rs v. Mc- Master (C. C. A.), 68 Fed. 177; Speer v. Kearney County Com'rs (C. C. A.), 88 Fed. 749; Allen v. Town of Lafayette, 89 Ala. 641, 9 L. E. A. 497; Town of Cicero v. Grisko (lU.), 88 N. E. 878; People V. CooUey, 146 111. App. 113; Heal V. Jefferson Tp., 15 Ind. 431; Clay- ton V. McWilliams, 49 Miss. 311; and San Patricio County v. Mc- Clane, 58 Tex. 243. 3 — Thomas v. City of Eichmond, 79 U. S. (12 Wall.) 349; Brown v. Sherman County Com'rs, 5 Fed. 274; Bangor Sav. Bank v. City of StUl- water, 46 Fed. 899; Allen v. Town of La Fayette, 89 Ala. 641, 9 L. E. A. 497; Lindsey v. Eottaken, 32 Ark. 619; Cothran v. City of Eome, 77 Ga. 582; Fuller v. City of Chicago, 89 111. 282; Puller v. Heath, 89 lU. 296; Gray v. Board of School In- spectors of Peoria, 231 111. 63, 83 N. E. 95; Dively v. City of Cedar Falls, 21 Iowa, 565; Long v. Boone County, 32 Iowa 181; Hooper v. Ely, 46 Mo. 505; Cheeiley v. Inhab- itants of Brookfield, 60 Mo. 53; Corpus Christi v. Weosaner, 58 Tex. 462. 4 — City of New Orleans v. War- ner, 180 U. S. 199, 45 L. Ed. 493, affirming 101 Fed. 1005. Bangor Savings Bank v. City of Stillwater, 46 Fed. 899. In the ab- sence of special statutory authority a city has no right to issue certifi- cates of indebtedness in negotiable form. Vale v. Buchanan (Ark.), 135 S. W. 848 ; People v. El Dorado County Sup'rs, 11 Cal. 170; Strai- ten V. Green, 45 Cal. 149; People v. Canty, 55 lU. 33; First Nat. Bank V. Van Buren School Trustee, Daviess County (Ind.), 93 N. E. 863; Home v. Mehler, 23 Ky. L. E. 1176, 64 S. W. 918 ; Flagg v. Parish of St. Charles, 27 La. Ann. 319. Hooper v. Ely, 46 Mo. 505. A county warrant cannot be issued to reimburse sureties for moneys ex- pended by them in bringing back a defaulting and absconding county 884 PUBLIC ^CUEITIES Public corporations exercise their powers by and througb agents of limited or special authority authorized to act for and on their behalf, only concerning those mat- ters which by some express provision of the law have been given to them to transact. That a warrant be valid, it is necessary then that it shall be issued or drawn by the proper official,^ and authorized, audited or allowed by that administrative body or official, to whom is dele- gated by law this particular duty." This authority may treasurer. AuU Sav. Bank v. City of Lexington, 74 Mo. 104 ; Markey v. School Dist. No. 18 (Nebr.), 78 N. W. 932; In re Opinion of Justices (N. H.), 75 Atl. 99. Hart V. Village of Wyndmere (N. D.), 131 N. W. 271. The payment of a village obligation by its legal warrant is sufBcient. Eidenmiller v. City of Tacoma (Wash.), 44 Pac. 877. Payment of monthly salaries may be made by the issue of warrants. 5 — See sees. 52 and 65, et seq., ante; Kearney County Com'rs v. McMaster (C. C. A.), 68 Fed. 177. Connor v. Morris, 23 Cal. 447. The auditor of the county is the mere clerk of the board of super- visors; and he has no power or au- thority to draw his warrant on the county treasurer for the payment of a claim unless the board of super- visors have made an express order that it be paid. Stoddard v. Ben- ton, 6 Colo. 508; Clark v. City of Des Moines, 19 Iowa 199; Clark v. Polk County, 19 lowa, 248; Tippe- canoe County Com'rs v. Cox, 6 Ind. 402; Leavenworth County Com'rs v. Keller, 6 Kan. 510; McDonald's Admstr. v. Franklin County (Ky.), 100 S. W. 861; Alberts v. Torrent, 98 Mich. 512; Bailey v. City of Philadelphia, 167 Pa. St. 569, 31 Atl. 925; Dennis v. Table Mountain Water Co., 10 Cal. 369; Newgasa v. City of New Orleans, 42 La. Ann. 163; Hull V. Inhabitants of Berk- shire, 26 Mass. (9 Pick.) 553; Saline County v. Wilson, 61 Mo. 237; State V. Collins, 21 Mont. 448, 53 Pac. 1114; Oakley v. Valley County, 40 Neb. 900, following Walsh v. Rogers, 15 Neb. 309; Halstead v. City of New York, 5 Barb. (N. T.) 218; Bailey v. City of Philadelphia, 167 Pa. 569. Merchants' Nat. Bank v. McKin- ney, 2 S. D. 106, 48 N. W. 841. To sustain the validity of warrants drawn under the authority of law, it is not necessary that they shall be signed by officials de jure; if they are de facto merely, it is sufficient. Stephens v. City of Spokane, 11 Wash. 41, 39 Pac. 266; Ivinson v. Hance, 1 Wyo. 270; Hubbard v. Town of Lyndon, 28 Wis. 675. 6— People V. Fogg, 11 Cal. 351; State V. Atkinson, 25 Wash. 283, 65 Pac. 531; Clark County Sup'rs \\ Lawrence, 63 111. 32; Clark v. City of Des Moines, 19 Iowa 199 ; Polk County V. Sherman, 99 Iowa, 60, 68 N. W. 562; Capmartin v. Police Jury, 19 La. Ann. 448; Saline County V. Wilson, 61 Mo. 237; Peo- ple V. Booth, 49 Barb. (N. T.) 31; People V. Eoberts, 45 App. Div. 145, MlSCELLANEOtJS EVIDENCES OF INDEBTEDNESS 885 be granted to some special officer to whom discretionary powers are given to pass upon the legality of the claim or indebtedness to liquidate which the warrant is drawn, or upon the sufficiency of the warrant itself. The duties then performed are quasi judicial in character, subject to the usual rules of law which govern and control the performance of duties of that nature^ The law, however, may impose upon such officials the ministerial duty merely of drawing the warrant upon the presentation to them of a claim or charge audited or allowed by certain designated officers. Here the duty is obligatory and the official is given no discretionary powers in the matter; it may then become his duty to draw such warrant, even without request of the party, in whose favor it is to be issued.* If he neglect or refuse 61 N. Y. Supp. 148; Ex parte Flor- ence Graded School Com'rs, 43 S. C. 11, 20 S. E. 794; Hubbard v. Town of Lyndon, 28 Wis. 674. 7 — Henderaon v. People, 17 Colo. 587; Carlile v. Hurd, 3 Colo. App. II, 31 Pac. 952; Ward v. Cook, 78 III. App. Ill; Norman v. Kentucky Board of Managers of World's Co- lumbian Exposition, 14 Ky. L. E. 529, 20 S. W. 901 ; State v. Hallock, 16 Nev. 373; People v. Wood, 35 Barb. (N. Y.) 653; People v. Booth, 49 Barb. (N. Y.) 31; People V. Green, 56 N. Y. 476; Commercial & Farmers' Bank v. Worth, 117 N. C. 146, 23 S. E. 160, 30 L. R. A. 261; Naylor V. McCoUoch (Ore.), 103 Pac. 68; Kensington Elec. Co. v. City of Philadelphia, 187 Pa. 446; In re Statehouse Commission (E. I.), 33 Atl. 453; City of Columbia v. Spigener (S. C), 67 S. E. 552; State V. Lindsley, 3 Wash. St. 125. 8— Wilson V. Neal, 23 Fed. 129; Board of Liquidation of Louisiana V. McComb, 92 V. S. 531; Jefferson- ian Pub. Co. v. Hilliard, 105 Ala, 576; Babcock v. Goodrich, 47 Cal. 488; Sehorn v. Williams, 110 Cal. 621; McMurray v. Hay den, 13 Colo, App. 51, 56 Pac. 206; State v. Buck les, 39 Ind. 272 ; Prime v. McCarthy, 92 Iowa, 569, 61 N. W. 220; Alberts V. Torrent, 98 Mich. 512; State v. Kenney, 10 Mont. 496, 26 Pac. 388; State V. Smith, 5 Mo. App. 427. State V. Moore, 40 Neb. 854, 59 N. W. 755, 25 L. E. A. 774. A state auditor has no power to question the validity of an act or to inquire whether a certain amount appropri- ated is excessive where the legis- lature has in the proper manner made an appropriation for such pur- pose. Hayes v. Davis, 23 Nev. 318, 46 Pac. 888; People v. Flagg, 16 Barb. (N. Y.) 503; People v. Haws, 36 Barb. (N. Y.) 59; Cunningham V. MiteheU, 67 Pa. 78; Pace v. Ortiz, 72 Tex. 437. 886 PUBLIC SECURITIES to perform the duty, its performance can be compelled by mandamus directed against him.® Where the law specifies the manner of allowance and audit of claims preliminary to the drawing of a warrant for their payment, such provisions are usually consid- ered mandatory in their character, necessary to be fol- lowed even to the slightest detail in order that there exist a legal authority for the warrant." The reason for this ruling is apparent. Unless the law otherwise provides, it is not necessary that there should be funds available for the payment of the warrant immediately upon its issue. The warrant is simply written evidence of an acknowledged legal claim against the public corporation; the time of its payment does not affect or determine the question of its validity.^ ^ 9— Wilson V. Neal, 23 Fed. 129; Keller v. Hyde, 20 Cal. 594; Babcock V. Goodrich, 47 Cal. 488 ; Eay v. Wil- son, 29 Ma. 342, 10 So. 613. Johns V. Orange County Com'rs, 28 Fla. 626. An officer cannot he compelled, by mandamus, to issue a warrant until the required action has been taken in respect to the al- lowance and certification of the claim where this is necessary. Eice V. Gwinn, 5 Idaho, 394, 49 Pac. 412; People V. Hastings, 5 111. App. 436; Campbell v. Polk County, 3 Iowa, 467; Evans v. McCarthy, 42 Kan. 426; State v. Clinton, 28 La. Ann. 47; Trustees of Paris Tp. v. Cherry, 8 Ohio St. 565; Merkel v. Berks County, 81% Pa. 505; Callaghan v. Salliway, 5 Tex. Civ. App. 239; State V. Headlee, 19 Wash. 477, 53 Pac. 948. See, also, authorities cited under preceding note. But see Land V. AUen, 65 Miss. 455. 10 — Murphy v. Garland County (Ark.), 137 S. W. 813. A Circuit Court judgment disallowing a claim precludes a new order by the County Court and a re-issue of warrants thereon. Plagg v. Parish of St. Charles, 27 La. Ann. 319. State V. Mcllraith (Minn.), 129 N. W. 377. The approval or allow- ance of accounts authorized by the water, light and building commission is not necessary under Laws of 1907, Chap. 412; Allan v. Kennard (Nebr.), 116 N. W. 63. Burke v. Gormley (N. J.), 80 Atl. 483. The audit of a claim by a city board is not final, but their action may be rescinded. 11 — Speer v. Kearney County Com'rs (C. C. A.), 88 Fed. 749. The fact that no levy of taxes has 'been made for the purpose of paying war- rants issued by county commission- ers in payment of indebtedness does not invalidate them. City of Little Eoek V. United States (C. C. A.), 103 Fed. 418; State v. Sherman, 46 Iowa, 415; Evans v. McCarthy, 42 Kan. 426, 22 Pac. 631; State v. Kenney, 10 Mont. 496, 26 Pac. 388. MISCELLANEOUS EVIDENCES OF INDEBTEDNESS 887 In some states the making of an appropriation for the payment of a claim is necessary to the issuance of a warrant for that purpose, and the authorities then hold that no matter how just or equitable the claim may be, no obligation rests on the public officials upon whom the duty ordinarily devolves to issue a warrant for the liqui- dation of such claim until an appropriation is made by the proper body for its payment unless there are moneys in the treasury available for such purpose.^^ § 447. Fund from which payable. The usual method for the payment of the ordinary current expenses of a corporation is through the ap- propriation of moneys by a duly authorized body for this purpose. The appropriation may be effected through a formal direction by the proper officials to pay, either from a fund raised or set aside especially for the settle- ment of specified claims or from the general revenues.^* But see State ex rel. Edmunds v. Hubbell v. City of South Huteh- Capdevielle (La.), 49 So. 1006; inson, 64 Kan. 645, 68 Pac. 52. Whitney v. Parish of Vernon (La.), The statute of limitations wUl not 52 So. 176 ; Niles Bryant School of start to run in favor of a city on its Piano Tuning v. Bailey (Mich.), outstanding warrants until it has 126 N. W. 116. money in its treasury to satisfy such 12 — Goyne v. Ashley County, 31 obligations. Snelling v. Joffrion, Ark. 552. The fact that warrants 42 La. Ann. 886; State v. Seibert, are selling at a discount cannot be 99 Mo. 122; State v. Kenney, 9 considered in making the appropri- Mont. 389, 24 Pae. 96; State v. Ken- ation for a certain purpose resulting ney, 10 Mont. 496, 26 Pac. 388; in an increase of the appropriation. State v. Hickman, 11 Mont. 541, 29 Cramer v. City & County of Sacra- Pae. 92; Niles Bryant School of mento Sup'rs, 18 Cal. 384; In re Piano Tuning v. Bailey (Mich.), Appropriation by General Assembly, 126 N. W. 116. 13 Colo. 316; Henderson v. People, Ballard v. Cerney (Nebr.), 120 17 Colo. 587; Collier & C. Litho- N. W. 151. The rule stated in the graphing Co. v. Henderson, 18 Colo. text, however, does not apply to the 259; Goodykoontz v. Acker, 19 Colo. payment of interest on public debts 360, S5 Pac. 911; Goodykoontz v. including outstanding warrants. People, 20 Colo. 374, 38 Pac. 473 ; State v. Lindsley, 3 Wash. St. 125. Cook County v. Lowe, 23 111. App. 13 — Carter v. Tilghman, 119 Cal. 649. 104; Stevens v. Truman, 127 Cal. 888 PtrBLIC SECUKITIES Where an appropriation is made for payment from a specific fund, the warrant can be drawn on and is pay- able only from such fund.^* If there are no moneys 155; Campbell v. Polk County, 3 Iowa, 467; Warren County Sup'rs V. Klein, 51 Miss. 807. State V. Clark (Nebr.), 112 N. W. 857. A warrant may be payable out of a general fund of a special year only. Eogers v. City of Omaha (Nebr.), 117 N. W. 119. A city warrant is not invalidated by a recital not con- templated by statute in respect to the fund from which it is payable. See, also, on this point, Abrahams v. City of Omaha (Nebr.), 114 N. W. 161; Shipley v. Haeheney, 34 Or. 303, 55 Pae. 971. City of Sherman v. Smith (Tex.), 35 S. W. 294. The funds for the payment of a special warrant may be limited by the amount of taxes which can be legally levied. School District No. 3 v. Western Tube Co. (Wyo.), 80 Pac. 155. 14 — Peake v. City of New Orleans, 38 Fed. 779; Eose v. Estudillo, 39 Cal. 270 ; McGowan v. Pord, 107 Cal. 177, 40 Pac. 231; Jordan v. Hubert, 54 Cal. 260; Travelers' Ins. Co. v. City of Denver, 11 Colo. 434, 18 Pac. 556; Nance v. Stuart, 12 Colo. App. 125, 54 Pac. 867; Park v. Candler, 113 Gav 647, 39 S. E. 89; Fuller v. Heath, 1 111. App. 118; Village of Marysville v. Schoonover, 78 111. App. 189; Union County Com'rs v. Mason, 9 Ind. 97; Phillips v. Eeed, 107 Iowa, 331, 77 N. W. 1031, 44 L. E. A. 131, modifying judgment in 76 N. W. 850. City of Atchison v. Leu, 48 Kan. 138, 29 Pac. 467. A city of the first class under the Kanaa* statutes is liable on warrants issued to pay for curbing and guttering a street although the money due it from spe- cial assessments levied for such pur- pose may not have been received. Labatt v. City of New Orleans, 38 La. Ann. 283; Abascal v. City of New Orleans, 48 La. Ann. 565; Peo- ple V. Treasurer of Merritt Tp., 38 Mich. 243. State V. Bartley, 41 Neb. 277, 59 N. W. 907. The holder of a gen- eral fund warrant may refuse to re- ceive in payment moneys belonging to another fund the diversion of which to the settlement of his claim is unconstitutional. Kingsberry v. Pettis County, 48 Mo. 207; Camp- bell V. Polk County Ct., 76 Mo. 57; Moody V. Cass County, 85 Mo. 477; Morrow v. Surber, 97 Mo. 155 ; State V. Wright, 17 Mont. 565, 44 Pae. 89 ; State V. Cook, 13 Mont. 465, 34 Pac. 770 ; People v. Lathrop, 19 How. Pr. (N. Y.) 358; People v. Wood, 71 N. Y. 371; Hall v. State, 54 Neb. 280; Eedmon v. Chacey, 7 N. D. 231; Theis V. Washita County Com'rs, 9 Okl. 643, 60 Pac. 505 ; Diggs v. Lob- sitz, 4 Okl. 232, 43 Pac. 1069 ; Jones V. City of Portland, 35 Or. 512; Northup V. Hoyt, 31 Or. 524, 49 Pac. 754; La Prance Fire Engine Co. v. Davis, 9 Wash. 600. Potter V. Black, 15 Wash. 186. If there is not sufficient money in a particular fund to pay the whole of a warrant presented and chargeable against such fund, its payment in part can be compelled. Soule v. City of Seattle, 6 Wash. 315, 33 Pae. 384, 1080; Kenyon v. City of Spo- kane, 17 Wash. 57, 48 Pac. 783; Wilson V. City of Aberdeen, 19 MISCELLANEOUS EVIDENCES OP INDEBTEDNESS 889 available at the time of issue, payment is necessarily de- ferred until sufficient funds accumulate with which to discharge the particular obligation.^ ^ The form of the warrant will determine the application of the rule above stated in respect to its payment. If the language is am- biguous or by its terms made payable first from a special fund and where moneys are not available in that fund, then from the general revenues, the warrant may be pay- able from any available source. The discussion upon this point in respect to negotiable securities will be re- Wash. 89; Townsend Gas & Elec. Light Co. V. Hill, 24 Wash. 469, 64 Pac. 778; Potter v. City of What com, 25 Wash. 207, 65 Pac. 197 Montague v. Horton, 12 Wis. 599 Pauly Jail Bldg. & Mfg. Co. v. Jef- ferson County, 160 Fed. 866; Allen V. Watts, 88 Ala. 497, 7 So. 190; Mobile County v. Powers (Ala.), 15 So. 642; MoiiiSon t. Austin State Bank, 213 IlL 472, 72 N. E. 1109; Miller v. Hinkle (Iowa), 113 N. W. 325. Dime Savings Institution v. Ho- boken, 42 N. J. L. 283. The duty to pay an improvement certificate out of general funds arises if the assess- ment legally levied is inadequate to meet the certificate. State v. Moss. (Wash.), 86 Pac. 1129. Jurey v. City of Seattle (Wash.), 97 Pac. 107. Special assessment warrants issued by the city of Seattle are not obligations of the city, but the holders are required to look solely to the special fund for their payment. State v. Lamprey (Wash.), 106 Pac. 501. But see Neal Loan & Banking Co. v. Chastain (Ga.), 49 S. E. 618; Butts County V. Jackson Banking Co. (Ga.), 60 S. E. 149. 15 — Scruggs V. Underwood, 54 Ala. 186; Day v. Callow, 39 Cal. 593; State v. State Treasurer, 32 La. Ann. 177; Wilson v. Knox County, 132 Mo. 387, 34 S. W. 45, 477; Andrew County v. Schell, 135 Mo. 37, 36 S. W. 206; Campbell v. Polk County, 49 Mo. 214; State v. Johnson, 162 Mo. 621, 63 S. W. 390. State V. Wilson, 71 Tex. 291, 9 S. W. 155. A state is not liable for the loss sustained by a warrant holder obliged to sell at a discount for lack of funds. But see Potter v. Black, 15 Wash. 186, where it is held that part of a warrant must be paid when there are insufficient moneys to pay the whole of it. Forbes v. Board of Com'rs of Grand County, 23 Colo. 344, 47 Pac. 388. Board of Education v. Foley, 88 111. App. 470. The burden of proof is on plaintiff to show that there was sufficient money in the appro- priate fund to pay the warrant at the time it was drawn. Adams v. Com'rs of Highway of Town of South Otter, 151 111. App. 68; State V. Eiokards, 17 Mont. 440, 43 Pac. 504; Bacon v. Dawes County (Nebr.), 92 N. W. 213; Stewart v. Custer County (S. D.), 84 N. W. 764. 890 PUBLIC SECURITIES membered," and the same general principles will control the payment of warrants as stated in that discussion. Fiscal authorities cannot be compelled to pay warrants drawn against a special fund by appropriation from the general revenues.^ ^ Although a public corporation by drawing a warrant against a particular fund does not guarantee the exist- ence of such a fund, it does guarantee the moneys in that fund legally belonging to it, and if there has been a diver- sion or misappropriation of such moneys for other pur- poses, the corporation is liable from its general revenues to that extent.^® There are many cases which hold to a general liability on the part of the public corporation, where it has neglected to collect or create a special fund designated for the payment of the warrants. ^^ A war- 16 — See Sec. 363, et seq., ante. 17— Wilder v. City of New Or- leans, 87 Fed. 843. Warrants when reduced to judgment become a charge upon all drainage taxes col- lected by the city. First National Bank v. Martin (Kan.), 52 Pae. 580; Klein v. Piper, 43 La. Ann. 362, 8 So. 927; Potter v. City of Whatcom, 25 Wash. 207, 65 Pac. 197. See, also, Ex parte Board of Com'rs of Florence Graded Schools, (S. C), 20 S. E. 794. 18 — Peake v. City of New Orleans, 38 Fed. 779 ; Wilder v. City of New Orleans (C. C. A.), 87 Fed. 843; Hockaday v. Chaffee County Com'rs, 1 Colo. App. 362; Shotwell v. City of New Orleans, 36 La. Ann. 938; Valleau v. Newton County, 72 Mo. 593 ; McGlue v. City of Philadelphia, 10 Phila. (Pa.) 348; Potter v. City of New Whatcom, 20 Wash. 589; Warner v. City of New Orleans, 87 Fed. 829; Pauly Jail & Mfg. Co. v. Jefferson County, 160 Fed. 866; Butts County v. Jackson Banking Co. (Ga.), 71 S. E. 1065; Ayres v. Thurston County (Nebr.), 88 N. W. 178; Thurston County v. Mclntyre (Nebr.), 106 N. W. 217; Blackman V. City of Hot Springs (S. D.), 85 N. W. 996; City of San Antonio v. Alamo National Bank (Tex.), 114 S. W. 909; State Savings Bank v. Davis, 22 Wash. 406, 61 Pac. 43; Quaker City National Bank v. ^City of Tacoma (Wash.), 67 Pae. 710; Northwestern Lmbr. Co. v. City of Aberdeen (Wash.), 77 Pae. 1063; Hemen v. City of Ballard (Wash.), 82 Pac. 277. See, also, eases cited in sec. 371, ante. But see Schulen- burg V. Boeckler Lmbr. Co. v. City of East St. LouiB, 63 HI. App. 214; Ames V. City of Seattle (Wash.), 1104 Pac. 109. 19 — Warner v. City of New Or- leans, 167 U. S. 467, affirming 87 Fed. 829; City of New Orleans v. Warner, 175 U. S. 120; Denny v. City of Spokane, 79 Fed. 719; Mills County Nat. Bank v. Mills County, 67 Iowa, 697; Keilly v. City of Al- MISCEL1.ANE0US EVIDENCES OF INDEBTEDNESS 891 rant for the payment of a specific claim may be held in- valid where it is general in its terms, but the authority for its payment is special. The party to whom such a warrant has been issued is usually held charged with knowledge of the provisions of the law allowing the claim and making the special appropriation.^" Where taxes and special assessments have been levied for the specific purpose of paying .for a local improve- ment, a city cannot justify its refusal to redeem war- rants issued for such work on the ground that such as- sessments were invalid.^" § 448. Formal issue and sale. In common with other evidences of indebtedness, a warrant is not issued until it is delivered and this in- volves the question of its issue and delivery to the proper person.^ ^ Statutory provisions forbidding the purchase of war- bany, 112 N. T. 30, 2 L. E. A. 648; wrong person may be restrained. Commercial Nat. Bank v. City of San Juan County Com'rs v. Oliver, Portland, 24 Or. 188; Jones v. City 7 Colo. App. 515; State v. Miller, of Portland, 35 Or. 512; Bank of 145 Ind. ^8. British Columbia v. City of Port State v. Pierce, 52 Kan. 521. To Townsend, 16 Wash. 450. But see issue county warrants or orders Stephens v. City of Spokane, 11 means ' ' to send out to deliver, or Wash. 41; and McEwan v. City of to put into circulation." Craig v. Spokane, 16 Wash. 212. Mason, 64 Mo. App. 342; State v. 20— Sutro V. Dunn, 74 Calif. 593, Lewis, 6 Ohio Dec. 198. 16 Pac. 505 ; City of New Orleans Clark County Sup 'rs v. Lawrence, V. City Hotel, 28 La. Ann. 423; 63 111.32. It is not necessary to the Soule V. Town of Ocosta (Wash.), validity of a warrant that it be de- 95 Pae. 1083. See, also. State v. livered in the county in which it is Farmer (Wash.), 88 Pac. 321. issued. 21— Eed Kiver Valley National Tan^iy v. Norman (Ky.), 27 S. W. Bank v. City of Pargo (N. D.), 103 861. Warrants cannot be issued be- N. W. 390. fore the expenses or liabilities are 22 — Jeffersonian Pub. Co. v. Hil- actually incurred. American Bridge liard, 105 Ala, 576. Co. v. Wheeler (Wash.), 76 Pae. Cooper V. Eoland (Ark.), 130 S. 534. W. 559. An issue of scrip to the 892 PUBLIC Securities rants by scrip or otlier evidences of indebtedness at a discount by county officers are construed strictly .^^ One who sells village warrants for value impliedly war- rants them to be genuine and not to his knowledge sub- ject to any counterclaims.^'' § 449. Audit and allowance of claims as preliminary to issuance. The audit and allowance of a claim is a recognition of its existence as a valid outstanding indebtedness and where the law provides for such action, if not done, war- rants although drawn by the proper officials cannot legally be paid.^^ After the issuance of a warrant upon an audit and al- lowance, the public corporation is estopped to set up as a defense, in an action upon it, irregularities in the audit or allowance; to illustrate, the audit and allowance at a special instead of a regular meeting of the board upon whom such duty rests.^^ § 450. Their legal character. Warrants issued by public corporations, purchased before maturity and for value, are subject to all defenses or equities, although in contradiction to their recitals, which may exist between the parties to the transaction 23 — Harrison County v. Ogden v. Police Jury of Natchitoehes, 19 (la.), 108 N. W. 451. La. Ann. 448; State v. City of New See, also, State v. Kelly (Kan.), Orleans, 50 La. Ann. 880; Wilson 96 Pac. 40, in respect to sale before v. State, 53 Neb. 113, 73 N. W. 456; time authorized by law. State v. Hallook, 20 Nev. 326, 22 24 — Hart v. Village of Wyndmere Pac. 123; In re Statehouse Bills, (N. D.), 131 N. W. 271; Giblin v. 19 E. I. 390, 35 Atl. 212. North Wisconsin Lumber Co. 26 — Warner v. City of New Or-' (Wis.), Ill N. W. 499. leans (C. C. A.), 87 Fed. 829; Spee- 25— Keller v. Hyde, 20 Cal. 594; v. Kearney County Com'rs (C. O. lawyer v. Colgan (Cal.), 33 Pac. A.), 88 Fed. 749; Los Angeles 911; Young v. Parish of East Baton County v. Lankershim, 100 Cal. 525. Eouge (La.), 36 So. 547; Capmartin MISCELLANEOUS EVIDENCES OF INDEBTEDNESS 893 whether such bona fide holder is the original payee or a subsequent purchaser for value.^^ In this respect they differ radically from negotiable bonds or securities issued by public corporations. The rules of law concerning the issue of warrants are applied with less strictness than in the case of negotiable bonds for this reason. The courts will imply authority to issue, when under the same circumstances no such authority would be implied with respect to negotiable securities, and they will overlook irregularities in the form or man- ner of issue when such irregularities would render ne- gotiable bonds absolutely void even in the hands of bona fide holders.^® "Warrants are not negotiable instruments in the full sense of the term as used by the law-merchant. They are non-negotiable and merely prima facie evidence of a valid claim against the corporation issuing them.^" 27— School Dist. Tp. v. Lombard, 2 Dill. 493, Fed. Cas. No. 12,478; Shirk V. Pulaski County, 4 Dill. 209, Fed. Cas. No. 12,794; Watson v. City of Huron (C. C. A.), 97 Fed. 449. 28 — Young V. Camden County, 19 Mo. 309. Sections of an act pre- scribing a form for county war- rants are merely directory and a departure from the form prescribed is no defense to an action on the warrant. The court say : ' ' The provisions of the act which have been relied upon by the counsel for the county, are directory to the county courts in issuing warrants, and the chief design of those enact- ments was, to prevent the making of paper by county courts which could be used as a circulating me- dium having the appearance of ordi- nary bank paper. * * * "When a party like the present plaintiff, has performed labor, or rendered services to the county, and holds a warrant issued upon the treasury of the county by the county court, his claim to the money is not af- fected by the taste of the court in ornamenting their warrants, al- though they are forbidden to use such ornaments by the county. The words of the warrant have the same meaning, and import the same ob- ligation whether the ends of the paper upon which it is printed have ornaments or not. ' ' 29 — Thompson v. Searcy County (C. C. A.) 57 Fed. 1030; Speer v. Kearney County Com'rs (C. C. A.) 88 Fed. 749; Lake County Com'rs v. Keene Five-Cent Sav. Bank (C. C. A.) 108 Fed. 505; Shirk v. Pulaski County, 4 Dill. 209, Fed. Cas. No. 12,794; Crawford County v. Wilson, 7 Ark. 214; Police Jury of Tensas V. Britton, 82 U. S. (15 WaU.) 566; Hill V. City of Memphis, 134 U. S. 198; Shirk v. Pulaski County, 894 PUBLIC SECUBITIES In a leading case in the Supreme Court of the United States ^° the court considered in an exhaustive opinion the implied power of a public corporation to issue nego- tiable securities and compared its power in this respect with that of its capacity to issue warrants and other non- negotiable evidences of indebtedness. In speaking of the latter, the court in its opinion said: "Vouchers for money due, certificates of indebtedness for services ren- dered, or for property furnished for the uses of the city, orders or drafts drawn by one city officer upon another, or any other device of the kind used for liquidating the amounts legitimately due to public creditors, are, of course, necessary instruments for carrying on the ma- chinery of municipal administration, and for anticipat- ing the collection of taxes. But to invest such documents with the character and incidents of commercial paper, so as to render them in the hands of bona fide holders absolute obligations to pay, however irregularly or 4 Dill. 209, Fed. Cas. No. 12,794; St. Louis, 57 Miss. 326; Great PaUs People V. El Doraclo County Sup'rs, Bank v. Parmington, 41 N. H. 32; 11 Cal. 170; Pacific Pav. Co. V. Mow- State v. Cook, 43 Neb. 318; D bray, 127 Cal. 1; Bay v. Wilson, County Com'rs v. Sauer, 8 Okl. 235; 29 Fla. 342, 10 So. 613, 14. L. E. A. Borough of Port Eoyal v. Graham, 773 ; Delf osse v. Metropolitan Nat. 84 Pa. 426 ; East Union Tp. v. Eyan, Bank, 98 111. App. 123; People v. 86 Pa. 459; Hyde v. County of Johnson, 100 111. 537 ; Davis V. Steu- Franklin, 27 Vt. 185; Bardsley v. ben School Tp., 19 Ind. 694, 50 N. Sternberg, 18 Wash. 612; West E. 1; Clark v. City of Des Moines, Philadelphia Title & Trust Co. v. 19 Iowa 199 ; Walnut Tp. v. Jordan, City of Olympia, 19 Wash. 150, 52 38 Kan. 562, 16 Pac. 812; Garfield Pac. 1015. See, also, many author- Tp. V. Crocker, 63 Kan. 272, 65 Pac. ities collected in 21 Am. & Eng. Bnc. 273; Sturtevant v. Inhabitants of Law (2d Ed.), p. 26, note to par. Liberty, 46 Me. 457; Emery v. In- 12; Watson v. City of Huron C. C. habitants of' Mariaville, 56 Me. 315 ; A. 97 Fed. 449 ; First National Bank Van Akin v. Dunn, 117 Mich. 421, v. Whisenhunt (Ark.), 127 S. W. 75 N. W. 938; Matthis v. Inhab- 968; Vale v. Buchanan (Ark.), 135 itants of Cameron, 62 Mo. 504; In- S. W. 848; Gray v. Board of School ternational Bank of St. Louis v. Inspectors, etc., 231 HI. 63, 83 N. E. Franklin County, 65 Mo. 105, over- 95; Bull v. Sims, 23 N. Y. 570. ruling Howell v. Eeynolds County, 30 — City of Nashville v. Eay, 86 51 Mo. 154; Chandler v. City of Bay U. S. (19 Wall.) 468. MISCELLANEOUS EVIDENCES OP INDEBTEDNESS 895 fraudulently issued, is an abuse of their true character and purpose. ' ' In another case in the sanae court where the same sub- ject was considered,^^ the court said: "The warrants being in form negotiable, are transferable by delivery so far as to authorize the holder to demand payment of them and to maintain, in his own name, an action upon them. But they are not negotiable instruments in the sense of the law-merchant, so that, when held by bona fide purchaser, evidence of their invalidity or defenses available against the original payee would be excluded. The transferee takes them subject to all legal and equita- ble defenses which existed to them, in the hands of such payee. "There has been a great number of decisions in the courts of the several states upon instruments of this kind, and there is little diversity of opinion respecting their character. All the courts agree that the instruments are mere prima facie and not conclusive evidence of the validity of the allowed claims against the county by which they were issued. The county is not estopped from questioning the legality of the claims; and when this is conceded, the instruments conclude nothing as to other demands between the parties. ' ' The court also in speaking of the decision in Craw- ford County V. Wilson, 7 Ark. (2 Eng.) 214, said : ' ' This case in the supreme court of Arkansas is cited as show- ing that a different rule prevails in that state. The lan- guage of the opinion, that county warrants are endowed with the properties of negotiable instruments, must be read in connection with the point involved, which was whether county warrants were transferable by mere de- livery, so as to vest the legal interest in the holder. To this extent they may be called negotiable, but no 31— Wall V. County of Monroe, 103 V. S. 74, 26 L. Ed. 480. 896 PUBLIC SECURITIES court of Arkansas has held that they were negotiable in the sense of the law-merchant, so as to shut out, in the hands of a bona fide purchaser, inquiries as to their validity or preclude defenses which could be made to them in the hands of the original parties. The law is not different there from that which obtains in other states." They are negotiable only so far that, when endorsed, they become transferable by delivery and the holder may maintain an action thereon in his own name. But in such action, whether brought by the original payee or a sub- sequent purchaser for value, all irregularities in the man- ner of issue, lack of authority or the purpose for which the funds were used, are available as defenses.^^ 32— Wall V. Monroe County, 103 U. S. 74; Ouachita County v. Wol- cott, 103 U. S. 559; Watson v. City of Huron (C. C. A.) 97 Fed. 449; Crawford County v. Wilson, 7 Ark. 214; Apache County v. Barth (Ariz.), 53 Pac. 187; People v. Gray, 23 Cal. 125; Jones v. Smith, 64 Ga. 711; People v. Eio Grande County Com'TS, 11 Colo. App. 124, 52 Pac. 748; Goodwin v. Town of Bast Hart- ford, 70 Conn. 18; NeweU v. School Directors of Dist. No. 1, 68 111. 514; City of Hammond v. Evans, 23 Ind. App. 501; Davis v. Steuben School Tp., 19 Ind. App. 694, 50 N. E. 1; Clark v. City of Des Moines, 19 Iowa 199; Clark v. Polk County, 19 Iowa 248 ; Long v. McDowell, 107 Ky. 14, 52 N. W. 812; Klein v. Pipes, 43 La. Ann. 359; Emery v. Inhabitants of Mariaville, 56 Me. 315; School Diat. No. 2 v. Stough, 4 Neb. 357; State ■^. Cook, 43 Neb. 318; Smith v. Town of Epping, 69 N. H. 558, 45 Atl. 415; McPeeters v. Blankenship, 123 N. C. 651; Gil- man V. Gilby Tp., 8 N. D. 627; Cap- ital Bank of St. Paul v. School Dlst. No. 53, 1 N, D. 479; Crawford v. Noble County Com'rs, 8 Okl. 450; National Surety Co. v. State Savings Bank, 156 Fed. 21 C. C. A.; Perry County V. Eversole (Ky.), 98 S. W. 1019; State v. Melcher (Nebr.), 127 N. W. 241; Smith v. Polk County (Ore.), 112 Pac. 715; Stratton v. Com'rs Court of I\:inney County (Tex.), 137 S. W. 1170; State v. Lewis (Wash.), 113 Pac. 629. But see Snyder Tp. v. Bovaird, 122 Pa. 442, 15 Atl. 910, as holding that a blank assignment does not vest in the holder of a township war- rant the right to maintain an action in his own name against the town- ship. Hubbell V. Town of Custer City, 15 S. D. 55, 87 N. W. 520; Lane v. Hunt County, 13 Tex. Civ. App. 315, 35 S. W. 10; Bardsley V. Sternberg, 17 Wash. 243, 49 Pac. 499; West Philadelphia Title & Trust Co. V. City of Olympia, 19 Wash. 150, 52 Pac. 1015; Chehalis County V. Hutcheson, 21 Wash. 82, 57 Pac. 341. See, also, authorities cited in preceding note. MISCELLANEOUS EVIDENCES OF INDEBTEDNESS 897 This rule was well stated in an early Kansas case,^* where the court said: "Such paper (commercial) is made free from defenses in the hands of such holders in order to facilitate the circulation thereof, and thereby promote the transaction of business. But paper non-ne- gotiable for any reason is not thus protected. The very fact of its being non-negotiable is a sign of warning to the prospective purchaser and places him on his guard. Municipal warrants though negotiable in form, are non- negotiable in fact; hence they are not within the protec- tion of the rule which guards commercial paper. The warrant in question being such an instrument, it was thereby, in the eye of the law, non-negotiable, though as to form and in other respects of a negotiable character. It therefore took its place in the list of non-negotiable paper for all purposes. In other words, an instrument non-negotiable between the original parties remains non- negotiable through successive transfers. The bank, know- ing that it was non-negotiable, must take and hold it as it would any other non-negotiable paper. ' ' Some authorities hold that an executive warrant di- recting the payment of money in pursuance of an appro- priation made by law does not partake of the nature of a contract but is merely a license of power and revoca- ble so long as the payment authorized is not made.^* §451. Form of warrant. A public corporation transacts its business, exercises all its powers and performs all its duties through its duly 33 — First National Bank of Ar- ments in the sense of the law mer- kansas City v. Gates, 66 Kan. 505, chant so that when held by a bona 72 Pae. 207. See, also, Watson v. fide purchaser evidence of their City of Huron, 97 Fed. 449 C. C. A. invalidity or defenses available They were in form negotiable and against the original payee would be transferable by delivery so far as excluded. to authorize the holder to maintain 34 — Fletcher v. Eenfroe, 56 Ga. in his own name an action on them, 674. but they were not negotiable instru- p. s.— 57 898 PUBLIC SECUBITIES appointed or elected agents. To protect the corporation, therefore, there are well defined and established rules of law controlling and regulating the manner in which, and the acts that may be done by such agents for and in behalf of their principal. This is especially true of action by or through which a pecuniary responsibility or obligation IS imposed upon a public corporation. Legal require- ments or established custom and usage may require war- rants in their form to be phrased in a certain manner,^^ signed by certain officials, endorsed by others,^" and sealed with the seal of the corporation, if any.*^ Where a warrant in its mechanical execution does not 35 — SMpman v. Forbes, 97 Cal. 572, 32 Pae. 599; Witter y. Bach- man, 117 Cal. 318, 49 Pac. 202; El- lis V. Witmer, 134 Cal. 249, 66 Pac. 301; State v. Pilsbury, 29 La. Ann. 787; Taylor v. Chickasaw County Sup'rs, 74 Miss. 23, 19 So. 834; Cal- laghan v. Salliway, 5 Tex. Civ. App. 239; Minor v. Loggins, 14 Tex. Civ. App. 15, 37 S. W. 1086. 36 — Apache County v. Barth (Ariz.), 53 Pac. 187; National Bank of D. O. Mills & Co. V. Herold, 74 Cal. 603, 16 Pac. 507, the omission of an official designation not mate- rial; First Nat. Bank v. Shewalter (Mo.), 134 S. W. 42; State v. Dick- erman, 16 Mont. 278, 40 Pac. 698. State V. Morton, 51 S. C. 323, 2S S. E. 945. It is not necessary that each member of the board of trus- tees of a school district sign a war- rant to render it valid. Stevens v. City of Spokane (Wash.), 39 Pac. 266. Bardsley v. Sternberg, 17 Wash. 243, 49 Pac. 499. A city is not liable for a fraudulent re-issue of warrants by its treasurer in pay- ment of the original indebtedness. 37— Smeltzer v. White, 92 U. S. 390; Springer v. Clay County, 35 Iowa 241. Thompson v. Fellows, 21 N. H. (1 Fost.) 425. A warrant issued by selectmen need not be under seaL State V. Morton, 51 S. C. 323, 28 S. E. 945. Heffleman v. Pennington County, 3 S. D. 162. The statute is very explicit as to how a claim against a county shall be presented and passed upon by its board of county commissioners. The duty of the board is to judicially investigate the validity and justice of the claim, and to allow or disallow the same in whole or in part, as to such board shall appear just or lawful. While the immediate purpose of the war- rant is to enable the claimant to whom it is delivered to draw from the county treasury the amount of money therein named, yet it rests upon, and its issue and payment could only be justified upon, the theory that after a full investigation the county had found itself to be so indebted; so that the warrant is a formal and deliberate acknowl- edgement by the county of such in- debtedness. ; MISCELLANEOUS EVIDENCES OF INDEBTEDNESS 899 comply with sucli reasonable requirements of the law, it may be considered invalid and the official to whom it is directed and whose duty it is to pay valid warrants only, can properly refuse to recognize it.^* It has been held, however, in some cases that statutory provisions fixing the form of warrants are directory and that the addition of other words does not necessarily destroy their legal character or affect their validity.^^ To refuse payinent may be not only a discretionary matter with such official but an imperative duty ; the right to refuse payment may also exist where the appropria- tion has been made to a certain individual for a specific purpose and the warrant as drawn is to another individ- ual and without specifying the purpose. No rule of uni- versal applicability, however, can be given but charter, or statutory provisions must be consulted to determiae the validity of the warrant in this respect. § 452. Phraseology of warrant. Provisions that a warrant shall show upon its face the purpose for which it is drawn are usually considered mandatory and in the absence of such recital, no recov- 38 — Hamilton County Com'rs v. rant holder to enforce it. Harrison Sherwood (C. C. A.) 64 Fed. 103. v. Logan County (Ky.), 110 S. W. A county warrant regular in its 377. form but issued for an account School Dist. No. 3 Carbon County which was not verified as required v. Western 'Tube Co. (Wyo.), 80 Pae. by Gen. St. Kan. 1889, Chap. 25, 155. A school district warrant is Sec. 28, is not utterly void, unless not rendered invalid by the failure issued fraudulently without consid- of the district clerk to number it as eration or authority. Bingham other warrants are numbered and to County V. First Nat. Bank, 122 Fed. note its issuance in his warrant stub 16. book. Freeman v. City of Huron, 10 S. 39 — City of Burrton v. Harvey D. 368, 73 N. W. 260. The failure County Sav. Bank, 28 Kan. 390 j of a city treasurer to record, as and Young v. Camden County, 19 required by law, warrants presented. Mo. 309. does not defeat the right of a war- 900 PUBLIC SECXJEITIES ery can be had even by a bona fide purchaser." A sub- stantial compliance, however, with charter or statutory provisions, satisfies legal requirements and payment can then be enforced.*^ Where they are issued containing certain recitals and the law in full under which they are issued, subsequent legislation cannot be passed which changes or affects the terms or conditions upon which they are payable. Such legislation will be considered an impairment of the obli- gation of the contract between the holder and the maker.*^ The party to whom payable is usually determined by law. Ordinarily, a warrant is only valid when issued in favor of the one so designated. This principle has been applied in the issue of a warrant to the assignee of one holding the original claim and invalidating it.*^ But the authorities are not unanimous on this point.** 40 — Bingham County y. First Nat. Bank, 122 i'ed. 16; Raymond v. People, 2 Colo. App. 329, 30 Pac. 504, following Traveler's Ins. Co. v. City of Denver, 11 Colo. 434, 18 Pac. 556; San Juan County Com'rs V. Oliver, 7 Colo. App. 515, 44 Pae. 362. McNutt V. Lemhi County (Ida.), 84 Pae. 1054. For cases passing upon questions relative to the phraseology or ornamentation of warrants, see Poote v. City of Salem, 96 Mass. (14 Allen) 87; Young v. Camden County, 19 Mo. 309; and Kenyon v. City of Spokane, 17 Wash. 57. 41 — Goldsmith v. Stewart, 45 Ark. 149; San Juan County Com'rs v. Oliver, 7 Colo. App. 515, 44 Pae. 362; Eay v. Wilson, 29 Fla. 342, 10 So. 613, 14 L. E. A. 773; City of East St. Louis v. Flannlgen, 36 111. App. 50. 42— Brooklyn Park Com'rs v. Armstrong, 45 N. Y. 234; Wabash & E. Canal Co. v. Beers, 2 Black (U. S.) 448. 43 — Sheerer v. Edgar, 76 Calif. 569. 44 — Hadley v. Dagug, 130 Cal. 207, 62 Pae. 500. The contract was originally awarded to John T. Long and before its completion was as- signed to the Western Contracting and Construction Company. The warrant issued with the assessment was in favor of "the Western Con- tracting and Construction Company, assignee of John T. Long, agents or assigns. ' ' The appellant con- tends that the warrant should have been issued in the name of the orig- inal contractor, and that its issuance in favor of his assignee was unau- thorized. The form of warrant which is prescribed in the street im- provement act in terms authorizes and empowers the contractor, his agents or assigns to demand and re- ceive the several assessments, and the act declares that the warrant to be MISCELLANEOUS EVIDENCES OE INDEBTEDNESS 901 § 453. Validity; in general. There does not exist usually an implied authority on the part of public corporations to issue warrants. The power must be found in some provision of the law of the state or charter of the municipality before it can be exer- cised. To be valid, there must exist the legal authority for their issue assuming the absence of irregularities in other respects.*^ In a case involving the validity of warrants which a school board had issued to pay for a school house site,*" the court said : ' ' The fact that the legislature has in no place, nor under any circumstances, clothed the district board with power to create debts that should be binding obligations upon the district, except by and with the issued shall be "substantially" in this form. The right of the con- tractor to assign the contract prior to the completion of the work is rec- ognized in many portions of the act and has been recognized by this court. Anderson v. De TJrioste, 96 Oal. 404. After he has ceased to have any interest in the contract, or in the assessment therefor, there would seem to be no reason for the issu- ance of the warrant in his name es- pecially since the statute does n«t specifically require it. Sections 9 and 10 of the act designated the assignee as the proper person to whom the warrant and assignment are to be delivered. We hold there- fore, that a warrant in favor of one who is therein named as the as- signee of the original contractor, whose name is also given, is "sub- stantially" in the form prescribed in the act. Berkeley Development Co. V. Marx (CaUf.), 102 Pac. 278; see, also, Travelers' Ins. Co. v. City of Denver, 11 Colo. 434; Interna- tional Bank of St. Louis v. Franklin County, 65 Mo. 105. 45— City of Little Eoek v. United States, 103 Fed. 418; Clark v. City of Des Moines, 19 Iowa 199; Jeffer- son County Sup'rs v. Arrighi, 54 Miss. 668; Trask v. Livingston County (Mo.), 109 S. W. 656; An- drew V. School Dist. of McCook, 49 Neb. 420, 35 L. E. A. 444; Markey V. School Dist. No. 18, 58 Neb. 479, 78 N. W. 932, following Pomerene V. School Dist. No. 56, 56 Neb. 126, 76 N. W. 414; State v. Omaha Nat. Bank, 59 Neb. 483, 81 N. W. 319. Board of Chosen Freeholders v. Buck (N. J.), 16 Atl. 698. An act purporting to grant authority for issuing state certificates of indebt- edness may be unconstitutional as violating Art. IV, Sec. 7, Par. 11 of the constitution. Nelson v. Harrison, 102 N. W. 197. Validity of warrant cannot be determined in an action to which the holder of the warrant is not a party. 46 — Farmers' & M. Nat. Bank v. School Dist. No. 5S, 6 Dak. 255. 902 PUBLIC SECUEITIES consent of the inhabitants of the district, is sufficient evi- dence that it supposed the authority to incur obligations would be more wisely exercised by those who had them to pay than by a board which peradventure might in that regard be moved by some ulterior purpose. In any event, the legislature, within the statutory limitations has left the matter entirely with the inhabitants of the district and empowered the district board to act only in conso- nance with the will of the voters of the district, as ex- pressed at the district meetings. The district board in issuing these orders acted without any authority what- ever and such orders are therefore, invalid for any pur- pose." The presumption of law is, however, in favor of the legality of warrants, orders or other like evidences of in- debtedness and the burden of proof is upon the party denying such validity.*'' The rule of law which applies to the issue of negotiable bonds or the incurring of indebtedness by a de facto corporation is applicable to the validity of warrants is- sued by a de facto organization. These are, if other- wise valid, held good in the hands of third parties to 47— Wall V. Monroe County, 103 1; Bay v. Wilson, 29 Fla. 342, 14 U. S. 74; George D. Barnard & Co. L. E. A. 773; People v. Johnson, 100 V. Knox County, 37 Fed. 563, 2 L. 111. 537; City of Connersville v. Con- E. A. 426; Aylesworth v. Gratiot nersville Hydraulic Co., 86 Ind. 184; County, 43 Fed. 350 ; Speer V. Kear- Hospers v. Wyatt, 63 Iowa 264; ney County Com'rs (C. C. A), 88 Leavenworth County Coni'rs v. Kel- Fed. 749; Seward County Com'rs v. ler, 6 Kan. 510; Cheeney v. Inhab- Aetna Life Ins. Co. (C. C. A.), 90 itants of Brookfield, 60 Mo. 53; Fed. 222; Eollins v. Eio Grande Mountain Grove Bank v. Douglas County Com'rs (C. C. A.), 90 Fed. County, 146 Mo. 42; Custer County 575 ; Board of Com 'rs of Kearney Com 'rs v. De Lana, 8 Okl. 213 ; County V. Irvine, 126 Fed. 689; Edinburg American Land & Mortg. Grayson v. Latham, 84 Ala. 546; Co. v. City of Mitchell, 1 S. D. 593, Lusk V. Perkins, 48 Ark. 238; 12 L. E. A. 705; Chehalis County v. Apache County v. Barth (Ariz.), 53 Hutcheson, 21 Wash. 82; Brown v. Pac. 187; San Juan County Com'rs School Directors of Jacobs, 77 Wis. V. Oliver, 7 Colo. App. 515; Lake 27. County Com'rs v. Standley, 24 Colo. . . _. . - - MISCELLANEOUS EVIDENCES OF INDEBTEDNESS 903 whom they have been sold. Obligations incurred by the inhabitants of a certain district as a rule cannot be avoided by the tax-paying interests of that territory. The obligation exists not against the individuals but against the district and the property within it.*^ The rule has also been applied where the de facto cor- poration existed under a law subsequently declared un- constitutional. In a case decided by the United States Circuit Court of Appeals for the Eighth Circuit,*^ the validity of certain warrants issued was contested and the defense urged that they were invalid because the law under which they were given was unconstitutional; the court said : ' ' Such a law passes the scrutiny and receives the approval of the attorney general, of the lawyers who compose the judiciary committees of the legislative bod- ies, of the legislature and of the governor before it reaches the statute book. * * * Courts declare its invalidity with hesitation and after long deliberation and much consideration, even when its violation of the organic law is clear and never when it is doubtful. Until the judiciary has declared it void, men act and contract, and they ought to act and contract, on the presumption that it is valid and where before such declaration is made, 48 — Board of Education of AtcM- should exist. * * * We conclude son V. De Kay, 148 TJ. S. 591. therefore, that there were de jure Merchants' Nat. Bank v. McKin- county offices existing in Douglas ney, 2 S. D. 106, 48 N. W. 841. The county to be filled and that, when payment of warrants was sought to filled, the ofl&eers were at least, de be avoided on the ground that there facto officers and their acts good as were no county officers and there- to third persons and the public; and fore no county. The court said: that the board of county commis- " So we say here the county existed sioners of said Douglas county in is- from the moment it was segregated suing the warrants in controversy, from the other portions of the ter- constituted a de facto board and the ritory, its boundaries defined, and warrants issued by it are prima its name given to it, and all the of- facie valid and binding upon the fioes provided by law existed. They county. ' ' See, also. Sec. 266, ante, were vacant, it is true, but they 49 — Speer v. Kearney County nevertheless existed, ready to be Com'rs, 88 Fed. 749, C. C. A. filled whenever certain conditions 904 PUBLIC SECUMTIES their acts and contracts have affected public interest or private rights, they must be treated as valid and lawful. The acts of a de facto corporation or officer under an un- constitutional law before its invalidity is challenged in or declared by the judicial department of the govern- ment cannot be avoided as against the interests of the public or of third parties who have acted or invested in good faith in reliance upon their validity by any ex post facto declaration or decision that the law under which they acted was void." § 453a. Validity as affected by debt limitations. In preceding sections the power to incur indebtedness by public corporations has been discussed, whether such indebtedness is to be evidenced by negotiable securities or otherwise, and in this connection attention has been called to the constitutional or statutory provisions found in every state and which limit the amount of indebtedness that can be legally incurred by them. Obligations as- sumed in excess of such limitations are usually held void and not capable of enforcement.^" 50— See Sees. 99, 100, ante. 338, 54 Pac. 174; City of Sherman Farmers ' & M. Nat. ^ Bank v. v. Smith, 12 Tex. Civ. App. 580, 35 School Dist. No. 53, 6 Dak. 255. S. W. 294; Baker v. City of Seat- We think it was the purpose of tie, 2 Wash. St. 576. Invalid war- the legislature to restrict within the rants, however, can be validated limits specified by the statute, the under legislative authority, amount of actual expenditures which Duryee v. Friars, 18 Wash. 55. could be made by the district in any The constitutional limitation does one year. Any other construction not apply to obligations incurred in of this statute would be equivalent matters essential to governmental to holding that it has nO force or maintenance and therefore warrants effect and that school districts or issued after such limitation had been school boards may incur any amount reached are prima facie valid, of indebtedness and bind the district Eoe v. Town of Philippi, 45 W. with its immediate payment. Va. 785, 32 S. B. 224. The fact of Andrew County v. Sehell, 135 Mo. a debt in excess of a constitutional 31, 36 S. W. 206; Mountain Grove limitation must, however, clearly Bank v. Douglas County, 146 Mo. appear. Kane v. School Dist., 52 42, 47 S. W. 944; D County Com'rs Wis. 502. V. Sauer, 8 Okl. 235; Municipal Se- Coffin v. Board of Com'rs of curity Co. v. Baker County, 33 Or. Kearney County, 114 Fed. 518 ; Hen- Miscellaneous evidences op indebtedness 905 Whether warrants as ordinarily issued constitute an "indebtedness" within the meaning of such constitu- tional or statutory phrases depends upon the decisions of a particular state following what might be termed a local public policy,^ ^ or upon the construction given by some courts to such instruments that if drawn against a tax levy or funds already within the control and pos- session of the corporation they do not constitute an in- debtedness.®^ In an Iowa case^* it was said: "If it appeared that the indebtedness to the payment of which the satisfaction of plaintiff's warrant is sought to be postponed was in- curred in excess of the prescribed limit * * ' the de- cision of this case would be a matter of no difficulty. It is true, the petition alleges that at the times when this indebtedness was contracted the city was in debt to the limit of the amount allowed. But it does not follow from derson v. People, 17 Colo. 587, 31 Pao. 334; McNutt v. Lemhi County (Ida.), 84 Pac. 1054; People v. To- ledo, etc., E. E. Co., 229 111. 327, 82 N. E. 420. Harrison County v. Ogden (la.), 110 N. W. 32. County supervisors have no authority to create an in- debtedness payable in the future. Warrants issued for purchase of road machine held void. Merchants National Bank v. City of East Grand Forks (Minn.), 102 N. W. 703; National Life Insurance Co. v. Dawes County (Nebr.), 93 N. W. 187; Burgin v. Smith (N. C), 66 S. E. 607. Darling v. Taylor (N. D.), 75 N. W. 766. Construing constitution Sees. 183 and 187 relative to limit of indebtedness. 51 — George D. Barnard & Co. v. Knox County, 37 Fed. 563, 2 L. E. A. 426, following Potter v. Douglas County, 87 Mo. 240; Koppikus v. State Capitol Com'rs, 16 Cal. 248; Henderson v. People, 17 Colo. 587. Every appropriation in excess of the constitutional limitation should be regarded as void. City of Spring- field V. Edwards, 84 111. 626 ; Law v. People, 87 111. 385; Fuller v. City of Chicago, 89 111. 282; In re State Warrants, 25 Neb. 659; State v. Parkinson, 5 Nev. 15; Lorence v. Bean, 18 Wash. 36. School Dist. No. 3 v. Western Tube Co., 5 Wyo. 185, and Penton V. Blair, 11 Utah 78, hold warrants void issued in excess of the Federal limitation on indebtedness. 52— Fuller v. Heath, 89 111. 296; Darling v. Taylor, 7 N. D. 538, 75 N. W. 766; Shannon v. City of Hu- ron, 9 S. D. 356, 69 N. W. 598; Lawrence County v. Meade County, 10 S. D. 175, 72 N. W. 405. 53— Phillips V. Eeed, 107 la. 331. 906 PUBLIC SECXJEITIES this that the indebtedness as represented by these war- rants was necessarily invalid. If the city had on hand or in prospect, at the time these warrants were issued, funds with which to meet them without trenching upon the rights of creditors, for current expenses of the city, then the warrants were valid, although such funds may have been thereafter wrongfully applied to other purposes." Those provisions which require, before an indebtedness can be legally incurred, the affirmative vote of the elect- ors, must be followed where warrants are regarded as an indebtedness, and if issued without are invalid.^* In some states the necessity for affirmative action by the electors in respect to the incurring of indebtedness or the expenditures of public moneys has not been held to apply to warrants even in excess of a constitutional limi- tation when issued in the payment of so-called compul- sory obligations. Previous discussion of this subject will be remembered.^^ In a case from Washington, it was held that the cost of constructing a courthouse and the salaries of county officials were to be regarded as obligations of this char- acter ; ^* it was contended that warrants issued after a county had reached its limit of indebtedness were illegal. The court held the disbursement a compulsory one and said: "At the time the court house was erected such a county building was absolutely necessary for county offi- cers and a proper care of the county records. Republic, the county seat, was a new mining camp and but a short time before had been destroyed by fire. Most of the buildings were small frame cabins, none of them being suitable places to deposit the county records or to ac- commodate the county offices. While, ordinarily, warrants issued in payment of money expended in building a court 54: — State ex rel. Egger v. Payne Wash. 549, 64 Pac. 717; see, also, (Mo.), 52 S. W. 412. Eauch v. Chapman, 16 Wash. 568, 55 — See Sec. 71, et seq., ante. 30 L. E. A. 407. 56 — Farquharson v. Yeargin, 24 MISCKLLANEOtrS EVIDENCES OF INDEBTEDNESS 907 house would not fall under the class of compulsory ob- ligations, the conditions existing in Republic at the time of the erection of the court house were such as to bring the warrants for the erection of this particular court house within the rule * * * because it may be fairly inferred that no other building could be had for the pur- pose, owing to the destruction of the town by fire." §454. Warrants invalid because of purpose for which issued. Again a warrant may be invalid because issued for a purpose which is not considered or regarded by the courts as a public one ; the basis of all legal expenditure of pub- lic moneys by public corporations is the fact of the dis- bursement for some purpose germane to their organiza- tion and the transaction of public business by them. Clearly, therefore, if warrants are issued by public cor- porations, although regular in their form, for a pur- pose not public in its character, they will be regarded as illegal, and not being considered negotiable in their char- acter, this question can be raised even where they have passed into the hands of bona fide holders for value and before maturity.^'' 57 — See Sec. 101, at seq., ante, municipality is not obliged to pay as to what is a public purpose. First a negotiable order of the board of Nat. Bank of Lansdale v. Wyan- police which does not show on its dotte County Com'rs (C. C. A.), 68 face or by the accompanying papers Fed. 878; Watson v. City of Huron, for what expenses the order is 97 Fed. 449; Littler v. Jayne, 124 drawn. D County Com'rs v. Sauer, 111. 123, 16 N. B. 374. 8 Okl. 235. Long V. Boone County, 32 Iowa Custer County Com'rs v. De Lana, 181. Warrants valid issued in pay- 8 Okl. 213, 57 Pac. 162. The pre- ment of a contract for grading and sumption, however, exists that such improving the public roads of a warrants are issued for lawful cor- county. porate purpose. Huron Water- Salamanca Tp. V. Jasper County works Co. v. City of Huron, 7 S. D. Bank, 22 Kan. 696. 9, 62 N. W. 981, 30 L. E. A. 848; Board of Police, etc., v. City of King v. Sullivan County, 67 Tenn. Biddeford (Me.), 72 Atl. 740. A (8 Baxt.) 329. 908 PUBLIC SECXIEITIES As illustrating the subject of this section in addition to the many cases cited in the section above referred to, a particular reference to a case from the State of Wash- ington ^* will be instructive and illuminating as well in the present days of extravagant municipal expenditure and the inclination on the part of public officials to take pleasure jaunts at the public expense. The expenses of certain city officials while on a trip to various places made for the purpose of investigating municipal affairs were sought to be recovered by them from the City of Seattle. The court held that such expenditures of pub- lic moneys would not be for a public purpose and re- fused to allow the payment of the claims. It said in part: "The members of the city council are trustees. The body holds a trust for the inhabitants of the city. The terms of the trust are fixed by legislation and no expenditure of money belonging to the city can be made without express authority or implied authority by reason of a necessary granted power. Where this au- thority does not exist the council is without power to authorize the payment of the claim against the city, and upon sound principle it cannot be conceded that the coun- cil had the power to authorize the payment of the claim of appellant. * * * Where the council is without power to authorize the payment of the claim, the officer may properly refuse to countersign the warrant direct- ing the payment of such claim. ' ' § 455. Invalidity resulting from character. By the Constitution of the United States the states are prohibited from coining money, emitting bills of credit or making anything but gold and silver coin a legal tender in payment of debts. At times states or subordinate municipalities have authorized the issuance of warrants 58— James v. City of Seattle, 22 Wash. 654, 62 Pao. 84. MISCELLANEOUS EVIDENCES OP INDEBTEDNESS 909 receivable in payment of taxes, debts, or other obliga- tions due them; the question of their validity has been raised, the contention being made that such warrants are "currency" within the meaning of the Federal Consti- tution, the emission of which is there prohibited. The decisions, however, have been adverse to such conten- tion.69 This subject has been previously fully considered,®'' a reference will, however, again be made to a leading case decided by the Supreme Court of the United States in which it was held that a warrant drawn by state author- ities receivable in payment of certain obligations due the state was not a bill of credit or other instrument in- tended to circulate as money,"^ this court in defining the term ' ' money ' ' said in part : ' ' These warrants were pay- able to the individual to whom the state was indebted, or to bearer, and were issued to a creditor of the state. That the legislature may have desired to facilitate the use of the warrants by these provisions is perhaps true, but the members of the legislature knew that to issue the warrants to circulate as money would be to condemn them from the start. That the promise should be made to receive them in payment of debts due the state would add to their usefulness and to the willingness of people to take them in payment of debts due them from the state and that while in their hands others might receive them in payment of debts, was a possibility or probabil- ity depending upon whether the person taking them had 59 — Craig v. Missouri, 4 Pet. (U. Lindsey v. Eottaken, 32 Ark. 619; S.) 410; Briscoe v. Bank of Ken- Cothran v. City of Eome, 77 Ga. tucky, 11 Pet. (U. S.) 257; Wood- 582; Dively v. City of Cedar Falls, rufE V. Trapnall, 10 How. (TJ. 8.) 21 Iowa, 565; Cheeney v. Inhabi- 190; Thomas v. City of Eichmond, tants of Brookfield, 60 Mo. 53. 79 U. S. (12 WaU.) 349; Sprott v. 60— See Sees. 81 et seq., and 348, United States, 87 TJ. S. (20 Wall.) ante. 459; Poindexter v. Greenhow, 114 61— Houston & T. C. B. E. Co. v. TJ. S. 270 (Virginia coupon cases); Texas, 177 TJ. S. 66. Baldy v. Hunter, 171 TJ. 8. 388; 910 PUBLIC SECURITIES opportunity to use them to pay some of his own debts to the state. That he might on some occasion be able to so use the warrant as to enable him to thereby discharge an obligation from himself to a third person who was willing to accept it, does not bring the warrant so used within the ordinary meaning of the term 'money.' It is not money in that sense. ' ' §456. Refunding. Warrants issued for the refunding of prior obligations partake of the original character of such indebtedness. Void debts cannot be rendered valid by a mere cbange of form,''^ and the reverse of this rule is also true that in- debtedness which is valid and binding cannot be made invalid by the issue of warrants for which there is no authority."^ As a rule in the absence of authority, war- rants outstanding cannot be funded by an issue of nego- tiable bonds, instruments of a different character and which may increase the debt in excess of a statutory or constitutional limit; and not subject to equitable de- fenses, such refunding bonds are usually held void.^* §457. Interest payable. Warrants are usually non-interest bearing, prima facie evidences of indebtedness. If made payable at a certain 62 — ^Eoyster v. Granville County Parish of East Baton Rouge, 31 La. Com'rs, 98 N. 0. 148; see, also, Ann. 221; City of Plattsmouth v. Sees. 206 and 207, ante. Mtzgerald, 10 Neb. 401; see, also, 63 — Otis V. Inhabitants of Stock- Sees. 206 and 207, ante, ton, 76 Me. 506. 64 — See the subject of refund- Brown V. Bon Homme County, 1 ing bonds. Chap. IX, ante. Whitwell S. D. 216, 46 N. W. 173. Neither v. Pulaski County, 2 Dill. 249, Fed. can a valid debt as evidenced by a Cas. No. 17,605; Bichards t. Klick- warrant be rendered invalid by the itat County, 13 Wash. 509. This issue of either void refunding war- can be done, however, if constitu- rants or bonds. See O'Connor v. tional authority exists. MISCELLANEOUS EVTDElSrCES OF INDEBTEDNESS 911 date, they bear interest from and after that date if pre- sented and payment is refused.^^ Where statutes prohibit the payment of interest on county warrants or orders it cannot be recovered and there are also authorities which hold that municipal war- rants or orders do not bear interest after they have be- come due and payable or after demand and non-payment for want of funds."* A demand is generally necessary 65 — City of New Orleans v. War- ner, 175 U. S. 120, modifying de- cree in (C. C. A.) 81 Fed. 645; Marks v. Purdue University, 37 Ind. 155. Rooney v. Dubuque County, 44 Iowa, 128. An actual tender of an amount due on a warrant, alone can suspend the accumulation of inter- est. Creole Steam Fire Engine Co. V. City of New Orleans, 39 La. Ann. 981. State V. Hickman, 11 Mont. 541, 29 Pae. 92. No special appropria- tion necessary for the payment of interest on outstanding warrants. Hotchkiss Y. Marion, 12 Mont. 218, 29 Pac. 821. Holding unconstitu- tional Compiled Statutes, division 5, Sec. 794, relating to the pay- ment of interest on unpaid war- rants after demand. Bead v. City of Buffalo, 74 N. Y. 463; Shipley 7. Hacheney, 34 Or. 303; Seton v. Hoyt, 34 Or. 266, 55 Pac. 967. Monteith v. Parker, 36 Or. 170, 59 Pac. 192. Where unpaid warrants are funded, the holder is entitled to interest from the date of the original warrant. Davidson County V. Olwill, 72 Tenn. (4 Lea) 28; Gibson County v. Eains, 79 Tenn. (11 Lea) 22; Langdon v. City of Castleton, 30 Vt. 285; Seymour v. City of Spokane, 6 Wash. 362; Alexander v. Oneida County, 76 Wis. 56, 45 N. W. 21; State v. Spinney (Ind.), 76 N. E. 971; State ex rel. Wheeler v. Adams (Mo.), 74 S. W. 497; Eisenhaur v. Barton County (Mo.), 88 S. W. 759; Territory v. Board of Com'rs, 8 Mont. 396, 20 Pae. 809. State V. Barry (Mont.), 63 Pac. 1030. Where under the statutes warrants when issued are entitled to interest on presentment and failure to pay. a subsequent act repealing this statutory provision impairs the obligation of a contract and is void. Shipley v. Hacheney (Ore.), 55 Pac. 971. Scranton v. Hyde Park Gas Co., 102 Pa. St. 382. Where a munic- ipal ordinance has provided for in- terest on a city warrant a subse- quent repeal of that ordinance can- not relieve the city from liability. Mcintosh V. Salt Lake County, 23 Utah 504, 65 Pac. 483. Special statutory provisions may warrant a reduction of interest. See also on this point, State v. Young, 22 Wash. 547, 61 Pac. 725. Tacoma Bituminous Paving Co. v. Sternberg (Wash.), 66 Pac. 121. Special contract provision in refer- ence to interest payable on local assessment warrants. State v. Stout (Wash.), 86 Pac. 848. 66— State v. Thompson, 10 Ark. 61. The state is not liable for in- 912 PTJBLIC SECURITIES to start interest running upon them if it is allowed. This rule also applies where they are payable on demand and on presentation, payment is refused.^'' Special statutes of particular states may provide for the payment of in- terest upon warrants presented for payment, and re- maining unpaid for want of funds. Such provisions will, of course, establish rights not otherwise existing.®* terest except upon an express con- tract to pay it. Eeed v. Mississippi County (Aik.), 63 S. W. 807. A. H. Andrews Co. v. Delight Special School District (Ark.), 128 S. W. 361. In the absence of stat- ute authorizing it, schools warrants do not bear interest. National Bank of Jacksonville v. Duval County (Fla.), 34 So. 894; State V. Stewart (Ma.), 38 So. 600; Madi- son County V. Bartlett, 2 111. (1 Scam.) 67; Hardin County v. Me- Tarlan, 82 111. 138 ; City of 'Chicago V. English, 80 111. App. 163; Hall c Jackson County, 95 111. 352; KUne V. Jefferson County (Ky.), 101 S. W. 356; Warren County Sup'rs 7. Klein, 51 Miss. 807. Hotchkiss V. Marion (Mont.), 29 Pac. 821. An act providing that county warrants where not paid upon presentation shall draw inter- est with certain exception is a spe- cial act under the State Constitu- tion prohibiting passage of local or special laws. Com. v. Philadelphia County Com'rs, 4 Serg. & E. (Pa.) 125; Ashe v. Harris County, 55 Tex. 49; Alexander v. Oneida County, 76 Wis. 56. See, also. City of Chicago V. Hurford, 238 111. 552, 87 N. E. 325, passing upon the question of when interest ceases on vouchers issued by a city to contractors in connection with the construction of local improvements. 67 — City of New Orleans v. War- ner, 175 U. S. 120. The commence- ment of a suit will be sufficient de- mand to make the warrant carry interest from that time. Ter. v. Cascade County Com'rs, 8 Mont. 396, 7 L. R. A. 105; Shipley v. Hacheney, 34 Or. 303, 55 Pac. 971; Monteith v. Parker, 36 Or. 170, 59 Pac. 192. Soule V. City of Seattle, 6 Wash. 315, 33 Pac. 384, 1080. Interest is not payable on improvement war- rants until after the city issuing them is entitled to interest on de- linquent taxes due under the as- sessment forming the fund for the payment of such warrants. 68 — Hall V. Jackson County, 95 111. 353; Marks v. Purdue Univer- sity, 37 Ind. 155; Eooney v. Du- buque County, 44 Iowa, 128; Eob- bins V. Lincoln County Ct., 3 Mo. 57; Skinner v. Platte County, 22 Mo. 437; State v. Trustees of Town of Pacific, 61 Mo. 155; Higgins V. Edwards, 2 Mont. 585; Seton v. Hoyt, 34 Or. 266, 43 L. E. A. 634; Monteith v. Parker, 36 Or. 170, 59 Pac. 192 ; Freeman v. City of Huron, 10 S. D. 368 ; Williams v. Shoudy, 12 Wash. 362. City of New Orleans v. Warner, 175 U. S. 120; but see Jacks & Co. T. Turner, 36 Ark. 89, where such a statute was held unconstitutional being in contravention of the con- MISCELLANEOUS EVIDENCES OF INDEBTEDNESS 913 §458. Actions on warrants; statute of limitations. Warrants being non-negotiable and merely a prima facie evidence of indebtedness against the public cor- poration issuing them are subject to all equities existing between parties even when they are in the hands of a bona fide holder who has purchased the same and paid value therefor before maturity. In an action brought by such a holder against the maker,°^ in case of a refusal to pay, all the defenses available or to which they were subject in the hands of the original payee may be taken advantage of by the defendant.'^'' But all conditions which under other circumstances would create an estop- pel against one of the parties to the transaction will oper- ate here to the same effect.^ ^ It is not necessary for the holder to proceed by mandamus against the proper dis- bursing officer of the corporation, but he may sue it stitutional provision prohibiting counties from issuing interest-bear- ing evidences of indebtedness. 69— Ohio County, Ky. v. Baird, 181 Fed. 49 C. C. A. Want of con- sideration is available as a defense. Barber Asphalt Paving Co. v. Village of Highland Park (Mich.), 120 N. W. 621. Failure to perform a contract can be urged as a de- fense in an action brought to col- lect on a warrant issued in ad- vance of the full completion of the contract work. Klein v. Warren County Sup'rs, 51 Miss. 878. See, also, Klein v. Smith County Sup'rs, 54 Miss. 254. 70 — Coffin V. Kearney County Com'rs, 114 Fed. 518. The defense that warrants issued in excess of the statutory limitation as to amount held not available where the fact is undisputed that there has been no assessment upon which to base a p. s.— 58 determination of what is the stat- utory amount. Grayson v. Latham, 84 Ala. 546; Pulaski County v. Lin- coln, 9 Ark. 320. Wood V. Bangs, 1 Dak. 179. An action for equitable relief involv- ing the validity of warrants cannot be maintained until the parties are placed in statu quo. Mitchelltree School Twp. V. Carnahan (Ind.), 84 N. E. 520; Polk v. Tunica County Sup'rs, 52 Miss. 422. Dakota County v. Barlett (Nebr.), 93 N. W. 192. A general admis- sion that county warrants were ' ' issued ' ' prevents a, subsequent ob- jection being made as to lack of county seal. Crawford v. Noble County Com'rs, 8 Okl. 450. See, also, Sec. 450, ante. 71 — Thompson v. Searcy County (C. C. A.) 57 Fed. 1030, following Fones Hardware Co. v. Erb, 54 Ark. 645, 13 L. E. A. 353. 914 PUBLIC SECUEITIES direct.''^ Mandamus is, however, usually the ordinary and exclusive remedy for the collection of a corporate warranto ^ If warrants are payable, as stated in a pre- ceding section,''* from a specific fund or by their terms are made payable from such fund, there is not a general obligation to pay them from revenues or funds raised in any other manner or for any other purpose. The holder of such warrants is limited in his recovery to the fund existing for their payment.''^ 72 — Jerome v. Eio Grande County Com'ra, 18 Fed. 873; Thompson v. Searcy County (C. C. A.) 57 Fed. 1030; School Dist. No. 7 t. Eeeve, 56 Ark. 68; Travelers' Ins. Co. v. City of Denver, 11 Colo. 434, 18 Pac. 556; Cook County v. SchaS- ner, 46 111. App. 611; People v. Clark County Sup'rs, 50 111. 213; City of Connersville v. Connersville Hydraulic Co., 86 Ind. 184; Wood V. State, 155 Ind. 1; Campbell v. Polk County, 3 Iowa, 467; Mills County Nat. Bank v. Mills County, 67 Iowa, 697; Benham v. Parish of Carroll, 28 La. Ann. 343; Interna- tional Bank v. Franklin County, 65 Mo. 105 ; Knapp v. City of Hoboken, 38 N. J. Law, 371; Eaton Water- works Co. V. Town of Eaton, 9 N. M. 70, 49 Pac. 898; Goldsmith v. Baker City, 31 Or. 249, 49 Pac. 973; Simmons v. Davis, 18 E. I. 46; Eochford v. School Dist. No. 11 (S. D.), 97 N. W. 747; Alexander V. Oneida County, 76 Wis. 56 ; Brown V. School Directors of Jacobs, 77 Wis. 27. 73 — Davenport v. Dodge County, 105 U. S. 237; CMckaming Tp. v. Carpenter, 106 U. S. 663; Pauly Jail Bldg. & Mfg. Co. v. Jefeerson County, 160 Fed. 866; Oliver v. Board of Liquidation (La.), 4 So. 166; State v. Clay County, 46 Mo. 231; Mansfield v. Fuller, 50 Mo. 338; Klein v. Smith County Sup'rs, 58 Miss. 540; Greeley v. Cascade County, 22 Mont. 580; Hopper v. Inhabitants of Union Twp. (N. J.), 24 Atl. 387; Theis v. Board of Board of Comm'rs of Washita County, 9 Okla. 643, 60 Pac. 505; Cloud V. Lawrence County (Wash.), 7 Pac. 741; Abernethy v. Town of Medical Lake, 9 Wash. 112; see, also. Sec. 418, et seq. 74— See Sec. 447, ante. 75 — Warner v. City of New Or- leans, 167 U. S. 467. Where a mu- nicipality issues warrants payable from a certain fund, it is estopped to set up as a defense in an action against it on such warrants that it had discharged claims against such fund in excess of the amount col- lected; the maintenance of such fund being practically abandoned. City of New Orleans v. Warner, 175 U. S. 120, 44 L. Ed. 96; United States V. King, 74 Fed. 493. Wilder v. City of New Orleans, 87 Fed. 843. The holders of special drainage warrants not restricted for their payment to the special fund from which they were originally de- signed to be paid. Bush v. Wolf, 55 Ark. 124; Forbes v. Grand County Com'rs, 23 Colo. 344; Bank of Na- eona v. March (Tex. Civ. App.) 51 MISCELLANEOXrS EVIDENCES OP INDEBTEDNESS 915 Tins principle, however, is not applied to the extent that a public corporation will be justified in refusing to levy or collect the taxes or special assessments with which to create the specified fund. In case of refusal on the part of public officers they can be compelled by man- damus to perform the duties imposed upon them by law in this.regard.'^'^ Neither will a public corporation be excused, by a plea of lack of funds, from paying warrants drawn upon a special fund where the moneys in this fund have been illegally withdrawn and used for other purposes,''^ or S. W. 266; Northwestern Lumber Co. V. City of Aberdeen, 22 Wash. 404. 76 — United States v. Macon County Ct., 75 Fed. 259; Warner V. City of New Orleans, 87 Fed. 829; City of New Orleans v. Warner, 175 TJ. S. 120; People v. Opel (111.), 91 N. E. 458. Knapp V. City of Hoboken, 38 N. J. Lawj 371. In this case the remedy of the warrant holder was held to be by action of debt not by mandamus to compel the enforce- ment of assessments. Theis v. AVashita County Com 'rs, 9 Okla. 643, 60 Pac. 505. Turner v. City of Guthrie (Okla.), 73 Pac. 283. The proceeding by m.andamus may be the proper one authorized by law and holders of warrants may not have the option to proceed in any other manner to en- force their obligations against the corporation. Citing Knox County Gom'rs v. Aspinwall, 24 How. (IT. S.) 376; Eoek Island County Sup'rs V. United States, 71 U. S. (4 Wall.) 435; City of Davenport v. Lord, 76 U. S. (9 Wall.) 409; Washington County Sup 'rs v. Durant, 76 U. S. (9 Wall.) 415; Eiggs y. Johnson County, 73 U. S. (6 Wall.) 166; Elliott County v. Kitchen, 77 Ky. (14 Bush) 289; Limestone County Com'rs Ct. v. Bather, 48 Ala. 434; Diggs v. Lobsitz, 4 Okl. 232; Com. V. Select & Common Councils of Pittsburgh, 34 Pa. 496; Bank of British Columbia v. City of Port Townsend, 16 Wash. 450; Sharp v. City of Mauston, 92 Wis. 629. See, also, First National Bank of Central City V. City of Port Townsend (Wash.), 184 Fed. 574; but, see. Board of Com'rs of Grand County V. King, 67 Fed. 202. In most of the states the law authorizing the issue of county warrants contem- plates that they will be satisfied from the ordinary county revenue or be absorbed in the payment of the county taxes. * * * Under the statutes of Iowa a mandamus could not issue to compel the county au- thorities to levy a special tax to pay a judgment rendered on county warrants. 77 — Hockaday v. Chaffee County Com'rs, 1 Colo. App. 362, 29 Pac. 287; Sehulenburg & Boeckler Lum- ber Co. V. City of East St. Louis, 63 111. App. 214. Valleau v. Newton County, 72 Mo. 593. The rule in the text, however, does not apply to warrants issued 916 PUBLIC SECTJKITIES ■where tlie public corporation has rendered itself inca- pable of creating such fund in the manner originally in- tended.^^ When there is a lack of the necessary moneys in the proper fund, no right of action will accrue against the public corporation where the taxes or assessments have been properly levied and collected or remain partially uncollected. It is generally optional with the holder of warrants in case of a refusal to levy taxes for their pay- ment to compel by mandamus the officials to perform their duties or to sue the public corporation^* without authority, and for a debt which the city could not legally contract. Pollock v. Stanton County, 57 Neb. 399; Ayres v. Thurston County, 63 Neb. 96, 88 N. W. 178; Brewer v. Otoe County, 1 Neb. 373; Eed Eiver Valley National Bank v. City of Fargo (N. D.), 103 N. W. 390; Blaekman v. City of Hot Springs, 14 S. D. 497, 85 N. W. 996; Jennings v. Taylor (Va.), 45 S. E. 913 ; State Sav. Bank v. Davis, 22 Wash. 406. New York Security & Trust Co. V. City of Tacoma, 21 Wash. 303, 57 Pac. 810. The rule applies where funds applicable to the payment of certain warrants have been placed for deposit in banks subsequently becoming insolvent with a resultant loss of sueli moneys. Quaker City Nat. Bank v. City of Tacoma, 27 Wash. 259, 67 Pac. 710. The city held not generally liable, the remedy of the warrant holder being an action in damages for the misappropriation; see Sec. 371, ante. 78— City of New Orleans v. War- ner, 175 U. S. 120, 44 L. Ed. 96; "Warner v. City of New Orleans, 87 Fed. 829 C. C. A.; Louisiana Nat. Bank v. Board of Liquidation, 30 La, Ann, 1356, 79 — Board of Improvement v. Mc- Manus, 54 Ark. 446. Mills County Nat. Bank v. Mills County, 67 Iowa, 697. The ques- tion is, how is the owner of the war- rants to enforce payment? There is no such privity between him and the taxpayers that any action or proceeding can be maintained against them. It is claimed that a demand should be made on the board of supervisors to levy a tax and that no suit can be maintained without such demand. This posi- tion cannot be maintained. It is the duty of the county to make the levy without a demand. It might with the same propriety, be claimed that the holder of any other war- rant upon the county must make a demand that a tax be levied to pay his warrant before be can maintain an action. The county has an un- doubted right to make any proper and lawful defense to these war- rants. If it has no defense, the plaintiff is entitled to judgment and to the enforcement of payment by the levy of a tax in obedience to the requirements of the statute. * * * The law contemplates that the own- ers of property benefited by the ditch must pay the cost of its con- MISCELLANEOUS EVIDENCES OP INDEBTEDNESS 917 The legal character of different classes or kinds of war- rants as bringing them within the operation of the stat- utes of limitation depends entirely upon the construction given them by the courts of a state.^" Ordinarily, the statute of limitations will not begin to run until after funds have been accumulated for the pay- ment of the warrant and there has been a failure on the part of the holder to present them and demand pay- ment.^i Although some cases hold that the statute com- mences to run from the date of delivery when the war- rants are made payable on demand,^^ and in a special case where an order was made that all warrants not registered under a certain act of the legislature should not be paid, the absence of knowledge of this order on the part of a warrant holder it was held would not bar him from a recovery.** In actions against public corporations on warrants valid on their face, the presumption of law exists that they were lawfully and legally issued and the burden of establishing their illegality or the fraudulent and il- strnetion and if the plaintiff ob- v. Otoe County, 124 TJ. S. 459, 8 tains judgment upon the warrants, Sup. Ct. Eep. 582, 31 L. Ed. 514; the method of raising means for its Knox County v. Morton, 68 Fed. 787 payment is plainly pointed out by C. C. A.; Apache County v. Earth statute. Knapp v. Mayor, etc. of (Ariz.), 53 Pac. 187; Hubbell v. Hoboken, 38 N. J. L. 371; Hunter City of South Hutchinson (Kan.), V. Mobley, 26 8. C. 192. 68 Pac. 52; Board of Com'rs of 80 — Knox County v. Morton (C. Seward County v. Shepard (Kan.), C. A.) 68 Fed. 787, construing Eev. 80 Pac. 36; Wilson v. Knox County St. Mo. 1889, Sec. 3195, relating to (Mo.), 34 S. W. 45; Barnes v. county warrants. Hintrager v. Turner (Okla.), 78 Pac. 108. Eichter, 85 Iowa, 222, 52 N. W. 82— Condon t. City of Eureka 188; Wilson v. Knox County, 132 Springs, 135 Fed. 566; People v. Mo. 387, 34 S. W. 45, 477; Borough Twp. Board of Lincoln, 41 Mich, of Port Eoyal v. Graham, 84 Pa. 415, 49 N. W. 925; Wilson v. Knox 426; Leach v. Wilson County, 68 County (Mo.), 28 S. W. 896. Tex. 353. 83— Leach v. County of Wilson 81— King Iron Bridge & Mfg. Co. (Tex.), 4 S. W. 613. 918 PUBLIC SECUBlTIES legal character of the claims upon which they were based is on the defendant.** § 459. Payment of warrants. Where the power to audit, allow and authorize the is- suance of warrants is by law placed in the hands of cer- tain designated officials of the public corporation upon the presentation of a warrant duly issued, other officials have no discretion in regard to its payment; this exists as an imperative duty capable of enforcement if there are sufficient funds.*^ Ordinarily where a warrant is defective in form or invalid it does not become the per- sonal obligation of the officials executing it, where it clearly appears it was not intended to be a personal obli- gation, and where a warrant valid on its face is paid the 84 — See See. 265, ante. San Juan County Com'rs v. Oliver, 7 Colo. App. 515, 44 Pac. 362; Adams v. Com'rs of Highways of Town of South Otter, 151 III App. 68; Everts v. District Tp. of Eose Grove, 77 Iowa, 37; Mountain Grove Bank v. Douglas County, 146 Mo. 42, 47 S. W. 944; Taylor v. Chicka- saw County Sup'rs, 74 Miss. 23, 19 So. 834; Freeman v. City of Huron, 10 S. D. 368, 73 N. W. 260; Taylor V. County Court of Braxton County (W. Va.), 50 S. E. 720; Scott t. School Directors of Armstrong, 103 Wis. 280, 79 N. W. 239. 85— Keller v. Hyde, 20 Cal. 593; Von Schmidt v. Widber, 105 Cal. 151; Gamble v. Clark (Ga.), 19 S. E. 54; Park v. Chandler (Ga.), 39 S. E. 89. Wood V. State (Ind.), 55 N. E. 959. Action to compel county treasurer to pay an order which theretofore had been duly stamped 'paid'; Nelson v. Harrison County (la.), 102 N. W. 197; State ex rel. Wheeler v. Adams (Mo..), 74 S. W. 497. A county treasurer who re- fuses to pay a warrant which it is his duty to pay is liable to the payee in damages. Bank of Staten Island V. City of New York, 68 App. Div. 231, 74 N. Y. Supp. 284; Martin v. Clark (N. C), 47 S. E. 397; Southern Audit Co. v. Mc- Kenzie (N. C), 61 S. E. 283; Cul- berson V. Gilmer Bank (Tex.), 50 S. W. 195; Bush v. Geisy, 16 Or. 355, 19 Pac. 123; Simmons v. Davis 18 E. I. 46; Culberson v. Gilmer Bank, 20 Tex. Civ. App. 565, 50 S. W. 195; Collier v. Peacock, 93 Tex. 255, 54 S. W. 1025. Webster v. Douglas County, 102 Wis. 181, 77 N. W. 885, 78 N. W. 451. If a payment of warrants is marked by haste and with apparent collusion in face of lack of funds to meet them, the officers paying them may be personally liable for the repayment of the money dis- bursed. MISCELLANEOUS EVIDENCES OF INDEBTEDNESS 919 official will be protected unless he is a party to or has knowledge of its illegality .«« The fact that the corpora- tion issuing the warrant may be its owner is ordinarily no ground for the refusal of a subordinate board or official to refuse payment.^^ Where warrants are authorized under law to be issued by a certain designated official body, an order for payment of a certain claim by another court predicated upon a judgment rendered by it will be sufficient authority for the payment of a warrant issued upon such judgment.*^ When refunding bonds have been issued to take up outstanding warrants and the bonds are subsequently established as void, the warrants in the meantime having been destroyed, this does not give a holder of such war- rants any right of action for damages against the cor- poration for the destruction; he can recover, however, the full value of the warrants,^^ and this is true where the same state of facts exist except the destruction of warrants and the question of damages.'"* The payment of warrants issued in settlement of a claim subsequently held invalid or of like warrants can be prohibited and all officials will be bound by orders of the proper authorities to this effect.^^ 86 — ^Pirst National Bank v. familiar with the illegality of the Whiaenhunt (Ark.), 127 S. W. claims upon which they are based. 968; Germania Bank v. Trapnell See, also, Merkel v. Berks County, (Ga.), 45 S. E. 466; Harrison 81 Pa. St. 505. V. Logan County (Ky,), 110 8. W. 87 — Louisiana Nat. Bank t. Board 377; Bailey v. Tompkins (Mich.), of Liquidation, 30 La. Ann. 1356. 86 N. W. 400; People v. Neff, 106 88— United States v. King, 74 N. T. S. 746. Fed. 493. Beohtel v. Prye, 217 Pa. 591, 66 89— O'Connor v. Parish of East Atl. 992. A county treasurer know- Baton Eouge, 31 La. Ann. 221. ing of the illegality of a warrant 90 — Gause y. City of Clarksville, should refuse to pay the same al- 1 McCrary, 78, 1 Fed. 353; Deyo though it has been approved by the v. Otoe County, 37 Fed. 247; Coffin county comptroller. But see Town v. Kearney County Com'rs, 114 Fed. of Buick V. Buick (Minn.), 127 N. 518; City of Plattsmouth v. Fitz- W. 452. The rule is different where gerald, 10 Neb. 401. the officer paying the warrants is 91 — Polk County v. Sherman, 99 920 PUBLIC SECURITIES The payment of warrants illegally drawn or issued may be enjoined and the warrants directed cancelled by a court of equity upon the complaint of a taxpayer, or one entitled to such relief.^^ Where the law contains provi- sions for their registration or record by certain officials, a failure to properly record or register them does not in- validate the warrants ; their validity cannot be destroyed by such failure or neglect. In a South Dakota case,"^ the court said: "The city treasurer is an officer of the city, over whom the warrant holder has no control and for whose neglect to perform his duty he is not responsible. If, therefore, the books of the treasurer were not properly kept and the proper entries made therein, the failure is the failure of the city by its officers, and it cannot take ad- vantage of such omission as against a warrant holder who has done all that the law requires him to do, namely to Iowa, 60; Taylor v. Chickasaw County Sup'rs, 74 Miss. 23; Hayes V. Davis, £3 Nev. 318; Ter. v. Browne, 7 N. M. 568; Frankel v. Bailey, 31 Or. 285, 50 Pac. 186; State V. Walker (Tenn.), 47 S. W. 417; Lane v. Hunt County, 13 Tex. Civ. App. 315. 92 — Andrews v. Pratt, 44 Cal. 309 ; Ackerman v. Thummel, 40 Neb. 95; Crawford v. Noble County Com'rs, 8 Okl. 450; Dorothy v. Pierce, 27 Or. 373; State v. Met- schan, 32 Or. 372, 53 Pac. 1071, 41 L. E. A. 692; Savage v. Stern- berg, 19 Wash. 679 j Webster v. Douglas County, 102 Wis. 181. Converse Bridge Co. v. Geneva County (Ala.), 53 So. 196; Pulaski County v. Lincoln, 9 Ark. 320 ; Lain- 'hnrt V. Burr (Fla.), 38 So. 711; I'Littler v. Jayne (111.), 16 N. E. 374. [ McDonald's Admnstr. v. Franklin : County (Ky.), 100 S. W. 861. I Money paid on an illegal warrant can be recovered by the county. Zerwekh v. Thornburg (la.), 98 N. W. 769. Complaint in suit to restrain payment of alleged illegal warrants held insufScient. Carr v. Dist. Court of Van Buren County (la.), 126 N. W. 791; Frankel v. Bailey (Ore.), 50 Pac. 186. Multnomah County v. White (Ore.), 85 Pac. 778. Moneys paid on void county warrants can be re- covered by the county. State v. Walker (Tenn.), 47 S. W. 417. Criswell v. Board of Directors (Wash.), 75 Pac. 984. Attorneys fee cannot be collected by taxpayer in an action to restrain collection of school warrants. See also City of San Diego v. Dauer (Calif.), 32 Pac. 561. In respect to proper parties entitled to relief; Noonan v. People, 221 111. 567, 77 N. E. 930. 93 — ^Freeman v. City of Huron, 10 S. D. 368, 73 N. W. 260. MISCELLANEOUS EVIDENCES OF INDEBTEDNESS 921 present Ms warrant for payment and have it registered for pajrment. As it was in fact registered, the court will presume that he paid or tendered the required fee, or that payment of the same was waived by the treasurer. ' ' § 460. Presentation for payment. As a rule, warrants must be presented to and demand made for payment of the proper disbursing officer of the corporation. This is necessary that the holder may pro- ceed by mandamus against the official to compel a pay- ment or to bring an action based upon them and that in- terest may commence to run.^* § 461. Payment; the amount. Pubhc officers have no authority to bind their princi- pal for the payment of more than the face of a warrant 94 — ^Warner v. City of New Or- leans, 87 Fed. 829; Grayson v. La- tham, 84 Ala. 546. Apache County v. Barth (Ariz.), 53 Pac..l87. The statute of limitatiom does not commence to run on county warrants until there is a fund in the treasury for their payment. City of Central v. Wilcoxen, 3 Colo. 566; Johnson v. Wakulla County, 28 Fla. 720, 9 So. 690; Bodman v. Johnson County, 115 Iowa, 296, 88 N. W. 331; Hubbell v. City of South Hutchinson, 64 Kan. 645, 68 Pao. 52; Oliver v. Board of Liqui- dation, 40 La. Ann. 321, 4 So. 166; State V. Board of Liquidation, 31 La. Ann. 273; Varner v. Inhabi- tants of Nobleborough, 2 Me. (2 Greenl.) 121; Ferguson v. City of St. Louis, 6 Mo. 499; Wilson v. Knox County (Mo.), 28 S. W. 896; Shipley v. Hacheney, 34 Or. 303, 55 Pac. 971. Freeman v. City of Huron, 10 S. D. 368, 73 N. W. 260. The next contention of appellants we shall notice is that the court erred in al- lowing interest on these warrants from the date of their presentation and registration. In this we think the court ruled correctly. The war- rants were payable upon presenta- tion for payment; and payment be- ing refused for want of funds, the holder was thereafter entitled to in- terest under the provision of Sees. 3721, 4746 Comp. Laws, until the treasurer set apart funds to pay them, as provided by section 1674, Comp. Laws. This and the preced- ing section clearly assume that such warrants bear interest after presen- tation and registration. San Pat- ricio County V. McClane, 58 Tex. 243; Bardsley v. Sternberg, 18 Wash. 612; State v. Young, 22 Wash. 547. City of New Orleans v. Warner, 175 IT. S. 120, 44 L. Ed. 96, modify- 922 PUBLIC SECUEITIBS although it may be at a discount and the sum realized from its sale at the discount price will bring to the holder a sum less than the bill or account rendered by him which has been approved, audited and allowed by the proper authorities.®^ A warrant issued either by fraud or mistake for an amount in excess of the sum actually due on the account or bill rendered and to pay which it was intended, is valid only for the amount for which it should have been properly issued.®" In some cases it has been held that the amount of taxes due from the holder of a warrant or other indebtedness owing the municipality issuing the warrant can be arbi- trarily deducted from the amount due on the warrant ing decree in 81 Fed. 645. Com- mencement of a suit ia a sufficient demand to make a warrant carry interest at a specified rate. Condon v. City of Eureka Springs, 135 Fed. 566. A holder of war- rants cannot be compelled to pre- sent them when issued prior to a, law providing for the calling in of outstanding warrants by order for cancellation and reissue. Valley Bank v. Brodie (Ariz.), 76 Pae. 617. Yell County v. Wills (Ark.), 103 S. W. 618. Passing upon the ques- tion of sufficient publication of a notice for presentation and re-issue of county warrants. South Yuba Water Co. v. City of Auburn (C&lif.), 118 Pac. 101. Bay V. Wilson (Fla.), 10 So. 613. Repudiation of warrants not pre- sented for re-examination cannot be authorized. Farmers Bank of Wy- eliffe V. City of Wycliffe (Ky.), 112 S. W. 835. See also Payne v. Baehr (Calif.), 95 Pae. 895; but see Speer v. Board of County Com 'rs of Kearney County, 88 Fed. 749 C. C. A. Presentation of county war- rants for payment is not necessary to maintain an action thereon. 95 — Morgan v. District of Colum- bia, 19 Ct. CI. 156; Shirk v. Pu- laski County, 4 Dill. 209, Fed. Cas. No. 12,794; Dorsey County v. Whitehead, 47 Ark. 205; Foster v. Coleman, 10 Cal. 278; Clark v. City of Des Moines, 19 Iowa, 199; Leav- enworth County Com'rs v. Keller, 6 Kan. 510; Bauer v. Franklin County, 51 Mo. 205; Cleveland County Com'rs v. Seawell, 3 Okl. 281; Municipal Security Co. v. Baker County, 33 Or. 338, 54 Pac. 174; State v. Wilson (Tex.), 9 S. W. 155; Arnott v. City of Spokane, 6 Wash. 442; Million v. Soule, 15 Wash. 261. 96— Foster v. Coleman, 10 Cal. 278; People v. State Treasurer, 40 Mich. 320; Chandler v. City of Bay St. Louis, 57 Miss. 326; Erskine v. Steele County, 4 N. D. 339, 60 N. W. 1050, 28 L. R. A. 645; Arnott v. City of Spokane, 6 Wash. 442, 33 Pae. 1063. MISCELLANEOUS EVIDENCES OP INDEBTEDNESS 923 with accrued interest, if any, or stated in another way, the payment of a warrant in full cannot be compelled where the owner is indebted to the maker.*'^ Where warrants have been fraudulently raised after issuance the corporation is not liable for their increased face value.^* § 462. Manner of payment. In the absence of restrictive legislation, a public cor- poration or the state may issue its warrants payable in gold coin of the United States or other legal tender. It may also make its warrants as well as other due bills or orders receiyable by the public corporation issuing them in payments of debts due such corporation."® Pursuant, therefore, to such provisions, the holder of warrants may insist upon their payment in the manner and mode prescribed or may compel an acceptance, in accordance with their terms by the public officials, in payment of taxes,^ or other obligations due from him to 97 — ^Funk v. State (Ind.), 77 N. ual a sum illegally received by him E. 854; LoB^ v. McDowell (Ky.), from the city. 52 S. W. 812; State v. Melton (W. Clayton v. McWilliams, 49 Miss. Va.), 57 S. E. 729; but see Alberts 311. In Mississippi during the re- V. Torrent, 98 Mich. Sl2, 57 N. W. bellion the payment in Confederate 569. money is sufficient. Eaton Water- 98— Chandler v. Bay St. Louis, 57 works v. Town of Eaton, 9 N. M. Miss. 326. 70, 49 Pac. 898; Lee v. Roberts, 3 99_White v. State (Ark.), 11 S. Okl. 106; Kenyon v. City of Spo- W. 765; Btat^ v. Miller, 145 Ind. kane (Wash.), 48 Pac. 78; see also 598, 44 N. E. 309. eases cited in Sec. 82, et seq., and Kentucky Chair Co. v. Com., 20 191, ante; but, see, Kentucky Chair Ky. L. E. 1279, 49 S. W. 197. State Co. v. Commonwealth (Ky.), 49 S. treasury warrants not available for W. 197, where it was held that the payment of a debt due the state. a tender of state treasury warrants Long V. McDowell, 21 Ky. L. E. in payment of a debt due the state 605, 52 S. W. 812. is not good. Alberts v. Torrent, 98 Mich. 512. 1— State v. Eives, 12 Ark. 721; A mayor has no authority to deduct Hill v. Logan County, 57 Ark. 400, from a valid warrant due an individ- 21 S. W. 1063; McKibben v. State, 924 PUBLIC SECURITIES the corporation. On the point that payment can be com- pelled in the manner provided by law the court in a South Dakota ease,^ said: "A city undoubtedly may, for its own convenience, make an estimate of the money it may require for each particular city purpose; but when it makes its levy, all those various sums must be aggre- gated, and the levy made for the total amount required for general municipal purposes. Of course, if the city makes any levy for bonded indebtedness, for interest, for the payment of any judgments or for any other spe- cial purpose authorized by law, the levy may be special as to those purposes. Its general municipal expenses cannot, however, be divided and subdivided and appro- priations made for specific purposes in advance, so as to cut off the rights of holders of warrants on its general fund, as was attempted to be done in the case at bar. Such a system, if permitted, would in a great measure, repeal the laws of the state. * * * Holders of valid 31 Ark. 46; Lindsey v. Eottaken, 32 Ark. 619, to the contrary, Loftin V. Watson, 32 Ark. 414; Pry v. Rey- nolds, 33 Ark. 450; Howell v. Hog- ins, 37 Ark. 110; Thorpe v. Coch- ran, 7 Kan. App. 726, 52 Pac. 107. State V. Payne, 151 Mo. 663, 52 S. W. 412. County warrants made by statutory provision receivable in payment of taxes are not so re- ceivable for any year other than that for which they were issued. Sheridan v. City of Eahway, 44 N. J. Law, 587; Town of Marinette v. Oconto County Sup'rs, 47 Wis. 216. St. Louis National Bank v. Mar- ion County (Ark.), 79 S. W. 791. The fact that a county is largely in- debted is not a sufficient reason for refusing to order warrants issued receivable for taxes under the statute. Ex parte WiUis (Ark.), 86 S. W. 300. The legal effect of a warrant receivable for taxes cannot be changed by an attempted agreement. Stillwell V. Jackson (Ark.), 93 S. W. 371. Warrants are receivable in discharge of special taxes for the construction of a court house. Vale V. Buchanan (Ark.), 135 S. W. 848. The provisions of a statute with respect to the issue of warrants must be complied with before they are receivable for county taxes. New Orleans v. City Hotel, 28 La. Ann. 423; State v. Pilsbury, 29 La. Ann. 787. Miller v. Lynchburg, 20 Gratt. (Va.), 330. The right to pay taxes by warrants must be exercised with- in the time provided by the statute granting it. 2 — Western Town Lot Co. v. Lane, 7 S. D. 1, 62 N. W. 982. MISCELLANEOUS EVIDENCES OF INDEBTEDNESS 925 city warrants have vested rights that cannot be ignored. Payment of such warrants in the manner provided by the law cannot be suspended at the mere will and pleasure of the city council. ' ' Usually a public corporation where warrants are at a discount, does not possess the power to issue them at such a rate as to make them a cash equivalent.^ The liquidation of an outstanding warrant by a check on an insolvent- bank does not constitute a payment and the full amount of the original debt with accrued interest can be recovered from the county issuing the same.^ § 463. Time of payment. Warrants where not otherwise provided are usually payable on presentation and demand.^ Payment may also 3 — Clayton v. MeWilliams, 49 Miss. 311; Bauer v. Eranklin County, 51 Mo. 205; see the preced- ing section. 4 — Chambers v. Custer County (Ida.), 71 Pac. 113. 5 — Shelley v. St. Charles County Ct., 21 Ted. 699; United States v. King, 74 Fed. 493 ; United States v. Macon County Ct., 75 Fed. 259; People V. Austin, 11 Colo. 134, 17 Pac. 485 ; McDonald v. Bird, 18 Cal. 195; Shaw v. Statler, 74 Cal. 258; Thorpe v. Cochran, 7 Kan. App. 726, 52 Pac. 107. State V. Burke, 35 La. Ann. 457. Warrants issued in favor of the Louisiana University take preced- ence of all others drawn on the general fund except those in favor of officers whose salaries are fixed by the constitution; this case also holds that warrants issued by the Louisiana board of health are not entitled to preference of payment out of the general fund, and Klein V. Pipes, 43 La. Ann. 362, holds that warrants issued for the sup- port of the University for the Edu- cation of Negroes should not in payment take precedence. State v. Johnson, 162 Mo. 621, 63 S. W. 390; Morrow v. Surber, 97 Mo. 155; An- drew County V. Schell, 135 Mo. 31; State V. Horstman, 149 Mo. 290; State V. Allison, 155 Mo. 326; Gree- ley V. Cascade County, 22 Mont. 580, 57 Pac. 274; Esser v. Spaulding, 17 Nev. 289; Eaton Waterworks Co. v. Town of Eaton, 9 N. M. 70; Shan- non V. City of Huron, 9 S. D. 356; Freeman v. City of Huron, 10 S. D. 368, 73 N. W. 260 ; La France Fire- Engine Co. v. Davis, 9 Wash. 600. Lorence v. Bean, 18 Wash. 36. A warrant issued in payment of a judgment should not be postponed in favor of other claims or neces- sary expenses. Bardsley v. Stern- berg, 18 Wash. 612, 52 Pac. 251; Long Beach School District v. Lutge, 129 Calif. 409, 62 Pac. 36. First National Bank v. Arthur (Colo.), 50 Pac. 738. A court may 926 PUBLIC SECUEITIES be due at a date specified," in the order of their registra- tion with designated public officials/ or in the order of their issuance by number or date.* direct the order of payment of city warranta. Phillips V. Eeed, 109 la. 188, 80 N. W. 347. If when warrants were issued they were payable in their order of presentation, a subsequent statute changing this will be void if impairing the contract of preced- ence established. State ex rel. Kirt- ley V. Shell (Mo.), 36 S. W. 306; Eed Eiver Valley National Bank v. City of Fargo (N. D.), 103 N. W. 390; State v. Melton (W. Va.), 57 S. B. 729; Smith v. Polk County (Ore.), 112 Pac. 715. 6 — Frankford Eeal-Estate, Trust & Safe-Deposit Co. v. Jackson County (C. C. A.), 98 Fed. 942; Miller County v. Gazola, 65 Ark. 353, 46 S. W. 423. Markey v. School Dist. No. 18, 58 Neb. 479, 78 N. W. 932. The contract and order in question each required the amount therein speci- fied to be paid at a date which had not then arrived. School district officers can contract for the fur- nishing of school houses only with reference to money on hand and at the time available for that purpose. The officers of the school district possessed no authority to make a contract or give a district order pay- able at a future time. This prin- ciple has been frequently stated and applied by this court. Citing School Dist. No. 2 v. Stough, 4 Neb. 360; State v. Sabin, 39 Neb. 570; A. H. Andrews & Ca. v. School Dist. of McGook, 49 Neb. 420. 7 — United States v. Macon County Court, 75 Fed. 259; Taylor v. Brooks, 5 Cal. 332; MoCall v. Har- ris, 6 Cal. 281; La Forge v. Magee, 6 Cal. 285; First Nat. Bank of Northampton v. Arthur, 10 Colo. App. 283, 50 Pac. 738; Shepherd v. Helmers, 23 Kan. 504; First Nat. Bank of Garden City v. Morton County Com'rs, 7 Kan. App. 739, 52 Pac. 580; Monroe v. Crawford, 9 Kan. App. 749, 58 Pac. 232; State V. Allison, 155 Mo. 325; State v. Gardner (Nebr.), 112 N. W. 373; Eaton Waterworks Co. v. Town of Eaton (N. Mex.), 49 Pac. 898; O'Donnell v. City of Philadelphia, 2 Brewst. (Pa.) 481. State V. Campbell, 7 S. D. 568, 64 N. W. 1125. In this case the court prepared the following syllabus: ' ' Every lawfully issued and valid municipal warrant should be paid in the order of its registration for pay- ment, although the same was issued in payment of an indebtedness of a prior year. ' ' Shannon v. City of Huron, 9 S. D. 356, 69 N. W. 598; Freeman v. City of Huron, 10 S. D. 368, 73 N. W. 260; Stewart v. Cus- ter County, 14 S. D. 155, 84 N. W. 764. 8— McCall V. Harris, 6 Cal. 281; MitcheU v. Speer, 39 Ga. 56. Thorpe v. Cochran (Kan.), 52 Pac. 187. The priority of payment may be established by general stat- utes. La France Fire Engine Co. v. Davis, 9 Wash. 600 ; Munson v. Mud- gett, 15 Wash. 321; Bardsley v. Sternberg, 18 Wash. 612; Potter v. City of New Whatcom, 20 Wash. 589; Eidemiller v. City of Tacoma, 14 Wash. 376, 44 Pac. 877; Hull v. Ames, 26 Wash. 272, 66 Pac. 391. MISCELLANEOUS EVIDENCES OF INDEBTEDNESS 927 Under special statutory provisions outstanding war- rants may be called for cancellation or re-issue,® or pro- vision may be made for their refunding.^" The weight of authority is to the effect that after issue they become a prima facie evidence of indebtedness which cannot be affected by subsequent legislation either as to the time, the mode or manner of payment.^ ^ If a certain provision is made or a certain fund is raised for the payment of specific indebtedness repre- sented by them, it is usually not necessary that the fund or provision should be available as an entirety before payment can be commenced. A distribution or payment should be made immediately upon any of the funds be- coming available for such purpose provided payment can be properly demanded at such time.^^ 9— Parsel v. Barnes, 25 Ark. 261; Frye v. Eeynolds, 22 Ark. 450. Thompson v. Seanlan (Ark.), 16 S. W. 197. Statutory provisions with respect to publication of notice of call for cancellation and re-issue must be complied with otherwise the order calling in outstanding war- rants or scrip will be void. Miller County V. Gazola (Ark.), 46 S. W. 423; Nevada County v. Williams (Ark.), 81 S. W. 384; Tell County V. WUl (Ark.), 103 S. W. 618; State ex rel. Kirtley v. Shell (Mo.), 36 S. W. 206. Smith V. Polk County (Ore.), 112 Pac. 715. A statute which author- izes the publication of a notice that unpaid county warrants which have been issued for more than seven years must be presented for pay- ment within sixty days or they will be cancelled creates a special limita- tion which does not begin to run until the publication has been made. 10 — State V. Funding Board (La.), 1 So. 910. 11 — United States v. Macon County Ct., 45 Fed. 400; Bead v. Mississippi County, 69 Ark. 365, 63 S. W. 807; State v. Barret, 25 Mont. 112, 63 Pac. 1030; Shipley v. Hach- eney, 34 Or. 303, 55 Pac. 971. 12 — United States v. Macon County Ct., 75 Fed. 259; Seals v. EvanS) 10 Cal. 459. Day V. Callow, 39 Cal. 593. A judgment authorizing a county treasurer to satisfy warrants par- tially paid out of a special fund from moneys that might thereafter come into such fund is to this ex- tent erroneous. Jordan v. Hulbert, 54 Cal. 260; -First Nat. Bank of Northampton v. Arthur, 10 Colo. App. 283, 50 Pac. 738 ; Butts County V. Jackson Banking Co. (Ga.), 60 S. E. 149; State v. Windle, 156 Ind. 648, 59 N. E. 276; Klein v. Pipes, 43 La. Ann. 362; Sheidley v. Lynch, 95 Mo. 487, 8 S. W. 434. State V. Gardner (Nebr.), 112 N. W. 373. The payment of school dis- trict warrants in full cannot be com- 928 PUBLIC SECTJKITIES This rule is applied to avoid the payment of interest upon warrants demanded and payment of which is re- fused, although there may be funds to pay on account. § 464. To whom payable. Warrants although not considered negotiable instru- ments according to the common rules of law are usually assignable, and when properly assigned and endorsed they become, in the hands of the holder, subject to prior equities, an enforceable demand by him against the cor- poration.^^ On this point the quotation from Mayor, etc., of Nash- ville V. Ray," in a previous section ^^ should be noted, and the court in a California case,^" in its opinion in part said: "County warrants acquire no greater validity in pelled where this would result in closing the schools, but a part pay- ment can be made. Haydon v. Ormsby County Sup'rs, 2 Nev. 371. State V. Grant, 31 Or. 370, 49 Pae. 855. A partial payment of a war- rant cannot be compelled. 13 — City of Nashville v. Bay, 86 XJ. S. (19 Wall.) 468; Ouachita County V. Woloott, 103 U. S. 559; Watson V. City of Huron (C. C. A.), 97 Fed. 449; Bayerque v. City of San Francisco, McAll. 175, Fed. Cas. No. 1,137; Crawford County v. Wil- son, 7 Ark. 214; Tippecanoe County Com'rs V. Cox, 6 Ind. 403; Thayer V. City of Boston, "36 Mass. (19 Pick.) 511; Hyde v. Franklin County, 27 Vt. 185; Averett's Adm'r V. Booker, 15 Grat. (Va.) 163; Peo- ple V. Hall, 8 Colo. 485; Cook County V. Lowe, 23 111. App. 649. County warrants drawn contrary to Starr & C. Ann. St. 111. p. 2460, held void. Garvin v. Wiswell, 83 111. 215; McCormick v. Grundy County, 24 Iowa, 382; Crawford v. Noble County Com'rs, 8 Okl. 450; Heffle- mau V. Pennington County, 3 S. D. 162; Gibson County v. Eain, 79 Tenn. (11 Lea) 20; Leach v. Wilson County, 62 Tex. 331; Brown v. School -Directors of Jacobs, 77 Wis. 27; Butts County v. Jackson Bank- ing Co. (Ga.), 60 S. E. 149; Newell v. School Directors, 68 111. 614; Sheffield School Twp. v. Andress, 56 Ind. 157; Long v. McDowell (Ky.), 52 S. W. 812; some cases, however, hold to the contrary. See Savage v. Mathews, 98 Ala. 535;. Dana v. City and County of San Francisco, 19 Calif. 486. Holtsclaw V. State (Ind.), 92 N. E. 121. A warrant drawn in favor of the town treasurer cannot be as- signed by him. State v. Omaha Na- tional Bank (Nebr.), 81 N. W. 319 and East Union Twp. v. Eyan, 86 Pa. 459. 14—19 WalL 468. 15 — See See. 450, ante. 16 — People V. El Dorado County Sup'rs, 11 Calif. 170. MISCELLANEOUS EVIDENCES OP INDEBTEDNESS 929 the hands of third parties than they originally possessed in the hands of the first holder, no matter for what consid- eration they may have been transferred or in what faith they may have been taken. If illegal when issued, they are illegal for all time. The protection which attends the purchaser of negotiable paper before maturity, without notice of the illegality of its consideration, does not ex- tend to like purchasers of county warrants. Were this otherwise, it is easy to se that the county would be en- tirely at the mercy of the board. ' ' And in an early case in Iowa, the court in discussing the nature of warrants as non-negotiable instruments, said: ' ' On the contrary if such warrants are held non-negotia- ble, it is completely in the power of all persons to -protect themselves from loss, since the law and the public rec- ords necesarily afford to every person the means of ascer- taining the facts as to the legality and validity of every warrant issued, so, that, by such non-negotiability, both the counties and individuals are abundantly and fully protected. There is no validity or force in the assump- tion that by such ruling the credit of the counties would be impaired and their necessary municipal operations be impeded. No honest person would refuse to labor or furnish material to a county because he could only re- ceive a fair and just compensation, nor because by judi- cial construction, it was furnished with a coat of mail guarding it against the assaults and machinations of the dishonest. A warrant properly issued, if not as readily sold, would yield more value to the seller when sold. In view of this concurrence of principle, authority and public policy we have no hesitation in holding that county warrants are not negotiable at the law-merchant. They are, of course, assignable under our statute, and suit may be brought thereon in the name of the assignee, but sub- ject to any defense which might be made as against the p. S.— 5 9 930 PUBLIC SECUEITIES payee. The assignee of a warrant may demand and sue upon refusal to pay.^^ The manner in which the transfer must be made to give the transferee the privileges and rights of his trans- feror depends largely upon statutory provisions prescrib- ing the manner in which this shall be done ;^^ otherwise, if the transfer is made in the customary manner for the sale and assignment of commercial paper or instruments of like character, it will be sufficient.^" Public officials cannot draw warrants for the payment of their salaries or personal claims which they may have against the cor- poration.^^ In an action brought by the holder of a warrant whether the original payee, his assignees or bearer, its presenta- tion and possession by plaintiff at the time of trial is prima facie evidence of his ownership though it is denied in the pleadings.^^ This rule is but a re-statement of that 17— Clark v. Polk County, 19 Iowa, 248. 18 — Laughlin v. District of Col- umbia, 116 U. S. 485; Beals v. Evans, 10 Cal. 459; Marshall v. Platte County, 12 Mo. 88. State V. Barret, 25 Mont. 112, 63 Pac. 1030. An assignee of state warrants succeeds to all the rights of his assignor, including that of de- manding and receiving interest. State V. Van Wyck, 20 Wash. 39, 54 Pac. 768; Webster v. Douglas County, 102 Wis, 181, 77 N. W. 885, 78 N. W. 451; Hook v. German- American Bank, 129 N. Y. S. 491; Bardsley v. Sternberg, 18 Wash. 612, 52 Pac. 251; Hart v. ViUage of Wyndmere (N. D.), 131 N. W. 271; Bank of Springfield City v. Ehea County (Tenn.), 59 S. W. 442; Shock V. Colorado County (Tex.), 115 S. W. 61 ; but see Twp. of Sny- der V. Bovaird (Pa.), 15 Atl. 910. 19 — Savage v. Mathews, 98 Ala. 535; Martin v. City & County of San Francisco, 16 Cal. 285; People V. Gray, 23 Cal. 125; State ex rel. Livesay v. Harrison (Mo.), 72 S. W. 469. 20— Watson v. City of Huron (C. C. A.), 97 Ped. 449; Crawford County V. Wilson, 7 Ark. 215 ; Sweet V. Carver County Com'rs, 16 Minn. 106 (Gil. 96). Board of Com'rs of Eamsey County V. Elmund (Minn.), 102 N. W. 719. Neither a county treasurer nor his sureties are liable on his bond because of the forgery of an order or of the endorsement of the payee's name. Crawford v. Noble County Com 'rs, 8 Okl. 450. 21— Cricket v. State, 18 Ohio St. 9. 22 — Heffleman v. Pennington County, 3 S. Dak. 162. MISCELLANEOUS EVIDENCES OF INDEBTEDNESS 931 which applies to the validity of negotiable securities which has been considered in previous sections. ^^ The rule as to warrants was well stated in Heffleman V. Pennington County,-* where the court said: "Appel- lant's remaining point is that, having in his answer de- nied the alleged transfer to an ownership by the respond- ent, the mere possession of and presentation by respond- ent at the trial was not sufficient evidence of the assign- ment and ownership. There being no other evidence as to ownership, there is here no question of preponderance, but simply, did possession of and dominion over these warrants tend to prove title? As possession is usually an incident of ownership, unexplained possession is al- ways some evidence of ownership. It may be very slight, and easily overcome but actual possession is a fact, and, in the absence of other facts, it will be presumed to be rightful. These warrants were in form payable to bearer. They were in the possession of and presented by respondent and were received from him without objec- tion. In the absence of any evidence whatever tending to question respondent's ownership, or tending to show that his absolute possession ought not to support the usual presumption, we think his ownership was suffi- ciently maintained until attacked by some evidence." § 465. Miscellaneous forms of indebtedness. A public corporation may, under authority of law, is- sue, as evidence of an indebtedness legally incurred, orders,^ negotiable certificates,^® school orders,^^ or other 23 — See Sees. 2,65 and 400, et seq., 26 — Brown v. Town of Canton, ante. 4 Lans (N. Y.) 409. 24^3 S. D. 162. 27— Whitney v. Inhabitants of 25 — McCutehen v. Town of Free- Stow, 111 Mass. 368; Edinburg dom, 15 Minn. 217 (Gil. 169.) ; American Land & Mortg. Co. v. City State T. Corzilius, 35 Ohio St. 69; of Mitchell, 1 S. D. 593. Stoll V. Johnson County Com'rs, 6 Wyo. 231. 932 PUBLIC SECTJEITIES acknowledgments of a similar character.^* These miscel- laneous forms of indebtedness when issued without au- thority are invalid ; ^^ but if the corporation had the pow- er to make the contract creating the indebtedness, the payee may then maintain an action for money or things had and received or services rendered.^" In a leading case in the Supreme Court of the United States,^^ Justice Strong in the opinion, said: "It is enough for them (the plaintiffs) that the city council have power to enter into a contract for the improvement 28— Bloomfield v. Charter Oak Bank, 121 IT. S. 121; Parsel v. Barnes, 25 Ark. 261; In re Certifi- cates of Indebtedness, 18 Colo. 566. Lincoln School Twp. v. Union Trust Co. (Ind.), 73 N. E. 623. A note. Foote v. City of Salem, 96 Mass. (14 Allen) 87; Eichardson v. City of Brooklyn, 31 Barb. (N. Y.) 152. Burgin v. Smith (N. C), 66 S. E. 607. The phrase "county scrip" means notes or evidences of debts other than coupon bonds. 29 — Bloomfield v. Charter Oak Bank, 121 U. S. 121; Scott's Ex'rs V. City of Shreveport, 20 Fed. 714. Bangor Sav. Bank v. City of Still- water, 46 Fed. 899. In the absence of special statutory authority, a city has no right to issue certificates of indebtedness in negotiable form, even in payment for property which it has authority to buy. City of Lockport V. Gaylord, 61 111. 276. Sullivan v. Highway Com'rs, 114 111. 262. Highway commissioners have no power to issue, under the statute, interest-bearing orders. Cit- izens' Bank v. Police Jury of Par- ish of Concordia, 28 La. Ann. 263; Smith V. Madison Parish, 30 La. Ann. 461; Parsons v. Inhabitants of Monmouth, 70 Me. 262; Abbott v. Inhabitants of North Andover, 145 Mass. 484; Smallwood v. Lafayette County, 75 Mo. 450; Andrews v. School District of City of McCook, 49 Nebr. 420, 68 N. W. 631; Town of Hackettstown v. Swackhamer, 37 N. J. Law, 191; Chosen Freeholders of Hudson County v. Buck, 51 N. J. Law, 155; Smith v. Epping, 69 N. H. 558; Stewart v. Otoe County, 2 Neb. 177; Parker v. Saratoga County Sup'rs, 106 N. Y. 392; Loan & Exch. Bank v. Shealey, 62 S. C. 337; Biddle v. City of Terrell, 82 Tex. 335; Exchange Bank of Vir- ginia V. Lewis County, 28 W. Va. 273. 30 — Bangor Savings Bank v. City of Stillwater, 49 Fed. 721; Watson V. City of Huron, 97 Fed. 449 ; Coles County V. Goehring, 209 lU. 142, 70 N. E. 610; MUliken v. George L. Gillen & Son (Ky.), 122 S. W. 151; Morgan v. Tcwn of Gnttenberg, 4Q N. J. L. 394; Ford v. Washington Twp., Burgin County (N. J.), 58 Atl. 79; but see Crawford v. Board of Com'rs of Noble County, 8 Okla. 450, 58 Pac. 616. See, also, Sees. 31, 32 and 380 et seq., ante. 31 — Hitchcock v. City of Galves- ton, 96 U. S. 341. MlSCELLANEOtTS EVIDENCES OE INDEBTEDNESS 933 of the sidewalks; that such a contract was made with them; that under it they have proceeded to furnish ma- terials and do work as well as to assume liabilities; that the city has received and now enjoys the benefit of what they have done and furnished; that for these things the city promised to pay; and that after having received the benefit of the contract the city has broken it. It matters not that the promise was to pay in a manner not authorized by law. If payments cannot be made in bonds because their issue is ultra vires, it would be sanctioning rank injustice to hold that payment need not be made at all." Municipal evidences of indebtedness may be divided into two classes, based upon legal character and char- acteristics as affected by or depending for validity, in the hands of the original payee or a bona fide holder for value, on the availability, as a defense in an action upon the indebtedness, of equities existing between the payee and the public corporation. These two classes as sug- gested are, first, negotiable bonds or securities, and sec- ond, warrants or other evidences of a similar character. In the case of negotiable bonds and securities, the rule of law is clearly established that in the hands of a bona fide purchaser for value, equities between original par- ties are not available as a defense. Warrants, as stated in a preceding section,^^ and all other evidences of a similar character are merely prima facie evidences of indebtedness and at no time can the maker of them be prevented from setting up as a defense equities that may have originally existed.*^ 32 — See Sees. 446 and 450, ante. district promissory note) ; Abasoal 33 — NeweU v. School Directors, 68 v. City of New Orleans, 48 La. Ann. 111. 514 (School order) ; HaU v. 565 (Floating debt certificate) ; Em- Jackson County, 95 111. 352; Farm- ery v. Inhabitants of Mariaville, 56 ers' Bank of Frankfort v. Orr, 25 Me. 315 (Town orders); School Ind. App. 71, 55 N. E. 35; Wood v. Dist. No. 2 v. Stough, 4 Neb. 359 State, 155 Ind. 1; SheflSeld School (School district orders); Rensselaer Tp. V. Andress, 56 Ind. 157 (School County Sup'rs v. Weed, 35 Barb. 934 PUBLIC SECUEITIES The miscellaneous forms of indebtedness considered in this section are subject to the rules of law, in regard to their issue, their form and their payment, applying to warrants and discussed in preceding sections.^* As a matter of convenience the authorities relating to special forms of indebtedness as distinguished by specific names are collected here. The weight of authority is tb the effect that the power to issue an evidence of indebtedness, negotiable in its character, cannot be implied but must be expressly given in some charter, statutory or constitutional provision. Under this ruling the making of a promissory note by the officials of a public corporation has been held unau- thorized even where the indebtedness is one that the pub- lic corporation could legally incur.^' (N. Y.) 136 (Draft drawn upon county treasurer) ; Loan & Exeh. Bank v. Stealey, 62 S. C. 337 (School warrant) ; Texas Transp. Co. V. Boyd, 67 Tex. 153. Cheeney v. Inhabitants of Brook- field, 60 Mo. 53. Although a war- rant if Signed by the proper officers prima facie imports validity, its is- suance may be shown to be ultra vires. Warrants issued to workmen in payment of wages for engraving illegal scrip are void. 84 — People v. Munroe, 100 Cal. 664. A writing purporting to be a sale or assignment of the un- earned salary of a public school teacher is the subject of forgery. Clark Cotinty Sup'rs v. Lawrence, 63 111. 32; Kelley v. City of Brook- lyn, 4 Hill (N. y.) 263; Brown v. Town of Jacobs, 77 Wis. 29; Strong V. District of Columbia, 4 Mackey (D. C.) 242. 35— City of Nashville v. Bay, 86 U. S. (19 Wall.) 468; Merrill v. Town of Monticello, 138 U. S. 673; Chisholra v. City of Montgomery, 2 Woods, 584, Fed. Gas. No. 2,686; White V. City of Eahway, 11 Fed. 853. Bangor Sav. Bank v. City of Still- water, 49 Fed. 721. Where nego- tiable certificates of indebtedness issued by a city, and Sued upon by the payee have been declared in- valid, the payee may maintain an action for money had and received, provided the city had power to make the contract out of which the in- debtedness arose. Ladd -^ Town of Franklin, 37 Conn. 53; Bourdeaux V. Coquard, 47 111. App. 254; Co- quard v. Village of Oquawka, 192 111. 355, aflirming 91 111. App. 64«; Craig School Tp. v. Scott, 124 Ind. 72. Carter v. City of Dubuqne, 35 Iowa, 416. A contract of guaranty is not negotiable and the power of a city to sell negotiable paper held by it does not carry with it as an in- cident the power to execute a guar- anty thereof. Capmartin v. Police MISCELLANEOUS EVIDENCES OF INDEBTEDNESS 935 It is considered desirable to avoid the granting of a power to public corporations vphich will enable them to issue valid securities or evidences of indebtedness not subject to defense or an investigation of equities which may exist between the parties. The subject of the im- plied power of the public corporation to issue negotiable instruments has been fully considered in previous sec- tions.^® Jury, 23 La. Ann. 190; Breaux v. IberviUe Parish, 23 La. Ann. 232; Flagg V. Parish of St. Charles, 27 La. Ann. 319; State v. Fisher, 30 La. Ann. 514. Neugass v. City of New Orleans, 42 La. Ann. 163. In the absence of express legislative authority, a mu- nicipal corporation has no power to utter unconstitutional obligations to pay money. Parsons v. Inhabi- tants of Monmouth, 70 Me. 262; Bobbins v School Dist. No. 1, 10 Minn. 340 (Gil. 268) ; Atlantic City Waterworks Co. v. Smith, 47 N. J. Law, 473; Halstead v. City of New York, 5 Barb. (N. T.) 218; Ket- chum V. City of Buffalo, 14 N. T. (4 Kern.) 356; Clark v. Saratoga County Sup'rs, 107 N. T. 553; Vaughn v. Forsyth County Com'rs, 117 N. C. 429; Stewart v. Otoe County, 2 Neb. 177. In West V. Town of Errol, 58 N. H. 233, it is held that the select- men may without vote of the town negotiate promissory notes upon which the town will be liable on a showing that the money went to its use or that the transaction was rati- fied. In City of Mineral Wells v. Darby (Tex. Civ. App.), 51 S. W. 351, it is held that a municipality may execute its note in payment of a legal obligation. 36 — See Sees. 57 et seq. and 84 et seq., ante, and the authorities there cited. See, also, Police Jury v. Britton, 82 U. S. (15 WaU.) 566; City of Nashville v. Bay, 86 U. S. (19 Wall.) 468; City of Nashville v. Lindsey, 86 TJ. S. (19 Wall.) 485; Claiborne County v. Brooks, 111 U. S. 400; Town of Concord v. Eobin- son, 121 U. S. 165; Kelley v. Town of Milan, 127 XJ. S. 139;Norton v. Town of Dyersburg, 127 U. S. 160; Young V. Clarendon Tp., 132 U. S. 340; Hill v. City of Memphis, 134 U. S. 198 ; Merrill v. Town of Monti- cello, 138 U. S. 673; Brenham v. German-American Bank, 144 XJ. 8. 173. See, also, the following authori- ties r Desmond v. City of Jefferson, 19 Fed. 483 ; Gause v. City of Clarks- ville, 5 Dm. 165, Fed. Cas. No. 5,276; Law v. People, 87 111. 385; Hewitt V. Board of Education of Normal School Dist., 94 HI. 528; Miller v. Dearborn County Com'rs, 66 Ind. 162; City of Eichmond v. McGirr, 78 Ind. 192; State v. Bab- cock, 22 Neb. 614; Douglass v. Vir- ginia City, 5 Nev. 147; Town of Hackettstown v. Swackhamer, 37 N. J. Law, 191; Knapp v. City of Hoboken, 39 N. J. Law, 394; Ket- chum V. City of Buffalo, 14 N. Y. (4 Kern.) 356; Bank of Chillieothe V. Town of Chillieothe, 7 Ohio (pt. 936 PUBLIC SECUEITIES § 466. The same subject; legal character. The Federal government has the exclusive power of coining money and issuing currency or certificates con- stituting a legal tender for the payment of debts. Where public corporations have issued certificates of indebted- ness, promissory notes or other instruments either in the similitude of bank notes or other usual forms of cur- rency, such have been held illegal in their character and the corporation held without power or authority to issue them.^'^ Securities of any form intended to circulate as money are held invalid. In a case decided by the Su- preme Court of the United States,^^ bonds had been issued having the form and appearance of treasury notes, which were afterwards redeemed and legal securities issued in their place, the city failing to pay, a holder brought an action to recover. The city resisted on the ground that the original bonds issued in the form of currency were illegal and that their surrender was not a valuable con- sideration for the bonds given in lieu thereof, the court said : " It can scarcely be doubted that whoever is capable of entering into an ordinary contract to obtain or re- ceive the means with which to build houses or wharves 2) 31; CityofWilliamsportv.com., 227; Cothran v. City of Eome, 77 84 Pa. 487; City of Waxahachie v. Ga. 582; Cheeney v. Inhabitants of Brown, 67 Tes. 519; Mills v. Glea- Brookfield, 60 Mo. 53; Allegheny son, 11 Wis. 470; Johes Ey. Secur. City v. McClurkan, 14 Pa. 81. 283; Burroughs, Pub. Secur. p. 185. State v. Cardozo, 5 S. C. (5 Eieh.) 37 — Thomas v. City of Eichmond, 297. Certificates of indebtedness is- 79 U. S. (12 Wall.) 349; City of sued by a state treasurer made re- Little Eock V. Merchants' Nat. ceivable in payment of taxes or Bank, 98 U. S. 308, 5 DUl. 299, Fed. other dues to the state, not held Cas. No. 9,455; Wesley v. Eells, 90 bills of credit within the sense of Fed. 151. that term as used in the constitution Lindsey v. Eottaken, 32 Ark. 619. of the United States. Where the city has illegally issued See, also, authorities cited See. ' ' city money, ' ' the holder thereof 459, ante. has no remedy. Dively v. City of 38^ — City of Little Eock v. Mer- Cedar Falls, 21 Iowa, 565. chants' Nat. Bank, 98 V. S. 308, 5 But see the same case, 27 Iowa, DUl. 299, Fed. Cas. No. 9,455. MlSCELLANEOtrS EVIDENCES OE IKDEBTEDNESS 937 or the like, may, as a general rule, bind himself by an admission of his obligation. The capacity to make con- tracts is at the basis of the liability. The first liability of the city was disputed by it. It had gone beyond its power, as it said, in making a debt in the form of bank notes. If it had not denied its power, judgment and an execution might have gone against it, and the cred- itor would have obtained his money. This privilege of nonresistance every person retains, and continues to re- tain. He can reconsider at any time, and confess and admit what the moment before he denied. In 1874, the City of Little Eock did reconsider. It said: "We will purge the transaction of illegality. We had the authority to accept from you in satisfaction of amounts received by us for legitimate purposes the sums in question. We did so receive and expend for legitimate purposes. We erred in making the payment to you in an objectionable form. We now pay our just and lawful debt by cancelling the bank notes issued by us, and delivering to you obli- gations in the form of bonds, to which form there is no legal objection." Legality based upon purpose for which issued follows the rule of law well settled and constantly referred to. If any such miscellaneous forms of indebtedness are is- sued as evidence of an indebtedness incurred for a pur- pose other than that authorized by law since they are subject to all equities, they will be held invalid. Public authorities cannot, by the use of an authorized instru- ment, create an indebtedness for an illegal purpose which will be binding upon the corporation.^® 39 — Clark v. City of Des Moines, See, also, eases cited in section 19 Iowa, 199, 87 Am. Dee. 423; 101, et seq., ante, where the subject ilerkel v. Berks County, 81% Pa. of what is a public purpose for the 505; Isaacs v. City of Eichraond, 90 expenditures of public moneys is Va. 30. fully considered. 938 PUBLIC SECUBITIES § 467. Form and phraseology. The law takes into consideration at all times the bona fides of the parties and the relative condition and cir- cumstances attending the character of the corporation and the issuing of the particular indebtedness. Where the public corporation authorized is what may be termed a public quasi corporation and where the officers of such corporation are not presumed to have the same degree or extent of intelligence, experience and learning as that, which it is presumed similar officers of a higher grade of corporations may have acquired or possess, the courts consider such circumstances or conditions and hold an instrument valid issued by them which may be techni- cally defective in its form but which substantially com- plies with the law authorizing its issue. But the ques- tion of the payment aside from mere form or execution of such instruments depends upon the principles consid- ered in preceding sections. At all times, questions based upon equities existing between the original parties can be raised and payment or nonpayment will depend upon their determination.'*" § 468. Mode and time of payment. The place and manner of payment,*^ the time,*^ the 40— Clark v. City of Des Moines, tonio (Tex. Civ. App.), 63 S. W. 19 Iowa, 199, 87 Am. Dec. 423; City 138. of New Orleans v. Strauss, 25 La. 42 — Owen v. Lincoln Tp., 41 Mich. Ann. 50; Chandler v. City of Bay 415. Notes issued by a city not hav- St. Louis, 57 Miss. 326; Cheeney ing been presented for redemption V. Inhabitants of Brookfield, 60 Mo. within the time prescribed by the 53; Knapp v. City of Hoboken, 38 act, the city is not under any obli- N. J. Law, 371; Inhabitants of gation in law or equity to redeem North Bergen v. Eager, 41 N. J. them. Law, 184. Brewer v. Otoe County, 1 Neb. 41 — Allen v. McCreary, 101 Ala. 373. In Nebraska it has been held 514; Armstrong v. Truitt, 53 Ark. that one receiving a warrant in 287; Marshatl v. City of San An- which no time of payment is fixed MISCELLANEOUS EVIDENCES OP INDEBTEDNESS 939 fund,*^ from wliicli payable, and the rights of parties holding such instruments whether the original payee or his assignee,** all depend upon the principles already suf- ficiently discussed. takes it with the expectation, if there are no available funds in the treasury, of waiting until the money can be raised in the ordinary way. Miller v. City of Lynchburgh, 20 Grat. (Va.) 330. Terry v. City of Milwaukee, 15 Wis. 490. Ail order drawn on the city treasurer directing him ' ' to pay," no date of payment being mentioned, imports that the order was payable on demand. Packard v. Town of Bovina, 24 Wis. 382. A town is not liable, on an order drawn against its treas- urer, until after demand and re- fusal of payment. 43— Meath v. Phillips County, 108 U. S. 553 ; Mobile County v. Powers, 103 Ala. 207; Allen v. Watts, 88 Ala. 497; Mitchell v. Speer, 39 6a. 56; Gamble v. Clark, 92 Ga. 695; Board of Education v. Foley, 88 111. App. 470 (School district war- rants) ; Tobin v. Emmetsburg Tp., 52 Iowa, 81; District Tp. of Coon V. Board of Directors of Providence, 52 Iowa, 287. Mills County Nat. Bank v. Mills County, 67 Iowa, 697, 25 N. W. 884. Suit may be brought without first requesting the levy of a tax to re- plenish the particular fund out of which they are payable. Hopper v. Inhabitants of Union Tp., 54 N. J. Law, 243, 24 Atl. 387. Certificates of indebtedness for local improvements. Wyoming County v. Bardwell, 84 Pa. 104; Bank of Spring City v. Ehea County (Tenn.), 59 S. W. 442. Terry v. City of Milwaukee, 15 Wis. 490. School orders are evi- dences of indebtedness, upon which, if payment is refused by the city treasurer for want of funds, an ac- tion will lie against the city. 44 — Terrell v. Town of Colebrook, 35 Conn. 188. The assignee of an authorized note can recover from the town. Ladd V. Town of PrankUn, 37 Conn. 53. A town promissory note held void in the hands of a purchaser for value who took it after the fact of the failure of the contract had been established. People v. Clark County Com'rs, 50 111. 213; Na- tional State Bank v. Independent Dist. of MarshaB, 39 loVa, 490; City of Springfield v. Weaver (Mo.), 37 S. W. 509; Flemming v. City of Hoboken, 40 N. J. Law, 270; Eaton 1-. Manitowoc County Sup'rs, 40 Wis. 668. CHAPTER XVIII ABSTRACTS PROM STATE CONSTITUTIONS RELATIVE TO PUBLIC DEBT AND THE POWER OF TAXATION A valuable compilation of state charters and constitu- tions has been published by the United States in seven volumes entitled "The Federal and State Constitutions, Colonial Charters and Other Organic Laws of the Several States, Territories and Colonies," compiled and edited by Francis N. Thorpe and printed in the Government Printing Office, Washington, D. C, in 1909. §469. Alabama. Constitution effective November 28, 1901. Art. XI, Sec. 213 : After the ratification of this Con- stitution, no new debt shall be created against or in- curred by this State, or its authority except to repel in- vasion or suppress insurrection, and then only by a con- currence of two-thirds of the members of each House of the Legislature, and the vote shall be taken by yeas and nays, and entered on the Journals ; and any act creating or incurring any new debt against this State, except as herein provided for, shall be absolutely void; provided, the Governor may be authorized to negotiate temporary loans, never to exceed three hundred thousand dollars, to meet the deficiencies in the treasury, and until the same is paid no new loan shall be negotiated; provided further, that the section shall not be so construed as to prevent the issuance of bonds for the purpose of refund- ingsthe existing bonded indebtedness of the State. 940 PUBLIC DEBT AND THE POWER 01" TAXATION 941 Art. XII, Sec. 222: The Legislature, after the rati- fication of this Constitution, shall have authority to pass general laws authorizing the counties, cities, towns, vil- lages, districts or other political subdivisions of counties to issue bonds, but no bonds shall be issued under au- thority of a general law unless such isue of bonds be first authorized by a majority vote by ballot of the quali- fied voters of such county, city, town, village, district, or other political subdivision of a county, voting upon such proposition. (Here follow provisions relative to form of ballot.) This section shall not apply to the renewal, re- funding or re-issue of bonds lawfully issued, nor to the issuance of bonds in cases where the same have been authorized by laws enacted prior to the ratification of this Constitution, nor shall this section apply to obliga- tions incurred or bonds to be issued to procure means to pay for street and sidewalk improvements or sanitary or storm water sewers, the cost of which is to be assessed, in whole or in part, against the property abutting said improvements or drained by such sanitary or storm water sewers. Art. XII, Sec. 224 : No county shall become indebted in an amount including present indebtedness, greater than three and one-half per centum of the assessed value of the property therein; provided, this limitation shall not affect any existing indebtedness in excess of such three and one-half per centum, which has already been created or authorized by existing law to be created; provided, that any county which has already incurred a debt ex- ceeding three and one-half per centum of the assessed value of the property therein, shall be authorized to in- cur an indebtedness of one and a half per centum of the assessed value of such property in addition to the debt already existing. Nothing herein contained shall pre- vent any county from issuing bonds, or other obligations, to fund or refund any indebtedness now existing or au- thorized by existing laws to be created. 942 PUBLIC SECURITIES Art. XII, Sec. 225: No city, town or other municipal corporation having a population of less than six thou- sand, except as hereafter provided, shall become indebted in an amount, including present indebtedness, exceeding five per centum of the assessed value of the property therein, except for the construction or purchase of water works, gas or electric lighting plants, or sewerage, or for the improvement of streets, for which purposes an additional indebtedness not exceeding three per centum may be created ; provided, this limitation shall not affect any debt now authorized by law to be created, nor any temporary loans to be paid within one year, made in anticipation of the collection of taxes, not exceeding one- fourth of the annual revenues of such city or town. All towns and cities having a population of six thousand or more, also Gadsden, Ensley, Decatur, and New Decatur, are hereby authorized to become indebted in an amount including present indebtedness, not exceeding seven per centum of the assessed valuation of the property therein, provided that there shall not be included in the limitation of the indebtedness of such last described cities and towns the following classes of indebtedness, to wit : Tem- porary loans, to be paid within one year, made in antici- pation of the collection of taxes, and not exceeding one- fourth of the general revenues, bonds or other obliga- tions already issued, or which may hereafter be issiied for the purpose of acquiring, providing or constructing schoolhouses, water works and sewers; and obligations incurred and bonds issued for street or sidewalk im- provements, where the cost of the same, in whole or in part, is to be assessed against the property abutting said improvements ; provided, that the proceeds of all obliga- tions issued as herein provided, in excess of said seven per centum shall not be used for any purpose other than that for which said obligations were issued. Nothing contained in this article shall prevent the funding or re- PUBLIC DEBT AND THE POWEB OF TAXATION 943 funding of existing indebtedness. This section shall not apply in the cities of Sheffield and Tuscumbia. Art. XII, Sec. 226: No city, town or village, whose present indebtedness exceeds the limitation imposed by this Constitution, shall be allowed to become indebted in any further amount, except as otherwise provided in this Constitution, until such indebtedness shall be reduced within such limit ; provided, however, that nothing herein contained shall prevent any municipality, except the city of Gadsden, from issuing bonds already authorized by law ; provided further, that this section shall not apply to the cities of Sheffield and Tuscumbia. §470. Arkansas. Constitution effective October 13, 1874. Art. XII, Sec. 12 : Except as herein provided, ' the State shall never assume or pay the debt or hability of any county, town or city, or other corporation whatever, or any part thereof, unless such debt or liability shall have been created to repel invasion, suppress insurrec- tion, or to provide for the public welfare and defense. Nor shall the indebtedness of any corporation to the State ever be released or in any manner discharged, save by payment into the public treasury. Art. XVI, Sec. 1: Neither the State, nor any city, county, town or other municipality in this State shall ever loan its credit for any purpose whatever ; nor shall any county, city, town or other municipality ever issue any interest-bearing evidences of indebtedness, except such bonds as may be authorized by law to provide for, and secure the payment of, the present existing indebted- ness ; and the State shall never issue any interest-bearing treasury warrants or scrip. In 1907, a constitutional amendment was submitted providing for the issue of bonds by municipalities. It failed by an overwhelming vote. There are, however, 944 PUBLIC SECURITIES numerous improvement districts which under special acts are allowed to borrow money or issue bonds which it seems do not come clearly under the prohibitory man- date of the Constitution. §471. Arizona. Constitution effective February 14, 1912. Art. IX, Sec. 5 : The State may contract debts to sup- ply the casual deficits or failure in revenues, or to meet expenses not otherwise provided for; but the aggregate amount of such debts, direct and contingent, whether contracted by virtue of one or more laws, or at different periods of time, shall never exceed the sum of three hun- dred and fifty thousand dollars; and the money arising from the creation of such debts shall be applied to the purpose for which it was obtained or to repay the debts so contracted, and to no other purpose. In addition to the above limited power to contract debts, the State may borrow money to repel invasion, suppress insurrection or defend the State in time of war ; but the money thus raised shall be applied exclusively to the object for which the loan shall have been author- ized or to the repayment of the debt thereby created. No money shall be paid out of the State Treasury except in the manner provided by law. Art. IX, Sec. 7: Neither the State, nor any county, city, town, municipality or other subdivision of the State, shall ever give or loan its credit in the aid of, or make any donation or grant, by subsidy or otherwise, to any individual, association or corporation, or become a sub- scriber to, or a shareholder in, any company or corpora- tion, or become a joint owner with any person, company or corporation, except as to such ownerships as may accrue to the State by operation or provision of law. Art. IX, Sec. 8 : No county, city, town, school district, or other municipal corporation shall for any purpose PUBLIC DEBT AND THE POWER OP TAXATION 945 become indebted in any manner to an amount exceeding four per centum of the taxable property in such county, city, town, school district, or other municipal corpora- tion, without the assent of a majority of the property taxpayers, who must also in all respects be qualified electors therein voting at an election provided by law to be held for that purpose, the value of the taxable prop- erty therein to be ascertained by the last assessment for State and county purposes, previous to incurring such indebtedness; except, that in incorporated cities and towns assessments shall be taken from the last assess- ment for city or town purposes; Provided, that any in- corporated city or town, with such assent, may be al- lowed to become indebted to a larger amount, but not ex- ceeding five per centum additional, for supplying such city or town with water, artificial light or sewers, when the works for supplying such water, light or sewers are or shall be owned and controlled by the municipality. §472. California. Constitution effective May 7, 1879. Aft. IV, Sec. 30: Prohibits the granting of aid in any form, either by the State or any of its subdivisions, for any sectarian purpose. Art. lY, Sec. 31: The Legislature shall have no power to give or to lend, or to authorize the giving or lending of, the credit of the State, or of any county, city and county, city, township or other political corporation or sub-divi- vision of the State now existing, or that may be here- after established, in aid of or to any person, association or corporation, whether municipal or otherwise, or to pledge the credit thereof in any manner whatever for the payment of the liabilities of any individual, association, municipal or other corporation whatever; nor shall it have power to make any gift, or authorize the making of any gift, or any public money or thing of value to any p. S.— 60 946 PUBLIC SECUEITIES '" '^ individual, municipal- or other corporation whatever; Provided, that nothing in this section shall prevent the Legislature granting aid pursuant to section twenty-two of this Article ; and it shall not have power to authorize the State or any political sub-division thereof to sub- scribe for stock or to become a stockholder in any cor- poration whatever. By an amendment adopted Nov. 8, 1910, further pro- vision is made for creating a fund of $5,000,000 for the use, establishment, maintenance and support of the Pan- ama Pacific International Exposition. Art. XI, Sec. 18: No county, city, town, township, board of education or school district shall incur any indebtedness or liability, in any manner, or for any purpose, exceeding in any year the income and revenue provided for it for such year, without the assent of two-thirds of the qualified electors thereof voting at an election to be held for that purpose, nor unless, before or at the time of incurring such indebtedness, provi- sion shall be made for the collection of an annual tax sufficient to pay the interest on such indebtedness as it falls due, and also provision to constitute a sinking fund for the payment of the principal thereof on or before maturity, which shall not exceed forty years from the time of contracting the same; Provided, however, that the City and County of San Francisco may at any time pay the unpaid claims, with interest thereon at the rate of five per cent per annum, for materials furnished to and work done for said city and county during the forty- first, forty-second, forty-third, forty-fourth and fiftieth fiscal years, and for unpaid teachers' salaries for the fiftieth fiscal year, out of the income and revenue of any succeeding year or years, the amount to be paid in full of said claims not to exceed in the aggregate the sum of five hundred thousand dollars, and that no statute of limitations shall apply in any manner to these claims; and provided further, that the City of Vallejo, of Solano PUBLIC DEBT AND THE POWEB OP TAXATION 947 County, may pay its existing indebtedness incurred in the construction of its water-works whenever two-thirds of the electors thereof voting at an election held for that purpose shall so decide, and that no statute of limitations shall apply in any manner. Any indebtedness or liability incurred contrary to this provision, with the exception hereinbefore recited, shall be void. The City and County of San Francisco, the City of San Jose and the Town of Santa Clara may make provision for a sinking fund, to pay the principal of any indebted- ness incurred, or to be hereafter incurred, by it, to com- mence at a time after the incurring of such indebtedness of not more than a period of one-fourth of the time of maturity of such indebtedness, which shall not exceed seventy-five years from the time of contracting the same. Any indebtedness incurred contrary to any provision of this section shall be void. (As amended in 1900, and again in 1906.) Art. XII, Sec. 13 : The State shall not, in any manner, loan its credit, nor shall it subscribe to or be interested in the stock of any company, association or corporation. Art. XVI, Sec. 1 : The Legislature shall not in any man- ner create any debt or debts, liability or liabilities, which shall, singly or in the aggregate with any previous debts or liabilities, exceed the sum of three hundred thousand dollars, except in case of war to repel invasion or sup- press insurrection, unless the same shall be authorized by law for some single object or work to be distinctly speci- fied therein, which law shall provide ways and means, exclusive of loans, for the payment of the interest of such debt or liability as it falls due, and also to pay and dis- charge the principal of such debt or liability within sev- enty-five years of the time of the contracting thereof, and shall be irrepealable until the principal and interest there- on shall be paid and discharged, and such law may make provision for a sinking fund to pay the principal of such debt or liability to commence at a time after the incurring 948 PUBLIC SECtrBITIBS of such debt or liability of not more than a period of one- fourth of the time of maturity of such debt or liability; but no such law shall take effect until, at a general elec- tion, it shall have been submitted to the people and shall have received a majority of all the votes cast for and against it at such election; and all moneys raised by au- thority of such law shall be applied only to the specific object therein stated, or to the payment of the debt there- by created, and such law shall be published in at least one newspaper in each county, or city and county, if one be published therein, throughout the State, for three months next preceding the election at which it is submitted to the people. The Legislature may at any time after the ap- proval of such law by the people, if no debt shall have been contracted in pursuance thereof, repeal the same.^ In 1901 a law was passed regulating the incurment of indebtedness for public improvements, section 4 of which established the following limit: "No city, town or jnu- nicipal corporation shall incur an indebtedness for public improvements which shall in the aggregate exceed fifteen per cent of the assessed value of the real and personal property of said city, town or municipal corporation. ' ' §473. Colorado. Constitution ratified July 1, 1876. Art. XI, Sec. 1 : Neither the state, nor any county, city, town, township, or school-district shall lend or pledge the credit or faith thereof, directly or indirectly, in any man- ner to, or in aid of, any person, company, or corporation, public or private, for any amount or for any purpose 1 — Pickerdike v. State (Calif.), was made from the current revenues 78 Pac. 270. Stats. 1891, Chap. 198, of the state to pay claims there- creating a coyote bounty of five dol- under, they did not constitute debts lars not in violation of Const. Art. of the state within the constitutional XVI, Sec. 1, and the court further section noted, held that where no appropriation PUBLIC DEBT AND THE POWER OP TAXATION 949 whatever, or become responsible for any debt, contract, or liability of any person, company, or corporation, pub- lic or private, in or out of the State. Art. XI, Sec. 2 : Neither the state, nor any county, city, town, township, or school-district shall make any dona- tion or grant to, or in aid of, or become a subscriber to, or shareholder in, any corporation or company, or joint owner with any person, company or corporation, public or private, in or out of the State, except as to such owner- ship as may accrue to the State by escheat, or by for- feiture, by operation or provision of law; * * * (here follow other exceptions of a similar nature). Art. XI, See. 3 : (As amended, Nov. 9, 1910.) The state shall not contract any debt by loan in any form, except to provide for casual deficiencies of revenue, erect public buildings for the use of the State, suppress insurrection, defend the State, or, in time of war, assist in defending the United States; and the amount of the debt contracted in any one year to provide for deficiencies of revenue, shall not exceed one-fourth of a mill on each dollar of valuation of taxable property within the State, and the aggregate amount of such debt shall not at any time exceed three-fourths of a mill on each dollar of said valuation, until the valuation shall equal one hundred millions of dollars, and thereafter such debt shall not exceed one hundred thousand dollars, and the debt incurred in any one year for erection of public buildings shall not exceed one-half mill on each dollar of said valuation, and the aggregate amount of such debt shall never at any time exceed the sum of fifty thousand dollars (except as provided in section five of this article), and in all cases the valuation in this section mentioned shall be that of the assessment last preceding the crea- tion of said debt. Provided, That, in addition to the amount of debt that may be incurred as above, the state may contract a debt by loan for the purpose of paying the principal and accrued interest of all the outstanding 950 tTJBLIC SBCUElTIfe& warrants issued by this State during and for the years 1887, 1888, 1889, 1892, 1893, 1894 and 1897 ; said debt to be evidenced by registered coupon interest-bearing fund- ing bonds to an amount not exceeding $2,115,000, or so mucb thereof as may be necessary to pay said warrants and interest thereon. Said funding bonds shall be dated December 1, 1910, shall be payable at the option of the. State of Colorado, at any time after ten years from their date, shall be abso- lutely due and payable fifty (50) years after their date and shall be of the denomination of one hundred ($100.00) dollars each or any multiple thereof. The interest on said bonds shall be payable semi-annually at the office of the state treasurer or at some place in the city of New York, U. S. A., and the principal of said bonds shall be payable at the office of the state treasurer. No such bonds shall be issued except at par and ac- crued interest and upon the contemporaneous surrender and cancellation of a like amount of principal and in- terest of said warrants. Said bonds to an amount equaling the principal of such warrants now held by the public school fund shall be registered by the state auditor and state treasurer in the name of and for the benefit of and payable only to the said fund and shall not be transferable. And all such bonds to an amount equaling the interest on said warrants now held in the school fund shall be sold by the state treasurer at not less than par and accrued interest, and the proceeds thereof paid into the school fund and distributed to the several counties and school districts of the state for school purposes in the propor- tions and in the manner required by law. See laws 1909, p. 315, chap. 148, submitting the con- stitutional amendment with the details relative to the is- sue of the bonds authorized. See, also, laws 1911, p. 271, chap. 108, submitting a con- stitutional amendment to be voted for at the next general PUBLIC DEBT AND THE POWEK OP TAXATION 951 election relative to county indebtedness. Const. Art. XI, See. 6. Art. XI, Sec. 4: In no ease shall any debt above men- tioned in this article be created, except by a law which shall be irrepealable until the indebtedness therein pro- vided for shall have been fully paid or discharged; such law shall specify the purposes to which the funds so raised shall be applied, and provide for the levy of a tax sufficient to pay the interest on, and extinguish the prin- cipal of such debt, within the time limited by such law for the payment thereof, which in the case of debts con- tracted for the erection of public buildings and supply- ing deficiencies of revenue, shall not be less than ten nor more than fifteen years, and the funds arising from the collection of any such tax shall not be applied to any other purpose than that provided in the law levying the same ; - and when the debt thereby created shall be paid or discharged, such tax shall cease and the balance, if any, to the credit of the fund, shall immediately be placed to the credit of the general fund of the State. Art. XI, Sec. 5 : A debt for the purpose of erecting pub- lic buildings may be created by law, as provided for in section four of this article, not exceeding in the aggregate three mills on each dollar of said valuation: Provided, That before going into effect such law shall be ratified by the vote of a majority of such qualified electors of the state as shall vote thereon at a general election, under such regulations as the general assembly may prescribe. In Article XI, sections 6, 7, 8 and 9 further provisions are found relative to the incurring of debts and the is- suing of bonds by a subordinate civil subdivision. Coun- ties are prohibited from contracting debts by law in any form except for public buildings, roads and bridges and such indebtedness is limited by and proportioned to the assessed valuation of the county incurring the debt. The aggregate indebtedness of any county for all purposes, exclusive of debts contracted before the adoption of the 952 PUBLIC SECUKITIES Constitution, shall not exceed twice the amount of the limit fixed unless the question incurring such indebted- ness is submitted to and authorized by the qualified tax paying electors. Bonds issued, if any, shall not run less than ten years. School districts cannot incur debt with- out first submitting the proposition to the tax payers. Cities and towns in contracting debts must first make provision for a tax not exceeding twelve mills on each dollar of valuation for the purpose of paying the annual interest and extinguishing the debt in not less than ten years and within fifteen years. No debt can be created unless the question is first submitted to the tax paying electors and the aggregate of the debt must never exceed 3 per cent of the valuation. Debts contracted for sup- plying water are exempt from the limit. § 474. Connecticut. Constitution as Amended and in force Jan. 1, 1906. Art. XXV, adopted as an amendment in 1877, is as fol- lows: No county, city, town, borough or other munic- ipality shall ever subscribe to the capital stock of any railroad corporation, or become the purchaser of the bonds, or make donation to, or loan its credit in aid of, any such corporation ; but nothing herein contained shall affect the validity of any bonds or debts incurred under existing laws, nor be construed to prohibit the General Assembly from authorizing any town or city to protect by additional appropriations of money or credit any railroad debt contracted prior to the adoption of this amendment. Eev. Stats, of 1902, chap 121, sec 1931, provides that "when any town shall have made appropriations or in- curred debts, or shall hereafter make appropriations or incur debts exceeding $10,000, it may issue bonds, either registered or with coupons attached, or other obligations, payable at such times and at such annual rate of interest PUBLIC DEBT AND THE POWER OF TAXATION 953 not exceeding 6 per cent, payable annually or semi-an- nnally, as it shall determine. ' ' §475. Delaware. Constitution adopted June 4, 1897. Art. Vin, Sec. 3: No money shall be borrowed or debt created by or on behalf of the State but pursuant to an Act of the General Assembly, passed with the concur- rence of three-fourths of all the members elected to each House, except to supply casual deficiencies of revenue, repel invasion, suppress insurrection, defend the state in war, or pay existing debts; and any law authorizing the borrowing of money by or on behalf of the state shall specify the purpose for which the money is to be bor- rowed, and the money so borrowed shall be used exclu- sively for such purpose; but should the money so bor- rowed or any part thereof be left after the abandonment of such purpose or the accomplishment thereof, such money, or the surplus thereof, may be disposed of ac- cording to law. Art. VIII, Sec. 4: No appropriation of the public money shall be made to, nor the bonds of this State be issued or loaned to any county, municipality or corpora- tion nor shall the credit of the State, by the guarantee or the endorsement of the bonds or other undertakings of any county, municipality or corporation, be pledged oth- erwise than pursuant to an Act of the General Assembly, passed with the concurrence of three-fourths of all the members elected to each House. Art Vin, Sec. 8: No county, city, town or other mu- nicipality shall lend its credit or appropriate money to, or assume the debt of, or become a shareholder or joint owner in or with any private corporation or any person or company whatever. 954 Public securities §476. Florida. Constitution as framed by Constitutional Conven- tion, Aug. 3, 1885. Art. IX, Sec. 6 : The Legislature shall have power to provide for issuing State bonds only for the purpose of repelling invasion or suppressing insurrection, or for the purpose of redeeming or refunding bonds already issued, at a lower rate of interest. Art. IX, Sec. 7 : No tax shall be levied for the benefit of any chartered company of the State, nor for paying interest on any bonds issued by such chartered compa- nies, or by counties, or by corporations, for the above- mentioned purpose. Art. IX, See. 10 : The credit of the State shall not be pledged or loaned to any individual, company, corpora- tion or association; nor shall the State become a joint owner or stockholder in any company, association or cor- poration. The Legislature shall not authorize any county, city, borough, township or incorporated district to become a stockholder in any company, association or corporation, or to obtain or appropriate money for, or to loan its credit to, any corporation, association, insti- tution or individual. Some additional legislative provisions relative to cit- ies, towns and counties are noted as found in the re- vised statutes of 1906, titles 9 and 10, first division. Section 786 of title 9 provides that counties may issue bonds for highways, buildings and funding purposes, the proposition to issue such bonds, however, must be sub- mitted to and authorized by a majority of the voters. Provision must be made for a sum sufficient to pay the interest and to raise the amount annually required as a sinking fund with which to pay the bonds at maturity. In title 10, cities and towns are prohibited from issuing bonds in excess of 5 per cent of the assessed value of property within their corporate limits. The question of Public DEiBt ajUb the powee of taxation 955 issuing bonds must be submitted to and approved by two- thirds of the registered voters actually voting. It is also necessary to submit to the voters the amount to be issued. Any city, or town may issue bonds i^i excess of the 5 per cent limit for gas or electric plants provided the addi- tional amount does not exceed 7 per cent of the total prop- erty valuation. The maturity of the bonds is fixed at not to exceed thirty years and the interest rate cannot exceed 7 per cent. Authority for the issue of such bonds must be granted by a majority of the votes cast at an annual or special election to be called for this purpose. Pro- vision for the payment of the interest and the establish- ment of a sinking fund with which to pay the bonds issued at maturity is also required. §477. Georgia. Constitution as adopted in 1877. Art. VII, Sec. 3, Par. 1 : No debt shall be contracted by or on behalf of the State, except to supply casual defic- iencies of revenue, to repel invasion, suppress insurrec- tion, and defend the State in time of war, or to pay the existing public debt; but the debt created to supply deficiencies in revenue shall not exceed, in the aggregate, two hundred thousand dollars. Art. VII, Sec. 4, Par. 1 : All laws authorizing the bor- rowing of money by or on behalf of the State shall specify the purposes for which the money is to be used, and the money so obtained shall be used for the purpose specified, and no other. Art. VII, Sec. 5, Par. 1 : The credit of the State shall not be pledged or loaned to any individual, company, corporation or association, and the State shall not be- come a joint owner or stockholder in any company, asso- ciation or corporation. Art. VII, Sec. 6, Par. 1 : The General Assembly shall not authorize any county, municipal corporation or po- 956 PUBLIC SECXJKITIES litieal division of this State to become a stockholder in any company, corporation or association, or to appropri- ate money for, or to loan its credit to any corporation, company, association, institution or individual, except for purely charitable purposes. This restriction shall not operate to prevent the support of schools by municipal corporations within their respective limits: Provided, That if any municipal corporation shall offer to the State any property for locating or building a capitol, and the State accepts such offer, the corporation may comply with such offer. Art. VII, Sec. 7, of the Constitution of 1877 was amend- ed on Oct. 5, 1910, to allow the City of Augusta to incur a bonded debt outside the limit then fixed, for the pur- pose of protection against floods ; it now reads as follows : Par. 1. "The debt hereafter incurred by any county, municipal corporation or political division of this State, except as in this constitution provided for, shall not ex- ceed seven per centum of the assessed value of all taxable property therein, and no such county, municipality or division shall incur any new debt, except for a tempo- rary loan or loans to supply casual deficiencies of reve- nue, not to exceed one-fifth of one per centum of the as- sessed value of taxable property therein, without the assent of two-thirds of the qualified voters thereof, at an election for that purpose, to be held as may be pre- scribed by law; but any city the debt of which does not exceed seven per centum of the assessed value of the tax- able property at the time of the adoption of this Consti- tution may be authorized by law to increase, at any time, the amount of said debt three per centum upon such as- sessed valuation; except that the City Council of Au- gusta, from time to time, as necessary, for the purpose of protection against floods, may incur a bonded indebted- ness upon its power-producing canal and municipal water- works, in addition to the debts hereinbefore in this para- graph allowed to be incurred, to an amount in the ag- PUBLIC DEBT AND THE POWEE OF TAXATION 957 gregate not exceeding fifty per centum of the combined value of such properties, the valuation of such proper- ties to be fixed as may be prescribed by law, but said valuation not to exceed a figure five per cent on which shall represent the net revenue per annum produced by the two such properties together at the time of said valuation, and such indebtedness not to be incurred ex- cept with the assent of "two-thirds of the qualified voters of such city, at an election or elections for that purpose to be held as may be now, or may be hereafter, prescribed by law for the incurring of new debts by said the City Council of Augusta." Par. 2. "County and city bonds, how paid. Any county, municipal corporation or political division of this State which shall incur any bonded indebtedness under the provisions of this Constitution shall, at or before the time of so doing, provide for the assessment and col- lection of an annual tax sufficient in amount to pay the principal and interest of said debt within thirty years from the date of the incurring of said indebtedness." Art. VII, Sec. 8, Par. 1: The State shall not assume the debt, nor any part thereof, of any county, municipal corporation, or political division of the State, unless such debt shall be contracted to enable the State to repel inva- sion, suppress insurrection or defend itself in time of war. Art. VII, Sec. 10, Par. 1 : Municipal corporations shall not incur any debt until provision therefor shall have been made by the municipal government. Art. VII, Sec. 12, Par. 1 : The bonded debt of the State shall never be increased, except to repel invasion, sup- press insurrection, or defend the State in time of war. Art. VII, See. 16, Par. 1 : The General Assembly shall not, by vote, resolution or order, grant any donation, or gratuity, in favor of any person, corporation or asso-* ciation. 958 PUBLIC SECXIBITIES §478, Idaho. Constitution adopted 1889. Art. VII, Sec. 11 : No appropriation shall be made, nor any expenditure authorized by the legislature, whereby the expenditure of the State during any fiscal year shall exceed the total tax then provided for by law, and appli- cable to such appropriation or expenditure, unless the legislature making such appropriation shall provide for levying a sufiicient tax, not exceeding the rates allowed in section nine (9) of this article, to pay such appropria- tion or expenditure within such fiscal year. This pro- vision shall not apply to appropriations or expenditures to suppress insurrection, defend the State, or assist in defending the United States in time of war. Art. VIII, Sec. 1. The legislature shall not in any man- ner create any debt or debts, liability or liabilities, which shall singly or in the aggregate, exclusive of the debt of the territory at the date of its admission as a state, ex- ceed the sum of one and one-half per centum upon the as- sessed value of the taxable property in the State, except in case of war, to repel an invasion or suppress insurrec- tion, unless the same shall be authorized by law for some single obligation or work to be distinctly specified therein, which law shall provide ways and means, exclusive of loans, for the payment of the interest of such debt or liability as it falls due ; and also for the payment and dis- charge of the principal of such debt or liability, within twenty years of the time of the contracting thereof, and shall be irrepealable until the principal and interest thereon shall be paid and discharged; but no such law shall take effect until at a general election it shall have been submitted to the people, and shall have received a majority of all votes cast for and against it at such elec- tion ; and all moneys raised by the authority of such law 'shall be applied only to the specific object therein stated, or to the payment of the debt thereby created, and such PUBLIC DEBT AND THE POWEE OF TAXATION 959 law shall be published in at least one newspaper in each county, or city and county, if one be published therein, throughout the State, for three months next preceding the election at which it is to be submitted to the people. The legislature may, at any time after the approval of such law, by the people, if no debt shall have been contracted in pursuance thereof, repeal the same.^ Art. VIII, Sec. 2 : The credit of the State shall not, in any manner, be given, or loaned to, or in aid of any indi- vidual, association, municipality or corporation ; nor shall the State, directly or indirectly, become a stockholder in any association or corporation. Art. VIII, Sec. 3: No county, city, town, toAvnship, board of education or school district, or other subdi- vision of the state, shall incur any indebtedness, or lia- bility, in any manner, or for any purpose, exceeding in that year the income and revenue provided for it for such year, without the assent of two-thirds of the qualified electors thereof voting at an election to be held for that purpose, nor unless, before or at the time of incurring such indebtedness, provision shall be made for the col- lection of an annual tax sufficient to pay the interest on such indebtedness as it falls due, and also to constitute a sinking fund for the payment of the principal thereof, within twenty years from the time of contracting the same. Any indebtedness or liability incurred contrary to this provision shall be void: Provided, That this sec- tion shall not be construed to apply to the ordinary and 2 — Stein v. Morrison (Ida.), 75 Lewis v. Brady (Ida.), 104 Pae. Pac. 246. Under Const., Airt. VIII, 900. The provisions of Art. VIII, See. 1, appropriations of public reve- Sec. 1, relative to the creation of an/ nue by the legislature in anticipation debt or liability exceeding 1%% of their receipt do not constitute a of the assessed value of taxable debt or liability but operate in the property in the state limits the leg- nature of a cash transaction as au- islature to the assessed valuation at thorized by Art. VII of the Const, re- the time of the passage of any meas- lating to the collection of taxes and ure creating a debt, revenues and the payment of state expenses. 960 PUBLIC SECUBITIES necessary expenses authorized by the general laws of the State. Art. VIII, Sec. 4: No county, city, town, township, board of education, or school district, or other subdivi- sion, shall lend or pledge the credit or faith thereof di- rectly or indirectly, in any manner, to, or in aid of any individual, association or corporation, for any amount or for any purpose whatever, or become responsible for any debt, contract or liability of any individual, asso- ciation or corporation in or out of this State. Art. XII, Sec. 3: The State shall never assume the debts of any county, town, or other municipal corpora- tion, unless Such debts shall have been created to repel invasion, suppress insurrection or defend the State in war. Art. XII, Sec. 4: No county, town, city, or other mu- nicipal corporation, by vote of its citizens or otherwise, shall ever become a stockholder in any joint stock com- pany, corporation or association whatever, or raise money for, or make donation or loan its credit to, or in aid of, any such company or association ; Provided, That cities and towns may contract indebtedness for school, water, sanitary and illuminating purposes : Provided, That any city or town contracting such indebtedness shall own its just proportion of the property thus created, and receive from any income arising therefrom, its pro- portion to the whole amount so invested. §479. Illinois. Constitution in force August 8, 1870. Art. IV, Sec. 18 : * * * Provided, the State may, to meet casual deficits or failures in revenues, contract debts never to exceed in the aggregate $250,000, and moneys thus borrowed shall be applied to the purpose for which they were obtained, or to pay the debt thus created, and to no other purpose; and no other debt PUBLIC DEBT AND THE POWEB OF TAXATION 961 except for the purpose of repelling invasion, suppressing insurrection or defending the state in war (for payment of which tlie faith of the State shall be pledged), shall be contracted, unless the law authorizing the same shall at a general election have been submitted to the people, and have received a majority of the votes cast for members of the General Assembly at such election. The General Assembly shall provide for the publication of said law for three months at least before the vote of the people shall be taken upon the same ; and provision shall be made at the time for the payment of the interest annually as it shall accrue, by a tax levied for the purpose or from other sources of revenue; which law providing for the pay- ment of such interest by such tax shall be irrepealable until such debt be paid ; and. Provided, further, that the law levying the tax shall be submitted to the people with the law authorizing the debt to be contracted. Art. IV, Sec. 20 : The State shall never pay, assume or become responsible for the debts or liabilities of, or in any manner give, loan or extend its credit to or in aid of, any public or other corporation, association or individ- ual. Art. VIII, Sec. 3 : Neither the General Assembly nor any county, city, town, township, school district or other public corporation shall ever make any appropriation, or pay from any public fund whatever, anything in aid of any church or sectarian purpose, or to help support or sustain any school, academy, seminary, college, univer- sity or other literary or scientific institution controlled by any church or sectarian denomination whatever; nor shall any grant or donation of land, money or other per- sonal property ever be made by the State or any such public corporation to any church or for any sectarian purpose. Art. IX, Sec. 12: No county, city, township, school district or other municipal corporation shall be allowed to become indebted in any manner or for any purpose 962 PUBLIC SECUEITIES to an amount, including existing indebtedness, in the ag- gregate exceeding 5 per cent on the value of the taxable property therein, to be ascertained by the last assessment for State and county taxes, previous to the incurring of such indebtedness. Any county, city, school district or other municipal corporation incurring any indebtedness as aforesaid shall, before or at the time of doing so, pro- vide for the collection of a direct annual tax sufficient to pay the interest on such debt as it falls due, and also to pay and discharge the principal thereof within twenty years from the time of contracting the same. This sec- tion shall not be construed to prevent any county, city, township, school district or other municipal corporation from issuing their bonds in compliance with any vote of the people which may have been had prior to the adoption of this Constitution in pursuance of any law providing therefor. On November 4, 1890, there was added to Art. VIII. of the Constitution, Sec. 13, which authorized the city of Chicago to issue World's Columbian Exposition Bonds. The following sections with others were separately submitted to a vote of the people and went into effect as law, July 2, 1870 : MtTisriciPAL Stjbsceiptions to Eailkoads oe Peivate Coe- poEATioNs: No county, city, town, township or other municipality shall ever become subscriber to the capital stock of any railroad or private corporation, or make donation to or loan its credit in aid of such corporation, Provided, however, that the adoption of this Article shall not be construed as affecting the right of any such munic- ipality to make such subscriptions where the same have been authorized, under existing laws, by a vote of the people of such municipalities prior to such adoption. Canal: * * * The General Assembly shall never loan the credit of the state or make appropriations from the treasury thereof in aid of railroads or canals. * * * PUBLIC DEBT AND THE POWEB OF TAXATION 963 §480. ludiaua. Constitution as adopted in 1851 with Amendments. Art. X, Sec. 5 : No law shall authorize any debt to be contracted, on behalf of the State, except in the following cases : To meet casual deficits in the revenue ; to pay the interest on the State debt; to repel invasion, suppress insurrection, or, if hostilities be threatened, provide for public defense. ^ Art. X, Sec. 6 : No county shall subscribe for stock in any incorporated company, unless the same be paid for at the time of such subscriptions; nor shall any county loan its credit to any incorporated company, nor borrow money for the purpose of taking stock in any such com- pany ; nor shall the General Assembly ever, on behalf of the State, assume the debts of any county, city, town or township, nor of any corporation whatever. March 24, 1881, the original of Art. XIII, of the Con- stitution was stricken out and the following adopted in lieu thereof : Art. XIII, Sec. 1 : No political or municipal corpora- tion in this State shall ever become indebted in any man- ner or for any purpose to an amount in the aggregate exceeding 2 per cent on the valuation of the taxable prop- erty within such corporation, to be ascertained by the last assessment for State and county taxes previous to the incurring of such indebtedness ; and all bonds or obliga- tions in excess of such amount given by such corpora- tion shall be void ; Provided, That in time of war, foreign invasion or other great public calamity, on petition of a majority of the property owners in number and value, within the limits of such corporation, the public authori- 3 — The liquidation of an obliga- issue of state bonds under Act 1907, tion acknowledged to be justly owing Chap. 244, compromising and ad- for past considerations is not "con- justing a debt to Vincennes Univer- tracting a debt" within Const., Art. sity. Hanley v. Sims, 175 Ind. 345. X, Sec. 5, so held in respect to the 964 PUBLIC SECTJEITIES ties in their discretion may incur obligations necessary for the public protection and defense to such an amount as may be requested in such petition. Several laws have been enacted since the foregoing constitutional limit was adopted and bonds have been issued by counties thereunder beyond the two per cent limit for the construction of ' ' free gravel, stone or other macadamized roads." In the case of Strieb v. Cox,* the Supreme Court of the State held that gravel road bonds are not properly an indebtedness of a county and therefore did not come within the inhibition of Art. XIII, Sec. 1. §481. Iowa. Constitution adopted 1857. Art. VII, Sec. 1: The credit of the State shall not in any manner be given or loaned to, or in aid of, any indi- vidual, association or corporation; and the State shall never assume or become responsible for the debts or liabilities of any individual, association or corporation, unless incurred in time of war for the benefit of the State. Art. VII, Sec. 2 : The State may contract debts to sup- ply casual deficits or failures in revenues, or to meet expenses otherwise provided for;' but the aggregate amount of such debts, direct and contingent, whether contracted by virtue of one or more Acts of the General Assembly or at different periods of time, shall never exceed the sum of $250,000 ; and the money arising from the creation of such debts shall be applied to the pur- pose for which it was obtained, or to repay the debts so contracted, and to no other purpose whatever. Art. VII, Sec. 3: All the losses to the Permanent, School, or University fund of this State, which shall have 4—111 Ind. 299, 12 N. B. 481. PUBLIC DEBT AND THE POWEE OF TAXATION 965 been occasioned by the defalcation, mismanagement, or fraud of the agents or officers controlling and managing the same, shall be audited by the proper authorities of the State. The amount so audited shall be a permanent funded debt against the State, in favor of the respective fund, sustaining the loss, upon which not less than six per cent annual interest shall be paid. The amount of the liability so created shall not be counted as a part of the indebtedness authorized by the second section of this article. Art. VII, Sec. 4: In addition to the above limited power to contract debts, the State may contract debts to repel invasion, suppress insurrection, or defend the the State in war; but the money arising from the debts so contracted shall be applied for the purpose for which it was raised, or to repay such debts, and. to no other purpose whatever. Art. VII, Sec. 5 : Except the debts hereinbefore speci- fied in this article, no debt shall be hereafter contracted by or on behalf of this State, unless such debt shall be authorized by some law for some single work or object, to be distinctly specified therein; and such law shall impose and provide for the collection of a direct annual tax sufficient to pay the interest on such debt as it falls due, and also to pay and discharge the principal of such debt> within twenty years from the time of contracting thereof; but no such law shall take effect until at a gen-, eral election it shall have been submitted to the people,' and have received a majority of all the votes cast for and against it at such .election; and all money raised by authority of such law shall be applied only to the specific object therein stated, or to the payment of the debt created thereby; and such law shall be published in at least one newspaper in each county, if one is published therein, throughout the State for three months preced- ing the election at which it is submitted to the people. Art. VII, Sec. 6: The Legislature may, at any time, 966 PUBLIC SECUEITIES after the approval of sucli law by the people, if no debt shall have been contracted in pursuance thereof, repeal the same; and may, at any time, forbid the contracting of any further debt, or liabihty, under such law ; but the tax imposed by such law, in proportion to the debt or liability, which may have been contracted in pursuance thereof, shall remain in force and be irrepealable, and be annually collected, until the principal and interest are fully paid. Art. VIII, Sec. 3 : The State shall not become a stock- holder in any corporation, nor shall it assume or pay the debt or liability of any corporation, unless incurred in time of war for the benefit of the State. Art. VIII, Sec. 4: No political or municipal corpora- tion shall become a stockholder in any banking corpora- tion, directly or indirectly. Art. XI, Sec. 3 : No county or other political or munic- ipal corporation shall be allowed to become indebted in any manner, or for any purpose, to an amount in the aggregate exceeding 5 per cent on the value of the taxable property within such county or corporation — to be ascer- tained by the last State and countj^ tax list previous to the incurring of such indebtedness. In 1900, the legislature of Iowa passed a bill, chapter 41, fixing the limit of indebtedness of cdunties and other political subdivisions at one and one-quarter per cent of the actual value of the property therein as rated by the last tax list. This change was made necessary under a revision of the revenue law which went into effect in 1898 by which property was appraised for taxation on a much higher basis than formerly. This act was amended in 1904 and again in 1906, the important sections are as fol- lows : Section 1 : That section thirteen hundred and six-b (1306-b) of the supplement to the code and chapter forty-three (43) of the Acts of the 30th General Assem- bly be and the same are hereby repealed, and the follow- ing enacted in lieu thereof : PUBLIC DEBT AND THE POWEB OP TAXATION 967 "No county or other political or municipal corporation shall be allowed to become indebted in any manner or for any purpose to an ajnount exceeding in the aggregate the amount of one and one-fourth per centum of the actual value of the taxable property within such county or cor- poration, except that cities and incorporated towns may, for the purpose of purchasing, erecting or maintaining and operating waterworks, electric light and power plants, gas works and heating plants, or of .building and constructing sewers, incur an indebtedness not exceeding in the aggregate, added to all other indebtedness, five per centum of the actual value of the taxable property within such city or incorporated town. The amount of such taxable property shall be ascertained by the last State and county tax list previous to the incurring of such indebtedness. "Section 2: Provided, That before such indebtedness can be contracted in excess of one and one-quarter per centum of the actual value of the taxable property ascer- tained as above provided in this Act, a petition signed by a majority of the qualified electors of such city or town shall be filed with the Council of such city or town, ask- ing that an election shall be called, stating the purpose for which the money is to be used and that the necessary waterworks, electric light and power plants, gas works, heating plants or sewers, cannot be purchased, erected, built or furnished within the limit of one and one-quarter per centum of the valuation. And Provided, That in cities having a population of more than ten thousand, the petition need not be signed by more than two hundred qualified electors. §482. Kansas. Constitution ratified October 4, 1851, with subsequent amendments. Art. XI, Sec. 5 : For the purpose of defraying extraor- dinary expenses and making public improvements, the 968 PUBLIC SECUKITIES State may contract public debts; but such debts shall never, in the aggregate, exceed $1,000,000, except as hereinafter provided. Every such debt shall be author- ized by law for some purpose specified therein, and the vote of a majority of all the members elected to each House, to be taken by the yeas and nays, shall be neces- sary to the passage of such law ; and every such law shall provide for levying an annual tax sufficient to pay the annual interest of such debt and the principal thereof when it shall become due; and shall specifically appro- priate the proceeds of such taxes to the payment of such principal and interest; and such appropriation shall not be repealed nor the taxes postponed or diminished until the interest and principal of such debt shall have been wholly paid. Art. XI, Sec. 6: No debt shall be contracted by the State except as herein provided, unless the proposed law for creating such debt shall first be submitted to a direct vote of the electors of the State at some general election ; and if such proposed law shall be ratified by a majority of all the votes cast at such general election, then it shall be the duty of the Legislature next after such election to enact such law and create such debt, subject to all the provisions and restrictions provided in the preceding section of this article. Art. XI, Sec. 7 : The State may borrow money to repel invasion, suppress insurrection or defend the State in time of war ; but the money thus raised shall be applied exclusively to the object for which the loan was author- ized, or to the repayment of the debt thereby created. Art. XI, Sec. 8: The State shall never be a party in carrying on any works of internal improvement. As will be noted, no provision is made in the Consti- tution restricting municipal indebtedness but the power is delegated to the Legislature by Art. XII, Sec. 5 : Pro- vision shall be made by general law for the organization of cities, towns and villages; and their power of tax- « PUBLIC DEBT AND THE POWEE OP TAXATION 969 ation, assessment, borrowing money, contracting debts and loaning their credit shall be so restricted as to pre- vent the abuse of such power. §483. Kentucky. Constitution adopted September 28, 1891. Sec. 49 : The Greneral Assembly may contract debts to meet casual deficits or failures in the revenue ; but such debts, direct or contingent, singly or in the aggregate, shall not at any time exceed five hundred thousand dol- lars, and the moneys arising fi;om loans creating such debts shall be applied only to the purpose or purposes for which they were obtained, or to repay such debts : Provided, The General Assembly may contract debts to repel invasion, suppress insurrection, or, if hostilities are threatened, provide for the public defense. Sec. 50 : No Act of the General Assembly shall author- ize any debt to be contracted on behalf of the Common- wealth except for the purposes mentioned in Section 49 unless provision be made therein to levy and collect an annual tax sufficient to pay the interest stipulated, and to discharge the debt within thirty years; nor shall such Act take effect until it shall have been submitted to the people at a general election and shall have received a majority of all the votes cast for and against it: Pro- vided, The General Assembly may contract debts by bor- rowing money to pay any part of the debt of the State without submission to the people and without making provision in the Act authorizing the same for a tax to discharge the debt so contracted or the interest thereon.^ Sec. 156 provides for the organization of the cities and 5 — James v. State University with reference to Const., Sees. 49 (Ky.), 114 S. W. 767. Construing and 50, prohibiting the legislature the legality of an appropriation for from contracting debts in excess of public buildings to be paid in three the amounts therein named, equal sums for three successive years t 970 PUBLIC SECUBITIES towns of the Commonwealth into classes based upon population, those of the same class to possess the same powers and be subject to the same restrictions. Sec. 157 : The tax rate of cities, towns, counties, tax- ing districts and other municipalities, for other than school purposes, shall not, at any time, exceed the follow- ing rates upon the value of the taxable property therein, viz. : For all towns or cities having a population of fif- teen thousand or more, one dollar and fifty cents on the hundred dollars ; for all towns or cities having less than fifteen thousand and not less than ten thousand, one dollar on the hundred dollars ; for all towns or cities having less than ten thousand, seventy-five cents on the hundred dollars ; and for counties and taxing districts fifty cents on the hundred dollars; unless it should be necessary to enable such city, town, county, or taxing district to pay the interest on, and provide a sinking fund for the extinction of indebtedness created before the adoption of this constitution. No county, city, town, taxing dis- trict, or other municipality, shall be authorized or per- mitted to become indebted, in any manner or for any pur- pose, to an amount exceeding in any year, the income and revenue provided for such year, without the assent of two- thirds of the voters thereof, voting at an election to be held for that purpose; and any indebtedness contracted in violation of this section shall be void. Nor shall such contract be enforceable by the person with whom made ; nor shall such municipality ever be authorized to assume the same. Sec. 158: The respective cities, towns, counties, tax- ing districts, and municipalities shall not be authorized or permitted to incur indebtedness to an amount, in- cluding existing indebtedness, in the aggregate exceed- ing the following named maximum percentages on the value of the taxable property therein to be estimated by the assessment next before the last assessment previous to the incurring of the indebtedness, viz: Cities of the PUBLIC DEBT AND THE POWER OF TAXATION 971 first and second classes, and of the third class having a population exceeding fifteen thousand, ten per centum; cities of the third class having a population of less than fifteen thousand, and cities and towns of the fourth class, five per centum; cities and towns of the fifth and sixth classes, three per centum, and counties, taxing districts, and other municipalities, two per centum: Provided, Any city, town, county, taxing district or other munic- ipality may contract an indebtedness in excess of such limitations when the same has been authorized under laws in force prior to the adoption of this constitution, or when necessary for the completion of and payment for a public improvement undertaken and not completed 'and paid for at the time of the adoption of this constitution : Aud, Provided further. If, at the time of the adop- tion of this constitution, the aggregate indebtedness, bonded or floating, of any city, town, county, taxing dis- trict or other municipality, including that which it has been or may be authorized to contract as herein provided, shall exceed the limit herein prescribed, then no such city or town shall be authorized or permitted to increase its indebtedness in an amount exceeding two per centum, and no such county, taxing district or other municipal- ity, in an amount exceeding one per centum, in the aggre- gate upon the value of the taxable property therein, to be ascertained as herein provided, until the aggregate of its indebtedness shall have been reduced below the limit herein fixed, and thereafter it shall not exceed the limit, unless in case of emergency, the public health or safety should so require. Nothing herein shall prevent the issue of renewal bonds, or bonds to fund the floating indebtedness of any city, town, county, taxing district or other municipality. Sec. 159: Whenever any county, city, town, taxing district or other municipality is authorized to contract an indebtedness, it shall be required, at the same time, to provide for the collection of an annual tax sufficient to 972 tUBLiC SECUBITIES pay the interest on said indebtedness, and to create a sinking fund for the payment of the principal thereof, within not more than forty years from the time of con- tracting the same. Sec. 176: The Commonwealth shall not asume the debt of any county, municipal corporation or political subdivision of the State, unless such debt shall have been contracted to defend itself in time of war, to repel inva- sion or to suppress insurrection. Sec. 177: The credit of the Commonwealth shall not be given, pledged or loaned, to any individual, company, corporation, association, municipality, or political sub- division of the State; nor shall the Commonwealth be- come an owner or stockholder in, nor make donation to, any company, association or corporation; nor shall the Commonwealth construct a railroad or other highway. Sec. 179: The General Assembly shall not authorize any county or subdivision thereof, city, town, or incor- porated district, to become a stockholder in any com- pany, association or corporation, or to obtain or ap- propriate money for, or to loan its credit to, any corpora- tion, association or individual, except for the purpose of constructing or maintaining bridges, turnpike roads, or gravel roads; Provided, If any municipal corporation shall offer to the Commonwealth any property or money for locating or building a Capitol, and the Common- wealth accepts such offer, the corporation may comply with the offer. § 484. Louisiana. Constitution adopted in 1898. Art. 46: The General Assembly shall have no power to contract, or to authorize the contracting, of any debt or liability, on behalf of the State; or to issue bonds or other evidence of indebtedness thereof, except for the PUBLIC DEBT AND THE POWEE OF TAXATION 973 purpose of repelling invasion, or for the suppression of insurrection.® Art. 58: The funds, credit, property or things of value of the State, or of any pohtical corporation there- of, shall not be loaned, pledged or granted to or for any person or persons, association or corporation, public or private ; nor shall the State, nor any political corporation purchase or subscribe to the capital or stock of any cor- poration or association whatever, for any private enter- prise. Nor shall the State, nor any political corporation thereof, assume the liabilities of any political, municipal, parochial, private or other corporation or association whatsoever ; nor shall the State undertake to carry on the business of any such corporation or association, or be- come a part owner therein ; * * * (here follows cer- tain exceptions). Art. 270: The General Assembly shall have power to enact geheral laws authorizing the parochial, ward and municipal authorities of the State by a vote of the majority of the property tax-payers in number entitled to vote under the provisions of this Constitution and in value, to levy special taxes in aid of public improvements or railway enterprises ; Provided, That such tax shall not exceed the rate of five mills per annum, nor extend for a longer period than ten years ; and Provided further. That no taxpayer shall be permitted to vote at such election unless he shall have been assessed in the parish, ward or municipahty to be affected for property the year pre- vious. Art. 281: Relating to the power of cities, parishes, etc., to incur iudebtedness and issue bonds was amended 6 — See, as determining the valid- La. Ann., Pt. 1, 443; State v. Nich- ity of bonds issued under the sup- ols, 30 La. Ann., Pt. 2, 980, 1217; plemental funding act of 1875. Cecil Forstall v. Board of Liquidation, 30 V. Board of Liquidation, 30 La. Ann. La. Ann., Pt. 2, 1151 and Charles v. Pt. 1, 34; construing the Louisiana Board of Liquidation, 41 La. Ann, Funding Acts of 1874 and 1875. 240, 5 So. 125. Hamlin v. Board of Liquidation, 30 974 PUBLIC SECURITIES in 1904, 1906, 1908 and again in 1910. As amended in 1910 it is found on pages 332 et seq. of Acts of Louisiana, 1910, regular and extra sessions. The article as amended is lengthy and specific in its details. It provides in sub- stance that municipal corporations, parishes, or school, drainage, subdrainage, road, navigation or sewerage dis- tricts except the city of New Orleans, may incur indebt- edness and issue bonds under the conditions prescribed. A majority vote is required and provision made for the levy of taxes to pay the indebtedness not exceeding ten mills. Power is given to incur indebtedness and issue bonds for constructing, improving and maintaining pub- lic roads and highways, paving and improving streets, roads and alleys, purchasing, or constructing systems of water works, sewerage, drains, navigation, lights, public parks and buildings, together with all the necessary equipment and furnishings, bridges and other works of public improvements. Bonds so issued shall not run a greater length of time than forty years, to be sold at not less than par and to bear not more than five per cent interest. The total issue by any subdivision for all pur- poses not to exceed ten per cent of the assessed valu- ation. Sewerage and drainage districts may be created and authority is given to levy an acreage tax not to exceed fifty cents per acre for the payment of bonds issued which when authorized by vote shall not extend beyond forty years, bearing a greater rate of interest than five per cent and be sold at not less than par. Pro- vision is also made for the issue of drainage bonds under certain conditions on petition of the majority of land owners affected. Provision is to be made for a sinking fund by an acreage tax not exceeding $3.50 per acre. Bonds so issued shall not run longer than forty years, not to exceed five per cent interest and be sold at not less than par. Police juries and municipal authorities also have authority to issue bonds for public improve- ments to bear not more than five per cent interest, not to PUBLIC DEBT AND THE POWER OF TAXATION 975 be sold for less than par and to extend not more than ten years. In 1906, 1908 and 1910, various amendments were adopted especially authorizing the state to issue refund- ing bonds and New Orleans and other cities to incur the indebtedness in the amendment designated. §485. Maine. Constitution of 1819. Art. IX, Sec. 14 : The credit of the State shall not be directly or indirectly loaned in any case. The Legis- lature shall not create any debt or debts, liability or liabilities, on behalf of the State, which shall singly or in the aggregate, with previous debts and liabilities here- after incurred, at any one time exceed $300,000, except to suppress insurrection, to repel invasion, or for pur- poses of war ; but this amendment shall not be construed to refer to any money that has been, or may be, deposited with this State by the Grovernment of the United States, or to any fund to which the State shall hold in trust for any Indian tribe. Art. IX. Sec. 15: The State is authorized to issue bonds payable within twenty-one years, at a rate of interest not exceeding six per cent, a year, payable semi- annually, which bonds or their proceeds shall be devoted solely towards the reimbursement of the expenditures incurred by the cities, towns and plantations of the state for war purposes during the rebellion, upon the following basis: Each city, town and plantation shall receive from the state one hundred dollars for every man furnished for the military service of the United States under and after the call of July second, eighteen hundred and sixty-two, and accepted by the United States, towards its quota for the term of three years, and in the same proposition for every man so furnished and accepted for any shorter period; and the same shall be 976 PUBLIC SECUBITIES in full payment for any claim upon the state on account of its war debts by any such municipality. A commission appointed by the Governor and Council shall determine the amount to which each city, town and plantation is entitled, to be devoted to such reimbursement, the sur- plus, if any, to be appropriated to the soldiers who enlisted or were drafted and went at any time during the war, or if deceased, to their legal representatives. The issue of bonds hereby authorized shall not exceed in the aggregate three million five hundred thousand dollars, and this amendment shall not be construed to permit the credit of the state to be directly or indirectly loaned in any other case or for any other purpose. In 1877, the 22nd amendment to the Constitution of Maine, relative to municipal indebtedness was adopted and subsequently at an election held September 11, 1911, the voters adopted an amendment to this amendment in- creasing the debt limit of cities of 40,000 or more from five per cent to seven and one-half per cent of the assessed valuation. Art. XXII as now in force is as follows: No city or town having less than four thousand inhabitants, accord- ing to the last Census taken by the United States, shall hereafter create any debt or liability which singly or in the aggregate, with previous debts or liabilities, shall exceed five per centum of the last regular valuation of said city or town, provided however, that cities having a population of forty thousand or more, according to the last Census taken by the United States, may create a debt or liability which, singly or in the aggregate, with previous debts or liabilities, shall equal seven and one- half per centum of the last regular valuation of said city, that cities of forty thousand inhabitants, or over, may, by a vote of their city government, increase the present rate of five per centum by one-fourth of one per centum in any one municipal year, until, in not less than ten years, the maximum rate of seven and one-half per PUBLIC DEBT AND THE POWEE OF TAXATION 977 centum is reached, that any city failing to take the increase in any one municipal year, then the increase for that year is lost and no increase can be made until the next year, as provided above ; and provided, further, that the adoption of this article shall not be construed as applying to any fund received in trust by the said city or town, nor to any town for the purpose of renewing exist- ing loans or for war; or to temporary loans to be paid out of money raised by taxation during the year in which they were made. §486. Maryland. Constitution as ratified Sept. 18, 1867. Art. Ill, Sec. 34: No debt shall be hereafter con- tracted by the General Assembly unless such debt shall be authorized by a law providing for the collection of an annual tax or taxes sufficient to the interest on such debt as it falls due, and also to discharge the principal thereof within fifteen years from the time of contracting the same; and the taxes laid for this purpose shall not be repealed or applied to any other object until the said debt and interest thereon shall be fully discharged. The credit of the State shall not in any manner be given, or loaned to, or in aid of any individual, association or cor- poration ; nor shall the General Assembly have the power in any mode to involve the State in the construction of Works of Internal Improvement, nor in granting any aid thereto, which shall involve the faith or credit of the State ; nor make any appropriation therefor except in aid of the construction of Works of Internal Improvement in the counties of St. Mary's, Charles and Calvert, which have had no direct advantage from such Works as have been heretofore aided by the State; and provided that such aid, advances or appropriations shall not exceed in the aggregate the sum of five hundred thousand dol- lars. * * * p. S.— 62 978 PUBLIC SECURITIES Art. Ill, Sec. 54: No county of this State shall con- tract any debt, or obligation, in the construction of any Eailroad, Canal, or other Work of Internal Improve- ment, nor give, or loan its credit to or in aid of any asso- ciation, or corporation, unless authorized by an Act of the General Assembly, which shall be published for two months before the next election for members of the House of Delegates in the newspapers published in such county, and shall also be approved by a majority of all the members elected to each House of the General As- sembly, at its next session after said election. In Art. XI, Sec. 7 of the Constitution, will be found certain special provisions relative to the incurring of debt by the city of Baltimore. §487. Massachusetts. Constitution of 1780, as amended from time to time. There seems to be no provision in the Constitution of Massachusetts limiting the power of the legislature to create state indebtedness or limiting its power to author- ize municipal indebtedness. Statutes general and special have been passed on this subject with respect to cities and towns. The provisions will be found incorporated in Revised Statutes, 1902, Chapter 27. §488. Michigan. Constitution as approved Nov. 3, 1908. Art. X, Sec. 10 : The State may contract debts to meet deficits in revenue, but such debts shall not in the aggre- gate at any one time exceed two hundred and fifty thou- sand dollars. The State may also contract debts to repel invasion, suppress insurrection, defend the State or aid the United States in time of war. The money so raised shall be applied to the purposes for which it is raised or to the payment of the debts contracted. PTJBLIC DEBT AND THE POWEB OP TAXATION 979 Art. X, Sec. 11 : No scrip, certificate or other evidence of State indebtedness shall be issued except for such debts as are expressly authorized in the Constitution. Art. X, Sec. 12 : The credit of the State shall not be granted to or in aid of any persons, association or cor- poration, public or private. Art. X, Sec. 13 : The State shall not subscribe to nor be interested in the stock of any company, association or corporation. Art. X, Sec. 14 : The State shall not be a party to, nor interested in any work of internal improvement, nor en- gage in carrying on any such work except in the improve- ment of, or aiding in the improvement of public wagon roads, in the re-f orestation and protection of lands owned by the State and in the expenditure of grants to the State of land or other property. Art. VIII, Sec. 12 : No county shall incur any indebt- edness which shall increase its total debt beyond three per cent of its assessed valuation except counties having an assessed valuation of five million dollars or less, which counties may increase their total debt to five per cent of their assessed valuation (as amended in 1910). Cities and villages are left by the 1908 Constitution to the discretion of the Legislature in the matter of restric- tions on their borrowing power. The provision which re- lates to this subject is found in Art. 8, Sec. 20, and is as follows : The Legislature shall provide by a general law for the incorporation of cities and by a general law for the in- corporation of villages ; such general laws shall limit their rate of taxation for municipal purposes and restrict their powers of borrowing money and contracting debts. §489. Minnesota. Constitution as adopted in 1857, with amendments. Art. IX, Sec. 5 : For the purpose of defraying extra- ordinary expenditures, the State may contract public 980 PUBLIC SECUEITIES debts, but such debts shall never, in the aggregate, exceed two hundred and fifty thousand dollars ; every such debt shall be authorized by law for some single object, to be distinctly specified therein; and no such law shall take effect until it shall have been passed by the vote of two- thirds of the members of each branch of the Legislature, to be recorded by the yeas and nays on the journals of each House, respectively ; and every such law shall levy a tax annually sufficient to pay the annual interest on such debt, and also a tax sufficient to pay the principal of such debt within ten years from the final passage of such law, and shall specially appropriate the proceeds of such taxes to the payment of such principal and interest; and such appropriation and taxes shall not be repealed, postponed, or diminished, until the principal and interest of such debt shall have been wholly paid. The State shall never contract any debts for works of internal improvements, or be a party in carrying on such works, except in cases where grants of land or other property shall have been made to the State, especially dedicated by the grant to specific purposes, and in such cases the State shall devote thereto the avails of such grants, and may pledge or ap- propriate the revenues derived from such works in aid of their completion/ Art. IX, Sec. 6 : All debts authorized by the preceding section shall be contracted by loan on State bonds of amounts not less than five hundred dollars each on in- terest, payable within ten years after the final passage of the law authorizing such debt; and such bonds shall not be sold by the State under par. A correct registry of all 7 — Brown v. Bingdahl (Minn.), able out of a special fund and are to 122 N. W. 469. The certificates of be regarded only as evidences of indebtedness authorized by general the right of the holder to demand laws 1909, Chap. 27, Sec. 2, for the and receive from the state treasury construction of a new state's prison the proceeds of the tax authorized do not create a general debt or ob- by that act to be levied and coUected ligation of the state contrary to for the "prison building fund." Const., Art. IX, Sec. 5, but are pay- , , - , ^ PUBLIC DEBT AND THE tOWfiE OF TAXATION 981 such bonds shall be kept by the treasurer, in numerical order, so as always to exhibit the number and amount unpaid, and to whom severally made payable. Art. IX, Sec. 7 : The State shall never contract any public debt, unless in time of war, to repel invasion or suppress insurrection, except in the cases and in the man- ner provided in the fifth and sixth sections of this article. Art. IX, Sec. 8: The money arising from any loan made, or debt or liability contracted, shall be applied to the object specified in the Act authorizing such debt or liability, or to the repayment of such debt or liability, and to no other purpose whatever. Art. IX, Sec. 10 : The credit of the State shall never be given or loaned in aid of any individual, association or corporation. *^ * * (Here follow provisions rela- tive to Minnesota State Railroad Bonds.) Art. IX, Sec. 14a: For the purpose of erecting and completing buildings for a hospital for the insane, a deaf, dumb and blind asylum, and State prison, the Legislature may, by law, increase the public debt of the State, to an amount not exceeding two hundred and fifty thousand dol- lars, in addition to the public debt already heretofore au- thorized by the Constitution, and for that purpose may provide by law for issuing and negotiating the bonds of the State, and appropriate the money only for the pur- pose aforesaid, which bonds shall be payable in not less than ten nor more than thirty years from the date of the same, at the option of the State. (Adopted Nov. 5, 1872.) Art. IX, Sec. 15 : The Legislature shall not authorize any county, township, city or other municipal corpora- tion to issue bonds, or to become indebted in any man- ner, to aid in the construction or equipment of any or all railroads to an amount that shall exceed five per centum of the value of the taxable property within such county, township, city, or other municipal corporation; the amount of such taxable property to be ascertained and determined by the last assessment of said property made, 982 PUBLIC SECUEITiES for the purpose of State and county taxation, previous to the incurring of such indebtedness. (Adopted March 4, 1879.) Prior to this amendment the percentage was ten instead of five. §490. Mississippi. Constitution adopted Nov. 1, 1890. Art. IV, Sec. 66: No law granting a donation or gratuity in favor of any person or object shall be enacted except by the concurrence of two-thirds of each branch of the Legislature nor by any vote for sectarian purpose or use. Art. IV, Sec. 80 : Provisions shall be made by general laws to prevent the abuse by cities, towns and other mu- nicipal corporations of their powers of assessment, taxa- tion, borrowing money and contracting debts. Pursuant to the above constitutional provision there was passed in 1910 (Chapter 142, Laws of 1910) an act which fixed a limit upon the debt which might be incurred by municipalities allowing cities having a population of 10,000 or more to become indebted for the purpose of im- proving streets or acquiring water works, gas or electric plants up to fifteen per cent of their assessed valuation. This law also provided that bonds issued for the construc- tion of provision of water works, gas or electric plants made might be secured through a pledge of the revenue of such plants. Art. VII, Sec. 183 : No county, city, town or other mu- nicipal corporation shall hereafter become a subscriber to the capital stock of any railroad or other corporation or association, or make appropriation, or loan its credit in aid of such corporation or association. All authority heretofore conferred for any of the purposes aforesaid by the legislature or by the charter of any corporation, is hereby repealed. Nothing in this section contained shall effect the right of any such corporation, municipality or PUBLIC DEBT AND THE POWER OF TAXATION 983 county to make such subscription where the same has been authorized under laws existing at the time of the adoption of this constitution, and by a vote of the people thereof, had prior to its adoption, and where the terms of submission and subscription have been or shall be com- plied with, or to prevent the issue of renewal bonds, or the use of such other means as are or may be prescribed by law for the payment or liquidation of such subscrip- tion, or of any existing indebtedness. Art. XIV, Sec. 258 : The credit of the State shall not be pledged or loaned in aid of any person, association or corporation ; and the State shall not become a stockholder in any corporation or association, nor assume, redeem, secure or pay any indebtedness or pretended indebted- ness alleged to be due by the State of Mississippi, to any person, association or corporation whatsoever, claiming the same as owners, holders or assignees of any bond or bonds, now generally known as "Union Bank" bonds and "Planters' Bank" bonds. §491. Missouri. Constitution effective Nov. 30, 1875, with amend- ments. Art. IV, Sec. 44 : The General Assembly shall have no power to contract or to authorize the contracting of any debt or liability on behalf of the state, or to issue bonds or other evidences of indebtedness thereof, except in the following cases : First, In renewal of existing bonds, when they cannot be paid at maturity, out of the sinking fund or other resources. Second, On the occurring of an unforeseen emergency, or casual deficiency of the revenue, when the temporary liability incurred, upon the recommendation of the gov- ernor first had, shall not exceed the sum of two hundred 984 PUBLIC SECURITIES and fifty thousand dollars for any one year, to be paid in not more than two years from and after its creation. Third, On the occurring of any unforeseen emergency, or casual deficiency of the revenue, when the temporary liability incurred or to be incurred shall exceed the sum of two hundred and fifty thousand dollars for any one year, the General Assembly may submit an act providing for the loan, or for the contracting of the liability, and containing a provision for levying a tax sufficient to pay the interest and principal when they become due (the lat- ter in not more than thirteen years' from the date of its creation), to the qualified voters of the state, and when the act so submitted shall have been ratified by a two- thirds majority, at an election held for that purpose, due publication having been made of the provisions of the act for at least three months before such election, the act thus ratified shall be irrepealable until the debt thereby incurred shall be paid, principal and interest. Art. IV, Sec. 45 : The General Assembly shall have no power to give or to lend, or to authorize the giving or lending of the credit of the State in aid of or to any per- son, association or corporation, whether municipal or other, or to pledge the credit of the State in any man- ner whatsoever, for the payment of the liabilities, pres- ent or prospective, of any individual, association or in- dividuals, municipal or other corporation whatsoever. This was amended in 1900 by the addition of the fol- lowing: "Provided, that the General Assembly shall have the power to appropriate from funds in the state sinking fund, being the proceeds of the tax authorized un- der section 14 of article X of the Constitution, to an amount not exceeding one million dollars for the exhibi- tion of the resources, products and industries of the state in the centennial celebration of the Louisiana purchase in the city of St. Louis." Art. IV, Sec. 46 : The General Assembly shall have no power to make any grant or to authorize the making of PUBLIC DEBT AND THE POWER OF TAXATION 985 any grant of public money or tiling of value to any in- dividual, association of individuals, municipal or other corporation whatsoever : Provided, that this shall not be so construed as to prevent the grant of aid in a case of public calamity. Art. IV, Sec. 47: The General Assembly shall have no power to authorize any county, city, town or town- ship, or other political corporation or subdivision of the State now existing, or that may be hereafter established, to lend its credit or to grant public money or thing- of value in aid of or to any individual, association or cor- poration whatsoever, or to become a stockholder in such corporation, association or company. This section was amended in 1902 by adding an excep- tion relative to pension funds for firemen and their wid- ows and children. Art. IV, Sec. 49 : The General Assembly shall have no power hereafter to subscribe or authorize the subscrip- tion of stock on behalf of the State, in any corporation or association, except for the purpose of securing loans heretofore extended to certain railroad corporations by the State. Art. IX, Sec. 6 : No county, township city or other mu- nicipality shall hereafter become a subscriber to the capital stock of any railroad or other corporation or as- sociation, or make appropriation or donation or loan its credit to or in aid of any such corporation or association, or to or in aid of any college or institute of learning, or other institution, whether created for or to be controlled by the State or others. All authority heretofore confer- red for any of the purposes aforesaid by the General Assembly, or by the charter of any corporation, is hereby repealed: Provided, however, that nothing in this Constitution contained shall affect the right of any such municipality to make such subscription, where the same has been authorized under existing laws by a vote of the people of such municipality prior to its adoption, or to 986 PUBLIC SECUEITIES prevent the issue of renewal bonds or the use of such other means as are or may be prescribed by law, for the liquidation or payment of such subscription, or of any existing indebtedness. Art. IX, Sec. 19: The corporate authorities of any county, city or any other municipal subdivision of this state, having more than two hundred thousand inhabit- ants, which have already exceeded the limit of indebted- ness prescribed in section 12 of article X of this con- stitution, may, in anticipation of the customary annual revenue thereof, appropriate, during any fiscal year, to- ward the general governmental expenses thereof, a sum not exceeding seven-eighths of the entire revenue applic- able to general governmental expenses (exclusive of the payment of the bonded debt of such county, city or mu- nicipality) that was actually raised by taxation alone dur- ing the preceding fiscal year ; but until such excess of in- debtedness cease, no further bonded debt shall be in- curred, except for the renewal of other bonds. Art. X, Sec. 12: As originally adopted, was amended in 1900, and again in 1902 by adding special authority to the cities of St. Louis and Kansas City to issue World's Fair and Water Works bonds, the section excluding these amendments is as follows : "No county, city, town, township, school district or other political corporation or subdivision of the State shall be allowed to become indebted in any manner or for any purpose to an, amount exceeding in any year the in- come and revenue provided for such year, without the as- sent of two-thirds of the voters thereof voting at an elec- tion to be held for that purpose; nor in cases requiring such assent shall any indebtedness be allowed to be in- curred to any amount, including existing indebtedness, in the aggregate exceeding five per centum on the value of the taxable property therein, to be ascertained by the assessment next before the last assessment for State and county purposes, previous to the incurring of such in- PUBLIC DEBT AND THE POWEE OP TAXATION 987 debtedness : Provided, that with such assent any coun- ty may be allowed to become indebted to a larger amount for the erection of a court-house or jail; and Pro- vided further, that any county, city, town, township, school district or other political corporation or sub- division of the State ; incurring any indebtedness requir- ing the assent of the voters as aforesaid, shall, before, or at the time of doing so, provide for the collection of an annual tax sufficient to pay the interest on such in- debtedness as its falls due, and also to constitute a sink- ing fund for payment of the principal thereof within twenty years from the time of contracting the same." Art. X, Sec. 12a, as adopted Nov. 4, 1902 : Any city in the state containing not more than thirty thousand (30,- 000) nor less than two thousand (2,000) inhabitants, may, with the assent of two-thirds of the voters thereof vot- ing at an election to be held for that purpose be allowed to become indebted in a larger amount than specified in section 12, article ten (X) of the Constitution of the State, not exceeding an additional five (5) per centum on the value of the taxable property therein, for the purpose of purchasing or constructing waterworks, electric or other light plants, to be owned exclusively by the city so purchasing or constructing the same : Provided, that any such city incurring any such indebtedness requiring the assent of the voters as aforesaid, shaU have the power to provide for, and, before or at the time of incurring such indebtedness, shall provide for the collection of an annual tax in addition to the other taxes provided for by this Constitution, sufficient to pay the interest on such in- debtedness as it falls due, and also to constitute a sink- ing fund for the payment of the principal thereof, within twenty years from the time of contracting the same, any provision in this constitution to the contrary, notwith- standing.* 8^ — Laws of Missouri, U905, pp. 313-325. 988 PUBLIC SECXJEITIES §492, Montana. Constitution adopted 1889. Art. V, Sec. 38 : The Legislative Assembly shall have no power to pass any law authorizing the State, or any county of the State, to contract any debt or obligation in the construction of any railroad, nor give or loan its credit to or in aid of the construction of the same. Art. XIII, Sec. 1 : Neither the State, nor any county, city, town, municipality, nor other subdivision of the States shall ever give or loan its credit in aid of, or make any donation or grant, by subsidy or otherwise, to any individual, association or corporation, or become a sub- scriber to, or a share holder in, any company or corpora- tion, or a joint owner with any person, company or cor- poration, except as to such ownership as may accrue to the State by operation or provision of law. Art. XIII, Sec. 2 : The Legislative Assembly shall not in any manner create any debt except by law which shall be irrepealable until the indebtedness therein provided for shall have been fully paid or discharged; such law shall specify the purpose to which the funds so raised shall be applied and provide for the levy of a tax sufficient to pay the interest on and extinguish the principal of such debt within the time limited by such law for the pay- ment thereof; but no debt or liability shall be created which shall singly, or in the aggregate with any existing debt or liability, exceed the sum of one hundred thousand dollars, except in cases of war, to repel invasion or sup- press insurrection, unless the law authorizing the same shall have been submitted to the people at a general election and shall have received a majority of the votes cast for and against it at such election. Art. XIII, Sec. 3 : All moneys borrowed by, or on be- half of the state or any county, city, town, municipality or PTJBLIC DEBT' AND THE POWEB OP TAXATION 989 other subdivision of the state, shall be used only for the purpose specified in the law authorizing the loan. Art. XIII, Sec. 4 : The state shall not assume the debt, or any part thereof, of any county, city, town or munic- ipal corporation. Art. XIII, Sec. 5: No county shall be allowed to be- come indebted in any manner, or for any purpose, to an amount, including existing indebtedness, in the aggregate, exceeding five (5) per centum of the value of the tax- able property therein, to be ascertained by the last as- sessment for state and county taxes previous to the in- curring of such indebtedness, and all bonds or obligations in excess of such amount given by, or on behalf of such county shall be void. No county shall incur any indebted- ness or liability for any single purpose to an amount ex- ceeding ten thousand dollars ($10,000) without the ap- proval of a majority of the electors thereof, voting at an election to be provided by law. Art. XIII, Sec. 6: No city, town, township or school district shall be allowed to become indebted in any man- ner or for any purpose to an amount, including existing indebtedness, in the aggregate exceeding three per cen- tum of the value of the taxable property therein, to be ascertained by the last assessment for the State and county taxes previous to the incurring of such indebted- ness, and all bonds or obligations in excess of such amount given by, or on behalf of, such city, town, township or school district shall be void; Provided, however, that the Legislative Assembly may extend the limit men- tioned in this section, by authorizing municipal corpora- tions to submit the question to a vote of the taxpayers affected thereby, when such increase is necessary to con- struct a sewerage system or to procure a supply of water for such municipality which shall own and control said water supply and devote the revenues derived therefrom to the payment of the debt. 990 PUBLIC SECUEITIES §493. Nebraska. Constitution ratified Oct. 12, 1875, with amendments. Art. XI, Municipal Corporations, Sec. 1: No city, county, town, precinct, municipality, or other subdivision of the State shall ever become a subscriber to the capital stock, or owner of such stock, or any portion or interest therein, of any railroad or private corporation, or asso- ciation. Art. XII, Sec. 1 : The State may, to meet casual defi- cits, or failures in the revenues, contract debts never to exceed in the aggregate one hundred thousand dollars; and no greater indebtedness shall be incurred except for the purpose of repelling invasion, suppressing insurrec- tion, or defending the State in war; and provision shall be made for the payment of the interest annually, as it shall accrue, by a tax levied for the purpose, or from other sources of revenue, which law providing for the payment of such interest by such tax shall be irrepealable until such debt be paid. Art. XII, Sec. 2 : No city, county, town, precinct, mu- nicipality, or other subdivision of the State shall ever make donations to any railroad or other work of internal improvement, unless a proposition so to do shall have been first submitted to the qualified electors thereof at an election by authority of law: Provided, That such donations of a county with the donations of such subdi- visions in the aggregate shall not exceed ten per cent of the assessed valuation of such county: Provided, fur- ther, That any city or county may, by a two-thirds vote, increase such indebtedness five per cent in addition to such ten per cent, and no bonds or evidences of in- debtedness so issued shall be valid unless the same shall have indorsed thereon a certificate signed by the secre- tary and auditor of state, showing that the same is issued pursuant to law. Art. XII, Sec. 3 : The credit of the State shall never be PUBLIC DEBT AND THE POWEE OF TAXATION 991 given or loaned in aid of any individual, association or corporation. §494. Nevada. Constitution adopted 1864, with amendments. Art. VIII, Sec. 8: The Legislature shall provide for the organization of cities and towns, by general laws, and restrict their power of taxation, assessment, borrowing money, contracting debts, and loaning their credit, except for procuring supplies of water. Art. VIII, Sec. 9 : The State shall not donate or loan money or its credit, subscribe to or be interested in the stock of any company, association, or corporation, except corporations formed for educational or charitable pur- poses. Art. VIII, Sec. 10 : No county, city, town, or other mu- nicipal corporation shall become a stockholder in any joint stock company, corporation, or association what- ever, or loan its credit in aid of any such company, cor- poration, or association, except railroad corporations, companies, or associations. Art. IX, Sec. 3 : The Legislature shall provide by law for an annual tax sufficient to defray the estimated ex- penses of the State for each fiscal year; and whenever the expenses of any year shall exceed the income, the leg- islature shall provide for levying a tax sufficient, with other sources of income, to pay the deficiency, as well as the estimated expenses of such ensuing year or two years. Art. IX, Sec. 4 : For the purpose of enabling the State to transact its business upon a cash basis from its organ- ization, the state may contract public debts; but such debts shall never, in the aggregate, exclusive of interest, exceed the sum of three hundred thousand dollars, ex- cept for the purpose of defraying extraordinary ex- penses, as hereinafter mentioned. Every such debt shall 992 PUBLIC SECURITIES be autliorized by law for some purpose or purposes, to be distinctly specified therein ; and every such law shall pro- vide for levying an annual tax sufficient to pay the inter- est semi-annually, and the principal within twenty years from the passage of such law, and shall specially ap- propriate the proceeds of said taxes to the payment of said principal and interest ; and such appropriation shall not be repealed, nor the taxes be postponed or diminished until the principal and interest of said debts shall have been wholly paid. Every contract of indebtedness en- tered into or assimaed by, or on behalf of, the state, when all its debts and liabilities amount to said sum before mentioned, shall be void and of no effect, except in cases of money borrowed to repel invasion, suppress insurrec- tion, defend the state in time of war, or, if hostilities be threatened, provide for the public defense. § 495. New Hampshire. Amended Constitution of 1902. Part 2nd, Art. V (Last Proviso) : Provided, That the general court shall not authorize any town to loan or give its money or credit directly or indirectly for the benefit of any corporation having for its object a dividend of profits or in any way aid the same by taking its stocks or bonds. The municipal bond act of 1895 controls the subject of bond issue by municipal corporations in detail. Public Statutes of New Hampshire, 1901, pp. 491, et seq. § 496. New Jersey. Constitution as adopted in 1844, with amendments. Art. I, Sec. 19: No county, city, borough, town, town- ship or village shall hereafter give any money or prop- erty, or loan its money or credit, to or in aid of any in- dividual, association or corporation, or become security PUBLIC DEBT AND THE POWEB OF TAXATION 993 for or be directly or indirectly the owner of any stock or bonds of any association or corporation. Art. I, Sec. 20 : No donation of land or appropriation of money shall be made by the State or any municipal corporation to or for the use of any society, association, or corporation whatever. Art. rV, Sec. 6, subdivisions 3 and 4 : 3. The credit of the State shall not be directly or indirectly loaned in any case. 4. The Legislature shall not in any manner create any debt or debts, liability or liabilities of the State, which shall singly or in the aggregate with any previous debts or liabilities at any time exceed one hundred thousand dollars, except for purposes of war, or to repel invasion, or to suppress insurrection, unless the same shall be au- thorized by a law for some single object of work, to be distinctly specified therein, which law shall provide the ways and means, exclusive of loans, to pay the interest of such debt or liability as it falls due, and also to pay and discharge the principal of such debt or liability with- in thirty-five years from the time of the contracting thereof, and shall be irrepealable until such debt or lia- bility and the interest thereon are fully paid and dis- charged; and no such law shall take effect until it shall, at a general election, have been submitted to the people, and have received the sanction of a majority of all the votes cast for and against it at such election; and all money to be raised by the authority of such law shall be applied only to the specific object stated therein, and to the payment of the debt thereby created. This section shall not be construed to refer to any money that has been, or may be, deposited with this State by the Govern- ment of the United States. Art. IV, Sec. 7 : The Legislature shall not pass private, local or special laws in any of the following enumerated cases, that is to say: Eegulating the internal affairs of p. S.— 63 994 PUBLIC SECURITIES towns and counties. * * * The Legislature shall pass no special act conferring corporate powers. * * * In 1903 (chapter 168, Laws of 1903, and chapter 103, Laws of 1907) a Referendum Act relating to the govern- ment of cities was passed by the Legislature, under the provisions of which, when accepted by the voters of any city, the debt-making power of the municipality is fixed at fifteen per cent of the taxables. Section 73: "The limit of the bonding power in such city is fixed at fifteen per centum of the value of the property therein as rated for taxation, as shown by the last duplicates of assess- ment for taxes made therein, and such limitation shall in no case be exceeded." § 497. New Mexico. Constitution adopted 1911. Art. IX, Sec. 1: The State hereby assumes the debts and liabilities of the Territory of New Mexico, and the debts of the counties thereof which were valid and sub- sisting on June 20, 1910, and pledges its faith and credit for the payment thereof. The Legislature shall, at its first session, provide for the payment or refunding there- of by the issue and sale of bonds, or otherwise. Art. IX, Sec. 2: No county shall be required to pay any portion of the debt of any other county so assumed by the State, and the bonds of Grant and Santa Fe coun- ties which were validated, approved and confirmed by Act of Congress of Jan. 16, 1897, shall be paid as hereinafter provided. Art. IX, Sec. 3 : The bonds authorized by law to pro- vide for the payment of such indebtedness shall be issued in three series, as follows : Series A. To provide for the payment of such debts and liabilities of the Territory of New Mexico. Series B. To provide for the payment of such debts of said counties. PUBLIC DEBT AND THE POWER OF TAXATION 995 Series C. To provide for the payment of the bonds and accrued interest thereon of Grant and Santa Fe counties which were validated, approved and confirmed by Act of Congress Jan. 16, 1897. Art. IX, Sec. 7 : The State may borrow money not ex- ceeding the sum of $200,000 in the aggregate to meet casual deficits or failure in revenue, or for necessary ex- penses. The State may also contract debts to suppress insurrection and to provide for the public defense. Art. IX, Sec. 8 : No debt other than those specified in the preceding section shall be contracted by or on be- half of this State, unless authorized by law for some specified work or object; which law shall provide for an annual tax levy sufficient to pay the interest and to pro- vide a sinking fund to pay the principal of such debt within fifty years from the time of the contracting there- of. No such law shall take effect until it shall have been submitted to the qualified electors of the State and have received a majority of all the votes cast thereon at a gen- eral election; such law shall be published in full in at least one newspaper in each county of the State, if one be published therein, once each week for four successive weeks next preceding such election. No debt shall be so created if the total indebtedness of the State, exclusive of the debts of the Territory and the several counties thereof, assumed by the State, would thereby be made to exceed one per centum of the assessed valuation of all the property subject to taxation in the State, as shown by the preceding general assessment. Art. IX, Sec. 9 : Any money borrowed by the State, or any county, district or municipality thereof, shall be ap- plied to the purpose for which it was obtained, or to repay such loan, and to no other purpose whatever. Art. IX, Sec. 10: No county shall borrow money ex- cept for the purpose of erecting necessary public build- ings or constructing or repairing public roads and bridges, and in such cases only after the proposition to 996 PUBLIC SECURITIES ' create such debt shall have been submitted to the qualified electors of the county who paid a property tax therein during the preceding year, and approved by a majority of those voting thereon. No bonds issued for such pur- pose shall run for more than fifty years. Art. IX, Sec. 11: No school district shall borrow money, except for the purpose of erecting and furnishing school buildings or purchasing school grounds, and in such cases only when the proposition to create the debt shall have been submitted to the qualified electors of the district and approved by a majority of those voting there- on. No school district shall ever become indebted in an amount exceeding six per centum on the assessed valua- tion of the taxable property within such school district, as shown by the preceding general assessment. Art. IX, Sec. 12: No city, town or village shall con- tract any debt except by an ordinance, which shall be ir- rei)ealable until the indebtedness therein provided for shall have been fully paid or discharged, and which shall specify the purposes to which the funds to be raised shall be applied, and which shall provide for the levy of a tax not exceeding twelve mills on the dollar, upon all taxa- ble property within such city, town or village, sufficient to pay the interest on and to extinguish the principal of, such debt within fifty years. The proceeds of such tax shall be applied only to the payment of such interest and principal. No such debt shall be created unless the ques- tion of incurring the same shall, at a regular election for councilmen, aldermen or other officers of such city, town or village, have been submitted to a vote of such qualified electors thereof as have paid a property tax therein dur- ing the preceding year, and a majority of those voting on the question, by ballot deposited in a separate ballot box, shall have voted in favor of creating such debt. Art. IX, Sec. 13 : No county, city, town or village shall ever become indebted to an amount in the aggregate, including existing indebtedness, exceeding four per cen- PUBLIC DEBT AND THE POWER OP TAXATION 997 turn on the value of the taxable property within such county, city, town or village, as shown by the last pre- ceding assessment for State or county taxes; and all bonds or obligations issued in excess of such amount shall be void; Provided, That any city, town or village may contract debts in excess of such limitation for the construction or purchase of a system for supplying water, or of a sewer system, for such town, city or village. Art. IX, Sec. 14: Neither the State nor any county, school district or municipality, except as otherwise pro- vided in this constitution, shall directly or indirectly lend or pledge its credit, or make any donation to or in aid of any person, association or public or private cor- poration, or in aid of any private enterprise for the con- struction of any railroad ; provided, nothing herein shall be construed to prohibit the State or any county or mu- nicipality from making provision for the care and main- tenance of sick and indigent persons. Art. IX, Sec. 15 : Nothing in this article shall be con- strued to prohibit the issue of bonds for the purpose of paying or refunding any valid State, county, district or municipal bonds, and it shall not be necessary to submit the question of the issue of such bonds to a vote as herein provided. § 498. New York. Constitution, 1894, as amended. Art. VII, Sec. 1 : The credit of the State shall not in any manner be given or loaned to or in aid of any in- dividual, association or corporation. Art. VII, Sec. 2 : The State may, to meet casual deficits or failures in revenues, or for expenses not provided for, contract debts ; but such debts, direct or contingent, singly or in the aggregate, shall not at any time exceed one million of dollars ; and the moneys arising from the loans creating such debts shall be applied to the purpose for 998 PUBLIC SECURITIES which they were obtained, or to repay the debt so con- tracted and for no other purpose whatever. Art. VII, Sec. 3 : In addition to the above limited pow- er to contract debts, the State may contract debts to re- pel invasion, suppress insurrection, or defend the State in war; but the money arising from the contracting of such debts shall be applied to the purpose for which it was raised, or to repay such debts, and to no other pur- pose whatever. Art. VII, Sec. 4: Except the debts specified in sec- tions two and three of this article, no debts shall be here- after contracted by or in behalf of this State, unless such debt shall be authorized by law, for some single work or object, to be distinctly specified therein; and such law shall impose and provide for the collection of a direct annual tax to pay, and sufficient to pay, the interest on such debt as it falls due, and also to pay and discharge the principal of such debt within fifty years from the time of the contracting thereof. No such law shall take effect until it shall, at a general election, have been submitted to the people, and have received a majority of all the votes cast for and against it at such election. On the final passage of such bill in either house of the Legislature, the question shall be taken by ayes and noes, to be duly entered on the journals thereof, and shall be : " Shall this bill pass, and ought the same to receive the sanction of the people?" The Legislature may at any time, after the approval of such law by the people, if no debt shall have been contracted in pursuance thereof, repeal the same ; and may at any time, by law, forbid the contract- ing of any further debt or liability under such law; but the tax imposed by such Act, in proportion to the debt and liability which may have been contracted in pur- suance of such law, shall remain in force and be irrepeal- able, and be annually collected, until the proceeds there- of shall have made the provision hereinbefore specified to pay and discharge the interest and principal of such debt PUBLIC DEBT AND THE POWER OF TAXATION 999 and liability. The money arising from any loan or stock creating such debt or liability, shall be applied to tlie work or object specified in the Act authorizing such debt or liability, or for the payment of such debt or liability and for no other purpose whatever. No such law shall be submitted to be voted on, within three months after its passage, or at any general election when any other law, or any bill, shall be submitted to be voted for or against. The Legislature may provide for the issue of bonds of the State to run for a period of not exceeding fifty years in lieu of bonds heretofore authorized but not issued, and shall impose and provide for the collection of a direct an- nual tax for the payment of the same as hereinbefore re- quired. When any sinking fund created under this sec- tion shall equal in amount the debt for which it was cre- ated, no further direct tax shall be levied on account of said sinking fund and the Legislature shall reduce the tax to an amount equal to the accruing interest on such debt. On Nov. 2, 1909, the following was added to Art. VII, Sec. 4: "The Legislature may from time to time alter the rate of interest to be paid upon any State debt which has been or may be authorized, pursuant to the provisions of this section, or upon any part of such debt, Provided, however. That the rate of interest shall not be altered upon any part of such debt or upon any bond or other evi- dence thereof, which has been or shall be created or issued before such alteration. In case the Legislature increase the rate of interest upon any such debt or part thereof, it shall impose and provide for the collection of a direct annual tax to pay and sufficient to pay the increased or altered interest on such debt as it falls due, and also to pay and discharge the principal of such debt within fifty years from the time of the contracting thereof, and shall appropriate annually to the sinking fund moneys in amount sufficient to pay such interest and pay and dis- 1000 PUBLIC SECUBITIES ' charge tjie principal of such debt when it shall become due and payable." November, 1905, an entirely new section, i. e.. Sec. 12, Art. VII, was adopted, providing for a state debt of not exceeding $50,000,000 for highway purposes. Art. VIII, Sec. 9 : Neither the credit nor the money of the State shall be given or loaned to or in aid of any association, corporation or private undertaking. This section shall not, however, prevent the Legislature from making such provision for the education and support of the blind, the deaf and dumb, and juvenile delinquents, as to it may seem proper. Nor shall it apply to any fund or property now held, or which may hereafter be held, by the State for educational purposes. : Art. VIII, Sec. 10: No county, city, town or village shall hereafter give any money or property, or loan its money or credit to or in aid of any individual, association or corporation, or become directly or indirectly the owner of stock in, or bonds of, any association or corporation ; nor shall any such county, city, town or village be allowed to incur any indebtedness except for county, city, town or village purposes. This section shall not prevent such county, city, town or village from making such provision for the aid or support of its poor as may be authorized by law. No county or city shall be allowed to become indebted for anj^ purpose or in any manner to an amount which, including existing indebtedness, shall exceed ten per cent of the assessed valuation of the real estate of such county or city subject to taxation as it appeared by the assessment rolls of said county or city on the last as- sessment for State or county taxes prior to the incurring of such indebtedness; and all indebtedness in excess of such limitation, except such as may now exist, shall be absolutely void, except as herein otherwise provided. No county or city whose j5resent indebtedness exceeds ten per cent of the assessed valuation of its real estate sub- ject to taxation shall be allowed to become indebted in any PUBLIC DEBT AND THE POWER OF TAXATION 1001 further amount until such indebtedness shall be reduced within such limit. This section shall not be construed to prevent the issuing of certificates of indebtedness or reve- nue bonds issued in anticipation of the collection of taxes for amounts actually contained, or to be contained in the taxes for the year when such certificates or revenue bonds are issued and payable out of such taxes. Nor shall this section be construed to prevent the issue of bonds to pro- vide for the supply of water; but the term of the bonds issued to provide the supply of water shall not exceed twenty years, and a, sinking fund shall be created on the issuing of the said bonds for their redemption, by raising annually a sum which will produce an amount equal to the sum of the principal and interest of said bonds at their maturity. All certificates of indebtedness or reve- nue bonds issued in anticipation of the collection of taxes, which are not retired within five years after their date of issue, and bonds issued to provide for the supply of wa- ter, and any debt hereafter incurred by any portion or part of a city, if there shall be any such debt, shall be included in ascertaining the power of the city to become otherwise indebted; except that debts incurred by the City of New York after the first day of January, nineteen hundred and four, and debts incurred by any city of the second class after the first day of January, nineteen hun- dred and eight, and debts incurred by any city of the third class after the first day of January, nineteen hundred and ten, to provide for the supply of water, shall not be so included ; and except further that any debt hereafter in- curred by the City of New York for a public improvement owned or to be owned by the city which yields to the city current net revenue, after making any necessary allow- ance for repairs and maintenance for' which the city is liable, in excess of the interest on said debt and of the annual installments necessary for its amortization, may be excluded in ascertaining the power of said city to be- come otherwise indebted, provided that a sinking fund 1002 PUBLIC SECTJEITIES for its amortization shall have been established and main- tained and that the indebtedness shall not be so excluded during any period of time when the revenue aforesaid shall not be sufficient to equal the said interest and amor- tization installments, and except further that any in- debtedness heretofore incurred by the City of New York for any rapid transit or dock investment may be so ex- cluded proportionately to the extent to which the current net revenue received by said city therefrom shall meet the interest and amortization installments thereof, pro- vided that any increase in the debt-incurring power of the City of New York which shall result from the exclusion of debts heretofore incurred shall be available only for the acquisition or construction of properties to be used for rapid transit or dock purposes. The Legislature shall prescribe the method by which and the terms and conditions under which the amount of any debt to be so excluded shall be determined, and no such debt shall be excluded except in accordance with the determination so prescribed. The Legislature may in its discretion confer appropriate jurisdiction on the Appellate Division of the Supreme Court in the First Judicial Department for the purpose of determining the amount of any debt to be so excluded. No indebtedness of a city valid at the time of its inception shall thereafter become invalid by reason of the operation of any of the provisions of this section. Whenever the boundaries of any city are the same as those of a county, or when any city shall include within its boundaries more than one county, the power of any county wholly included within such city to become in- debted shall cease, but the debt of the county heretofore existing shall not, for the purposes of this section, be reckoned as a part of the city debt. The amount here- after to be raised by tax for county or city purposes, in any county containing a city of over 100,000 inhabitants, or any such city of this State, in addition to providing for the principal and interest of existing debt, shall not PUBLIC DEBT AND THE POWEE OP TAXATION 1003 in the aggregate exceed in any one year two per cent of the assessed valuation of the real and personal estate of sncli county or city, to be ascertained as prescribed in this section in respect to county or city debt (as amended in 1899, 1905 and 1909). §499. North Carolina. Constitution of 1868, as amended. Art. I, Sec. 6: The state shall never assume to pay, or authorize the collection of any debt or obligation, ex- press or implied, incurred in aid of insurrection or re- bellion against the United States, or any claim for the loss or emancipation of any slave; nor shall the General As- sembly assume or pay, or authorize the collection of any tax to pay, either directly or indirectly, expressed or im- plied, any debt or bond incurred, or issued, by authority of the convention of the year one thousand eight hun- dred and sixty-eight, nor any debt or bond, incurred or issued by the legislature of the year one thousand eight hundred and sixty-eight, at its special session of the year one thousand eight hundred and sixty-eight, or at its regular sessions of the years one thousand eight hun- dred and sixty-eight and one thousand eight hundred and sixty-nine and one thousand eight hundred and seventy, except the bonds issued to fund the interest on the old debt of the state, unless the proposing to pay the same shall have first been submitted to the people and by them ratified by the vote of a majority of all the qualified vot- ers of the state, at a regular election held for that pur- pose. Art. V, Sec. 4 : Until the bonds of the state shall be at par, the General Assembly shall have no power to con- tract any new debt or pecuniary obligation in behalf of the state, except to supply a casual deficit, or for sup- pressing invasion or insurrection, unless it shall in the same bill levy a special tax to pay the interest annually. 1004 PUBLIC SECURITIES And the General Assembly shall have no power to give or lend the credit of the state in aid of any person, asso- ciation or corporation, except to aid in the completion of such railroads as may be unfinished at the time of the adoption of this constitution, or in which the state has a direct pecuniary interest, unless the subject be submit- ted to a direct vote of the people of the state, and be ap- proved by the majority of those who shall vote thereon. Art. VII, Sec. 7 : No county, city, town, or other mu- nicipal corporation, shall contract any debt, pledge its faith, or loan its credit, nor shall any tax be levied or col- lected by any officers of the same, except for the neces- sary expenses thereof, unless by a vote of the majority of the qualified voters therein. Art. VII, Sec. 13 : No county, city, town, or other mu- nicipal corporation shall assume to pay, nor shall any tax be levied or collected for the payment of any debt, or the interest upon any debt, contracted directly or indirectly in aid or support of the rebellion. § 500. North Dakota. Constitution as adopted Oct. 1, 1889. Art. VI, Sec. 130 : Municipal Coeporations. The Leg- islative Assembly shall provide by general law for the or- ganization of municipal corporations, restricting their powers as to levying taxes and assessments, borrowing money and contracting debts, and money raised by taxa- tion, loan or assessment for any purpose shall not be di- verted to any other purpose except by authority of law. Art. XII, Sec. 182 : The State may, to meet casual defi- cits or failure in the revenue, or in case of extraordinary emergencies, contract debts, but such debts shall never in the aggregate exceed the sum of two hundred thousand dollars, exclusive of what may be the debt of North Da- kota at the time of the adoption of this Constitution. Every such debt shall be authorized by law for certain PUBLIC DEBT AND THE POWER OF TAXATION 1005 purposes, to be definitely mentioned therein, and every such law shall provide for levying an annual tax suifi- cient to pay the interest semi-annually, and the principal within thirty years from the passage of such law, and shall specially appropriate the proceeds of such tax to the payment of said principal and interest, and such ap- propriation shall not be repealed nor the tax discontinued until such debt, both principal and interest, shall have been fully paid. No debt in excess of the limit named shall be incurred except for the purpose of repelling in- vasion, suppressing insurrection, defending the State in time of war, or to provide for public defense in case of threatened hostilities; but the issuing of new bonds to refund existing indebtedness shall not be construed to be any part or portion of said two hundred thousand dollars.* Art. XII, Sec. 183 : The debt of any county, township, city, town, school district, or any other political subdi- vision, shall never exceed five (5) per centum upon the assessed value of the taxable property therein : Provided, That any incorporated city may, by a two-thirds vote, in- crease such indebtedness three (3) per centum on such assessed value beyond said five (5) per cent limit. In estimating the indebtedness which a city, county, town- ship, school district or any other political subdivision may incur, the entire amount of existing indebtedness, whether contracted prior or subsequent to the adoption of this Constitution shall be included; Provided, further. That any incorporated city may become indebted in any amount not exceeding four (4) per centum on such as- sessed value without regard to the existing indebtedness of such city, for the purpose of constructing or purchas- ing water-works for furnishing a supply of water to the 9 — state V. McMillan (N. D.), 96 Valley City as in excess of the con- N. W. 310. Bonds issued to pro- stitutional limit prescribed in Sec. cure funds to erect and equip build- 182, are void, ings for the State Normal School at 1006 , ^ PUBLIC SECURITIES inhabitants of such city, or for the purpose of construct- ing sewers and for no other purpose whatever. All bonds or obligations in excess of the amount of indebtedness permitted by this Constitution given by any city, county, township, town, school district, or any other political sub- division, shall be void. Art. XII, Sec. 184: Any city, county, township, town, school district, or any other political subdivision, incur- ring indebtedness shall, at or before the time of so do- ing, provide for the collection of an annual tax sufficient to pay the interest and also the principal thereof when due, and all laws or ordinances providing for the payment of the interest or principal of any debt shall be irrepeal- able until such debt be paid. Art. XII, Sec. 185 : Neither the State nor any county, city, township, town, school district, or any other political subdivision, shall loan or give its credit or make dona- tions to or in aid of any individual, association or cor- poration, except for necessary support of the poor, nor subscribe to or become the owner of the capital stock of any association or corporation, nor shall the State en- gage in any work of internal improvement unless author- ized by a two-thirds vote of the people. Art. XII, Sec. 187 : No bond or evidence of indebted- ness of the State shall be valid unless the same shall have endorsed thereon a certificate signed by the Auditor and Secretary of State, showing that the bond or evidence of debt is issued pursuant to law and is within the debt limit. No bond or evidence of debt of any county, or bond of any township or other political subdivision, shall be valid unless the same have endorsed thereon a certificate signed by the County Auditor, or other officer authorized by law to sign such certificate, stating that said bond or evidence of debt is issued pursuant to law and is within the debt limit. PtTBLIO DEBT AND THE POWEE OF TAXATION 1007 §501. Ohio. Constitution of 1851, as amended. Art. VIII, Sec. 1: The State may contract debts to supply casual deficits or failures in revenues or to meet expenses not otherwise provided for; but the aggregate amount of such debts direct and contingent, whether con- tracted by virtue of one or more Acts of the General As- sembly, or at different periods of time, shall never exceed seven hundred and fifty thousand dollars ; and the money arising from the creation of such debts shall be applied to the purpose for which it was obtained or to repay the debts so contracted and to no other purpose whatever. Art. VIII, Sec. 2: In addition to the above limited power the State may contract debts to repel invasion, sup- press insurrection, defend the State in war, or to redeem the present outstanding indebtedness Of the State; but the money arising from the contracting of such debts shall be applied to the purpose for which it was raised or to repay such debts, and to no other purpose whatever ; and all debts incurred to redeem the present outstanding indebtedness of the State shall be so contracted as to be payable by the sinking fund hereinafter provided for as the same shall accumulate. Art. VIII, Sec. 3 : Except the debts above specified in sections 1 and 2 of this article, no debt whatever shall hereafter be created by or on behalf of the State. Art. VIII, Sec. 4 : The credit of the State shall not in any manner be given or loaned to or in aid of any in- dividual, association, or corporation whatever; nor shall the State ever hereafter become a joint owner or stock- holder in any company or association in this State or elsewhere formed for any purpose whatever. Art. VIII, Sec. 5: The State shall never assume the debts of any county, city, town or township, or of any corporation whatever unless such debt shall have been 1008 PUBLIC SECURITIES created to repel invasion, suppress insurrection or defend the State in war. Art. VIII, Sec. 6 : The General Assembly shall never authorize any county, city, town or township, by vote of its citizens or otherwise, to become a stockholder in any joint stock company, corporation or association what- ever ; or to raise money for, or loan its credit to, or in aid of, any such company, corporation or association. Art. XII, Sec. 6 : The State shall never contract any debt for purposes of internal improvement. Art. XIII, Sec. 6: The General Assembly shall pro- vide for the organization of cities and incorporated vil- lages by general laws and restrict their power of taxa- tion, assessment, borrowing money, contracting debts and loaning their credit, so as to prevent the abuse of such power. For legislative provisions see Page and Adams Anno- tated Ohio General Code of 1912, sections 3912 et seq. Sec. 3912: Municipal corporations shall have special power to borrow money and to maintain and protect a sinking fund. Sec. 3914: Municipal corporations may issue bonds in anticipation of special assessments. Such bonds may be in sufficient amount to pay the estimated cost and expense of the improvement for which the assessments are levied. In the issuance and sale of such bonds the municipality shall be governed by all restrictions and limitations with respect to the issuance and sale of other bonds and the assessments as paid shall be applied to the liquidation of such bonds. Sec. 3918 : Bonds issued under authority of this chap- ter shall express upon their face the purpose for which issued and under what ordinance. Sec. 3940: Such bonds may be issued for any or all of such purposes, but the total indebtedness created in any one fiscal year by the council of a municipal corpo- ration, under the authority conferred in the preceding section, shall not exceed one per cent, of the total value of all property in such municipal corporation, as listed and assessed for taxation. j PUBLIC DEBT AND THE POWEB OF TAXATION 1009 Sec. 3941: The net indebtedness created or incurred by the council under the authority granted it in section one (1) of this act and in an act passed April 29th, 1902, to amend sections 2835, 2836 and 2837 and to repeal section 2837a of the Revised Statutes together with its subsequent amendments shall never exceed four (4) per cent, of the total value of all property in such municipal corporation as listed and assessed for taxation. Sec. 3948 : The net indebtedness created or incurred by a municipal corporation under authority of sections one and four of this act and under the authority of an act passed April 29th, 1902, to amend sections 2835, 2836, and 2837 and to repeal section 2837a of the Eevised Statutes together with its subsequent amendments, shall never exceed in total eight (8) per cent, of the total value of all property in such municipal corporation as listed and assessed for taxation. §502. Oklahoma. Constitution as ratified Sept. 17, 1907. Art. X, Sec. 14 : Taxes shall be levied and collected by general laws, and for public purposes only, except that taxes may be levied when necessary to carry into effect section 31 of the bill of rights. Except as required by the Enabling Act, the State shall not assume the debt of any county, municipal corporation, or political subdivision of the State, unless such debt shall have been contracted to defend itself in time of war, to repel invasion, or to suppress insurrection. Art. X, Sec. 15 : The credit of the State shall not be given, pledged or loaned to any individual, company, cor- poration, or association, municipality, or political subdi- vision of the State ; nor shall the State become an owner or stockholder in, nor make donation by gift, subscription to stock, by tax or otherwise, to any company, associa- tion, or corporation. Art. X, Sec. 16 : All laws authorizing the borrowing of money by and on behalf of the State, county, or other p. a— 64 1010 PUBLIC SECURITIES ^ political subdivision of the State, , shall specify the pur- pose for which the money is to be used, and the money so borrowed shall be used for no other purpose. Art. X, Sec. 17: The Legislature shall not authorize any county or sufedivision thereof, city, town or incor- porated district, to become a stockholder in any com- pany, association, or corporation, or to obtain or ap- propriate money for, or levy any tax for, or to loan its credit to any corporation, association, or individual. Art. X, Sec. 23 : The State may, to meet casual deficits or failure in revenue, or for expenses not provided for, contract debts, but such debts, direct and contingent, singly or in the aggregate, shall not -at any time, exceed $400,000, and the moneys arising from the loans creating such debts shall be applied to the purpose for which they were obtained or to repay the debts so contracted, and to no other purpose whatever. Art. X, Sec. 24 : In addition to the above limited power to contract debts, the State may contract debts to repel invasion, suppress insurrection or to defend the State in war ; but the money arising from the contracting of such debts shall be applied to the purpose for which it was raised, or to repay such debts, and to no other purpose whatever. Art. X, Sec. 25 : Except the debts specified in sections 23 and 24 of this article, no debts shall hereafter be con- tracted by or on behalf of this State, unless such debt shall be authorized by law for some work or object, to be distinctly specified therein; and such law shall impose and provide for the collection of a direct annual tax to pay, and sufficient to pay, the interest on such debt as it falls due and also to pay and discharge the principal of such debt within twenty-five years from the time of the contracting thereof. No such law shall take effect until it shall, at a general election, have been submitted to the people and have received a majority of all the votes cast PT7BLIC DEBT AND THE POWER OF TAXATION 1011 for and against it at such election. On tlie final passage of such bill in either House of the Legislature, the ques- tion shall be taken by yeas and nays, to be duly entered in the journals thereof, and shall be: "Shall this bill pass, and ought the same to receive the sanction of the peo- ple?" Art. X, Sec. 26: No county, city, town, township, school district or other political corporation, or subdi- vision of the State, shall be allowed to become indebted, in any manner, for any purpose, to an amount exceeding, in any year, the income and revenue provided for such year, without the assent of three-fifths of the voters there- of voting an election to be held for that purpose, nor, in cases requiring such assent, shall any indebtedness be allowed to be incurred to an amount including existing indebtedness, in the aggregate exceeding 5 per cent of the valuation of the taxable property therein, to be as- certained from the last assessment for State and county purposes previous to the incurring of such indebtedness ; provided, that any county, city, town, township, school district or other political corporation or subdivision of the State, incurring any indebtedness, requiring the as- sent of the voters as aforesaid, shall, before or at the time of doing so, provide for the collection of an annual tax sufficient to pay the interest on such indebtedness as it falls due, and also to constitute a sinking fund for the payment of the principal thereof within twenty -five years from the' time of contracting the same. Art. X, Sec. 27 : Any incorporated city or town in this State may, by a majority of the qualified property tax- paying voters of such city or town, voting at an election to be held for that purpose, be allowed to become indebted in a larger amount than that specified in section 26, for the purpose of purchasing or constructing public utilities, or for repairing the same, to be owned exclusively by such city : Provided, That any such city or town incur- 1012 PUBLIC SECUEITIES ring any such indebtedness requiring the assent of the voters as aforesaid, shall have the power to provide for, and, before or at the time of incurring such indebtedness, shall provide for, the collection of an annual tax in addi- tion to the other taxes provided for by this Constitution, sufficient to pay the interest on such indebtedness as it falls due, and also to constitute a sinking fund for the payment of the principal thereof within twenty-five years from the time of contracting the same. Art. X, Sec. 28 : Counties, townships, school districts, cities and towns shall levy sufficient additional revenue to create a sinking fund to be used, first, for the pajrment of interest coupons as they fall due ; second, for the payment of bonds as they fall due ; third, for the payments of such parts of judgments as such municipality may, by law, be required to pay. Art. X, Sec. 29 : No bond or evidence of indebtedness of this State shall be valid unless the same shall have en- dorsed thereon a certificate, signed by the Auditor and Attorney-General of the State, showing that the bond or evidence of debt is issued pursuant to law and is within the debt limit. No bond or evidence of debt of any county, or bond of any township or any other political subdi- vision of any county, shall be valid unless the same have endorsed thereon a certificate signed by the County Clerk, or other officer authorized by law to sign such cer- tificate, and the County Attorney of the county, stating that said bond or evidence of debt is issued pursuant to law, and that said issue is within the debt limit. §503. Oregon. Constitution ratified Nov. 9, 1857, with amendments. Art. XI, Sec. 5 : Acts of Legislative Assembly incor- porating towns and cities shall restrict their powers of PUBLIC DEBT AND THE POWEE OP TAXATION 1013 taxation, borrowing money, contracting debts, and loan- ing their credit. Art. XI, Sec. 6 : The State shall not subscribe to or be interested in the stock of any company, association or corporation. Art. XI, Sec, 7: The Legislative Assembly shall not loan the credit of the State, nor in any manner create debts or liabilities, which shall singly or in the aggregate with previous debts or liabilities, exceed the sum of fifty thousand dollars, except in case of war, or to repel in- vasion or suppress insurrection, and every contract of indebtedness entered into or assumed by or on behalf of the State, when all its liabilities and debts amount to said sum, shall be void and of no effect. Art. XI, Sec. 8: The State shall never assume the debts of any county, town or other corporation whatever, unless such debts shall have been created to repel in- vasion, suppress insurrection, or defend the State in war. Art. XI, Sec. 9 : No county, city, town, or other mu- nicipal corporation, by vote of its citizens or otherwise, shall become a stockholder in any joint-stock company, corporation or association whatever, or raise money for, or loan its credit to, or in aid of any such company, cor- poration or association. Art. XI, Sec. 10 : No county shall create any debts or liabilities which shall singly or in the aggregate exceed the sum of five thousand dollars, except to suppress in- surrection or repel invasion, or to build permanent roads within the county; but debts for permanent roads shall be incurred only on approval of a majority of those vot- ing on the question. Under the authority of the Constitution, See. 5, quoted above, legislative acts have been passed from time to time relative to the incurring of debts by towns and cities. See Ballinger & Cotton 's Ann. Codes & Stats., Sec. 2722, 2727-2735, 3389 and 3415. I0l4 tUBLlC SECXTEITIES § 504. Pennsylvania. Constitution ratified Dec. 16, 1873, with amendments. Art. IX, Sec. 4: No debt shall be created by, or on behalf of, the State except to supply casual deficiencies of revenue, repel invasions, suppress insurrection, defend the State in war, or to pay existing debt; and the debt created to supply deficiencies in revenue shall never ex- ceed, in the aggregate at any one time, one million of dollars. Art. IX, Sec. 5 : All laws authorizing the borrowing of money by and on behalf of the State shall specify the purpose for which the money is to be used, and the money so borrowed shall be used for the purpose speci- fied and no other. Art. IX, Sec. 6 : The credit of the Commonwealth shall not be pledged or loaned to any individual, company, corporation or association, nor shall the Commonwealth become a joint-owner or stockholder in any company, as- sociation or corporation. Art. IX, Sec. 7 : The General Assembly shall not au- thorize any county, city, borough, township or incorpo- rated district to become a stockholder in any company, association or corporation, or to obtain or appropriate money for, or to loan its credit to, any corporation, as- sociation, institution or individual. Art. IX, Sec. 8 : The debt of any county, city, borough, township, school district, or other municipality or incor- porated district, except as herein provided, shall never exceed seven per centum upon the assessed value of the taxable property therein, nor shall any such municipality or district incur any new debt, or increase its indebted- ness to an amount exceeding two per centum upon such assessed valuation of property without the assent of the electors thereof at a public election in such manner as shall be provided by law ; but any city the debt of which PUBLIC DEBT AND THE POWER OF TAXATION 1015 now exceeds seven per centum of such assessed valuation may be authorized by law to increase the same three per centum, in the aggregate at any one time upon such valuation. In November 1911, the following paragraph was added to section 8 : "Except that any debt or debts hereinafter incurred by the city and county of Philadelphia for the construc- tion and development of subways for transit purposes, or for the construction of wharves and docks, or the recla- mation of land to be used in the construction of a system of wharves and docks, as public improvements, owned or to be owned by said city and county of Philadelphia, and which shall yield to the city and county of Philadel- phia current net revenue in excess of the interest on said debt or debts, and of the annual installments necessary for the cancellation of said debt or debts, may be ex- cluded in ascertaining the power of the city and county of Philadelphia to become otherwise indebted: Pro- vided, That a sinking fund for their cancellation shall be established and maintained." Art. IX, Sec. 9 : The Commonwealth shall not assume the debt, or any part thereof, of any city, county, bor- ough or township, unless such debt shall have been con- tracted to enable the State to repel invasion, suppress domestic insurrection, defend itself in time of war, or to assist the State in the discharge of any portion of its present indebtedness. Art. IX, Sec. 10: Any county, township, school dis- trict or other municipality Lricurring any indebtedness shall, at or before the time of so doing, provide for the collection of an annual tax sufficient to pay the interest, and also the principal thereof within thirty years. Art. XV, Sec. 2: No debt shall be contracted or lia- bility incurred by any municipal government except in pursuance of an appropriation previously made therefor by the municipal government. 1016 PUBLIC SECUEITIES Art. XV, Sec. 3: Every city shall create a sinking fund which shall be inviolably pledged for the payment of its funded debt. § 505. Rhode Island. Constitution of 1842 as amended. Art. IV, Sec. 13 : The general assembly shall have no power, hereafter, without the express consent of the peo- ple, to incur state debts to an amount exceeding fifty thousand dollars, except in time of war, or in case of in- surrection or invasion ; nor shall they in any ease, with- out such consent, pledge the faith of the state for the payment of the obligations of others. This section shall not be construed to refer to any money that may be de- posited with this state by the government of the United States." Art. IV, Sec. 14 : The assent of two-thirds of the mem- bers elected to each house of the general assembly shall be required to every bill appropriating the public money or property for local or private purposes. See also Revised Statutes of 1909, title 8, chap. 46, sees. 20 and 21. Sec. 20: "The outstanding notes, bonds and contracts of towns shall be paid and be fulfilled according to the tenor thereof, and all public works now authorized to be prosecuted shall be prosecuted and all iudebtedness now authorized to be incurred on account thereof may be in- curred according to the tenor of the authority thereof. ' ' Sec. 21: "No town shall, without special statutory au- 10— In re State House Bomds (E. Blais v. Franklin (R. I.), 77 Atl. I.), 33 Atl. 870. Acts authorizing 172. Public laws 1909, Chap. 499, the issue of bonds for the construe- relative to the construction of a tion of state house should provide bridge between the cities of Paw- for the repayment into the treasury tucket and Central Falls do not of moneys already expended for this create a state debt contrary to purpose. Const., Art. IV, Sec. 13. PUBLIC DEBT AND THE POWEE OF TAXATION 1017 thority therefor, incur any debt in excess of three per cen- tum of the taxable property of such town, including the indebtedness of such town on the tenth day of April, one thousand eight hundred and seventy-eight, but the giving of a new note or bond for pre-existing debt, or for money borrowed and applied to the payment of such pre-exist- ing debt, is excepted from the provisions of this section, and the amount of any sinking fund shall be deducted in computing such indebtedness." § 506. South Carolina. Constitution 1895 with amendments. Art. VIII, Sec. 3: The General Assembly shall re- strict the powers of cities and towns to levy taxes and as- sessments, to borrow money and to contract debts, and no tax or assessment shall be levied or debt contracted except in pursuance of law, for public purposes specified by law." Art. VIII, Sec. 5: Cities and towns may acquire, by construction or purchase, and may operate water works systems and plants for furnishing lights, and may fur- nish water and lights to individuals, firms and private corporations for reasonable compensation; Provided, That no such construction or purchase shall be made ex- cept upon a majority vote of the electors in said cities or towns who are qualified to vote on the bonded indebted- ness of said cities or towns. Art. VIII, Sec. 7 : No city or town in this State shall hereafter incur any bonded debt which, including exist- ing bonded indebtedness, shall exceed eight per centum of the assessed value of the taxable property therein, and no such debt shall be created without submitting the ques- 11- — See as construing South Oar- termining the validity of bonds is- olina Act of 1873, entitled, "An act sued thereunder, Walker v. State, to reduce the volume of public debt 12 S. C. 200. and provide for the same," and de- 1018 PUBLIC SECURITIES tion as to the creation thereof to the qualified electors of such city or town, as provided in this Consitution for such special elections; and unless a majority of such electors voting on the question shall he in favor of creatin,g such further bonded debt, none shall be created: Provided, That this section shall not be construed to prevent the issuing of certificates of indebtedness in anticipation of the collection of taxes for amounts actually contained or to be contained in the taxes for the year when such cer- tificates are issued and payable out of such taxes : And Provided, further, That such cities and towns shall on the issuing of such bonds create a sinking fund for the redemption thereof at maturity. Nothing herein con- tained shall prevent the issuing of bonds to an amount sufficient to refund bonded indebtedness existing at the time of the adoption of this Constitution. At the election of Nov. 8, 1908, four amendments were adopted adding the following paragraphs to Art. VIII, Sec. 7: ' ' Provided, That the limitation proposed by this section, and by Sec. 5, Art. X, of this Constitution, shall not apply to bonded indebtedness incurred by the town of Darling- ton, where the proceeds of said bonds are applied solely for the purpose of drainage of said town and street im- provements, and where the question of incurring such indebtedness is submitted to the freeholders and qualified voters of such municipality, as provided in the Constitu- tion upon the question of other bonded indebtedness." "Provided, That the limitations imposed by this sec- tion and by Sec. 5 of Art. X, of this Constitution shall not apply to bonded indebtedness incurred by the towns of Aiken in the County of Aiken; Camden, in the Coimty of Kershaw ; Cheraw, in the County of Chesterfield ; Clin- ton, in the County of Laurens ; Edgefield, in the County of Edgefield; and St. Matthews, in the County of Cal- houn, when the proceeds of said bonds are applied solely and exclusively for the buUding, erecting, establishing • PUBLIC DEBT AND THE POWER OF TAXATION l0l9 and maintenance of water-works, electric-liglit plants, sewerage system or streets, and where the question of incurring such indebtedness is submitted to the qualified electors of said municipality, as provided in the Consti- tution, upon the question of bonded indebtedness. ' ' "Provided, further. That the limitations imposed by this section and by Sec. 5, of Art. X, of this Constitution, shall not apply to the bonded indebtedness incurred by the City of Aiken ; but said City of Aiken may increase its bonded indebtedness in the manner provided for in said section of said article to an amount not exceeding fifteen per cent of the value of the taxable property therein for the purpose of establishing, extending, com- pleting and repairing a system of water-works, sewer- age, electric lights and power." "Provided, further, That the limitations imposed by this section and by Sec. 5, Art. X, of this Constitution, shall not apply to bonded indebtedness incurred by the town of St. Matthews, but said town of St. Matthews may increase its bonded indebtedness in the manner provided in said section of said article to an amount not exceeding fifteen per cent of the value of the taxable property therein, where the proceeds of said bonds to the amount of twenty thousand ($20,000) dollars shall be turned over by the town council of said town of St. Matthews to the duly appointed commissioners of the county of Calhoun, for the purpose of aiding in the construction of public buildings for the County of Calhoun. ' ' "Provided, further, That the limitations imposed by this section and by Sec. 5 of Art. X, of this Constitution, shall not apply to the bonded indebtedness in and by any municipal corporation when the proceeds of said bonds are applied solely and exclusively for the pur- chase, establishment and maintenance of a water-works plant, or sewerage system, or lighting plant, and when the question of incurring such indebtedness is submitted to the freeholders and qualified voters of such municipality, 1020 PUBLIC SECURITIES as provided in the Constitution upon the question of other bonded indebtedness. ' ' Art. X, Sec. 5 : The bonded debt of any county, town- ship, school district, municipal corporation or political division or subdivision of this state shall never exceed eight per centum of the assessed value of all the taxable property therein. And no county, township, municipal corporation or other political division of this state shall hereafter be authorized to increase its bonded indebted- ness if at the time of any proposed increase thereof the aggregate amount of its already existing bonded debt amounts to eight per centum of the value of all taxable property therein as ascertained by the valuation for state taxation. And wherever there shall be several political divisions or municipal corporations covering or extending over the same territory, or portions thereof, possessing a power to levy a tax or contract a debt, then each of such politi- cal divisions or municipal corporations shall so exercise its power to increase its debt under the foregoing eight per cent limitation that the aggregate debt over and upon any territory of this state shall never exceed fifteen per centum of the value of all taxable property in such terri- tory as valued for taxation by the state : Provided, That nothing herein shall prevent the issue of bonds for the purpose of paying or refunding any valid municipal debt heretofore contracted in excess of eight per centum of the assessed value of all taxable property therein. Art. X, Sec. 6: The credit of the State shall not be pledged or loaned for the benefit of any individual, com- pany, association or corporation ; and the State shall not become a joint-owner of or stockholder in any company, association or corporation. The General Assembly shall not have power to authorize any county or township to levy a tax or issue bonds for any purpose except for edu- cational purposes, to build and repair public roads, build- ings and bridges, to maintain and support prisoners, pay PUBLIC DEBT AND THE POWER OF TAXATION 1021 jurors, county officers, and for litigation, quarantine and court expenses, and for ordinary county purposes, to sup- port paupers, and pay past indebtedness. Provided, That the limitation imposed by this section shall not apply to any township in the County of Greenwood, nor to any township in the County of Saluda, through which, in whole or in part, the line of railroad of Greenwood & Sa- luda Railroad shall be located and constructed, nor to the County of Saluda, such said townships in Greenwood County and Saluda County and the County of Saluda be- ing hereby expressly authorized to vote bonds in aid of the construction of the said proposed railroad, under such restrictions and limitations as the General Assembly may prescribe hereinafter; Provided, That the amount of such bonds shall not exceed eight per centum of the assessed valuation of the taxable property of such town- ships." (As amended in 1910.) Art. X, Sec. 7: No scrip, certificate or other evidence of State indebtedness shall be issued, except for the re- demption of stock, bonds or other evidences of indebt- edness previously issued, or for such debts as are ex- pressly authorized in this Constitution. Art. X, Sec. 11: To the end that the public debt of South Carolina may not hereafter be increased without the due consideration and free consent of the people of the State, the General Assembly is hereby forbidden to create any further debt or obligation, either by the loan of the credit of the State, by guaranty, endorsement or otherwise, except for the ordinary and current business of the State, without first submitting the question as to the creation of such new debt, guaranty, endorsement or loan of its credit to the qualified electors of this State at a general State election; and unless two-thirds of the qualified electors of this State, voting on the question, shall be in favor of increasing the debt, guaranty, en- dorsement or loan of its credit none shall be created or made. And any debt contracted by the State shall be by 1022 PUBLIC SECTJKITIES loan on State bonds, of amounts not less than fifty dol- lars each, bearing interest, payable not more than forty years after final passage of the law authorizing such debt. A correct registry of all of such bonds shall be kept by the treasurer in numerical order, so as to always exhibit the number and amount unpaid, and to whom sev- erally made payable. And the General Assembly shall levy an annual tax sufficient to pay the annual interest on said bonds. §507. South Dakota. Constitution as adopted Oct. 1, 1889, with amend- ments. Art. X, Sec. 2: Except as otherwise provided in the Constitution, no taxes or assessment shall be levied or collected or debts contracted by municipal corporations except in pursuance of law for public purposes specified by law; nor shall money raised by taxation, loan or as- sessment for one purpose ever be diverted to any other. Art. XIII, Sec. 1 : Neither the State nor any county, township or municipality shall loan or give its credit or make donation to or in aid of any individual, associa- tion or corporation, except for the necessary support of the poor, nor subscribe to or become the owner of the capital stock of any association or corporation, nor pay or become responsible for the debt or liability of any in- dividual, association or corporation; Provided, That the State may assume or pay such debt or liability when in- curred in time of war for the defense of the State. Nor shall the State engage in any work of internal improve- ment. Art. XIII, Sec. 2: For the purpose of defraying ex- traordinary expenses and making public improvements, or to meet casual deficits or failure in revenue, the State may contract debts never to exceed with previous debts in the aggregate $100,000, and no greater indebtedness PUBLIC DEBT AND THE POWER OP TAXATION 1023 shall be incurred except for the purpose of repelling in- vasion, suppressing insurrection, or defending the State or the United States in war, and provision shall be made by law for the payment of the interest annually and the principal when due, by tax levied for the purpose, or from other sources of revenue, which law providing for the payment of such interest and principal by such tax or otherwise shall be irrepealable until such debt is paid ; Provided, however. The State of South Dakota shall have the power to refund the territorial debt assumed by the State of South Dakota by bonds of the State of South Dakota. Art. XIII, Sec. 3 : The indebtedness of the State of South Dakota limited by Sec. 2 of this article shall be in addition to the debt of the Territory of Dakota assumed by and agreed to be paid by South Dakota. Art. XIII, Sec. 4 : The debt of any county, city, town, school district, civil township or other subdivision, shall never exceed five (5) per centum upon the assessed valu- ation of the taxable property therein for the year pre- ceding that in which said indebtedness is incurred. "In estimating the amount of the indebtedness which a municipality or subdivision may incur, the amount of indebtedness contracted prior to the adoption of the Con- stitution shall be included : "Provided, That any county, municipal corporation, civil township, district or other subdivision may incur an additional indebtedness not exceeding ten per cen- tum upon the assessed valuation of the taxable property therein for the year preceding that in which said indebt- edness is incurred, for the purpose of providing water and sewerage, for irrigation, domestic uses, sewerage and other purposes ; and, "Provided, further. That in a city where the popula- tion is 8,000 or more, such city may incur an indebted- ness not exceeding eight per centum upon the assessed valuation of the taxable property therein for the year 1024 PUBLIC SECURITIES next preceding that in which said indebtedness is in- curred, for the purpose of constructing street railways, electric lights or other lighting plants; "Provided, further, That no county, municipal cor- poration, civil township, district or subdivision shall be included within such district or subdivision without a majority vote in favor thereof, of the electors of the county, municipal corporation, civil township, district or other subdivision, as the case may be, which is pro- posed to be included therein, and no such debt shall ever be incurred for any of the purposes in this section pro- vided, unless authorized by a vote in favor thereof by a majority of the electors of such county, municipal cor- poration, civil township, district or subdivision incurring the same." (As amended in 1896 and 1902.) Art. XIII, Sec. 5 : Any city, county, town, school dis- trict or any other subdivision incurring indebtedness shall, at or before the time of so doing, provide for the collection of an annual tax sufficient to pay the interest and also the principal thereof when due, and all laws or ordinances providing for the payment of the interest or principal of any debt shall be irrepealable until such debt be paid. §508. Tennessee. Constitution adopted Feb. 23, 1870, with amend- ments. Art. II, Sec. 29 : * * * but the credit of no county, city, or town, shall be given or loaned to, or in aid of any person, company, association, or corporation and the assent of three-fourths of the votes cast at said elec- tion. Nor shall any county, city or town become a stock- holder with others in any company, association or cor- poration except upon a like election and the assent of a like majority (here follow certain exceptions as to the number of votes required). PUBLIC DEBT AND THE PQWEE OF TAXATION 1025 Art. II, Sec. 31 : State Aid Forbidden. The credit of this State shall not be hereafter loaned or given to or in aid of any person, association, company, corporation, or municipality; nor shall the State become the owner, in whole or in part, of any bank, or a stockholder with others in any association, company, corporation, or mu- nicipality. Art. II, Sec 33: State Bonds to Defaulting Rail- roads, None. No bonds of the State shall be issued to any railroad company which, at the time of its application for the same, shall be in default in paying the interest upon the State bonds previously loaned to it, or that shall hereafter, and before such application, sell or absolutely dispose of any State bonds loaned to it for less than par. Art. XI, Sec. 10 : Internal Improvements to be En- couraged. A well regulated system of internal improve- ment is calculated to develop the resources of the State and promote the happiness and prosperity of her citi- zens; therefore, it ought to be encouraged by the Gen- eral Assembly. §509. Texas. Constitution as ratified Feb. 17, 1876, with amend- ments. Art. Ill, Sec. 49: No debt shall be created by or on behalf of the State, except to supply casual deficiencies of revenue, repel invasion, suppress insurrection, defend the State in war, or pay existing debt ; and the debt cre- ated to supply deficiencies in the revenue shall never, ex- ceed in the aggregate at any one time two hundred thou- sand dollars. Art. Ill, Sec. 50 : The Legislature shall have no power to give or to lend, or to authorize the giving or lending, of the credit of the State in aid of, or to any person, as- sociation, or corporation, whether municipal or other, or to pledge the credit of the State in any manner whatso- , p. S.— 65 1026 PUBLIC SECUBITIES ever for the payment of the liabilities, present or pros- pective, of any individual, association of individuals, municipal or other corporation whatsoever. Art. Ill, Sec. 51 : The Legislature shall have no power to make any grant, or authorize the making of any grant, of public money to any individual, association of indi- viduals, municipal or other corporation whatsoever ; Pro- vided, That this shall not be so construed as to prevent the grant of aid in case of public calamity. Art. Ill, Sec. ,52, as amended in 1904 : The Legislature shall have no power to authorize any county, city, town or other political corporation or subdivision of the State to lend its credit or grant public money or thing of value in aid of, or to any individual, association or corporation whatsoever, or to become a stockholder in such corpora- tion, association or company; Provided, however. That under legislative provision any county, any political sub- division of a county, any number of adjoining counties, or any political subdivisions of the State, or any defined district now or hereafter to be described and defined within the State of Texas, and which may or may not include towns, villages, or municipal corporations, upon a vote of a two-thirds majority of the resident property taxpayers voting thereon who are qualified electors of such district or territory to be affected thereby, in addi- tion to all other debts, may issue bonds or otherwise lend its credit to any amount not to exceed one-fourth of the assessed valuation of the real property of such district or territory, except that the total bonded indebtedness of any city or town shall never exceed the limits im- posed by other provisions of this Constitution, and levy and collect such taxes to pay the interest thereon and pro- vide a sinking fund for the redemption thereof, as the Legislature may authorize, and in such manner as it may authojize the same, for the following purposes, to-wit: (a) The improvement of rivers, creeks and streams • PUBLIC DEBT AND THE POWEK OF TAXATION 1027 to prevent overflows, and to permit navigation thereof or irrigation therefrom, or in aid of such purpose. (b) The construction and maintenance of pools, lakes, reservoirs, dams, canals and waterways for the purpose of irrigation, drainage or navigation, or in aid thereof. (c) The construction, maintenance and operation of macadamized, graveled or paved roads and turnpikes, or in aid thereof. Art. XI, Sec. 3: No county, city or other municipal corporation shall hereafter become a subscriber to the capital of any private corporation or association, or make any appropriation or donation to the same, or in any wise loan its credit; but this shall not be construed to in any way affect any obligation heretofore undertaken pursuant to law. Art. XI, Sec. 5 : Cities having more than ten thousand inhabitants may have their charters granted or amended by special act of the Legislature, and may levy, assess, and collect such taxes as may be authorized by law, but no tax for any purpose shall ever be lawful, for any one year which shall exceed two and one-half per cent of the taxable property of such city; and no debt shall ever be created by any city, unless at the same time provision be made to assess and collect annually a sufficient sum to pay the interest thereon and create a sinking fund of at least two per cent thereon. Art. XI, Sec. 6 : Counties, cities and towns are author- ized, in such mode as may now or may hereafter be pro- vided by law, to levy, assess and collect the taxes neces- sary to pay the interest and provide a sinking fund to satisfy any indebtedness heretofore legally made and undertaken; but all such taxes shall be assessed and col- lected separately from that levied, assessed and collected for current expenses of municipal government, and shall when levied specify in the act of levying the purpose therefor, and such taxes may be paid in the coupons, 1028 PUBLIC SECURITIES ^ bonds, or other indebtedness for the payment of which such tax may have been levied. Art. XI, Sec. 7: All counties and cities bordering on the coast of the Gulf of Mexico are hereby authorized, upon a vote of two-thirds of the taxpayers therein (to be ascertained as may be provided by law), to levy and collect such tax for the construction of sea-walls, break- waters or sanitary purposes, as may be authorized by law, and may create a debt for such works and issue bonds in evidence thereof. But no debt for any purpose shall ever be incurred in any manner by any city or county, unless provision is made, at the time of creating the same, for levying and collecting a sufficient tax to pay the interest thereon and provide at least two per cent as a sinking fund ; and the condemnation of the right of way for the erection of such works shall be fully provided for. Art. XI, Sec. 8: The counties and cities on the Gulf Coast being subject to calamitous overflows, and a very large proportion of the general revenue being derived from those otherwise prosperous localities, the Legisla- ture is especially authorized to aid by donation of such portion of the public domain as may be deemed proper, and in such mode as may be provided by law, the con- struction of sea-walls or breakwaters, such aid to be pro- portioned to the extent and value of the works con- structed, or to be constructed, in any locality. §510. Utah. Constitution of 1895 with amendments. Art. Ill, Sec. 3: All debts and liabilities of the Ter- ritory of Utah incurred by authority of the legislative assembly thereof are hereby assured and shall be paid by this State. Art. XIV, Sec. 1: To meet casual deficits or failures in revenue, and for necessary expenditures for public pur- poses, including the erection of public buildings, and for PtTBLlC DEBT AND THE POWEB OF TAXATION 1029 the payment of all Territorial indebtedness assumed by the State, the State may contract debts not exceeding (as amended in 1910) in the aggregate at any one time an amount equal to one and one-half per centum of the value of the taxable property of the State, as shown by the last assessment for State purposes previous to the incurring of such indebtedness. But the State shall never contract any indebtedness, except as in the next section provided, in excess of such amount, and all moneys arising from loans herein authorized shall be applied solely to the pur- poses for which they were obtained. Art. XIV, Sec 2: The State may contract debts to repel invasion, suppress insurrection, or to defend the State in war but the money arising from the contract- ing of such debts shall be applied solely to the purpose for which it is obtained. ^^ Art. XIV, Sec. 3 : No debt in excess of the taxes for the current year shall be created by any county or subdivi- sion thereof, or by any school district therein, or by any city, town or village, or any subdivision thereof, in this State; unless the proposition to create such debt shall have been submitted to a vote of such qualified electors as shall have paid a property tax therein, in the year pre- ceding such election, and a majority of those voting thereon, shall have voted in favor of incurring such debt. Art. XIV, Sec. 4: When authorized to create indebt- edness as provided in Section 3 of this Article, no county shall become indebted to an amount, including existing indebtedness, exceeding 2%. No city, town, school dis- trict or other municipal corporation, shall become in- debted to an amount, including existing indebtedness, 12 — State V. Candland (Utah), derived from an exercise of the 104 Pae. 205. The phrase "shall State's pover of taxation." never contract any indebtedness" as Under this construction the debt used in Const., Art. XIV, Sees. 1 and authorized to be incurred by the 2, includes any obligations which regents of the state university held the State undertakes or is obligated an obligation or debt of the state, to pay out of future appropriations 1030 ' PUBLIC SECUEITIES exceeding 4% of the value of the taxable property therein, the value to be ascertained by the last assess- ment for State and county purposes previous to the incurring of such indebtedness; except that in incorpo- rated cities the assessment shall be taken from the last assessment for city purposes ; Provided, That no part of the indebtedness allowed in this section shall be incurred for other than strictly county, city, town or school dis- trict purposes ; Provided, further. That any city of the first and second class, when authorized as provided in Section 3 of this Article, may be allowed to incur a larger indebtedness, not to exceed four per centum, and anj^ city of the third class, or town, not to exceed (as amended in 1910) eight per centum additional, for sup- plying such city or town with water, artificia] lights or sewers when the works for supplying such water, light and sewers shall be owned and controlled by the munici- pality. Art. XIV, Sec. 5: All moneys borrowed by, or on behalf of the State, or any legal subdivision thereof, shall be used solely for the purpose specified in the law authorizing the loan. Art. XIV, Sec. 6 : The State shall not assume the debt, or any part thereof, of any county, city, town or school district. Art. XIV, Sec. 7 : Nothing in this article shall be so construed as to impair or add to the obligation of any debt heretofore contracted, in accordance with the laws of Utah Territory, by any county, citj-, town or school district, or to prevent the contracting of any debt, or the issuing bonds therefor, in accordance with said laws, upon any proposition for that purpose, which, according to said laws, may have been submitted to a vote of the quahfied electors of any county, city, town or school dis- trict before the day on which this Constitution takes effect. PUBLIC DEBT AND THE POWEE OP TAXATION 1031 §511. Vermont. Constitution established July 9, 1793 with amend- ments. There appears to be nothing in the constitution rela- tive to the debt making power of civil subdivisions. The Legislature has authorized in chap. 157, Eev. Stats, of 1906, sees. 3556-3558, 3574 and 3575 the incurring of indebtedness, the sections noted are as follows : Sec. 3556 : No municipal corporation shall create an indebtedness, unless to refund outstanding bonds or orders, to an amount exceeding five times its grand list last taken ; provided that it may, by a two-thirds vote by ballot of the voters present and voting at a meeting called for that purpose, increase such indebtedness an additional amount not exceeding five times such grand list. Bonds or obligations given or created in excess of the limit authorized by this section shall be void. See, 3557: In determining the amount of municipal indebtedness permitted by the preceding section, obliga- tions created for a water supply, sewers or electric lights, and temporary loans created in anticipation of the col- lection of taxes and necessary for meeting current expenses, shall not be taken into account ; Provided, That no such temporary loan shall be extended beyond the fiscal year for which it is made, and shall not exceed in amount 90% of the amount of taxes levied for such year; nor shall the provisions of this and the preceding section apply when the charter of a municipal corpora- tion limits its indebtedness. Sec. 3558: A town may aid in the construction of a railroad organized under the general law, by issuing bonds to aid such railroad, by taking the capital stock therein, or in such other manner as it directs; but the liability so assumed shall not exceed eight times the grand list of the town. Such aid shall be given as pro- vided in this chapter. 1032 PUBLIC SECUEITIES Sec. 3574: A town or incorporated village may issue bonds, to an amount not exceeding three times its grand list, for the purpose of purchasing road-making appa- ratus and for building permanent highways within the limits of such town or village. Sec. 3575: Such town or incorporated village may vote to issue such bonds at a meeting of the corporation, duly warned for that purpose, by a two-thirds majority of all the votes cast, and may stipulate in such vote by whom and in what manner the proceeds of such bonds shall be expended; but no town or incorporated village shall issue such bonds if it is already bonded to an amount exceeding five times its grand list. See also Rev. Stats. 1906, chap. 157, sees. 3567-3573, granting authority for the refunding of outstanding bonds and notes. §512. Virginia. Constitution effective July 10, 1902, with amend- ments. Art. VIII, Sec. 127: No city or town shall issue any bonds or other interest-bearing obligations for any pur- pose, or in any manner, to an amount which, including existing indebtedness, shall, at any time, exceed eighteen per centum of the assessed valuation of the real estate in the city or town subject to taxation, as shown by the last preceding assessment for taxes ; Provided, however, That nothing above contained in this section shall apply to those cities and towns whose charters' existing at the adoption of this constitution authorize a larger per- centage of indebtedness than is authorized by this sec- tion; and Provided, further. That in determining the limitation of the power of a city or town to incur indebt- edness there shall not be included the following classes of indebtedness : (a) Certificates of indebtedness, revenue bonds or PUBLIC DEBT AND THE POWER OF TAXATION 1033 other obligations issued in anticipation of the collection of the revenue of such city or town for the then current year ; Provided, That such certificates, bonds or other ob- ligations mature within one year from the date of their issue, and be not past due, and do not exceed the reve- nue for such year ; (b) Bonds authorized by an ordinance enacted in accordance with section one hundred and twenty-three, and approved by the affirmative vote of the majority of the qualified voters of the city or town voting upon the question of their issuance, at the general election next succeeding the enactment of the ordinance, or at a spe- cial election held for that purpose, for a supply of water or other specific undertaking from which the city or town may derive a revenue ; but from and after a period to be determined by council, not exceeding five years from the date of such election, whenever and for so long as such undertaking fails to produce sufficient revenue to pay for cost of operation and administration (including interest on bonds issued therefor, and the cost of insur- ance against loss by injury to persons or property), and an annual amount to be converted into a sinking fund sufficient to pay, at or before maturity, all bonds issued on account of said undertaking, all such bonds outstanding shall be included in determining the limitation of the power to incur indebtedness, unless the principal and interest thereof be made payable ex:clusively from the receipts of the undertaking. Art. XIII, Sec. 184: No debt shall be contracted by the State except to meet casual deficits in the revenue, to redeem a previous liability of the State, to suppress insurrection, repel invasion, or defend the State in time of war. No scrip, certificate or other evidence of State indebtedness, shall be issued, except for the transfer or redemption of stock previously issued, or for such debts as are expressly authorized in this Constitution. Art. XIII, Sec. 185 : Neither the credit of the State, 1034 PUBLIC SECUEITIES nor of any county, city or town, shall be, directly or indi- rectly, under any device or pretense whatsoever, granted to or in aid of any person, association, or corporation; nor shall the State, or any county, city, or town subscribe to or become interested in the stock or obligations of any company, association, or corporation, for the purpose of aiding in the construction or maintenance of its work; nor shall the State become a party to or become inter- ested in any work of internal improvement, except pubhc roads, or engage in carrying on any such work; nor assume any indebtedness of any county, city, or town, nor lend its credit to the same ; but this section shall not prevent a county, city or town from perfecting a sub- scription to the capital stock of a railroad company au- thorized by existing charter conditioned upon the affirm- ative vote of the voters and freeholders of such county, city or town in favor of such subscription; Provided, That such vote be had prior to July first, nineteen hun- dred and three. Art. XIII, Sec. 186: Prohibits the payment of debts or obligations created either by the State or any county, city or town in aid of the rebellion. §513. Washington. Constitution as adopted October 1, 1889, with amend- ments. Art. VIII, Sec. 1: The State may, to meet casual deficits or failure in revenues, or for expenses not pro- vided for, contract debts, but such debts, direct and con- tingent, singly or in the aggregate, shall not at any time exceed four hundred thousand dollars ($400,000), and the moneys arising from the loans creating such debts shall be applied to the purpose for which they were obtained or to repay the debts so contracted, and to no other purpose whatever. Art. VIII, Sec 2: In addition to the above limited PUBLIC DEBT AND THE POWEB OF TAXATION 1035 power to contract debts, the State may contract debts to repel invasion, suppress insurrection, or to defend the state in war, but the money arising from the contracting of such debts shall be applied to the purpose for which it was raised, and to no other purpose whatever. Art. VIII, Sec. 3: Except the debts specified in sec- tions one and two of this article, no debt shall hereafter be contracted by, or on behalf of this State, unless such debt shall be authorized by law for some single work or object to be distinctly specified therein, which law shall provide ways and means, exclusive of loans, for the pay- ment of the interest on such debts as it falls due, and also to pay and discharge the principal of such debt within twenty years from the time of the coutracting thereof. No such law shall take effect until it shall, at a general election, have been submitted to the people and have received a majority of all the votes cast for and against it at such election, and all moneys raised by authority of such law shall be applied only to the specific object therein stated, or to the payment of the debt thereby created, and such law shall be published in at least one newspaper in each county, if one be published therein, throughout the State, for three months next pre- ceding the election at which it is submitted to the people.^^ Art. VIII, Sec. 5 : The credit of the State shall not, in any manner be given or loaned to, or in aid of, any indi- vidual, association, company or corporation. Art. VIII, Sec. 6: No county, city, town, school dis- trict, or other municipal corporation shall for any pur- pose become indebted in any manner to an amount ex- ceeding one and one-half per centum of the taxable prop- is — Seattle Dock Co. v. Seattle & private contractors with liens on L. W. Waterway Co., 195 U. S. 624. state tidelands for their compensa- Affirming 77 Pac. 845, Laws of 1893, tion do not create a debt by or on Chap. 99, providing for the con- behalf of the State under Const., struction of public waterways by Art. VIII, Sec. 3. 1036 PUBLIC SECXJEITIES erty in such county, city, town, school district, or other municipal corporation, without the assent of three-fifths of the voters therein voting at an election to he held for that purpose, nor in cases requiring such assent shall the total indebtedness at any time exceed five per centum on the value of the taxable property therein, to be ascer- tained by the last assessment for State and county pur- poses previous to the incurring of such indebtedness, ex- cept that in incorporated cities the assessment shall be taken from the last assessment for city purposes : Pro- vided, That no part of the indebtedness allowed in this section shall be incurred for any purpose other than strictly county, city^ town, school district, or other munic- ipal purposes : Provided, further, That any city or town with such assent may be allowed to become indebted to a larger amount, but not exceeding five per centum addi- tional, for supplying such city or town with water, arti- ficial light, and sewers, when the works for supplying such water, light, and sewers shall be owned and con- trolled by the municipality. Art. VIII, Sec. 7: No county, city, town or other municipal corporation shall hereafter give any money or property, or loan its money or credit, to or in aid of any individual, association, company or corporation, except for the necessary support of the poor and infirm, or become directly or indirectly the owner of any stock in or bonds of any association, company or corporations. Art. XII, Sec. 9: The State shall not in any mannen loan its credit nor shall it subscribe to or be interested in, the stock of any company, association or corporation. § 514. West Virginia. Constitution as adopted in 1872, with amendments. Art. X, Sec. 4: No debt shall be contracted by this State, except to meet the casual deficits in the revenue; to redeem a previous Hability of the State, to suppress PUBLIC DEBT AND THE POWEB OF TAXATION 1037 insurrection, repel invasion, or defend the State in time of war ; but the payment of any liability other than that for the ordinary expenses of the State shall be equally distributed over a period of at least twenty years. Art. X, Sec. 6: The credit of the State shall not be granted to, or in aid of, any county, city, township, cor- poration or person ; nor shall the State ever assume, or become responsible for the debts or liabilities of any county, city, township, corporation, or person, nor shall the State ever hereafter become a joint owner or stock- holder in any company or association in this State or elsewhere, formed for any purpose whatever. Art. X, Sec. 8: No county, city, school district, or municipal corporation, except in cases where such cor- porations have already authorized their bonds to be issued, shall hereafter be allowed to become indebted, in any manner, or for any purpose, to an amount, includ- ing existing indebtedness, in the aggregate exceeding 5 per centum on the value of the taxable property therein, to be ascertained by the last assessment for State and County taxes, previous to the incurring of such indebted- ness, nor without, at the same time, providing for the collection of a direct annual tax sufficient to pay, annu- ally, the interest on such debt, and the principal thereof, within and not exceeding thirty-four years: Provided, That no debt shall be contracted under this section unless all questions connected with the same shall have been first submitted to a vote of the people and have received three-fifths of all the votes cast for and against the same. §515. Wisconsin. ( Constitution of 1848 with amendments. Art VIII, Sec. 3 : The credit of the State shall never be given or loaned in aid of any individual, association or corporation. Art. VIII, Sec. 4 : The State shall never contract any 1038 PUBLIC SECTJEITIES public debt, except in the cases and manner herein pro- vided. Art. Vin, Sec. 6 : For the purpose of defraying ordi- nary expenditures, the State may contract public debts but such debts shall never in the aggregate exceed $100,000. Every such debt shall be authorized by law, for some purpose or purposes to be distinctly specified therein; and the vote of a majority of all the members elected to each House, to be taken by yeas and nays, shall be necessary to the passage of such law ; and every such law shall provide for levying an annual tax sufK- cient to pay the annual interest of such debt, and the principal within five years from the passage of such law, and shall specially appropriate the proceeds of such taxes to the payment of such principal and interest, and such appropriation shall not be repealed, nor the taxes be postponed, or diminished, until the principal and inter- est of such debt shall have been wholly paid. Art. VIII, Sec. 7: The Legislature may also borrow money to repel invasion, suppress insurrection or defend the State in time of war ; but the money thus raised shall be applied exclusively to the object for which the loan was authorized, or to the repayment of the debt thereby created. Art. VIII, Sec. 9: No scrip, certificate or other evi- dence of State debt whatsoever shall be issued, except for such debts as are authorized by the sixth and sev- enth sections of this article. Art. VIII, Sec. 10 : The State shall never contract any debt for works of internal improvement or be a party in carrying on such works ; but whenever grants of land or other property shall have been made to the State especially dedicated by the grant to particular works of internal improvement, the State may carry on such par- ticular works and shall devote thereto the avails of such grants, and may pledge or appropriate the revenues de- PUBLIC DEBT AND THE POWER OF TAXATION 1039 rived from such works in aid of their completion. Pro- vided, That the State may appropriate moneys for the purpose of acquiring, preserving and developing the water power and forests of the State; but there shall not be appropriated under the authority of this section in any one year an amount to exceed two-tenths of one mill of the taxable property of the State as determined by the last preceding State assessment. Art. XI, Sec. 3, as amended November 3, 1874 : " It shall be the duty of the legislature and they are hereby em- powered to provide for the organization of cities and incorporated villages and to restrict their power of taxa- tion, assessment, borrowing money, contracting debts and loaning their credit so as to prevent abuses in assess- ments and taxation and in contracting debts by such municipal corporations. No county, city, town, village, school district or other municipal corporation shall be allowed to become indebted in any manner or for any purpose, to any amount, including existing indebtedness in the aggregate exceeding 5% on the value of the taxa- ble property therein, to be ascertained by the last assess- ment for State and county taxes previous to the incur- ring of such indebtedness. Any county, city, town, vil- lage, school district or other municipal corporation in- curring any indebtedness as aforesaid, shall before or at the time of doing so provide for the collection of a direct annual tax sufficient to pay the interest on such debt as it falls due, and also to pay and discharge the principal thereof within twenty years from the time of contracting the same. ' ' " 14 — Long V. New London, 9 Biss. city, constitutional under Act. XI, 539. An act authorizing a city to Sec. 3, requiring the Legislature to issue bonds "for such sum or sums restrict the power of taxation, bor- * * * as may be agreed upon by rowing money, etc. by municipalities, and between the directors of the rail- See, also, Perrin v. City of New road and the proper oflScials" of the London (Wis.), 30 N. W. 623. 1040 PUBLIC SECUBITIES §516. Wyoming. Constitution adopted 1889 with amendments. Art. Ill, Sec. 39 : The legislature shall have no power to pass any law authorizing the State or any county in the State to contract any debt or obligation in the con- struction of any railroad or give or loan its credit to or in aid of the construction of the same- Art. X, Sec. 5, Eailkoads : Neither the State, nor any county, township, school district or municipality shall loan or give its credit or make donations to or in aid of any railroad or telegraph line : Provided, That this sec- tion shall not apply to obligations of any county, city, township or school district, contracted prior to the adop- tion of this constitution. Art. XVI, Sec. 1 : The State of Wyoming shall not in any manner create any indebtedness exceeding one per centum on the assessed value of the taxable property in the state as shown bj^ the last general assessment for taxation, preceding; except to suppress insurrection or to provide for the public defense. Art. XVI, Sec. 2 : No debt in excess of the taxes for the current year, shall in any manner be created in the State of Wyoming, unless the proposition to create such debt shall have been submitted to a vote of the people and by them approved; except to suppress insurrection or to provide for the public defense. Art. XVI, Sec. 3 : No county in the State of Wyoming shall in any manner create any indebtedness, exceeding two per centum on the assessed value of taxable property in such county, as shown by the last general assessment, preceding; Provided, however. That any county, city, town, village or other subdivision thereof in the State of Wyoming, may bond its public debt existing at the time of the adoption of this constitution, in any sum not exceeding four per centum on the assessed value of the taxable property in such county, city, town, village or PUBLIC DEBT AND THE POWEB OF TAXATION 1041 other subdivision, as shown by the last general assess- ment for taxation. Art. XVI, Sec. 4: No debt in excess of the taxes for the current year shall, in any manner, be created by any county or subdivision thereof, or any city, town or village, or any subdivision thereof in the State of Wyoming, unless the proposition to create such debt shall have been submitted to a vote of the people thereof and by them approved. Art. XVI, Sec. 5 : No city, town or village, or any sub- division thereof, or any subdivision of any county of the State of Wyoming, shall, in any manner, create any indebtedness exceeding two per centum on the assessed value of the taxable property therein; Provided, how- ever. That any city, town or village may be authorized to create an additional indebtedness, not exceeding four per centum on the assessed value of the taxable property therein as shown by the last preceding general assess- ment, for the purpose of building sewerage therein. Debts contracted for supplying water to such city or town are excepted from the operation of this section. Art. XVI, Sec. 6: Neither the state nor any county, city, township, town, school district, or any other politi- cal subdivision, shall loan or give its credit or make donations to or in aid of any individual, association, or corporation, except for the necessary support of the poor, nor subscribe to or become the owner of the capital stock of any association or corporation. The state shall not engage in any work of internal improvement unless authorized by a two-thirds vote of the people. Art. XVI, Sec. 8: No bond or evidence of indebted- ness of the State shall be valid unless the same shall have endorsed thereon a certificate signed by the auditor and secretary of state that the bond or evidence of debt is issued pursuant to law and is within the debt limit. No bond or evidence of debt of any county, or bond of any township or other political subdivision, shall be valid 1042 PUBLIC SECUKITIES unless the same shall have endorsed thereon a certificate signed by the county auditor or other ofScer authorized by law to sign such certificate, stating that said bond or evidence of debt is issued pursuant to law and is within the debt limit. §517. Territorial. The power of territorial legislatures to incur debts or authorize the incurring of indebtedness is limited by Act of Congress, July 30, 1886, to be found in 24 Statutes at Large, Chap. 170, sections 3 and 4, which are as follows : Sec. 3: That no law of any territorial legislature shall authorize any debt to be contracted by or on behalf of such territory except in the following cases : To meet a casual deficit in the revenues, to pay the interest upon the territorial debt, to suppress insurrections, or to pro- vide for the public defense, except that in addition to any indebtedness created for such purposes, the legislature may authorize a loan for the erection of penal, charitable or educational institutions for such territory, if the total indebtedness of the territory is not thereby made to exceed one per centum upon the assessed value of the taxable property in such territory as shown by the last general assessment for taxation. And nothing in this act shall be construed to prohibit the refunding of any existing indebtedness of such ter- ritory, or of any political or municipal corporation, county, or other subdivision therein. Sec. 4: That no political or municipal corporation, county, or other subdivision in any of the territories of the United States shall ever become indebted in any man- ner or for any purpose to any amount in the aggregate, including existing indebtedness, exceeding four per cen- tum on the value of the taxable property within such corporation, county, or subdivision, to be ascertained by the last assessment for territorial and county taxes pre- PUBLIC DEBT AND THE POWEK OF TAXATION 1043 vious to the incurring of such indebtedness ; and all bonds or obligations in excess of such amount given by such corporation shall be void. That nothing in this act shall be so construed as to affect the validity of any act of any territorial legislature heretofore enacted, or of any obligations existing or contracted thereunder, nor to preclude the issuing of bonds already contracted for in pursuance of express provisions of law ; nor to prevent any territorial legisla- ture from legalizing the acts of any county, municipal corporation, or subdivision of any territory as to any bonds heretofore issued or contracted to be issued. § 518. Hawaii Territory. By an Act of Congress, laws of 1900, chap. 339, the limit of indebtedness is fixed at seven per cent of the assessed value of taxable property. § 519. The Philippine Islands. In sections 64, 66-73 of the Act of 1902, to provide for the civil government of the Philippine Islands, authority is to be found for the incurring of indebtedness and the issuance of municipal bonds by various municipalities subordinate to the Philippine Islands Government. CHAPTER XIX BOND FORMS AND RECORDS § 520. Marcy v. Township of Oswego.^ "The bonds to which coupons were attached involved in this case contained the following recital: "This bond is executed and issued by virtue of and in accordance with an Act of the Legislature of the said State of Kansas, entitled 'An Act to Enable Municipal Townships to Sub- scribe for Stock in any Railroad, and to Provide for the Payment of the Same, approved Feb. 25th, 1870, ' and in pursuance of and in accordance with the vote of three- fifths of the legal voters of said Township of Oswego, at a special election duly held on the seventeenth day of May, A. D. 1870." Each bond also declared that the Board of County Commissioners of the County of Labette, of which county the township of Oswego is a part, had caused it to be issued in the name and in behalf of said township, and to be signed by the chairman of the said Board of County Commissioners, and attested by the County Clerk, of the said County, under its seal. Accordingly, each bond was thus signed, attested and sealed. Nor is this all. The bonds were registered in the office of the State Auditor, and certified by him in accordance with the provisions of an Act of the Legislature. His certificate on the back of each bond declared that it had been regularly and legally issued, that the signatures thereto were genuine, and 1 — Marcy v. Township of Oswego, 92 U. S. 371, 23 L. Ed. 748. 1044 BOND FORMS AND EECOBDS 1045 that it liad been duly registered in accordance with the Act of the Legislature." § 521. County of Dixon v. Marshall Field.^ The recitals in the bonds which were relied on in this case to set in operation in favor of the defendant in error the doctrine of estoppel were as follows : ' ' This bond is one of a series of $87,000 issued under and in pursuance of an order of the county commissioners of the Coimty of Dixon, in the State of Nebraska, and authorized by an election held in the said County on the 27th day of December, A. D. 1875, and under and by virtue of Chap- ter 35 of the General Statutes of Nebraska, and amend- ments thereto, and the Constitution of the said State, article 12, adopted October, A. D. 1875." "These recitals, in conjunction with the certificate of the county clerk, and those of the secretary and auditor of state, it is claimed, declare a compliance with the law in the issue of the bonds, which, as against an innocent holder for value, cannot now be questioned." § 522. Morgan et al v. United States.^ a 165,120.) ■ (165,210. " (Consolidated debt. Issued under Act of Congress ap- proved March 3, 1865. Eedeemable after five and pay- able twenty years from date.) "1,000.) (1,000. "It is hereby certified that the United States of Amer- ica are indebted unto bearer in the sum of one thousand dollars, redeemable at the pleasure of the United States after the first day of July, 1870, and payable on the first day of July, 1885, with interest from the first day of July, 1865, inclusive, at six per cent per annum, payable 2 — County of Dixon v. Marshall States, 113 XJ. 8. 476, 28 L. Ed. Field, 111 U. S. 83, 28 L. Ed. 360. 1044. 3 — Morgan, et. al. v. The United 1046 iPUBLlC SJiCtrElTIES on the first day of January and July in each year, on the presentation of the proper coupon hereunto annexed. This debt is authorized by Act of Congress approved March 3, 1865. "Washington, July 1, 1865. J. Loweey, "For Register of the Treasury. "Six months' interest due July 1, 1885, payable with this bond. "(Thirteen coupons attached from and including cou- pon for interest due January 1, 1879, to and including coupon for interest due January 1, 1885.)" § 523. Bernard's Twp. v. Morrison et al.* "This bond is one of a series of like tenor, amounting in the whole to the sum of one hundred and twenty- seven thousand dollars, issued on the faith and credit of said Township in pursuance of an Act entitled 'An Act to Authorize Certain Towns in the Counties of Somerset, Morris, Essex and Union to issue Bonds and Take Stock in the Passaic Valley and Peapack Eailroad Company,' approved April 9, 1868. ' ' In testimony whereof, the undersigned commissioners of the said Township of Bernard, in the County of Som- erset, to carry into effect the purposes and provisions of the said Act, duly appointed, commissioned and sworn, have hereunto set our hands and seals the first day of January, in the year of our Lord one thousand eight hun- dred and sixty-nine. "John H. Andekson, (L. S.) "John Gueein, (L. S.) "Oliver R. Steele, (L. S.) ' ' Commissioners. "Registered in the county clerk's office. "William Ross, Je., "County Clerk." 4 — Bernard's Twp. v. Morrison, at al., 133 U. S. 523, 33 L. Ed. 726. BOND FOKMS AND EECOKDS 1047 § 524. Rich v. Town of Mentz.^ The following is the record in full as presented to the Supreme Court of the United States and appearing on pages 1076-77 of Book 33 of Lawyer's Edition: "I. On the 18th day of July, 1872, there was filed in the clerk's office of the County of Cayuga, N. Y., the judgment of the county judge of said county, with the pe- tition of certain taxpayers of which the following are copies : " 'County of Cayuga, N. Y. " 'In the matter of the application of the taxpayers of the Town of Mentz, Cayuga County, N. Y.— Petition. " 'To the Honorable the County Judge of the County of Cayuga, N. Y. : " 'The petition of the subscribers hereto respectfully shows : That they are a majority of the taxpayers of the Town of Mentz, in the County of Cayuga, and State of New York, whose names appear upon the last preceding assessment-roll or tax-list of said Town of Mentz, as owning or representing a majority of the taxable prop- erty in the corporate limits of the said Town of Mentz ; that they are such a majority of taxpayers, and are taxed or assessed for, or represent, such a majority of taxable property; that they desire that said Town shall create and issue its bonds to the amount of thirty thousand dol- lars ($30,000), which said amount does not exceed twenty per centum of the whole amount of taxable property, as shown by said assessment roll or list, and invest the same, or the proceeds thereof, in the stock of the Cayuga Northern Railroad Company, which is a railroad com- pany in the State of New York. " 'And your petitioners pray your honor to cause to be published the proper notice, to take proof of the facts 5 — Eieh v. Town of Mentz, 134 U. S. 632, 33 L. Ed. 1074. 1048 PUBLIC SECUBITIES set forth in this petition ; and that such proceedings may be had thereon as are authorized and prescribed by the statutes of the State of New York, in such case made and provided. " 'Dated April 20, 1872. " ' (Signed by) A. M. Geeen, and 224 other names, and verified by Green on the 28th day of May, 1872. " 'County of Cayuga, N. Y. " 'In the matter of the application of the taxpayers of the Town of Mentz, Cayuga County, N. Y. — Or- der of County Judge. " 'On the petition herein bearing date the 20th day of April, A. D. 1872, and on motion of H. V. Howland, at- torney for said petitioners, it is ordered that a notice be forthwith published in the Auburn Daily Advertiser, a newspaper published in the said County of Cayuga, di- rected to whom it may concern, and setting forth that on the 8th day of June, A. D., 1872, at 10 o 'clock in the fore- noon of that day, I, William E. Hughitt, county judge of the County of Cayuga, in the State of New York, will proceed to take proof of the facts set forth in said peti- tion, as to the number of taxpayers joining in said peti- tion, and as to the amount of taxable property repre- sented by them and that such proof will be taken at the grand jury room, in the court house of the City of Au- burn, in said County of Cayuga, N. Y. " 'Dated this 28th day of May, in the year of our Lord, 1872. " 'W. E. Hughitt, " 'Cayuga County Judge, ' ' ( Indorsed : ' Filed May 28, 1872. ' ) "(Then follows the usual affidavit of the printers of said newspaper, showing due publication of the notice of hearing.) BOND FORMS AND EECOEDS 1049 " 'County of Cayuga. " 'In the matter of the application of the taxpayers of the Town of Mentz. — Judgment. " 'Upon the filing of the petition herein and order made thereon, with a copy of the notice to take proof of the facts set forth in said petition, and the affidavit of pub- lication of the said notice in the manner required by law, and by the order made in this proceeding as aforesaid, together with the testimony taken therein ; and it appear- ing to the satisfaction of the court that the whole num- ber of taxpayers in the Town of Mentz, Cayuga County and State of New York, whose names appear upon the last assessment-roll or tax-list for the year 1871, is 434, and that of this number 225 have signed the said peti- tion, being more than one-half of said taxpayers ; and it further appearing that the total valuation of the taxable property of the said town of Mentz upon the said assess- ment-roll or tax-list is five hundred and forty thousand six hundred and forty-five dollars, and that the valua- tion of the property of said petitioners as represented upon the said roll or tax-list is $312,350, being thirty-one thousand and twenty-eight dollars in excess of one-half of the total valuation of the taxable property of said Town of Mentz. " 'Now, on motion of H. V. Howland, attorney for said petitioners, it is adjudged, decreed and determined that the said petitioners do represent a majority of the tax- payers of said Town of Mentz as shown by the last pre- ceding tax-list or assessment-roll, that is to say, the said tax-list or assessment-roll for the year 1871, and do rep- resent a majority of the taxable property upon said tax- list or assessment-roll. " 'And it is hereby ordered, that William A. Halsey, E. B. Somers and J. H. Wethey, three freeholders, resi- dents and taxpayers within the corporate limits of said Town of Mentz, be, and they hereby are, appointed com- 1050 PUBLIC SECUEITIES missioners for the period of five years next ensuing, and until others are appointed by a county judge of this county, or other competent authority, to cause or exe- cute in due form of law, with all reasonable dispatch, bonds of the said Town of Mentz, of the amount of thirty thousand dollars, and to issue or sell the same, or dis- pose of the same and invest the same or the proceeds thereof in, and to subscribe in the name of the said Town of Mentz, the stock of "The Cayuga Northern Railroad Company" to the amount of $30,000; and that the said commissioners and each of them shall have all the powers and be subject to the same duties and liabilities, imposed and prescribed in and by the Act of the Legislature of the State of New York entitled "An Act to Amend an Act to Authorize the Formation of Railroad Companies and to Regulate the Same," passed April 2d, 1850 (and all other Acts pertaining to that subject) "so as to Per- mit Municipal Corporations to Aid in the Construction of Railroads," passed May 18, 1869, and the several Acts amendatory thereof and supplementary thereto. " 'And it is further adjudged and ordered, that notice of the final determination herein as aforesaid be forth- with published in the Auburn Daily Advertiser, a news- paper published in the said County of Cayuga, once in each week for three weeks. " 'Dated July 17, 1872. '"W. E. HUGHITT, " 'Cayuga County Judge." ' ' ( Indorsed : ' Filed July 17, 1872. ' ) "(Due proofs were made of publication of the fore- going determination.) "II. The Cayuga Northern Railroad Company was duly incorporated under the General Statutes of the State, on the 22nd of April, 1872. "III. The persons named in said adjudication of the county judge aforesaid, qualified as commissioners under BOND tOBMS AND EECOBDS 1051 the statute and subscribed, in behalf of said Town of Mentz, for 300 shares of the capital stock of said com- pany, of par value of $100 per share, and paid therefor by the issue to said company of thirty Town of Mentz bonds of $1,000 each, in form as set out in the complaint, with coupons attached in the usual form, providing for the payment of interest semi-annually, January and July; principal payable July 15, 1902. ' ' The coupons were all in the following form : " '$35.00. " 'The Town of Mentz, County of Cayuga, will pay the bearer hereof, at the Fourth National Bank of New York, in the City of New York, on the 15th day of July, 1876, the sum of thirty -five dollars, for six months' interest then due on bond No. 7. " '$35.00. W. A. Halsey, Commissioner.' "IV. Prior to the commencement of this action the plaintiff became a purchaser of the five bonds and at- tached coupons which are described in the declaration in this action, from one Doming, who had theretofore pur- chased the same for cash, and without notice of an in- firmity, the plaintiff being a resident citizen of the State of Iowa. "V. Plaintiff produced said five bonds, with twelve coupons each $35, cut from each, in all sixty coupons, which with the interest to the day of trial amounted to $2,836.25. "VI. That no part of said railroad has ever been built; but the Town of Mentz raised the money by tax, according to said statute, and has paid the coupons of the entire issue, which fell due January 15, 1873; the Town has never paid any other coupons, and said com- missioners have retained, and now hold, the usual certifi- cates of stock in the said railroad company, 300 shares, received by them at the time of delivery of said bonds to the railroad company. 1052 PUBLIC SECURITIES "VII. All the proofs were taken subject to defend- ant's objection, that the county judge acquired no juris- diction under the original petition; and also that judg- ment of the county judge was insufficient. "And defendant insisted upon the aforesaid objection, and prayed for a dismissal of the complaint with costs." The form of the bonds, of which plaintiff held five, numbers 21, 22, 23, 24 and 25, with their coupons, was thus set out in the complaint : "No. 21. United States of America, $1,000. State of New York, Town of Mentz, County of Cayuga. "Issued by virtue of an Act of the Legislature of the State of New York, entitled, 'An Act to Amend an Act Entitled an Act to Authorize the Formation of Eailroad Corporations, and to Eegulate the Same, Passed April 2, 1850, so as to Permit Municipal Corporations to Aid in the Construction of Eailroads, Passed, May 18, 1869. ' "This Act authorizes the Town of Mentz, in the County of Cayuga to subscribe to the stock of 'The Cayuga Northern Eailroad Co.,' and to issue town bonds in pay- ment therefor. The whole amount of the bonds to be issued in pursuance of said Act is $30,000. "Know all men by these presents, that we, the under- signed commissioners under the above entitled Acts, for the Town of Mentz, in the County of Cayuga and State of New York, upon the faith and credit and in behalf of said Town, for value received promise to pay said bearer the sum of one thousand dollars on the 1st day of July in the year one thousand nine hundred and two (1902) at the Fourth National Bank of New York in the City of New York, with interest at seven per cent per annum; from and after the 15th day of July, 1877, payable semi- annually upon the 15th day of July, and January, in each year at the same place, on the presentation and surrender of the coupons for such interest hereto annexed. BOND POEMS AND BECORDS 1053 "In witness whereof we have hereunto set our hands and seals and have caused the coupons hereto annexed to be signed by W. A. Halsey, one of our number, this 15th day of July in the year one thousand eight hundred and seventy-two. "E. B. SoMERs, (L. S.) "W. A. Halsey, (L. S.) "J. H. Wbthey. (L. S.)" The judges of the court being divided in opinion as to the sufSciency of the petition, and of the adjudication and judgment of the county judge, judgment was ordered for the defendant in accordance with the opinion of the cir- cuit judge, and the following questions, upon which the division of opinion arose, were certified to this court: "First. Was the petition of certain taxpayers of the Town of Mentz, which was presented to the county judge of Cayuga County, in the State of New York, on the 28th day of May, 1872, and a copy of which is set forth in the finding and decision of the court, sufficient in the form and substance of its recital, to authorize the said county judge to take jurisdiction and proceed to render an ad- judication pursuant to chapter 907 of the Laws of New York of 1869, as amended by chapter 925 of the Laws of New York of 1871? ' ' Second. Was it essential in order to confer jurisdic- tion upon said county judge, to adjudicate pursuant to section 2 of chapter 907 of the Laws of 1869, as amended by section 2 of chapter 925 of the Laws of 1871, that the petition should state, among other things, in substance, that the taxpayers petitioning were a majority of taxpay- ers of the Town of Mentz, who were taxed or assessed for property, not including those taxed for dogs or high- way tax only? ' ' Third. Was the adjudication of the county judge of Cayuga County, made on the 17th day of July, 1872, a copy of which is set forth in the findings and decision of 1054 PUBLIC SBCUBITIES the court, sufficient to authorize the defendant to create and issue its bonds pursuant to chapter 907 of the Laws of New York of 1869, as amended by chapter 925 of the Laws of New York of 1871? ' ' Fourth. Was it essential in order to confer authority upon the defendant to create and issue its bonds under said Laws of 1869 and 1871, that the adjudication or judgment of the county judge should declare, in sub- stance, that the quorum of taxpayers who desired that the defendant should create and issue its bonds, was one ex- clusive of taxpayers who were assessed or taxed for dogs or highway tax only 1 ' ' § 525. Board of County Commissioners of the County of Chaflfee v. Potter.^ "No $1,000. "United States of America, County of Chaffee, State of Colorado. "Funding Bond. "(Series A.) "The county of Chaffee, in the State of Colorado ac- knowledges itself indebted, and promises to pay to or bearer, one thousand dollars, lawful money of the United States, for value received, redeemable at the pleasure of said county after ten years, and absolutely due and payable twenty ye.ars from the date hereof, at the office of the treasurer of said county, in the town of Buena Vista, with interest thereon at the rate of eight per cent per annum, payable semi-annu- ally on the first day of March, and the first day of Sep- tember of each year, at the office of the county treasurer 6 — Board of County Com'rs of the County of Chaffee v. Potter, 142 U, S. 355, 35 L. Ed. 1040. BOND FOEMS AND BECOEDS 1055 aforesaid, or at the banking-house of Kountze Brothers, in the City of New York, at the option of the holder, upon the presentation and surrender of the annexed coupons as they severally become due. ' ' This bond is issued by the Board of County Commis- sioners of said Chaffee County, in exchange at par for valid floating indebtedness of the said County, outstand- ing prior to August 31, 1882, under and by virtue of, and in full conformity with, the provisions of an Act of the General Assembly by the State of Colorado, entitled 'An Act to Enable the Several Counties of the State' to Fund their Floating Indebtedness,' approved February 21, 1881, and it is hereby certified that all the requirements of law have beeai fully complied with by the proper ofS- cers in the issuing of this bond. It is further certified that the total amount of this issue does not exceed the limit prescribed by the constitution of the State of Colo- rado, and that this issue of bonds has been authorized by a vote of a majority of the duly qualified electors of the said County of Chaffee, voting on the question at a gen- eral election duly held in said county, on the seventh day of November, A. D., 1882. "The bonds of this issue are comprised in three series designated 'A,' 'B,' and 'C,' respectively; the bonds of series 'A' being for the sum of one thousand dollars each, those of series 'B' for the sum of five hundred dol- lars each, and those of series 'C for the sum of one hundred dollars each. This bond is one of series 'A.' "The faith and credit of the County of Chaffee are hereby pledged for the punctual payment of the princi- pal and interest of this bond. "In testimony whereof, the board of county commis- sioners of the said County of Chaffee have caused this bond to be signed by their chairman, countersigned by the county treasurer and attested by the county clerk under 1056 PUBLIC SECUEITIES the seal of the county, this first day of December, A. D., 1882. "Chairman Board of County Commissioners. "Attest: "County Clerk. "(County Seal). ' ' Countersigned : "County Treasurer." § 526. City of Brenham v. German-American Bank, 7 "United States of America. "State of Texas. City of Brenham. "City of Brenham Bonds. "No $100. "Bonds for General Purposes, $15,000. ' ' Twenty years after date, for value received, the City of Brenham promises to pay to bearer one hundred dol- lars with interest at the rate of ten per cent per annum from date, payable semi-annua,lly, on the first days of September and March of each year, upon presentation of the proper coupon hereto annexed, both principal and interest payable at the office of the treasurer of the City of Brenham. This bond is redeemable by the City of Brenham after the expiration of ten years from date hereof. This bond is authorized by an ordinance of the City of Brenham, approved June 7th, A. D. 1879. "In witness whereof, the mayor and sec- retary of the City of Brenham hereunto set their hands and affix the seal of the City of Brenham, this 31st day of July, A. D. 1879. M. P. Keee, Mayor. "C. H. Caelisle, City Secretary." 7 — City of Brenham v. German- American Bank, 144 U. S. 173, 36 L. Ed. 390. BOND FORMS AND KECOEDS 1057 The ordinance referred to in the bonds is here given in full as it appears on page 392, Book 36, Lawyer's Edi- tion: "An ordinance to provide for the issue and sale of fifteen thousand dollars in coupon bonds of the city, to borrow money for general purposes. Be it ordained by the city council of the City of Bren- ham: Sec. 1. That the mayor be, and is hereby, authorized and empowered to have printed coupon bonds of the City of Brenham to the amount of fifteen thousand dollars. Sec. 2. Said bonds shall be three (3) of the denomina- tion of one thousand dollars ($1,000.00), fourteen (14) of the denomination of five hundred ($500.00) dollars, twenty-five (25) of the denomination of one hundred ($100.00) dollars and fifty of the denomination of fifty ($50.00) doEars. They shall be made payable to bearer twenty years after date at the office of the treasurer of the City of Brenham, with interest from date until paid, at the rate of ten per cent per annum, payable semi-annually on the first days of September and March, at the office of the treasurer of the City of Brenham, but the city shall have the right to redeem said bonds at any time after five years from date. Sec. 3. Said bonds shall be dated and interest begin to run on the first day of , A. D. 18 . . , provided that should any of said bonds be sold at a subsequent date the amount of interest then due shall be indorsed as a credit on the coupons first due. Sec. 4. Said bonds shall be signed by the mayor and countersigned by the city clerk, and the seal of the city shall be affixed, and they shall be numbered and reg- istered as Series 2, No , giving the number of the bond issued, commencing with No. 1. Sec. 5. Coupons shall be attached to each of said bonds for each semi-annual installment of interest, which said coupon shall have printed thereto the signature of 1058 PUBLIC SECURITIES the mayor and the city clerk, and shall be received for general ad valorem taxes of the city. Sec. 6. Said bonds shall be negotiated and sold by the mayor and the finance committee of the city as the same may be required for general purposes, but in no case shall they be sold at a greater discount than five per cent, and the proceeds thereof shall be placed in the treasury of the city to the credit of the general fund. Sec. 7. That there be, and is hereby appropriated, out of the general ad valorem tax of the city one-eighth of one per cent, or so much thereof as may be necessary, on the assessed value of the taxable property of the city, as a special interest and sinking fund with which to pay the interest on said bonds and liquidate the same, and said fund shall be kept separate from the other funds of the city and shall be used for no other purpose. Sec. 8. That this ordinance go into effect and have force from and after its passage. Approved June 7th, 1879. M. P. Keeb, Mayor. Attest: C. H. Caelisle, Secretary. § 527. Board of Education v. De Kay.^ "No School Bond. $1,000.00. ' ' City of Atchison, State of Kansas. "Know all men by these presents, that the City of Atchison, Kansas, for value received, is indebted to the bearer in the sum of one thousand dollars, which it prom- ises to pay on the 1st day of January, A. D., 1884, at the National Park Bank, in the City of New York, with in- terest at the rate of ten per cent per annum, payable semi-annually, on the 1st day of January and on the 1st day of July of each year upon presentation at the said National Park Bank of the interest coupons hereto at- tached as they mature; the last installment of interest 8 — Board of Education v. De Kay, 148 U. S. 591, 37 Lu Ed. 573. BOND FORMS AND KECOEDS 1059 payable with this bond. This bond is issued under and by virtue of an Act of the Legislature of the State of Kansas, entitled 'An Act to Organize Cities of the Second Class, Approved February 28th, 1868,' and is secured by pledge of the school fund and property of said city of Atchison for the payment of the principal and interest thereof, as the same may become due. "Dated at Atchison, this 1st day of January, 1869. (Signed) "Jno. A. Maetin, "President of the Board of Education. "W. F. Downs, ClerTc. "Countersigned: — "Feank Smith, Treasurer." § 528. Graves et al. v. County of Saline.» "United States of America. $1,000.00. "State of Illinois, County of Saline, funding bond, is- sued under the Act of 1865 as amended April 27, 1877, and June 4, 1879. Twenty years after date, for value received, the county of Saline promises to pay to the bearer hereof the sum of $1,000 in lawful money of the United States, at the office of the treasurer of the State of Illinois, in the City of New York, with interest at the rate of 6 per cent per an- num, payable annually, as shown by and upon the sur- render of the annexed coupons, as they severally become due, reserving, however, the right to redeem this bond at any time after five years from date. This bond is one of a series of 195 of like tenor, is- sued for the purpose of funding and retiring certain bind- ing, subsisting, legal obligations of said county, which remain outstanding and unpaid, under the provisions of an act of the general assembly of the State of Illinois, 9 — Graves, et al. v. County of Saline, 161 U. S. 359, 40 L. Ed. 732. 1060 PUBLIC SECtTRITIES entitled 'An Act to Enable counties, cities, towns, town- ships, school districts, and other municipal corporations to fund, retire and purchase their outstanding bonds and other evidences of indebtedness in the office of the audi- tor of public accounts,' approved February 13, 1865, and acts amendatory thereto, approved April 27, 1877, and June 4, 1879, and in pursuance of a vote of a major- ity of the legal voters of said county, voting at an election legally called, under said act, the 6th of November, 1883. We hereby certify that all requirements of said acts have been fully complied with in the issue thereof. In testimony whereof, we, the undersigned officers of said county, being duly authorized to execute this obliga- tion on its behalf, have hereunto set our signatures this 1st day of July, A. D. 1885. W. G. Fbith, Chairman of the County Board. W. E. Burnett, (Seal.) * County Clerk." Each of said bonds was duly registered according to law with the auditor of the state of Illinois, who indorsed upon each of said bonds the following : "State of Illinois. $1,000. Saline County Bond. Date of bond, July 1, 1885. Payable twenty years after date. Redeemable five years after date. Interest pay- able July 1, annually. Principal and interest payable at the office of the state treasurer of the state of Illinois, in the city of New York, and state of New York. Auditor's Office, Illinois, Springfield, Nov. 23d, 1885. I, Charles P. Swigert, auditor of public accounts of the state of Illinois, do hereby certify that the within bond has been registered in this office this day, pursuant to the provisions of an act entitled 'An act to enable counties, cities, towns, townships, school districts and other mu- nicipal corporations to fund, retire, and purchase their BOND rOEMS AND RECORDS 1061 outstanding bonds and other evidences of indebtednesa, and to provide for the registration of new bonds or other evidences of indebtedness, in the office of the au- ditor of public accounts,' approved February 13, 1865, and acts amendatory thereto, approved April 27, 1877, and June 4, 1879. I further certify that the aggregate equalized valuation of property assessed for taxation in said county for the year 1885 were certified to this office as follows : Real estate, $1,362,921. Personal property, $477,340. In testimony whereof, I have hereunto subscribed my name, and affixed the seal of my office, the day and year aforesaid. Charles P. Swigebt, (Seal.) Auditor Public Accounts." § 529. Woodruff v. State of Mississippi." "No. 309. $1,000. Mississippi Levee District No. 1. United States of America, State of Mississippi. Eight Per Cent Bond. One of a series of five hundred bonds of one thousand dollars each, numbered from one to five hundred consec- utively, issued by the levee board of the state of Missis- sippi, district No. 1, in pursuance of and by the authority granted in an act of the legislature of the state of Missis- sippi, approved March 17, 1871, entitled 'An act to re- deem and protect from overflow from the River Missis- sippi certain bottom lands herein described.' Know all men by these presents that the levee board of the state of Mississippi, district No. 1, under and by au- thority of the law mentioned in the caption hereof, here- by acknowledge themselves, for value received, indebted to the bearer in the sum of one thousand dollars in gold 10 — Woodruff V. State of Missis- sippi, 162 U. S. 291, 40 L. Ed. 973. 1062 PUBLIC SECURITIES coin of the United States of America, which said sum the said levee board of the state of Mississippi, district No. 1, for themselves and their successors, do hereby bind themselves and engage well and truly to pay to the bearer on the 1st day of January, A. D. 1878, at the bank- ing house of the National Park Bank, in the city of New York ; and the said levee board of the state of Mississip- pi, district No. 1, for themselves and their successors, do hereby engage to pay an interest thereof of 8 per cent per annum, payable semi-annually on the 1st days of Janu- ary and July in each and every year ensuing the date hereof until the maturity and payment of this bond, at the place of payment mentioned in the coupons hereto annexed, upon the delivery of said coupons as they sev- erally become due. In testimony whereof, the president of the levee board of the state of Mississippi, district No. 1, has signed and the treasurer of said board has countersigned these pres- ents, and the president has caused the seal of the said board to be afSxed hereto the first of January, in the year of our Lord one thousand eight hundred and sev- enty-two. (Signed) M. S. Alcoeit, President. (Signed) A. R. Howe, Treasurer." Upon each bond was printed as an endorsement, sec- tions 7, 8, 9, 10, 20 and 29 of the act of 1871. § 530. County of Presidio v. Noel-Young Bond & Stock Co." The statement in the opinion of the court in this case relative to the form of bond is as follows: "Each of the bonds sued on is in the name of the county, is for $1,000, and payable to bearer fifteen years after date, at 8 per 11 — County of Presidio v. Noel- Young Bond & Stock Co., 212 U. S. 558, 53 L. Ed. 402. BOND FORMS AND BECOEDS 1063 cent per annum interest, on the 10th of April at the state treasury. It recites that it was 'issued by virtue of an act of the legislature of the state of Texas, entitled "An act to authorize the county commissioners' court of the several counties of the state to issue bonds for the erection of a court house to levy a tax to pay for the same," approved February 11, 1881, and by virtue of the provisions of chapter 17, laws of called session of the eighteenth legislature, which said chapter has since been validated by the act of March 27, 1885, authorizing the county commissioners' court of the several counties of the state to issue bonds for the erection of a county jail, and by order of the county commissioners' court of the several counties of the state to issue bonds for the erection of a county jail, and by order of the commis- sioners' court of said county of Presidio, on the 9th day of February, 1886, and is redeemable before maturity at the pleasure of the county. ' ' To each bond was affixed the seal of the county com- missioners' court and each was signed by the county judge, countersigned by the clerk of the county court and by the county treasurer, the latter certifying that it had been registered. § 531. National Life Insurance Co. v. Board of Education of the City of Huron.^^ The following is a copy of one of the bonds from which these coupons were cut: "Issued in accordance with the provisions of sections 1830, 1831 and 1832 of the Compiled Laws of 1887, of Da- kota Territory, and in force in the state of South Da- kota, authorizing boards of education to issue bonds to raise funds to purchase school sites, erect school build- ings, or to fund bonded indebtedness. 12 — National Life Insurance Co. V. Board of Education of the City of Huron, 62 Fed. 778. 1064 PUBLIC SECURITIES "No. 1. United States of America. $500.00. "The State of South Dakota, Board of Education, "City of Huron. "The board of education of the city of Huron, county of Beadle, state of South Dakota, fifteen years after the date hereof, for value received, promises to pay bearer five hundred dollars, lawful money of the United States, at office of the Chase National Bank, New York City, with interest thereon at the rate of six per cent per annum, payable semi-annually according to the tenor and effect of the annexed coupons. The bond is one of a series of bonds of like date, tenor and effect, amounting in the aggregate to sixty thousand dollars, and numbered from one to one hundred and twenty, inclusive, issued to raise funds for the purchase of a school site, and for the erec- tion of a school building thereon. And it is hereby cer- tified and recited that all acts, conditions, and things re- quired to be done, precedent to and in the issuing of said bonds, have duly happened and been performed in regu- lar and due form as required by law, and that the total amount of this issue of bonds, together with all other outstanding indebtedness of said board of education, does not exceed the statutory or constitutional limitation and that this bond has been duly registered by the clerk of the board of education in a book provided for that pur- pose, as required by law. "In testimony whereof, the board of education of the city of Huron, in the county of Beadle, state of South Da- kota, has caused this bond to be signed by its president, attested by its clerk, countersigned by its treasurer, and the seal of said board of education to be hereunto affixed, at the city of Huron, this 4th day of October, A. D. 1890. (Seal.) "(Signed) F. F. Smith, President. " (Countersigned) J. C. Klemme, Treasurer. ' ' Attest : John Westdahl, Clerk." BOND FOfiMS AND EECOEDS 1065 § 532. Risley v. Village of Howell.is "No $1,000.00. "The United States of America. "State of Michigan (Michigan coat of arms), "Village of Howell. "Improvement Bond. "Know all men by these presents, that the village of Howell, in the state of Michigan,, acknowledges to owe and promises to pay to J. M. Ashley, Jr., or bearer, one thousand dollars, lawful money of the United States of America, on the first day of , in the year of our Lord, one thousand eight hundred and , at the Fourth National Bank, in the city of New York, with interest at the rate of sis per centum per annum payable semi-annually, on the first days of December and June in each year, on the surrender of the annexed coupons as they severally become due. This bond is issued under and by authority of a special act of the state of Michigan, entitled 'An act to authorize the village of Howell to raise money to make public improvements in the village of Howell, being No. 248 of the Local Acts of 1885, of the legislature of the state of Michigan,' approved February 25, 1885, and also under the ordinance of the village of Howell, passed August 12, 1885. "In testimony whereof, the said village of Howell has caused these presents to be signed by the president and recorder of said village, and to be sealed with the seal of said village, this twelfth day of August, A. D. 1885. "(Seal.) (Signed) Geo. H. Chapel. "(Signed) Jay Coeson." 13 — Eisley v. Village of Howell, 64 Fed. 453. 1066 PUBLIC SECUBITIES § 533. Hughes County, S. D., v. Livingston." "Number $500.00. "United States of America. "State of South Dakota, "Hughes County Funding Bond. "Know all men by these presents, that the county of Hughes, in the state of South Dakota, acknowledges it- self to owe, and for value received hereby promises to pay to T. W. Pratt or bearer, the sum of five hundred dollars ($500.00); in lawful money of the United States of America, on the sixth day of July, A. D. 1911, or at any time after the sixth day of July, A. D. 1901, at the option of said county, with interest thereon at the rate of six per centum per annum, payable annually on the sixth day of July in each year, on presentation and sur- render of the annexed interest coupons as they severally become due. Both principal and interest of this bond are payable at the Chemical National Bank, in the City of New York, and the state of New York. This bond is one of a series of like tenor and date, numbered from 1 to 224, both inclusive, aggregating the sum of $112,000.00, and is issued by said county of Hughes for the sole pur- pose of funding the outstanding indebtedness of said county incurred for constructing a court house and jail, and is issued in pursuance of an act of the Eighteenth legislative assembly of the territory of Dakota, entitled 'An act authorizing and empowering organized counties of Dakota to erect county buildings for court house and jail purposes, and to issue and dispose of bonds to pro- vide funds to pay therefor, and to provide for the pay- ment of principal and interest of such bonds.' (Laws Dak. T. 1889, c. 42), and in accordance with an election duly called and held on the second day of June, 1891, and it is hereby certified and recited that all acts, conditions, 14 — Hughes County, S. D. v. Liv- ingston, 104 Fed. 306. BOND FORMS AND EECORDS 1067 and things required to be done precedent to and in tlie issuing of this series of bonds have been properly done, happened, and been performed in the regular and due form, as required by law, and that the total indebted- ness of said county, including this issue of bonds, does not exceed the constitutional and statutory limitations. In witness whereof (that) said county of Hughes, by its board of county commissioners, has caused this bond to be signed by the chairman of said board, attested by the county auditor of said county, and caused the seal of said county to be affixed hereto the sixth day of July, A. D. 1891. "(Signed.) John F. Hughes, "Chairman of the Board of County Commissioners. "Attest: Haery Ernest,, Cownii/ Auditor. "Registered in my office, according to law: "Thomas H. Green, "County Treasurer." §534. The County of Presidio v. Noel- Young Bond & Stock Company. ^^ Plaintiff's Original Petition To the Honorable U. S. Circuit Court, W. D. T., El Paso, Texas : The Noel- Young Bond and Stock Company, Plaintiff complaining of the County of Presidio, in the State of Texas, Defendant, respectfully states: That plaintiff is a corporation duly incorporated and organized under the laws of the State of Missouri and is not a resident of the State of Texas ; and the defendant is a municipal corporation constituting one of the counties of the State of Texas and organized under the laws of said State, and that W. W. Bogel, who is a resident of the 15 — 'The County of Presidio v. Noel- Young Bond & Stock Company, 212 U. S. 58, 53 L. Ed. 402. 1068 PUBLIC SECUEITIES said County of Presidio, is the County Judge of said county and said county is located in the Western District of Texas. Plaintiff states that on the 6th day of December, 1886, said County of Presidio executed and delivered its cer- tain negotiable or written obligations and bonds num- bered 90, 91, 92, 94, 95, and 96, each and every one of said bonds and obligations being issued, as is represented and recited in the same, for the erection of a courthouse and jail, said recital in each of said bonds is as follows : ' ' This bond is issued by virtue of an act of the Legis- lature of the State of Texas, entitled 'An Act to author- ize the County Commissioners ' court of the several coun- ties of the state, to issue bonds for the erection of a court house, and to levy a tax to pay for same ; approved Feb- ruary 11th, 1881, and by virtue of the provision of Chap- ter 17, laws of called session of the 18th Legislature, which said chapter has since been validated by the Act of March 27th, 1885, authorizing the County Commis- sioners' Court of the several counties of the state, to is- sue bonds for the erection of a county jail, and by order of the County Commissioners' Court of said County of Presidio, on the 9th day of February, A. D. 1886, and is redeemable before maturity at the pleasure of the county. ' ' Plaintiff states that each of said bonds is endorsed and was endorsed at the time of its issuance, with the follow- ing printed endorsement "Bond No $1,000.00 Pre- sidio County Court-house and Jail Bond." Plaintiff states that each and every one of said bonds was alike and of the same tenor and effect (excepting the numbers thereof), and they all bear interest at the rate of eight per cent per annum, payable annually on the 10th day of April, at the state treasury, on surrender of the proper coupons attached thereto, and all of said bonds were duly signed and executed by the proper officers and agents of said County of Presidio and were duly regis- ' BOND POEMS AND EECOBDS 1069 tered by the treasurer of said county under the direction and orders of the Commissioners' Court of said county. That by each of said bonds the said County of Presidio acknowledged itself indebted to, and promised to pay to the bearer thereof the sum of One Thousand Dollars fif- teen years after the date thereof, to-wit: fifteen years after December 6th, 1886, with interest at the rate of 8 per cent per annum payable as aforesaid on the presenta- tion and surrender of the proper coupons thereto at- tached, and that said bonds and coupons were duly is- sued by virtue of the authority recited in them and by authority of law. That to each of said bonds above mentioned there were attached fifteen coupons of and for the sum of $80.00 each, for the annual interest of 8 per cent provided for in the same whereby the County of Presidio promised in each of said coupons to pay to the bearer thereof the sum of $80.00. That one of said coupons on each of said bonds has become due on the 10th day of April of each and ever^ year since their issuance, up to and including the year 1900, and each and all of said coupons were and are pay- able to the bearer of same and were and are signed by the proper officers of said county and were and are at- tested as required by law: that the plaintiff. The Noel- Young Bond and Stock Company is the bearer and holder of each and all of said bonds Nos. 90, 91, 92, 94, 95, and 96, and of the interest coupons which were attached there- to, as aforesaid. That all of the interest coupons which were attached to said bonds up to and including the year 1895, have been paid, and that the six coupons for $80.00, each pay- able on April 10th, 1896, belonging to and issued in con- nection with said six bonds, and the six coupons for $80.00 each payable on April 10th, 1897, and the six cou- pons for $80.00 each payable on April 10th, 1898, and the six coupons for $80.00 each payable on April 10th, 1899, 1070 PUBLIC SECURITIES and the six coupons for $80.00 each payable on April 10th, 1900, belonging to and issued in connection with said bonds, are all past due and remain unpaid, and that the principal due on said thirty coupons amounts in the ag- gregate to the sum of $2400.00 Plaintiff states that all of said six bonds matured and became due and payable on the 6th day of December, 1901, and there being no coupons on them representing the interest accruing after April 10th, 1900, there is due upon the same interest at 8 per cent per annum from April 10th, 1900. Plaintiff says that payment of said six bonds for $1000.00 each aggregating $6000.00, with interest on the same at the rate of 8 per cent per annum from April 10th, 1900, and the payment of all of said thirty coupons and interest hereinbefore described has been duly de- manded and all of said bonds and coupons have been duly presented to the Commissioners' Court of Presidio County, Texas, for payment and allowance, and all the same have been by the Commissioners' Court of Presidio County heretofore wholly refused and disallowed and the payment of the same has been refused, and said court has refused to recognize said bonds and coupons in any way as just and valid claims against said county ; and by the order of said Commissioners ' Court, said county has repudiated any and all liability on said bonds and cou- pons. That the principal due on said six coupons for the sum of $80.00 each, which fell due April 10th, 1896, is $480.00 and the principal due on said six coupons for the sum of $80.00 each, which fell due on April 10th, 1897, is $480.00 and the principal due on said six coupons for the sum of $80.00 each which fell due on April 10th, 1898, is $480.00 and the principal due on said six coupons for the sum of $80.00 each, which fell due on April 10th, 1899, is $480.00 and the principal due on said six coupons for the sum of $80.00 each which fell due on April 10th, 1900 is BOND FORMS AND EECOEDS 1071 $480.00 and the principal due on the said six bonds as aforesaid is $6,000.00. Plaintiff states that said defendant the County of Pre- sidio, has never paid plaintiff, the legal holder, owner and bearer of said bonds and coupons, any amount what- ever due thereon; and plaintiff is damaged in the sum of $10,000. Plaintiff prays that the defendant, the County of Pre- sidio, Texas, be duly cited, as the law provides, and it prays judgment against said County of Presidio for the amount of the bonds sued on, to-wit : $6,000.00 with in- terest on the same at eight per cent per annum from April 10th, 1900, and for the whole amount of said cou- pons, with interest on the coupons, hereinbefore de- scribed respectively, at the rate of six per cent per an- num from the time they matured respectively; and it prays judgment for costs and asks for general relief. PaTTEBSON & BuCKLEE, Attorneys for the Plaintiff. §535. Defendant's first amended original answer. And now comes the defendant, Presidio County by its attorneys in the above styled and numbered cause, and by leave of the Court first had and obtained, amends its answer heretofore filed, and in lieu thereof, files the fol- lowing pleas to the plaintiff 's petition : (1.) And for plea and answer to plaintiff's action de- fendant comes by its attorneys and says, that plaintiff ought not to have and recover herein for that, heretofore, to-wit : On the 28th day of March, 1893, in a certain suit therein pending in the District Court in and for Presidio County, Texas, wherein Ball, Hutchings & Company were the plaintiffs and the said Presidio County, and the coun- ties of Brewster, Jeff Davis, Buchel and Foley, in the State of Texas, were the defendants, in which suit the plaintiffs sought to recover judgment for the sum of 1072 PUBLIC SBCtTBITIES $1,440.00, being the interest due on certain interest bearing coupon bonds attached to bonds numbered 90, 91, 92, 93, 94, 95, and 96 inclusive, the said bonds pur- porting to have been issued on the 6th day of December, 1886, by Presidio County, for one thousand dollars each, payable to bearer fifteen years after date with interest at the rate of 8 per cent per annum, which interest was evidenced by fifteen coupons attached to each of said bonds of $80.00 each, which numbered consecutively from 1 to 15, of which coupons plaintiffs alleged they were the holders and bearers, and became so for value before ma- turity, without notice of any irregularity or infirmity af- fecting the validity of either of said bonds or coupons. That among other defenses plead by this defendant in said suit, it was alleged that if said bonds were issued and delivered to plaintiffs of [or] their assignors, they were so issued and delivered for an unlawful purpose, to- wit: for the purpose of furnishing the courthouse of Marfa as per specifications of a certain contract made with Britton & Long for the sum of seven thousand dol- lars, as appears from the proceedings of the Commis- sioners' Court of Presidio County, dated December 4th, 1886, that the order and proceedings of said Commis- sioners' Court in issuing and delivering said bonds for the aforesaid purpose were fraudulent and illegal and void and that the contractors to whom said.coupons and bonds were issued, and the subsequent holders thereof had notice of the purposes above stated, for which said bonds were issued, and in said plea, it was further al- leged that Presidio County, the defendant herein, issued certain bonds numbered one to sixty inclusive, for the purpose of building a courthouse, with interest coupons attached, which were delivered to J. W. Britton, a con- tractor, that bonds and coupons for building a jail, num- bered 61 to 86 inclusive, were delivered to D. C. Ander- son, a contractor, that bonds for the construction of wa- ter works, numbered from eighty-seven to eighty-nine BOND FORMS AND EECOEDS 1073 inclusive, with interest coupons attached, were issued to J. H. Britton, and that coupons attached to said bonds numbered ninety to ninety-six inclusive, the subject mat- ter of said suit, were issued on the 6th day of December, 1886, and delivered to Britton & Long, contractors, for the purpose of purchasing furniture for the courthouse at Marf a, and that if said County Commissioners ' Court had any authority in law to issue bonds for the building of the courthouse and jail at Marfa, such power had been exhausted by issuing the bonds numbered one to eighty-six inclusive, and the interest coupons attached thereto and that the subsequent issuance and delivery of the bonds for furnishing the courthouse was without au- thority of law, fraudulent and void, and that the proceed- ings of the Commissioners' Court in relation thereto af- fected with notice all persons purchasing and dealing in said bonds and interest coupons, and especially the plain- tiff in said suit, and defendant says that upon issue joined upon said pleadings the plaintiffs and defendants as aforesaid, the District Court of Presidio County, the Honorable C. N. Buckler presiding, before whom said case was tried without a jury, jury being waived, en- tered in substance the following judgment: Ball, Hutchings & Company vs. Peesidio County et al. Now on this, the 28th day of March, 1893, this cause came on for trial, and all the parties to the action an- nounced ready for trial, and a jury being waived, and after hearing the evidence and argument of counsel, was of the opinion that the law and the facts were with the defendants, and so found, wherefore, the Court doth or- der and adjudge that the plaintiffs herein. Ball, Hutch- ings & Company, recover nothing against the defendants, Presidio County, Jeff Davis County, Brewster County, 1074 PUBLIC SECUEITIES Buchel County and Foley County, and that the said de- fendants, and each of them, go hence without day and re- cover their costs of the plaintiff herein, and the plaintiff, Ball, Hutchings & Company, pay all the costs incurred in this action, and that execution issue therefor, and to the judgment of the Court as heretofore set out. The plain- tiff by their counsel, in open court excepted, and gave no- tice of appeal. And defendants say that the coupons and bonds re- ferred to in the plaintiff's petition in this case are the same bonds to which the coupons were attached that were sued upon in the aforesaid case, in which judgment was rendered against the plaintiff. Ball, Hutchings & Company, except bond and coupons attached thereto, numbered ninety-three, which are not involved in this suit; and defendant further says that the judgment ren- dered against plaintiff in said suit of Ball, Hutchings & Company, vs. the defendants aforesaid, in the District Court of Presidio County, Texas, was thereafter in all things affirmed by the Supreme Court of the State of Texas, on, to-wit : the 4th day of March, A. D. 1895. The defendant says that the aforementioned suit was upon interest coupons attached to bonds numbered ninety to ninety-six inclusive, and are the same identical bonds sued on in this case, except bond number ninety-three, as aforesaid, as by the record and proceedings thereof will more fully appear, which said judgment of the Dis- trict Court of Presidio County, being affirmed by the Su- preme Court of the State of Texas, still remains in full force and effect, and is in no wise reversed or made void, and this the said defendant is ready to verify by such record, wherefore the defendant pleads said judgment in bar of this suit, and prays judgment against the said plaintiff thereon and for all costs of suit. Bball & Kemp, J. A. Gillett, Attorneys for Defendants. BOND FOEMS AND KECOKDS 1075 (2.) And for further plea in this behalf defendant says that plaintiff ought not to have and recover herein upon the said series of bonds and coupons attached, sued upon in this case, being numbered ninety, ninety-one, ninety-two, ninety-four, ninety-five and ninety-six, be- cause the same were issued and delivered to Britton & Long, contractors, for the fraudulent and illegal purpose of furnishing the courthouse at Marf a, which had already been constructed, and because said bonds and coupons attached thereto were issued without any lawful author- ity, in this ; that the power of the county to erect a court- house and jail at Marfa having been exhausted, as ap- pears from the order of the Commissioners' Court of Presidio County on February 9th, 1886, recited in face of said bonds and the contract therein mentioned. The purchasers of the bonds in suit were put upon inquiry and affected with notice of the fraudulent and illegal character of said bonds. That is to say : that on the 9th day of February, 1886, the Commissioners' Court of Presidio County, Texas, entered an order embodying the following: (1) The bid of Britton to construct a court- house at Marfa, Presidio County, Texas, for sixty thou- sand dollars, to be paid in courthouse and jail bonds, and that of Anderson to construct a jail at the same place for twenty-six thousand dollars, to be paid in the same kind of bonds, which were accepted; (2) Britton and Anderson were respectively required within ten days from February 9th, 1886, the date of said order, to enter into contracts to construct same; (3.) Work to begin in twenty days from date of contract, and the courthouse to be furnished within one year, and the jail to be finished within six months from date of contracts; (4.) the bonds were to be of the denomination of one thousand dollars each, to bear interest at eight per cent, to run fifteen years from their dates, and the sixty thousand dollars to be delivered to Britton wear [were] to bear same date as his contract to build courthouse, thirty thousand dollars 1076 PUBLIC SECURITIES of them to be delivered to liim when the contract was signed, and thirty thousand when the court house was half finished and the twenty-six thousand dollars to be delivered to Anderson were to bear the same date as his contract to build the jail, thirteen thousand dollars of them to be delivered to him when the contract was signed and thirteen thousand dollars when the jail was half fin- ished; (5.) And the County Judge was authorized on behalf of the county, to enter into said contracts with Britton and Anderson, and to issue, and to deliver to them respectively, said bonds as above provided; that sixty of said bonds numbering one to sixty inclusive, were dated February 11th, 1886, and delivered to Britton, and that twenty-six of said bonds, numbering from sixty-one to eighty-six inclusive, were dated February 15, 1886, and delivered to Anderson, said 86 bonds being for one thou- sand dollars each, were of the bonds authorized to be is- sued by said order of February 9th, 1886, of the Commis- sioners ' Court of Presidio County, and each bond was in the same words and figures, with the exception of num- bers and dates that on the 6th day of December, 1886, the Commissioners' Court of Presidio County, for the purpose of paying for the furnishing of said courthouse and erecting a system of water works for said court- house and jail then already constructed delivered to Brit- ton and Long ten bonds numbered eighty-seven to ninety- six inclusive, each in the following language except as to number, omitting coupons. "The State of Texas, County of Presidio: No. 96, $1,000.00. "The County of Presidio, in the State of Texas, will pay the bearer $1,000, fifteen years after date, with inter- est at -the rate of eight per centum, payable annually on the 10th day of April, at the state treasury, on surren- der of proper coupon hereto attached. This bond is is- sued by virtue of an act of the Legislature of the State BOND POEMS AND EECOEDS 1077 of Texas, entitled 'An act to authorize the County Com- missioners ' Court of the several Counties of the state to issue bonds for the erection of a courthouse, and to levy a tax to pay for the same, approved February 11, 1881, and by virtue of the provisions of chapter 17, laws of called session of the Eighteenth Legislature, which said chapter has since been validated by the act of March 27, 1885, authorizing the County Commissioners' Court of the several counties of the state to issue bonds for the erection of a county jail, and by order of the County Commissioners ' Court of said County of Presidio, on the 9th day of February, 1886, and is redeemable be- fore maturity at the pleasure of the county. "In testimony whereof, the County Commissioners' Court of Presidio County has caused to be hereto aflSxed the seal and signature of the proper officers of said Court this the 6th day of December, 1886. "J. S. Catlin, "County Judge of Presidio County. "Countersigned, "W. S. Lampert, "Clerk of the County Court of Presidio County, Texas. "Eegistered: "Feed W. Ruaff, "County Treasurer." And defendant says that said order only authorized the issuance of eighty-six bonds of one thousand dollars each, and directed that they should be dated within ten days of February 9, 1886, which was in fact complied with by dating those numbered one to sixty on the 11th, and those numbered sixty-one to eighty-six on the 15th of February, 1886, and delivering them to the contractors aforesaid. That the issuance of the bonds aforesaid fully satisfied the order of the Commissioners ' Court aforesaid and the said ten bonds subsequently issued, to which coupons were attached, involved in this suit, were issued in fact 1078 PUBLIC SECTJEITIES without an order of the said Commissioners' Court to support them, and are therefore void in law. Defendant further says that the law requires a dealer in county bonds to know the provisions of the act of the Legislature, and the order of the County Commissioners' Court under and by virtue of which such bonds were issued, whether referred to on the face of the bonds or not ; that the said plaintiffs were informed from the act of the Legislature, the order of February 9, 1886, and the bonds given De- cember 6, 1886, purchased by them, to which coupons are attached, that there was a difference of ten months be- tween the order of the court and the bonds purporting to have been issued thereunder, and whereas the order re- quired the total issue of bonds authorized to be dated within ten days from February 9, 1886, sixty thousand dollars when the courthouse contract was signed, and twenty-six thousand dollars when the jail contract was signed, both contracts to be signed within ten days, that all of said bonds were, under said order and to be deliv- ered before December, 1886, as the courthouse was to have been completed within one year and the jail in six months from the date of contracts, and one-half of the courthouse and jail bonds were to have been delivered to the contractors on the signing of the contracts, and the other half when the respective buildings were one-half completed, and thus requiring delivery in all probability, of all the bonds within seven or eight months from Febru- ary 9, 1886; that the County Judge was authorized to sign and deliver the bonds, sixty to Britton and. twenty- six to Anderson; that before delivery they must have been executed by the County Clerk, registered by the County Treasurer; that the delivery of the said bonds satisfied said order of February 9th, 1886, that by the numbering of the said ten bonds of December 6, 1886, offered for sale, from eighty-seven to ninety-six inclusive, evidenced that more than eighty-six bonds were being issued under said order, and that these facts being known BOJSTD FORMS AND EECQKDS 1079 were sufficient to put plaintiffs upon inquiry as to whether these bonds were in excess of the amount authorized by the said order, and being thus put upon inquiry as to such facts, it became plaintiff's duty to use reasonable diligence to ascertain as to whether the bon^s of Decem- ber 6, 1886, offered them were in fact in excess of the amount authorized by such order, and the failure of plain- tiff to follow up the information in its possession is and was in law inconsistent with good faith, and affects them with notice of the invalidity of said bonds and coupons at- tached thereto. Wherefore defendant says that the bonds and coupons sued upon and described in said plain- tiff's petition are fraudulent, illegal and void, and this, the defendant is ready to verify. Beall & Kemp, J. A. GiLLETT, Attorneys for Defendant. State of Texas, County of Taylor: Before me, the undersigned authority, on this day per- sonally appeared J. A. Gillett, who signed and subscribed the foregoing pleas numbered one and two, after being duly sworn, says the facts stated therein are true. J. A. GiLLETT. Sworn to and subscribed before me, this the 3rd day of October, A. D. 1905. J. H. Finks, Clerk. And further comes the defendant, by its attorneys and says that the coupons each and every one of them sued for by plaintiff as set out in his petition, are barred by the statute of limitation of four years, in this, that suit was not brought to recover hereon within four years next after the cause of action accrued, and this the defendant is ready to verify. Wherefore plaintiff ought not to have recovered there- on, and of this defendant prays judgment. Beall, & Kemp, J. A. GiLLETT, Attorneys for Defendant. 1080 PUBLIC SECTJKITIES Now comes the defendant, by its attorneys, and denies all and singular the allegations of plaintiff- petition ex- cept as may hereinbefore have been admitted in the foregoing answers, and of this puts itself upon the country. Beall & Kemp, J. A. GiLLETT, Atty's for Deft. § 536. Bill of exceptions. Be it remembered, that on the trial of the above en- titled cause, to-wit, the 3rd day of October, A. D. 1905, the following proceedings were had. The plaintiff brought suit to recover against the de- fendant on certain bonds numbered 90, 91, 92, 94, 95, and 96, of date December 6th, 1886, with interest bearing cou- pons attached to each of said bonds the recital in each of said bonds being as follows: "This bond is issued by virtue of an act of the Legis- lature of the State of Texas, entitled 'An act to author- ized the County Commissioners' Court of the several counties of the state, to issue bonds for the erection of a courthouse, and to levy a tax to pay for same. Approved February 11th, 1881, and by virtue of the provisions of chapter 17, law of called sessions of the 18th Legisla- ture, which said chapter has since been validated by the act of March 27, 1885, authorizing the County Commis- sioners' Court of the several counties of the state, to is- sue bonds for the erection of a county jail, and by order of the County Commissioners' Court of said County of Presidio, on the 9th day of February, A. D. 1886, and is redeemable before maturity at the pleasure of the county. ' ' Plaintiff alleged that each of said bonds is endorsed and was endorsed at the time of its issuance with the fol- lowing printed endorsement; Bond No. — $1,000.00, Pre- sidio County Courthouse and Jail Bond." The Plain- BOND FORMS AND EECOEDS 1081 tiff alleged that each and every of said bonds were alike, of the same tenor and effect (excepting the number there- of) and that they all bore interest at the rate of 8 per cent per annum, payable annually on the 10th day of April, at the State Treasury, on the surrender of the proper coupons attached thereto and all of said bonds were duly signed and executed by the proper officers and agents of said County of Presidio, and were duly reg- istered by the Treasurer of said county under the direc- tions and orders of the Commissioners' Court of said County. That by each of said bonds the said County of Presidio promised to pay to the bearer thereof the sum of One Thousand dollars fifteen years after the date thereof, to-wit, fifteen years after December 6, 1886, with interest at the rate of 8 per cent per annum, payable on the presentation and surrender of the proper coupons thereto attached, and that said bonds and coupons were duly issued by virtue of the authority recited in them, and by authority of law; and that each of said bonds above mentioned had attached thereto fifteen coupons for the sum of $80.00 each, for the annual interest of 8 per cent provided for in the same, and that in each of said coupons the county promised to pay the bearer thereof the sum of $80.00. That one of said coupons on each of said six bonds became due on the 10th of April of each and every year since their issuance, up to and including the year 1900 ; and each and all of said coupons were, and are payable to the bearer of the same and were signed by the proper officer of said county, and attested as required by law and that the plaintiff Noel- Young Bond & Stock Company is the bearer and holder of each and all of said bonds numbered as aforesaid, and of the interest coupons which are attached thereto which became due April 10th, 1896-1897-1898-1899 and 1900. That all of said six bonds matured and became due and payable on the 6th day of December, 1901, and that there being no coupons on them representing the interest ac- 1082 PUBLIC SECURITIES cruing on said bonds after April 10, 1900, there is due upon the same interest at the rate of 8 per cent per an- num from April 10, 1900. That the payment of said six bonds of $1,000.00 each aggregating $6,000.00 with inter- est on the same at 8 per cent per annum from April 10, 1900 ; and the payment of all of said thirty coupons which became due as hereinafter stated and the interest herein- after described has been duly demanded, and all of said bonds and coupons have been duly presented to the Com- missioners ' Court of Presidio County, Texas, for pay- ment and allowance, and all of the same have been by the Commissioners' Court of Presidio County heretofore wholly refused and disallowed, and payment of the same has been refused, and said Court has refused to recog- nize said bonds and coupons in any way as just and valid claims against said county ; and by the order of said Com- missioners ' Court said county has repudiated any and all liability on said bonds and coupons. That the principal which fell due on said six coupons for the sum of $80?00 each, which fell due April 10, 1896, is $480.00 and the prin- cipal due on said six coupons for the sum of $80.00 each, which fell due on April 10, 1900, is $480.00, and the prin- cipal due on said six coupons for the sum of $80.00 each which fell due on April 10, 1898, is $480.00 and the prin- cipal due on said six coupons for the sum of $80.00 each, which fell due on April 10, 1899, is $480.00; and the prin- cipal due on said six coupons for the sum of $80.00 each, which fell due on April 10, 1900, is $480.00, and the prin- cipal due on the said six bonds as aforesaid, is $6,000.00. That the County of Presidio has never paid plaintiff the legal owner and bearer of said bonds and coupons any amount due thereon; and the plaintiff is damaged in the sum of $10,000.00. Plaintiff prayed judgment against said County of Pre- sidio for the amount of the bonds sued upon, to-wit, $6,000.00, with interest on the same at the rate of 8 per cent per annum from April 10, 1900, and for the whole BOND FOBMS iND BECOEDS 1083 amount'of said 30 coupons with interest on the coupons at tlie rate of 6 per cent per annum from the time they ma- tured respectively on April 10, 1896, April 10, 1897, April 10, 1898, April 10, 1899 and April 10, 1900, and for costs. Plaintiff's petition was filed the 26th day of July, 1904, in the United States Circuit Court for the Western Dis- trict of Texas at El Paso and the case was transferred by an order of the Hon. T. S. Maxey, Judge of said Court, he being disqualified to try said cause, to the United States Circuit Court for the Northern District of Texas, at Abeline, for the trial on to-wit, the 12th day of Octo- ber, A. D. 1904. The defendant Presidio County filed its plea and answer to said action, setting up the following defense thereto. (See amended answer on preceding pages.) The plaintiff, the Noel- Young Bond & Stock Company, introduced in evidence on the trial of this case the six bonds described in its petition, and the thirty coupons sued upon in same, to-wit, bonds numbered 90, 91, 92, 94, 95, and 96, all of date December 6th, 1886, and all alike in form excepting their numbers. The following is a copy of each of said bonds (the numbers being dif- ferent as stated) : "The State of Texas, "County of Presidio: "No. — $1,000.00. "The County of Presidio, in the State of Texas, will pay the bearer $1000, fifteen years after date, with interest at the rate of 8 per centum, payable annually on the 10th day of April, at the state treasury, on surrender of the proper coupon hereto attached. This bond is issued- by virtue of an act of the Legislature of the State of Texas, entitled 'An act to authorize the County Commissioners' Court of the several counties of the State to issue bonds for the erection of a courthouse and to levy a tax to pay for the same,' approved February 11,. 1881, and by virtue of the provisions of chapter 17, laws of called session of the 1084 PUBLIC BECtTEtTIteS Eighteenth Legislature, which said chapter has since been validated by the act of March 27, 1885, authorizing the County Commissioners' Court of the several counties of the State to issue bonds for the erection of a county jail, and by order of the County Commissioners' Court of said County of Presidio, on the 9th day of February, 1886, and is redeemable before maturity at the pleasure of the County. "In testimony whereof the County Commissioners' Court of Presidio County has caused to be hereto affixed the seal and signature of the proper officers of said court, this 6th day of December, 1886. J. S. Catlin, ' ' County Judge of Presidio County. "Countersigned: "W. S. Lempekt, ' ' Cleric of the County Court of Presidio County, Texas. "Registered: "Feed W. Rouff, ^'County Treasurer." Plaintiff also introduced in evidence the following printed endorsement which appears upon the bjack of each of said bonds: "Bond No. — $1,000.00 Presidio County Court House and jail Bond." The said thirty coupons introduced in evidence were the six coupons from said bonds numbers 90, 91, 92, 94, 95, and 96, which became due and payable on the 10th day of April, 1896; the six coupons from said bonds which became due on April 10th, 1897, the six coupons from said bonds which became due April 10th, 1898, the six coupons from said bonds which became due April 10th, 1899, the six coupons from said bonds which became due April 10, 1900. Plaintiff read from agreed statement in writing an ad- mission upon the trial of the cause that the six bonds sued upon and the thirty coupons above described, had been BOND FOEMS AND KECOEDS 1085 presented to the County Commissioners' Court of Pre- sidio County for payment and were disallowed by said Court before the filing of this suit. The defendant offered and read in evidence from an agreed statement of facts the following portions thereof in substance. The plaintiffs' petition in the case of Ball, Hutchings & Company vs. Presidio County, No. 227, filed in the Dis- trict Court of Presidio County, Texas, on August 15th, 1892, in which plaintiff in said cause No. 227 sought to recover upon certain coupons which matured prior to and on the 10th day of April, 1892, which said coupons were attached originally to bonds numbers 90, 91, 92, 93, 94, 95, and 96, it being alleged in said petition filed in said case on August 15th, 1892, that Ball, Hutchings & Com- pany were the owners and legal holders of the seven bonds and the coupons sued upon in said case numbered 227, which were attached to said bonds numbers 90 to 96, inclusive, and it was alleged that said bonds had been issued by Presidio County. The defendant, Presidio County, offered in evidence the answer filed by defendant in said case setting up the same defenses as are plead in this suit to show the in- validity and illegality of said bonds. Defendants also introduced as evidence the judgment of the District Court of Presidio County rendered in said cause on the 28th day of March, 1893, in words and figures as follows : No. 227 "Ball, Hutchings & Co. vs. Peesidio County et al. "Now on this, the 28th day of March, 1893, this cause came on for trial, and all the parties to the action an- nounced ready for trial, and a jury being waived, the Court, after hearing the evidence and argument of coun- 1086 PUBLIC SECTJKITIES sel, was of the opinion that the law and the facts were with the defendants, and so found, wherefore the Court doth order and adjudge that the plaintiffs herein, Ball, Hutchings & Co., recover nothing against the defendants, Presidio County, Jeff Davis, Brewster County, Buchel County and Foley County, and that said defendants and each of them go hence without day, and recover their costs of the plaintiffs herein ; and that the plaintiffs. Ball, Hutchings & Co., pay all the costs incurred in this ac- tion, and that execution issue therefor. And to the judg- ment of the Court as heretofore set out the plaintiffs, by their counsel, in open court excepted and gave notice of appeal, and plaintiffs' exceptions to the findings of the Court were overruled." The defendant also offered in evidence the record of the case on appeal and the decision of the Court of Civil AppZeals [Appeals] as reported in S. W. Reporter vol. 27 p-. 702-707, in which said court reversed the judgment of the District Court of Presidio County, and rendered the same in favor of the plaintiff. Ball, Hutchings & Com- pany, and also the record of the judgment of the Su- preme Court of the State of Texas in said cause,- in which said court reversed the judgment of the Court of Civil Appeals, and affirmed the judgment of the District Court of Presidio County. The Supreme Court holding in its said judgment and opinion as reported in vol 88, Tex. Sup. Ct. Reports, p-. 60 to 66. This evidence was offered and read in support of de- fendants' pleas of former judgment in bar of plaintiffs' action. The defendant offered and read in evidence in support of its second plea in which the bonds and coupons at- tached thereto sued upon in plaintiffs' petition alleged to have been issued fraudulently and without lawful au- thority, not being supported by any order of court au- thorizing the issuance and delivery of said bonds, the statement of facts, agreed upon, in the case of Ball, BOND FOBMS AND RECORDS 1087 Hutchings & Company vs. Presidio County et al. — The following portions of which are embodied substantially in this bill of exceptions as follows : (1.) The defendant offered in evidence the order of the County Commissioners ' Court of said County of Pre- sidio, 9th day of February, 1886, as follows : "Commissioners' Court Minutes, February Term, 1886. "Now on this, the 9th day of February, A. D. 1886, Commissioners' Court being in regular session, and hav- ing met pursuant to adjournment, with the following offi- cers present, to-wit : Hon. T. T. Harnett, County Judge ; J. A. Wedell, Co. Com'r Precinct No. 1; G. W. Brown, Co. Com'r Precinct No. 2; J. F. Ellison, Co. Com'r Pre- cinct No. 3; H. L. Kelly, Co. Com'r Precinct No. 4; C. L. Nevill, Sheriff, M. F. Brown, Co. Attorney ; W. S. Lem- pert. Clerk, came on to be heard and considered by the court the matter of contracts for the construction of courthouse and jail for Presidio County, and the same having been fully considered by the Court, it is ordered by the court that the bid of J. H. Britton to construct a courthouse in accordance with the plans and specifica- tions furnished by him and now on file in this Court, for the sum of sixty thousand ($60,000.00) dollars, to be paid in county courthouse and jail bonds bearing even date with the contract to be entered into in accordance with law and bearing interest at the rate ot 8% per annum, payable in fifteen years, as provided by law ' ' Said bonds to be paid and delivered to the said J. H. Britton in the following installments, to-wit: Thirty thousand (30,000) dollars upon the execution of the con- tract and bond, and the remainder, thirty thousand (30,- 000) dollars, when the said courthouse is one-half con- structed, be and the same is hereby accepted. "And it is further ordered by the Court that the bid of D. C. Anderson to construct a ^'ounty [county] jail for 1088 PUBLIC SECUEITIES said County of Presidio, in accordance with the plans and specifications furnished by Alfred Giles, and now on file in this Court, for the sum of tweiity-six thousand dollars (26,000), to be paid in Presidio County courthouse and jail bonds, bearing even date with this contract, to be entered into, and bearing interest at the rate of 8 p-r cent, p-r annum and payable in fifteen years, as pro- vided by law, said bonds to be paid and delivered to the said D. C. Anderson in the following installments, to-wit : Thirteen thousand (13,000) dollars upon the execution of the contract and bond in accordance with this order, and the remaining thirteen thousand (13,000) dollars when the said county jail is one-half constructed, be and the same is hereby accepted. "It is further ordered by the court that the said J. H. Britton shall enter into a good and sufficient bond with two or more sureties in the sum of one hundred thou- sand dollars, to be approved by the County Judge of Pre- sidio County ; and that the said D. C. Anderson shall en- ter into a good, and sufficient bond, with two or more good and sufficient sureties, in the sum of fifty thousand (50,000) dollars, to be approved by the County Judge of Presidio County; the said bonds to be conditioned upon the faithful compliance by said J. H. Britton and the said B. C. Anderson with the said contract. "It is further ordered by the Court that upon the said J. H. Britton and the said D. C. Anderson making and delivering to the County Judge of Presidio County the bonds hereinbefore required, the said County Judge of Presidio County is hereby authorized and empowered to enter into, in behalf of Presidio County, a written con- tract with the said J. H. Britton and the said D. C. Ander- son for the construction of said courthouse ajjd jail upon the terms hereinbefore specified; and is further author- ized and empowered to issue county courthouse and jail bonds for one thousand dollars each to the amount of eighty-six thousand ($86,000) dollars, conditioned as the BOND FORMS AND EECORDS 1089 law provides, and bearing interest at the rate of 8 per cent, p-r annum, and to deliver to the said J. H. Britton thirty thousand (30,000) dollars of said bonds and to deliver to the said D. C. Anderson thirteen thousand (-13,000) dollars of said bonds immediately upon the signing of said (contract) or as soon thereafter as prac- ticable. "It is further ordered by the Court that the said County Judge of Presidio County is further authorized and empowered to deliver to the said J. H. Britton the additional and remaining thirty thousand (30,000) dol- lars, in such bonds and to the said D. C. Anderson the ad- ditional and remaining thirteen thousand (13,000) dol- lars in such bonds upon the certificate of the superintend- ents to be selected and employed by the county, that said courthouse or said jail, as the case may be, is one-half constructed. ~ "It is further ordered by the Court that C. L. Nevill be, and he is hereby authorized and empowered, in con- junction with said superintendent, to receive and pass upon said jail, and the same shall not be received until the saine is accepted by said C. L. Nevill and said superin- tendent, it is further ordered by the Court that said court- house and jail shall be erected in the town of Marfa, County of Presidio, and State of Texas, upon such lot or lots as may be designated by the Commissioners' Court. "It is further ordered by the Court that the County Judge in Presidio County is hereby authorized and em- powered to employ E. Northcraft, if he will accept, or some other competent person, as superintendent of the construction of said courthouse and county jail and to enter into a contract with the said persons employed, to pay him the sum of two hundred (200) dollars per month as compensation for services as such superin- tendent. "It is further ordered by the Court that said contract p. S.— 69 1090 PUBLIC SECUKITIES shall require the said contractors to begin work in the way of preparations within twenty (20) days from date of contract, and that the said courthouse Shall be com- pleted and finished in twelve (12) months from the date of the contract, and the said county jail shall be com- pleted and finished in six (6) months from date of con- tract. It is the further order of the Court that J. H. Britton is required, to enter into a contract with the County Judge of Presidio County for the construction of a courthouse in accordance with the award within ten days from date of this order, and that the said D. C. An- derson enter into contract with said County Judge for the construction of said jail in accordance with the award within ten (10) days from the date of this order, and that if said contracts are not entered into as herein required, the deposit of five per cent, of the amount of said awards now with the clerk of this Court shall be adjudged for- feited to Presidio County, and that the clerk of this Court notify the said J. H.' Britton and D. C. Anderson of the order by delivering to them a certified copy of the same. The defendant then introduced in evidence the order of the County Commissioners ' Court of Presidio County, Texas, of the 8th day of November, 1886 ; which said or- der is as follows : " Be it remembered, that on this, the 8th day of Novem- ber, 1886, there was begun and holden a regular term of the Commissioners ' Court in and for Presidio County, Texas, at Marfa, Presidio County, Texas; officers pres- ent, Hon. T. T. Harnett, County Judge of Presidio Coun- ty; J. A. Wedell, Co. Commissioner Precinct No. 1; G. W. Brown, Co. Commissioner Precinct No. 2; W. J. Bishop, Co. Commissioner Precinct No. 3; H. L. Kelly, Co. Commisssioner Precinct No. 4 ; W. S. Lempert, Clerk ; C. L. Nevill, sherife. "Now on this the 10th day of November, 1886, came on to be considered the bid of Britton and Long to furnish all material and labor necessary and to complete the wa- BOND FORMS AND KECOEDS 1091 terworks system for the courthouse and jail in accordance with plans and specifications furnished by E, Northoraft, superintendent, for the sum of Three Thousand Dollars, payable in Presidio County Courthouse and jail bonds bearing 8 per cent interest. "It is the order of the Court that said bid be accepted for said system of waterworks for the courthouse and jail as per plans and specifications filed this, the 10th day of November, 1886, with the clerk of this court, and that said bonds issue within a reasonable length of time, amounting to $3,000, payable in fifteen years bearing in- terest at the rate of 8 per cent per annum, and to be dated on the first day of December, A. D. 1886. "It is the further order of the Court that said Britton and Long be, and they are required to complete said wa- terworks system without any unnecessary delay. It is the further order of the Court that the County Judge of Presidio County be, and he is hereby authorized and em- powered to issue bonds in accordance with this order." The defendant next offered in evidence the following order of the Commissioners' Court of Presidio County, Texas, to-wit: "Commissioners' Court Minutes, December Term, 1886. Saturday, the ^th Day of December, 1886. "Court met pursuant to adjournment, officers present, Hon. J. H. Catlin, Co. Judge; H. D. Lindenborn, Co. Com'r Prec't No. 1; G. A. Brown, Co. Com'r Prec't No. 2; J. A. Wedell, Co. Com'r Pr-c't No. 3; H. L. Kelly, Co. Com'r Prec't No. 4; C. L. Nevill, sheriff; W. S. Lempert, d'k. "Now on this day it is the order of the Court that the bid of Britton and Long to furnish the courthouse with furniture, &c., as per specifications of Britton & Long now on file in this Court, for the sum of $7,000.00 be and the same is hereby accepted and that the necessary con- tract be entered into. "Now on this day it is the order of the Court that pay- 1092 PUBLIC SECUEITIBS ment for the furniture, &c., for courthouse to be con- structed for by Britton and Long be made in advance, to which order and the order accepting said bid J. H. Catlin, County Judge, entered his protest in open court." Plaintiff then offered in evidence the testimony of J. H. Catlin, County Judge of Presidio County, as follows : "That he Catlin, was County Judge of Presidio County on December 4, 1886, and that on or about that date, bids were received by the Commissioners' Court of said coun- ty to furnish the courthouse with good and substantial furniture, such as was necessary to carry on the business of the county. There were two bids received for furnish- ing said courthouse with the proper furniture. The con- tract was awarded to Britton & Long, and in payment for said furniture bonds were issued and delivered to the said Britton & Long, Nos. 90-96, inclusive. He, Cat- lin, as County (Judge) presidim^r at this meeting of the County Commissioners' Court, and entered his protest of record against the awarding of said contract, but in as mtich as he was overruled by a majority of the court, he signed the bonds as County Judge, said bonds were is- sued and delivered to said Britton and Long in payment of said furniture and said bonds were issued and made out upon the same lithographic blanks which were left over from the original lithographic blanks for bonds for courthouse and jail." Defendant next introduced in evidence the following order of the County Commissioners' Court of Presidio County, Texas, as follows : Now on this, the 9th day of February, A. D. 1886, Com- missioners* Court being in regular session and having met pursuant to adjournment with the following ofiflcers present, to-wit: Hon. T. T. Harnett, County Judge; J. A. Wedell, Co. Com'r Pr-c't No. 1; G. W. Brown, Co. Com'r Prec't No. 2; J. F. Ellison, Co. Com'r Prec't No. 3; H. L. Kelly, Co. Com'r Prec't No. 4; C. L. Nevill, sher- BOND FOEMS AND KECOEDS 1093 iff; M. F. Brown, Co. Attorney, and W. S. Lempert, Clerk. "Now on this day it is the order of the Court that the clerk of this Court order at once for the use of the coun- ty, one hundred blank courthouse and jail bonds, to bear interest at the rate of 8 per cent, said bonds to be printed on durable paper or parchment similar to the bonds is- ,sued by El Paso County, Texas, said bonds to be in ac- cordance with a form for the same, which is hereby di- rected to be furnished said clerk by the county attorney of said county." Defendant offered in evidence a tabulated statement of the bonded indebtedness of Presidio County, Texas, showing that under the [order] of Feb. 9, 1886, author- izing the issurance [issuance] of sixty bonds and cou- pons attached, for the building of the courthouse dated February 11, 1886; and twenty-six bonds, with coupons attached for the building of the jail, dated February 15, 1886, were issued and registered, the bonds aforesaid were for one thousand dollars each, with interest coupons attached, and numbered consecutively from one to eighty- six inclusive, and under the order of the 8th day of No- vember, 1886, these bonds were issued, numbered 87 to 89 inclusive, and dated November 27, 1886, and registered about the same date by th« County Treasurer. That the bonds numbered from 90 to 96 inclusive, were dated De- cember 6, 1886, and registered by the County Treasurer on the same date, being the bonds sued on in the case, ex- cept No. 93. Defendant then offered in evidence by agreement the deposition of F. M. Ball, taken in the year 1892, in said cause No. 227, Ball, Hutchings & Company vs. Presidio County then in the District Court of Presi- dio County, Texas, and by deposition in said cause No. 227 taken by Plaintiff in the year 1892 said F. M. Ball testified as follows; "I am the owner of only four of the bonds, being numbers, 90, 92, 94, and 96. I have disposed 1094 PUBLIC SECUEITIES of the others to Mr. J. C. League. I have originally bought seven. The bonds were sent to the attorneys for plaintiff, Ball, Hutchings & Co., at El Paso. I bought the seven bonds of Mr. John T. Long, who sold me same in Galveston on December 10th, 1886, and when I purchased these bonds all their coupons were attached, they being newly issued. I paid $7,006.22, said price be- ing par and interest. I considered the bonds perfectly good or I should not have bought them. At the time of my purchase I had no notice of any facts affecting the legality of said bonds and coupons, and I received no notice of any other facts connected with the issuance of said bonds except as recited in said bonds. I purchased said coupons and bonds as an investment, having idle money for that purpose. "At the time I purchased the bonds I made no state- ment that ' I was afraid the bonds were illegally issued ; ' or words to that effect ; nor did I make any inquiry as to whether or not there was pending in Presidio County any suit or proceedings as to the illegality of said bonds ; nor did I ever see or hear of any advertisement or notice being published in the Galveston Daily News or other paper, emanating from the taxpayers of Presidio County concerning the issurance [issuance] of said bonds as to their being in any manner illegal. On application at the office of A. H. Belo & Co. for a copy of the Galveston News containing said advertisement or notice I was in- formed that if they had in their possession an issue of the Galveston News containing such advertisement that they were too busy to furnish me with a copy." Defendant also introduced in evidence by agreement the deposition of J. C. League, which was taken in said cause No. 227, Ball, Hutchings & Co. vs. Presidio County, in the year 1892, and in said deposition taken as afore- said in the year 1892, in said cause No. 227, J. C. League testified as follows : BOND FORMS AND KECOEDS 1095 "That he was the owner of the bonds and coupons de- scribed in plaintiff's petition; that he could not describe the bonds, but that they are the same in description and the same in issue as those bonds owned by F. M. Ball; that he did not have the bonds, and could not obtain a copy to attach to his deposition; that he had sold the bonds to which the coupons were attached; that he pur- chased the bonds and coupons with F. M. Ball from a party purporting to be the contractor for building the courthouse for which the bonds were issued; that Ball paid for the seven bonds described in plaintiff's petition, and that he paid Ball for three of them with the attached coupons ; that he paid full or par value for the bonds and accrued interest at the time he purchased them with at- tached coupons, that at the time he purchased them he was investing a considerable sum of money in Texas County bonds issued for courthouse and jail purposes; that he purchased the bonds on or about December 10, 1&86; that at the time he purchased them Mr. Ball came into his office with a party representing himself to be of a firm of contractors who had secured the seven bonds in part payment for building the courthouse at Marfa, and that the contractors had agreed to sell all of said bonds if taken as a whole, at par and accrued interest ; that Ball did not want to invest in more than four bonds, and that he (witness) agreed with Ball to take the other three bonds ; that Ball bought the bonds at par and accrued in- terest ; that witness paid him for three bonds at par and accrued interest ; that he questioned the party offering the bonds for sale as to whether there was anything about the bonds affecting their legality, and that the party told him and Ball there was not ; that he was never informed nor did he have any notice of any facts connected with the issuance of said bsnds, except as were stated in said bonds; that he purchased said bonds as an investment. 1096 PtrBLlC SECURITIES and was induced to do so because he thought the bonds were good and a safe investment. Cross-examination : "I purchased said bonds and coupons about December 10, 1886, from F. M. Ball directly but through of a party claiming to have been one of the contractors who built the courthouse of Presidio County for which the bonds were issued in part payment. I paid for the bonds par and accrued interest to date of purchase. My recollec- tion is that the first maturing coupon was for a fractional amount of interest, amounting to something like $27.00 to $28.00 on each bond to the date the first payment was due — April 10, 1887. I think I paid two or three dollars ac- crued interest in each bond to December 10, 1886. ' ' The defendant also introduced by agreement the depo- sition of George Sely taken by the plaintiffs in the year 1892 in said cause No. 227, Ball, Hutchings & Co. vs. Pre- sidio , County, and in said cause in the year 1892, the said George Sely testified by deposition as follows: ' ' That the firm of Ball, Hutchings & Company are not the owners of the coupons mentioned in said suit No. 227 in District Court Presidio County, but merely agents for their collection; that the coupons actually belonged on four (4) bonds to Frank Ball and on three (3) bonds to J. C. League ; that the seven bonds mentioned were pur- chased by Frank Ball on the 10th day of December, 1886, from John T. Long, at par and interest and Mr. Frank Ball then sold to Mr. J. C. League three (3) of said bonds at par with interest. ' ' At the close of the evidence counsel for plaintiff, the Noel- Young Bond & Stock Company in this case, admit- ted that the coupons sued upon in this case were barred by the statute of limitations of four years, and the Court thereupon instructed the jury orally, as follows : Gentle- men of the Jury. In this case, you will return a verdict in favor of the plaintiff against the defendant, Presidio Bond forms and kecoeds 1097 County, for the amount of the principal of the bonds sued upon, with interest thereon at the rate of 8 per cent per annum from the 6th day of December, 1900." And the Court stated to the jury that the coupons sued upon were barred by the statute of limitations. To which charge of the Court in the presence of the jury, and before the jury retired to consider of its verdict, the defendant ex- cepted to that portion of the charge wherein the jury were instructed to "Return a verdict in favor of the plaintiff against the defendant for the amount of the bonds sued lipon, with interest thereon at the rate of 8 per cent per annum from the 6th day of December, 1900," on the following grounds : Because the judgment of the District Court of Presidio County rendered on the 28th day of March, 1893, which was affirmed on error by the Supreme Court of Texas, in which bonds sued on in this case were held void, was under the pleadings and evi- dence in this case a bar to plaintiff's action; second, be- cause under the pleadings and undisputed evidence in this case, the said bonds were issued without lawful authority not being supported by any order of the Commissioners' Court of Presidio County, authorizing the issuance of the same. Third, because said bonds were issued and de- livered to Britton & Long, contractors, for the illegal pur- pose of furnishing the court house at Marfa, which had already been constructed, and were issued without any lawful authority, the power of the county to issue bonds to erect a courthouse and jail at Marfa, having been ex- hausted as appears from the order of the Commission- ers' Court of Presidio County, on February 9th, 1886, which is recited in the face of said bonds, and the con- tracts mentioned in said order of the Court, and the reg- istry of said bonds affected with notice the purchasers of the bonds in this suit, that said bonds were issued with- out authority of law. Thereupon the defendant asked the Court to give the 109B PUBLIC SECUEITIES following Charge, ' ' You are instructed that the Supreme Court of Texas having held the bonds sued upon void; and it appearing from the evidence and admission of parties in Court that the interest coupons sued upon in this case are barred by the statute of limitation, you will return a verdict for the defendant;" which said charge was refused by the Court, to which the defendant excepted at the time on the grounds states [stated] in the foregoing exception. And thereupon the jury retired un- der the oral instruction aforesaid by the court and ren- dered a verdict in favor of the plaintiff and against the defendant for the sum of Six Thousand ($6,000.00) Dol- lars, with 8 per cent interest thereon from December 6th, 1900, and judgment of the court was rendered upon the said verdict for the sum of eight thousand three hundred and sixteen dollars and to the verdict and judgment thereon, the defendant excepted on the ground that under the issues joined and the evidence in the case the jury should have been instructed by the Court to find for the defendant, and the defendant requested that its Bill of Exceptions, taken at the time, be now signed, allowed, and approved by the Court, and made a part of the record, under the order of the Court, made at the time, granting a period of thirty days within which to prepare and file this Bill of Exceptions, which is accordingly done. Edwabd R. Meek, U. 8. District Judge. In Chambers, at Port Worth, Oct. 28th, 1905. § 537. Oral charge of the court. "Gentlemen of the Juey: In this case, you will re- turn a verdict in favor of the plaintiff against defendant, Presidio County, for the amount of the principal of the bonds sued upon, with interest thereon at the rate of 8 per cent per annum from the 6th day of December, 1900 ; ' ' and the Court stated to the jury that the coupons sued upon were barred by the statute of Limitations. bond forms and records 1099 Defendant's Special Charge Gentlemen of the jury, you are instructed in this case to return a verdict in favor of the defendant, Presidio County. J. A. GiLLETT, Beall & Kemp, Att'ys for Defendant. Refused. * Edward R. Meek, Judge. Verdict of Jury In the United States Circuit Court, For the Northern Ju- dicial District of Texas, at Abeline. Verdict of the jury in the case of The Noel- Young Bond & Stock Com- pany vs. The County of Presidio, No. 335. We the jury find for the plaintiff for the amount of the bonds $6,000.00 with interest from Dec. 6th, 1900, at 8% per annum. W. L. DuRRETT, Foreman. §538. Judgment. "On this the 3rd day of October, 1905, the above styled cause came on for trial. Both parties appeared by their attorney and announced themselves ready for trial. A jury consisting of D. W. Stephens, W. H. Robertson, J. H. Stamp, W. C. Martin, W. L. Durrett, R. L. Setton, Burnie Miller, H. J. Haddington, T. M. Green, J. B. Am- merman, Fred Alvoid and R. A. Simpson was duly em- panneled, qualified and sworn. The Court sustained the defendant 's plea of the statute of limitation of four years to all of the coupons sued upon by the plaintiff and in- structed the jury, and the jury being further instructed so to do returned into open court the following verdict : Verdict of the jury in the case of the Noel Young Bond & Stock Company, vs. the County of Presidio, No. 335 : — • 1100 fUBLlO SBCUEITIES We the jury find for the plaintiff for the amount of the bonds, $6,000.00, with interest from Dec. 6th, 1900, at 8% per annum. W. L. DuEEETT, Foreman. It is therefore ordered and adjudged by the Court that the plaintiff take nothing as against defendant upon any of the coupons sued upon and as to same defendant go hence without a day, and it is ordered and adjudged that the plaintiff, The Noel- Young Bond and Stock Co., (a corporation) do have and recover of and from the County of Presidio in the State of Texas the sum of Eight Thou- sand Three Hundred and Sixteen Dollars and interest on same from this date at the rate of 8 per cent per an- num and all costs in this behalf expended and that said County of Presidio do pay off and satisfy this judgment in the regular course of its business as the law provide, and that all proper process may issue for the enforcement of this judgment. At the request of defendant's counsel they are hereby allowed 30 days from this date in which to prepare and file their bill of exceptions. Defts. except to charge of Court and refusal to give charges asked for." § 538a. Petition for Writ of Error. Defendant herein, and says that on or about the 3rd day of October, A. D. 1905, this Court entered judgment herein in favor of the plaintiff against this defendant, in which judgment, and the proceedings had prior thereto in this cause, certain errors were committed, to the prej- udice of this defendant, all of which will more in detail appear from the assignment of errors, which is filed with this petition. Wherefore this defendant prays that a writ of error may issue in this behalf to the United States Circuit Court of Appeals for the Fifth Circuit for the correction of errors so complained of, and that a tran- script of the records, proceedings and papers in this case, BOND FOBMS AND EECOBDS 1101 duly authenticated, may be sent to tlie said Circuit Court of Appeals. T. J. Beall, J. A. GiLLETT, Attorneys for Plaintiffs in Error, Presidio County. Allowed this third day of February, 1S906. Edwaed E. Meek, Judge. % 539. Assignment of errors. The defendant in this action, in connection with its pe- tition for writ of error, makes the following assignment of errors which it avers occurred upon the trial of the cause, to-wit : 1. The Court erred in its oral instructions to the jury as follows : "In this case you will return a verdict in favor of the plaintiff for the amount of the bonds sued upon, amounting to the sum of $6,000.00 with interest at the rate of S% per annum from the 6th day of December, 1900." 2. The Court erred in refusing to charge the jury to find for the defendant as requested. 3. The Court erred in refusing to give the following charge asked by the defendant: "You are instructed that the Supreme Court of Texas, having held the bonds sued upon void; and it appearing from the evidence and ad- mission of parties in court that the interest coupons sued upon in this case are barred by the statute of limitation, you will return a verdict for the defendant. ' ' 4. The court erred in entering judgment in favor of the plaintiff and against the defendant. T. J. Beall, J. A. GiLLETT, Attorneys for Defendant, Presidio County, Pl'ff in Error. 1102 PUBLIC SECUKITIES § 540. Judgment in U. S. Circuit Court of Appeals. Thereafter and in due course the following judgment was entered : Pkesidio County vs. The Noel-Young Bond & Stock Company. This cause came on to be heard on the transcript of the record from the Circuit Court of the United States for the Northern District of Texas, and was argued by coun- sel. On consideration whereof, it is now here ordered and adjudged by this Court that the judgment of the said Cir- cuit Court in this cause be, and the same is hereby, affirmed. It is further ordered and adjudged that the plaintiff in error, Presidio County, Texas, and the sureties on the writ of error bond herein, Chas. S. Murphy and J. Hum- phries, be condemned to pay the costs of this cause in this Court, for which execution may be issued out of said Cir- cuit Court. Dec. 15, 1906. §541. National Life Ins. Co. v. Board of Education of City of Huron." Complaint. The National Life Insurance Company, a corporation organized and existing under and by virtue of the laws of the State of Vermont, and having its principal place for the transaction of business in the City of Montpelier, in the said State, and being a citizen and resident of the said State, claims of the defendant, the Board of Edu- cation of the City of Huron in the State of South Dakota, the sum of four thousand five hundred dollars ($4,500.00), with legal interest thereon from the date of the maturity 16—62 Fed. 778 C. C. A. BOND FORMS AND BECORDS 1103 of the several coupons hereinafter set out, and costs of suit ; the said Board of Education of the City of Huron, in the State of South Dakota, being a municipal cor- poration, or body corporate, under and by virtue of the laws of the State of South Dakota, and a citizen and resident of said State, and for cause of such claim the complainant respectfully alleges: I. It is and was provided, at the times hereinafter named, by the laws of the State of South Dakota, that it should be lawful for the defendant, a body corporate, and it was thereby empowered, whenever deemed necessary by said Board of Education, in order to raise sufficient funds for the purchase of a schoolhouse site or sites and to erect a suitable building or buildings thereon, to issue bonds bearing a rate of interest not exceeding seven per cent per annum, payable semi-annually at such place as the said bonds might direct, and the said defendant was, by said laws, empowered to sell such bonds upon the market, such bonds to be issued after the question of the issue thereof should have been submitted to a vote of the people and a majority of the qualified electors shall have voted in favor of issuing the said bonds. n. Your petitioner further shows that, being so empow- ered, the defendant did, on the 22nd day of September, 1890, by resolution, determine that it had become neces- sary, in order to accommodate the pupils residing within the territorial limits of the City of Huron and within the jurisdiction of the said Board of Education of the City of Huron, to purchase an additional school site and erect a suitable school building thereon, and to raise sufficient funds- therefor by borrowing the sum of sixty thousand dollars ($60,000) by the issue and sale of bonds therefor. That following the said action of the defendant corpora- tion, an election was held on the 3rd day of October, 1104 PUBLIC SECUEITIES 1890, at which election a majority of the votes cast, were cast in favor of the issuing of said bonds. That said bonds were to be issued, and were issued in denomina- tions of five hundred dollars ($500.00) each, numbered from one (1) to one hundred and twenty (120), inclu- sive. That said bonds were within the statutory and con- stitutional limitations as to indebtedness, and were in all respects issued in conformity with the provisions of the statutes in such cases made and provided. That said bonds bore date October 4th, 1890, and were due in fifteen (15) years, and bore six per cent interest payable semi- annually, which installments of interest were represented by coupons attached to each of said bonds, which coupons were numbered from one (1) to thirty (30), inclusive. That a copy of one of said bonds, being bond No. 1 of the said issue, is as follows : "Issued in accordance with the provisions of Sections 1830, 1831 and 1832 of the Compiled Laws of 1887 of Da- kota Territory, and in force in the State of South Da- kota, authorizing Boards of Education to issue bonds to raise funds to purchase school sites, erect school build- ings or to fund bonded Indebtedness. No. 1 United States of America. $500.00 The State of South Dakota, Board of Education, City of Huron. The Board of Education of the City of Huron, County of Beadle, State of South Dakota, fifteen years after the date hereof, for value received, promises to pay bearer Five Hundred Dollars lawful money of the United States, at the office of the Chase National Bank, New York City, with interest thereon at the rate of six per cent per annum, payable semi-annually according to the tenor and effect of the an- nexed coupons. This bond is one of a series of bonds of like date, tenor and effect, amounting in the aggregate to BOND FOEMS AND KECOEDS 1105 sixty thousand dollars, and numbered from one to one hundred and twenty, inclusive. Issued to raise funds for the purpose of a school site and for the erection of a school building thereon. And it is hereby certified and recited that all acts, con- ditions and things required to be done, precedent to and in the issuing of said bonds, have duly happened and been performed in regular and due form, as required by law, and that the total amount of this issue of bonds to- gether with all other outstanding indebtedness of said Board of Education does not exceed the statutory con- stitutional limitation, and that this bond has been duly registered by the clerk of the Board of Education in a book provided for that purpose, as required by law. In testimony whereof, the Board of Education of the City of Huron, in the County of Beadle, State of South Dakota, has caused this bond to be signed by its presi- dent, attested by its clerk, and countersigned by its treas- urer, and the seal of said Board of Education to be here- unto aifSxed at the City of Huron this 4th day of October, A. D. 1890. [Seal] (Signed) F. F. Smith, President. (Countersigned) J. C. Klemme, Treas. Attest : John Westdahl, Clerk. ' ' That the remaining bonds were of like form in every respect save and except that they were numbered respect- ively from two to one hundred and twenty, inclusive. That attached to the said bond No. 1 were thirty (30) coupons, coupon No. 1 of which was in form as -follows, to-wit : "$15.00 City of Huron, South Dakota. Coupon No. 1. The Board of Education of the City of Huron, Beadle County, South Dakota, will pay bearer fifteen dollars on the 4th day of April, A. D. 1891, at the office of Chase p. S.— 70 1106 PUBLIC SECUEITIES National Bank, New York City, being semi-annual inter- est on Bond No. 1. F. F. Smith, President. Countersigned, J. C. Klemme, Treasurer. Attest: John Westdahl, Clerk." That the remaining twenty-nine (29) coupons attached to the said bond No. 1 were of like form in every respect, save and except the date of maturity thereof, the said bonds maturing respectively, coupon No. 2 in six months from the maturity of coupon No. 1, coupon No. 3 six months from that, and so on for the entire series of cou- pons. That all of the other bonds had coupons of like tenor and effect. That the said bonds and coupons were duly sold in the market in good faith and for value. III. That all the coupons hereinafter set out by copy as exhibits to this complaint and numbered from one (1) to three hundred (300), inclusive, and made a part hereof, are now held and owned by the complainant herein, and are each and all of them due and unpaid, and that the de- fendant refuses to pay the same or any part thereof. That they are each respectively due and payable at the times and in the amounts as shown by the said exhibits hereto attached, and that each of said coupons bears in- terest from the date of its maturity at the rate of seven per cent per annum. That the complainant, being now the owner and holder of the coupons, copies of which are hereto attached as hereinbefore stated, numbered ex- hibits one (1) to three hundred (300), inclusive, is en- titled to judgment thereon upon each of the said coupons for the amount thereof, with interest at the rate of seven per cent per annum from the date of its maturity, respect- ively. Wherefore, the plaintiff prays judgment against the de- fendant, in the sum of four thousand and five hundred dollars ($4,500.00), with interest upon one thousand eight BOND FOEMS AND BECOEDS 1107 himdred dollars ($1,800.00) of the said sum from the 4th day of April, A. D. 1891, at seven per cent per annum, and upon nine hundred dollars ($900.00) of the said sum from the 4th day of October, A. D. 1891, at seven per cent per annum, and upon nine hundred dollars ($900.00) of the said sum from the 4th day of April, 1892, at seven per cent per annum, and upon the remaining nine hundred dollars ($900.00) of the said sum from the 4th day of October, 1892, at the rate of seven per cent per annum, and for costs of suit, and for all other proper and appro- priate relief. KliUFFMAN & GUEENSEY, „ E. I). Sampson & Joe Kieby, Attorneys for Complainant. § 542. Amendments to complaint. Comes now the plaintiff in the above cause and by leave of the court first had and obtained, amends its complaint now on file therein, and by way of such amendment re- spectfully shows to the court as follows, to-wit : I. That this complainant amends its complaint in this cause by substituting in lieu of the name given to the defendant wherever it appears in the said complaint, the words, "The Board of Education of the City of Huron of the State of South Dakota." II. By way of further amendment to the said complaint, this complainant respectfully shows to the court that at the time the bonds of the defendant, from which the coupons sued upon in this action were served, were is- sued and sold, the said defendant through its officers, in order to facilitate the sale of said bonds caused to be prepared, and did prepare, certificates and certified cop- ies of the records of the defendant corporation, duly 1108 PUBLIC SECUEITIES certified by the proper officers of the defendant corpora- tion, showing the proceedings had by the defendant with reference to the issuance of the said bonds, the purpose for which it was proposed to use the money to be derived from the sale of the said bonds, the amount of the indebt- edness and the equalized assessed valuation of the de- fendant corporation, and, generally, all matters prelimi- nary to the issuance of the said bonds affecting their validity. That the said bonds were sold upon the open market to the New England Loan & Trust Company, which com- pany was induced to purchase the same by reason of the recitals in the said bonds, and by reason of the matters and things set out in the said certificates and certified copies showing said bonds to constitute valid obligations of the defendant corporation, and that the said bonds were so purchased in the open market by the said New England Loan & Trust Company in reliance upon the statements contained in the recitals in the said bonds and in the said certificates and certified copies furnished by defendant. That the said New England Loan & Trust Company so purchased the said bonds in the ordinary course of busi- ness in good faith for a valuable consideration before the maturity of the first of the series of coupons attached thereto, believing the said bonds to be the valid obliga- tions of the said defendant corporation, and without any knowledge of any matter or thing in any way tending to impeach the validity of the said bonds. That the bonds were thereafter sold in the ordinary course of business before maturity, and for value, by the said New England Loan & Trust Company to various parties who bought the same in good faith in reliance upon the recitals contained in the said bonds, and upon said certified copies and certificates and without knowl- edge of any matter or thing tending to impeach their validity. BOND FOEMS A1'. Porter, 780. V. Post, 771. Bates County v. Winters, 235, 255, 388, 517. Bath County v. Amy, 843. Battles & Webster v. Laudenslager, 479. Bauer v. Franklin County, 922, 925. Bauman v. City of Duluth, 283. Baumgartner v. Hasty, 76. Bay V. Davidson, 90. Bay City Traction & Electric Co. v. Bay City, 220. Bayerque v. City of San Francisco, 928. Beale v. Pankey, 41. Beals v. Evans, 927, 930. Beaner v. Lucas, 865. Bear v. City of Cedar Rapids, 84. Beard v. City of Hopkinsville, 138, 148. V. Wilson, 863. Beardsley v. Smith, 720. Beattie v. Andrew County, 382. Beaver, County of, v. Armstrong, 391, 400, Bechtel v. Frye, 919. Beck V. City of St. Paul, 196. Belknap v. City of Louisville, 286, 393. Bell V. Burgess and Town Council of Borough of Waynesboro, 669. V. City of Shreveport, 493. V. Farmville, etc., R. R. Co., 672, 679. Bell County v. Lightfoot, 310. Belleville, City of, v. Wells, 189, 319, 866. 1124 TABLE OS" CASES [RErEEENCES Belo V. Forsythe County Com'rs, 247, 460, 509, 566, 577. Beloit, City of, v. Morgan, 649, 653, 670. Benham v. Parish of Carroll, 914. Bennett v. Town of Mt. Vernon, 97. V. Town of Netagamon, 175, 179, 185. Bennett Trust Co. v. Sengstacken, 120. Benwell v. City of New York, 31, 451. Bergen County Freeholders v. Mer- chants Exchange Bank, 343. Berka v. Woodward, 91. Berkeley v. Board of Education of Lexington, 269, 305. Berkeley Development Co. v. Marx, 901. Berky v. Board of Com'rs of Pueblo County, 768. Berlin Iron Bridge Co. v. City of Antonio, 90, 357; 260. V. Wilkes County Com'rs, 98. Berliner v. Town of Waterloo, 344. Bernard's Township v. Morrison, 117, 567, 589, 605, 644, 646, 1046. V. Stebbins, 363, 797, 808. Berry v. Mitchell, 86. Bessemer, City of, v. Bessemer Water Works, 75. Bew V. Ventnor City, 873. Beyer v. Town of Crandon, 94. Bickerdike v. State, 138, 432. Bicknell v. Widner School Town- ship, 103. Biddeford, City of, v. Yates, 80, 82. Biddle v. City of Terrell, 777, 932. V. Town of Eiverton, 220, 270. Bigler v. Waller, 729. Biglow V. Inhabitants of Perth Am- boy, 108. Big Grove, Town of, v. Wells, 236. Bilger v. State, 329. Billings Sugar Co. v. Fish, 324, 230, 309. ARE TO pages] Bills V. City of Goshen, 299, 303. V. State, 165. Bingham v. Board of Sup'rs of Mil- waukee County, 259, 350. Bingham County v. First Nat. Bank, 899, 900. Birch Cooley, Town of, v. First Nat. Bank of Minneapolis, 240, 243, 245. Bird V. Common Council of City of Detroit, 353. Birdsall v. Russell, 350. Birkholz v. Dinnie, 427. Birmingham, City of, v. Rumsey, 715. Birmingham Trust & Savings Co. v. Jefferson County, 758. Bishop V. Milwaukee, 576. Bissell V. City of Jeffersonville, 51, 509, 566, 605, 668, 669, 679. v. City of Kankakee, 187, 250, 472, 498, 689. V. Spring Valley Township, 117, 355, 355, 358, 366, 389, 506, 651, 653. Blair v. Gumming County, 809. Black V. Buncombe County Com'rs, 218, 315, 335. V. Cohen, 126, 697. v. Common Council of Detroit, 93. V. Early, 28, 262. V. Fishburne, 41, 45, 345. Blackman v. City of Hot Springs, 890, 916. v. Lehman, 730. Blackwell v. Village of Coeur D'Alene, 719, 765. Blades v. Hawkins, 89. v. Water Com'rs of Detroit, 313. Blaine v. City of Seattle, 388, 399. v. Hamilton, 384, 386. Blaine County v. Lincoln County, 37. Blair v. City of Waco, 117, 488. V. Gumming County, 348, 350, 358, 733. Blais V. Franklin, 64, 1016. TABLE OF CASES 1125 [beperences Blake v. Jacks, 33. V. Mayor of City of Macon, 99, 331. Blanchard, City of, v. Village of Benton, 133, 139, 522. Blanding v. Burr, 192. Blankenshlp v. City of Sherman, 84. Blanks v. City of Monroe, 145. Blanton v. Board of County Com'rs, 420, 432. Block V. Bourbon County Com'rs, 379. V. City of Chicago, 67. V. Com'rs of Bourbon County, 469, 544, 555, 606. Blood V. Beal, 131, 303, 324, 333. Bloomfield, Town of, v. Charter Oak Bank, 98, 933. Bloomer, Village of, v. Town of Bloomer, 70. Bloomington, City of, v. Smith, 442, 479. Blount County v. Loudon County, 35. Blufield, City of, v. Johnson, 521. Board of Chosen Freeholders v. Buck, 901. Board of Commissioners v. Baker, 143, 305. V. Board of Pilot Com'rs, etc., 311. V. Day, 111. V. McClintock, 324, 328, 339. Board of Com'rs of Barber County V. Society for Savings, 430, 599. Carbon County v. Rollins, 492. Chaffee County v. Potter, 388, 615, 621, 1054. Clark County v. Woodbury, 592. Comanche County v. Lewis, 185, 535, 542, 597, 599. Cowley County, Kan., v. Heed, 608, 635. Cumberland County v. Eandolph, 673, 679. AEE TO PAGES] Board of Com'rs of Florence Graded Schools, Ex parte, 890. Franklin County v. Gardiner Sav- ings Inst., 758, 763. Grand County v. King, 747, 838, 841, 848, 915. Gunnison County, Colo., v. E. H. Rollins & Sons, 427, 461, 531, 565, 576, 582, 588, 599, 615, 623, 627, 707. V. Sims, 839. Hamilton County v. Sherwood, 813. Haskell County, Kan., v. Na- tional Life Ins. Co., 419, 431, 423, 550, 589, 590, 591, 594, 634, 817. Henderson County v. Travellers Ins. Co., 236, 548, 565. Iowa Drainage Dist. v. Wilkins County, 630. Jackson County v. Branaman, 149. V. Brush, 254. Kearney County v. Irvine, 797, 856, 902. v. McMaster, 795, 825. Kinginan County v. Cornell Uni- versity, 589, 634, 695, 872. Kiowa County v. Howard, 424, 430, 597, 599, 736. Knox County v. Aspinwall et al., 391. Lake County, 816. V. Graham, 615, 688. V. Keene 5-Cent Savings Bank, 427, 432, 434, 516, 530, 533. V. Piatt, 433, 653, 655, 817. V. Rollins, 133, 134. V. Standley, 426, 433, 576. V. Sutliff, 461, 463, 477, 508, 512, 513, 516, 533, 613, 615, 624', 625, 653, 829. Meade County v. Aetna Life Ins. Co., 615. 1126 TABLE OF CASES [eefeeences Board of Com'rs of Onslow County V. Tollman, 339, 356, 358, 374, 375, 380, 395. Ouray County, 867. Owen County v. Spangler, 333. Oxford, N. C. V. Union Bank of Richmond, 438, 545, 551, 653, 656, 660, 688. Perry County v. Gardner, 306. Pratt County, Kan., v. Society for Savings, 419, 432, 873, 873. Ramsey County v. Edmund, 930. Seward County, Kan. v. Aetna Life Ins. Co., 173, 178, 188, 316, 415, 431, 433, 436, 431, 550, 599. V. Shepard, 917. Stanly County v. Coler, W. N. & Co., 337, 531, 551, 638, 635, 659, 663, 707, 868. V. Snuggs, 337, 500. Town of Salem v. Wachovia Loan & Trust Co., 874. Wilkes County v. Call, 337, 593. V. Coler, 550, 593, 643. • Board of Education v. Alliance Assurance Co., 68. V. Board of Education, etc., 13. V. Bolton, 548 V. Foley, 889, 939. V. McMahan, 175. V. Phipps, 335. Board of Education of Barker Dist. V. Board of Education of Val- ley Dist., 31. Board of Education of City of Atchison v. De Kay, 398, 301, 349, 385, 593, 659, 664, 903, 1058. Huron v. National Life Ins. Co., 140, 143. lola V. Fronk, 865. Pierre v. McLean, 508, 516, 598. Topeka v. State, 317. V. Welch, 317, 290. Eddy V. Bitting, 140. Flatwood's Dist. v. Berry, 88. AEE TO pages] Board of Education of Oity of Fonda, 363. Ridgefield Twp. v. Board of Edu- cation, etc., 811. Winchester v. County of Win- chester, 392. Board of Finance v. Jersey City, 673. Board of Handley Trustees v. Win- chester Memorial Hospital, 57. Boa,rd of Improvement v. Mc- Manus, 916. Board of Lake County Com'rs v. Linn, 347. Board of Liquidation v. United States ex rel., 844, 846. Board of Liquidation for United States, In re, 58, Board of Liquidation of City Debt, State ex rel., v. Briede, 90, 497. Louisiana v. McComb, 410, 885. New Orleans v. State of Louisi- ana, 89, 554, 584. V. United States ex rel. Hart, 339, 341. Board of Police, etc., v. City of Biddeford, 907. Board of Sup'rs v. Cowan, 63. Board of Sup'rs of Alpena County V. Simmons, 736, 737. Carroll County v. United States ex rel. etc., 836. Cumberland County v. Randolph, 604. Queens County v. Phipps, 531. Board of Township Com'rs v. Buck- ley, 40. Board of Trustees v. Brattleboro Savings Bank, 176, 430. v. Chesapeake, etc., R. R. Co., 241. Board of Trustees of Augusta v. Maysville, etc., R. R. Co., 339. Youngville Twp. v. Webb, 228. Board of Water Com'rs, In re, 86. Bobo V. Board of Levee Com'rs, 770. TABLE OP CASES 1127 [references Bodenheim v. Lightfoot, 311. Bodman v. Johnson County, 931. Boeckler & Schulenburg Lumber Co. v. City of East St. Louis, 915. Boehm v. City of Baltimore, 77. Been v. Town of Greensboro, 376. Boesch V. Byrom, 339, 336. Bogart V. Lamotte Township, 349, 414, 417j 660. Boise City v. Boise City Artesian, etc., Co., 83. V. Union Bank & Trust Co., 395, 781. Boise City Nat. Bank v. Boise City, 33, 103, 188. Bolles V. Perry County, 577. V. Town of Brimfield, 555, 674, 677, 679, 683. Bolton V. Board of Education, 643. Bond Debt Cases, 698. Bond of Gr'eenwald, 724. Bonham v. Needles, 589. Bonnell v. Nuckolls County, 137. Bonner v. City of New Orleans, 393. Bonta V. Fiscal Court of Mercer County, 364, 314. Booth V. McGuinness, 51. V. Town of Woodbury, 75. Bordeaux v. Coquard, 174. Borough, Munhall, v. Miffin Town- ship, 37. Borough of Millvale, In re, 333. Borough of Freesport v. Marks, 560. Millerstown v. Frederick, 476. Montvale v. Peoples Bank, 373, 443, 458, 463, 464, 473. Port Royal v. Graham, 894, 917. Kainsburgh v. Eyan, 784. Boss V. Hewitt, 470. Boakowitz v. Thompson, 337, 800, 853. Boston & C. Smelting Co. v. Elder, 34. Boston Water Power Co. v. City of Boston, 107, 358. ARE TO PAGES] Bouknought v. Davis, 696. Bound V. Wisconsin Cent. R. R. Co., 239, 330. Bourbon County Com'rs v. Block, 567. Bourdeaux v. Coquard, 934. iBowditch V. Supt. of Streets of Boston, 95. Bowdoinham v. Richmond, 40. Bowen v. Mayor, etc., of Town of Greensboro, 279, 326. Bowling Green, City of, v. Gaines, 81. Bowman v. City of Middlesboro, 696. Boyce v. Auditor General, 420, 423. Boyd V. Kennedy, 443, 478, 481. Boyle V. New Orleans, 326. Bradford v. City of Glasgow, 335. V. Westbrook, 339, 336, 536. Village of, v. Cameron, 426, 565, 599. Bradish v. Lucken, 39. Bradley v. Franklin County, 231. Bradshaw v. City of High Point, 209, 268, 414. Branch v. Sinking Fund Com'rs, 339, 431. Brand v. Town of Lawrenceville, 530, 695. Brannon v. Hursell, 404. Bras V. McConnell, 239, 242, 387, 289. Brattleboro Savings Bank v. Trus- tees of Hardy Township, 188, 415, 599, 626. Braun v. Board of Com'rs of Benton County, 764. Brazoria County v. Youngstown Bridge Co., 340, 550, 563, 839. Breaux v. Iberville Parish, 118, 935. Breckenridge Co.unty v. McCracken, 53, 339, 733, 746, 813. Brenham, City of, v. German Ameri- can Bank, 103, 106, 173, 174, 187, 417, 474, 935, 1056. Brewer v. Otoe County, 938, 916. 1128 TABLE OF CASES [references Brewster v. Wakefield, 404. Brewton, Town of, v. Spira, 503, 595. Brick Prea. Church v. City of New York, 87. Bridgeport, City of, v. Housatonic R. R. Co., 380. Briggs V. Town of Phelps, 459, 471. V. Voss, 124. Brightwell v. Kansas City, 253. Brinckerhoff v. Board of Education of N. Y., 714. Brinkworth v. Grable, 395, 400. Briscoe v. Bank of Kentucky, 160, 161, 909. Brix V. Clatsop County, 151. Broad v. City of Moscow, 140, 149. Broadfoot v. City of Fayetteville, 74; Broadway Savings Inst. v. Town of Pelham, 611. Brockenhrough v. Board of Water Com'rs of City of Charlotte, 64, 150, 152, 770. Brockway v. Board of Sup'rs of Louisa County, 339, 336. V. City of Roseburg, 148. Brook V. City of Oakland, 195, 383, 733, 765. Brooke v. City of Philadelphia, 129, 154, 155. Brooklyn Park Com'rs v. Arm- strong, 900. Brooklyn, Town of, v. Aetna Life Ins. Co., 246, 356, 375, 468, 469, 500, 516, 695. Brooklyn Trust Co. v. Hebron, 607. Brooks V. City of Baltimore, 321. V. Incorporated Town of Brook- lyn, 76, 89, 213, 317. V. Schultz, 332. Bronson, Matter of, 875. V. Smith, 349. Broughton v. City of Pensaeola, 42, 55. ARE TO pages] Brown v. Bon Homme County, 28, 118, 298, 354, 356, 567, 661, 663, 910. V. Carl, 379, 283, 293. V. City of Atchison, 92, 437, 428, 787. V. City of Corry, 148. V. City of Lakeland, 186, 749. V. City of Newburyport, 174. V. Gates, 713. V. Ingalls Township, 374, 278, 283, 290, 412, 419, 427, 430, 565, 589, 607, 634, 660. V. Inhabitants of Melrose, 203. V. Keener, 230. V. Milliken, 432, 635, 659, 856. V. Ringdahl, 314, 980. V. School Directors of Jacobs, 902, 914, 928. V. Sherman County Com'rs, 883. V. Spoflford, 461. V. Tinsely, 304, 437. ' V. Town of Canton, 931. V. Town of Jacobs, 934. V. Town of Pt. Pleasant, 400, 812. V. Village of Grangeville, 174, 176, 289. Browne v. Town of Providence, 71. Brownell v. Town of Greenwich, 126, 35S, 497, 736, 739, 740. Brownson v. Smith, 368. Brownsville Taxing Dist. v. Loague, 841. Brunnitt v. Ogden Water Works Co., 55, 81. Brunstein v. People, 75. Bruce v. City Council of Green- ville, 231. Brumby v. City of Marietta, 287, 298. Bryan v. City of Lincoln, 289, 294. Buard v. Board of Com'rs, etc., 274. Buchanan v. Litchfield, 222, 255, 505, 510, 562, 577, 584, 588, 614, 689, 818. fABLE of CASES 1129 [references Buck V. City of Eureka, 713. V. People, 768. Bucroft V. City of Council Bluffs, 763. Buffalo & J. R. R. Co. v. Faulkner, 339, 242. Buffalo, etc.. County v. School Dis- trict No. 4, 185. Buffalo, Twp. of, T. Cambria Iron Co., 544. Buick, Town of, v. Buick, 919. Buist V. City Council of Charleston, 416, 866. Bull V. Sims, 894. Bullitt V. City of Philadelphia, 378. Bullock V. Robinson, 67, 90. Bunch's Ex'rs v. Fluvanna County, 451. Surges V. Mabin, 378, 280. V. Seligman, 550, 554. Burgin v. Smith, 13, 905, 932. Burke v. Gormley, 886. Burleigh County v. Kidder County, 34. Burlington, City of, v. Central Vt. Ry. Co., 10, 235, 318. Burlington Mfg. Co. v. Board of Courthouse & City Hall Com'rs, 713. Burlington Savings Bank v. City of Clinton, 33, 38, 150, 504, 530, 532, 653, 695, 763, 810. Burlington, Township of, v. Beas- ley, 237, 348. Burlington Water Works Co. v. Woodward, 148. Burnett v. Maloii6y, 734. V. Markley, 135. Burnham v. Brown, 470. v. City of Milwaukee, 190. Burns v. City of New York, 89. V. Clarion County, 60. Burr V. Chariton County, 366. V. City of Carbondale, 695. Burrough v. Moss, 405. Burrough's Public Securities, 42. ARE TO pages] Burroughs v. Richmond County Com'rs, 391, 400, 401. Burrton, City of, v. Harvey County Savings Bank, 882, 899. Bush V. Geisy, 918. V. Wolf, 914. Bushnell v. Beloit, 184. Butler V. Andrus, 209. V. Board of Directors of Fourche Drainage Dist., 330. V. Boatmen's Bank, 484. V. City of Charlestown, 94, 97. V. Passaic, 301. V. Walker, 40. Butterfield v. Melrose, 496. V. Town of Ontario, 21. Butts County v. Jackson Banking Co., 88, 103, 770, 784, 889, 890, 927, 928. Butz United States ex rel. v. City of Muscatine, 553, 554, 838, 844, 853. Byars v. State, 10. Byrne v. Parish of East Carol, 286. Cadillac, City of, v. Woonsoeket Institute for Savings, 187, 351, 435, 437, 439, 430, 598, 599, 730. Cagwin v. Hancock, 272, 500, 517, 611, 647. V. Town of Hancock, 474, 576, 686. Cahill V. Hogan, 309, 783. Cain V. Brovirn, 40. V. City of Wyoming, 145. V. Smith, 285. Cairo, City of, v. Allen, 713. V. Zane, 338, 366, 404, 581, 634, 742. Cairo, etc., R. R. Co. v. City of Sparta, 66, 737. Calahan v. Handsaker, 289. Calhoun v. Delhi, etc., R. R. Co., 664. V. Millard, 668, 659. 1130 TABLE OP CASES [RErERENCES Calhoun v. Town of Miller, 271. Calhoun County Sup'rs v. Gal- braith, 200, 349, 730. Caliborne County v. Brooks, 173. California Bank v. Dunn, 380, 391. California University v. Bernard, 416. Callaghan v. Salliway, 886, 898. V. Town of Alexandria, 274, 344. Callam v. City of Saginaw, 217. Calloway, County of, v. Foster, 53, aOO, 544, 548. Calvert v. Brook, 195. Camden, Clay County v. Town of New Martinsville, 137, 306. Camp V. Town of Hazlehurst, 285. Campbell v. City of Indianapolis, 681. V. City of Kenosha, 661, 663, 663, 670, 672. V. Knoxville, etc., R. E. Co., 185. V. Paris, etc., E. E. Co., 329. V. Polk County, 886, 888, 889, 914. \. Youngson, 230. Campbells ville Lumber Co. v. Hub- bert, 803. Canandaigua, Village of, v. Hayes, 204, 873. Canosia Tp. v. Grand Lake Tp., 38. Cantillon v. Dubuque & N. W. R. Co., 243. Canton, Town of. State ex rel., v. Allen, 874. Cape Girardeau County Court v. Hill, 654, 751. Capital Bank of St. Paul v. School Dist. No. 53, 896. Capmartin v. Police Jury of Natchitoches, 174, 884, 893, 934. Cardoza v. Baird, 134. Carey v. Blodgett, 85, 385. Carling V. Jersey City, 81. Carlile v. Hurd, 885. ARE TO PAGES] Carlson v. City of Helena, 107, 133, 357, 383, 385, 364, 276, 277, 353, 486, 704, 734, 740, 751, 873. Carlton v. People, 131. Carney v. Village of Marseilles, 714. Carpenter v. Buena Vista, 351. V. Greene County, 338, 346, 287, 671, 679, 730, 808. V. Hindman, 437. V. Town of Central Covington, 34, 364, 414. V. Town of Lathrop, 576, 610. V. Yeadon Borough, 94. C. A. Rathbone v. Kiowa County Com'rs, 183. Carr v. Coke, 869. V. District Court of Van Buren County, 72, 920. V. Northern Liberties, 80. Carriger v. Morristown, 359. Garrison v. Kershaw County, 107, 268. Carroll County v. Smith, 292, 393, 468, 473, 544, 547, 567. Carruthers v. City of Shelbyville, 54. Carter v. Barclay, 229. V. Cambridge, 58, 59. V. City of Dubuque, 99, 174, 638, 934. V. Ottawa, 453. V. State, 713, 714. V. Tilghman, 887. Carter County v. Sinton, 38, 53, 71, 187, 442, 863, 865. Cartersville, City of, v. Baker, 217. Carthage, City of, v. Burton, 38, 41. v. Garner, 83. Cartwright v. Village of Sing Sing, 379. Caruthers v. Harnett, 331. Carver v. Board of Liquidation, 599, 663. Casady v. Lowry, 341. TABLE OP CASES 1131 [keperences Cascaden v. City of Waterloo, 863. Case V. Inhabitants of Clinton, 95. State ex. rel. v. Wilson, 76, 84. Casey v. People, 200. Cass County v. Gillette, 200, 391, 468, 547. V. Johnson, 236, 550, 809. V. Johnston, 391, 387. V. Jordan, 393. V. Shores, 436. V. Wilbarger County, 435, 690, 839. Cassidy V. Woodbury County, 363. Catlettsburg, City of, v. Self, 150, 436. Catron v. La Fayette County, 328, 231, 348, 576, 630, 737. Cavender v. City of Charlestown, 78. C. B. Nash Co. v. City of Council Bluffs, 142, 385. C. Bridge & Covington Co. v. David- son, 195. C. B. & Q. R. R. Co. V. Aurora, 695. V. Otoe County, 172, 178. V. Village of Wilber, 276. Cecil V. Board of Liquidation, 973. Cedar Rapids, L F. & N. W. R. Co. V. Elseffer, 343. Centerville, City of, v. Fidelity Trust & Guaranty Co., 145. Central Branch Union Pac. Ry. Co. V. Smith, 593. Central, City of, v. Wilcoxen, 921. Central Irrigation Dist., In re, 491. Certificates of Indebtedness, In re, 932. Chaffee v. Middlesex R. R. Co., 400. Chaffee County Com'rs v. Potter, 505, 510, 513, 565, 576, 582, 588, 637. Chaffin V. Taylor, 159. Chalk V. White, 342. Chalstram v. Board of Education of Knox County, 34, 30, 41, 73. ARE TO pages] Chamberlain v. City of Hoboken, 86, 874. V. City of Tampa, 531. Chambers v. Cook, 314. V. Custer County, 935. Chambers County v. Clewes, 550, 568, 816, 818. Champlain, Village of, v. McCrea, 223. Chandler v. City of Bay St. Louis, 894, 923, 933, 938. V. City of Boston, 54. v. Starling, 120. United States ex rel., v. County Com'rs of Dodge County, 838. Chanute, City of, v. Davis, 280. V. Trader, 654. Chaplin, etc.. Road Co. v. Nelson County, 204. Chapman v. City Council of Charleston, 730, 808. V. Douglas County, 784. V. Morris, 423. Chariton, City of, v. HoUiday, 862. Charles v. Board of Liquidation, 973. Charlotte v. Shepard, 690. Chase v. Gilbert, 384. V. Trout, 874. v. Morrison, 714. Chaska Co. v. Board of Sup'rs, 217. Chatham County Com'rs v. F. M. Stafford & Co., 60, 867. Cheeney v. Inhabitants of Brook- field, 883, 903, 909, 934, 936, 938. Chehalis County v. Hutcheson, 898, 903. Chelsea Savings Bank v. City of Ironvifood, 784, 798. Cherry Creek, Town of, v. Becker, 337, 375, 516, 660. Chester, City of, Bullock, 864. Cheyenne, City of, v. State, 255, 874. Cheyenne County Com'rs v. Bent County Com'rs, 39. 1132 TABLE OF CASES Chicago V. M. & M. Hotel Co., 84. V. People, 405. Chicago & Alton Ry. Co. v. People, 256. Chicago & Iowa R. R. Co. v. Mal- lory, S87. Chicago & N. W. Ry. Co. v. Faulk County, 781. V. State, 308, 309. Chicago, B. & Q. R. Co. v. Village of Wilher, 378. Chicago, City of, v. Brede, 765. V. Crozer, 266. V. English, 912, 381. V. Galpin, 147. V. Gunning System, 83. V. Hurford, 912. V. McDonald, 131. V. Morton Mill Co., 98. V. Peck, 95. V. People, 763. V. Pittsburgh, etc., Ry. Co., 132, 350. V. Rumsey, 54. V. Sansum, 714. V. Schmidinger, 81. V. Weber, 75, 84. Chicago, Danville, etc., R. R. v. St. Anne, 339. Chicago, etc., R. R. Co. v. City of Aurora, 736, 763. V. Klein, 316. V. Mallory, 339. V. Marseilles, 333. V. Pinckney, 548. V. Schewe, 246. Chicago, K. & W. R. Co. v. Chase County Com'rs, 241, 245, 565. V. Freeman, 339. V. Harris, 242, 269, 340. V. Makepeace, 245. V. Ozark Township, 246. V. Stafford County Com'rs, 335. Chicago, Milwaukee, etc., Ry. Co. v. Shea, 133, 337. Chicago, P. * S. W. R. Co. v. Town of Marseilles, 243. ABB TO pages] Chiekaming v. Carpenter, 341, 346, 795, 914. Chicot County v. Louis, 210. V. Sherwood, 794, 813, 857. Childs V. City of Anacortes, 639. ChUlicothe, City of. State ex rel., v. Gordon, 872, 873. Chilton V. Town of Gratton, 140, 142, 228, 338, 512, 516, 565, 605, 617, 625, 661. Chiniquy v. People, 239, 248. Chippewa Bridge Co. v. City of Durand, 91, 94. Chisholm v. City of Montgomery, 173, 506, 566, 611, 647, 689, 934. Choate v. City of Buffalo, 195, 253. Choisser v. People, 67, 238, 363, 283, 534, 669, 678. Chosen Freeholders of Hudson County V. Buck, 932. Sussex County v. Strader, 11. Chostkov V. City of Pittsburgh, 376, 865. Christian County Court v. Smith, 300, 280. Christie v. Board of Chosen Free- holders of Bergen County, 304. V. City of Duluth, 129. Churchman v. Martin, 724. Cicero, Town of, v. City of Chicago, 30. V. Clifford, 391. V. Grisko, 883. Cincinnati, City of, v. Anderson, 724. V. Ferguson, 775. V. Guckenberger, 412, 433. V. Trustees of City Hospital, 190. Cincinnati, etc., Ry. Co. v. Baugh- man, 41. V. People, 193, 356. Citizens' Bank v. City of Spencer, 89, 90. V. City of Terrell, 259, 508, 617, 633, 777. TABLE OP CASES 1133 [repeeences Citizens' Bank v. Police Jury of Par- ish of Concordia, 933. V. Town of Jennings, 356. Citizens Gas &, Mining Co. v. Town of Elwood, 300. Citizens Savings & Loan Assoc'n v. City of Topeka, 313, 309, 318, 660, 683, 746. V. Perry County, 355, 396, 498, 505, 565, 581, 607, 634, 659, 686. Citizens Savings Bank v. City of Newburyport, 117, 512, 533, 615, 634, 731. V. Town of Greenburg, 493, 496. City and County of Denver v. Hallett, 256, 704, 737, 740. City Bank v. Mahan, 160. City Council, etc., v. Board of Com'rs of Adams County, 33. City Council of Augusta v. Dunbar, 875. Dawson v. Dawson Water Works Co., 88, 91, 146, 276, 387. Montgomery v. Capital City Water Co., 79. V. Montgomery Water Works, 93. V. Moore, 865. V. Reese, 190. Nashville v. Ray, 883. City of Akron v. Dobson, 317, 531. Albany v. McNamara, 118. Alma V. Guaranty Savings Bank, 301, 736. v. Loehr, 334. Alpena v. Kelley, 882. Anniston v. Hurt, 770. Ardmore v. State, 282. Asheville v. Webb, 374, 420. Ashland v. Culbertson, 199, 286. Atchinson v. State, 333. Atchison v. Butcher, 393, 493. V. Friend, 771. ■ V. Leu, 888. V. Price, 839. ARE TO pages] City of Athens v. Hemerick, 875, 338, 331. Aurora v. West, 171. Austin V. Cahill, 315, 499, 753, 769, 770, 773, 811, 831, 848, 843. V. McCall, 775. V. Nealle, 730. V. Valle, 346. Baltimore v. Bond, 431. V. Eschbach, 94. V. Gahan, 81. v. State, 36. Bardwell v. Southern Engineer- ing & Boiler Works, 784. Belleville v. Wells, 189, 319, 866. Beloit V. Morgan, 653. Bessemer v. Bessemer Water Works, 75. Bethany, State ex rel., v. Allen, 884. Biddeford v. Yates, 80, 82. Birmingham v. Rumsey, 715. Blanchard v. Village of Benton, 139. Bloomington v. Smith, 479. Bluefield v. Johnson, 521. Boise City v. Union Bank & Trust Co., 395. Bowling Green v. Gaines, 81. Brenham v. German American Bank, 173, 187, 1056. Bridgeport v. Housatonic R. R. Co., 380. Buffalo, In re, 77, 118. Burlington v. Centr. Vt. Ry. Co., 10, 225, 318. Burrton v. Harvey County Sav. Bank, 899. Cadillac v. Woonsooket Institute for Savings, 187, 351, 485, 487, 429, 430, 598, 599, 730. Cairo v. Zane, 238, 366, 713, 743. Carteraville v. Baker, 217. Carthage v. Burton, 88, 41. V. Garner, 88. 1134 TABLE OF CASES [eefeeencbs Cfity of Carthage, State ex rel., v. Gordon, 209, 378, 280, 383, 704, 740, 780. Catlettsburg v. Self, 150, 426. Centerville v. Fidelity Trust & Guaranty Co., 145. Central v. Wilooxen, 921. Centralia, State ex rel., v. Wilder, 118, 196. Chanute v. Davis, 380. Chariton v. Holliday, 862. Chester v. Bullock, 864. Cheyenne v. State, 255, 874. Chicago V. Brede, 765. V. Crozer, 366. V. English, 381, 912. V. Galpin, 147. V. Gunning System, 83. V. Hurford, 912. V. McDonald, 131, 147. V. Morton Mill Co., 98. V. Peck, 95. V. People, 763. V. Pittsburgh, etc., Ry Co., 132, 250. V. Rumsey, 54. V. Sansum, 714. V. Schmidinger, 81. V. Weber, 75, 84. Chillicothe, State ex rel., v. Gor- don, 196, 873. V. Wilder, 319, 385. Cincinnati v. Anderson, 724. V. Ferguson, 775. v. Guckenberger, 412, 433. V. Trustees of City Hospital, 190. Clarksdale, Miss., v. Pacific Imp. Co., 604. Cleburne v. Gutta Percha & Rub- ber Mfg. Co., 139, 204, 358. Cleveland, Tenn., v. United States, 57, 313, 749, 761, 848, 852. Clinton v. Walliker, 149. Colorado Springs v. Neville, 73. Columbia v. Spigener, 885. ARE TO PAGES] City of Columbia, State ex rel., v. Allen, 222, 257, 277, 385. V. Wilder, 138. Columbus V. Dennison, 235, 343, 565, 589. V. Woonsocket Institution of Savings, 258, 363, 631. ConnersviUe v. Connersville Hy- draulic Co., 902, 914. Conyers v. Kirk, 136. Coolidge V. General Hospital So- ciety of Connecticut, 599, 663. Council Bluffs v. Stewart, 138, 333. Covington v. Kentucky, 25, 74. V. Nadaud, 251. Cripple Creek v. Adams, 322, 256, 403, 442, 459, 700. Cumberland v. Magruder, 175. Danville v. Danville Water Co., 145. V. Mitchell, 713. Davenport v. Lord, 915. Defiance v. Schmidt, 363, 589, 598, 608, 643. Denver v. Hayes, 384. V. Iliff, 68. Detroit v. Detroit Citizens St. R. R. Co., 55. V. Detroit City Railway Co., 75, 92. V. Grummond, 91. V. Parker, 319. East St. Louis v. Flannigen, 900. V. Maxwell, 411. V. Zebley, 80. Eau Claire v. Eau Claire Water Co., 155, 223. Elizabeth v. Force, 350, 457, 482. Elmira v. Seymour, 866. Ensley v. Cohn, 54. V. Simpson, 54, 55, 73, 770. Eugene v. Willamette Valley Co., 195, 285, 719, 758. TABLE OF CASES 1135 [references City of Evansville v. Dennett, 565, 589, 590, 591, 592, 593, 594, 624. V. Woodbury, 171, 175, 181, 184, 550. Fort Madison v. Fort Madison Water Co., 755, 753. Fort Scott V. Eads Brokerage Co., 83, 88. Galena v. Amy, 193, 841, 855, 857, 872. V. Corwith, 411, 417. Galesburg v. Hawkinson, 9. Geneva v. People, 713. Gladstone v. Throop, 142, 351, 359, 457, 496, 522, 532, 564, 613, 872. Goodland v. Nation, 423. Graymount v. Stott, 268. Great Falls v. Theis, 490. Greensboro v. Scott & Stringfel- low, 268. Grenada v. Brogden, 683. Guthrie v. Territory, 58, 62. Hammond v. Evans, 896. Hannibal v. Fauntleroy, 662. Hartford v. Hartford Electric Light Co., 87. V. Maslem, 54. Hazlehurst, v. Mayes, 76, 84, 118, 210. Helena v. Helena Water Works Co., 325. V. Mills, 146. Houston V. Potter, 358. V. Stewart, 150. V. Vorhees, 770. Huron v. Second Ward Savings Bank, 106, 175, 190, 195, 416, 426, 430, 432, 436, 511, 522, 557, 565, 576, 594, 613. Indianapolis v. Consumers' Gas Trust Co., 861. V. Wann, 91. lola V. Merriman, 140. Ironwood v. Wickes, 489. ARE TO pages] City of Jcfiferson v. Jennings Bank- ing & Trust Co., 373, 460, 478, 816. V. Marshall Nat. Bank, 373, 598. JeflFersonville v. Patterson, 393. Joliet V. Verley, 78. Jonesboro v. II. R. Co., 672. Joplin, State ex rel., v. Wilder, 284, 758. Kearney v. Woodruff, 227, 229, 504, .608. Kenosha v. Lamson, 21, 383, 386, 394, 400, 407, 544, 670. Knoxville v. Gas, 866. La Crosse v. La Crosse Gas & Electric Co., 87. La Harpe v. Elm Township Gas- light, etc., Co., 54. Lampasas v. Talcott, 121, 536. Lamproso v. Talcott, 536. La Porte v. Gamewell Fire Alarm & Tel. Co., 137. Lawrenceville v. Hennessey, 266. Lead v. Clatt, 861. Leavenworth v. Wilson, 284. Lexington v. Butler, 385, 392, 394, 407, 454, 467, 531, 606, 742. v. Kentucky Chautauqua As- sembly, 253. V. Lafayette County Bank, 86, 146. Lincoln v. Sun Vapor Street Light Co., 303. Litchfield v. Ballou, 87, 630, 633, 789, 792. Little Rock v. Merchants' Nat. Bank, 936. v. United States, 699, 750, 833, 837, 842, 855, 882, 886, 901. Lockport V. Gaylord, 933. Logansport v. Dykeman, 108. V. Jordan, 129, 150, 203, 206, 313. Los Angeles v. Hance, 341, 865. V. Teed, 413, 419, 424, 432, 436, 743. 1136 TABLE OF CASES [ebferences City of Louisiana v. Wood, 785. Louisville V. Bank of Louisville, 117, 357. V. Board of Park Com'rs, 339, 290. V. Commonwealth, 53. V. University of Louisville, 713. V. Weikel, 78. Lynchburg v. Norvell, 493. Macon v. East Tenn. V. & G. R. Co., 338, 343. v. Jones, 268. Mankato v. Barber Asphalt Pav- ing Co., 149. Marshall v. Allen, 82. V. Marshall Nat. Bank, 375. Memphis v. Bethal, 175, 210, 391, 400, 494, 496, 534, 661. V. Brown, 86, 449, 763. V. Hastings, 253. V. Memphis Sav. Bank, 349, 740, 769. Menasha v. Hazzard, 564. Mineral Wells v. Darby, 185, 935. Mitchell v. Smith, 432, 548. Mobile v. Kimball, 330. v. Moag, 86, 88. Morrison v. Hinkson, 713. Mt. Vernon v. State, 204. Nashville v. Hagan, 94. V. Linck, 77. V. Lindsey, 935. V. Ray, 17, 171, 180, 442, 894, 928, 934, 935, New London v. Brainerd, 86. New Orleans v. Citizens Bank of Louisiana, 653. V. City Hotel, 891. V. Clark, 60, 351, 348, 417. V. Fisher, 770. V. Home Mutual Ins. Co., 714. V. Morris, 715. V. Strauss, 938. V. Warner, 883, 890, 911, 912, 914, 915, 916, 921. Newport, Ex parte, 140. ABE TO pages] City of Newport v. Newport Light Co., 219. Newport News v. Potter, 87, 95. New York v. Second Ave. R. R. Co., 80. V. Sands, 497. V. Tenth Nat. Bank, 58, 60. Nokomis v. Zepp, 266. Oak Cliff V. Btheridge, 135. Oakland v. Oakland Water Front Co., 712. V. Thompson, 253. Oklahoma v. T. M. Richardson Lumber Co., 119. Olney v. Harvey, 713. Orleans v. Clarke, 675. Ottawa V. Carey, 76, 595. V. First Nat. Bank of Ports- mouth, 595, 601, 730, 806. V. People, 78. Ottumwa V. City Water Supply Co.; 137, 141, 150, 151, 152. Paris V. Sturgeon, 89. Patterson v. Barnett, 303. Pekin v. Reynolds, 405, 743. Perry v. Norwood, 374. Philadelphia v. Flannagan, 130. v. Fox, 9. V. Gorgas, 95. Pierre v. Dunscomb, 175, 193, 195, 416, 419, 436, 430, 478, 533, 530, 599. Pittsburgh, In re, 863. Plattsmouth v. Fitzgerald, 784, 910, 919. Port Huron v. ^cCall, 85. Poughkeepsie v. Quintard, 432, 436. Providence v. Providence Electric Light Co., 204. Pueblo V. Dye, 721. Quincy v. Warfield, 382, 416, 417, 434. Radford v. Heth, 175, 347. Ray V. Vansycle, 391. TABLE OF CASES 1137 [eefeeenoes City of Redlands v. Brook, 107, 674, 677, 679. Redondo Beach v. Cate, 765. Richmond v. McGirr, 127, 935. Rochester v. Quintard, 734. Rome V. Whitestown Water Works Co., 257, 530, 564, 775. Salem v. Lane & Bodley Co., 712. San Antonio v. Alamo Nat. Bank, 890. V. Beck, 134, 135. V. E. H. Rollins & Sons, 487, 490. V. Gould, 362. V. Lane, 531, 566. V. Tobin, 204. San Diego v. Dauer, 920. V. Potter, 187, 195, 251, 283, 873. San Luis Abispo v. Hoskin, 277, 278. Santa Barbara v. Davis, 350, 873. Santa Cruz v. Waite, 382, 418, 422, 508, 795, 843. Santa Monica v. Los Angeles County, 12. Savannah v. Kelly, 99, 233, 872. Seattle v. Stirrat, 118, 126. Sherman v. Smith, 888, 904. Somerville v. Dickerman, 84. South Bend v. Lewis, 292, 294. South Hutchinson v. Barnum, 565, 643. South St. Paul V. Lamprecht Bros., 192, 231, 533, 589, 607, 738. Springfield v. Edwards, 137, 332, 883, 905. V. Weaver, 939. St. Joseph V. Joseph Water Works Co., 146, 148. V. Pitt, 315. St. Louis V. East St. Louis Gas- light & Coke, 147. V. Mortman, 71. St. Petersburg v. English, 24, 484. p. s.— 72 ARE TO pages] City of Superior v. Marble Savings Bank, 589, 635, 758. V. Norton, 95. Syracuse v. Reed, 497. Tacoma v. Titlow, 80. Tarkio v. Cook, 302, 863. Terrill v. Dissant, 258, 883. Thomasville v. Thomasville Elec- tric Light & Gas Co., 377. Tiffin V. Griffith, 199. Topeka v. Dwyer, 28. Tyler v. L. L. Jestei> & Co., 146, 258, 301, 434, 432, 769, 783, 856. V. Tyler Bldg. & Loan Assoc'n, 336, 428, 430, 499, 503, 533, 598, 806, 811. Uvalde v. Spier, 42, 478. Vicksburg v. Lombard, 567, 743. Virden v. Fishback, 713. Waxahachie v. Brown, 417, 936. Wellington v. Wellington Tp, 11. Welston V. Morgan, 87. Wichita v. Skeen, 91. Wilkesbarre, Appeal of, 777, 780. Williamsport v. Commonwealth, 111, 171, 239, 936. Winchester v. Redmond, 84. Winona v. Botzet, 11. V. Jackson, 90. V. School Dist. No. 83, 31. City Water Supply Co. v. City of Ottumwa, 142. Clagett V. Duluth Township, 517, 671, 698. Claiborne County v. Brooks, 104, 183, 185, 354, 355, 550, 555, 935. Clapp V. Cedar County, 697, 730. V. City of Marice, 351, 594. V. Otoe County, 12, 176, 280, 531, 536, 554, 557, 589, 594, 608, 635, 722, 844. V. Village of Marice City, 599. Clark V. City of Davenport, 311. 1138 TABLE OP CASES [refbkences Clark V. City of Des MoineS, 94, 99, 495, 884, 894, 896, 901, 933, 937, 938. V. City of Janeaville, 344. V. City of Los Angeles, 195, 310, 324, 284, 302, 548, 671, 681. V. City of Washington, 79. V. Evans, 473. V. Iowa City, 391, 400, 403, 407. V. Janesville, 111, 392. V. Logan County, 90. V. Montgomery County Com'rs, 289. • V. Polk County, 884, 896, 930. V. Saratoga County Sup'rs, 935. V. Town of Nobleaville, 269. V. Town of Rosedale, 242, 343. V. West Bloomfield Township, 87. Clark &, Courts v. San Jacinto Coun- ty, 107. Clark County Sup'rs v. Lawrence, 884, 891, 934. Clarke v. City of Rochester, 9. V. Janesville, 407. V. Sup'rs of Hancock County, 358. V. Town of North Hampton, 373, 660. Clarksdale, City of, v. Pacific Imp. Co., 604. Town of, V. Broaddus, 381. Claybrook v. Board of Com'rs of Rockingham County, 370, 291, 398, 499, 508. Claybrooke v. County Com'rs, 578. Clay County v. Chickasaw County, 36. V. McAleer, 852. V. Society for Savings, 564, 604, 607. Clayton v. McWilliams, 883, 923, 935. Cleburne, City of, v. Gutta Percha & Rubber Mfg. Co., 129, 204, 258. Clegg V. Richardson County School Dist., 190. ABE TO pages] Clements v. State, 714. Cleveland v. Calvert, 191, 195, 229, 381, 297, 584. V. City Council of Spartanburg, 369, 396, 331. Cleveland, City of, v. United States, 57, 313, 749, 761, 839, 848, 853. Cleveland County Com'rs v. Seawell, 932. Cleveland, Paynesville & Ashtabula R. R. Co. V. Pa., 875. Clifton Forge, Town of, v. Alleghany Bank, 533, 560, 595. V. Brush Electric Co., 478. Clinton, City of, v. Walliker, 149. Clother v. Maher, 38. Cloud V. Lawrence County, 914. Clydewell v. Martin, 870. Coal Creek Township, Advisory Board of, v. Levandowaki, 306. Coal-Float, A, v. City of Jefferson- ville, 77. Coates v. Campbell, 350. v. New York, 303. Coconino County v. Yavapai County, 38. Codman v. Crocker, 54. Coe V. Caledonia & M. R. Co., 241. Coffin V. Board of Com'rs of Kearney County, 170, 174, 411, 417, 498, 507, 518, 688, 689, 904, 913, 919. V. City of Indianapolis, 416, 421. V. Richards, 412, 419. Cofield V. Britton, 40. Coggeshall v. City of Des Moines. 298, 749. Coker v. Atlanta, etc., Ry. Co., 88. Colbert v. State, 704, 740. Colburn v. Chattanooga West R. R. Co. 174. V. McDonald, 143, 369, 659. Cole V. Caledonia & Miss. Ry. Co., 280. V. Dorr, 70. V. La Grange, 349. Coleman v. Board of Sup'rs, 247. 696. TABLE OF CASES 1139 [ebfebences Coleman v. Broad River Township, 242, 673, 675, 678. V. Frame, 283. V. Marin County, Sup'rs, 240,344. V. Town of Eutaw, 285, 289. V. Township of Hartford, 96. Coler v. Board of Com'rs of Santa Fe County, 118, 126, 208, 359, 380, 473, 478, 512, 613. V. City of Cleburne, 117, 353, 355, 356, 357, 368. V. Coppin, 713. V. Dwight School Township of Richland County, 28, 347, 356, 566, 577, 581, 584, 643, 644. V. Rhoda School Township, 566, 605. V. Wyandotte County, 373. Coles V. Washington County, 59. Coles County v. Goehring, 356, 933. Collier v. Peacock, 918. Collier & C. Lithographing Co. v. Henderson, 887. Collings V. County of Camden, 333. Collins V. Gilbert, 822. Coloma, Town of, v. Eaves, 388, 400, 478, 500, 517, 564, 567, 581, 608, 614, 643, 645, 805. Colorado Springs, City of, v. Neville, 73. Columbia v. Dennison, 136. Columbia Ave., etc.. Trust Co. v. City of Dawson, 145. Columbia, City of, v. Spigener, 885. Columbia, State ex rel., v. Allen, 205, 783. Columbia County Com'rs v. King, 32, 38, 74, 839. Columbus, City of, v. Dennison, 335, 343, 565, 589. V. Woonsocket Institution for Savings, 358, 363, 631. Columbus Gas Light & Coke Co. v. City of Columbus, 83. Colusa County v. Glen Covlnty, 38. ABE TO PAGES] Comanche County Com'rs v. Lewis, 31, 38, 368, 584. Commercial & Farmers' Bank v. Worth, 885. Commercial Nat. Bank v. City of Portland, 763, 891. of Cleveland v. lola City, 350, 683. Commercial Wharf Corp. v. City of Boston, 89. Commissioners v. Snuggs, 690. Anderson County v. Beal, 604, 607, 836. Buncombe County v. Payne, 337, 660, 674, 860, 870. Chaffee County v. Potter, 635. Columbia v. King, 544. Comanche County v. Lewis, 604, 677. Craven v. Atlantic, etc., R. R. Co., 183. Delaware v. McClintock, 174. Douglas County v. Bolles, 236, 454, 457, 458, 460, 461, 500, 564, 581, 610, 643. Granville v. Com'rs of Vance, 39. Henderson County v. Travellers Ins. Co., 581. Highways v.. Jackson, 149. Jefferson County v. People, 414. Johnson County v. January, 589, 659, 661. V. Thayer, 237, 465. Knox County v. Aspinwall, 563, 565, 589, 603, 643, 839. V. Nichols, 375. Leavenworth County v. Hamlin, 438. Limestone County v. Rather, 339. Madison County v. Brown, 456. Marion County v. Clark, 351, 375, 380, 444, 456, 460, 531, 643, 736, 742, 826. Ouray County v. Geer, 432. Parks, Boulevards, etc., v. Comp- troller of City of Detroit, 302. Pitt County v. MacDonald, Mc- Kay & Co., 749, 1140 TABLE OF CASES [eefbeences Commisaioners Sinking Fund of Louisville v. Zimmerman, 381, 775. St. Louis County v. Nettleton, 368, 380. Taxing Dist. of Brownsville v. League, 657, 837. Town of H^ndersonville v. C. A. Webb & Co., 107, 267, 268. Common Council v. Schlich, 595. of Muskegon v. Gow, 266. Commonwealth v. Blackley, 54. v. Bush, 120. V. Chesapeake & 0. R. Co., 340. v. City of Covington, 10, 222. V. City of Pittsburgh, 171, 229, 567. V. Commissioners of Allegheny County, 380, 442, 698, 730, 747. V. Emigrant Savings Bank, 350. v. Lane, 90. v. Louisville & Nash. R. R. Co., 813. v. McCuUough, 397. v. Philadelphia County Com'rs, 912. v. Town of Williamstown, 184, 340, 485. V. Wotton, 124. ex rel Whelan v. Pittsburgh, 183, 184, 839. of Virginia v. Chesapeake & Ohio Canal Co., 401, 404, 499. v. State of West Virginia, 31, 86. Commonwealth Real Estate Com- pany V. City of South Omaha, 33. Concord, Town of, v. Portsmouth Savings Bank, 300. V. Robinson, 185, 200, 287, 577, 673, 935. Condon v. City of Eureka Springs, 917, 923. Conek v. Skeen, 257. Conklin v. City of El Paso, 364, 414, 775, 874. ARE TO PAOES] Conner v. City of Nevada, 132, 304, 205. Connersville, City of, v. Conners- ville Hydraulic Co., 902, 914. Connor v. City of Marshfield, 137, 264. V. Morris, 884. Conollton School Dist., etc.. State ex rel., v. Gordon, 367. Conrad v. Kinzie, 354. Conradt v. Miller, 75. Consolidated Association of Plant- ers V. Avegno, 478, 482. Consolidated Coal Co. v. Trustees, etc., 90. Continental Construction Co. v. City of Altoona, 95. Contoocook Fire Precinct v. Town of Hopkinton, 339. Contracting of State Debt by Loan, In re, 414. Converse v. City of Ft. Scott, 237, 341, 247, 366, 367, 696. Converse Bridge Co. v. Geneva Coun- ty, 920. Conyers, City of, v. Kirk, 126. Cook V. City of Ansonia, 132. v. City of Beatrice, 274, 333, 334. V. Lyon County, 478. V. South Park Com'rs, 253. Cook & Sons, W. W. v. City of Cameron, 97. Cook County v. Chicago Industrial School for Girls, 218. >'. Lowe, 887, 928. V. Schaffner, 914. Cooke V. United States, 373. Coolidge, City of, v. General Hos- pital Society of Connecticut, 599, 663. Coombs V. Jefferson Township Boone County, 303. Cooper v. Jersey City, 373, 457, 481. V. Roland, 891. V. Springer, 62. V. Sullivan County, 635, TABLE Ot CASES 1141 [refeeenoes are to pages] Cooper V. Town of Thompson, 391, County of Calloway v. Foster, 53, 671, 681. Copper V. Jersey City, 126. Coquard v. School District of Joplin, 489. V. Village of Oquawka, 174, 187, 414, 416, 428, 855, 934. Corbet v. Town of Kocksbury, 616, 617. Corcoran v. Chesapeake & Ohio Canal Co., 395. Corey v. City of Fort Dodge, 150. Corker v. Village of Mountain Home, 873. CorUss V. Village of Highland Park, 139. Cornell University v. City of Mau- mee, 536, 677. Corning v. Meade County Com'rs, 175, 192, 196, 197. Comman v. Hagginbotham, 68. Corporation v. County of Pontiac, 356. Corpus Christi v. Weossner, 883. CosteUo V. Inhabitants of North Easton, 103. Cothran v. City of Rome, 165, 166, 883, 909, 936. Cotton V. Inhabitants of New Prov- idence, 275, 561, 566, 625. Cottrell V. Town of Lenoir, 195, 209, 298. Coulson V. City of Portland, 129. Council Bluffs, City of, v. Stewart, 333. Counterman v. Dublin Township, 326. County and City of Denver v. Hal- lett, 256, 704, 737, 740. County Com'rs v. Chandler, 230. V. Sauer, 894. Cherokee County v. Wilson, 847. County of Armstrong v. Brinton, 733. Bates V. Winters, 388. Beaver v. Armstrong, 391. 200. Carter v. Sinton, 187. Cass V. Gillett, 468. V. Johnson, 236, 387, 550, 809. V. Shores, 426. Chaffee v. Potter, 582. Chambers v. Clewes et al., 816. Chicot v. Lewis, 210. Clay V. Society for Savings, 604, 607. Dallas V. McKenzie, 474, 531, 548, 613, 615, 689, 813. Daveiss v. Huidekoper, 236. Dixon v. Field, 612, 617, 1045. Galena v. Amy, 780. Green v. Daniels, 350, 393, 830. Hennepin v. Brotherhood of Geth- semane, 218. Henry v. Nicolay, 379, 517, 548, 564. Jasper v. Ballou, 427, 599, 662, 663. Jefferson v. Hawkins, 428. V. Jenning Banking & Trust Co., 349. Kankakee v. Aetna Life Ins. Co., 356. ' Lake v. Graham, 612, 616, 617. Lancaster v. Sheraw & C R. R. Co., 394. Leavenworth v. Barnes, 350, 550. Lexington v. Butler, 391. Macon v. Shores, 236, 478, 531, 530, 548, 818. United States ex rel., 748. Mobile V. Kimball, 116, 307, 308, 318, 319, 469, 830. Moultrie v. Fairfield, 85, 270, 313, 563, 565. V. Rockingham 10-Cent Saving Bank, 296, 500, 589. Nehama v. Frank, 819. Presidio v. Noel-Young Bond & Stock Co., 455, 520, 556, 565, 572, 595, 615, 624, 627, 652, 802, 1062, 1067. 1142 TABLE 01' Cases [references County of Ralls v. Douglass, 199, 236, 343, 356, 818, 826. Randolph v. Post, 247, 696. Ray V. Van Sycle, 334, 548, 661. Sac V. Cromwell, 460. Schuyler v. Thomas, 235. Scotland v. Thomas, 53, 400, 548. Sherman v. Simons, 615. Tipton V. Locomotive Works, 555, 662. Tulare v. Kings County, 36, 38. Warren v. Marcy, 467, 468, 604. Wilson V. Nat. Bank, 450. Yolo V. Coglan, 869. Coulson V. City of Portland, 146. Council Bluffs, City of, v. Stewart, 138. Counterman v. Dublin Township, 325. Courtner v. Etheridge, 117, 671, 673. Courtright v. Deeds, 244. Covington & C. Bridge Co. y. David- son, 63, 195. Covington, City of, v. Kentucky, 25, 74. V. Nadaud, 251. Cowdery v. City of Caneaea, 254, 660. Cowley County Com'rs v. Heed, 565. Cox V. Borough of Connelsville, 486. v. Com'rs of Pitt County, 250, 298, 531, 867, 869. V. Jones, 89. Coy V. Lyon City, 7^7. C, P. & A. R. R. Co. V. Common- wealth of Pennsylvania, 875. Craft v. Lofinck, 38, 63. Craig V. Mason, 891. V. Missouri, 159, 160, 909. V. Town of Andes, 270, 576, 636. Craig School Tp. v. Scott, 934. Craighead v. Bank, 165. Cramer v. City & County of Sacra- mento Sup'rs, 887. Crampton v. Zabriskie, 262, 324, 387. ABE TO PAGES] Cranor v. Board of Com'rs of Volu- sia County, 99. Crawford v. Noble County Com'rs, 896, 913, 920, 928, 930, 932. Crawford County v. Wilson, 893, 896, 928, 930. Creager v. Snyder, 218. Creed v. McCombs, 255. Creighton v. City and County of San Francisco, 69. Creole Steam Fire Engine Co. v. City of New Orleans, 911. Creston Iowa Works Co. v. Crea- ton, 145. Cricket v. State, 930. Cripple Creek, City of, v. Adams, 222, 256, 403, 442, 459, 700. Criswell v. Board of Directors, 920. Crittenden v. Town of Booneville, 81. Crittenden County Court v. Shanks, 174, 175. Crogster v. Bayfield County, 631, 629, 632. Cromwell v. County of Sac, 404, 442, 460, 650, 652. Cronin v. Patrick County, 450, 664. Cronley v. City of Tucson, 292, 293. Crosby v. City of Mayfield, 332. Cross, Ex parte, 40. Cross V. Town of Morristown, 77. Crow V. Township of Oxford, 367, 592. Crowder v. Town of Sullivan, 145. Crowley, Town of, v. F. R. Fulton Co., 208. Cudd V. Calvert, 669, 673. Cuddon v. Eastwick, 8. Culberson v. Gilmer Bank, 918. Culbertson v. City of Fulton, 148, 233, 338. V. City of Louisville, 420, 719. Cullman County v. Blount Co., 33. Culver V. Ft. Edward, 175, 255. Cumberland & 0. R. Co. v. Barren County Ct., 239. TAJ3LE OP CASES 1143 [references Cumberlan * City of, v. Magruder, 175, 331, 264. Cumberland County Sup'rs v. Ran- dolph, 666. Cummings v. Hyatt, 229, 230, 270. Cummins v. District Township, 426. V. Doon Township, 432. V. Gaston, 32. T. Hyatt, 296. Cunningham v. City of Cleveland, 144, 520. V. Mitchell, 885. V. Thompson, 720. V. Saling, 135. Curran v. Arkansas, 160. Currie v. Lewiston, 356, 358. Curtenius v. Hoyt, 326. Curtis V. County of Butler, 83, 184, 358, 359, 391. Curtiss, Administrator, v. Whipple, 218, 229, 318. Cushman v. Com'rs of Carver Coun- ty, 497. Custer County Com'rs v. De Lana, 902, 907. Cutler V. Madison County Sup'rs, 292, 671. Daggett V. Lynch, 174, 678, 882. Daily v. Columbus, 104. V. Swope, 230. Dakota County v. Bartlett, 913. Dallas, County of, v. McKenzie, 474, 531, 533, 548, 613, 615, 689, 813. Daly V. Brown, 653. Dana v. Bouler, 478. V. City and County of San Fran- cisco, 928. Daniel v. Long, 341. Danielly v. Cabaniss, 516, 565, 575. Daniels v. Long, 222. Danville v. Montpelier R. R. Co., 331. ARE TO PAGES] Danville, City of, v. Danville Water Co., 145. V. Mitchell, 713. Darby & Co., E. M., v. City of Mo- desta, 350, 359. Dare County Com'rs v. Currituck County Com'rs, 31. Darke v. Board of Com'rs of Salt Lake County, 175, 421, 427. Darling v. Box Butte Co., 88. V. City of Baltimore, 713, 839. v. City of Manistee, 98. V. Taylor, 905. Darlington v. City of New York, 72, 715. Town of, V. Atlantic Trust Co., 192, 233, 516, 662, 842. Darrington v. Branch of Bank of Alabama, 160. Daughlin v. County Com'rs, 751. Davenport v. County of Dodge, 316, 722, 809, 838, 914. V. Elrod, 218. V. IQeinschmidt, 90, 328, 333. City of, V. Lord, 915. David V. East Baton Rouge, 661. V. Portland Water Committee, 72. Davidson v. Hine, 50. V. New Orleans, 309, 320. V. OlwiU, 911. Davies v. Saginaw County, 322. Daviess v. Des Moines, 767. Daviess County v. Dickinson, 98, 99, 144, 611, 628, 630, 632, 647, 660. V. Howard, 192, 630, 660. V. ,Huidekoper, 236, 567. Davis V. Board of Com'rs of Lincoln County, 855. V. City of Sacramento, 395, 403. V. County of Yuba, 765. V. Dougherty County, 280, 370. V. Hert, 296, 297. V. Kendallville, 478. V. Laughlin, 18. V. Miller, 405. 1144 TABLE OF CASES [eepeeences Davis V. Steuben School Tp., 894, 896. V. Town of Fremont, 137, 220. V. Wayne County Court, 264. Davis County v. Dixon, 350. Da-wson County Com'rs v. McNa- mara, 217, 593. Dawson Soap Co. v. City of Chi- cago, 69. Day V. Callow, 889, 927. V. City of Austin, 294. D. County Com'rs v. Sauer, 904, 907. Dean v. Davis, 8. V. City of Walla Walla, 152. Debnam v. Chitty, 661, 689. Debt Limit of City of New York, In re, 155. Decatur, Town of, v. Wilson, 291, 298. Decker v. Deimer, 107. Decorah v. Bullis, 125. Defiance, City of, v. Schmidt, 363, 589, 598, 608, 643. De Forth v. Wise. & Mich. R. R. Co., 270. Delafield v. lUinoia, 492, 494. V. State, 160. Deland v. Piatt County, 176, 565, 604, 607. Delfosse v. Metropolitan Nat. Bank, 894. De Mattos v. City of New What- com, 31, 32, 428, 669. Deming v. Holton, 642. V. Inhabitants of Houlton, 604. Dempsey v. Twp. of Oswego, 854. Denisoh v. City of Columbus, 659. Dennis v. Table Mountain Water Co., 884. Denny v. City of Spokane, 763, 769, 855, 890. Dent V. Cook, 117, 174, 688. Denver, City and County of, v. Hallett, 256, 704, 737, 740. City of, V. Hayes, 284. V. Iliff, 68. AKE TO PAGES] Derby, In re, 282. Derby & Co., E. M., v. City of Mo- desto, 222, 278, 380, 695. Desha County v. State, 36, 314, 437, 751. Desmond v. City of Jefferson, 103, 104, 935. D'Esterre v. City of Brooklyn, 187, 349, 451, 463, 472, 689, 730. V. City of New York, 34, 38, 348, 351, 373, 485, 592, 593, 698. Detroit, City of, v. Detroit Citizens St. R. R. Co., 55. V. Detroit City Railway Co., 75, 92. V. Grummond, 91, V. Parker, 319, 321. Devereaux v. City of Brownsville, 74. Devine v. Sacramento County Sup'rs, 238. De Voss V. City of Richmond, 508, 567. Deyo V. Otoe County, 428, 683, 919. Diamond v. Lawrence County, 443. Dick V. Scarborough, 284, 289. Dickason, State ex rel., v. Marion County Court, 129. Dickinson v. Board of Chosen Free- holders of Hudson County, 189, 867. State ex rel., v. Neely, 673. Diefenderfer v. State, 410, 489, 490. Diggs v. Lobsitz, 888, 915. Dime Deposit & Discount Bank v. City of Scranton, 769. Dime Savings Institution v. Ho- boken, 889. Dingman v. City of Sapulpa, 328. Dishon v. Smith, 333. District Tp. of Coon v. Board of Directors of Providence, 939. Dively v. City of Cedar Falls, 165, 333, 883, 909, 936. Dixon County v. Field, 209, 301, 367, 505, 510, 511, 520, 547, 567, 576, 580, 584, 587, 588, 612, 617, 647, 686, 689, 707, 1045. TABLE OF CASES U45 [kepekences Dodge V. City of Memphis, 108, 688, 689, 786. V. Mission Townsliip, Shawnee County, 249. V. People, 40. V. Piatt County, 548. V. Van Buren County Ct. Judge, 333. Dolaud V. Clark, 145, 151, 206. Dolloff V. Inhabitants of Ayer,- 87. Dolton, Village of, v. Dolton, 713. Donnelly v, Cabaniss, 697. Dooley v. Smith, 739. Doon Township v. Cummins, 144, 207, 426, 432, 438, 452, 505, 510, 522, 660. Doty V. Ellsbree, 185, 251. Dougherty County v. Boyt, 190. Douglas V. Chatham, 341. V. County of Pike, 544, 549. V. Lincoln County, 344. Town of, V. Niantic Savings Bank, 695. Douglas County Com'rs v. BoUes, 817. Douglass V. Virginia City, 935. Dorothy v. Pierce, 920. Dorsey County v. Whitehead, 922. Dows V. Town of Elmwood, 677, 683, 736, 739. D. P. K K. Co. V. Baltimore v. Pumphrey, 867. Drainage Dist. No. 1 v. Richardson County, 230. Drainage Dist. No. 3, In re., 230. Draper v. Springport, 363, 784. Dresser v. Missouri & Iowa Ry. Construction Co., 465. Dring v. St. Lawrence Township, 209, 223. Duanesburg, Town of, v. Jenkins, 239, 255, 331, 647, 681. ABE TO PAGES] Dudley V. Board of Com'rs of Lake County, 51, 103, 195, 207, 400, 511, 582, 615, 635, 661, 807. Duell County, Nebr., v. First Nat. Bank of Buchanan County, 844, 853. Dugas v. Donaldsonville, 437, 438. Duke V. Brown, 393, 475. V. Williamsburgh, 673. Dunbar v. Board of Comm'rs of Canyon County, 171, 193, 231, 331, 498. Duncan v. City of Charlestown, 365. Dunkirk, etc., R. R. Co. v. Batchel- lor, 67. Dupont V. City of Pittsburg, 143. Durach, Appeal of, 310. Durand v. Iowa County, 467. Durant v. Iowa County, 547. Durbridge v. State, 357. Durrett v. Davidson, 757. Duryee v. Friars, 136, 486, 904. Dutchess County Ins. Co. v. Hach- field, 479. Du Toit V. Village of Belview, 140, 310. Duval County v. Knight, 493. Eagle, Town of, v. Kohn, 340, 246, 344, 379, 517, 576, 577, 584, 637. E. & Wabash Co. v. Beers, 900. Earles v. Wells, 130, 148. East Chicago Co. v. City of East Chicago, 54. Lincoln, Town of, v. Davenport, 125, 389, 390, 805. Moline, Village of, v. Pope, 67, 151. Montpelier v. City of Barre, 33. Oakland, Township of, v. Skin- ner, 474, 550. St. Louis V. Amy, 746, 776, 832, 839. V. Flannigen, 900. V. Maxwell, 411. 1146 a?ABLE OP CASES [beferences East St. Louis v. United States ex rel. Zebley, 80, 772, 853. Tennessee University v. City of Knoxville, 9, 217, 310. Union Tp. v. Ryan, 894, 928. Eaton V. Manitowoc County Sup'rs, 939. V. Mimnaugh, 67, 135, 151, 205, 310. Eau Claire, City of, v. Eau Claire Water Co., 155, 223. Eckerson v. City of Des Moines, 51, 69. Eekola v. City of Bristol, 340, 341, 343. Ecroyd v. Goggeahall, 531. Eddy V. City and County of San Francisco, 798. V. People, 343. Edinburg American Land & Mortg. Co. V. City of Mitchell, 903, 931. Edison Electric Co. v. City of Pas- adena, 91, 92, 98. Edison Electric Light & Power Co. V. Bloomquist, 83. Edminson v. City of Abilene, 412, 418, 474. Edmunds, State ex rel., v. Capde- vielle, 887. Edward C. Jones Co. v. Board of Education, 493. V. Town of Gottenberg, 339, 347. Edwards v. Bates County, 407, 653, 730, 803, 816. V. City of Cheyenne, 333. V. City of Kirkwood, 81. V. Kearzey, 56. Edwards Hotel & City R. R. Co. v. City of Jackson, 80, 118. Effner v. City of Toledo, 251. Egerton v. Third Municipality, 713. Eggbgrn v. Board of Sup'rs of Cul- pepper County, 295. Egger, State ex rel, v. Payne, 906. Ehrlich v. Jennings, 442, 479. ARE TO PAGES] E. H. Rollins & Sons v. Board of Com'rs of Gunnison County, 461, 530, 531, 565, 588, 828, 839. Eidenmiller v. City of Tacoma, 884, 936. Ellison V. Town of Williamston, 306. Eisenhaur v. Barton County, 911. Eldridge v. Trezevant, 330^ 318. Eleanor Nesbitt v. Independent Dist. of Riverside, 653, 803. Electric Plaster v. Blue Rapids City Township, 394. Elizabeth, City of, v. Force, 350, 457, 482. EUenwood v. City of Reedsburg, 220, 223, 301. EUinghouse v. Taylor, 330. Elliott v. City of Philadelphia, 143, 303. V. Monongahela City, 76. V. Pardee, 40. Elliott, County of, v. Kitchen, 769, 915. Ellis V. Trustees of Graded School of Oxford, 191, 267, 747. V. Witmer, 381, 898. Ellison V. Town of Williamston, 205, 268. Elmira, City of, v. Seymour, 866. Elmore, Logan and Bingham Coun- ties V. Alturas County, 37. Elmwood, Township of, v. Marcy, 53, 66, 549. Elpaso County Com'rs v. Bish, 11. Elting V. Hickman, 228. Elyria Gas & Water Co. y. City of Elyria, 383, 303, 331, 334, 484, 487. E. M. Derby & Co. v. City of Mo- desto, 377, 350, 359, 380, 695. Emdon v. City of Monroe, 315. Emerie v. Gilman, 714. Emery v. Inhabitants of Mariaville, 894, 896, 933. Table of cases 1147 [eeferences Emery, Town of, v. Town of Wor- cester, 35, 37. Eminence, Town of, v. Grasaer'a Excrs, 659, 661. Emlen v. Lehigh Coal & Nav. Co., 405. Emmett Irrigation Dist. v. Shane, 188, 369, 370. Empire v. Darlington, 235. Enfield, Town of, v. Jordan, 13, 176, 199, 468, 74S, 743. English V. Chicot Co., 83. V. Smack, 330. V. Sup'rs, 751. Ensley, City of, v. Cohn, 54. V. Simpson, 54, 55, 72, 770. Epping V. City of Columhus, 128, 130, 133, 192, 261, 262, 288, 370, 493. Erskine v. Nelson County, 427. V. Steele County, 922. Esser v. Spaulding, 925. Essex, Town of, v. Day, 740. Esteves v. Board of Com'rs, etc., 287. Estill County, Kentucky, v. Embry, 245, 378. E. T. Lewis Co. v. City of Win- chester, 773, 775, 780. Eufaula v. McNab, 250. Eugene, City of, v. Willamette Val- ley Co., 195, 285, 719, 758. Evans v. Brown, 869. V. Cleveland & P. R. Co., 730. V. Cumberland County Com'rs, 267. V. Holman, 147, 151. V. McCarthy, 886. V. McFarland, 175, 209, 260, 292, 493, 589, 616. Evansville, City of, v. Dennett, 183, 184, 233, 504, 516, 565, 581, 582, 589, 590, 591, 592, 593, 594, 624. V. Woodbury, 171, 175, 181, 184, 550. ARE TO PAGES] Evansville R. R. Co. v. Evansville, 695. Evenson v. Demann, 195, 217. Everett v. Independent School Dis- trict of Rock Rapids, 630. V. Smith, 294. Everts v. District Tp. of Rose Grove, 918. Evertsen v. National Bank of New- port, 21, 383, 390, 391, 392, 393, 399, 400, 479. Ewing V. West Chicago Park Com'rs, 765. Exchange Bank v. Lewis County, 174, 932. Ex parte Board of Com'rs of Flor- ence Graded Schools, 885, 890. City of Newport, 140. Cross, 40. Folsom, 33, 46, 753. Haskell, 861. Johnson, 69. Jones, 76. Koen, 28. Parsons, 746. Selma, etc., R. R. Co., 340. Simmons, 10. Sims, 102, 103. Unger, 310. Willis, 934. Pabro V. Town of Gallup, 293. Fairfield v. County of Gallatin, 548, 550. Fairfield v. Rural Independent School Dist. of Allison, 505, 520, 616, 617. Falconer v. Buffalo, etc., R. R. Co., 301, 342. Fales V. Russell, 479. Falkenstein Township v. Fitch, 437. Fallbrook Irrigation Dist. v. Brad- ley, 12, 229, 318, 320, 550, 553, 556, 829. Farley, Town of, v. Town of Box- ville, 35. 1148 TABLE OF CASES [references Farmer v. City of Cincinnati, 487. V. Town of Thompson, 188, 393, 335, 371. Farmers' Bank of Frankfort v. Orr, 933. Wycliffe v. City of Wycliffe, 922. Farmers' Loan & Trust Co. v. City of Galesburg, 474. V. City of Sioux Falls, 207, 284, 286. Farmers' & M. Nat. Bank v. School Dist. No. 53, 901, 904. Farmers' & Merchants State Bank V. School Twp. etc., 175. Farmers' Nat. Bank v. Jones, 425. Farmingtou v. Pilsbury, 808. Farnham v. Benedict, 235. Farnum v. Benedict, 237. Farqviharson v. Yeargin, 336, 906. Farr v. Town of Lyons, 450. Farrell v. Port of Columbia, 69. Farson v. Sioux City, 769, 771. Farson, Leach & Co. v. Board of Com'rs, etc., 432. V. Board of Com'rs of Sinking Fund of City of Louisville, 734. V. City of Sioux City, 798. Farwell y. City of Minneapolis, 67, 189. V. City of Seattle, 76. T. Port of Columbia, 68. Faulkenstein Twp. of Stanton County v. Fitch, 508, 647. Faulkner v. City of Seattle, 150, 293. Favalora v. Police Jury of Parish of St. Bernard, 228. Fawcett v. Town of Mt. Airy, 86, 137, 268. Fazende v. City of Houston, 56, 57, 521, 769. F. B. Williams Cypress Co. v. Police Jury, 287. F. C. Austin Mfg. Co. v. Colfax County, 204. V. Smithfield Twp., 790. ABE TO pages] Federal, etc., Ey. Co. v. City of Pittsburg, 316. Fellows V. Walker, 219, 331, 336. Fenton v. Blair, 139, 905. Fergus Falls Water Company v. City of Fergus Falls, 222. Ferguson v. City of St. Louis, 921. Fernald v. Town of Oilman, 88, 594, 659, 784. Fernandez v. City of New Orleans, 714. Ferris v. Widber, 136. Fidelity, etc., Co. v. Shenandoah, etc., 365. Fidelity Trust & Guaranty Co. v. Fowler Water Co., 145, 500. Fidelity Trust, etc., Co. v. Lawrence County, 195, 199. Finlayson v. Vaughan, 133. Finn v. Board of Sup'rs of Bay County, 490, 491. First Municipality v. Orleans The- atre Co., 680. First Nat. Bank v, Arthur, 925. V. City of Elgin, 17, 344. V. Concord, 509. V. Doon Township, 505, 660. V. Martin, 890. V. Moore, 470, 473. V. Scott County, 460, 480. V. Shewalter, 898. V. Town of Concord, 478. V. Van Buren School Trustees, 305, 883. V. Whisenhunt, 894, 919. Arkansas City v. Gates, 897. Cedar Kapids v. Hendrie, 244. Central City v. City of Port Townsend, 915. Garden City v. Morton County Com'rs, 936. Johnsbury v. Concord, 664. Lansdale v. Wyandotte County Com'rs, 907. Northampton v. Arthur, 926, 927. North Bennington v. Arlington, 358. TABLE OF CASES 1149 [references First Nat. Bank of Oswego v. Town of Wolcott, 659, 661. St. Paul V. County Com'rs of Scott County, 400, 403. Fiscal Court of Breckenridge County V. Board of Trustees, etc., 874. Fishblatt v. Atlantic, 310, 253. Fisher v. Board of Liquidation of New Orleans, 421. V. City of St. Louis, 763. V. City of Seattle, 251, 630. Fitch V. Board of Auditors of Claims, 58. Fitzgerald v. Walker, 176. Flagg v. City of Palmyra, 375, 353, 401, 478, 561, 736. V. Parish of St. Charles, 883, 886, 935. V. School Dist. No. 70, 366, 368, 449, 566, 577, 635, 643, 743, 806. Flannagan v. Buxton, 76. Fleming v. Trowsdale, 839, 846, 655. Flemming v. City of Hoboken, 939. Fletcher v. Borough of Collingwood, 279, 289. V. Eenfroe, 897. Town of, V. Hickman, 460, 822. Florence Graded School Com'rs, Ex parte, 885, 890. Florman v. School Dist. No. 11, 713. Floyd County v. State, 393. Floyd County Com'rs v. Shorter, 695. Flynn v. Little Falls Water Power Co., 82. Poland V. Town of Frankton, 145. Foley V. City of Hoboken, 196. Folsom, Ex parte, 32, 46, 753. Folsom V. Greenwood Co., 46, 846. V. Ninety-Six, 51, 233. Fones Hardware Co. v. Erb, 913. Fontenot v. Young, 37. Foote T. City of Salem, 900, 932. V, Town of Hancock, 494. AKE TO PAGES] Forbes v. Board of Com'rs of Grand County, 889, 914. Force v. Elizabeth, 478. V. Town of Batavia, 399, 305. Ford V. City of Carterville, 146. v. Washington Township, Bergin County, 104, 932. Forest County v. Langlade County, 31, 39. Forman v. Hair, 196. Forstall v: Board of Liquidation, 973. Forsyth v. Hammond, 648. Fort Madison, City of, v. Fort Mad- ison Water Company, 753, 755. Water Co. v. City of Fort Mad- ison, 92, 763. Fort Scott, City of, v. Eads Broker- age Co., 83, 88. Fosdick V. Perrysburg, 300. Foster v. Boston Park Com'rs, 352. V. City of Kenosha, 233. V. City of Worcester, 217. V. Coleman, 923. V. Fowler, 713. Fouruier v. West Bay City, 863. Fourth Nat. Bank v. City of Dallas, 258. Fowler v. City of Superior, 127, 151, 333. T. Vandal, 40. Fox V. Jones, 89. V. Workman, 719, 765. Frances v. Howard County, 174, 211, 474, 476, 511, 520, 523, 550, 584, 615, 617, 631. Frank v. Butler County, 366, 368. V. City of Decatur, 76. Frankel v. Bailey, 930. Frankford Real-Estate, Trust & Safe-Deposit Co. v. Jackson County, 926. Frankfort, Village of, v. Schmidt, 459. Franklin v. Baird, 326, 487. 1150 TABLE OF CASES [eefeeences, Franklin County v. Commonwealth, 315. Frantz v. Autry, 13. V. Jacob, 266, 383, 493. Freeman v. City of Huron, 899, 913, 918, 920, 931, 935, 936. Freeport v. Marks, 770. Freeport Water Co. v. City of Free- port, 75. Freesport, Borough of, v. Marks, 560. Fremont and Big Horn Counties, In re, 37. Fremont Bldg. Assoe'n v. Sherwin, 231. Fremont County, In re, 33. Fremont, etc., R. R. Co. v. Penning- ton County, 314, 753, 781. French v. Barber Asphalt Paving Co., 319, 320. V. City of Burlington, 333. V. South Arm Township, 265. Frick V. Mercer County, 304. Friend v. City of Pittsburg, 744. V. Gilbert, 59. Fritsch v. Salt Lake City Com'rs, 130, 131, 135, 576, 629. Fritz V. City and County of San Francisco, 175, 252, 293. Frost V. Central City, 128, 217, 386, 387, 392. V. Inhabitants of Belmont, 103. Fry V. Reynolds, 924, 927. Ft. Dodge, etc., v. City of Fort Dodge, 132, 321. Ft. Edward, Village of, v. Fish, 322, 487, 493. Fuller V. City of Chicago, 883, '905. V. Heath, 883, 888, 905. Fullerton v. Dea Moines, 51. V. School Dist., 41, 576. Fulton V. Cummings, 80. V. Town of Riverton, 605, 643, 644. Funk V. State, 933. ARE TO pages] 6 Gable v. City of Altoona, 758, 763. Gabler v. Elizabeth City, 713. Gaddis v. Richland Co., 171, 374, 486, 680, 683. Gage V. City of Chicago, 347. Galbraith v. City of Knoxville, 344, 534, 661, 775. Gale V. Village of Kalamazoo, 80. Galena, City of, v. Amy, 193, 780, 841, 855, 857, 872. V. Corwith, 410, 411, 417. Galesburg, City of, v. Hawkinson, 9. Galindo v. Walker, 81. Galloway v. City of Memphis, 31. V. Jenkins, 66, 329. Galveston, etc., R. R. Co. v. Cowdry, 453. V. Harris, 863. Gamble v. Clark, 918, 939. V. Erdrich Bros. Marx, 310. V. Rural Independent School Dist. of Allison, 450, 453, 459, 461, 463, 463, 565, 586, 589, 833. Garden City, etc., R. R. Co. v. Na- tion, 237, 366. Garden City, G. & N. R. R. Co. v. Masch, 273, 278. Garden City R. R. Co. v. Catron, 367. Gardner v. Haney, 344, 443, 533. Garfield Township v. Crocker, 894. V. Herman, 41. Garland County v. Hot Springs County, 33, 38, 39. Garvin v. Wiswell, 443, 938. Gasaway v. City of Seattle, 310. Gaskill v. Dudley, 713. Gaulbert v. City of Louisville, 413, 420. Gause v. City of Clarksville, 186, 238, 438, 919, 935. Gay V. New Whatcom, 839. Geer v. Board of Com'rs of Ouray County, 419, 599, 653, 865. TABLE OP CASES 1151 [references Geer v. School Dist. No. 11, 476, 530, 612, 615, 617, 786, 856. Gelpcke v. City of Dubuque, 103, 181, 391, 404, 405, 443, 530, 531. Gem Irrigation Dist. v. Johnson, 305. Geneseo v. General, etc.. Mineral Co., 521. Geneva, City of, v. People, 713. Genoa, Town of, v. Woodruff, 401, 403, 404, 405, 605. Gentry, State, ex rel., v. Village of Dodson, 81. Gentsch v. State, 70. George v. Oxford Township, 297, 518, 584. Geo. D. Barnard & Co. v. Board of Com'rs of Polk County, 33, 536. V. Knox County, 903, 905. German American Bank v. City of Brenham, 403. German Ins. Co. of Freeport v. City of Manning, 138, 183, 187, 358, 359, 629, 874. German Savings & Loan Society v. Ramish, 335, 344, 530, 719, 765. German Savings Bank, of Daven- port, V. Franklin County, 55, 239, 242, 367, 550, 636. German Washington Fire Associa- tion V. City of Louisville, 310. Germania Bank v. Trapnell, 919. Germanla Savings Bank v. Town of Darlington, 208, 485, 544. V. Village of Supension Bridge, 373, 481. Getchell v. Benton, 227, 250. Ghiglione v. Marsh, 185, 328, 395. Gibbons v. Hillsborough County, 487. Gibbs V. School Dist. No. 10, 565, 607, 647. Giblin v. North Wiscorisin Lumber Co., 898. AKE TO pages] Gibson v. Krapp, 629. V. Mason, 233. Gibson County v. Rains, 911, 928. Giddings v. San Antonio, 196. Gilbert v. Canyon County, 231, 255, 285. Gilbough V. Norfolk, etc., Co., 478, 480. Gilchrist v. Town of Little Rock, 353, 736. Giles V. Dennison, 146. Gillette-Herzog Mfg. Co. v. Canyon Co., 87. Gillim V. Daviess County, 633. Gilman v. County of Douglas, 728. V. Gilby Tp., 896. Incorporated, Town of, v. Fern- aid, 784. Gilson V. Dayton, 517, 518, 593, 688. Girard v. City of Philadelphia, 57, 77. Givens v. Hillsborough County, 335, 669, 671. Gladstone, City of, v. Throop, 142, 351, 359, 457, 496, 523, 532, 564, 613, 872. Gladwin v. Ames, 136. Glass v. Parish of Concordia, 174. Glen V. Wray, 233, 660. Glenn County v. Klemmer, 303. Glucose Sugar Refining Co. v. City of Marshalltown, 103. Goddard v. City of Lowell, 95. Gold V. City of Peoria, 155. Goldsmith v. Baker City, 914. V. San Francisco County Sup'rs, 135, 713. V. Stewart, 900. Goldthwaite v. City of Montgom- ery, 75. Gooch V. Town of Patterson, 386. Good Roads Machinery Co. v. Old Lycoming Twp., 104. Gooden v. Police Jury of Lincoln Parish, 277. Goodland, City of, v. Nation, 433. Goodman v. Simonds, 461. 1152 TABLE OF CASES [references Goodnow T. Ramsey County Com'rs, 171, 184. Goodrich v. City of Chicago, 79. V. City of Detroit, 319. Goodson V. Dean, 307, 304, 334. Goodwin v. Town of East Hartford, 896. Goodyear Rubber Co. v. City of Eureka, 874. Goodykoontz v. Acker, 887. V. People, 887. Gordon v. Thorp, 713. Gorman v. Sinking Fund Com'rs, 432. Goshen Township v. Shoemaker, 696. Gould, In re, 70. Gould T. City of Paris, 855. V. Starling, 126. V. Venice, 363. V. Village of Seneca Falls, 396. Goyne v. Ashley County, 887. Goytino v. City of Waynesboro, 80. Grace v. Town of Hawkinsville, 309, 333. Grace, Hermon & v. Board, etc., of Essex Co., 13. Grady v. Landram, 204. V. Lincoln, 174. V. Pruit, 264. Grafton Bank v. Doe, 470. Graham v. City of Spokane, 138, 155. V. City of Tuscumbia, 438, 655. V. Roberts, 51. Grainger County v. State, 54. Granada County Sup'rs v. Brogdon, 589, 677. Grand Chute, Town of, v. Winegar, 460, 478, 564, 583, 589, 608, 698, 836. Grand Island, etc., Ry. Co. v. Baker, 135. Grannis v. Blue Earth County Com'rs, 91. V. Cherokee Township of York County, 673, 681. AKE TO pages] Grant v. City of Erie, 80. Grant County v. Lake County, 39, 135. Grant, Town of, v. Township of Reno, 461. Village of, v. SherriU, 323. Grattan Township v. Chilton, 342, 245, 589, 635, 643, 816, 817, 828. Graves v. Moore County Comm'rs, 193, 329, 337, 545, 689. V. Saline County, 348, 403, 430, 604, 635, 636, 638, 659, 663, 687, 696, 1059. Gray v. Board of School Inspectors of Peoria, 338, 883, 894. V. Bourgeois, 107. V. Jones, 334. V. Mount, 284. V. State, 58, 721, 769. V. Tax Collector, 359. Graymount, City of, v. Stott, 268. Grayson v. Latham, 902, 913, 931. Great Falls, City of, v. Theis, 490. Great Falls Bank v. Farmington, 894. Greeley v. Cascade County, 914, 925. V. Jacksonville, 230, 695. Green v. Dyersburg, 239. V. Smith, 372. Green County v. Connes, 235. V. Daniel, 350, 393, 804, 830. V. Qufnlan, 239. V. Shorten, 340, 577, 660. Greenburg, Town of, v. Interna- tional Trust Co., 107, 459, 485. Greensboro, City of, v. Scott & Stringfellow, 268. Gregory v. City of New York, 85. V. Woodbury, 124. Grenada City County Sup'rs v. Brogden, 85, 679, 683. Grennan v. Carson, 9, 16, 775. Grether v. AVright, 876. Gried v. Town of Sterling, 272. Griffin v. City of Tacoma, 95, 152, 867. TABLE OF CASES 1153 [ebperences Griffin v. Powell, 70. Griffith V. Burden, 444, 453, 484, 494. Griswold v. City of Ludington, 714. Grosse Pointe Township v. Finn, 64, 732. Gubner v. McClellan, 68, 134. Guekenberger v. Dexter, 486. Guernsey v. Burlington Twp., 594. Guilford v. Chenango County Sup'rs, 60. Guilfoyles' Exe'r v. City of Mays- ville, 150. Guillory v. Avoyelles R. Co., 245. Gvmn V. Barry, 239. Gunnison County Com'rs v. E. H. Rollins & Sons, 461, 505, 511, 513. Guthrie v. Sparks, 846. Guthrie, City of, v. Territory, 58, 62. Guthrie Nat. Bank v. City of Guth- rie, 62, 68. Gutta Percha & Rubber Mfg. Co. V. Ogalalla, 98. Gutzeller v. People, 52. H Hackett v. City of Ottawa, 38, 249, 504, 560, 550, 591, 595, 597, 601. V. Tyrrell, 375. Hackettstown, Town of, v. Swack- hamer, 102, 103, 932, 935. Hadley v. Dagne, 348, 900. Haeusaler v. City of St. Louis, 187, 231. Hagan v. Comm'rs Court of Lime- stone County, 128, 151. Hagar v. Reclamation Dist., 239. V. Yolo County Sup'rs, 320. Hall V. Baker, 679. V. Cedar Rapids, 151. V. City of Madison, 295. V. Hood River Irrigation Dist., 174. V. Jackson County, 912, 933. p. s.— 73 AKB TO PAGES] Hall V. New Orleans, 395. V. State, 888. Halliday v. Hildebrandt, 576. Halsey v. Gillette, 355. Halstead v. Mayor, etc., of New York, 476, 884, 935. Ham V. Board of Levee Com'rs for Yazoo Mississippi Delta, 521. Hamilton v. San Diego County, 536. V. State, 862. v. Village of Detroit, 269, 270, 278, 282, 285. Hamilton County v. Montpelier Savings Bank & Trust Co., 430, 439. Hamilton County Comm'rs v. Cot- tingham, 133. V. Mighels, 11, 15. V. Sherwood, 899. Hamilton Gas Light, etc., Co. v. City of Hamilton, 336. Hamlin v. Board of Liquidation, 973. V. Meadville, 257, 334. Hammond v. City of San Leandro, 287. V. Clark, 12. V. Place, 714, 769, 804. City of, V. Evans, 896. Hampton v. Hickey, 195. Hancock v. Chicot County, 119, 174, 472, 688. Handley Trustees, Board of, v. Winchester Memorial Hospital, 57. Hanley v. Randolph County Court, 331. V. Sims, 251, 963. Hannan v. Board of Education of Lawton, 95. Hannibal v. Fauntleroy, 534, 567, 577, 662, 820. Hannibal & St. Joe R. R. Co. v. Marion County, 659. Hansard v. Green, 187, 489, 874. 1154 TABLE OF CASES [REFERENCES Hanson v. Franklin, 307. V. Vernon, 233. Hanswirth v. Mueller, 275, 278. Hardee v. Brown, 75. Hardemah County v. Foard County, 260, 263, 369, 630. Harders Fire Proof Storage & Van Co. V. City of Chicago, 309. Hardin County v. McFarlan, 174, 411, 912. Harding v. Rockford, etc., R. R. Co., 387, 695. Harmon v. Auditor of Public Ac- counts, 287, 299. Harper County Com'rs v. Rose, 38, 366, 677. Harrington v. Town of Plainview, 339, 339, 330, 332, 642. Harrison v. Borough of Madison, 124. V. City of Elizabeth, 90. V. Logan County, 899, 919. Harrison County v. Ogden, 893, 905. Harrison County Court v. Smith, 119. Harshman v. Bates County, 176, 236, 339, 292, 517, 607. V. Knox County, 654, 657. United States ex rel, V. County Court, 653. Hart V. City of New York, 95. V. Orleans Levee Com'rs, 230. V. Village of Wyndmere, 97, 884, 892, 930. Harter v. Kernochan, 235, 564, 604, 634, 659, 797. Hartford, City of, v. Hartford Elec- tric Light Co., 87. V. Maslem, 54. Hartford Bridge Co. v. Town of East Hartford, 49. Hartman v. Greenhow, 396, 397. Harwood v. Wentworth, 68. Hasbrouck v. City of Milwaukee, 233, 678. Haskell, Ex parte, 861. Haug V. Town of Gunage, 351. ARE TO PAGES] Haumeister v. Porter, 780. Havemeyer v. Iowa County, 536, 544. Hawkins v. Carroll County, 292, 393. T. Mitchell, 765. Hawley v. Fairbanks, 834, 855. Hayden v. Douglas County, 766, 771. Haydon v. Ormsby County Sup'rs, 928. Hayes v. Davis, 885, 920. V. Holly Springs, 672, 673, 689. V. Walker, 32, 865. Hazlehurst, City of, v. Mayes, 76, 84, 118, 310. Head v. City of Des Moines, 10. Heal V. Jefferson Township, 883. Heaney v. Sprague, 83. Heard v. Calhoun School Dist., 576. Hebbard v. Ashland County, 135. Hedges v. County of Dixon, 144, 505, 587, 615, 616, 637, 631, 633, 689. Heed v. Com'rs of Cowley County, 634, 659. Hefferlin v. Chambers, 210. HefBeman v. Pennington County, 882, 898, 928, 930. Heffner v. Cass & Morgan Counties, 230. V. City of Toledo, 262, 348, 874. Heilbron v. City of Cuthbert, 219, 298, 724. Heine v. Board of Levee Com'rs, 335, 799, 830, 838, 845, 849. Heinl v. City of Terre Haute, 140, 251. Heins v. Lincoln, 184, 417, 421, 424, 432. Helena, City of, v. Helena Water Works Co., 335. v. Mills, 146. Helena Consolidated Water Co. v. "] Steele, 55. Water Works Co., State ex rel, V. City of Helena, 138, 137, 150, 204, 307. TABLE OF CASES 1155 [references Heller v. Stremmel, 9. Hellman v. County of Los Angeles, 318. V. Shoulders, 700. Hemen v. City of Ballard, 890. Hemp V. Town of Hazlehurst, 280. Hempstead, Village of, v. Seymour, -384. Hempstead County v. Howard County, 39. Henderson v. City of Cincinnati, 264. V. Jackson County, 184. V. People, 885, 887, 904, 905. Henderson County Com'rs v. Wil- liams, 326. Henderson Water Co. v. Trustees of Henderson Graded School, 220. Hendersonville, Town of, v. Jordan, 268, 293. Hendrick v. Culberson, 295, 297. Hennepin, County of, v. Brother- hood of Gethsemane, 218. Henry v. Cohen, 218. Henry County v. Nicolay, 291, 344, 379, 517, 548, 564. Henshaw v. Christian, 472. Hepburn v. Griswold, 739. Hequembourg v. Dunkirk, 230. Herford v. City of Omaha, 78. Herman v. City of Oconto, 91, 146, 874. V. Rogers, 672. V. Town of Guttenberg, 189, 416. Herman & Grace v. Board, etc., of Essex Co., 13. Hershoff v. Beardsley, 302. Herwig v. Richardson, 668, 698. Hetland v. Board of Comm'rs of Norman County, 190. Hettinger v. Good Road Dist. No. 1, of Washington County, 67, 193, 374. Hewitt V. Normal School Dist., 103, 472, 695, 935. Hibbard v. Barker, 81, 332. ARE TO PAGES] Hibernian Savings & Loan Assoc. V. City and County of San Francisco, 876. Hicks V. Roanoke Brick Co., 713. County Auditor et al. v. Cleve- land, 655, 752, 841, 846, 855. Hidalgo County Drainage Dist. No. 1 V. Davidson, 346. Higgins V. City of San Diego Water Co., 82, 90, 93, 93, 234, 713. V. Edwards, 912. Higginson . v. Inhabitants of Na- hant, 353. Hightower v. City of Raleigh, 217, 268, 523, 533, 747, 780. Highway Commission v. C. A. Webb & Co., 137, 210. Hill V. City of Indianapolis, 99. v. City of Kahoka, 38. V. City of Memphis, 184, 185, 191, 193, 212, 263, 419, 669, 786, 893, 935. V. Logan County, 923. Hills V. Peekskill Savings Bank, 599, 663. Hillsborough County v. Henderson, 255, 303, 305, 734. Hilton V. Common Council of Grand Rapids, 98. Hinkley v. City of Arkansas City, 301, 413, 503, 590, 821, 824, 829. Hinsdale, Village of, v. Shannon, 863. Hintrager v. Richter, 917. Hirt V. City of Brie, 433. Hitchcock V. City of Galveston, 88, 93, 139, 175, 183, 187, 338, 251, 763, 786, 932. Hjelm V. Patterson, 70. Hoag V. Town of Greenwich, 485, 736, 737, 740, 788. Hoagland v. Sacramento, 63. Hobart v. Supervisors, 416, 419. Hockaday v. Chaifee County Comm'rs, 139, 890, 915. Hodge V. Levi, 678. 1156 TABLE OF CASES [eepebences Hodgeman County Com'rs v. Gar- field County Com'rs, 38. Hodgea v. City of Buffalo, 668. V. Shuler, 393. Hbdgman v. St. Paul & Chicago Ry. Co., 338, 330. Hoeppner v. City of Rhinelandei, 91. Hoertz v. Jefferson, etc., Co., 230. Hoff V. Jasper County, 367. Hoffman v. City of Pittsburg, 300. V. Gallatin County, 576, 6S8. Hogan V. State, 305, 372. Holeomb v. Johnson's Estate, 315. Holcombe v. Haywood Co. Com'rs, 267. Holden v. Freedmen's Savings & Trust Co., 404. Holland v. State, 243. HoUiday v. Hildebrandt, 327, 433. V. Sweet Grass County, 38. Hollywood Union High School Dist. V. Keyes, 276. Holmes v. City of Shreveport, 104, 185. Holroyd v. Town of Indian Lake, 96. Holt County v. National Life Ins. Co. of Montpelier, 834, 839. Holton V. City of Camilla, 191, 234, 666. V. City of San Antonio, 331. Holtsclaw V. State, 938. Hone V. Presque Isle Water Co., 86. Honey v. State, 869. Hook V. German American Bank, 930. Hooker v. Town of Greenville, 196. Hooper v. State, 228, 883. Hope v. Board of Liquidation, 423, 771. V. Dykes, 521. Hopkins County v. St. Bernard Coal Co., 267. Hopper V. Inhabitants of Union Twp., 914, 939. ABE TO pages] Hopper V. Town of Covington, 449, 600, 813. State ex rel, v. Cottengin, 834. Hopple V. Hippie, 687. Hord V. State, 97. Hor-gan & Slattery v. City of New York, 118. Hornbrook v. Township of Elm Grove, 28. Home V. Mehler, 883. Horsefall v. School District, 521. Horton v. Andrus, 758. V. City Council of Newport, 24, 51, 52. V. City of Greensboro, 208, 300, 420. V. Town of Thompson, 518, 580. Hospers v. Wyatt, 902. Hotchkiss V. Marion County, 430, 433, 432, 911. Houma Lighting & Ice Mfg. Co. v. Town of Houma, 145, 330. House Bill No. 231, In re, 36, 250. Houston V. People, 341, 358. City of, V. Potter, 358. V. Stewart, 150. V. Vorhees, 770. Houston & Texas Cent. R. R. Co. v. State of Texas, 89, 160, 909. Houston County v. Henry County, 33, 38. Hovey v. Mayo, 80. Howard v. Bates County, 21. Howard v. Burke, 120. V. Independent School Dist. No. 1, 285. V. Kiowa County, 187, 419, 433. V. Smith, 258, 783. v. Town of Eastlake, 83, 363. V. Trustees of School Dist. No. 27, 119, 364, 365, 334, 336, Howard County v. Boonesville Cen- tral Bank, 661. Court, 761. V. Paddock, 200. TABLE OP CASES 1157 [repeeences Howard Savings Inst. v. TJlwark, 876. Howell V. City of Athens, 292, 297. V. City of Peoria, 332. V. Hogins, 924. V. Reynolds County, 894. Howland v. Board of Sup'rs of San Joaquin County, 262, 263, 292, 781. Hoxie V. Scott, 270, 576. Hubbard v. City of Toledo, 229. V. Norton, 86. T. Sadler, 183, 185, 229. V. Town of Lyndon, 884, 885. V. Woodson, 274, 285. Hubbell V. City of South Hutchin- son, 887, 917, 921. V. Town of Custer City, 578, 896. Hubbert v. Campbellsville Lumber Co., 803. Hudley v. Board of Com'rs of Lake County, 391. Hudson V. Inhabitants of Winslow, 567, 611. Huey V. Macon County, 407. Huffmire v. City of Brooklyn, 33. Hughes V. Horsky, 276. V. Roberts, 287. Hughes County v. Livingston, 393, 404, 430, 451, 461, 462, 531, 563, 572, 589, 634, 635, 642, 697, 743, 804, 817, 1066. Hughson V. Crane, 230, 337, 338, 486, 492. Huidekoper v. Buchanan County, 607. Hull V. Ames, 136, 926. v. Inhabitants of Berkshire, 884. V, Marshall County, 357. Humboldt Township v. Long, 286, 388, 366, 367, 387, 442, 511, 581, 606, 612, 613, 615. Hungerford v. Moore, 116. Hunneman v. Inhabitants of Graf- ton, 96. Hunt V. Fawcett, 333, 420, 493. Hunter, In re, 81. ARE TO pages] Hunter v. City of Pittsburgh, 25, 75. V. Mobley, 917. Huntington v. Texas, 445. Huoma Lighting & Ice Mfg. Co. v. Town of Huoma, 150. Hurd V. City of Fairbury, 378, 285, 288. Huron, City of, v. Second Ward Savings Bank, 106, 175, 190, 195, 416, 436, 430, 432, 436, 511, 522, 557, 565, 576, 581, 594, 613. Huron Waterworks Co. v. City of Huron, 98, 907. Hussey v. Smith, 116. Hutchinson v. Borough of Belmar, 863. V. Self, 200, 378, 332, 337, 534. Hutchinson & So. R. R. Co. v. Fox, 340. V. Kingman County Com'rs, 565. Hyatt V. Williams, 185. Hyde v. County of Franklin, 894, 928. Hyde Park, Village of, v. Ingalls, 417. Iglehart v. City of Dawson Springs, 393, 874. Illinois Trust & Savings Bank v. City of Pontiac, 503. In. & 111. Cent. Ry. Co. v. Sprague, 403. Incorporated Town of Oilman v. Fernald, 784. Independent Dist. of Rock Rapids v. Society for Savings, 630. Independent School Dist. v. Stone, 607, 614. of Ackley v. Hall, 735. of Sioux City v. Rew, 432, 478, 500, 508, 523, 534, 558, 565, 581, 589, 599, 641, 642, 744, 795, 796, 805, 807. 1158 TABLE OF CASES [references Indian Industrial School for Girls V. Clark County, 213, 217. Indiana Trust Co. v. Jefferson Twp., Boone County, 103. Indianapolis, City of, v. Consumers' Gas Trust Co., 861. V. Wann, 91. Inge V. Board of Public Works of Mobile, 53. Inglin V. Hoppin, 230. Inhabitants of Leominster v. Con- ant, 321. North Bergen v. Eager, 938. Orvil Township v. Borough of Woodcliff, 38. Pompton V. Cooper Union, 170. Stoughton V. St. Paul, 354. Tisbury v. Inhabitants of West Tisbury, 37. Veazie v. Inhabitants of China, 78. Waterford v. Oxford Coimty Com'rs, 251. Yarmouth v. Inhabitants of North Yarmouth, 8. In re Adams, 252. Allison, 51. Appropriation by General Assem- bly, 887. Attorney General, 341. Board of Liquidation for United States, 58. Board of Water Com'rs, 86. Borough of Millvale, 333. Central Irrigation Dist., 491. Certificates of Indebtedness, 932. City of Buffalo, 77, 118. City of Pittsburgh, 862. Contracting of State Debt by Loan, 414. Debt Limit of City of New York, 155. Derby, 282. Drainage Dist. No. 3, 230. Fremont and Big Horn Counties, 33, 37. Gould, 70. ARE TO PAGES] In re House Bill No. 231^ 36, 250. Hunter, 31. Krickbaum's Contested Election, 120. Madera Irr. Dist., 229. McKenan's Estate, 309. Menefee, 368, 414, 420, 432. Mt. Washington Road Co., 253. Municipal Fuel Plants, 72. Munro, 75. Niland, 96. Opinion of the Justices, 67, 307, 318, 753, 755, 884. Sanitary Board of East Fruitvale Sanitary Dist., 22, 51. School Directors of Aliquippa, 37. Spring Valley Swamp, 230. State Board of Equalization, 322. State Bonds, 129. State House Bonds, 892, 1016. Statehouse Commission, 885. State Warrants, 139, 427, 905. Sugar Notch Borough, 35. Taxes Delinquent of St. Louis County, 493. Village of Kenmore, 84, 770. Insurance Co. v. Bruce, 635. International Bank of St. Louis v. Franklin County, 894, 901, 914. lola. City of, v. Merriman, 140. Iromvood, City of, v. Wickes, 489. Irvine v. Board of Com'rs of Kear- ney County, 428. Irwin V. Lowe, 299. Irwin-Hudson Co. v. Kincaid, 341. Isaacs V. City of Richmond, 937. Itasca Independent School Dist. v. McElroy, 277. Ivinson v. Hance, 882, 884. Jacks & Co< V. Turner, 912. Jackson v. Board of Education of City of Minneapolis, 71. V. Rendleman, 217. V. Stockbridge, 245. TABLE OP CASES 1159 [EErEKENCES Jackson v. Vicksburg, etc., R. R. Co., 480. Jackson County Sup'rs v. Brush, 247, 324, 646. V. La Crosse County Sup'rs, 58. Jacksonville Electric Light Co. v. City of Jacksonville, 219. Jacksonville, etc., R. R. Co. v. Wirden, 274. James v. City of Seattle, 908. V. State University, 969. James County v. Hamilton, 40. Jamison v. Independent School Dist. of Rock Rapids, 427. Janeway v. City of Duluth, 219. Jardet v. Board of Liquidation of Public Debt, 423. Jarrott v. Moberly, 238, 291. Jasper, County of, v. Ballou, 427, 599, 662, 663. Jeff Davis County v. City Nat. Bank, 38. Jefferson, City of, v. Marshall Nat. Bank, 373, 598. Jefferson County v. Burlington & Missouri River R. R. Co., 460. V. Hawkins, 428, 784. V. Jenning Banking & Trust Co., 263, 349, 373, 460, 478, 816. Commissioners of, v. People, 414. Supervisors v. Arrighi, 901. jeffersonian Pub. Co. v. Hilliard, 885, 891. Jeffersonville, City of, v. Patterson, 393. Jeffries v. Lawrence, 824. Jenkins v. Andover, 218. V. Newman, 133, 231. V. Williams, 274, 520. Jennings v. Taylor, 916. Jennings Banking & Trust Co. v. City of Jefferson, 187, 233, 808. Jerome v. Rio County Com'ra, 914. Jersey City v. North Jersey City Street Ry. Co., 310. Jewell V. City of Superior, 739, 740, 764, 769. ARE TO PAGES] Jewell Belting Co. v. Village of Bertha, 82, 97. Job V. City of Alton, 321. John Hancock, etc., Ins. Co. v. City of Huron, 207. Johns V. Orange County Com'rs, 886. Johnson, Ex parte, 69. Johnson v. Board of Com'rs of Nor- man County, 90, 150. V. Butler, 466. V. City of Milwaukee, 190, 229, 253. V. City of San Diego, 38. V. County of Stark, 382, 390, 394, 405, 410, 743. V. Roddey, 284. V. Wakulla County, 921. V. Williams, 228, 262, 304. V. Wilson County Com'rs, 107, 217, 332. Johnson City v. Charleston, etc., R. R. Co., 519. Johnson County v. January, 592, 593. Johnston v. Galveston County, 230. United States ex rel., v. County Court of Clark County, 838. Joliet, City of, v. Verley, 78. Jones, Ex parte, 76. Jones V. Bank of Tenn., 165. v. City of Camden, 228, 229, 252, 335, 432, 522, 560, 595. v. City of Newbem, 251, 261, 267. V. City of Portland, 888, 891. V. City of Seattle, 349, 373. V. Com'rs of Stokes County, 310. V. Cullen, 661. V. Hurlburt, 333. V. Macon, etc., R. R. Co., 492. V. Madison County Com'rs, 64, 107, 493. V. Mayor, etc., of Little Rock, 326. V. Smith, 896. V. Town of North Wilkesboro, 81. State ex reL, v. Froelich, 133, 227. 1160 2'ABLE 01" CASES [references Jones Co., Edward C, v. Board of Education, 493, V. Town of Guttenberg, 339, 347. Jonesboro City v. Cairo & St. Louis R. R. Co., 672, 679, 680, 864. Jonestown, Town of, v. Ganong, 251. Joplin, City of. State ex rel., v. Wil- der, 758. Jordan v. Cass County, 293, 804. V. City of Greenville, 217, 318, 430. V. City of Logansport, 129. V. Hubert, 888, 927. Joseph, City of, v. Joseph Water Works Co., 148. Judson V. City of Bessemer, 724. V. City of Plattsburg, 176, 535. Judy V. Beckwith, 309. Jurey v. City of Seattle, 889. Jussen V. Lake County Com'rs, 270. Justices, Opinion of, 410, 427. Kahrs v. City of New York, 33. Kaigler v. Roberts, 297. Kaiser v. Campbell, 189. Kane v. City of Charleston, 421, 424. V. Independent School Dist., 576. V. School Dist. 52, 904. Kankakee, Town of, v. McGrew, 127. Kankakee County v. Aetna Life Ins., 119, 356. Kansas v. Rollins, 296. Kansas City v. Ward, 150. V. Wyandotte Gas Co., 199. Kansas City & P. R. Co. v. Rich Township, 246, 270. Kansas City, etc., Brick Co. v. Na- tional Surety Co., 95. Katzenberger v. Aberdeen, 173, 185, 498, 577, 584, 669, 678, 683, 689. Kearney, City of, v. Woodruff, 227, 269, 504, 608. ARE TO pages] Kearney County Com'rs v. Mc- Master, 883, 884. Keech v. Joplin, 315, 770. Keefe v. People, 50. Keehn v. City of Wooster, 598. Keene v. Jefferson County, 861, 867. Keens Five-Cent Savings Bank v. Lyon County, 138, 531, 629. Keihl V. City of South Bend, 144. Keith County v. Ogalalla Power & Irrigation Co., 521. Keithsburg v. Frick, 659, 661, 662, 671. Keller v. Hyde, 886, 892, 918. V. Scranton, 132, 148. Kelley v. City of Brooklyn, 934. V. City of Milwaukee, 80. Kelly V. City of Minneapolis, 150, 155, 765, 766, 774. V. City of Pittsburgh, 9, 319. V. Cole, 130, 414. V. McCormack, 363. V. Milan, 173, 195, 263, 438, 589, 656, 668. V. Town of Milan, 185, 935. V. Town of Torrington, 97. Kemp V. Town of Hazlehurst, 293, 704, 736, 740, 769. Kendall v. Porter, 381. Kenebec Water Dist. v. Waterville, 140. Kennard v. Cass County, 400, 812. Kennedy v. Birch, 761. Kenhelly v. Jersey City, 79. Kenicott v. Wayne County, 246, 604, 606. Kennicott v. Sup'rs of Wayne, 459. Kenosha, City of, v. Lamson, 21, 383, 386, 394, 400, 407, 544, 670. Kensington Elec. Co. v. City of Philadelphia, 885. Kent V. Town of Hazlehurst, 289, Village of, v. Dana, 349, 351, 353, 354, 591, 596, 597, 808. V. United States, 259, 771. TABLE OF CASES ii6i [references Kentucky Chair Co. v. Common- wealth, 923. Light & Power Co. v. James H. Williams & Co., 204. Union Ry. Co. v. Cojinty of Bour- bon, 393. Kenyon v. Board of Sup'rs, 95. V. City of Spokane, 784, 888, 900, 923. Kerr v. City of Corry, 566, 589. Kershaw v. Town of Hancock, 407. Ketchum v. Buffalo, 104, 111, 115, 170, 935. V. Duncan, 391, 395. Kettle River, Town of, v. Town of Bruno, 33, 810. Keweenaw Association v. School Dist. of Hancock Twpt., 28. Keyes v. St. Croix County, 360. Kierpan v. City of Portland, 33. Kilbourne v. St. John, 338. Kilgore v. Magee, 870. Kimball v. Grant County Com'rs, 150, 758. V. Reclamation Fund Comm., 339. V. Rosendale, 673. V. Town of Lakeland, 589, 634. Kimberlin v. Com'rs of Five Civilized Tribes, 341. King V. Fleming, 364. V. McDrew, 713. V. Sullivan County, 907. King Iron Bridge & Mfg. Co. v. Otoe County, 917. Kingsberry v. Pettis County, 888. Kinnard v. Cass County, 391. Kinyon v. Wohlford, 373. Kirch V. City of Louisville, 69. Kirkbride v. Lafayette County, 343, 659. Kirker v. City of Cincinnati, 121. Kirkpatrick v. Van Cleave, 585. Kirsch v. Braun, 765. Kirtley, State ex rel., v. Shell, 926, 927. ARE TO pages] Klamath Falls, Town of, v. Sachs, 120, 176, 184, 209, 330, 223, 503, 690, 636. Klein v. Piper, 890. V. Pipes, 896, 925, 927. v. Smith County Sup'rs, 913, 914. V. Warren County Sup'rs, 913. Kline v. City of Streator, 270, 288, 303. V. Jefferson County, 913. V. Mayor of Hoboken, 104, 170, 914, 915, 917, 936, 938. V. Newtown, 494. Knight V. Town of West Union, 287, 290, 291. V. Western Union, 124. . Knollman, State ex rel., v. King, 148, 192. Knox V. Baton Rouge, 269, 777. V. Lee and Parker v. Davis, 739. Knox County v. Aspinwall, 332, 347, 276, 344, 386, 500, 663, 666, 681, 608, 644, 915. v. Morton, 917. V. Ninth Nat. Bank, 337, 274, 275, 381, 303, 533, 644, 693, 704, 736. Knox County Com'rs v. Nichols, 347. V. Wallace, 275. Knox County Court v. United States ex rel. Harshman, 761. Knoxville, City of, v. Gas, 866. Kockrow V. Whisenand, 304. Koehler v. Hill, 870. Koen, Ex parte, 28. Koppikus v. State Capitol Com'rs, 906. Koshkonong v. Burton, 400, 407. 442, 446, 856. Kotchkiss Y. Marion, 913. Krause v. Lehman, 96, 203. Krickbaum's Contested Election, In re., 130. Kronsbein v. City of Rochester, 143, 146, 155. Kucera v. West Chicago Park Com'rs, 140, 189, 363. 1162 TABLE; OF CASES [references Kuchli V. Minn. Brush Electric Co., 204. Kuhn V. City of Port Townsend, 28. V. Common Council City of De- troit, 151. Kumpe V. Bynum, 12, 192. Kunz V. School Dist. No. 28 of Hutchinson County, 347, 743. Kyle V. Abemathy, 124. Labatt v. City of New Orleans, 888. Labette County Com'rs v. United States, ex rel. Moulton, 845, 846. Lachman v. Walker, 84. La Crosse, City of, v. La Crosse Gas & Electric Co., 87., Ladd v. City of Portland, 74. V. Town of Franklin, 934, 939. Lafayette County Co. v. Wunder- lich, 843. Lafferty v. Huffman, 869. La Forge v. Magee, 936. La France Fire Engine Co. v. Davis, 925, 926, 888. La Harpe, City of, v. Elm Town- ship Gaslight, etc., 54. Lainhart v. Burr, 90, 920. Lake County v. Dudley, 707. V. E. H. RoUins & Sons, 200, 587, 707. V. Graham, 93, 99, 433, 498, 510, 511, 520, 567, 576, 580, 582, 584, 586, 587, 588, 612, 616, 617, 686, 707. Lake County Com'rs v. Keene Five- Cents Sav. Bank, 532, 893. V. Linn, 375. V. Standley, 200, 530, 902. V. Sutliff, 565. Lakey v. Fayetteville Water Co., 145. Lamar Water & Electric Light Co. V. City of Lamar, 145, 806. Lamb v. Anderson, 244. ABE TO pages] Lamberton, Town of, v. John Nuveen & Co., 260. Lamoille Valley R. R. Co. v. Fair- field, 340. Lampasas, City of, v. Talcott, 121, 536. Lamprecht Bros. Co. v. City of South St. Paul, 825. V. Williamsport, 487. Lancaster, County of, v. Sheraw & C. R. R. Co., 394. School Dist. V. Robinson-Hum- phrey Co., 142. Town of, V. First Nat. Bank, 383, 394. Land v. Allen, 886. , Land Grant R. & T. Co. v. Davis County Com'rs, 239. Lane v. East Tenn. etc., R. R. Co., 394. V. Gluckaul, 724. V. Hunt County, 896, 920. V. Inhabitants of Embderi, 17, 356, 359, 696. V. Schomp, 330, 333, 456, 565. Lang V. City of Bayonne, 28. Langdon v. City of Castleton, 911. Lansing, Town of, v. Lytle, 402. La Porte v. Gamewell Fire Alarm & Tel. Co., 137, 137, 306. Larabee v. Dolley, 319. Laramie County Com'rs v. Albany County Com'rs, 33, 49. Largen v. State, 41. Larkin v. City of Alleghany, 94. Laughlin v. District of Columbia, 930. Laury v. Rogers, 159. Lavin v. Board of Com'rs of Cook County, 120. Law v. City and County of San Francisco, 143, 195, 204, 317, 293, 301, 350. v. Pe6ple, 102, 103, 127, 139, 171, 174, 882, 905, 935. Lawrence County's Appeal, 495. TABLE OP CASES 1163 [KErEEENCES Lawrence County v. Lawrence Fis- cal Court, 203, 204, 699. V. Meade County, 39, 199, 905. V. N. W. R. R. Co., 495. Lawrenceville, City of, v. Hen- nessey, 266. Lawson v. Milwaukee, etc., R. R. Co., 233. V. Schnellen, 118, 331. Lawton v. County of Racine, 330. Laycock v. Baton Rouge, 316. Leach v. County of Wilson, 917, 938. V. People, 121. Leach & Co., Farson, v. Board of Com'rs, 433. Lead, City of, v. Clatt, 861. Leavenworth v. Norton, 76. City of, v. Wilson, 284. County of, v. Bamea, 350, 550. Leavenworth County Com'rs v. Kel- ler, 884, 902, 933. Leavenworth, etc., R. R. ' Co. v. Com'rs of Douglas County, 348, 659. Leavitt v. Town of Somerville, 432, 437. Ledwich v. McKim, 375, 506. Lee V. Roberts, 923. v. Robinson, 160, 166. Lee County v. Robertson, 770. V. Rogers, 544, 670. Leeman v. Ferris Irrigation Dist., 473, 478, 530. LeFeber v. Northwestern, etc., Co., 81. Lehigh Valley R. R. Co. v. Canal Board, 331. Lehigh Water Co.'s Appeal, 11. Lehman v. City of San Diego, 46, 175, 183, 344, 353, 669, 688. Lemont v. Singer & Talcott Stone Co., 824. Lenox Land Co. v. City of Oakdale, 54. Lent V. Tillson, 330, 338. Leonard v. City of Canton, 83, 84. ARE TO PAGES] Leslie v. Kite, 84. LeTourneau v. City of Duluth, 266. y. Hugo, 189. Lettioe v. American National Bank, 269. Levy V. McClellan, 129, 130, 131, 133, 141, 143, 151, 155. Lewis V. Barbour County Com'rs, 366, 378. V. Bourbon County Com'rs, 280, 344, 499, 506, 576, 577, 584. V. Brady, 959. V. Brown Township, 469, 654. V. City of Port Angeles, 220, 336. V. City of Shreveport, 185, 519, 667. V. Clarendon, 383. v. Comanche County Com'rs, 543, 607. V. Lofley, 217. V. Pima County, 157, 191. V. Sherman County Com'rs, 594. V. Shreveport, 474. V. Taylor, 544. Lewis Co., E. T., v. City of Win- chester, 773, 775, 780. Lexington, City of, v. Butler, 385, 391, 393, 394, 407, 454, 467, 531, 743. V. Kentucky Chautauqua Assem- bly, 352. V. Lafayette County Bank, §6, 146, 606. Town of, V. Union Nat. Bank, 346, 350, 358, 359, 375, 403, 663, 730. Libby v. City of Portland, 10. Limestone County Com'rs Ct. v. Rather, 915. Lincoln v. Iron County, 811. City of, V. Sun Vapor Street Light Co., 302. Lincoln County v. Brock, 13. V. Lunning, 407, 408, 797. Lincoln School Twp. of Hendricks County V. Union Trust Co., 81, 306, 933. 1164 iABLE OP CASES [references Lind V. Chippewa County, 218. Lindsay v. Rottaken, 102, 165, 472, 883, 909, 924, 936. Lines v. Village of Otego, 204. Linn v. State Bank, 165, 217, 299. Lippincott v. Town of Pana, 171, 824. Lippitt V. City of Albany, 371, 666, 813. Liquidators of City Debts v. Munic- ipality No. 1, 56, 57. Litchfield, City of, v. Ballou, 87, 630, 632, 712, 789, 792. Little Elver Twp., Reno County, v. Board of Com'rs of Reno Coun- ty, 704, 741, 769. Little Rock, City of, v. Merchants Nat. Bank, 663, 786, 936. V. United States, 699, 750, 833, 837, 839, 842, 855, 882, 886, 901. Littlefleld v. Inhabitants of Green- field, 713. Littler v. Jayne, 907, 920. Litz V. Village of West Hammond, 203. Livesay, State ex rel., v. Harrison, 930. Livingston v. School Dist. No. 7, 518, 784. Livingston County v. First Nat. * Bank of Portsmouth, 235, 236, 296, 605, 643. V. Weider, 309, 311. Lloyd V. City of Altoona, 421, 726. Loan & Exch. Bank v. Shealey, 932, 934. Loan Association v. Topeka, 249, 527. Lobdell V. City of Chicago, 127, 150. Loekard v. Decatur County Com'rs, 714. Locke V. Davison, 419. Lockport, City of, v. Gaylord, 932. Lodenslager v. Atlantic City, 230. Lodgord v. City of East Grand Forks, 282. ARE TO pages] Loeb V. Trustees of Columbia Twp., 191, 415, 550, 553. Loeffler v. City of Chicago, 76. Loftin V, Watson, 924 Logansport, City of, v. Dykeman, 108. V. Jordan, 129, 150, 203, 206, 313. Loudon, etc., Land Co. v. City of Jellieo, 92. Long V. Boone County, 883, 907. V. McDowell, 896, 923, 928. V. New London, 1039. Long Beach School Dist. v. Lutge, 925. Lorence v. Bean, 714, 905, 925. Lorsbach v. Lincoln County, 393. Los Angeles, City of, v. Hans, 341, 865. V. Teed, 413, 419, 424, 433, 436, 743. Los Angeles County v. Lankershim, 892. Los Angeles Gas Co. v. Toberman, 94. Louis County v. Gordon, 230. Louisiana v. Taylor, 200. City of, V. Wood, 353, 632, 785. State of, V. City of New Orleans, 56, 57, 857. V. Pillsbury, 34, 38, 55, 309, 544, 548, 753, 857, 863, 865. V. Police Jury of St. Martin's Parish, 57, 753, 761, 839. V. United States, 59. Louisiana Nat. Bank v. Board of Liquidation, 916, 919. Louisiana Ry. & Nav. Co. v. Ma- dere, 307. Louisiana State Bank v. Orleans Nav. Co., 99, 518. Louisville v. Savings Bank, 199. City of, V. Bank of Louisville, 117, 357. V. Board of Park Comm'rs, 229, 290. V. Commonwealth, 53. V. University of Louisville, 713. TABLE OF CASES 1165 [references Louisville, City of, v. Weikel, 78. Louisville & Nashville R. R. Co. V. Commonwealth, 129. V. Davidson County Court, 293, 296. Love V. Holmes, 72, 195. Lovejoy v. Inhabitants of Foxoroft, 102, 103. Lowber v. City of New York, 713. Lowell V. City of Boston, 212, 250. Lowry v. City of Lexington, 77, 81. Lucas v. Purdy, 307. Lucia V. Village of Montpelier, 337. Ludington Water Supply v. Luding- ton, 145. Luling V. Racine, 188, 659, 662. Lumberton, Town of, v. John Nuveen & Co., 277, 390. Lund V. Board of Com'rs of Newton County, 90. Lusk V. Perkins, 902. Lussem v. Sanitary Dist. of Chi- cago, 175, 230, 256. Lutterloh v. City of Fayetteville, 51, 868. Luzader v. Sargent, 297. Lynch v. Eastern L. & M. R. Co., 335, 340. Lynchburg v. Slaughter, 461, 522, 595. City of, V. Nowell, 493, 496. Lynchburg & D. R. R. Co. v. Person County Com'rs, 293. Lynchburg, etc., R. R. Co. v. Board of Com'rs of Person County, 265, 340. Lyon V. Elizabeth City, 713. Lyon County, Iowa, v. Keene 5 -Cent Savings Bank, 426, 432, 450, 523, 795, 807, 821. Lyons v. Chamberlain, 497. V. Cole, 328. V. Munson, 654. V. Wood, 869. Lyons County v. Ashuelot National Bank of Keene, 802. AKE TO PAGES] Lynde v. Winnebago County, 126, 184, 356, 357, 389, 563, 564, 606, 742. Lynn v. Polk, 327. Lytle V. Lansing, 255, 463, 473, 817. M M. & N. P. R. Co. V. Schenk, 244. Macon, City of, v. East Tenn., V. & G. R. Co., 238, 243. v. Jones, 268. Macon County v. Huidekoper, 316. V. Shores, 336, 478, 530, 531, 548, 818. Macon County Court v. United States ex rel., etc., 762 Maddox v. Graham, 442. Madera Irr. Dist., In re., 229. Madison County v. Bartlett, 912. V. Brown, 642. V. Paxton, 453, 463. V. Priestly, 292. Madison County Sup'rs v. Brown, 288. Madrey v. Cox, 30, 233. Maenhaut v. New Orleans, 753, 764. Maher v. City of Chicago, 763. Mahomet v. Quackenbush, 71, 865. Mahon v. Luzerne County, 96. Mail V. Maxwell, 336. Maish V. Territory of Arizona, 337, 432. Major V. Aldenborough, 278. State ex rel., v. Ryan, 70. Mall v. City of Portland, 229,. 395. Manahan v. Adams County, 33. Mandeville v. Reynolds, 118. Manhattan, etc., Co. v. City of Iron- wood, 255, 273, 518, 580, 604. Manhattan Savings Institute v. New York National Exchange Bank, 391, 451. Institution v. East Chester, 479, 730. Trust Company v. City of Day- ton, 88, 91. 1166 TABLE OF CASES [references Manitou, Town of, v. First National Bank, 493, 496. Mankato, City of, v. Barber Asphalt Paving Co., 149. Manley v. Board of Com'rs of Pueblo County, 418, 419, 432. Mannie v. Hatfield, 76. Manning v. City of Devils Lake, 319. Mansfield v. Fuller, 914. Mantel v. State, 84. Manufacturers Land & Imp. Co. v. City of Camden, 71. Marey v. Town of Oswego, 366, 367, 400, 500, 511, 604, 612, 613, 615, 1044. Mariner v. Mackey, 71S. Marinette, Town of, v. Oconto County Sup'rs, 924. Marion County v. Coler, 260, 309, 516, 655, 825. v. Rives & McChord, 12. Marion County Com'rs v. Clark, 479. V. Harvey County Com'rs, 38. v. Riggs, 11. Marion Water Co. v. City of Marion, 314. Marion School, City of, v. Forest, 12, 310. Markey v. School Dist. No. 18, 884,. 901, 926. Marks v. Purdue University, 817, 911, 912. Marlowe v. School Dist. No. 4, Mur- ray County, 328, 333. Marra v. San Jacinto & P. V. Irri- gation Dist., 800, 839. Marsh v. Fulton Co., 117, 507, 660, 683, 784. V. Little Valley, 548, 769, 804. Marshall v. City of San Antonio, 938. v. Elgin, 565. V. Platte County, 930. v. Russell, 354. V. Silliman, 133, 278, 286, 678. ARE TO pages] Marshall, City of, v. Allen, 82. V. Marshall Nat. Bank, 375. State ex rel., v. Bugg, 230. JIarshall County v. Cook, 263, 576, 660. Marshall County Sup'rs v. Schenck, 531, 603, 664. Marshall Field & Co. v. Clark, Col- lector, 869, 872. Martin v. Bennett, 278, 337. V. City and County of San Fran- cisco, 930. V. Clark, 918. V. Somerville Water-Power Co., 57. Martin County v. Gillespie Coijnty, 366, 368, 428, 455, 464, 805. Martindale v. Incorporated Town of Rochester, 89. Martin-Strelan Co. v. City of Du- buque, 305, 784. Marysville, .Village of, v. Schoon- over, 888. Mason v. City of Shawnee Town^ 300. V. Com'rs of Roads & Revenvies, 713. v. Cranbury Township, Middlesex County, 220. V. Pearson, 78. v. Frick, 443. V. Shawneetown, 386. Massachusetts & S. Const. Co. v. Cherokee Twp., 238, 243. Mather v. City and County of San Francisco, 764, 768, 769, 810. Mathis V. Runnells, 509, 624. Matter of Bronson, 875. Matter v. Tuthill, 230. Matthis V. Inhabitants of Cameron, 894. Mattingly v. District of Columbia, < 320, 670, 671. Mauldin v. City Council of Greens- ville, 195, 210, 327. TABLE OF CASES 1167 [eepebences Maumee School Township v. School town of Shirley City, 32. Maury v. Rogers, 160. Maxey v. City of Oshkosh, 193, 217, 257, 351. V. County Court of Williamson County, 522. V. Powers, 54. V. Williamson County, 697. May V. Bermel, 292. V. Cass County, 339, 489. V. City of Chicago, 89. Maybin v. City of Biloxi, 283. Mayfield Woolen Mills v. City of Mayfield, 148, 310. Mayo V. Insurance Co., 86. V. Town of Washington, 220. Mayor v. Aldan Borough, 107, 521. V. Inman, Swan & Co., 292. V. State, 160, 339. Mayor, City of Baltimore v. Gill, 326. V. Ulman, 303. Columbus V. Dennison, 671. GriflSn v. City Bank of Mason, 739. V. Inman, 183, 485. Helena v. Helena Water Works Co., 655, 829. Nashville v. First Nat. Bank, 393. V. Ray, 20, 104, 113, 169, 173, 387, 474, 786. New Orleans v. United States ex rel. Stuart, 655, 72l, 841, 854. Patterson v. Baker, 653. McAleer v. Angell, 89. McArthur v. City of Cheboygan, 520. McBean v. City of Fresno, 145. McBryde v. City of Montesano, 279, 284. McCall V. Hancock, 549. V. Harris, 926. McCarter v. McKelvey, 70. McCarty v. Queen, 71. *" McCavick v. Independent School Dist. of Florence, 154. ARE TO pages] McCleary v. Babcook, 224, 233. McCless V. Meekins, 420, 423, 768, 812. McClure v. Township of Oxford, 119, 170, 233, 255, 392, 401, 453, 436, 476, 498, 518, 580, 584, 686, 805, 812. McCord V. City of Jackson, 103, 203. McConnell v. Hammond, 250. McCormick v. City of Niles, 87. V. Grundy County, 928. V. Village of West Duluth, 175, 704. McCoy V. Briant, 301. V. Washington County, 159, 391. McCraw v. Williams, 120. McCreight v. Zemp, 268. McCuUoch V. Maryland, 22, 876. McCully V. Board of Education of Ridgefield Township, 18, 719. V. Tracy, 714. McCurdy v. School Dist. No. 1, 373. V. Shiawassee County, 89, 103, 790. McCutchen v. Town of Freedom, 931. McDermott v. Sinking Fund Com'rs of Jersey City, 775. McDonald v. Bird, 925. V. City of Louisville, 311. V. City of New York, 357. V. Doust, 40. McDonald's Adm'r v. Franklin County, 87, 884, 920. McDonogh's Ex'rs v. Murdoch, 57. McDowell V. Mass. & S. Construc- tion Co., 293, 296, 332, 664. V. Rutherford Ry. Construction Co., 293, 296. McEwan v. City of Spokane, 891. McFarland v. State Bank, 165. McGarvey v. Swan, 69, 70. McGillic V. Corby, 79. McGillivray v. Joint School Dist., 630. 1168 TABLE OF CASES [references McGilvery v. City of Lewiston, 150, 765. McGinnis v. Board of Trustees, 277, 290, 773. McGlue V. City of Philadelphia, 890. McGoodwin v. City of Franklin, 293. McGowan v. Ford, 888. McHugh V. City and County of San Francisco, 175, 252. Mcintosh V. Salt Lake County, 911. McKee v. Vernon County, 350, 389. McKenan's Estate, In re, 309. McKenzie v. Wooley, 295. McKethan v. Cumberland County Com'rs, 231. McKibben v. State, 924. McKinnon v. Mertz, 151. McLain v. Valley County, 423, 509, 607. McLaughlin v. Summit Hill Borough, 289. McLaurin v. Tatum, 295. McLendon v. Com'rs of Anson, 403, 405. McLeod V. Board of Coto'rs of Town of Carthage, 321. McMahon v. Sup'rs of San Mateo County, 340. McManus v. Duluth, C. & N. R. Co., 242, 245. McMaster v. City of Waynesboro, 145, 220. McMillan v. Anderson, 337. V. Boyles, 671. McMullen v. Inghram, Circuit Judge, 737. V. Person, 769. McMurray v. Hayden, 885. McNeal v. City of Waco, 783. McNutt V. Lemhi County, 204, 668, 900, 905. McPeeters v. Blankenship, 896. McPherson v. Foster, 350, 476, 499, 633. ARE TO PAOES] MoSurely v. MeGrew, Iowa, 51, 52, 72, 73. McTwiggan v. Hunter, 93. McVichie v. Town of Knight, 274, 337. McWilliams v. Board of Directors Of Iberville Parish, 285, 297. Mead v. Turner, 264, 326, 337, 747. Meath v. Phillips County, 423, 939. Meday v. Borough Rutherford, 84. Meixwell v. Kirkpatrick, 445. Melloe V. Pittsburg, 151. Melvin v. Lisenby, 358, 359. Memphis v. Adams, 365. City of, V. Bethal, 175, 210, 391, 400, 494, 496, 534, 661. V. Brown, 86, 449, 763. V. Hastings, 253. V. Memphis Sav. Bank, 349, 740, 769. Menard v. Hood, 333. Menasha County v. Frank, 723. Menefee, In re, 368, 414, 420, 432. Mensha v. Hazzard, 367, 375, 604, 635. Mentz, Town of, v. Cook, 272. Mercantile Incorporating Co. v. Junkin, 309. Mercantile Trust & Deposit Co. v. City of Columbus, 145. Merced v. California University, 489. Mercer County v. Hackett, 18, 126, 362, 443, 446, 456, 494, 581, 589. V. Provident Life & Trust Co., 239, 242, 378, 475, 516, 644, 683. Merchants Nat. Bank v. Bergen County, 355, 498, 507, 567, 577, 612, 642, 687. V. City of East Grand Forks, 59, 139, 196, 905. V. County of Pulaski, 428. V. Escondido Irrigation Dist., 718, 753. V. Little Rock, 426. TABLE OF CASES 1169 [repeeences Merchants Nat. Bank v. McKinney, 884, 903. M. & Farmers Nat. Bank v. School Dist. No. 53, 904. Meriwether v. Garrett, 25, 30, 46, 53, 56, 714. V. Muhlenburg County Court, 310, 550. V. Saline County, 446. Merkel v. Berks County, 886, 919, 937. Merrick v. Inhabitants of Amherst, 311. Merrill v. Smith County, 511. V. Town of Monticello, 173, 174, 180, 181, 255, 410, 417, 428, 786, 934, 935. Metcalf V. Merritt, 8, 491. Metropolis Theatre Co. v. City of Chicago, 310. Metropolitan Savings Bank v. Bal- timore, 479. Metzgar v. Attica & Arcade Ky. Co., 327, 331. Meyer v. Brown, 42, 126, 430. V. City and County of San Fran- cisco, 381, 403, 765, 769, 810. V. City of Muscatine, 181, 375, 500, 531, 581, 590, 607, 694, 742. V. Richards, 526. Meyers v. City of Jeffersonville, 102, 422, 426. V. York & C. R. R., 21. Middleport v. Aetna Life Ins. Co., 185, 200, 240, 299, 417, 695, 824. Middleton v. City of St. Augustine, 219, 330, 349, 671, 681. V. Mullica Township, 356. Midland, Township of, v. County Board of Gage County, 240, 243, 331. Milan Taxpayers v. Tenn. Cent. R. R. Co., 185, 344, 350, 382, 790. Miles V. Ray, 333. P. s.— 74 ABE TO pages] Mill Valley, Town of, v. House, 347, 873. Miller v. Board of Com'rs, 111. V. City of Lynchburgh, 924, 939. V. City of Milwaukee, 763. V. Commissioners, 104. V. Dearborn County Comm'rs, 208, 935. V. Hinkle, 889. V. Hixson, 511. V. McWilliams, 714, 721, 839. V. Ferris Irrigation Dist. 29, 536, 589, 634. V. School Dist. No. 3, Carbon County, 293, 346, 420, 432. V. Superior Machine Co., 365. V. Town of Berlin, 403, 478, 534, 589, 605, 805. V. Town of Pulaski, 867. V. Wilson, 875. Miller County v. Gazola, 926, 927. Millerstown v. Frederick, 476, 576, 628, 629. Milliken v. George L. Gillen & Son, 932. Million v. Soule, 922. Mills V. Bellmer, 487. V. Gleason, 103, 111, 112, 523, 661, 936. V. Town of Jefferson, 403. V. Williams, 5, 24. Mills County Nat. Bank v. Mills County, 890, 914, 916, 939. Millsaps V. City of Terrell, 106, 211, 630, 777. Millvalley, Town of, v. House, 251. Millville Gaslight Co. v. Vineland Light & Power Co., 13. Milner v. City of Pensacola, 74, 181. Milster v. City of Spartanburg, 34, 40. Mineral Wells, City of, v. Darby, 185, 935. Miners Ditch Co. v. Zellerbach, 4. Minnesota, State of, v. Duluth & I. R. R. Co., 55. Minor v. Loggins, 898. 1170 TABLE OP CASES [eeperences Minturn v. Larue, 83. Mintzer v. Schilling, 40. Missouri River, etc., R. R. Co. v. Miami County, 521. Missouri Pac. R. Co. v. Tygard, 245. Mitchell V. Burlington, 181, 590, 827. V. City of Negaunee, 319. V. Speer, 926, 939. City of, V. Smith, 432, 548. Mitchell County v. City National Bank, 231, 260, 263, 499, 510, 595, 779, 782. Mitchelltree School Twp. v. Carna- han, 913. Mittag V. Borough of Park Ridge, 175, 195, 200, 281, 386. Mix V. People, 315. Mobile, City of, v. Moag, 86, 88. County of, v. Kimball, 116, 307, 308, 318, 319, 330, 469, 830. V. Powers, 889, 939. V. Sands, 561, 661. Town of, v. Watson, 43, 55. Mobile Transportation Co. v. City of Mobile, 713. Mobile Savings Bank v. Oktibbeha County Sup'rs, 459, 471. Moller V. City of Galveston, 230, 346, 353. Molineux v. State, 403. Molyneaux v. City of Minneapolis, 872. Monaghan v. City of Philadelphia, 713. Monahan v. Lynch, 124. Monical v. Heise, 873. Monroe v. Crawford, 936. Monroe Water Works Co. v. City of Monroe, 92. Montague v. Horton, 889. Montclair v. Ramsdell, 71, 85, 454, 457, 460, 500, 817, 864. Monteith v. Parker, 911, 912. Montgomery v. Township of St. Mary's, 357, ARE TO PAGES] Montgomery Beer Bottling Works V. Gaston, 870; Montgomery, City Council of, v. Moore, 865. Montgomery County v. Menefee County Ct., 38. V. Taylor, 33, 432. Montpelier, Town of, v. Town of East Montpelier, 24, 37, 49. Montpelier Savings Bank & Trust Co. V. School Dist. No. 5 of Town of Ludington, 104, 261, 418, 432, 467, 472, 518, 634. Montvale, Borough of, v. Peoples Bank, 373, 442, 458, 463, 464, 473. Moody V. Cass County, 888. Moore v. City of Detroit, 97. V. City of Walla Walla, 724. V. Greenhow, 383, 397. V. Jefferson, 739. V. New Orleans, 852. Moran v. Miami County Com'rs, 191, 193, 385, 386, 443, 589, 694. Morgan v. Beloit, City and Town, 33, 37, 38, 649. V. Board of Councilmen of City of Frankfort, 780. V. District of Columbia, 933. V. Town of Guttenberg, 932. V. Town of Waldwick, 38. V. Schusselle, 52. V. United States, 470, 1045. Morgan County v. Allen, 550. Morrell v. Smith County, 353, 381. Morrill v. Smith County, 235, 358, 260, 363, 633, 761, 770. Morris v. Hoagland, 333. V. State, 56. V. William, 343. Morris & Wliitehead v. Taylor, 416, 417, 433, 438, 432. Morris County Com'rs v. Hinehman, 661, 663. Morrison v. Austin State Bank, 889. TABLE OF CASES 1171 [references Morrison v. Inhabitants of Town- ship of Benard's, 358. V. Morey, 230. City of, V. Hinkson, 713. Morrow v. Surber, 888, 935. Morton v. Carlin, 179, 363, 536. V. City of Nevada, 790, 792. Moses V. City of Key West, 489, 491. Mosher v. Independent School Dist., 333. Moss V. Sugar Ridge Twp., 87. Moulton V. Bvansville, 243. Moultrie, County of, v. Fairfield, 85, 270, 313, 517, 563, 565, 806. V. Rockingham 10-Cent Saving Bank, 296, 500, 589. Mound City Land & Stock Co. v. Miller, 230. Mountain Grove Bank v. Douglas County, 902, 904, 918. Mowry v. Mowry, 315. Mt. Hope Cemetery v. City of Bos- ton, 31. Mt. Morris, Town of, v. King, 235. V. Thomas, 235. V. Williams, 403. Mt. Pleasant, Town of, v. Beck- with, 24, 31, 34, 38, 49. Mt. Vernon, City of, v. State, 304. Mt. Washington Road Co., In re, 253. Muhlenburg County v. Morehead, 400. Multnomah County v. White, 930. Munday v. Assessors of Rahway, 57. Munhall Borough School Dist. v. Miffin Twp. School Dist., 35, 37. Municipal Fuel Plants, In re, 73. Municipal Securities v. Baker County, 139, 135, 138, 661, 904, 933. Munro, In re, 75. Munson v. Mudgett, 395, 936. Murdock V. Aiken, 768, ARE TO PAGES] Murfreesboro R. Co. v. Hertford County Com'rs, 243. Murphy v. City of Long Branch, 293. v. City of Salem, 305, 325. V. City of San Luis Obispo, 274, 387, 300, 349, 724, 736. V. City of Spokane, 774. V. Garland County, 886. V. Police Jury, St. Mary Parish, 303, 305, 721. V. Town of East Portland, 139. Town of, V. C. A. Webb & Co., 368. Murray v. Ballou, 467. V. Beckwith, 473. v. Charleston, 396, 553, 876. V. Fay, 410, 430. V. Lardner, 373, 391, 403, 457, 465, 472, 483, 833. V. Stanton, 445. Muagrove v. Kennell, 119. Muskegon Traction & Light Com- pany v. City of Muskegon, 775. Muskingum County Com'rs v. State, 334, 422. Mutual Benefit Life Insurance Co. V. City of Elizabeth, 275, 428, 561, 565, 625, 642, 644, 758. Myers v. City of Jeffersonville, 200, 336. V. Commonwealth, 308. Mygatt V. City of Green Bay, 475, 498, 742. N Naegely v. City of Saginaw, 303, 303. Nalle v. City of Austin, 187, 358, 337, 335, 493, 496. Nance v. StUart, 888. Napa Valley R. R. Co. v. Napa County, 64, 341. Nash V. Baker, 331. Nash Co., C. B., v. City of Council Bluffs, 142, 1172 TABLE OF CASES [references Nashville, City of, v. Hagan, 94. V. Linck, 77. V. Lindsey, 935. V. Ray, 17, 171, 180, 442, 894, 928, 934, 935. National Bank v. County of Yank- ton, 157, 671, 677, 876. of Commerce v. Town of Gra- nada, 170, 222, 275, 278, 299, 301, 418, 475, 498, 566, 590, 591, 606, 647, 869, 874. D. 0. Mills & Co. V. Herold, 898. Jacksonville v. Duval County, 103, 912. La Crosse v. Petterson, 447. North America v. Kirby, 47Q. Republic v. City of St. Joseph, 170, 406, 445, 498, 740. Western Ark. v. Sebastian County, 56. National Life Ins. Co. v. Dawes County, 905. of Montpelier v. Board of Edu- cation of City of Huron, 28, 99, 125, 279, 356, 492, 494, 523, 530, 531, 534, 536, 560, 563, 565, 568, 582, 587, 589, 594, 607, 616, 626, 628, 634, 642, 662, ■692, 709, 779, 1063. V. Mead, 427, 436, 511. National State Bank v. Independent School Dist. of Marshall, 576, 939. National Surety Co. v. State Sav- ings Bank, 896. Nauvoo v. Retter, 467, 812. Naylor v. McCulloch, 76, 229, 885. Neacy v. City of Milwaukee, 187, 220, 276. Neal Loan & Banking Co. v. Chas- tain, 889. Neale v. Wood County Court, 130, 141, 200, 243, 248, 279, 284, 696, 723. Neely v. Town Council of Yorkville, 229, 356, 357, 534. Nehama County v. Frank, 809, 819. ARE TO pages] Nelson v. City of South Omaha, 323. V. Fleming, 229. v. Harrison County, 91, 901, 918. V. Haywood County, 201, 236, 288, 296, 380, 478, 660. Louisiana ex rel., v. Police Jury of St. Martin's Parish, 658, 753, 839. Nenasha, City of, v. Hazzard, 564. Neosha County Com'rs v. Stoddard, 97. Nesbitt V. Independent Dist. of Riverside, 21, 170, 401, 476, 510, 582, 628, 630, 650. Ness V. Board of Com'rs of Marshall County, 94. Neuse River Navigation Co. v. Com'rs of Newbern, 493. Nevada Bank v. Steinmitz, 241, 244. Nevada County v. Williams, 927. Nevada Nat. Bank v. Board of Sup'rs of Kern County, 311, 321. New Albany Bank v. Danville, 184. New Buffalo, Township of, v. Cam- bria Iron Co., 235, 460. Newell V. School Directors of Dist. No. 1, 896, 928, 933. New England Co. v. Robinson, 103. Newgass v. City of New Orleans, 884, 935. New Iberia, Town of, v. New Iberia etc.. Drainage Dist., 230. New London, City of, v. Brainerd, 86. Newman v. Emporia, 299. New Orleans v. Southern Bank, 410. New Orleans Board of Liquidation V. Hart, 839. New Orleans, City of, >. City Hotel, 891, 924. V. Clark, 31, 52, 60, 219, 251, 348, 307, 309, 391, 394, 417, 653, V. Fisher, 770. V. Home Mutual Ins. Co., 714, TABLE OF CASES 1173 [references New Orleans, City of, v. Morris, 715. V. Strauss, 938. V. Warner, 883, 890, 911, 913, 914, 915, 916, 931. New Orleans, etc., R. "R. Co. v. Mc- Donald, 183, 364. New Orleans Gas Light Co. v. City of New Orleans, 80. New Orleans Ins. Association v. City of New Orleans, 401. New Orleans Water Works Co. v. Louisiana Sugar Kefining Co., 794. Newport, City of, v. Newport Light Co., 319. Newport News, City of, v. Potter, 87, 95. New Providence, Town of, v. Hal- sey, 442, 565, 613, 615, 625, 795, 807, 808. New York & R. Cement Co. v. Davis, 185. New York Cent. & Hudson River R. R. Co. V. City of Rochester, 319. New York, City of, v. Sands, 497. V. Second Ave., R. R. Co., 80. V. Tenth Nat. Bank, 58, 60. New York, etc., Co. v. City of Brooklyn, 229. New York Guaranty Company v. Board of Liquidation, 753. New York Life Ins. Co. v. Cuyahoga County Com'rs, 59, 63, 466, 661, 671, 723. New York Security & Trust Co. v. City of Tacoma, 916. Nichol V. Coster, 50. Nichols V. Board of Directors of School Dist. No. 10, Wash., 396, 673. • Nickerson v. City of Boston, 319. Nlcolay v. St. Clair County, 478. Niland, In re., 96. Niles Bryant School of Piano Tun- ing V. Bailey, 887. ARE TO PAGES] Niles Water Works v. Niles, 148. Ninety-Six, Town of, v. Folsom, 565, 589, 606, 635. Ninth Nat. Bank v. Knox County, 379, 583. Nixon V. Campbell, 242, 244. Noble V. Davison, 337. V. Vincennes, 371. Noel V. City of San Antonio, 258. Noel-Young Bond & Stock Co. v. County of Mitchell, 475, 476, 522, 660, 661. Noesen v. Port Washington, 329. Nokomia, City of, v. Zepp, 266. Nolan County v. State, 174, 184, 511, 523, 560, 595, 632, 660, 661, 677, 740, 777. Noonan v. People, 930. Norman v. Kentucky Board of Man- agers of World's Columbian Ex- position, 885. North V. McMahan, 364, V. Piatt County, 333. North Bergen, Inhabitants of, v. Eager, 938. North Pa. R. R. Co. v. Adams, 405. Northern Bank of Toledo v. Porter Township Trustees, 355, 568, 609, 642, 687, 691, 695. Northern Trust Co. v. Village of Willamette, 765. Northrup v. Hoyt, 888. Northwestern Lumber Co. v. City of Aberdeen, 890, 915. Savings Bank v. Town of Cen- treville Station, 522, 565, 595. University v. Village of Wilmette, 69. Norton v. Board of Com'rs of Tax- ing Dist. of Brownsville, 195, 201, 292. V. City of Roslyn, 98. V. Shelby County Com'rs, 119, 120, 121, 123, 124, 179, 438, ; 551, 552, 683, 689. V. Town of Dyersburg, 185, 255, ' 790. 935. 1174 TABLE OF CASES [eeperences Norwood V. Baker, 320. Nugent V. City of Newark, 292. V. Putnam County Sup'rs, 235, 500, 582, 661, 662. N. W. Halsey & Co. v. City of Belle Plaine, 142, 201, 207. Oak Cliff, City of, v. Etheridge, 135. Oakland, City of, v. Thompson, 252. V. Oakland Water Front Co., 712. Oakley v. Valley County, 884. O'Brien et al. v. Wheelock et al., 551, 555, 763, 851. O'Bryan v. Owensboro, 775. O'Connor v. Ea-st Baton Rouge Par- ish, 429, 910, 919. Odd Fellows' Savings, etc., Bank v. Quillen, 416. O'Donnell v. City of Philadelphia, 926. Oelrich v. Pittsburgh, 173, 451. Office Specialty Mfg. Co. v. County of Elbert, 268, 291. Ogden V. City of Daviess, 170, 175, 176, 178, 185, 689. O'Hara v. State, 60. Ohio V. Frank, 404. Ohio County, Ky. v. Baird, 913. Ohio Valley Iron Works v. Town of Moundsville, 250. Oklahoma City v. State, 217, 285. V. T. M. Richardson Lumber Co., 108, 119. Olcott V. Fond du Lac Sup'rs, 233. Oldtown & L. R. Co. v. Veazie, 240. Oleson V. Green Bay, etc., Ry. Co., 233. Olive V. School Dist. No. 1, 296.- Oliver V. Board of Liquidation, 914, 921. Olmstead v. City of Superior, 766, 771. Olney, City of, v. Harvey, 713. Omaha Electric Light & Power Co. V. City of Omaha, 83. Omaha Nat. Bank v. Omaha, 383. ARE TO PAGES] Omaha Water Co. v. City of Omaha, 222. O'Neil V. Flannagan, 90. O'Neill V. City of Hoboken, 60, 230, 856. Onstott V. People, 293. Ontario v. Hill, 265, 576. Ontario County v. Shepard, 348, 349, 423. Town of, V. Union Bank of Ro- chester, 186, 576, 816. Opinion of the Justices, In re, 67, 307, 318, 410, 427, 432, 723, 724, 753, 755, 884. Oquawka, Village of, v. Graves, 183, 416. Orchard v. School Dist. No. 70, 494. Oregon, Town of, v. Jennings, 287, 332, 567, 586, 607, 613, 615, 643. Oren v. Pingree, 132. Ore. Short Line R. R. Co. v. Pioneer Irr. Dist., 230. Orleans, City of, v. Clark, 675. Town of, V. Piatt, 457, 467, 531, 547, 564, 595, 654, 695, 825. V. Union Bank, 522. Ormond, Town of, v. Shaw, 54. Orton V. Andrus, 229. Orvis V. City of Des Moines Park Com'rs, 141. Osborn v. Adams County, 327, 248, 249. Osborne v. Bank of U. S., 22, 876. Osborne County Com'rs v. Blake, 714. Ostrander v. City of Salmen, 222, 284. Oswego City Savings Bank v. Board of Education, etc., 347, 350. Oswego County Savings Bank v. Town of Genoa. 240, 242, 243, 475, 517, 663, 668, 672. Oswego Township V. Anderson, 179, 349, 536, 561, 655. Otis V. Cullum, 526. V. Inhabitants of Stockton, 910. TABLE OP OASES 1175 [references Otoe County v. Baldwin, 71, 671, 680, 864. Ottawa, City of, v. Carey, 75, 76, 83, 249, 595. V. First Nat. Bank of Ports- mouth, 38, 249, 450, 689, 595, 601, 730, 806. V. People, 78. Ottumwa, City of, v. City Water Supply Co., 127, 141, 150, 151, 153. Ouachita County v. Wolcott, 896, 928. Oubre v. Town of Donaldsonville, 259. Overall v. City of Madisonville, 136, 145, 204, 205. Owen V. Branch Bank, 165. V. Lincoln Township, 938. Owen County v. Walker, 97. Owensboro Water Works Co. v. City of Owensboro, 353, 395, 497, 771. Pace V. Ortiz, 885. Pacific Imp. Co. v. City of Clarks- dale, 38, 42, 297, 700, 730, 784. Pacific Pav. Co. v. Mowbray, 894. Pacific K. Co. V. Seely, 245. Pacific Underwriters v. Widber, 135, 204. Pack V. United States, 124. Packard v. City of Mobile, 806. V. Town of Bovina, 939. Packwood v. Kittitas County, 274, 724. Padgett et al. v. Post, 655, 753, 841, 855. Painter v. City of Norfolk, 90. Palmer v. City of Danville, 74. V. City of Helena, 76, 220, 433. Pana v. Bowler, 404, 468, 556, 565, 607. Pangborn v. Joving, 870. Paris, City of, v. Sturgeon, 89. Park V. Candler, 888, 918. AKE TO pages] Park Com'rs v. Detroit Common Council, 53, 65, 66. Parker v. Catholic Bishop of Chi- cago, 861. V. City of Philadelphia, 92. V. Saratoga County Sup'rs, 932. V. Scogin, 11. V. Smith, 239. Parker-Washington Co. v. Kansas City, 69. Parkersburg v. Brown, 249, 660. Parkersburg Gas Co. v. City of Parkersburg, 220. Parkinson v. City of Parker, 383. Parks V. West, 275, 276, 277. Parmelee v. Knox, 526. Parsel v. Barnes, 927, 932. Parsons, Ex parte, 746. Parsons v. District of Columbia, 319. V. Inhabitants of Goshen, 87. V. Inhabitants of Monmouth, 174, 932, 935. V. Jackson, 403, 447, 449. V. Van Wyck, 250. Partridge v. Bank of England, 393. Town of, v. Dennie, 37. Pass School D'ist., etc., v. Holly- wood City School Dist., 32. Patching v. Hutchinson, 358. Patterson v. Yuba, 133. City of, V. Barnett, 303. Paul V. City of Kenosha, 784. Paulson V. Rogers, 340. Pauly Jail Bldg., etc., Co. v. Kearney County Com'rs, 317, 889, 890, 914. Paye v. Grosse Point Twp., 531. Payne v. Baehr, 922. Peabody v. Westerly Waterworks, 175. Peacock & Co., W. C, v. Pratt, 309. Peake v. City of New Orleans, 888, 890. Pearson v. Eanlett, 341. Peek V. City of Hempstead, 688. 1176 TABLE OF CASES [repeeences 'Peck-Williamaon, etc., Co. v. Board of Education, etc., 91. Peed V. McCrary, 103. Pekin, City of, v. Reynolds, 405, 743. Pence v. City of Frankfort, 30, 863. Pendleton County v. Amy, 517, 531, 532, 568, 662. Penick v. Foster, 10. Pennie v. Reis, 52. Peunick v. Foster, 103. Pennington v. Baehr, 389. V. Park, 663. PennsylTania County v. City of Pittsburg, 32. Penobscot & K. H. Co. v. Dunn, 240. Penrose v. Ventnor City, 311. People V. Adirondack R. R. Co., 253. V. Alameda County, 37. V. Austin, 925. V. Bancroft, 23. V. Bamett, 339. V. Bartlett, 125. T. Batchellor, 53. V. Bennett, 9. 7. Board of Audit, 96. V. Board of Education, etc., 60, 63. V. Board of Supervisors, 64. V. Booth, 486, 884, .885. V. Bowman, 28, 316. V. Brennan, 339. V. Brislin, 196, 252. V. Burr, 59. V. Canty, 883. V. Chicago & A. R. Co., 714. V. Chicago & Eastern 111. R. R. Co., 314. V. Chicago, B. & Q. R. R. Co., 777, 839. V. Chicago, etc., R. R. Co., 315, -721, 768. V. City Council of Salt Lake City, 209. V. City of Chicago, 64, 311. V. City of Geneva, 137, 268. V. City of Oakland, 30. ABE TO pages] People V. City of Tazewell, 394. V. City of Wilmington, 40. V. Clark County Sup'rs, 914, 939. V. Clean Street Co., 82. V. Cline, 269, 340. V. Coler, 38. V. Common Council of City of Buffalo, 57, 758. V. Common Council of Detroit, 11, 313. V. CooUey, 883. V. Counts, 276, 278. V. Dakin, 521. V. Draper, 49. V. Earl, 11, 68. V. El Dorado County Sup'rs, 883, 894, 928^ V. Fogg, 393, 884. V. Ford County, 382. V. Flagg, 66, 885. V. Florville, 299. V. Getzendaner, 381. v. Grand Trunk West. Ry. Co., &1, 83. V. Gray, 896, 930. V. Green, 885. V. Haines, 336. V. Hall, 928. V. Hanford Union High School Dist. 128, 263. V. Harrington, 862. V. Hart, 276. V. Hastings, 886. V. Hatch, 273. V. Haws, 63, 885. V. Holden, 244, 246, 341. V. Home Insurance Co., 875. V. Hummel, 520, 771. V. Button, 265. V. IngersoU, 74, 531. V. Johnson, 894, 902. V. Lathrop, 888. V. Logan County, 339. V. Mahaney, 863. V. May, 135. V, McBride, 51. TABLE OP OASES 1177 [befebences People V. McElroy, 310, 867. V. McCreery, 351. V. Mead, 363. V. Metz, .51. V. Miller, 60. V. Mitchell, 643. V. Morgan, 246. V. Morris, 9, 25. V. Morse, 437. V. Munroe, 883, 934. V. Neff, 919. V. Nichols, 315. V. Niebruegge, 8, 40. V. Onondaga Twp. Sup'rs, 59. V. Opel, 310, 915. V. Otis, 479. V. Parks, 317, 318. V. Parmerter, 341, 414, 452. V. Peck, 548. V. Pederson, 38. T. Peoria & Eastern Ry. Co., 315. V. Pitt, 331. V. Porter, 723. V. Prendergast, 51. V. Queens County Sup'rs, 80. V. Rio Grande County Com'rs, 300, 896. V. Roberts, 884. V. San Francisco, 341. V. Sawyer, 271, 373. V. Schenectady County Sup'rs, 241. V. School Directors, etc., 363. V. Scott, 322. V. Seaman, 217, 389. V. Slayton, 771. V. Smith, 272. V. Spencer, 272. V. Stanton, 130. V. State Treasurer, 53, 333, 932. V. State Water Supply Co., 68. V. Stem, 870. V. Superior Ct. of Cook County, 713. V. Supervisors, 264. V. Supervisors of Chenango, 870. AKE TO pages] People V. Sup'rs of Livingston, 733. V. Sup'rs of Town of Gravesend, 300, 339. V. Tazewell County, 743. V. Toledo, etc., R. R. Co., 905. V. Town of Berkeley, 287, 393. V. Town of Bishop, 200. V. Town of Hart, 278. V. Town of Oran, 37. V. Township Board of Lincoln, 917. V. Township Board of Salem, 233. V. Treasurer of Merritt Town- ship, 888. V. White, 341. V. Wiggins, 330. V. Wood, 885, 888. V. Woods, 415. V. Wyant, 393. People ex rel, etc., 318. People ex rel. v. Porter & Calvin Twps., 784. Prettyman v. Board of Sup'rs, 341. Peoples Bank v. School Dist. No. 53, 499, 517, 738. Peoples Nat. Bank of Brattleboro v. Ayer, 736. Pepin Township v. Sage, 31, 33, 35, 67, 68. Perkins v. Inhabitants of Milford, 330. Perkins County v. Graff, 126, 337, 229, 345, 372, 379. V. Keith County, 37. Perrin v. City of New London, 1039. Perris Irr. Dist. v. Thompson, 594. Perry v. Keene, 233. City of, V. Norwood, 274. County V. Engle, 89. V. Eversole, 896. Perun v. Cleveland, 536. Peters v. City of Lynchburg, 310. Petros V. City of Vancouver, 220. Pettibone v. West Chicago Park Com'rs, 140, 361, 363, 765, 783. 1178 TABLE OF CASES [befebences Peyaud v. State, 159. Pfirman v. Dist. of Clifton, 831. Pfister V. State, 340. State ex rel., v. Manitowoc County, 839. Phelps V. Hawley, 78, 79. V. Town of Lewiston, 358, 390, 467. V. Yates, 635. Philadelphia, City of, v. Flannagan, 120. V. Fox, 9. V, Gorgas, 95. V. Masonic Home, 218. Phillips V. Reed, 888, 905, 926. V. Town of Albany, 331. Phillips Village Corporation v. Phil- lips Water Co., 76. Phoenix Water Co. v. City Coun- cil of City of Phoenix, 288. Piatt V. People, 340. Pickens Township v. Post, 378, 455, 461, 467, 470, 478, 481, 565. Pickerdike v. State, 948. Pierce Butler, etc., Co. v. Bleckwen, 217. Pierre, City of, v. Dunscomb, 175, 192, 195, 416, 419, 426, 430, 478, 523, 530, 531, 599. Pine Grove Township v. Talcott, 133, 192, 307, 309, 555. Pittsburg, Bank of, v. Neal, 373. Pittsburgh, C, C. & St. L. R. R. Co. V. Harden, 244. Pittsburgh, etc., R. R. Co. v. Alleg- heny County, 485. V. Hood, 300. Plainview, Town of, v. Winona & St. Peter R. R. Co., 334. Planters & Savings Bank v. Huiett Township, 30, 32. Piatt V. City and County of San Francisco, 24, 51, 75, 222, 224, 522. V. City of Payette, 107, 284. Platteville v. Galena, etc., R. R. Co., 243, 348, 696. ARE TO PAGES] Plattsmouth, City of, v. Fitzgerald, 429, 784, 910, 919. Pleasant Township v. Aetna Life Ins. Co., 233, 544. Pleasant Valley Coal Co. v. Salt Lake County Comm'rs, 199. Plinkiewisch v. Portland Ry. Light & Power Co., 78. Plummer v. Kennedy, 96. Poindexter v. Greenhow, 160, 383, 388, 397, 909. Police Jury v. Britton, 103, 118, 167, 180, 417, 441, 893, 935. of Jefferson v. United States ex rel Piske, 655. Poling V. Board of Education, 91. Polk V. Tunica County Sup'rs, 913. Polk County v. Sherman, 884, 919. Pollard V. Pleasant Hill, 478, 724, 728. Pollock V. City of San Diego, 304, 366. V. Farmers Loan & Trust Co., 876. V. Stanton County, 916. Polly V. Hopkins, 331, 336. Polo V. Stevens, 259. Pomerene v. School Dist. No. 56, 901. Pompton v. Cooper Union, 531, 560, 564, 589, 659. Pontiac Water L. & P. Co. v. City of Pontiac, 147. Pontotoc, Town of, v. Fulton, 740, 769. Pope v. Board of Com'rs of Lake County, 336, 731. V. Town of Union, 862. Port Huron, City of, v. McCall, 85, 423. Port Royal, Borough of, v. Graham, 894. Porter v. City of Tipton, 492. V. Lainhart, 344. V. Vinzant, 85. Portland v. Yick, 870. TABLE OE' CASES 1179 [references Portland Savings Bank v. City of Evansville, 411, 417, 560. Portsmouth Savings Bank v. Vil- lage of Ashley, 298, 372, 374, 503, 506. Posey Township, Franklin County, v. Senour, 12. Post V. Pulaski County, 67, 238, 282, 287, 510, 594, 604, 669, 678. Potsdam Electric Light & Power Co. V. Village of Potsdam, 220. Potter V. Black, 888, 889. V. ChaflFee County, 427, 615. V. City of New Whatcom, 889, 890, 926. V. Douglass County, 129, 135, 905. V. Greenwich, 737. V. Lainhart, 256, 285, 289, 292, 303, 304, 358, 485, 487, 671, 674, 681. Poughkeepsie, City of, v. Quintard, 432, 436. Powell V. City of Madison, 437. V. Com'rs Court of Madison County, 421. v. Heisler, 350, 484. V. Sup'rs of Brunswick County, 237. V. Town of Providence, 190. Prairie, Town of, v. Lloyd, 373, 375, 834. Prairie School Township v. Haseleu, 119, 37S. Pratt V. Luther, 365. Prescott Irrigation Co. v. Flathers, 330. Presidio County v. City Nat. Bank, 38, 260, 363, 664, 713. V. Noel- Young Bond & Stock Co., 455, 530, 531, 556, 565, 573, 595, 615, 634, 652, 803, 1062, 1067. Presque Isle County Sup'rs v. Thompson, 38. Preston v. Sturgis Milling Co., 307. ARE TO pages] Prettyman, People ex rel., v. Board of Sup'rs, 341, 353, 697. Prickett v. Marceline, 366, 615, 638, Prime v. McCarthy, 885. Prince v. City of Quincy, 135, 147, 222, 333. v. Crocker, 34, 224. Pritchard v. Magoun, 231. Proctor, State ex rel., v. Walker, 434. Proprietors of Mt. Hope Cemetery V. City of Boston, 73. Providence, City of, v. Providence Electric Light Co., 204, Provident Life & Trust Co. v. Mer- cer County, 343, 378, 604, 635, 659, 661. Pruyn v. Milwaukee, 404. Pryor v. City of Kansas City, 229. Pueblo, City of, v. Dye, 731. Pugh V. Moore, 136, 457, 668, 698. Pulaski County v. Lincoln, 913, 920. Purcell V. City of East Grand Forks, 209, 366. Purdy V. Town of Lansing, 239, 242. Putnam v. City of Grand Rapids, 151. Quaker City Nat. Bank v. City of Tacoma, 890, 916. V. Nolan County, 171, 358, 303, 507, 617, 777. Queensbury, Town of, v. Culver, 194, 232, 237, 356, 358, 393, 494, 555, 803. Queens County Sup'rs v. Phipps, 338. Quilici v. Strosnider, 51 Quill V. City of Indianapolis, 137, 149. Quincey, etc., Ry. Co. v. Morris, 133. Quincy, City of, v. Cooke, 64, 679, 680. V. Warfield, 383, 416, 417, 434. Quinlan v. Greene County, 445. Quint V. City of Merrill, 84. 1180 TABLE OF CASES [references R Rader v. Southeasterly Road Dist. of Union, 74. Radford, City of, v. Heath, 175, 347. Rae V. City of Flint, 77. Rahway Savings Institution v. City of Rahway, 358. Railroad Co. v. Blanchard, 337. V. Com'rs of Paola Twp., 437. V. County of Otoe, 53, 228, 343, 266. V. Dunn, 326. V. Evansville, 550. V. Johnson, 729. Rainsburgh Borough v. Ryan, 357, 784. Ralls County v. Douglass, 38, 120, 134, 199, 336, 343, 356, 548, 818, 826. Ralls County Court v. United States, 654, 746, 752, 843, 848, 849. Rambo v. Larrabee, 68. Ramsay v. Town of Marble Rock, 329. Ramsey v. City of Shelbyville, 204. Randolph County v. Post, 98, 347, 696. V. Ralls, 713. Ranger v. New Orleans, 739. Ranney v. Rader, 237, 294, 299. Ransom v. Real, 712. V. City of Pierre, 653. V. Rutherford County, 317, 250, 866. Rapp V. Venable, 70. Rathbone v. Board of Com'rs of Kiowa County, 142, 171, 174, 183, 197, 461, 500, 518, 550, 615, 627, 628, 817. ' V. Hopper, 434. Raton Water Works Co. v. Town of Raton, 90, 146, 914, 933, 925, 926. Ranch v. Chapman, 136, 365, 267, 906. ARE TO pages] Ravenswood, S. & G. R. Co. v. Town of Ravenswood, 240, 243. Ray V. School Dist. No. 9, Caddo County, 143. V. Wilson, 886, 894, 900, 902, 922. Ray County v. Vansycle, 235, 334, 391, 548, 661. Raymond v. People, 900. Rea V. City of Lafayette, 284. Read v. City of Buffalo, 911. V. City of Plattsmouth, 188, 6.74, 675, 678. V. Mississippi County, 937. Reclamation District v. McPhee, 28. V. Turner, 8. Redd V. Henry County Com'rs, 332. Redding v. Esplin Borough, 146. Redfoot Lake Levee Dist. v. Daw- son, 230. Redlands, City of, v. Brook, 107, 674, 677, 679. Redmon v. Chacey, 888. Redondo Beach, City of, v. Gate, 765. Red River Furnace Co. v. Tennessee Cent. R. R. Co., 192, 266, 274, 284, 287, 395, 383, 670, 679. Red River Valley Nat. Bank v. City of Fargo, 891, 916, 926. Red Rock v. Henry, 873. Reed v. City of Cedar Rapids, 174, 195, 307, 264. V. City of Plattsmouth, 632. V. Mississippi County, 912. V. Town of Orleans, 497. Reed City, Village of, v. Reed City, etc., Works, 91, 98. Rees V. City of Watertown, 339, 699, 799, 838, 845, 855, 857. V. Kranth, 277. V. Olmstead, 646. Rehmke v. Goodwin, 208. Reilly v. City of Albany, 890. Reineman v. Covington, etc., R. R. Co., 202, 225, 330, 628. Reis v. City of New York, 54. V. State, 564, 576, 699. TABLE OF CASES 1181 [ebfeeences Removal Cases, 797. Render v. City of LouisTille, 860. Rensselaer County Sup'rs v. Weed, 933. Renwick v. Davenport & N. W. R. R. Co., 233. Revell V. City of Annapolis, 189. Revere Water Co. v. Inhabitants of Town of Winthrop, 222. Rex V. Bedford Level, 120. Reynolds v. City of Waterville, 141, 151, 153, 333. V. Lyon County, 207, 428, 433, 628, 632, 784. Reynolds & Henry Construction Co. V. City of Monroe, 290, 296. Rhode Island Hospital Trust Co. v. Armington, 876. Rhodes v. City of Louisville, 371. V. Love, 8. Rice V. City of Milwaukee, 130, 155, 204. V. Gwinn, 886. V. Shealy, 723. V. Trustees of Hayvcard, 91. Rich V. Mentz Township, 119, 269, 388, 427, 510, 567, 696, 1047. Richardi v. Village of Bellaire, 302. Richards v. Hammer, 68. V. Klickitat County, 423, 487, 910. V. Town of Clarksburg, 78. V. Village of Belair, 222. Richardson v. Boske, 35. V. City of Brooklyn, 933. v. Lawrence Coimty, 445, 494. V. Sup'rs of Lyon County, 333. V. Marshall Co., 174, 337, 488, 698. V. McReynolds, 186. Richeson v. People, 200. Richmond v. Crenshaw, 327. V. McGirr, 103, 127, 935. Richmond Cemetery Co. v. Sullivan, 425, 432. Richmond, etc.. County v. Town of West Point, 104, 108. ARE TO pages] Riggs, United States ex rel., v. John- son County Sup'rs, 339, 554, 752, 834, 838, 843, 844, 915. Riley v. Carrico, 133, 140, 174, 179. v. Garfield Township, 179, 420, 423, 536, 542. Ring V. Johnson, 389. Rippe V. Becker, 227. Risley v. City of Utica, 309. V. Village of Howell, 170, 344, 504, 565, 585, 589, 594, 1065. Ritchie v. Franklin County Com'rs, 664, 671, 680. River Rouge, Village of, v. Hosmer, 328. Riverside County v. San Bernardino County, 34. Bobbins v. Hoover, 88, 97. V. Lincoln County Ct., 912. V. School Dist. No. 1, 935. Roberts v. City of Cambridge, 86, 98. Town of, V. Bolles, 275, 288, 450, 549, 604, 606, 695, 806. Roberts & Co. v. City of Paducah, 349, 412, 418, 503, 704, 736, 740. V. Taft, 484, 486, 487. Robertson v. Blaine County, 33, 856. V. Breedlove, 174, 192. V. City of Staunton, 195, 201, 202, 208. V. Library Trustees of Alameda, 140. V. Preston, 316. Robinson v. City of Goldsboro, 229, 264, 273. V. Lee, 165. Robinson-Humphrey v. Wilcox Coun- ty, 489. Rochester, City of, v. Quintard, 734. Rochford v. School Dist. No. 11, 914. Rock Creek, Township of, v. Strong, 263, 296, 368, 604, 736. Rockefeller v. Taylor, 316. Rock Island County Sup'rs v. United States, 259, 915. Rockwall County v. Roberts County, 143, 1182 TABLE OF CASES [references Bodman v. Town of Washington, 690, 870. Roe V. Town of Phillippi, 904. Rogan V. Watertown, 233, 238, 411, 417. Rogers v. Board of Com'rs of Le Sueur County, 118, 174, 204. V. City of Burlington, 51, 93, 181, 184, 400, 531, 837. V. City of Keokuk, 233, 670, 839. V. City of Omaha, 888. V. City of St. Paul, 319. V. Independent School Dist. of Colfax, 530. V. Rochester, etc., R. R. Co., 672. V. Runyan, 340. V. Trustees Graded School, 210. V. Walsh, 536. Rollins V. Lake County, 133. V. Rio Grande County Com'rs, 200, 902. Rollins & Sons, E. H., v. Board of Com'rs of Gunnison County, 461, 530, 531, 565, 588. Rolph V. City of Fargo, 307, 319. Rome, City of, v. Whitestown Water Works Co., 257, 530, 564, 775. Rondot V. Rogers Township, 231, 304, 356, 358, 363, 446, 462, 549, 606-, 659, 661. Rooney v. Dubuque County, 911, 913. Root V. City of Topeka, 91, 98. Rose V. Estudillo, 888. V. McKie, 747. Rosenbaum v. Bauer, 844. V. San Francisco, 797. Ross V. Lipscomb, 284, 724. Rothschild v. Bantfel, 52. Rouede v. Jersey City, 403. Royster v. Granville County Com'rs, 910. Rozier v. St. Francois, 533. Rumsey v. Town of Sauk Centre, 38. Ruohs V. Town of Athens, 28, 171, 179, 536. ARE TO PAGES] Rushe V. Town of Hyattsville, 186, 328. Rushville Gas Co. v. City of Rush- ville. 111, 219. Russell V. Cage, 211. V. High School Board of Educa- tion, etc., 67. Rutland, Town of, v. Town of West Rutland, 36. Ryan v. Lynch, 472, 689, 695. T. Mayor, etc., of Tuscaloosa, 385, 287, 302, 874. Ryerson v. Uttley, 237. Rylands v. Pinkerman, 861. Sac, County of, v. Cromwell, 460. ■ Sackett v. City of New Albany, 135, 332. Sackrider v. Board of Sup'rs of Sagi- naw County, 867. Sacramento County v. Southern Pac. R. R. Co., 98. Sage v. Fargo Township, 197, 472, 519, 668. Salamanca Township v. Jasper County Bank, 907. Salem, City of, v. Lane & Bodley Co., 712. Saleno v. City of Neosha, 145. Saline County v. Wilson, 884. Salmon v. Rural Independent School Dist. of Allison, 430, 478, 833: Salt Lake City v. Christensen Co., 307. Salt Co. V. Heidenheimer, 536. Saltsman v. Olds, 140. Sampson v. People, 176, 824. San Antonio, City of, v. Alamo Nat. Bank, 890. V. Beck, 134, 135. V. E. H. Rollins & Sons, 487, 490. V. Gould, 363. V. Lane, 475, 531, 566. v. Mehaflfy, 363, 454, 530, 531, 604, 864. V. Tobin, 204, TABLE OF CASES 1183 [references San Diego, City of, v. Dauer, 920. V. Potter, 187, 195, 251, 283, 873. San Diego County v. Riverside Coun- ty, 36. San Diego Water Co. v. City of San Diego, 98. San Francisco Gas Co. v. City of San Francisco, 108, 784. San Juan County Com'rs v. Oliver, 891, 900, 902, 918. San Luis Obispo, City of, v. Hos- kin, 277, 278. San Patricio County v. McCIane, 883, 921. Sanitary Board of East Fruitvale Sanitary Dist., In re, 22, 51. Sandeen v. Ramsey County, 118. Sanford v. City of Tucson, 149. Sandifer v. Foard Co., 259. Sandoz v. Sanders, 35. Santa Anna v. Frank, 838. V. San Buenaventura, 673. Santa Barbara, City of, v. Davis, 350, 873. Santa Cruz, City of, v. Waite, 282, 418, 422, 508, 795, 843. Santa Cruz County v. Barnes, 75. Santa Cruz R. R. Co. v. Santa Cruz County Com'rs, 340. Santa Monica, City of, v. Los An- geles County, 12. Sargent v. Board of Education, 218. v. Clark, 24, 54, 72. Satterlee v. Strider, 341, 374. Sauer v. Town of Gillett, 634. Saunders, State ex rel., v. Kohnke, 753. Savage v. City of Tacoma, 151. V. Mathews, 938, 930. V. Sternberg, 930. Savannah, City of, v. Kelly, 99, 233, 873. Savings Bank v. National Bank, 442. Sawyer v. Colgan, 721, 893. V. Manchester & K. R. Co., 242, 245. V. Parish of Concordia, 55, ABE TO pages] Sayles v. Garrett, 457. Sayre v. Wheeler, 354. Sayre Borough v. Phillips, 77. Schaeffer v. Bonham, 116, 660. V. Burham, 689. Schigley v. City of Waseca, 51. Schmid v. Town of Genoa, 472. V. Village of Frankfort, 378, 459. Schmitz T. Special School Dist. of Little Rock, 176, 335, 765. V. Zeh, 195, 630, 659, 664. Schneck v. City of Jeffersonville, 218, 533, 671, 678. Schneider v. City of Menasha, 89. Schnell v. City of Rock Island, 90, 147, 151, 659, 663, 664. Schonweiler v. Allen, lOT, 326, 347. School City of Marion v. Forrest, 13, 310. of Rushville v. Hayes, 190. School Directors of Aliquippa, In re, 37. School District v. First Nat. Bank of Xenia, 354. V. Insurance Company, 190. V. Chapman, 467, 473, 478, 598, 865. V. Cushing, 346, 350, 434, 456, 730. V. Greenfield, 31. V. Lombard, 893. V. Reeve, 914. V. State, 179, 536. v. Stone, 581, 585. V. Stough, 896, 926, 933. V. Western Tube ConS^any, 204, 217, 888, 899, 905. Schreiber v. Langlade County, 31. Schuerman v. Territory, 410. Schulenburg & Boeckler Lumber Co. V. City of East St. Louis, 890, 915. Schultze V. Township Committee of Manchester Township, 355, 276. Schuyler County v. People, 263. V. Thomas, 235. Schwartz v. Wilson, 305. Schwartze v. City of Camden, 83, 1184 TABLE OF CASES [eefeeences Scipio, Town of, v. Wright, 38, 237, 265, 272, 484, 517, 550, 556, 559, 576, 605. Scofield V. City of Council Bluffs, 763. Scotland County v. Thomas, 53, 235, 400, 548. Scotland County Court v. United States ex rel. Hill, 175, 199, 404, 460, 473, 544, 746, 817. Scott V. City of Davenport, 333. V. City of La Porte, 151, 333. V. Hayes, 382. V. School Directors of Armstrong, 918. V. Village of Saratoga Springs, 51. Scottish Union and National Ins. Co. V. Bowland, as Treasurer, etc., 875. Scott's Ex'rs V. City of Shreveport, 93, 932. Scranton v. Hyde Park Gas Co., 911. Scruggs V. Underwood, 889. Sears v. Board of Street Com'rs of the City of Boston, 334. V. Steele, 328. Seaside Realty & Improvement Co. V. Atlantic City, 252. Seattle, City of, v. Stirrat, 118, 126. Seattle Dock Co. v. Seattle & L. W. Waterways Co., 216, 1035. Second Nat. Bank v. School Dist. of Connellsville, 816. Second Ward Savings Bank v. City of Hurpn, 416, 594, 659. Sedgewick County v. Bunker, 36. Sehorn v. Williams, 885. Seibert v. Lewis, 55, 57, 259. Seitzinger v. Borough of Tamaqua, 81, 220. Selma, etc., R. R. Co., Ex parte, 340. Seton V. Hoyt, 911, 912. Seward v. Revere Water Co., 189, 364, 274. V. Town of Liberty, 95. Seward County Com'rs v. Aetna Life Ins. Co., 903. AEB TO PAOES] Seybel v. National Currency Bank, 482. Seybert v. City of Pittsburg, 184, 531, 534. Seymour v. City of Orange, 70. v. City of Spokane, 911. V. City of Tacoma, 279, 283, 285, 333. V. Frost, 395, 396. Shannon v. City of Huron, 417, 418, 905, 925, 936. Shapleigh v. City of San Angelo, 38, 29, 44, 535. Sharp V. City of Mauston, 915. V. Contra Costa County, 414. Sharpless v. City of Philadelphia, 24, 213. Shattuck V. Smith, 874. Shaw V. Independent Dist. of River- side, 427, 433, 476, 615. v. Statler, 925. Shawnee County Com'rs v. Carter, 674, 883. Shearer v. Board of Sup'rs of Bay- County, 678. Sheboygan County v. Parker, 119, 354. Sheerer v. Edgar, 900. Sheffield School Twp. v. Audress, 928, 933. Sheidley v. Lynch, 937. Shelby County v. Jarnagin, 349, 646. Shell V. Carter County, 397. Shelly V. St. Charles County Court, 739, 925. Shepard v. Tulare Irrigation Dist., 769, 830. Shepherd v. Helmers, 936. Sheridan v. City of New York, 89. V. City of Rahway, 934. Town of, v. Stahl, 497. Sherlock v. Village of Winnetka, 317, 326, 336, 382, 488, 494, 495, 743. Sherman, City of, v. Smith, 888, 904. Sherman County v. Simons, 13, 190, 513, 586, 612, 615, 685. 636. TABLE OF CASES 1185 [references Shinbone v. Randolph County, 393. Shipley v. Carroll, 373. V. Hacheney, 888, 911, 913, 921, 927. Shipman v. Forbes, 898. Shirk V. Pulaski County, 893, 922. Shively v. Bowlby, 876. Shock V. Colorado County, 930. Shoemaker v. Goshen Township, 175, 662. V. United States, 852. Short V. Gouger, 10. Shorten v. Green County, 304. Shoshone County v. E. H. Rollins & Sons, 306. V. Profit, 34, 35, 37. V. Thompson, 35. Shotwell T. City of New Orleans, 890. Shurtleff v. Inhabitants of Wiscas- set, 562, 696. Sibley v. City of Mobile, 199, 746, 842, 855. Sidway v. South Park Com'rs, 496. Sierra County Com'rs v. Dona Ana County Com'rs, 38. Silliman v. Fredericksburg, 171. Silsby Mfg. Co. v. City of Allen- town, 98. SilTa V. City of Newport, 765. Simmons, Ex parte, 10. V. Davis, 914, 918. Simon v. Independent School Dist. (5f Allison, 463. Simons v. City of Eugene, 90, 145, 758. Sims, Ex parte, 102, 103. Sinclair v. Brightman, 756, 758, 765. Singer Mfg. Co. v. City of Elizabeth, 736. Sinton v. Carter County, 730. Sioux City v. Weare, 98, 713, 730. Sioux City & St. Paul Ry. Co. v. Osceola County, 427, 457, 478. Sisk V. Cargile, 412, 767, 872. Sisson V. Board of Sup'rs of Buena Vista County, 765. p. s.— 75 ARE TO PAGES] Sixth District Agricultural Associa- tion V. Wright, 12. Skinker v. Butler County, 744. Skinner v. City of Santa Rosa, 275, 724, 726. V. Franklin County, 796. V. Platte County, 912. Slack V. Blackburn, 269. Slattery & Horgan v. City of New York, 118. Slaughter v. Mallett Land & Cat- tle Co., 98. V. Mobile, 92. Slayton v. Rogers, 410. Slifer V. Howell, 476. Slingerland v. City of Newark, 882, Sloan V. State, 26. Slutts V. Dana, 8, 331, 339, 431, 533, 758. Smalley v. Yates, 339, 341, 488. Smallwood v. Lafayette County, 932. Smith V. Appleton, 330. V. Biesaida, 8. V. Board of Com'rs of Hamilton County, 149, 310. V. Board of Trustees, etc., 13, 172, 175. V. Borough of Hightstown, 23, 71. V. Bourbon County Com'rs, 339. V. Broderick, 205. V. City of Appleton, 74, 331. V. City of Dublin, 276, 279, 293, 370. V. City of Fresno, 145. V. City of Macon, 865. V. City of Madison, 85, 103, 111. V. City of Nashville, 220. V. City of Newbern, 218. V. City of Philadelphia, 91, 94, 98. V. City of Seattle, 719, 765. V. City of St. Joseph, 132. V. City of Vicksburg, 210. V. Coiinty of Clark, 240, 390, 400, 593, 604, 806. V. County of Sac, 403, 819, 832. V. Epping, 932. 1186 TABLE OF CASES [eeperences Smith V. Gouldy, 303. V. Inhabitants of Danville, 11. V. Inhabitants of Dedham, 145. V. Los Angeles County, 496. V. Madison Parish, 174, 932. V. McNair, 526. V. Mercer County, 421, 425. V. Milton, 208. V. New Orleans, 160, 442. V. Ontario, 474. V. Police Jury of Claiborne Par- ish, 269. V. Polk County, 896, 926, 927. V. Stephan, 420, 426. V. Stevefts, 307. V. Tallapoosa County, 393, 544. V. Tobenor, 862. V. Town of Belhaven, 290, 523. V. Town of Epping, 118, 357, 896. State ex rel., v. City of Neosha, 152. Smeltzer v. White, 898. Smythe v. Inhabitants of New Providence Township, 363. Snell V. Bridgewater, etc., 872. Snelling v. Joffrion, 887. Snyder v. Baird Independent School Dist. 335. v. Board of Trustees, etc., 290. V. Kantner, 335, 432. Snyder Township v. Bovaird, 896, 930. Society for Propagation of the Gos- pel V. New Haven, 8. Society for Savings v. Board of Com'rs of Pratt County, 419. V. New London, 236, 662. Solon, Town of, v. Williamsburg Savings Bank, 272, 347, 365, 432. Somerville, City of, v. Dickerman, 84. Sommercamp v. Kelly, 282. Soper v. Henry County, 11. Soule V. City of Seattle, 888, 913. ' V. McKibben, 154. ARE TO PAGES] Soule V. Town of Ocosta, 891. South Bend, City of, v. Lewis, 292, 294. Southern Audit Co. v. McKenzie, 918. Southern Kansas & Pac. R. Co. v. Towner, 235, 246. Southern Pac. E. R. Co. v. United States, 648. Southern Railway Company v. Board of Com'rs of Buncombe County, 81, 315. V. Board of Com'rs of Mecklen- burg County, 338, 770. V. Hartshotne, 234. V. St. Clair County, 311. Southerland v. Town of Golds- borough, 293. South Hutchinson, City of, v. Bar- num, 565, 642. Southold Savings Bank v. Board of Education, 810. South Ottawa, Town of, v. Perkins, . 170, 474, 551, 660, 673, 689, 868, 869. South Portland, Town of, v. Town of Cape Elizabeth, 35. South St. Paul, City of, v. Lamp- recht Bros., 192, 231, 532, 589, 607, 738, Southwestern Telegraph & Tele- phone Company v. City of Dal- las, 24. Southworth v. City of Glasgow, 143, 281. South Yuba Water Co. v. City of Auburn, 922. Sowens v. City of Racine, 229. Sower V. Philadelphia, 301. Spalding County v. W. Chamberlain & Co., 266. Sparks v. Bdhannan, 437. Spaulding v. City of Lowell, 83. ;j v. Inhabitants of Peabody, 220. ' Spears v. City of New York, 80. Specht V. City of Louisville, 70. TABLE OF CASES 1187 [references Speer v. Board of Com'rs of Kear- ney County, 28, 34, 38, 565, 826, 829, 883, 886, 892, 893, 902, 903, 922. Spencer v. City of Clarkesville, 370, 371. V. Merchant, 320, 794. Spillraan v. Parkeraburgh, 135, 151, 333. Spitzer v. Village of Blanchard, 565, 575, 610, 647. V. Village of Fulton, 295. United States ex rel., v. Town of Cicero, 748, 851. Spooner v. Holmes, 391, 478. Town of, V. Town of Minong, 33. Spring Creek Drainage Dist. v. El- gin, etc., Ry. Co., 719, 765. Springer v. Clay County, 898. Springfield, City of, v. Edwards, 129, 137, 330, 332, 882, 905. V. Weaver, 939. Springfield, etc., R. R. Co. v. Cold Springs Twp., 695. Springfield Safe Deposit & Trust Co. V. City of Attica, 511, 517, 550, 615, 674, 675. Springport, Town of, v. Teutonia Savings Bank, 271, S37, 664. Spring Valley Swamp, In re., 330. Sprott V. United States, 909. Stackhouse v. Ifowland, 287. Stafford v. Chippewa Valley Electric Ry. Co., 86'l. Stallcup V. City of Tacoma, 544, 548. Stambaugh, Township of, v. Treas- urer of Iron County, 53. Stanley v. McGeorge, 130. Staples V. City of Bridgeport, 107. Starin v. Genoa, 265, 593. V. Town of Granada, 576. State V. Adams County, 227. V. Allison, 489, 935, 926. V. Ames, 196. V. Anderson County, 117, 349, 663. ARE TO PAGES] State V. Atkin, 64. V. Atkinson, 884. V. Babcock, 103, 104, 111, 119, 143, 185, 211, 229, 231, 270, 280, 302, 332, 366, 416, 576, 935. V. Bacon, 536, 870. V. Bank of Washington, 393. V. Barker, 9, 16. V. Barnes, 317. V. Baron, 747. V. Barret, 927, 930. V. Barry, 911. V. Bartley, 888. V. Benton, 196, 329, 251, 294, 421. V. Bergen, 337. V. Board of Com'rs of Clinton County, 237. V. Board of Com'rs of Marion County, 13, 64, 306, 309. V. Board of Com'rs of Newton County, 305. V. Board of Com'rs of Scott County, 661. V. Board of Com'rs of Shawnee County, 230, 758. V. Board of Com'rs of Vander- burgh County, 331. V. Board of Com'rs of Wichita County, 575, 589, 616, 636. V. Board of County Com'rs, 317. V. Board of County Commission- ers of Spokane County, 23. V. Board of Education of Perrys- burg, 566, 577, 635. V. Board of Liquidation, 341, 414, 770, 771, 921. V. Board of Liquidation of City Dept., 135, 417, 423. V. Brasfield, 393. V. Braxton County Court, 310, 753. ' V. Brock, 45. V. Brown, 674. V. Browne, 36. V. Bruce, 59. V. Buchanan, 497. 1188 TABLE OF CASES [repeeences state V. Buckles, 885. V. Burke, 926. V. Bntler, 84. V. Byrne, 753. V. CaflFery, 222. V. Campbell, 926. V. Candland, 1029. V. Cape Girardeau County Ct., 714. V. Carbon County, 279, 284, 288. V. Cardoza, 160, 781, 93Q. V. Carroll, 120. V. Cascade County Com'rs, 714. V. Cederaski, 23. V. Cherry County, 281. V. Chittenden, 341. v. City Council of Montgomery, 456, 604. V. City of Bayonne, 217. V. City of Birmingham, 40. V. City of Blaine, 422. V. City of Bristol, 310, 747. V. City of Cincinnati, 310, 681. V. City of Clay Center, 280. V. City of Elizabeth, 492. V. City of Great Falls, 102, 146, 310. V. City of Hastings, 245. V. City of Helena, 92, 148. V. City of Lawrence, 10, 64, 67, 189, 317. V. City of Madison, 56. V. City of Milwaukee, 714. V. City of Minneapolis, 82, 242, 246. V. City of Mobile, 49. V. City of Montgomery, 565. V. City of Morristown, 240, 243, 342. V. City of Newark, 170. V. City of New Orleans, 714, 892. V. City of Pullman, 90, 265. V. City of St. Louis, 80. V. City of Toledo, 189, 229. V. City of Topeka, 266, 270. v. Clark, 300, 888. ABE TO PAGES] State V. Clausen, 18. V. Clay Center, 335. V. Clay County, 914. V. Clement Nat. Bank, 308. T. Clinton County, 394, 456, 886. V. Coflfrey, 190. V. Collins, 884. V. Commissioners, 575, 577, 584. V. Com'rs of Anderson County, 342. V. Com'rs of Hancock County, 697. V. Com'rs of Wabaunsee County, 332. V. Common Council of Madison, 250. V. Common Council of Toma- hawk, 128, 140, 243. V. Cook, 888, 894, 896. V. Cooley, 68. V. Cornell, 213, 419. V. Corzilius, 931. V. County Debt of Davis County, 863. V. County of Dakota, 599, 663. V. County of Dorsey, 50. V. County of Reno, 271. V. Crow Wing County Com'rs, 40. V. Curators of State University, 293. V. Davis, 251, 415. V. Denny, 11. V. Dickerman, 675, 784, 898. V. Douglas, 125. V. Edwards, 84, 311. V. Eldridge, 309. V. Evans, 270. V. Farmer, 891. V. Fayette County Comm'rs, 127, 229, 508. V. Fidelity, etc. Co., 875. V. Fisher, 935. V. Flanders, 416. V. Foley, 59. V. Forest County, 23. TABLE OP CASES 1189 [references state V. Frear, 51. V. Funding Board, 927. V. Gardner, 926, 927. V. Gardozo, 770. V. Garronte, 548. V. Gerdink, 12. V. Getchell, 669. V. Graham, 129, 199. V. Grant, 928. V. Grefe, 74. V. Groth, 69. V. Gunn, 866. V. Haben, 52. V. Hallock, 885, 892. V. Hancock County, 332. V. Hannibal & St. Jo. R. R. Co., 438. V. Harris, 293, 342. V. Hart, 126, 380, 457. V. Headlee, 886. V. Heber City, 209, 276. V. Henderson, 29. V. Hickman, 887, 911. V. Hodapp, 765. V. Holladay, 438. V. Hopkins, 155. V. Hordey, 696. V. Horn, 665. V. Home, 635. V. Horstman, 925. V. Jennings, 340. V. Johns, 119. V. Johnson, 889, 935. V. Kansas City, 196, 209, 328. V. Kansas City, etc., Ry. Co., 316. V. Kelly, 315, 892. V. Kenney, 885, 886, 887. V. Kern, 91. V. Kersten, 71. V. King County, 229. V. Kiowa County Com'rs, 38, 696. V. Lake City, 346. V. Lamprey, 889. V. Lancaster County, 140. V. Laramie County Comm'rs, 130. V. Lewis, 891, 896. ARE TO pages] state V. Lincoln County Com'rs, 317, 393. V. Lindsley, 885, 887. T. Little Rock, etc., R. R. Co., 286. V. Lowe, 52. V. Lytton, 189, 218, 866. V. Macon County Court, 749. V. Madison, 354. V. Marlowe, 197. V. Mason, 310. V. Mayes, 381. V. Mayo, 23. V. McSride, 740. V. McDonald, 23. V. McGraw, 218. V. Mcllraith, 886. V. McMillan, 257, 367, 1005. V. McNutt, 37. V. Melcher, 896. V. Melton, 923, 926. V. Metschau, 920. V. Millar, 71, 239, 263, 264, 285, 289, 295, 733, 775, 891, 923. V. Minneapolis, 240, 241. V. Mississippi Bridge Co., 313, 315. V. Missouri, etc., Ry. Co., 316. V. Mitchell, 663. V. Moore, 193, 353, 354, 423, 438, 885. V. Moriarity, 251. V. Morton, 898. V. Moss, 765, 889. V. Nealy, 233. V. Nelson County, 350, 313. V. Newark, 171, 675. V. Nichols, 973. V. Nohl, 863. V. Norvell, 714. V. Omaha Nat. Bank, 901, 928. V. Orr, 863. V. Owsley, 310. V. Parkinson, 59, 883, 905. V. Payne, 924. V. Peele, 117. V. Perry, 218. 1190 TABLE OF CASES [references state V. Perrysburg, 494. V. Pickett, 434. V. Pierce, 891. V. Pillsbury, 898, 984. V. Poulin, 124. V. Powers, 175. V. Quayle, 209. V. Rathburn, 395, 719, 765. V. Rice, 765. V. Rickards, 889. V. Rives, 933. V. Rogers, 189, 861. V. Roggen, 280, 283, 333, 349, 366. V. Rose, 433. V. Royce, 313. V. Rube, 189, 394. V. Sabin, 926. V. Sabine County Court, 330. V. Saline County Court, 376, 332, 344, 544, 604, 696. V. Salt Lake City, 274, 288, 303, 873. V. Sanderson, 607. V. School District, 519, 598, 600. V. School Dist. No. 1 of Cascade County, 376, 379. V. School Dist. No. 3, 349. V. School Dist. No. 5 of Barnes County, 265. V. School Dist. No. 7, 536. T. School Dist. No. 13, 296. V. School Dist. No. 16, 186. V. School Dist. No. 50, 499, 598. V. Searle, 175, 309. V. Seibert, 887. V. Several Parcels of Land, 28. V. Sherman, 886. V. Shortridge, 851. V. Shufford, 40. V. Smith, 83, 861, 885. V. Southern Ry. Co., 323. V. Spartanburg, etc., JL R. Co., 394. V. Spinney, 911. V. State Treasurer, 889. V. Stewart, 913. ABE TO PAGES] state V. Stout, 911. V. Sup. Ct. of Whatcom County, 150. V. Suwannee County Com'rs, 38, 372. V. Swan, 870. V. Switzler, 213. V. Tampa Water Works Co., 80, 83, 193, 222. V. Tappan, 53. V. Terre Haute, 217. V. Thompson, 911. V. Thorn, 839. V. Tolly, 265. V. Town of Clark, 300. V. Town of' Columbia, 205. V. Town of Genoa, 174, 349. V. Town of Newberry, 269. V. Traumel, 758, 761, 853. V. Trenton, 190. V. True, 91, 98. V. Trustees of Town of Pacific, 913. V. Tryon, 300. V. Union Township, 696. V. Van Horn, 660, 664. V. Van Wyck, 930. V. Village of Harris, Chisago County, 40. T. Village of Perrysburg, 349. V. Walbridge, 85. V. Walker, 920. V. Wall, 230. V. Warren County Comm'rs, 228. V. Webber, 84. V. Weir, 204, 205. V. Wells, 478. V. West, 433. V. Weston, 174, 281. V. Wheadon, 243. V. Whiteside, 340, 341, 673, 675, 681. V. Whitney, 39. V. Wichita County Com'rs, 467, 565, 595. V. Wilkinson, 437, 663. TABLE OF CASES 1191 [refeebnces state V. Williams, 91, 256. V. Wilson, 889, 928. V. Windle, 111, 987. V. Wright, 888. V. Yankee, 40. V. Young, 521, 911, 931. V. Ziegler, 303. State Bpard of Equalization, In re, 388. State Bonds, In re, 189. State ex rel. Applegate v. Taylor, 13, 230. Ark. So. R. E. Co. v. Knowles, 276. Board of Liquidation v. Brede, 90, 497. Carrollton Scliool Dist., etc. v. Gordon, 367. Case V. Wilson, 76, 84. Chillicothe v. Gordon, 873. City of Bethany v. Allen, 384. City of Carthage v. Gordon, 209, 280, 382, 704, 740, 780. City of Centralia v. Wilder, 118, 196. City of Chillicothe v. Gordon, 196, 873. City of Chillicothe v. Wilder, 319, 381, 285. City of Columbia v. Allen, 305, 333, 257, 277, 385, 783. City of Columbia v. Wilder, 138. City of Joplin v. Wilder, 284, 758. V. Clifford, 84. Dickason v. Marion County Court, 129. Dickinson v. Neely, 673. Edmunds v. Capdevielle, 887. Egger V. Payne, 906. Gentry v. Village of Dodson, 81. Helena Water Works Co. v. Hel- ena, 138. Hopper V. Cottengin, 834. Jones V. Froelich, 133, 387. Kirtley v. Shell, 936, 937. Knollraan v. King, 148, 193. ARE TO PAGES] State ex rel. Livesay v. Harrison, 930. Major V. Ryan, 70. Marshall v. Bugg, 230. Pfister V. Manitowoc County, 839. Proctor V. Walker, 424. Saunders v. Kohnke, 753. Smith V. City of Neosha, 153. Town of Canton v. Allen, 319, 280, 280, 285, 288, 874. Utick V. Comm'rs of Polk County, 230. Wheeler v. Adams, 911, 918. Witmer v. Conrad, 107, 371. Wolfe V. Parmenter, 881. Wright V. Hortsman, 765. State of Kansas v. State of Colo- rado, 330. of Louisiana v. City of New Or- leans, 56, 57, 754. V. Pilsbury, 55. V. Police Jury of St. Martin's Parish, 57. V. United States, 59. of Minnesota v. Duluth & I. E. R. Co., 55. V. Farmers and Mechanics Sav- ings Bank, 876. of Wisconsin v. Torinus, 99. Statehouse Bills, In re, 893. State House Bonds, In re, 1016. Statehouse Commission, In re, 885. State Savings Bank v. Davis, 890, 916. State Warrants, In re, 139, 437, 905. Staten Island Water Supply Co. v. City of New York, 87. Statesville Bank v. Statesville, 359. Stebbins v. Judge of Superior Court of Grand Rapids, 294. v. Perry, 366, 283, 660. Stedman v. City of Berlin, 146. Steele County v. Erskine, 88, 671, 674. Stein v. City of Fargo, 334. V. City of Mobile, 309. 1192 TABLE OF OASES [references stein V. Morrison, 139, 959. Steines v. Franklin County, 60, 365, 436, 576, 610, 677. Steitenroth v. City of Jackson, 76. Stephens v. City of Spokane, 884, 891. Stern v. Betlielehem Borough, 389. V. City of Fargo, 76, 84, 364, 376, 377, 278, 384, 873. Stewart v. Custer County, 889, 936. V. Henry County, 740. V. Lansing, 391, 544, 547, 833, 835. V. Otoe County, 932, 935. V. Polk County Sup'rs, 333. Stevens v. Anson, 210. V. City of Spokane, 898. V. Truman, 887. Stillwell V. Jackson, 934. Stites, Town of, v. Wiggins Ferry Company, 331. St. Joseph Board of Public Schools V. Patten, 78. St. Joseph, City of, v. Joseph Water Works Co., 146. V. Pitt, 315. St. Joseph Township v. Rogers, 51, 233, 391, 393, 589, 603, 604, 609, 673, 679, 686. St. Lawrence Township v. Freeman, 617. V. Furman, 511, 530. St. Louis, City of, v. East St. Louis Gaslight & Coke, 147. V. Mortman, 71. St. Louis County Com'rs v. Nettle- ton, 730. St. Louis, etc., R. R. Co. v. People, 261, 306, 317. St. Louis Nat. Bank v. Marion County, 924. Stock Co. & Mound City Land v. MUler, 230. Stockton V. Powell, 290, 295, 363, 861. ABE TO pages] Stockton & V. R. Co. v. City of Stockton, 244. Stoddard v. Benton, 884. Stokes V. Gallaway, 71. V. Scott County, 233. Stoll V. Johnson County Com'rs, 931. Stone V. Bevans, 90. V. City of Charleston, 30, 37. V. City of Chicago, 137, 131, 139, 140, 155, 196, 251, 422. V. Gregory, 278, 389. Stoughton, Inhabitants of, v. St. Paul, 354, 355, Stoutenburgh v. Hennick, 75. St. Paul Gas Light Co. v. Village of Sandstone, 28, 485, 494, 536, 565. St. Petersburg, City of, v. English, 24, 484. Stratton v. Com'rs Court of Kin- ney Co., 187, 359, 329, 336, 443, 896. V. Green, 883. Straw V. Harris, 36, 51, 140, 175, 176. Street v. Com'rs of Craven, 496, 700. V. Varney Electrical Supply Co., 53. Strickler v. Yager, 383, 397. Strieb v. Cox, 764. Strock V. City of East Orange, 250. Strodtman v. Menard County, 263. Strong v. District of Columbia, 730, 934. Stronger v. Franklin Co., 97. Stroud V. Consumer's Water Co., 210. Stryker v. Board of Com'rs of Grand County, 748, 749, 831, 837, 838, 843, 844. Stuart V. Inhabitants of Ellsworth, 124. V. Kirley, 33. V. School Dist. of Kalamazoo, 28. Sturtevant v. City of Alton, 228. V. Inhabitants of Liberty, 894. TABLE OB' CASeS 1193 [references Suffolk Savings Bank v. City of Boston, 496, 508, 740, 741. Sugar V. City of Monroe, 521. Sugar Notch Borough,. In re, 35. Sullivan v. Highway Com'rs, 933. V. Walton, 437. Sully v. Drennan, 339. Summerton v. City of Elizabeth, 68. Sun Mutual Ins. Co. v. Mayor, etc., of New York, 863. Sun Printing & Publishing Ass'n v. Mayor, etc., of New York, 225. Superior, City of, v. Marble Savings Bank, 589, 635, 758. V. Norton, 95. Superior Mfg. Co. v. School Dist. No. 3, Kiowa "County, 661. Supervisors v. Durant, 834. Calhoun County v. Galbraith, 263, 350, 589, 743. Jackson County v. Brush, 330. Marshall County v. Schenck, 556, 659, 661, 663, 680. Portage v. Wis. Central R. R. Co. 176, 233. Rock Island County v. United States ex rel., 193, 550, 654, 750, 848. Susong V. Cokesbury Twp., Abbe- ville County, 34. Sutherland-Inues Company v. Vil- lage of Evart, 89. Sutliff V. Lake County Com'rs, 510, 577, 584, 587, 588, 615, 686, 707. Sutro V. Dunn, 891. V. Rhodes, 576, 630. V. Pettit, 630. Sutter County v. Nieols, 311. Sutton City v. Babcock; 576, 639. Swain v. Seamens, 42. Swan V. City of Arkansas, 298, 299, 303, 418, 688. V. City of Indianola, 81, 90. Swanson v. City of Ottumwa, 153, 184, 185, 428, 499, 790. ARE TO pages] Swanton, Village of, v. Town of Highgate, 76. Sweeney v. Tenn. Cent. R. R. Co., 240. ■ Sweet V. Carver County Com'rs, 930. V. City of Syracuse, 209, 783. V. Hulbert, 213. Swenson v. Town of Mt. Olive, 268. Swift V. Inhabitants of Falmouth, 86. V. Tyson, 373, 557. Sykes v. City Water Company v. Santa Cruz, 222. V. Columbus, 187, 669, 678, 683, 688. Synod of South Dakota v. State, 218. Syracuse, City of, v. Reed, 497. Syracuse Savings Bank v. Seneca Falls, 736. Syracuse Township v. Rollins, 291, 635, 739, 828. Tacoma, City of, v. Titlow, 80. Tacoma Bituminous Paving Co. v. Sternberg, 911. Tagart v. Northern Cent. R. Co., 335. Taggart v. City of Detroit, 218. Talcott V. Parish of Iberville, 256. V. Township of Pine Grove, 232, 318, 549. Tally V. Commissioners' Court, 17. Tandy v. Norman, 891. Tarkio, City of, v. Cook, 302, 863. Tate V. City of Elberton, 103. V. Town of Parkland, 326, 331. Taylor v. Board of Sup'rs, 276. V. Brooks, 926. V. Brownfield, 217, 263. V. Chickasaw County Sup'rs, 898, 918, 920. V. City of Ypsilanti, 232, 843, 544, 549, 550. V. County Court of Braxton County, 918. 1194 TABLE OF CASES [references Taylor V. Daviess County, 457, 632. V. Greenville County Sup'rs, 379. V. Kolb, 341. V. Manson, 203. V. Newberne County Com'rs, 229. V. Pine Grove Tp., Saluda County, 34. V. School Dist. of Garfield, 38. v. Sparks, 277, 278, 288. Taxes Delinquent of St. Louis County, In re, 493. Tax Payers of Webster Parish v. Police Jury, 269, 338. T., C. R. R. Co. & Houston v. Texas, 909. Tehama County v. Siason, 204, 205, 329. Terrell v. Town of Colebrook, 939. City of, v. Dessaint, 258, 882. Terrett v. Taylor, 52. Territory v. Board of Com'rs, 911. V. Board of Commissioners of Santa Fe County, 32, 851. V. Board of Trustees for High School of Logan County, 141. V. Browne, 920. V. Cascade County Com'rs, 38, 912. V. Hopkins, 421, 704, 740, 769. V. Vail, 64. V. Whitehall, 223, 255, 326. Terry v. City of Milwaukee, 939. V. King County, 190, 317. V. Wisconsin, M. & F. Ins. Co. Bank, 57. Texas v. Hardenburgh, 445. V. White, 445, 460. Texas Transp. Co. v. Boyd, 934. Thackston v. Goodwin, 431, 427. Thatcher v. People, 275. Thayer v. City of Boston, 938. v. King, 479. V. Montgomery County, 389, 390. The George W. Elder, 71. Theis V. Board of Com'rs of Beaver County, 496, 497. ARE TO pages] Theis V. Board of Com'rs of Washita County, 264, 839, 888, 914, 915. Thomas v. Board of Sup'rs of Lee County, 269, 275. V. City of Burlington, 132. V. City of Richmond, 166, 883, 909, 936. V. City of St. Cloud, 867. V. County of Morgan, 236, 243, 375, 379. V. Town of Lansing, 170, 688. Thomasville, City of, v. Thomas- ville Electric Light & Gas Co., 277. Thompson v. Board of Trustees of City of Alameda, 80, 81. V. Fellows, 898, V. Lee County, 83, 19S, 225, 373, 391, 400, 403, 544. V. Perrine, 400, 467, 468, 544, 671, 680. V. Perris Irrigation Dist., 839. V. Scanlan, 927. V. Sfearcy County, 893, 913, 914. V. Village of Mecosta, 358, 374, 459, 466, 473, 595, 816. V. Wiley, 56. Thompson-Houston Electric Co. v. City of Newton, 27*3, 336, 345. Thornburgh v. City of Tyler, 195, 363, 363, 769, 855. V. School Dist. No. 3, 143, 374, 510, 629, 632, 661, 689, 824. Thorpe v. Cochran, 934, 935, 926. Thurston County v. Mclntyre, 890. Tidewater Co. v. Coster, 230. Tiffin, City of, v. Griffith, 199. Tillotson V. City of Saginaw, 196. Times Publishing Co. v. Weatherby, 95. Tinkel v. Griffin, 310, 389, 292. Tippecanoe County Com'rs v. Cox, 884, 928. v. Lucas, 75. Tippett v. MoGrath, 329, 337, 346. TABLE OF CASES 1195 [eeferences Tipton V. City of Shelbyville, 193, 211. V. Smythe, 723, 742, 855. Tipton County Com'ra v. Indianapo- lis, P. & C. R. Co., 242. Tipton, County of, v. Locomotive Works, 555, 662. Tobin V. Emmetsburg Tp., 939. Todd V. City of Laurens, 196. Tolaon v. Police Jury of St. Tam- many Parish, 269, 276. Tonawanda v. Lyons, 320. Tone V. Tillamook City, 223. Toney v. City of Macon, 34. Toomey v. City of Bridgeport, 206. Toothaker v. City of Boulder, 804. Topeka, City of, v. Dwyer, 28. Topsliam, Town of, v. Rogers, 108. Tousey v. City of Indianapolis, 95. Towle V. Brown, 31. Town of AeUey v. Town of Vilas, 35. Adell V. Woodall, 234. Alden v. Easton, 263. Andes v. Ely, 271, 273, 533, 635. Aroma v. Auditor of State, 356. Bardwell v. Harlin, 314. Beloit V. Morgan, 649. Bernard's v. Morrison, 644, 646. Big Grove v. Wells, 236. Birch Cooley v. First Nat. Bank of Minneapolis, 240, 243, 245. Bloomfield v. Charter Oak Bank, 98. Brewton v. Spira, 503, 595. Brooklyn v. Aetna Life Ins. Co., 246. Buffalo V. Cambria Iron- Co., 544. Buick V. Buick, 919. Burlington v. Beasley, 227, 248. Canton, State ex rel., v. Allen, 219, 220, 280, 285, 288, 874. Cherry Creek v. Becker, 327, 375, 516, 660. Cioero v. City of Chicago, 30. v. Clifford, 391. v. Grisko, 883. ARE TO pages] Town of Clarksdale v. Broaddus, 281. Clifton Forge v. Alleghany Bank, 522, 560, 595. V. Brush Electric Co., 478. Coloma V. Eaves, 288, 400, 478, 500, 517, 564, 567, 581, 608, 614, 642, 645, 805. Concord v. Portsmouth Savings Bank, 200. V. Robinson, 185, 287, 577, 672, 935. Crowley v. F. R. Fulton Co., 208. Darlington v. Atlantic Trust Company, 192, 233, 516, 662, 842. Decatur v. Wilson, 291, 298. Douglas V. Niantic Savings Bank, 695. Duanesburgh v. Jenkins, 239, 331, 681. Eagle V. Kohn, 246, 344, 379, 517, 576, 577, 584, 637. East Lincoln v. Davenport, 125, 389, 390, 805. Elmwood v. Marcy, 53, 66, 549. Emery v. Town of Worcester, 35, 37. Eminence v. Grasser's Excrs., 659. Enfield v. Jordan, 13, 176, 740, 742, 743. Farley v. Town of Boxville, 35. Fletcher v. Hickman, 460, 822. Genoa v. Woodruff, 401, 403, 404, 405, 605. Gilman, Incorporated, v. Fernald, 784. Gilson V. Dayton, 688. Gosport V. Pritchard, 95. Grand Chute v. Winegar, 460, 698. Grant v. Twp. of Reno, 461. Greenburg v. International Trust Co., 107, 459, 485. Hackettstown v. Swackhamer, 103, 103, 932, 935. Hendersonville v. Jordan, 368, 293. 1196 TABLE OB- CASES [references Town of Humboldt v. Long, 615. Jonestown v. Ganong, 251. Kanlcakee v. McGrew, 127. Kettle Elver v. Town of Bruno, 32, 810. Klamath Falls v. Sachs, 120, 175, 184, 209, 220, 223, 503, 590, 635. Lancaster v. First National Bank, 383, 394. Lansing v. Lytle, 402. Lexington v. Union Nat. Bank, 346, 350, 358, 359, 375, 403, 659, 663, 730. Little Eock v. Merchants Nat. Bank, 786. Lumberton v. John Nuveen & Co., 260, 277, 290. Manitou v. First Nat. Bank, 493, 496. Marinette v. Oconto County Sup'rs, 924. Mentz V. Cook, 272. Middleport v. Aetna Life Ins. Co., 299, 695, 824. Milan v. Tenn. Central R. R. Co., 790. Mill Valley v. House, 251, 347, 873. Mobile V. Watson, 55. Montpclier v. Town of East Montpelier, 24, 37, 49. Mt. Morris v. King, 235. V. Thomas, 235, V. Williams, 403. Mt. Pleasant v. Eeckwith, 24, 31. Murphy t. C. A. Webb & Co., 268. New Buffalo v. Cambria Iron Co., 460. New Iberia v. New Iberia, etc., Drainage Dist., 230. New Providence v. Halsey, 615. Ninety-Six v. Folsom, 565, 589, 606, 635. Ontario v. Union Bank of Roch- ester; 126, 576, 816. ARE TO pages] Town of Oregon v. Jennings, 287, 567, 607, 613, 643. Orleans v. Piatt, 457, 547, 522. Ormond v. Shaw, 54. Pana v. Bowler, 563. Partridge v. Dennie, 37. Plainview v. Winona & St. Peter R. R. Co., 334. Platteville v. Galena, 243. Pontotoc V. Fulton, 7i0, 769. Prairie v. Lloyd, 373, 375, 824. Queensbury v. Culver, 194, 232, 356, 358, 392, 494, 555, 803. Roberts V. Bolles, 604, 606. Rock Creek v. Strong, 296, 368, 736. Rutland v. Town of West Rut- land, 36. Scipio V. Wright, 272, 605. Sheridan v. Stahl, 497. Solon V. Williamsburg Savings Bank, 372, 347, 365, 432. South Ottawa v. Perkins, 170, 474, 551, 660, 673, 868, 869. South Portland v. Town of Cape Elizabeth, 35. Spooner v. Town of Minong, 33. Springport v. Teutonia Savings Bank, 271, 664. Stites V. Wiggins Ferry Com- pany, 231. Stoughton V. Paul, 355. Topsham v. Rogers, 108. Vaughan v. Town of Montreal, 37, 38. Venice v. Murdock, 457, 550, 556, 559, 576, 605, 642. Walnut v. Wade, 607. Walton V. Adair, 771. Washington v. Coler, 193, 350, 688, 736. Waynesville v. Satterthwait, 872. Weyauwega v. Ayling, 354. Windfall City v. First Nat. Bank, 765, 810. Winnimac v. Huddleston, 328. TABLE OF CASES 1197 [references Town of Woodstock v. Gallup, 353. Townsend v. Lamb, 245. Townsend Gas & Elee. Light Co. v. Hill, 889. Township Board of Education v. Carolan, 306. Township of East Oakland v. Skin- ner, 474, 550. of Midland v. County Board of Gage County, 340, 331. of Snyder v. Bovaird, 930. of Stanbaugh v. Treasurer of Iron County, 53. Tracy v. Phelps, 459. Trammell v. Pennington, 64. Trask v. Livingston County, 305, 306, 901. Travelers' Ins. Co. v. City of Den- ver, 888, 900, 901. V. Johnson City, 689. V. Mayor, et al., 790. V. Township of Oswego, 117, 170, 415, 475, 476. Traver v. Merritt County Com'rs, 348. Tregea v. Modesta Irr. Dist., 339. Trimmer v. Bomar, 332. Troutman v. Hayes, 278. Trowbridge v. City of New York, 490. v. Schmidt, 138. Troy V. Doniphan Co. Com'rs, 117. Truelson v. Mayor of Duluth, 232. Trustees for Vincennes University V. State of Indiana, 8. Common School Dist. No. 32, etc., V. Thomas Kane & Co., 366. Dartmouth College v. Woodward, 3, 6, 24. Elizabethtown v. Chesapeake, 0. & S. W. R. Co., 241. Goldsborough Graded School v. Broadhurst, 264. Internal Improvement Fund v. Lewis, 391. ARE TO pages] Trustees of Paris Township v. Cherry, 886. Tucker v. City of Raleigh, 18, 175, 183. Tukey v. City of Omaha, 355, 366, 338, 531. Tulare, County of, v. Kings County, 36, 38. Turner v. City of Forest, 301. V. City of Guthrie, 915. V. City of Harrisburg, 311. V. City of Hattiesburg, 176, 301. V. Leflore County, 380. V. Woodson County Com'rs, 376, 630. Turney v. Town of Bridgeport, 303. Turpin v. Madison County Fiscal Court, 386, 391, 704, 740. Twitchell v. Sea Isle City, 284. Tylee v. Hyde, 280. Tyler, City of, v. L. L. Jester & Co., 146, 258, 301, 434, 432, 769, 783, 856. V. Tyler Bldg. & Loan Assoc'n, 336, 428, 430, 499, 503, 533, 598, 806, 811. Tyson v. Salisbury, 210, 736. Ulster County v. State, 770. Underhill v. Sonora, 857. Underwood v. Town of Ascheboro, 135, 137, 268. Unger, Ex parte, 310. Union Bank of Richmond v. Oxford County Com'rs, 93, 263, 287, 499, 532, 661, 663, 674, 681, Union Cattle Co. v. International, etc., Co., 735. Union County Com'rs v. Mason, 888. Union Pac. R. R. Co. v. Com'rs, 231. v. Lincoln County, 330. v. Smith, 250, 499. Union Trust Company of San Fran- cisco V. State, 719, 768. United States v. Baltimore & Ohio R. R. Co., 100. 1198 TABLE OP CASES [references United States v. Board of Liquida- tion of City Debt, New Orleans, 262, 340. V. Capdevielle, 149. V. City of Ft. Scott, 150, 758. V. City of Memphis, 30. V. City of New Orleans, 75, 80, 311, 713, 746, 747. V. County of Clark, 381, 758, 761, 813, 838, 844. V. County of Macon, 313, 748, 762, 764, 831, 848, 849, 851, 915, 925, 926, 927. V. Gettysburg Electric Co., 253. V. Jefferson County Court, 752. V. King, 831, 834, 914, 919, 925. V. Knox County, 761, 762, 764. V. Lincoln County, 839. V. MacFarland, 75. V. Realty Co., 61. V. Saunders, 747, 758, 818, 832, 839. V. State, 381. V. The Haytian Republic, 652. V. Thompson, 544. V. Union Pacific R. R. Co., 157. ex rel. Baer v. City of Key West, 726, 747, 749, 761, 833, 839. Butz V. Muscatine, 838. Chandler v. County Com'rs of Dodge County, 331, 838. Harshman v. County Court, 652. Riggs V. Johnson County, 838, 843, 844. Spltzer V. Town of Cicero, 748, 851. Webber v. Lee County, 844. United States Trust Co. v. Village of Mineral Ridge, 519, 597. Unity V. Burrage, 864. Upper Darby Twp. v. Borough of Lansdowne, 74. U. S. Bank v. City of Kendall, 28, 40. U. S. Wood Preserving Co. v. Sund- maker, 95. ARE TO PAGES] Utick, State ex rel., v. Comm'rs of Polk County, 230. Utter V. Franklin, 157, 422, 426, 677. Uvafde, City of, v. Spier, 42, 478. Vadakin v. Crilly, 488. Vale V. Buchanan, 883, 894, 924. Valleau v. Newton County, 890, 915. Validly V. Board of Park Com'rs of Grand Forks, 140, 150, 747. Valley Bank v. Brodie, 922. Valley County v. McLain, 414. Valparaiso v. Gardner, 145. Van Akin v. Dunn, 894. Vance v. City of Little Rock, 309, 310, 839. Van Cleve v. Passaic Valley Sewer- age Com'rs, 67, 133, 178, 316. Vandriss v. Hill, 38. Van Horn v. Kittitas Co., 713. Van Pelt v. Bertilrud et al., 723. Varner v. Inhabitants of Noblebor- ough, 921. Vashon v. Greenhow, 383. Vaughn v. Forsyth County Com'rs, 935. Township of, v. Town of Mon- treal, 37, 38. Veatch v. City of Moscow, 410, 420. Veeder v. Lima, 118, 500, 575. 577, 584, 610. Venice v. Breed, 265, 817. Town of, V. Murdock, 457, 550, 556, 559, 576, 605, 642. Verbeck v. Scott, 331. Verner v. Mueller, 287, 288. Vernon v. Board of Sup'rs of San Bernardino County, 23. Vickrey v. Sioux City, 758, 764, 770. Vicksburg v. Lombard, 174, 183, 567, 642, 743. Vicksburg, etc., Ry. Co. v. Good- enough, 140. TABLE OF CASES 1199 [eeperences Vicksbnrg, S. & P. R. Co. v. Scott, 235. Vidal V. Girard'B Ex'rs, 57. Vilas V. City of Manilla, 88. Village of Bradford v. Cameron, 426, 565, 599. Bloomer v. Town of Bloomer, 70. Canandaigua v. Hayes, 204, 873. Champlain v. McCrea, 223. Dolton V. Dolton, 713. East Moline v. Pope, 67, 151. Ft. Edward v. Fish, 232, 487, 493. Frankfort v. Schmidt, 459. Grant v. SherriU, 222. Hempstead v. Seymour, 284. Hinsdale v. Shannon, 863. Hyde Park v. Ingalls, 417. Kenmore, In re, 84, 770. Kent V. Dana, 349, 351, 353, 354, 591, 596, 597, 808. V. United States, 259, 771. Marysville v. Schoonover, 888. Oquawka v. Graves, 183, 416. Reed City v. Reed City,, etc., Works, 91, 98. River Rouge v. Hosmer, 328. Swanton v. Town of Highgate, 76. Waverly v. Waverly Water Co., 257. Vineyard v. City of Grangeville, 71. Virden, City of, v. Fishback, 713. Virginia & T. R. Co. v. Lyon County Com'rs, 245, 247. Von Hoffman v. City of Quinoy, 55, 184, 553, 752, 781, 838, 844, 849. Von Hostrup v. City of Madison, 241, 605, 694. Von Schmidt v. Widber, 77, 918. Vose V. Inhabitants of Frankfort, 37. Voss V. Waterloo Water Co., 147, 151. Vossen V. City of St. Clair, 874. ARE TO pages] W Wabash & E. Canal Co. v. Beers, 900. Wabash, etc., Ry. Co. v. McCleave, 316. Wabash R. R. Co. v. People, 90. Wade V. LaMoille, 548. V. Oakmount Borough, 146, 205. V. Travis County, 260, 263, 517, 550, 544, 778, 781, 801. Wagner v. Meety, 330. V. Milwaukee County, 866. Waite V. City of Santa Cruz, 124, 175, 188, 356, 414, 422, 424, 439, 504, 508, 531, 565, 581, 589, 590, 591, 592, 624, 804, 867. Wakefield v. Brophy, 97. Waleott V. Dennes, 329. Waldo V. Portland, 117. Walker v. Board of Com'rs of Mon- roe County, 765. V. Caldwell, 863. V. Inhabitants of West Boylston, 861. V. State, 160, 455, 464, 534, 1017. Walkley v. City of Muscatine, 325, 838. Wall v. County of Monroe, 895, 896, 902. v. St. Louis County, 189, 218. Walla Walla City v. Walla Walla Water Co., 144. Waller v. Osban, 10, 75. Walling V. Lummis, 427. Walnut Township v. Jordan, 45, 894. V. Wade, 119, 356, 393, 403, 404, 405, 607, 633, 828, 870. Walsh V. Rogers, 884. Walston V. Nevin, 320. Walters v. Dorian, 775 Walton v. Develing, 333. Town of, v. Adair, 771. Waples v. City of Dubuque, 856. 1200 TABLE OF CASES [references Ward V. Cook, 885. V. Field Museum of Natural His- tory, 51. V. Grandin, 38. V. Kropf, 296. V. Piper, 833. Ware v. Pleasant Grove Twp., 713. Warner v. City of New Orleans, 92, 890, 892, 914, 915, 916, 921. V. Hoaglund, 74. Warren County v. Marcy, 467, 468, 478, 547, 567, 604, 646. Warren County Sup'rs v. Klein, 882, 888, 912. Washburn v. Commonwealth, 118, 174. Washburn Water Works Company V. City of Washburn, 33, 38. Washington County v. David, 374, 661. V. United States e? rel., etc., 838. V. Williams, 448, 530, 659, 661, 662, 739, 764, 796, 801, 831, 839. Washington County Sup'rs v. Du- rant, 915. Washington, Town of, v. Coler, 37, 192, 350, 688, 736. Water, Light & Gas Co. v. Hutch- inson Interurban E,y. Co., 242. Waterloo Water Mfg. Co. v. Shana- han, 229. Watson V. City of Huron, 102, 173, 174, 893, 894, 896, 897, 907, 928, 930, 932. v. DeWitt County, 260, 263. Waverly, Village of, v. Waverly Water Co., 257. Waxahaohie, City of, v. Brown, 187, 417, 936. Wayne County Savings Bank v. School Dist. No. 5, etc., 34. Waynesville, Town of, v. Satter- thwait, 872. W. C. Peacock & Co. v. Pratt, 309. ARE TO pages] Weaver v. City and County of San Francisco, 204, 713. V. Ogden City, 713. Webb V. Lafayette County, 689. Webb Granite, etc., Co. v. City of Worcester, 203, 206. Weber, United States ex rel., v. Lee County, 843, 844. Webster v. City of Fargo, 321. V. Douglas County, 918, 920, 930. V. Town of White Plains, 254. Webster, Battles &, v. Laudens- lager, 479. Weekes v. City of Galveston, 74. Weeks v. Smith, 869. Weightman v. Clark, 318, 551. Weill V. Canfield, 867. Weismer v. Village of Douglass, 52, 213, 214, 663. Weister v. Hade, 58. Weith V. Wilmington, 78. Welch V. Getzen, 142, 257, 347. Welker v. Potter, 303. Wellington, City of, v. Wellington Township, 11. Wells V. City of Savannah, 311. V. City of Sioux Falls, 209, 347. V. Mason, 839. V. McNeil, 315. V. Pontotoc County, 689. V. Supervisors, 173, 185, 254. V. Town of Salina, 102, 104, 114, 174, 250. Wellsborough v. N. Y., etc. R. R., 272. Wellston, City of, v. Morgan, 87. Welch V. Post, 176. Wesimer v. Douglas, 661. Wesley v. Bella, 160, 165, 936. Wesson v. Saline County, 510, 544, 565, 590, 591, 594, 634, 825. V. Town of Mt. Vernon, 430, 565. West V. Town of Errol, 935. West Chicago Park Com'rs v. City of Chicago, 140, 256, 765. Westernman v. Cape Girardeau County, 607. TABLE OF CASES 1201 [references Western Town Lot Co. v. Lane, 934. Westminster Water Co. v. City of Westminster, 148. Weston V. City of Newburgh, 379, 389. V. Hancock County, 193, 377, 283. V. Ryan, 67. West Philadelphia Title & Trust Co. V. City of Olympia, 894, 896. West Plains Twp. of Meade County V. Sage, 187, 421, 451, 466, 523, 550, 594, 700, 730, 863. West Virginia & P. R. Co. v. Har- rison County Ct., 343, 243. Wetmore v. City of Oakland, 217. Wetumpka v. Wetumpka Wharf Co., 174, 304, 835. Weyand v. Stoner, 867. Weyauwega, Town of, v. Ayling, 354, 356, 357. Whaley v. Commonwealth, 315. Whann v. Coler, 451. Wharton v. City of Greensboro, 51, 172, 179, 195, 673, 678. Wheeler v. City of S. Ste Marie, 76. V. Herbert, 32, 35, 54, 68. v. Plattsmouth, 210. State ex lel., v. Adams, 911, 918. Wheelock v. City of Lowell, 313. Whelan, Commonwealth ex rel., v. City of Pittsburg, 494, 839. White V. Chowan County Com'rs, 11. V. City of Atlanta, 33, 34, 38, 356, 865. V. City of Decatur, 107, 770. V. City of Rahway, 934. V. Quanah, 45. V. State, 933. V. Vermont & Mass. R. R. Co., 450. Whitehead, Morris &, v. Taylor, 416, 433. Whitewell v. Pulaski County, 183, 410, 431, 423, 910. P. S.— 76 ARE TO pages] Whiting V. Potter, 272. V. Sheboygan & F. R. R. R. Co., 333. Whitney v. City of New Haven, 96. V. Inhabitants of Stow, 45, 931. V. Kentucky Midland Ry. Co., 211. V. Parish of Vernon, 97, 887. White River Savings Bank of White River Junction v. City of Su- perior, 601, 765. White River School Twp. of John- son County V. Caxton County, 784. Whiteside v. School Dist. No. 5, 713. Whittemore v. People, 765. Wichita, City of, v. Skeen, 91. Wichman v. City of Placetville, 873. Wiggin V. City of Lewiston, 190, 207. Wightman v. Village of Tecumaeh, 389, 394, 315. Wilbur V. Wyatt, 381, 518. Wilcox V. Paddock, 337. Wilcoxon V. City of Bluffton, 140. Wilder v. City of New Orleans, 890, 914. V. Rio Grande County Comm'ra, 300. Wiley V. Board of Education, 348, 363. V. Silliman, 380, 576. Wilkesbarre, City of. Appeal of, 777, 780. Wilkes County v. Call, 690. V. Coler, 707, 869. Wilkins v. City of Waynesboro, 305, 356, 259, 276, 293, 780. Wilkinson v. Peru, 337. V. Van Norman, 333. Williams v. Board of Revenue of Butler County, 486, 493. V. Cammack, 330. V. City of Caldwell, 309. V. City of Nashville, 54. V. Moody, 31. 1202 TABLE OF CASES [references Williams v. People, 277, 280, 282, 283, 534, 576, 672. v. Shoudy, 912. V. Town of Duanesburgh, 64, 194, 681. V. Town of Roberts, 567, 647. Williamson v. Aldrieh, 155, 293. V. City of Keokuk, 689. Williamsport, City of, v. Common- wealth, 104, 111, 171, 174, 183, 229, 036. Willis, Ex parte, 924. Willis -V. Miller, 397. Wills V. Bates County, 12, 176. Wilmington, etc., R. R. Co. v. Board of Com'rs of Onslow County, 274, 339. Wilson V. Board of Education of City of Huron, 140, 566, 634. V. Borough of CoUinswood, 305. V. City Council of Florence, 106, 293, 295. V. City of Aberdeen, 888. V. City of Shreveport, 171, §44. V. Knox County, 889, 917, 921. V. Mitchell, 765. V. Neal, 380, 885, 886, V. Oswego Township, 797. V. Otoe County, 90. V. Pike County, 274, 288. V. Shreveport, 187, 475. V. State, 892. V. Town of Salamanca, 119, 613, 615. Wilson County v. Third Nat. Bank of Nashville, 343, 450. Winchester, City of, v. Redmond, 84. Windfall City, Town of, v. First Nat. Bank, 765, 810. Windsor v. City of Des Moines, 139, 138, 147, 150, 331. Winnimac, Town of, v. Huddleston, 328. ARE TO PAGES] Winona, City of, v. Botzet, 11. V. Jackson, 90. V. School Dist. No. 82, 31. Winston v. City of Ft. Worth, 443, 634, 734. v. City of Spokane, 150, 151, 153. Wisconsin Industrial School v. Clark County, 218. Witler V. Board of Supervisors, 183. Witmer, State, ex rel., v. Conrad, 107, 271. Witte V. Board of Sup'rs of Polk County, 184, 186. Witter V. Bachmau, 898. Wittkowsky v. Board of Com'rs of Jackson County, 13, 185, 233, 500, 860. Wittmer v. City of Jamestown, 99. Wolf County v. Beckitt, 309. Wolfe v. School Dist. No. 3, Colum- bia County, 136, 305. State ex rel., v. Parmeuter, 881. Wolflf V. City of New Orleans, 55, 746, 753, 844. Wolff Chemical Co. v. City of Philadelphia, 770. Wood v. Alleghany County, 348, 456. v. Bangs, 913. v. City of Seattle, 861. V. Com'rs of Oxford, 333. v. Louisiana, 784. V. Millspaugh, 332. V. Ross, 191, 196, 223, 284, 784. V. State, 914, 918, 933. Woodall V. Town of Adell, 363, 37,1, 653. Woodbridge v. City of Duluth, 233, 346. Woodruff V. Okolona, 499, 518, 634. V. State of Mississippi, 159, 389, 724, 727, 1061. V. Trapnall, 160, 909. V. Welton, 95. Woods V. Board of Education of City of Covington, 415. TABLE OF CASES 1203 [refeeences Woods V. Lawrence County, 385, 386, 390, 445, 494. Woodstock, Town of, v. Gallup, 253. Woodward v. City of Grangeville, 96, 255. V. City of Waynesville, 149. V. Reynolds, 274, 349. Wooley V. City of Louisville, 780. V. Louisville So. Ry. Co., 295, 297. Woolfolk V. City of Padueah, 285. Worcester County Bank v. Dor- chester, etc., Bank, 373. Workman v. Campbell, 245. Wormington v. Pierce, 333. Wormser Goodman Construction Co. V. Borough of Belmar, 89. Wormstead v. City of Lynn, 93. Worth v. City of Padueah, 771. Worthington v. Board of Education, etc., 292. Wright V. East Riverside Irriga- tion Diat., 517. V. Milwaukee & St. P. R. Co., 335. V. United States, 120. V. Wabash, etc., Ry., 322. State ex rel., v. Hortsman, 765. Wrought-Iron Bridge Co. v. City of Arkansas City, 874. Wulf V. Kansas City, 191. WuUenwaber v. Dunigan, 246, 347, 270, 271, 326. W. Va. & P. R. R. Co. V. Harrison County Court, 378. W. W. Cook & Son v. City of Cameron, 97. Wygatt V. Green Bay, 503. ARE TO pages] Wykes v. City Water Works Co. of Santa Cruz, 661. Wylie V. Speyer, 480. Wyman v. Searle, 369, 397. Wyoming County v. Bardwell, 939. Yamhill County v. Foster, 13, 307, 311. Yarish v. Cedar Rapids, I. F. & N. W. R. Co., 378, 280. Yavapai County v. McCord, 414, 671, 681. Yell County v. Wills, 922, 927. Yesler v. City of Seattle, 353, 381, 382, 486, 864. Yolo, County of, v. Coglan, 869. Young v. Board of Com'rs of Tipton County, 175, 503, 747. V. Board of Education, etc., 118. v. Camden County, 893, 899, 900. V. Clarendon Township, 173, 185, 254, 263, 366, 372, 376, 935. V. Henderson, 174. V. Pariah of East Baton Rouge, 892. V. Roberts, 335. V. Webster City & S. W. R. R. Co., 274. Youngerman v. Murphy, 145. Yow V. Sullivan, 33. Zane v. Hamilton County, 544, 550, 554. Zerwekh v. Thornburg, 930. Ziegler v. Menges, 313, 330. INDEX [REFERENCES ABE TO SECTIONS] ABSENCE OF AUTHOEITY— See "Authority." ACCOUNTING— Accounting may be required in case of diversion or illegal use of special funds, 371. ACTION— Each matured coupon constitutes a separate cause of action, 193. Examination of original cause of action in proceedings to enforce judgment, 317. For money had and received on account of payments for void bonds, 380. To enforce public securities, 384. See also this subject indexed under "Pleading and Practice," 384, et seq. Bight of action on each separate bond and coupon, 389. Bight of bond holder to maintain action to enforce payment, 390. Matters of defense as affected by estoppel by recitals, 391. See "Eecitals." On refunding renewal and compromise securities, 391. When injunction operates as a bar to an action to enforce payment of securities, 395. On warrants and miscellaneous evidences of indebtedness, 458. Equitable defenses available in an action on warrants, 458. For money had and received allowed when void warrants issued in payment of just claim, 465. ACTUAL— Notice or knowledge as affecting bona fide holding of negotiable securities, 230. What constitutes actual notice or knowledge, 230. ADJOUENMENT— Of legislative bodies, 436, 443. ADJUSTMENT OF DEBTS— Liabilities when territory is annexed or divided, 19. 1205 1206 INDEX [references are to sections] ADVEETISBMENT— Sale of municipal securities, when required after public advertise- ment, 241. Form of, and publication, 241. AGENCY— Of apportionment of debts and liabilities on change of boundaries, 21. AGENTS AND OFFICEES OF PUBLIC COEPOKATIONS— Authority to bind corporation in making contracts, 51, 52. Authority to act must be expressly given, 52. The public charged with notice of limited powers, 52. Authority in respect to incurring indebtedness, 65. Indebtedness must be incurred by agent having authority, 65. Authority of de facto officers, 66. Eule as to validity of acts of de facto officers, 66, 67. Fraud or misconduct of public officers, 68. De facto corporate existence necessary to incur indebtedness, 86. Official action by for issue of negotiable securities, 140. Authority to execute negotiable securities, 167. Purchasers assume risk of genuineness of signatures to securities, 167. Authority, how given, to execute bonds, 167. What is a sufficient signature? 168. " Sale of securities to public officials connected with issue of securities, void, 242. Purchaser of securities bound to ascertain extent of authority in issue of securities, 254. Presumption exists of their authority to issue negotiable securities, 265. When charged with duty of determining debt limit as affecting doc- trine of recitals, 303. Power and authority of, to make recitals in negotiable securities, 312, et seq. Subject indexed in detail under "Eecitals in Negotiable Securities." Performance of non discretionary duties may be compelled by manda- mus, 370. To whom writs of mandamus should be directed, 425. Failure to perform duties in respect to levying taxes no defense to writ of mandamus, 431. Levy of taxes or special assessments for payment of warrants com- pelled by mandamus, 458. Failure to record or register warrants does not affect their validity, 459. AID TO EAILWAYS— See "Eailway Aid." AMOUNT— Eecoverable on public securities issued, 351. INDEX 1207 [references are "to sections] ANNEXATION OR DIVISION OF COKPOEATE BOUNDAEIES— See "Corporate Boundaries." ANSWER— In County of Presidio v. Noel- Young Bond & Stock Company, 212 U. S. 558, 535. In National Life Insurance Company v. Board of Education of City of Huron, 62 Fed. 778, 543. ANTEDATING OF SECURITIES— Validity of securities — when affected by antedating, 166. Immaterial irregularities disregarded, 166. ANTICIPATION OF REVENUES— See ' ' Revenues. ' ' APPEAL— See "Pleading and Practice." BUI of exceptions on appeal, 409, 536. Review on appeal of findings of fact, 410. Scope of inquiry on appeal, 411. APPLICATION FOR ELECTION— See "Election." APPORTIONMENT OF INDEBTEDNESS— On change in corporate boundaries, 19. See "Corporate Boundaries." APPROPRIATION— When necessary to the legal issue of warrants or miscellaneous evi- dences of indebtedness, 446. ASSENT OF VOTERS— See "Election," "Negotiable Securities," "Conditions," "Vote." ASSESSMENT— When the basis of indebtedness, 76. Securities a, general charge when special assessment or tax Ib in- valid, 367. ASSESSMENT ROLLS— See "Assessments," "Records." ASSIGNMENT OP ERRORS— Form of, in County of Presidio v. Noel- Young Bond & Stock Company, 212 U. 8. 558, 539. AUDIT— Of original indebtedness operates as an estoppel on the issue of securities, 391. Audit and allowance of claim as basis for issue of warrants, 446, 449. 1208 INDEX [references are to sections] AUTHORITY— Necessity for express authority to incur indebtedness, basis of rule, 58. Implied authority to incur debts, 61. Soundness of doctrine, 62. Of public corporation to incur indebtedness, 57 et seq. See also, ' ' Indebtedness, ' ' and ' ' Negotiable Securities. ' ' Conferred by ordinance to issue negotiable securities, 137. Conferred by resolution, 138. Want of authority ground to restrain issue of negotiable secur- ities, 155. Necessity of for issue of negotiable securities, 164. Por sale of negotiable securities, 238. See "Sale of Negotiable Securities." Purchaser must ascertain authority for issue of securities, 248, 249. Eecitals of constitutional authority to issue securities, effect of, 285. Eecitals of legislative authority to issue securities, effect of and construction, 286. Presumption exists of authority on part of agents and ofBcers to act, 265. Of agents and officers to make recitals in negotiable securities, 312 et seq. See subject indexed in detail under "Eecitals in Negotiable Securi- ties." Cannot be created by curative legislation, 329. Securities void in absence of authority to issue, 330. Of agents and officers to issue warrants and miscellaneous evidences of indebtedness, 446. When discretionary, 446. Audit and allowance of claim operates as estoppel, 449. To issue negotiable securities and incur indebtedness, constitutional provisions relative to, arranged alphabetically by states, 469 et seq. See "Indebtedness," "Negotiable Securities." BALLOTS— Form of, for use at election, 132. BIDDEES— Conditions required of bidders on sale of negotiable securities, 241. Eights of on sale, 243. Validity of bonds as affecting sale, 244. See also ' ' Sale of Negotiable Securities. ' ' BIDS— See "Sale of Negotiable Securities." BILL OF EXCEPTIONS— Form of, in County of Presidio v. Noel-Tovmg Bond & Stock Com- pany, 212 V. S. 558, 536. INDEX 1209 [references are to sections] BILLS OF CREDIT— Term as used in TJ. S. Constitution as affecting validity of public securities, 81, 82, 83. Warrants when invalid as violating constitutional provisions in respect to, 455. Miscellaneous securities invalid when intended to circulate as money, 466. BONA TIDE HOLDING— Bona fide holding necessary for application of doctrine of estoppel, 218. Definition of bona fide holder, 219. Presumption in favor of a bona fide holding, 220. Possession make prima facie case of bona fide holding, 220. Eights of bona fide purchaser, 221. Bona fide purchaser unaffected by antecedent facts, 221. Conditions necessary to constitute bona fide holding, 222. Acquirement in good faith for a consideration, 222. Must be acquired before maturity or without notice of dishonor, 222. Must be acquired without notice of facts impeaching validity, 222, 226, et seq. Rights of transferee of bona fide holder, 223. Acquires all rights of his transferer independent of his own knowl- edge, 223. Consideration as affecting bona fide holding, 224. Fraud as affecting rights of bona fide holder, 224. Notice of facts affecting bona fide holding may be actual or con- structive, 226. When knowledge must have been acquired, 226. Constructive notice, 227. las pendens as constructive notice, 228. Judgment as constructive notice, 228. Injunction proceedings as notice, 228. Overdue coupons as constructive notice, 229. Actual notice or knowledge, 230. Rule of actual notice or knowledge, how modified, 230. Title of bona fide holder, how defeated, 231. By absolute want of power to Issue securities, 231. Some positive prohibition of laVv, 231. Knowledge with which a holder of bonds is charged, 232, 233. Purchaser charged with knowledge of law authorizing issue of secur- ities, 232. Charged with what securities disclose on their face, 232. Charged with character of public corporations, as having limited powers, 232. With knowledge of what public records charged, 233. What a purchaser is not bound to ascertain, 233. 1210 INDEX [references are to sections] BONA TIDE HOLDING— Bona fide holder not required to examine all intermediate steps in issue, 233. Presumption exists of bona fide holding of negotiable securities, 265. No bona fides can dispense with authority to Issue securities, 331. Eights of bona fide holders of securities cannot be affected by diver- sion of funds, 371. Payment of securities held by bona fide holders, see "Payment." Burden of proof upon one attacking validity of bonds, 400. Bona fide holders of warrants entitled to payment, 484. BONDED DEBT— See "Negotiable Securities," "Indebtedness." BONDS— Form of, see "Bonds," chapter 19. See "Negotiable Securities." BOEROW MONEY— Implied power to borrow money, 58, 61, 62, 63. Power to — distinction between borrowing money and incurring indebt- edness by contract, 64. BOUND AEIES— Cannot be changed to detriment of creditor's rights, 30. See "Corporate Boundaries." BOUNDAEY LINE— See "Corporate Boundaries." BEIDGES— Use of moneys for construction of, a public purpose, 108. BUILDINGS— Construction of public buildings a public purpose, 103, 104. BUEDEN OF PEOOF— Presumption of validity of negotiable security throws burden of proof upon person attacking it, 400. Burden of proof when shifted, 403. How affected by proof of irregularity or fraud, 403. Doctrine of burden of proof as stated in Murray v. Lardner, 403. Burden of proof required by Illinois courts in grant? of railway aid, 404. Presumption in favor of holder of negotiable securities when validity attacked, 402. Upon one attacking validity of warrants, 453, 464. Index 1211 [references are to sections] BY LAWS— See "Ordinances." CANALS— Construction of, a public use of moneys, 108. CANVASS— Of election returns, 133. CAPITAL STOCK— See "Eailway Aid." cash- As property to he divided on change of boundaries, 22. cebtificate of eegisteation oe issue— See " Eegistration, " "Formalities Eequired in Issue of Negotiable Securities. ' ' CEETIFICATES of INDEBTEDNESS— Definition of, 12. See "Warrants," "Negotiable Securities." CEETIFICATION— Of bonds by public ofScials; when necessary to establish technical issue, 164. CHANGE— Of grade of public corporation as affecting liabilities, 19. Of corporate boundaries. See "Corporate Boundaries." Of creditor's remedy when impairing obligation of contract, 433. Of railway route. See "Eailway Aid." CHARGE TO JTJEY- Form of in County of Presidio v. Noel- Young Bond & Stock Com- pany, 212 TJ. S. 558, 537. CHAETEE— Power to amend or repeal charter of public corporation, 15. Private corporation, rule as to amendment of, 15. Distinction between charter of public and private corporation, 15. CITIES— See "Public Corporations." CITY WAEEANT8— See "Warrants." CLASSIFICATION LAWS— Power of legislature to pass, 34, 1212 INDEX [refkrences are to sections] CLASSIFICATION OF— . Public corporations, 4. Public securities, 10. CO-EXISTING CORPORATIONS— Powers of taxation of public corporations coincident in territory, 144. See ' ' Payment, " " Taxation. ' ' COIN— See "GFold." COLLATERAL ATTACK— Doctrine of as applied to corporate existence, 16. Validity of corporate organization cannot be attacked collaterally, 266. COMMERCIAL PAPEI^- See "Negotiable Securities." COMMISSIONS— Of agents in sale of public securities, 247. COMPLAINT— In County of Presidio v. Noel-Toung Bond & Stock Company, 212 IT. S. 558, 534. In National Life Insurance Company v. Board of Education of City of Huron, 62 Fed. 788, 541, 342. COMPLETION OF RAILROAD— See "Railway Aid." COMPROMISE SECURITIES- Authority to issue, 211. Under what conditions can outstanding indebtedness be compromised, 211. See "Refunding Renewal and Compromise Securities." COMPULSORY AND VOLUNTARY INDEBTEDNESS— Rule of Federal courts in regard to, 71. Rule of state courts in regard to, 71. When excluded from total debt of corporation, 71. Warrants when regarded as compulsory obligations, 453a. CONDITIONS— Performance of conditions precedent to grant of radlway aid, 118. Special performance, when required, 113. Required conditions precedent to railway aid, waiver of, 115. Affirmative vote as condition precedent to valid issue of negotiable securities, 122. Issue of bonds when conditions precedent not complied with may be restrained, 156. Required for issue of refunding or renewal securities, 203. Conditions precedent must be performed as in case of original issue of securities, 203. INDEX 1213 [references ABE TO SECTIONS] CONDITIONS— Necessary to constitute bona fide holder of public securities, 222 et seq. See also "Bona Fide Holding." Performance of conditions required for legal issue of bonds, 332. See also "Kecitals in Negotiable Securities." Eecital of performance of conditions operate as an estoppel, 276 et seq. See subject fully indexed under "Eecitals in Negotiable Securities." Presumption ' exists that conditions precedent have been performed for issue of negotiable securities, 265. Prescribed by express statutory authority as affecting validity of bonds, 311. CONSIDERATION— For transfer of negotiable securities, 224. See also "Bona Fide Holding." CONSOLIDATION— Of railways does not defeat railway aid granted, 110. See "Corporate Boundaries." CONSTITUTION— Effect of recitals of constitutional authority to issue securities, 285. Provisions in respect to levy of taxes when self executing, 375. Prohibitive provisions of do not confer authority to issue securities, 433. CONSTITUTIONAL LIMITATIONS— Oil legislative power, 33. On power to pass classification laws, 34. In respect to uniformity of legislation, 35. On power of taxation, 143. Maximum rate or amount of taxation, 143. Maximum rate of taxation, when increased, 143. Doctrine of estoppel by recitals as affected by distinction between constitutional and statutory authority to issue, 299. Eelative to maturity of public securities, 352. Prohibit impairment of contract obligation in respect to levy of taxes for payment of securities, 362. See also "Contract Obligation." Constitutional provisions relative to the incurring of public indebted- ness and the issue of negotiable securities. Arranged alphabetically by states, 469 et seq. Alabama, 469. Florida, 476. Kentucky, 483. Arkansas, 470. Georgia, 477. Louisiana, 484. Arizona, 471* Idaho, 478. Maine, 485. California, 472. Illinois, 479. Maryland, 486. Colorado, 473. Indiana, 480. Massachusetts, 487. Connecticut, 474. Iowa, 481. Michigan, 488. Delaware, 475. Kansas, 482. Minnesota, 489. 1214 INDEX [references are to sections] CONSTITUTIONAL LIMITATIONS— North Dakota, 500. Ohio, 501. Oklahoma, 502. Oregon, 503. Pennsylvania, 504. Rhode Island, 505. South Carolina, 506. South Dakota, 507. Tennessee, 508. Texas, 509. Utah, 510. Vermont, 511. Virginia, 512. Washington, 513. West Virginia, 514. Wisconsin, 515. Wyoming, 516. , Territorial, 517. Hawaii Territory, 518. Philippine Islands, 519. Mississippi, 490. Missouri, 491. Montana, 492. Nebraska, 493. Nevada, 494. New Hampshire, 495. New Jersey, 496. New Mexico, 497. New York, 498. North CaroUna, 499. CONSTEUCTION— Corporate powers, rules of construction of, 44. Kule of strict construction, how modified, 45. Strict and liberal rules of in respect to issue of negotiable securities, 87, 88. Grant of power to issue negotiable securities, how construed, 91. Eule of strict construction, when applied, 91. Of limiting provisions on power to issue negotiable securities, 92. Of additional grants of authority to issue negotiable securities, 119. Election laws liberally construed, 129. Of state statutes. Federal courts follow decisions of state courts as a rule, 269a. Exception to rule when decisions adverse to rights granted by Federal laws, 269a. Of constitutional provisions limiting taxing power, 149. Of recitals in negotiable securities, 284. Eule of strict construction of recitals when applied, 284. Of curative legislation, 325. Character and construction of curative legislation, 325. Of miscellaneous forms of indebtedness, 467. CONSTEUCTION OF EAILEOADS^ See "Railway Aid." CONSTEUCTIVB— Constructive notice or knowledge as affecting bona fide holding, 227", 228. CONTENTS OF PUBLIC SECURITIES— See "Form." "Formalities Required for Issue of Negotiable Securi- ties," "Warrants." CONTRACT OBLIGATION— Cannot be impaired by subsequent limitations upon power to tax, 150, 362. Validity of securities not affected by subsequent legislation, 268. Special fund for payment of security cannot be lessened or diverted without impairing, 362. Duty to levy sinking fund taxes a contract obligation, 377. [" INDEX 1215 [references are to sections] CONTEACT OBLIGATION— Impaired by changea in power to tax to detriment of creditors, 37, 160, 268, 362. Provision for sinking fund taxes a contract, 362. When impaired by change in remedy of creditors, 433, Subsequent legislation cannot affect rights of holder of warrants, 452. CONTEACTS— Power of legislature over contracts of public aorporation, 30. Vested rights, cannot be impaired by legislative action, 37. Power of public corporation to contract, 46 et seq. Purpose of contract as affecting validity, 46. Implied power to contract, 47. Ultra vires, 48. Classes of ultra vires contracts, 49. Enforcement of ultra vires contracts, 50. Formal execution of public contracts, 51. Authority of ofScera and agents to bind public corporation, 52. Eatification of ultra vires contract, 53. Contracts of, suretyship and guaranty, 54. Distinction between borrowing money and incurring indebtedness by contract, 64. Payments in executory contracts not usually considered a debt in ascertaining total debt of public corporation, 77. COEPOEATB AGENTS— See "Agents and Officers." COEPOEATB BONDS— See "Negotiable Securities." OOEPOEATE BOUNDAEIES— Change of, 17. Power of legislature to change, 17. Effect of change upon corporate rights, 17. Effect of change upon public property and liabilities, 18. Division or adjustment of debts and liabilities on change of corporate boundaries, 19. Power of legislature over, 28. OOEPOEATE CONTEACTS— See "Contracts." OOEPOEATE DEBTS— See "Indebtedness," "Negotiable Securities." Effect of division or annexation upon, 18. OOEPOEATE EXISTENCE— Not subject to collateral attack, 16. Power of legislature over, 25. 1216 INDEX [refebences aee to sections] COKPOEATE EXISTENCE— De facto corporate existence necessary for the issue of negotiable securities, 86. Cannot be attacked when de facto organization exists, 244. CORPORATE POWERS— See "Powers of Public Corporations," also particular power sought. CORPORATE PURPOSES— See ' ' Public Purpose. ' ' CORPORATION— Definition of, 2. Definition and classification of, 2. Public, 3. Private, 3. Public corporation, 3. Public quasi corporation, 7. COUNTIES— See "Public Corporations." ( COUNTY WARRANTS— See "Warrants." COUPONS— Nature and definition, 13. Interest, when payable upon public securities, 179. Rate paid when fixed by statute, 180. When rate is discretionary with public oflScials, 180. Rate less than maximum fixed by law will not invalidate bonds, 180. Coupons as evidences of interest obligations, 181. Definition and character of coupons, 181. Power of corporation to issue negotiable securities with coupons at- tached, 182. The coupon; its form, 183. Are negotiable instruments complete in themselves, 181, 183. Illustrative forms of coupons, 184. Execution of, including signatures, 185. Irregularities in execution of, 185. Not necessary to contain name of payee, 186. Legal character of coupons as negotiable instruments, 187. Construed in connection with bond to which attached, 187. Not negotiable when not containing words of negotiability, 187. Due on date specified for payment, 188. Necessity for presentment and demand of payment, 188. Obligation of endorsee as to interest payment, 188. Time, place and order of payment, 189. INDEX 1217 [refbbences abb to sections] COUPONS— Can be made payable without geographical limits of corporation issuing them, 189. Wlhen payable from a special fund not a general obligation, 189. Medium of payment determined by authority to issue or terms of con- tract, 190. Taxes cannot be deducted from amount due on coupons, 190. Coupons, when receivable in payment of taxes, 191. When so receivable do not violate U. S. constitutional provisions, 191. Coupons entitled to days of grace, when, 192. Severed coupon a separate and independent promise to pay, 193. Constitute a separate cause of action, 198. Effect of overdue coupon on bond from which taken, 194. Interest on overdue coupons, 194. Demand, when necessary to recover interest on unpaid coupons, 195. Equities which attach to an overdue or dishonored coupon, 196. Eight to recover on overdue coupons, 197. Running of statute of limitations, how interrupted, 197. Overdue coupons, when constructive notice to purchaser of negotiable securities, 229. Eule modified in ease of non-negotiable instrument, 235. Eight of action on each separate coupon, 389. Presumption of validity throws burden of proof upon one attacking validity of coupon, 400. COUET OP EQUITY— Will not ordinarily appoint a receiver for public corporation, 387. Sealing down of excessive issue when denied, 887. Doctrine of equitable subrogation, 888. Will reform securities defectjvely issued, 165-168, 172. COUBTS— Power over acts of public corporations, 42. Implied power to compel payment of debts, 60. Power to compel payment of moral obligation, 60. Eule of Federal courts respecting voluntary and compulsory obliga- tions, 71. ' 1 Eule of state courts in regard to compulsory and voluntary indebted- ness, 71. -) -■--^ Where power to tax does not exist, courts cannot compel its exercise, 141. Power to restrain issue of negotiable securities, 151 et seq. Power to compel issue of negotiable securities, 163. Eule in state and Federal courts in respect to restraining issue of bonds, 152, 153. Of equity will reform securities defectively issued, 165, 166, 167, 168, 172. P. S.— 77 1218 INDEX [rbfkrences are to sections] COUETS— When state decisions involving validity of securities not followed by Federal courts, 270-271. Federal courts exercise independent judgment in absence of state decisions, 272. Decisions of state courts not controlling Federal courts on general questions of commercial law, 273. Doctrine of scaling down of excessive issue when applied by state and Federal courts, 308. The dbctrine of estoppel by recitals as applied by the Federal courts, 276. The doctrine of estoppel by recitals as applied in the state courts, 280. Adverse decisions of state court when not affecting validity of nego- tiable securities, 267. Adverse decisions of state court on validity of securities not binding on Federal courts, 267. Validity of negotiable securities, by what court decided, 269. Federal courts have right to decide all questions relating to rights granted by TJ. S. constitution, 269. Courts cannot control general expenditures for current expenses, 372. Doctrine of Federal courts in respect to implied liability on void bonds, 380. Discretionary power of courts to order judgment paid in installments, 415. State courts cannot interfere by injunction or otherwise with process of Federal courts, 416. Cannot control discretionary powers in respect to mandamus, 428. When discretionary powers may be controlled, 429. CREATION OF— A pubKc corporation, 14. CEEDITOES— Eights of, cannot be impaired by change of boundaries, 18, 19. Eights of, as affected by legislative action, 30. Impairment or destruction of vested rights as a limitation on power of legislature, 37. Not affected by wrongful diversion of special funds, 371. Eights of cannot be inquired into when not in court, 422. See also "Obligation of Contract," "Payment." CUEATIVB LEGISI/ATION— Authority of legislature to pass, 324. Character of and construction, 325. INDEX 1219 [references are to sections] CURATIVE LEGISLATION— Validity of curative acts, 325. When conferring authority in absence of original grant of authority, 326. Most frequently passed in case of an irregular exercise of a given power, 327. Doctrine of as applied to, 327. Excessive issue of securities. Unauthorized subscription to railroad stock. Election irregularities. Unauthorized elections. Failure to hold elections. Informalities in official proceedings. Defects in original act. Williams v. Town of Duanesburgh, 328. Extent of legislative power in respect to passage of cuiative legisla- tion, 329. ' Cannot create power through passage of curative legislation or act of ratification, 329. CUEEENT EXPENSES— When considered in determining total debt of corporation, 72. Limitations on issue of negotiable securities involving current expenses, 95, 98. Moneys appropriated for cannot be issued in payment of public secur- ities, 372. Courts cannot control discretionary powers of officers in respect to cur- rent expenditures, 372. Discretionary powers in respect to cannot be controlled by courts, 429. Usually paid by issue of warrants, 446. Agents and officers, limited power of in respect to issue of warrants and miscellaneous evidences of indebtedness, 446. CUEEENT EEVENUES— See "Eevenues. " Anticipation of not considered exercise of power to issue negotiable securities, 96. Expenditures in excess of, when prohibited, 97. DATING AND ANTEDATING OF SECUEITIBS— Immaterial irregularities will not affect validity, 166. , Presumption exists that securities are properly dated, 166. Validity of when dated on Sunday, 166. DAYS OF GEACE— When interest coupons entitled to days of grace, 192. DEALEES IN BONDS— See "Purchase of Securities, "Sale of Negotiable Securities." 1220 INDEX [kefekences Are to sections] DEBT— See "Indebtedness." Rapid Increase of, 1. DE FACTO— Authority of de facto officers to incur indebtedness on behalf of public corporations, 66. Definitions of de facto and de jure officers and usurper, 66. What necessary to constitute an officer de facto, 66. Necessity for existence of legal office, 66. Validity of acts of de facto officers, 67. Presumption of validity attaches, 67. De facto corporate existence necessary to valid issue of negotiable securities, 86. Official de facto may execute negotiable securities, 167. Validity of securities cannot be attacked under de facto corporate existence, 244. De jure existence not necessary to valid issue of bonds, 251. De facto corporations may issue valid negotiable securities, 266. Warrants issued by de facto corporations valid, 543. DErAULT— When principal becomes due on default in interest, 354. In payment of public securities, 339 et seq. State default, 339. County repudiations, 340. Municipal defaults, 341. DEFENCES— Want of power as a defence in an action on negotiable securities, 330. Definition of want of power, 330. Signifies absolute lack of legal authority, 330. Where want of power to issue exists doctrine of estoppel cannot apply, 330. Want of power as distinguished from irregularities in the exercise of a given power, 331. Illustrative cases discussing distinction, 331. Nonperformance of conditions as a defence, 332. See also "Eecitals in Negotiable Securities." Fraud as a defence, 333. Pending proceedings no defence, 334. Lack of funds for payment constitutes no defence, 334. Injunction when no defence in an action on negotiable securities, 334. Equitable defences available between maker and holder of warrants, 464. See also "Eecitals in Negotiable Securities." INDEX 1221 [refeeences are to sections] DEFENDANT— See "Pleading and Practice." DEFINITION OF— Bona fide holder of securities, 219. CouponB, 13, 181. Current expenses, 98. De facto and de jure officers, 66. Discretionary and imperative powers, 40. Essentials of negotiable instruments, 212, 214. Express and implied powers, 39. Indebtedness or debt, 31, 69. Injunction, 152. Internal improvements, 108. Limitations upon power of taxation, 141. Local improvements, 108, 117. Mandamus, 151, 418. Negotiable instruments, 212. Ordinance, 137. Par value, 245. Private corporation, 2, 3. Public corporation, 2, 3. Public purpose, 101. Public securities, negotiable bonds, 10, 11. Eecitals in pubUc securities, 276, 278, 279, 283. EesolutioD, 137. Taxation, 141. Technical issue of bonds, 164. Warrants and miscellaneous evidences of indebtedness, 446. Warrants, orders, 12. DELEGATION OF COEPOEATE POWEES— Eule in respect to delegation or surrender, 43. Power to tax can be delegated by legislature, 141. DELIVEEY— Necessary to create legal obligation, 176. Effect of delivery upon title, 176. Possession of bona fide holder carries title, 176. Technical delivery only made by those authorized, 176. Irregularities in delivery as affecting validity of securities, 176. Young V. Township of Clarendon, 177. Involving question of delivery of securities. Of refunding and renewal securities, 205. 1222 INDEX [references are to sections] DELIYERY— Delivery of obligation necessary to establish its character as a nego- tiable instrument, 214. Warrants and miscellaneous evidences of indebtedness transferable by delivery, 450, 464. DEMAND— In respect to payment of interest on negotiable securities, 188. When necessary to recover interest on unpaid coupons, 195. DEMUEEEE— See "Pleading and Practice." DEPOT— See "Eailway Aid.'» DEPEECIATED CUERENCY— See "Medium," "Payments." DISCOUNTING SECUEITIES— See "Par," "Sale of Negotiable Securities." DISCEETIONAEY POWEES— See ' ' PoweTs of Public Corporations. ' ' To what extent power to incur indebtedness discretionary when ex- pressly given, 59. Power of taxation not discretionary when once granted, 141. Not controlled by writ of mandamus, 419. As to levy of taxes cannot be compelled by mandamus, 428. DISHONOE— See "Negotiable Securities," "Coupons," "Bona Fide Holding." DISSOLUTION 01' COEPOEATION— Effect on indebtedness, 23, 23a. Of public corporations not affecting securities issued, 266. DIVEESION— Of funds designated for payment of public securities illegal, 371. Liability of municipal corporations for diversion or misappropriation of special fund established for payment of warrant, 447. DIVISION OF COEPOEATE TEKBITOEY— See "Corporate Boundaries." DEAINAGE— See "Public Purpose." EFFECT OF EECITALS— See "Eeoitals in Negotiable Securities." INDEX 1223 [ebfkbences are to sections] ELECTION— Affirmative vote as precedent to issue of negotiable securities, 122. When election not necessary to issue of negotiable securities, 124. Petition for election, 125. Classification of petitioners, 125. Form of petition, 125. New York decisions relative to petition, 126. Notice or order for election, 127. Contents of notice, 127. Form of order or notice for election, 128. Service and publication of notice or order for election, 129. Questions for submission at an election, 130. Form in wHeli questions should be submitted, 130. Manner and time of holding the election, 131. Place and time of holding, 131. Ballots, form of to be used at an election, 132. Canvass of and election returns, 133. Necessary votes at election to authorize issue of negotiable securities, 134. Proportion of votes required, 134. Voters, and their qualifications, 135. Eight of women to vote, 135. Election irregularities afford ground for equitable relief in issue of negotiable securities, 157. Affirmative vote of electors, when necessary for issuing of refunding and renewal securities, 203. When no election necessary as basis of issue of refunding and renewal securities, 203. Irregularities in elections cured by recitals in securities, 292. Eule applies to manner and time of holding elections, 292. Effect of recitals of an election when none was held, 293-294. Unauthorized elections illegality of, remedied by curative legislation, 327. BLECTOBS— See "Voters." EQUITABLE DEFENCES— May be considered between maker and holder of warrants and mis- cellaneous evidenCES of indebtedness, 450, 464, 465. Available in an action on warrants and miscellaneous evidences of indebtedness, 458, 465. Available between maker and holder or assignee of warrant, 464. See also "Negotiable Securities." 1224 INDEX [references are to sections] EQUITABLE BELIEF— In case of void bonds, 380, 886. Irregularities in execution or form of securities remedied in equitable proceedings, 386. When collection of special assessments involved, 386. In case of diversion of special fund or special property set aside for payment of bonds, 371, 447. ESCROW— Negotiable securities, when held in escrow, 178. Delivery by depositary, 178. Performance of conditions as affecting delivery by depositary, 178. ESSENTIALS— Of negotiable instruments, 212, 214. Of bona fide holding, 222 et seq. ESTOPPEL— Tax payer when estopped to claim injunctive relief in respect to void issue of bonds, 159, 162. Doctrine of estoppel by recitals, etc., applies to refunding and renewal securities, 208. Doctrine of estoppel applies to de facto corporations in issuing nego- tiable securities, 266. Validity of negotiable securities as affected by the doctrine of estoppel, 274, et sea- When affected by delivery of securities, 275. Effective through doctrine of recitals so called, 276. This subject fuUy indexed under "Recitals in Negotiable Securities." Bule of estoppel modified by what securities disclose upon their face, 291. Also by facts appearing in public records, knowledge of which holder is charged, 291. Doctrine of estoppel applies to bona fide holders only, 277. EXCESSIVE ISSUE— Effect of recitals in excessive issue of securities, 295. Validity of issue in excess of legal authority, 304. When excess securities held good, 305. Excess securities held void in toto, 306. Issue held valid in part or void in part, 307. The doctrine of scaling down as applied by the state and Federal courts, 308. Hedges v. Dixon County, 309. Scaling down of excessive issue when equitable relief denied, 387. EX DELICTO— See "Torts." INDEX 1225 [eefekencbs are to sections] EXECUTION OP SEOUEITIES— See "Formalities Required for Issue of Negotiable Securities." Of refunding and renewal securities, 205. EXECUTOEY— Payments on executory contracts not usually included in debt computa- tions, 77. EXEMPTION— Securities of Federal government and territories generally exempt from taxation, 444. Special state exemptions from taxation of public securities, 445. Arranged alphabetically by states, 445. EXISTENCE OF COEPOEATION— See "Corporate Existence." EXPENSES— See "Current Expenses." EXPRESS POWEE— Definition of, 38. Of public corporations, 38. In respect to incurring indebtedness, 56. Necessity for express authority to incur indebtedness, basis of rule, 58. To issue refunding and renewal securities, 198, 200. Effect of express recitals in negotiable securities as an estoppel, 283, 297, 298. Power of public officials to make recitals. See "Eeeitals in Negotiable Securities." * See also "Negotiable Securities," "Indebtedness," "Warrants." EXTINCTION OF COEPOEATION— See "Dissolution of Corporation." PACT— Eeeitals of fact in negotiable securities. See "Eeeitals in Negotiable Securities." Purchaser bound by facts disclosed on face of securities, 261. -FALSE DATE— See "Dating and Antedating of Securities." FEDERAL COUETS— Jurisdiction of in actions to enforce public securities, 384. Arises under Federal constitution and acts of Congress, 384. Jurisdiction of cannot be impaired by state laws, 384. Jurisdiction depends upon amount involved and diversity of citizen- ship, 384. Removal of cases to Federal courts, 385. 1226 INDEX [eeterences ake to sections] PBDEBAL COUETS— Original jurisdiction cannot be acquired merely by removal, 385. Transfer of bonds for collection as affecting jurisdiction of, 393, 394. Process of cannot be interfered with by state coul'tB or state action, 416. . Eight of to issue writ of mandamus, 424. Cannot be prevented by injunction of state courts, 424. FEDBEAL GOVEENMENT— Power to create public corporation, 14. Contract void as affecting rights of, 49. FEMALES— See "Women." 'PINDEE OF SECUEITIES— See "Lost and Stolen Bonds and Coupons." FINDINGS OP PACT— See "Pleading and Practice." FLOATING DEBT— See "Indebtedness." POEM— Failure to observe directory provisions will not' invalidate securities, 165. Negotiable securities, 165. Interest coupon, 183. Illustrative forms of coupons in detail, 184. Of refunding and renewal bonds, 205. Of recitals affecting validity of negotiable securities, 290. See also "Eecitals in Negotiable Securities.." Essentials of legislative act, 437. Of warrants and miscellaneous evidences of indebtedness, 451, 452, 467. Of miscellaneous evidences of indebtedness, 467. Forma of pleadings in cited cases, 524, 534 et seq. See "Pleadings." Bonds, forms of in; Marcy v. Township Oswego, 92 U. S. 371, 520. County of Dixon v. Marshall Field, 111 XT. S. 83, 521. Morgan et al v. U. S., 113 V. S. 476, 522. Bernard's Township v. Morrison et al, 133 IT. S. 523, 523. Eieh V. Town of Mentz, 134 U. S. 632, 524. Board of County Commissioners of County of Chaffee v. Potter, 142 U. S. 355, 525. City of Brenham v. German-American Bank, 144 U. S. 173, 526. Board of Education v. DeKay, 148 U. S. 591, 527. Graves et al v. County of Saline, 161 U. S. 359, 528. Woodruff V. State of Mississippi, 162 U. S. 291, 529. INDEX 1227 [references are to sections] FOEM— County of Presidio v. Noel- Young Bond & Stock Company, 212 U. S. 558, 530. National life Insurance Company v. Board of Education of City of Huron, 62 Fed. 778, 531. Eisley v. Village of Howell, 64 Fed. 453, 532. Hughes County, S. D., v. livingston, 104 Fed. 306, 533. FOEMALITIES— Necessary in execution of contract, 51. FOEMALITIES EEQUIEED FOE ISSUE OF NEGOTIABLE SBCUE- ITIES— , "Issue" explained and defined, 163, 164. When are negotiable securities "issued," 164. Need not be issued all at one time, 164. Technical issue when compelled by mandamus, 164. Form of securities, 165. Statutory provisions in respect to form usually considered directory, 165. Practice when prescribed by statute, 165. Dating and antedating of securities, 166. Immaterial irregularities will not affect validity of securities, 166. Delivery of bonds on Sunday may be void, 166. Final execution of bonds involving the element of time, 166. Person must occupy official position at time bonds dated, 166. Eule as to antedating, 166. Signatures of officials, 167, 168. Due execution of securities necessary to their validity, 167. Authority to execute securities, 167. Purchasers take risk of genuineness of signatures, 167. Presumption exists of lawful authority to execute, 167. Execution need not be within geographical limits of public corpora- tioh, 167. Signatures required in case of an official or administrative board, 167. Countersigning a ministerial act, 167. May be compelled by mandamus, 167. Execution of securities, including signing and countersigning, com- pelled by mandamus, 163, 167. Question of sufficient signature discussed, 168. Need not be in personal handwriting, 168. Substantial compliance with provisions relative to formalities sufficient, 168. Weyauwega vs. Ayling, 169. Anthony vs. County of Jasper, 170. Color vs. Cleburne, 171. (Cases above cited involved questions relating to official position and time of execution of securities.) 1228 INDEX [ebjerencbs are to sectionsJ FOBMALITIES REQUIEED FOE ISSUE OP NEGOTIABLE SECTTE- ITIES— Necessity for attaching seal, 172. Statutory provisions generally directory, 172. Irregularities can be cured by court of equity, 172. Presumption exists that seal attached is the corporate seal, 172. Provisions for registration, 173. Purpose of registration, 173. Construction of laws requiring registration or certification, 173. When registration or certification conclusive as to facts recited, 173. When not so conclusive, 173. By whom must securities be registered, 173. Official validation or legalization of public securities, 174. States having provisions for official validation, 174. Cases involving construction of Georgia validation statutes, 175. Delivery of negotiable securities, necessity for, 176. Title is passed by delivery; possession and title inseparable, 176. Equities may be inquired into before delivery, 176. Belivery may be constructive as well as actual, 176. Authority of public officials to deliver negotiable securities, 176. Delivery a material and essential part of a technical "issuance," 176. Young vs. Township of Clarendon, 177. (Involving question of delivery.) Negotiable securities, when delivered in escrow, 178. Delivery by depositary before conditions performed, as affecting valid- ity of bonds, 178. Formalities necessary for issue of refunding and renewal securities, 205. See also "Warrants." Formalities required for legal issue of warrants and miscellaneous evi- dences of indebtedness, 448. FEAUD— Affecting legality of contract, 49. Of public officers incurring indebtedness, 68. Not available as a defence against a bona fide holder of negotiable securities, 333. FUNDS— Power of legislature over public funds, 26. Lack of funds no defence in action to enforce securities, 334. Existence of not necessary for issue of warrant, 446. Lack of funds hot available as a defence in an action on warrants, 459. FUTTTOE INTEEEST— See "Interest," "Coupons." INDEX [references are to sections] 1229 GENERAL DEBT— See "Indebtedness." GENERAL DENIAL— See "Pleading and Practice," "Pleadings." GENERAL ELECTION- See "Election." GENERAL POWER OP TAXATION— See "Taxation." GENERAL POWER TO ISSUE SECURITIES— See "Negotiable Securities," "Warrants." GEORGIA— Official validation of securities by Georgia statute, 174. Georgia cases construing provision for validation in Georgia, 175. GOLD COIN— Payment of interest on negotiable securities, in gold coin, 190. Right to payment in coin established by contract, 190. As a medium of payment of corporate negotiable securities, 348. Illustrative and leading cases of this question, 348. Warrants may be made payable in gold coin, 462. GOOD FAITH- As an element in payment of pubUe securities, 338. GRACE— See "Days of Grace." GRADE— Of corporations as affecting power to issue negotiable securities, 85. GUARANTY— Power of public corporation in respect to power of, 54. Power to enter into contract of suretyship, 54. HIGHEST BIDDER^ See "Bidder," "Sale of Negotiable Securities." HIGHWAYS— Use of moneys for construction and improvement of, a public purpose, 108, 117. HOLDER— See "Bona Eide Holding." HOLDERS OF SECURITIES— See "Bona Fide Holding." 1230 INDEX [refebbncbs Abe to sections] ILLINOIS DECISIONS— Eelative to place of payment, 357. IMPERATIVE POWERS— See ' ' Powers of Public Corporations. ' ' IMPLICATION— See "Implied Powers," "Agents and Ofacers," "Payment," "Tax- ation. ' ' IMPLIED CONTRACTS— See "Contracts," "Implied Powers." IMPLIED POWERS— Definition of, 38. . Of public corporations, 38. To enact ordinances, 39. To institute public offices, 39. To acquire and hold property, 39. To exercise police power, 39. Miscellaneous implied powers, 39. Implied power to contract, 47. In respect to public indebtedness, 56. Of courts to compel payment of debts, 60. Basis of implied authority to incur indebtedness, 61. Soundness of implied power doctrine in respect to incurring debts, 62. Mayor of Nashville vs. Ray, 63. Power to issue negotiable securities when implied, 87, 88. To issue refunding and renewal securities, 198, 202. Implied liability for payments made on account of void bonds, 380. Authority to issue warrants and miscellaneous evidences of indebted- ness, 450, 465. Power to issue promissory note does not usually exist, 465. Implied power of public official to make recitals. See "Recitals in Negotiable Securities. ' ' See also "Negotiable Securities," "Indebtedness," "Warrants," "Taxation." IMPOSED OBLIGATIONS— See ' ' Compulsory Debts. ' ' IMPROVEMENT SECURITIES— See "Public Purpose." INCIDENTAL POWERS— See ' ' Implied Powers. ' ' INDEX 1231 [eepekences ake to sections] INCOME— See "Revenue." INCOEPOEATION— See "Corporate Existence." INDEBTEDNESS— Definition of certificate of indebtedness, 12. PubliiJ indebtedness, rapid increase of, 1. Division or adjustment of on change of boundaries, 19. Eule for apportionment of on change in boundaries, 19. Power to apportion on change of boundary, 20. Apportionment, agency of, on change of boundary, 21. Character or form of as affecting ap'^jortionment, 22. Pleating — how apportioned, 22. EfEect of dissolution upon corporate indebtedness, 23a. Merriwether vs. Garret, 23a. Power of legislature to compel payment of, 31. For local purpose, cannot be compelled by legislature, 32. Power to incur indebtedness, how given, 57. Manner in which incurred, 57. Necessity for express authority; basis of rule, 58. To what extent discretionary when expressly given, 59. Implied power of courts to compel payment of debts, 60. Basis of implied authority to incur indebtedness, 61. Soundness of implied power doctrine, 62. Mayor of Nashville vs. Bay, 63. Distinction between borrowing money ,aud incurring indebtedness by contract, 64. Authority of public ofScials and agents in respect to incurring, 65. Authority of de facto officers to incur indebtedness, 66. Validity of acts of de facto officers, 67. Fraud, and misconduct of public officials, 68. Definition of words ' ' indebtedness " or " debt ' ' as used in laws of lim- itation, 70. Debts, when excepted from laws of limitation, 70. Refunding bonds, 70. Liability for torts, 70. Limitation on power of state when not applied to municipality, 70. Unearned interest not considered debt, 70. Compulsory and voluntary debts, 71. Current and necessary expenses, 72. The indebtedness must be a legal demand, 73. 1232 INDEX [repeeences are to sections] INDEBTEDNESS— Indebtedness further defined, warrants issued in anticipation of taxes levied, 74. Debts of territorially coexisting public corporations, 75. Basis of indebtedness, assessment or valuation, 76. Payment under executory contracts not usually considered a debt, 77. Payment from special source or special fund, 78. Net or gross debt, 79. Deduction of assets in determining net debt, 79. Power of IT. S. to issue negotiable securities, 80. Power of states to issue negotiable securities, 81. U. S. Supreme Court cases involving constitutional prohibition relative to states emitting bills of credit, 82. Decisions of state and other courts on same subject, 83. Power of subordinate public corporations to issue negotiable securities, 84, 85. De facto corporate existence necessary, 86. Power to issue negotiable securities, when implied, 87. Power when implied from the grant of other powers, 88. Power to issue negotiable bonds, 89. General and special laws as affecting power to issue bonds, 90. Eules of construction applied to laws granting br withholding author- ity, 91. Limitations on power to issue negotiable securities, 92 et seq. Payment of indebtedness a public use of funds, 116. Not created until securities are technically issued, 164. Of public corporation may be refunded, renewed or compromised, 198 et seq. Refunding and renewal bonds excluded from debt computations, 199. Public securities generally can be refunded, 204. Character of indebtedness capable of being refunded, 204. See also "Negotiable Securities." Paypient of public indebtedness, 335 et seq. See this subject indexed in detail under "Payment." Duty of public corporation to pay, 346. Provisions for payment of at time debt was incurred, 374. Debts to which sinking fund provision apply, 379. Validity of warrants and miscellaneous evidences of indebtedness as affected by debt limitations, 453a. Warrants when regarded as compulsory indebtedness, 453a. Constitutional provisions relative to the incurring of indebtedness and the issue of negotiable securities. Arranged alphabetically by states, 469 et seq. INDEX 1233 [references are to sections] INDEBTEDNESS— Alabama, 469. Arkansas, 470. Arizona, 471. California, 472. Colorado, 473. Connecticut, 474. Delaware, 475. Florida, 476. Georgia, 477. Idaho, 478. IlUnois, 479. Indiana, 480. Iowa, 481. Kansas, 482. Kentucky, 483. Louisiana, 484. Maine, 485. Maryland, 486. Massachusetts, 487. Michigan, 488. Minnesota, 489. Mississippi, 490. Missouri, 491. Montana, 492. Nebraska, 493. Nevada, 494. New Hampshire^ 493. New Jersey, 496. New Mexico, 497. New York, 498. North Carolina, 499. North Dakota, 500. Ohio, 501. Oklahoma, 502. Oregon, 503. Pennsylvania, 504. Rhode Island, 505. South Carolina, 506. South Dakota, 507. Tennessee, 508. Texas, 509. Utah, 510. Vermont, 511. Virginia, 512. Washington, 513. West Virginia, 514. Wisconsin, 515. Wyoming, 516. Territorial, 517. Hawaii Territory, 518. Philippine Islands, 519. INDORSEE— , Obligation of indorser as to payment of interest, 188. INJUNCTION— Definition of, 151. Proper remedy to restrain issue of bonds, 152, 153. Basis of injunction proceedings to restrain issue of securities, 152, 153. Parties plaintiff and defendant in proceedings to restrain issue, 154. Want of authority to issue securities ground for injunctive relief, 155. Non-compliance with conditions precedent, 156. Sale or transfer of property by railroad company no ground for relief, 156. Failure to hold popular election as ground for relief, 157. Legality of election may be inquired into, 157. Issue of securities in excess of legal limitation may be enjoined, 158. Time within which injunction proceedings must be commenced, 159. Injunction will not issue where bonds have already been delivered, 159. Relief afforded by injunction, prospective only, 159. Illustrative cases where relief by injunction was denied, 160. Proper remedy to restrain the levy of illegal taxes, 161. Cases in which relief will be denied in respect to tax levy, 161a. Informalities and irregularities generally disregarded, 161a. Tax payer estopped to contest validity of tax, 162. Injunction proceedings, when constructive notice to purchaser of nego- tiable securities, 228. When a bar to an action to enforce payment of securities, 395. p. s.— 78 1234 INDEX [eefeeences aee to sections] INJUNCTION— By state court will not afEect right of Federal court to issue writs of mandamus, 424. Issued to restrain payment of illegal warrants, 459. INNOCENT HOLDER— See "Bona Pide Holding." INNOCENT PURCHASER— See "Bona Fide Holding." "Purchase of Negotiable Securities." INTEREST— Unearned interest not considered a debt in determining debt of public corporation, 70. Payment of interest when operating as an estoppel, 318. Not usually payable upon warrants before maturity, 457. When demand for payment of warrants necessary to start running of interest, 457. See "Coupons," "Payment." INTEREST COUPONS— See "Coupons," "Interest." INTEREST ON SECURITIES— See ' ' Coupons, " " Interest. ' ' INTERNAL IMPROVEMENTS— Construction of, when a. public purpose, 108. Securities may be issued for — when, 108. See "Public Purpose." INVALID BONDS— See ' ' Validity of Negotiable Securities, " " Void Securities. ' ' IRREGULARITIES— In issue of securities, 164. In form of negotiable securities, 165. In dating and antedating securities, 166. In mechanical execution of negotiable securities, 167, 168. In sale of securities wiU not afEect validity of bonds, 241. Remedied by curative legislation, 327. See ' ' Curative Legislation. ' ' In issue of negotiable securities remedied by recitals, 371. See "Recitals in Negotiable Securities." In the exercise of a given power distinguished from absolute want of power, 331. ISSUE OF NEGOTIABLE SECURITIES— Proceedings to restrain or compel, 151 et seq. See also "Negotiable Securities," and "Formalities Required for Issue of Negotiable Securities." Need not be issued all at same time, 164. INDEX {RErEKENCES ARE TO SECTIONS] 1235 ISSUE OF NEGOTIABLE SECURITIES— Separate issues not necessary for each purpose authorized at election, 164. Time of sale as related to time of issue, 240. JUDGMENT— When constituting constructive notice to purchaser of negotiable securi- ties, 228. When refunded, 204. Estoppel by judgment, 315. Decision in respect to any essential fact or question when conclusive, 315. Illustrative and leading cases on estoppel by judgment, 315. ' Collusive, when free from collateral attack, 315. Examination of original cause of action in proceedings to enforce judg- ment, 317. Public property not subject to lien of judgment, 343. Necessity for obtaining in actions to enforce payment of negotiable securities, 412. Amount of judgment recoverable, 413. Collection of judgment, 414. Creditor has no additional right of taxation, 414. Discretionary power to order judgment paid in installments, 414. Eight of debt to special remedy not changed by rendition of judgment, 415a. Previous judgment when inquired into, 417. Judgment as affected by dissolution by public corporation, 417. In Circuit Court in County of Presidio vs. Noel- Young Bond & Stock Company, 212 U. S. 558, 538. In U. S. Circuit Court of Appeals (same case), 540. JUEISDICTION OE FEDBEAL COUETS— In actions to enforce public securities, 384. Exists under provisions of Federal constitution and statutes, 384. Cannot be impaired or annulled by state laws, 384. Eemoval of cases to the Federal courts, 385. See "Federal Courts." KNOWLEDGE— Constructive knowledge or notice as affecting bona fide holding, 227, 228, 229. Actual knowledge or notice as affecting bona fide holding, 230. Knowledge with which holder of bonds is charged, 232. Presumed to know laws of state, 232. Purchaser charged with what appears on face of securities, 232. LACHES— Injunctive relief when denied on account of, 159, 160, 162. Equitable estoppel as based upon, 320. 1236 INDEX [eefeeences are to sections] LAW— Form of, 437, 443. Validity of laws as affected by subject matter, 439. Must be uniform in its operation, 439. Prohibition against special legislation, 439. Classification laws, 439. Time of introduction of bills, 440. Form and mode of passage, 440. Necessity for yeas and nays, 440. Publication and record of, 441. Official record of proceedings to what extent conclusive, 441. Eepeal of prior legislation, 442. Ordinances as laws, 443. Beeitalg as to lawful authority. See "Recitals in Negotiable Securities." LAW MERCHANT— See "Negotiable Securities." LEGAL CURKENCY— See "Payment," "Medium," "Gold." LEGAL DEMAND— Obligation, to be considered a debt must be a legal demand, 73. LEGALITY OF ELECTION— See "Election." LEGALITY OF ISSUE— See "Validity of Negotiable Securities," "Negotiable Securities." LEGAL TENDER— Cases cited and discussed, 349. LEGAL VOTERS— See "Voters." LEGISLATION— Subsequent legislation as affecting contract obligation in respect to payment of securities, 362. Law making power vested in legislature, 434. Validity of legislation, presumption of, 435. Validity dependent upon legality of legislative action, 436. Meetings, time and manner of holding, 436. Necessity for. quorum, 436. Form of legislative act requisites of, 437. Title of act constitutional provisions relative to, 438. Sufficiency of title of legislative act, 438. Validity of legislation as affected by subject matter. INDEX 1237 [references ABE TO SECTIONS] LEGISLATION— Also by general characteristics of law, 439. Legislative acts, how introduced, 440. Form and mode of passage, 440. . Eecord of passage entry in journals, 440. Publication and official record of legislative acts, 441. Eecord of passage, to what extent conclusive, 441. Eepeal of prior legislation, 442. Repeal by implication, 442. Municipal ordinances considered as legislative acts, 443. Form and mode of passage, 443. Subsequent legislation cannot affect rights of holder of warrants, 452. LEGISLATUEE— Power to change boundaries, 17. To apportion property on change of boundaries, 16, 19, 20. Power to dissolve corporation, 23. Power in general over public corporations, 25. Power over public quasi corporations, 25. Power over public corporations acting in a private capacity, 25. Control ovel- public funds, 26. Power of over public revenues, 27. Control over corporate boundaries, 28. Power over public property, 29. Power over trust property, SO. Power over corporate contracts, 30. Power to compel payment of debts, 31. Power to compel payment of equitable obligations, 31. Power to compel incurring of debt for local purpose, 32. Constitutional limitations affecting legislative power, 33. Special legislation, 33. Power to pass classification laws, 34. Limitations based on uniformity of legislation, 35. Control over corporation in its private capacity, 36. Can delegate power to tax to a subordinate public corporation, 141. Validity of public securities not affected by subsequent legislation, 268. Effect of recitals of general legislative authority to issue securities, 286. Extent of power to pass curative legislation, 324, 329 et seq. May compel payment of corporate obligations, 347. LEVY OP TAXES— See "Taxation." LIABILITIES OF— Public corporations, 7. Public quasi corporations, 7. Mimicipal cotporations, 6, 7. Effect of annexation or division of territory upon, 18, 19. 1238 iKDEX [befebences ake to sections] LIEN— Of indebtedness upon public property, 24. Upon private property of individuals, 24, 345. Of judgment on public property, 343. LIGHTING— Maintenance of lighting system a public purpose, 105. LIMIT OF DEBT— See ' ' Indebtedness, " " Limitations. ' ' LIMITATIONS ON POWEE TO INCUR INDEBTEDNESS— See "Negotiable Securities" and "Indebtedness." Eefunding and renewal bonds excluded from debt limitations, 199, 209. Issue of refunding and renewal securities does not create a new debt, 209. Issue of securities in excess of legal limitation may be restrained by injunction, 158. Pureiaser of securities charged with excessive issue under constitu- tional limit, 252. Eule, how affected by doctrine of recitals, 252. See also ' ' Recitals in Negotiable Securitfes. ' ' Validity of warrants, etc., when affected by debt limitation, 453a. On power to issue negotiable securities and incur indebtedness, consti- tutional provisions relative to, arranged alphabetically by states, 469 et seq. LIMITATIONS ON POWEE TO ISSUE SECURITIES— See "Limitations," "Indebtedness," "Negotiable Securities." LIS PENDENS— When constituting constructive notice to purchaser of negotiable se- curities, 228. LOCAL ASSESSMENTS— Definition of, 147. Basis of rule for levies, 147. General tax cannot be levied for construction of local improvement, 148. LOCAL IMPROVEMENTS- Construction of, a public purpose, 108, 117. Negotiable securities may be issued for, 108, 117. Legislature cannot compel levy of tax for community or local pur- pose, 142. LOCAL LAWS— See "Special Legislation." INDEX 1239 [befeeences are to sections] LOCATION AND COMPLETION OF EAILEOADS— See "Eailway Aid.|' LOST BONDS— See "Lost and Stolen Bonds and Coupons." MANDAMUS— A proper remedy to compel issue of securities, 151, 163. Definition of, 151. Not available to compel performance of discretionary acts, 163. Mechanical or ministerial duties or acts may be coerced, 163. Execution of bonds may be com,pelled by mandamus, 163. Issue and delivery of bonds may be compelled by mandamus, 164. Available remedy for enforcement of judgment lien, 343. Duty to levy sinking fund taxes may be compelled by mandamus, 377. When futile, no ground for equitable relief, 387. As an available remedy to holders of public securities, 418. Definition and character of remedy, 418. Not available to control judgment or discretion, 419. Available as a remedy for the enforcement of a judgment to com- pel the payment of corporate bonds, 420, 422. Eight of Federal courts to issue writs of mandamus, 420, 424. Available as a remedy to compel levy of taxes, 420, 422. "What petition for mandamus should show, 421. Right of parties in mandamus proceedings to entire relief available, 422. Necessity for demand of payment as essential to issue of writ, 422. Mandamus an ancillary remedy, 423. State courts cannot by injunction prevent issue of writ by Federal courts, 424. Parties in mandamus proceedings, 425. Should be directed to all officials whose action is necessary to secure reUef, 425. To what officials writ should be directed, illustrative cases, 425. Mandamus not a creative writ, 426. Cannot issue to compel levy of taxes in excess of legal authority to levy, 426. Eemedy prospective in its character, 426. Power of taxation cannot be created by issue of writ, 426. Writ denied Where authority to tax does not exist, 427. Discretionary powers in respect to current expenditures not controlled by writ, 428. Decisions holding that courts may control such discretionary powers, 429. Mandamus, defenses to writ, 430. Absence of authority to levy taxes a defense, 430. Distress to debtor no defense, 430. Failure to perform duty by public official no defense, 431. 1240 INDEX [bepebences are to sections] MANDAMUS— Statutes of limitations as a defense, 432. Eight to writ when not affected by change of creditor 's remedy, 433. An ordinarily available remedy for enforcement of judgment, 418 et seq. Available and ordinary remedy for collection of warrants, 458. MATTERS OF PACT— See "Tacts," "Recitals in Negotiable Securities." MAXIMUM ISSUE— See "Negotiable Securities," "Limitations," "Indebtedness," "Ex- cessive Issue." MAYOR OP NASHVILLE vs. EAT— Discussing implied power of public corporation to issue negotiable bonds, 63. MEDIUM OP PAYMENT- Payment of interest on negotiable securities, gold coin, 190. Eight to payment in coin established by contract, 190. Taxes cannot be deducted from the amount of interest coupon due, 190. When receivable in payment of taxee, 191. Of payment of negotiable securities, 239. Sale on credit, 239. Of payment of public securities, 348. In gold coin, etc., 348. MEETINGS— Of legislative body, 436, 443. MERIWETHER vs. GARRETT— Effect upon indebtedness of corporate dissolution, 24, 344. MISCONDUCT— Of public officials in incurring indebtedness, 68. MISREGITALS— Of legal authority to issue securities, effect of, 288. Recitals of authority to issue securities, ordinances, court orders, effect of, 287. MODE OP ISSUING SECURITIES— See "Formalities Required for Issue of Negotiable Securities." MONEY— See "Gold," "Medium of Payment," "Payment." MONEY HAD AND RECEIVED- Payments made on account of void bonds may be recovered in an action for, 380. Action for allowed, when warrants issued for payment of just claim are void, 465. INDEX 1241 [reperences are to sections] MOEAL OBLIGATION— Power of legislature to compel payment of, 31. MUNICIPAL AID— See "Eailway Aid." MUNICIPAL AID BONDS— See "Negotiable Securities." MUNICIPAL BONDS— See "Negotiable Securities." MUNICIPAL CONTRACTS— See "Contracts." MUNICIPAL COEPOEATION— Definition of, 6. Nature and powers of, 3, 5, 6. Distinguished from public quasi corporation, 7. MUNICIPAL COUNCILS— Proceedings by to issue negotiable securities, 136, 443. MUNICIPAL DECISION— See "Estoppel," "Eeeitals in Negotiable Securities." MUNICIPAL FUNDS— See "Funds," "Eevenue." MUNICIPAL INDEBTEDNESS— See "Indebtedness," "Negotiable Securities." MUNICIPAL OFFICEES— See "Agents and Offices." MUNICIPAL OEDEES— See "Warrants." MUNICIPAL POWEES AND LIABILITIES— See "Public Corporations," "Indebtedness," "Powers of Public Corporations," "Negotiable Securities." MUNICIPAL EEVENUES— See "Eevenues. " MUNICIPAL SECUEITIES— See "Negotiable Securities," "Warrants." MUNICIPAL WARRANTS- See "Warrants." NAME OF EAILROAD— See "Eailway Aid." NEGOTIABLE INSTRUMENT— See "Negotiable Securities," "Warrants." 1242 INDES [BEFEBGNCES ABE TO SECTIONS] NEGOTIABLE SECUEITIES— Definition of, 11. Power of United States to issue, 80. Power of states to issue, 81. Limitations upon power of states to issue, 81. Power of subordinate public corporations to issue negotiable securi- ties must be expressly given, 84, 85. Eeasons for the rule, 84, 85. Power to issue, when implied, 87. United States Supreme Court cases on this subject, 87. Power, when implied from grant of other powers, 88. Power to issue negotiable bonds implied from grant of power to issue securities, 89. Limitations on power to issue, 92 et seq. Construction of limiting provisions, 92. Eetroaetive effect of limitations, 93. Constitutional provisions, when self -executing, 94. Limitations involving the phrase "current expenditures," 95, 98. Limitations when involving an anticipation of current revenues, 96. Expenditures in excess of current revenues, when prohibited, 99. Degree of limitation per eentile, 99. Limitations based on amount of tax- rate, 100. The purpose of a debt as an inherent limitation, 101. Negotiable securities can only be issued for a. public purpose, 101. Constitutional limitations an to purpose of debt, 108. The construction of buildings a public purpose, 103. Private schools and charitable institutions eliminated, 104. To supply light, a public purpose, 105. Supplies of water considered a public purpose, 106. Public utilities — so-called, 107. The construction of local and internal improvements — when con- sidered a public purpose, 108. Eailway aid, 109 et seq. Miscellaneous illustrations of a public purpose, 116. Payment of debts, 116. Local improvements, 117. Public boulevards and parks, 118. Construction of constitutional grants of authority, 119. Provision for payment when debt is incurred, 120. Affirmative vote as precedent to valid issue, 122. Written assent of voters, 123. Election, when not necessary for issue, 124. Petition for election, 125. New York decisions relative to petition for election, 126. Notice or order for election, 127. Form of order or notice for election, 128. INDEX [bepeeences ake to sections] 1243 NEGOTIABLE SEGUEITIES— Notice or order of election; its service or pubUeation, 129. Questions to be submitted at election, 130. Manner of holding an election, 131. Place and time of holding election, 131. Ballots, form of, 132. Canvass of election returns, 133. Necessary votes for authority to issue negotiable securities, 134. Voters and their qualifications, 135. Proceedings to issue by municipal councils or official bodies, 136. Authority to issue, when conferred by ordinance, 137. Authority to issue, when conferred by resolution, 138. Contents of ordinance or resolution, 139. Official action by officers or quasi legislative bodies, 140. Proceedings to restrain or compel issue of negotiable securities, 151 et seq. Distinction between injunction and mandamus, 151. Mandamus the proper remedy to compel issue, 151, 163. Issue, when restrained, rule in state courts, 152. Basis of proceedings to restrain, 152. Use of injunction in restraining issue of negotiable securities, 152. Eule in the Federal courts in respect to the same questions, 153. Parties plaintiff and defendant, 154. Issue restrained when there is utter lack of authority, 155. Eule as to unconstitutional law under which authority is claimed, 155. Noncompliance with conditions precedent as basis of proceedings to restrain, 156. Failure to comply with requirements of popular election, 157. Issue in excess of legal limitation can be restrained, 158. Time within which relief must be sought in proceedings to restrain issue, 159. Belief denied when party guilty of laches, 159, 160. Other instances where relief was denied, 160. An issue of negotiable securities, when compelled, 163. Mandamus the usual and proper remedy to compel issue of bonds, 163. Use of remedy controlled by its nature, 163. Mechanical or ministerial acts of officers in executing bonds may be compelled, 163. Formalities required for issue of negotiable securities, 164 et seq. See also "Formalities Eequired for Issue of Negotiable Securities." Form of negotiable security, 165. Dating and ante dating of negotiable securities, 166. Signatures of officials, 167. Sufficient signature, what is, 168. AflS^ing of seal, 172. Eegistration and certification of negotiable securities, 173. Official validation or legalization, 174. 1244 INDEX [eeperences are to sections] NEGOTIABLE SECUEITIES— Georgia eases construing validation statute in that state, 175. Delivery of securities, 178. Securities held in escrow, 178. The above references from 164 to 178, inclusive, are indexed in de- tail under ' ' Formalities Eequired for Issue of Negotiable Securities. ' ' Payment of interest on, 179 et seq. See subject indexed in detail under "Coupons," "Payment." Bate paid or allowed by law, 180. Usually by coupons attached to securities, 181. Power to issue coupons representing interest installments, 182. Form of interest coupon, 183, 184. Execution of interest coupons, 185. Not necessary to include name of payee, 186. Legal character of interest coupons as negotiable instruments, 187. Payment of interest coupon, 188. Time, place and order of payment, 189. Medium of payment, 190. Coupons receivable in payment of taxes, 191. Days of grace, 192. Severed coupons, nature of and rights pertaining to holder of, 193. Severed coupons constitute separate and independent promise to pay, 193. Overdue coupons, 194. Effect of dishonor upon bond from which detached, 194. Interest on overdue coupons, 194. Demand, when necessary to recover interest on unpaid coupons, 195. Equities attaching to overdue or dishonored coupons, 196. Statute of limitations as affecting rights of holder, 197. Eefunding, renewal and compromise securities, 198 et seq. See subject indexed in detail under "Eefunding, Eenewal and Com- promise Securities." Definition of a negotiable instrument, 212. Public securities regarded as negotiable instruments, 213. Essentials of negotiable paper, 214. The promise to pay must be certain, 214. Fact of payment must be certain, 214. Amount to be paid must be certain, 214. Delivery necessary to establish status as a negotiable instrument, 214. See also "Delivery." Time of payment; payee, 215. Time of payment as affecting negotiability, 216. Optional payment does not defeat negotiability, 216. Registration, effect of, 217. Bona fide holding necessary to establish character as negotiable in- strument, 218 et seq. See subject indexed in detail under "Bona Fide Holding." INDEX 1245 [BEFEEENCES ABE TO SECTIONS] NEGOTIABLE SECURITIES— Sale of negotiable securities, 237 et seq. See subject indexed in detail under "Sale of Negotiable Securities." Validity of negotiable securities, 265 et seq. See subject indexed in detail under ' ' Validity of Negotiable Se- curities. ' ' Defences available in action on, 330 et seq. Payment of, 335 et seq. For detailed index of this subject see "Payment." Duty of corporation to pay, 346. Implied power of public corporation to pledge its credit, 346. Time of payment of, 352. Certainty in respect to time of payment of, 353. Validity as affected by variation from designated maturity, 353. Payments made on account of void bonds may be recovered in an action for money had and received, 380. Actions to enforce obligations of, 384 et seq. See also this subject indexed in detail under "Pleading and Prac- tice." Bight of action on each separate bond and coupon, 389. Bonds transferred for collection only, as affecting jurisdiction of Federal Courts, 393, 394. Taxation of, 444. Character of vrarrantg and miscellajieous evidences of indebtedness aa non-negotiable securities, 450, 464. Constitutional provisions relative to the issue of negotiable securities. Arranged alphabetically by states, 469 et seq. Alabama, 469. Arkansas, 470. Arizona, 471. California, 472. Colorado, 473. Connecticut, 474. Delaware, 475. Florida, 476. Georgia, 477. Idaho, 478. Illinois, 479. Indiana, 480. Iowa, 481. Kansas, 482. Kentucky, 483. Louisiana, 484. Maine, 485. Maryland, 486. Massachusetts, 487. Michigan, 488. Minnesota, 489. Mississippi, 490. Missouri, 491. Montana, 492. Nebraska, 493. Nevada, 494. New JIampshire, 495. New Jersey, 496. New Mexico, 497. New York, 498. North Carolina, 499. North Dakota, 500. Ohio, 501. Oklahoma, 502. Oregon, 503. Pennsylvania, 504. Ehode Island, 505. South Carolina, 506. South Dakota, 507. Tennessee, 508. Texas, 509. Utah, 510. Vermont, 511. Virginia, 512. Washington, 513. West Virginia, 514. Wisconsin, 515. Wyoming, 516. Territorial, 517. Hawaii Territory, SIS. Philippine Islands, 519. 1246 INDEX [rbfebences are to sections] NET debt- How ascertained in determining debt of public corporation, 79. NON-NEGOTIABLE SECUBITIES— See "Negotiable Securities," "Warrants." NON-PAYMENT OP BONDS— See "Payment." NON-PAYMENT OF COUPONS— See "Coupons," "Payment." NON-PEEFOBMANCE OF CONDITIONS— See "Conditions," "Eecitals in Negotiable Securities," "Estoppel." NOTE— See "Warrants," "Negotiable Securities." NOTICE— Of antecedent facts as affecting bona fide holding, 226. Constructive notice or knowledge as affecting a bona fide holding, 227. Constructive notice through lis pendens, existing judgment or injunc- tion proceedings as affecting bona fide holding, 228. See "Election." NUMBER OF BONDS— See "Formalities Required for Issue Negotiable of Securities." OBJECT OF ISSUE— See "Public Purpose." OBLIGATION OF CONTRACT- See "Contract Obligation." OFFICIAL SIGNATURES- See "Signatures," "Formalities Required in Issue of Negotiable Securities, " " Warrants. ' ' OPTIONAL— Payment of securities, 336. Provisions in respect of payment as affecting negotiability of se- curities, 353, 356. Right of corporation to call for payment, 355. In favor of holder of securities, 356. ORDER— For an election, 127. Form of, for an election, 128. Service or publication of order for election, 129. Contents of, 129. Questions to be submitted in order for or notice of election, 130. INDEX 1247 [KEPHtENCES AKE TO SECTIONS] OEDINANCES— Power conferred by ordinance to issue negotiable securities, 137. Definition of, 137. Form and contents of ordinance for issue of securities, 139. When purchaser of securities bound to examine ordinances relating to issue of securities, 251. Eecitals of authority to issue securities derived from ordinances, effect of, 287. Ordinances, legal character as laws, 443. Validity of, how tested, 443. Must be passed in mode prescribed by municipal charter, 443. Regularly signed and approved, 443. Must be published as required by law, 443. Form of in City of Brenham vs. German- American Bank, 144 XT. S. 173, 526. ORIGINAL PARTIES TO BONDS— See "Bona Fide Holding." OVER-DTJE^ Over-due interest and coupons. See "Coupons." Over-due coupons, when constructive notice to purchaser of negotiable securities, 229. OVER ISSUE OF SECURITIES— See "Excessive Issue of Securities." PAR— Requirement that securities be sold not less than par, 245. Contracts for purchase at less, usually void, 245. Securities may be sold for less in absence of statutory prohibition, 245. Bona fide holder can recover full value although sale may be made at less than par, 245. Amount Tecoverable on public securities sold at less than par, 351. Amount recoverable on warrants sold less than par, 461. PART PAYMENT OF WARRANTS— See "Warrants." PARTICULAR FUNDS— See "Special Funds." PAST DUE COUPONS— See ' ' Coupons, " " Over-due Coupons. ' ' PAYEE— Name of payee in security, 166. Name of payee in interest coupon, 186. Negotiable security payable to bearer or blank, 350. 1248 INDEX [references are to sections] PAYMENT— Power of legislature to compel payment of debt, 31. Implied power of courts to compel payment of indebtedness, 60. Under executory contracts, not usually considered a debt, 77. Obligation payable from special source or special fund not usually considered a debt in determining total indebtedness, 78. Payment of debts considered a public use of funds, 116. Provision for payment when debt is incurred, 120. Of interest on pubMc securities, 179 et eeq. See "Coupons." Certainty of payment an essential of negotiable securities, 214. Unconditional payment an essential of negotiable securities, 214. Certainty of amount paid payable an essential of negotiable securi- ties, 214, 215. Optional payment does not destroy character as negotiable security, 216. Medium of for negotiable securities, 239. Questions involved in payment of public securities, 335. Motives and reasons for payment, 336. Economic argument for payment of public debt, 336. Constitutional limitation relative to term of securities, 336. Serial and optional issues, 336. Payment of public securities dependent upon good faith, validity of securities and financial competency of maker, 337. Good faith as involved in payment of securities, 338. State defaults, 339. County repudiations, 340. Municipal defaults, 341. Elements involved In determination of validity of public securities, 341. Sources of payment, 343. Property subject to lien of judgment, 343. Public property not subject to judgment lien, 343. Mandamus to compel levy of taxes, the only available remedy, 343. Meriwether vs. Garrett, 344. Discussing resources available for public creditors, 345. Constitutional provisions or statutes providing special sources; of pay- ment, 345. New England rule as to lien of judgment stated, 345. Duty of corporation to pay, 346. Where power to tax exists its exercise can be compelled 346. Public securities a charge upon what corporation 347. In case of issue of precinct bonds, 347. Medium of payment, 348. Provisions for payment in gold coin, 348. Illustrative cases on medium of payment as provided in securities, 348. Legal tender cases, 349. INDEX 1249 [RiSFEEENCES ABE TO SECTIONS] PAYMENT— Securities, to whom payable, 350. May be made payable to bearer or order with provisions for indorse- ment in blank and registration, 350. Effect of provisions for registration, 351. Amount recoverable, 351. Par of securities generally collected though issued at a discount, 351. Time of payment, 352. Constitutional provisions limiting time bonds may run, 352. Certainty in respect to time of payment, 353. Optional payment as affecting validity of securities, 353. Variation in maturity from authority granting power to issue as affecting validity, 353. Maturity established by duration of interest period, 353. Order of payment and priority, 354. Order of presentation generally determines order of payment, 354. When principal becomes due upon default in interest, 354. Eight of corporation to call for payment, 355. Optional payment when in favor of holder, 356. Place of payment, 357. Either within or without geographical limits of maker, 357. Illinois rule to the contrary, 357. Power to pay as related to power to tax, 358. Doctrine of implied power to levy taxes for the payment of interest or principal, 359. Implied power assumed in the absence of positive prohibition to the contrary, 359. Power to tax for payment may be limited by constitutional or sta- tutory provisions, 359. Power to pay tax will not be implied when method of paying in- debtedness is prescribed, 360. Delegation of power to tax by legislature not illegal, 361. Eepeal of change in law providing means of payment impairs con- tract obligation, 362. Eule on this question as stated and discussed by Supreme Court cases, 362. Special source of revenue cannot be diverted without impairing con- tract obligation, 362. Sources of payment whether general or special, 363. When public securities will constitute a general charge, 364. Payment from either general or special sources of revenue, 364. United States vs. Fort Scott, 365. Discussing payment from general and special sources of revenue, 366. Payment from general funds, though a special tax has been pro- vided, 366. p. 8.-79 1250 INDEX [eefeeences aeb to sections] PAYMENT— Public securities a general charge when special tax or assessment in- valid, 367. Payment from a special fund created by a special tax, 368. Eights of security holder to enforce special fvmd or tax provisions, 368, 370. Taxing districts, 369. Power. of taxing districts to levy taxes when coincident in territory, 369. Duty of public corporations to levy taxes, 370. Power in this respect can be enforced by mandamus, 370. Funds or taxes specially provided for payment of securities cannot be diverted, 871. Moneys appropriated for current expenses not generally available for payment of public securities, 372. Payment of public securities through sinking fund provisions, 373. Investment of sinking funds, 373. Constitutional provisions relative to levying taxes when self executing, 375. Tax levy provisions held mandatory, 375. Effect of failure to levy sinking fund tax upon validity of securi- ties, 376. Neglect and failure of officials to act will not render bonds void, 375, 376, 377. Duty to levy sinking fund taxes may be compelled, 377. Provisions for levying sinking fund taxes constitute a contract, 377. Sufficiency of provision for levy of sinking fund taxes, 378. Debts to which sinking fund provisions apply, 379. The payment of void bonds. How enforced, 380. Moneys advanced for can be recovered in an action for money had and received, 380. Principle based upon equity and right dealing, 380. Illustrative cases discussing this doctrine, 380. City of Litchfield vs. Ballou to the contrary of the rule above stated, 381. Other cases holding contrary to this doctrine, 382. Statute of limitations as applied to implied promise to repay money received for void bonds, 383. Securities payable from specific taxes or property when affecting right of action for, 397. Of securities from general revenues after special fund is exhausted, 422. Of warrants and miscellaneous evidences of indebtedness, 459. Payment of warrants when refunded by void securities, 459. Circumstances justifying refusal to pay warrants, 459. Presentation of warrant for payment, necessity for, 460. Amount recoverable on warrants and miscellaneous forms of in- debtedness, 461. INDEX 1251 [REFERENCES ARE TO SECTIONS] PAYMENT— Taxes when deducted from amount due, 461. Amount recovered when warrants sold at a discount, 461. Manner of payment established by contract, 462. Warrants receivable for taxes and debts due the maker, 462. Payment according to contract in warrant may be enforced, 462. Check on delinquent bank does not constitute payment of warrant, 462. Time of payment, 463. On demand or at a specified date, 463. According to order of issuance, 463. In order of their registration, 463. Partial payments made upon warrants when allowed, 463. Assignee of warrants entitled to payment, 464. Equitable defences available as between holder of warrant and maker, 464. Eights of assignee to demand payment of warrant and sue upon re- fusal, 464. Burden of proof upon one attacking validity of warrants in the hands of holder or his assignee, 464. Possession and dominion over warrants prima facia evidences of title, 464. PAYMENT OP COUPONS— See "Coupons," "Payment." PAYMENT OP INTEREST- See "Payment," "Interest," "Coupon." PAYMENT OF TAXES— See "Taxes," "Payment." PAYMENT OP WAEEANT8— See "Payment," "Warrants." PENDENCY OF ACTION— See "Lis Pendens," "Construction," "Constructive Notice," "Bona Fide Holding." PEEFORMANCE OP CONDITIONS— See "Conditions." PEEPETUAL INJUNCTION— See "Injunction." PETITION— Petition for election, 125. Notice or order for election, 127. Form and contents of, 127, 128. Service of publication of notice for election, 129, 1252 INDEX [references are to sections] PETITION-- Questions, how submitted to voters in notice, ]30. For writ of mandamus to show what facts, 421. Form of for election in Eieh vs Town of Mentz, 134 U. S. 632, 524. PLACE— Of payment of negotiable securities, 357. May be made within or without geographical limits of maker, 357. See "Payment," "Coupons." PLAINTIFF— Parties plaintiff. See "Pleading and Practice," "Mandamus," "Injunction," "Ac- tions. ' ' PLEADING AND PEACTICE— See "Actions." Payments made on account of void bonds may be recovered in an action for money had and received, 380. Jurisdiction of Federal courts in actions to enforce public securities, 384. Jurisdiction established by Federal constitution and statutes, 384. Jurisdiction of Federal courts cannot be impaired or annulled by state laws, 384. Illustrative cases, 384. Eemoval of cases to Federal courts, 385. Equitable relief when afforded the holder of public securities, 386. In the case of an issue of void bonds, 380, 386. For the reformation of bonds irregular in form, 386, 371. To compel an accounting of special assessments collected, 368, 371, 386. Equitable relief when denied, 387. Mandamus futile no ground for equitable relief, 387. Eeceiver of public corporation will not be appointed, 387. Equitable relief not allowed in scaling down of excess issue, Hedges vs. Dixon County, 387. Doctrine of equitable subrogation, 388. Eight of action accrues to holder of each separate bond and coupon, 389. Conditions necessary to right of bond holder to maintain action, 390. Holders may resort to mandamus to compel levy of assessment of taxes, 390. Doctrine of estoppel as affecting right of bond holder to maintain action, 391. Questions of form, fraud and misconduct cannot be raised, 391. Parties plaintiff, 392. Bona fide holder or his transferee entitled to maintain action, 392. Eights of holder when bonds are transferred for collection only, 393. As affecting jurisdiction of Federal courts, 393. INDEX 1253 [eefeeences aeb to sections] PLEADING AND PRACTICE— Where question of jurisdiction is not involved action may be main- tained on bonds transferred for collection only, 394. Injunction when not a bar to right of action, 395. Parties defendant, 396. Parties defendant when precinct bonds are sued upon, 396. Eight of action as affected by fact that bonds are payable by specific taxes or property, 397. Pleadings in actions to enforce public securities, 398. Facts necessary to be averred, 398. Sufficiency of complaint, 398. What questions raised by demurrer, 399. Demurrer when sustained, illustrative cases, 399. Burden of proof, 400. Possession of negotiable instrument makes prima facie case, 400. See also "Validity of Negotiable Securities" and "Coupons." Presumption of validity as affecting burden of proof, 400. Issues raised by general denial, 401. Effect of recitals upon affirmative defences, 402. See also "Eecitals in Negotiable Securities," "Validity of Nego- tiable Securities" and "Estoppel." AflSrmative defences, 402. Burden of proof when shifted, 403. Proof of irregularity or fraud may shift burden of proof, 403. Doctrine of burden of proof as stated in Murray v. Lardner, 403. Burden of proof as required by Illinois cases, 404. Pindings of fact, nature of, 405. When jury unnecessary, 406. Directed verdict questions involved, 407. Errors on trial when ground for reversal, 408. Bill of exceptions on appeal, 409, 536. Scope of inquiry on appeal, 410, 411. Questions not raised below cannot be reviewed by appellate court, 411. Judgment, necessity for obtaining, 412. Amount recoverable on judgment, 413. Judgment procured ordinarily gives creditor no additional rights of taxation, 414. Collection of judgment, 414. Discretionary power to order judgment paid in installments, 415. Judgment as affecting character of debt or special remedy, 415a. Process of Federal courts cannot be interfered with by state action, 416> In action to enforce judgment inquiry in respect to basis of when per- mitted, 417. Dissolution of public corporation as affecting right to collect judgment, 417. Mandamus as a remedy, 418 et seq. See subject indexed in detail under "Mandamus." 1254 INDEX [rbi'eebnces are to sections] PLEADING AND PEACTICE— Discretionary power of courts in respect to current expensbs, 429. Statutes of limitations as a defence in actions on public securities, 432. Change of creditors remedy not permissible, 433. Obligation of contract when impaired by change of creditors remedy, 433. PLEADINGS— See "Pleading and Practice." Porms of in the cases noted below: County of Presidio vs. Noel- Young Bond & Stock Company, 212 IT. S. 558, 524 et seq. Plaintiff 's original petition, 534. Defendant 's first amended original answer, 535. Bill of exceptions, 536. Charge to have verdict of jury, 537. Judgment in XJ. S. Circuit Court, 538. Petition for writ of error, 538a. Assignment of errors, 539. Judgment in U. S. Circuit Court of Appeals, 540. National Life Insurance Company vs. Board of Education of City of Huron, 62 Fed. 778, 541 et seq. Complaint, 541. Amendments to complaint, 542. Amended answer, 543. Eich vs. Town of Mentz, 134 U. S. 632, 524. POPULAR VOTE— See "Election," "Vote." POSSESSION OF SECURITIES- See "Bona Fide Holding," "Actions," "Burden of Proof." POWER- To create public corporation, 14. Of public quasi corporation, 7. POWERS OF LEGISLATURE— See "Legislature." POWERS OF PUBLIC CORPORATIONS— See "Want of Power," "Indebtedness," "Negotiable Securities," "Warrants," "Taxation," etc. Where found, 38. Express and implied, 38. To enact ordinances, 39. To institute public offices, 39. To acquire and hold property, 39. To exercise police power, 39. iWDES 1255 [references are to sections] POWEBS OF PUBLIC COEPOEATIONS— Miscellaneous implied powers, 39. Discretionary and imperative powers, 40. Exercise of imperative powers, 41. Exercise of discretionary powers, 42. Delegation and surrender of corporate powers, 43. Eules of construction, 44. Eule of strict construction, how modified, 45. Power to contract, 46 et seq. See "Contracts." Irregular exercise of power in respect to contracts, 50. Power to incur indebtedness, 57 et seq. See also ' ' Indebtedness. ' ' Presumption exists that corporations had power to issue negotiable securities, 265. To issue negotiable securities. See "Negotiable Securities." In respect to taxation. See "Taxation." PEECEDENT CONDITIONS— See ' ' Conditions. ' ' PEECINCT BONDS— See "Negotiable Securities." Payment of precinct or township obligations, 347. PEESENT DEBT— See "Indebtedness." PEESENTMENT— See "Coupons," "Payment," "Warrants." PEESUMPTION— That negotiable securities have been properly executed and issued, 164. Of regularity in dating and ante dating of securities, 166. Of authority of ofiScials to execute securities, 166. In respect to character of seal aflSxed to negotiable instrument, 172. In favor of bona fide holding of public securities, 220. Presumption of notice or knowledge of holder of securities, when raised 227, 228. That purchaser of securities has knowledge of the laws of the state, 232. Of law exists in favor of validity of public securities, 265. Not when want of power appears upon face of securities, 265. That holder of public securities acquired them before maturity, 265. Of bona fide holding, 265. That conditions precedent have been performed, 265. 1256 INDEX [references are to sections] PRESUMPTION— That ofiScers and agents possess authority to act in issuance of secur- ities, 265. i Presumption of bona fide holding throws burden of proof on person attacking validity of securities, 265. Of validity of legislative acts, 435. Of validity of warrants, 453, 458. PRIVATE— Public corporations may assume character of private, 25. Non-governmental debt, cannot be incurred, 32. Legislative control over power of public corporation to act in a private capacity, 36. ' Private purpose invalidates public contract, 46. Distinction between public and private corporations, 55. Issue of negotiable securities for private purpose prohibited, 102. See "Public Purpose." Sale of negotiable securities, 242. Private property cannot be taken for payment of debts of public cor- poration, 345. Validity of warrants determined by purpose for which issued, 454. Warrants issued for private purpose regarded invalid, 454. PROCEEDINGS IN EQUITY— See "Actions," "Equitable Defences," "Mandamus," "Injunction." PROCEEDINGS TO ISSUE SECURITIES- See ' ' Formalities Required for Issue Negotiable Securities. ' ' PROCEEDINGS TO RESTRAIN OR COMPEL ISSUE OF SECURITIES— Distinction between mandamus and injunction, as appropriate remedies, 151. Issue of negotiable securities restrained on complaint of tax payer, 152. Grounds of relief available to tax payer, rule in state courts, 152. The rule as stated in Federal courts, 153. Parties plaintiff and defendant, 154. Ground of relief, want of authority for issue of bonds, 155. Non-compliance with conditions precedent, 156. Requirement of a popular election when involved as a ground for relief, 157. Issue of securities in excess of legal limitation, ground for relief, 158. Rule when part of issue in excess of legal limitation, 158. Time within which relief must be sought, 159. Delivery as affecting right of taxpayer to restrain issue, 159. Circumstances under which will be denied, in detail, 160. IITDEX 1251 [references are to sections] PEOCEEDINGS TO EESTRAIN OR COMPEL ISSUE OP SEOUEITIES— Issue of securities, when compelled, 163. Mandamus the proper remedy, 163. Use of mandamus controlled by its nature, 163. Discretionary duties cannot be coerced, 163. Execution of bond may be compelled by mandamus, 163. PEOCEEDS— Of public securities, illegal use of as affecting validity, 262, 263. PROHIBITIVE PEOVISIONS— See "Limitations," "Indebtedness." PROMISSORY NOTE— See "Warrants," "Indebtedness," "Implied." PUBLICATION— Of petition or order for election, 129. Of ordinances, 443. Of legislative enactments, 441, 443. PUIBLIC BUILDINGS— See "Buildings," "Public Purpose." , PUBLIC COEPOEATION— Definition of, 3, 5. Distinguished from private, 3. Classification of, 4. Elements of, 9. Power to create, 14. Charter of and legal nature, 15. Annexation or division of territory, 17, 18. Effect of upon public property and liabilities, 18. Division or adjustment of debts and liabilities on change of boundaries, 19. Change in grade of, effect on liabilities, 19. Dissolution of, 23. Dissolution, how effected, 23. Effect of dissolution on debts and liabilities, 23a. Capacity to act as private corporation, 25. Legislative control over corporation in its private capacity, 36. Powers of, 38 et seq. See also "Powers of Public Corporations." Power to contract, 46 et seq. See also "Contracts." Distinction between public and private, 55. Debts of territorially coexisting public corporations, 75. Power to issue railway aid securities, 109 et seq. Power to make donations to railways, 112. Delegated power to tax construed strictly, 141, 142. 1258 INDEX [kEFEBENCES ABE TO SECTIONS] PUBLIC COEPOEATION— Power to tax, of organizations coincident in territory, 144. Exercise of power of taxation upon annexation or division of territory, 145. Exemption from taxation by territory detached or annexed, 145. Eight of de facto corporations to issue securities not questioned, 266. Authority of to issue negotiable securities and incur indebtedness, con- stitutional provisions relative to, arranged alphabetically by states, 469 et seq. Tor details see ' ' Negotiable Securities, " " Indebtedness. ' ' See also "De Facto," "Taxation," etc. PUBLIC ENTERPEISE— See "Public Purpose." PUBLIC FUNDS— Power of legislature over, 26. See "Funds," "Eevenue." PUBLIC HIGHWAYS— See "Highways," "Public Purpose." PUBLIC OFFICERS— See "Agents and Officers." PUBLIC PAEKS AND BOULEVAEDS— Issue of negotiable securities for, a public use of funds, 118. PUBLIC PEGPEETY— Effect of annexation or division upon, 18, 19. Power of legislature over, 29. Creditor 'a rights in cannot be impaired by legislative action, 30. Power of legislature over public property, 29. Trust property, power of legislature over, 30. Of public corporations; how divided on change of boundaries, 18, 20, 21. Not subject to lien of judgment, 343. Not subject to seizure under process, 343, 344. Exceptions to this rule, 345. Property held in private capacity, 343. PUBLIC PUEPOSE— Purpose of debt an inherent limitation on power to issue negotiable securities, 101. Definition of public purpose, 101. Constitutional limitations as to public purpose, 102. Private aid, granting of private aid prohibited, 102. Construction of public buildings a public purpose, 103. Private schools and charitable institutions, when eliminated, 104. INDEX 1259 [references are to sections] PUBLIC PUEPOSE— Construction of lighting plant a public purpose, 105. Maintenance of water supply a public purpose, 106. Construction of internal improvements, wlien considered a public pur- pose, 108. Payment of debts a public purpose, 116. Miscellaneous illustrations of public purpose, 116. Construction of local improvements a public purpose, 117. Sevcers, 117. Public parks and boulevards, 118. Power of taxation can. only be exercised for public purpose, 141. Recitals of public purpose in securities operate as an estoppel, 289, 290, 291. Sufficiency of recitals in securities as to purpose for which issued, 290. When illegal purpose appears upon face of securities doctrine of estoppel by recitals wiU not apply, 291. PUBLIC QUASI CORPOEATIONS— Definition of, 7. Distinguished from municipal, 7. Powers of, 7. PUBLIC EBCOED— See ' ' Eecords, " " Eecitals. ' ' PUBLIC SECUEITIES— Definition and classification of, 10. Power of legislature to compel payment of, 31. Issue of when compelled-, 32, 163. Eegarded as negotiable instruments, 213. See "Negotiable Securities," "Warrants." PUBLIC USE— See "Public Purpose." PUBLIC WOEKS— See "Local Improvements," "Internal Improvements," "Public Pur- pose." PUECHASE OP SECUEITIfiS— See "Bona Fide Holding." Before maturity and without notice of dishonor, essential to bona fide holding, 225. Bidder may enforce contract in connection with, 243. Prospective buyer cannot be compalled to take securities of questionable validity, 244. Purchaser bound to ascertain authority for issue, 248 et seq. Including constitutionality of act granting authority, 250. Also legality of corporate organization and manner of acting, 251. 1260 INDEX [references are to sections] PURCHASE OF SECUBITIES— Purchaser 's rights, as affected by excessive issue of securities, 252. Bound by recitals of fact, 253. Purchaser bound to determine authority of ofiicials to act in issue of securities, 254. Also charged with examination of certain public records, 255. Assessment rolls and other records, 256. Extent of search required of purchaser, 257. Charged with knowledge of public records only, 259. Not bound to ascertain performance of conditions; under what circum- stances, 260. Purchaser bound by what securities disclose on their face, 261. His rights not aflEected by use of proceeds by public corporation, 262. "Validity of bonds not aflEected by illegal use of proceeds, 263. PURCHASER FOR VALUE— See ' ' Purchase of Securities, " " Bona Fide Holding. ' ' PURPOSE OP ISSUE OF SECURITIES— See "Public Purpose." PURPOSE OP TAXATION— See "Taxation." QUALIFICATIONS— Of voters at an election for issue of negotiable securities, 135. See "Voters," "Election." QUASI— Public quasi corporation defiilition and powers of, 4, 7. QUORUM— Presumption of quorum in passage of legislation, 435. Necessity for legal quorum to validity of enactments, 436. Including passage of ordinances, 443. RAILWAY AID— Issue of negotiable securities in aid of railways a public purpose, 109, 110. Incomplete organization of railway, how affecting validity of railway aid securities. 111. Charter changes aflfeeting railway aid. 111. Power of public corporation to make donation to railway, 112. Performance of eondltions precedent required of railway companies, 113. Waiver of ednditions, 115. Completion of road, 113. Location of railway line, 119. Constfuction of terminal facilities, 113. INDEX 1261 [references are to sections] RAILWAY AID— Substantial performance of conditions only, required, 113. Unauthorized subscription to stock remedied by curative legislation, 327. Election irregularities remedied by curative legislation, 327. Consolidation of railroad corporation no defense to railway aid bonds, 350. RAILWAYS— See "Railvray Aid." RAILWAYS— DONATIONS TO— See "Railvray Aid." RATE OF INTEREST— See "Interest," "Coupons," "Warrants." RATIFICATION— Of an invalid or ultra vires contract, 53. Equivalent to original authority, 325. Doctrine of equitable estoppel based upon ratification, 321, 322. Acts of ratification, how performed, 322. Acts of ratification constitute an equitable estoppel, 319. Levy of taxes for payment of interest on bonds, 319. Retention of stock in railroad corporations, 319. Recognition of validity of securities by issue of renewal or refunding securities, 319. See also "Curative Legislation." j RECITALS IN NEGOTIABLE SECURITIES— Recitals of sale at not less than par value operate as an estoppel, 245. Recitals in excessive issue, when binding upon purchaser of securities, 252. When purchaser charged with examination of recitals of fact in public securities, 252. Maker of securities estopped by recitals contained in them, 276. Definition of recital, 276. Recital of performance of conditions operates as au estoppel, 276. Doctrine applies only to recitals of fact, 276. Not to recitals of legal authority, 276. Doctrine of estoppel by recitals applies only to bona fide holder of securities, 278. Legal effect of recitals operate equitably, 278. Also as a municipal decision so called, 278. Leading and illustrative cases on doctrine of recitals, 279. Town of Coloma v. Eaves, 279. The doctrine of estoppel by recitals as applied in the state courts, 280. Doctrine of estoppel not applied in the absence of recitals, 281. Leading eases referred to, 281. Rule when recitals are contrary to statutory provisions, 282. 1262 INDEX [eejerences are to sections] EECITALS IN NEGjOTIABLB SECURITIES— Or when recitals show that statutory provisions have not been complied with, 282. Doctrine as affected by character of recital, 283. Whether express or general, 283. Express recital operates as an estoppel, 283. Difference of holding as to effect of a general recital, 283. Kecitals to contain what and their construction, 284. Eecitals of lawful authority, constitutional provisions, 285. Effect of, limited by character of whether general or special, 285. Eecitals of authority, legislative, 286. Eecitals of other authority, ordinances and court orders effect of, 287. Mis-recitals of legal authority, 288 On matters of fact, purpose for which securities issued, 289. Operate as an estoppel, 289. Eecitals of proper purpose estop even when securities issued for illegal purpose, 289. Sufficiency of recitals as to purpose for which securities are issued, 290. Eecitals of purpose generally operate as an estoppel, 290. Eule modified by facts disclosed on face of securities, 291. Also by rule requiring examination of public records, 291. Estoppel as applied to election and matters pertaining thereto, 292. Performance of conditions presumed from recitals in securities, 292. Eecitals cure all election irregularities, 292. Effect of recital of an election when the contrary is true, 293. Doctrine of the Federal courts on this point, 293. Doctrine of the state courts on this point, 294. Effect of recitals when bonds issued in excess of legal limit, 295. When no recitals are made, no estoppel can follow, 296. The effect of a general recital of the performance of conditions pre- cedent, 297. The effect of express recitals, 298. Excessive issue of securities as based upon a statutory or constitutional limitation, 299. The doctrine of estoppel by recitals will not apply where purchaser of securities is charged with examination of designated public records, 300. Illustrative cases stating distinctions, 300. Board of County Commissioners of Chaffee County v. Potter, 301. Board of Commissioners of Gunnison County v. Eollins & Sons, 302. The doctrine of recitals as affected by duty of public officials in con- nection with determining debt limit, "303. Miscellaneous illustrative cases relating to recitals of fact, 310. Express statutory recitals when not operating as an estoppel, 311. Statutory conditions providing for performance of prescribed acts, 311. Eecitals, power to make, 312. INDEX 1263 [RErEBENCES ARE TO SECTIONS] KECITALS IN NEGOTIABLE SECUEITIES— Doctrine of estoppel by recitals based upon authority of public officials to make them, 312. Authority to make recitals in securities. How given, 313. Authority to make recitals also implied from general power of public officials, 313. Eecitals without authority cannot operate as an estoppel, 314. Will not operate as an estoppel where there is utter want of power to issue, 330-331. Effect of recitals upon burden of proof, 402. EECOEDS— Purchaser of securities charged with examination of, when, 255, 256, 257, 258, 259. Estoppel by recitals. How affected by rule requiring examination of records, 291. Eequired examination of public records as affecting doctrine of estoppel by recitals, 300, 301, 302. Extent of investigation required of purchaser of securities, 302. Official book of record of ordinances, competent evidence of passage, 402. Of passage of legislative enactments, 441. Official record of passage of law, how far conclusive, 441. In United States Supreme Court in Eich v. Town of Mentz, 134 U. S. 632, 524. In United States Supreme Court in County of Presidio v. Noel- Young Bond and Stock Co., 212 U. S. 558, 534 et seq. EEPUNDING EENEWAL AND COMPEOMISE SECUEITIES— Excluded in determining total debt of public corporation, 70. Authority and power to issue, 198. Legal authority to issue negotiable securities must first exist, 198, 199. Authority to issue refunding bonds may be implied, 198. May be implied from power to borrow money, 198. Eefunding bonds excluded from computations to ascertain debt limit, 199. Authority, where expressly given, 200. Construction of statutory authoj'ity to issue, 201. Authority to Issue refunding securities, when implied, 202. Conditions required for issue, 203. Affirmative assent of voters, 203. Provision for payment of interest and principal, 203. "When affirmative vote of electors not necessary, 203. What can be refunded, 204. Formalities of issue, 205. Same principles govern as applied to original bonds, 205. Issue of securities, 205. 1264 INDEX [REFERENCES AEE TO SECTIONS] EEFUNDING EENEWAL AND COMPROMISE 8ECUEITIES— Invalidity of old debt, as affecting the new, 206. Invalidity of old debt not affecting legal status of new, 206. Kule applied to issue in excess of legal limitation, 206. Invalidity of new debt as affecting old, 207. Legal status of old securities not affected by new, 207. Doctrine of estoppel applies to refunding securities, 208. Issuing of refunding securities does not create a new debt, 209. Doon Township vs. Cummins — involving the validity of an issue of refunding securities, 210. Compromise bonds, when authority to issue exists, 211. Irregular issue of securities may be compromised, 211. Power of corporate officials to pass upon validity of securities com- promised, 211. Issue of refunding bonds operates as an equitable estoppel, 319. When issued for liquidation of outstanding warrants, 456. Validity of warrants issued for refunding prior obligations, 456. Legal character of warrants as affected by character of original debt, 456. Authority to issue refunding warrant must exist, 456. BEGISTRATION— When required by constitutional and statutory provisions, 173. Purpose to be accomplished by, 173. Certification by what official, 173. Failure to register or certify as- required, effect upon validity of secur- ities, 173. Eegistration and validation of securities, 174. Eeference to states containing such provisions, 174. Georgia cases in respect to validation and confirmation, 175. When registration does not destroy negotiability of public securities, 217. Provision for registration in negotiable securities, 350. Provisions for registration and record of warrants, 459. Warrants may be made payable in order of their registration, 463. EEISSUE OF SECUEITIES— See "Refunding, Renewal and Compromise Securities." REMEDIES— Change of when the impairment of a contract obligation, 433. EEORGANIZATION OF PUBLIC CORPORATION— See "Dissolution." REPEAL— Of prior legislation, 442, 445. See "Taxation." Rights of creditors cannot be affected by, 442. See "Contract Obligation." INDEX 1265 [REFEKENOES AEE TO SECTIONS] SEQUISITES OF ISSUE-lOF SECURITIES— See ' ' Formalities Eequired in Issue of Negotiable Securities. ' ' EESIGNATION OP OFFICEES— See "Agents and Officers," "Mandamus." EESOLUTION— Definition of, 137. Authority to issue negotiable securities conferred by, 137, 138. EBSTEAIN— Proceedings to restrain issue of negotiable securities, 151 et seq. See also "Negotiable Securities." EEVENXJES— Power of legislature over public revenues, 27. Current revenues considered in connection with negotiable securities, 96. Expenditures in excess of current revenues, when prohibited, 97. Public securities when -a. charge upon general revenues, 363. Securities payable from either special or general revenues, 364. When payable from general funds though a special tax provided, 366. See also "Payment." E0AD8 AND HIGHWAYS— See "Highways." SALE— Of warrants and miscellaneous evidences of indebtedness, 448. Audit and allowance of claims as preliminary to issue of warrants, 449. SALE OF NEGOTIABLE SECUEITIES— Questions involved in sale of negotiable securities, 237. Authority to sell, 238. Medium of payment, 239. Sale on credit, 239. Time of sale as related to date of issue, 240. Manner of sale, 241. Generally required after public advertisement, 241. Deposit of security by bidders, 241. Form of advertisement, 241. Private sale of securities, when authorized, 242. Sale to public officials connected with issue generally invalid, 242. Eights of buyer, at sale, 243. Purchaser may compel delivery of bonds, 243. Validity of bonds as affecting sale, 244. Bidder need not accept bonds of doubtful validity, 244. Sale of securities at less than par, 245. When prohibited, sale usually held void, 245. p. s.— 80 1266 INDEX [references are to sections] SALE OP NEGOTIABLE SECUEITIES— Validity of securities, however, not affected, 245. Recitals in bonds in respect to conditions of sale operate as estoppel, 245. Usury, when involved in a sale less than par, 246. Commissions, 247. Purchaser to ascertain authority for issue of securities, 248. Is charg-ed with notice of authority to issue, 249. Also, constitutionality of act granting authority, 250. When purchaser is required to ascertain validity of corporate organiza- tion and manner of acting, 251. Eecitals as to these facts may operate as estoppel, 251. Issue in excess of constitutional limitations, how affecting validity of securities offered, 252. To what extent purchaser is required to examine recitals of fact, 253. Authority of officials to act must be ascertained by purchaser, 254. Purchaser assumes risk of genuineness of official signatures, 254. Purchaser charged with examination of records, and nature of con- ditions, 256. Where authority to issue securities referred to records as teats of validity, 255. When purchaser should examine assessment rolls and other records, 256. Purchaser need examine only such records as required by law, 256. Rule in respect to imperfect records, 256. Eule modified as to >f acts peculiarly within knowledge or control of public officials, 257. Dixon County v. Field; Chaffee County v. Potter, 258. Involving questions relating to examination of records. Purchaser charged with knowledge of public records only, 259'. Extent to which purchaser is required to ascertain performance of con- ditions precedent, 260. Bound by what bonds disclose on their faee, 261. Purchaser not required to see that proceeds of bonds are properly ap- plied, 262, Illegal use of proceeds does not affect validity of bonds, 263. Warrants of the transferrer of negotiable securities on private sale, 264. SALE OF RAILROADS— See "Railway Aid." SCALING DOWN— Doctrine of applied to excessive issue of public securities, 308, 309. SCHOOL BONDS, ORDERS, WARRANTS— See "Negotiable Securities," "Warrants." SCROLL— See "Signatures," "Seal." INDEX 1267 [eeteeences aee to sections] SEAL,— Necessity for afiixing of coiporate seal, 172. Court of equity will remedy defects in respect to, 172. Presumption, in respect to corporate seal, 172. Sealed instruments, when negotiable, 214. SECTARIAN SCHOOLS— See "Public Purpose." SELF-EXECUTING— When constitutional provisions relative to issue of negotiable securities self-executing, 94. Constitutional provisions relative to levy of taxes, 375. SERIAL BONDS— Issue of, 336. SEVERED OR DETACHED COUPONS— See "Coupons." SIGNATURES— Official signatures to negotiable securities, 167. By whom made, 167. Signature of de facto official sufficient, 167. Authority to sign, how given, 167. Countersigning, when necessary, 167. When execution of securities can be compelled, 167. The sufficiency of signatures, 168. Not necessary to be in personal handwriting, 168. Defects in execution, reformed by court of equity, 168. Signature on interest coupon, no necessity for personal handwriting, 185. Purchaser assumes risk of genuineness of official signatures, 254. See "Formalities Required on Issue of Negotiable Securities." SINKING FUND— Legislative action cannot impair, 30. When amounts in sinking fund to be deducted from gross debt, 79. Provision for when debt is incurred-, 120, 121. Establishment of as basis for issue of refunding and renewal secur- ities, 203. Payment of securities through sinking fund provisions, 373. Rule in respect to investment of sinking fund, 373. Definition of sinking fund, 373. Failure to levy sinking fund taxes does not affect validity of securities, 376. Irregularities in levy of taxes for as affecting validity of securities, 376, Duty to levy sinking fund taxes, 377. Provisions for sinking fund a contract, 377. 1268 INDEX [keperenoes are to sections] SINKING FUND— What constitvites a sufficient provision for sinking fund, 378. Debts to which sinking fund provisions apply, 379. SITUS— Taxation of public securities determined generally by domicile of owner, 444. Of securities held by trustees and in estates, 444. SOURCES OP PAYMENT— See "Payment." SPECIAL AUTHORITY— See "Authority." SPECIAL ELECTION— See "Election." SPECIAL FUND— Indebtedness payable from special fund not considered a debt in deter- mining total debt of a corporation, 78. Payment of interest from special fund, 189. When interest coupon a charge upon both general and special funds, 189. Indebtedness payable from special fund cannot be refunded as a general charge, 204. For payment of securities cannot be lessened or diverted without im- pairing contract obligation, 362. Securities when a general charge upon revenues of corporation, 363. Secvirities payable from either special or general revenues, 364. United States v. Fort Scott, 365. Payment of securities from general funds though special tax provided, 866. Securities a general charge when special tax or assessments is invalid, 367. Payment from special fund or by a special tax, 368. Special funds cannot be diverted or lessened without impairing contract obligation, 362. Securities payable from special fund not a charge upon general revenues, 368. Levy of special taxes may be compelled by mandamus, 368. Diversion of special funds, 371. Created for payment of securities may be protected, 371. Securities payable from specific taxes or property as limiting right of action to enforce payment of, 397. Eights of creditors to may be enforced by mandajoius, 422. For the payment of warrants and miscellaneous evidences of indebted- ness, 447. The existence of for payment of warrants not guaranteed, 447. INDEX 1269 [REFERENCES ARE TO SECTIONS] SPECIAL FUND— Public corporations liable for diversion or misappropriation of special fund established for payment of warrants, 447. Available for payment of warrants, 458. SPECIAL LEGISLATION— Prohibition of, as affecting legislative power, 33. "Validity of negotiable securities as affected by, 90, 91. See "Legislation." SPECIAL TAXES— See "Local Assessments," 'Special Fund. STATE— Power to create public corporation, 14. Power to alter, amend, etc., charter of public corporation, 15. May question corporate existence, 16. Limitation of power to incur debt, when applied to a municipality, 70. Limitation on power to issue negotiable securities in Federal consti- tution, 81, 82, 83. Percentage limitation on power to incur indebtedness, 99. Limitations based on amount tax rate, 100. Provisions relative to granting of railway aid, 109. Constitutional provisions limiting maturity of securities, 352. Special state exemptions from taxation of public securities, 445. Arranged alphabetically by states, 445. Constitutional provisions relative to the incurring of indebtedness and the issue of negotiable securities. Arranged alphabetically by states, 469 et seq. Alabama, 469. Arkansas, 470. Arizona, 471. California, 472. Colorado, 473. Connecticut, 474. Delaware, 475. Florida, 476. Georgia, 477. Idaho, 478. Illinois, 479. Indiana, 480. Iowa, 481. Kansas, 482. Kentucky, 483. Louisiana, 484. Maine, 485. Maryland, 486. Massachusetts, 487. Michigan, 488. Minnesota, 489. Mississippi, 490. Missouri, 491. Montana, 492. Nebraska, 493. Nevada, 494. New Hampshire, 495. New Jersey, 496. New Mexico, 497. New York, 498. North Carolina, 499. North Dakota, 500. Ohio, 501. Oklfihoma, 502. Oregon, 503. Pennsylvania, 504. Rhode Island, 505. South Carolina, 506. South Dakota, 507. Tennessee, 508. Texas, 509. Utah, 510. Vermont, 511. Virginia, 512. Washington, 513. West Virginia, 514. Wisconsin, 515. Wyoming, 516. Territorial, 517. Hawaii Territory, 518. Philippine Islands, 519. 1270 INDEX [eeperences are to sections] STATE COURT— See "Courts." STATUTES OF LIMITATION— What statute applies to detached interest coupons, 197. Bunning of statute, how interrupted, 197. Offer of compromise, when an interruption, 197. As affecting implied promise to repay money received for void bond% 383. As a defense in mandamus proceedings, 432. When applied to collection of warrants, 458. STATUTORY- Special provisions permitting seizure of designated property, 345. See ' ' Construction. ' ' Limitations on power to incur debt. See "Limitations," "Indebtedness." STATUTORY AUTHORITY— See "Authority," "Indebtedness," "Negotiable Securities." STOCK— Railway aid granted to purchase of stockj 110, 112. See "Railway Aid." STOLEN AND LOST BONDS OR COUPONS— Innocent purchaser or holder of acquires title, 234. Rule modified when acquired after maturity, 234. Rule as affected by non-negotiable character of security, 235. Time stolen immaterial, 236. What inquiries to be made by purchaser of securities, 236. STREET LIGHTING— See "Public Purpose." STRICT CONSTRUCTION— See "Construction." SUBROGATION— Doctrine of equitable subrogation, 388. SUNDAY— Validity of bonds dated on Sunday, 166. TAXATION— Power granted cannot be impaired to detriment of rights of creditors, 37. Power of officials to levy taxes construed as mandatory, 91. Definition and nature of power, 141. Limitations upon power of taxation, 141. Delegation of power to subordinate agencies, 141. Not discretionary when once granted, 141. Where power does not exist courts cannot compel its exercise, 141. INDEX 1271 [references ABE TO SECTIONS] TAJXATION— Limitations of power of municipal corporations to tax, 142. Legislature cannot compel levy of tax for a local purpose, 142. Limitations upon power based upon amount, 143. Limitations based upon purpose, 143. Increase of taxation when authorized by vote, 143. Taxation by organizations coincident in territory, 144. Adjustment of taxes on division or annexation of territory, 145. Exemption from taxation on annexation, 145. Power of taxation must be exercised for a public purpose, 146. Taxes cannot be levied for private purposes, 146. Local or special assessments, definition and basis, 147. Based upon immediate and special benefits, 147. Local improvement taxes levied for local purposes only, 148. Construction of tax limitations, 149. Limitations as impairing contract obligations, 150. Bight of courts to compel exercise of power of mandamus, 150. Taxation for purpose of establishing sinking fund, 150. Subsequent legislative acts relative to cannot affect contract obliga- tion in securities issued, 268. Power to tax as relating to payment of public security, 358. Maximum tax levy for payment of securities, 358. Ability of public corporation to pay limited by maximum rate, 358. Implied po,wer to levy taxes for payment of interest and principal of public securities, 359. Power to issue generally carries with it implied power to tax, 359. Limited by constitutional provisions relative to tax levies, 359. When the power to tax for payment of securities will not be implied, 360. Construction of direct power to tax for payment of securities, 361. Grant of taxing power regarded as mandatory, 361. Implied power to levy taxes for payment of public securities, 359. When power to tax not impUed, 360. Change or repeal of taxing laws may impair contract obligation, 362. Creative and organization of taxing districts, 369. May embrace coextensive territory, 369. Duty to levy taxes for payment of public securities, 370. May be enforced by mandamus, 370. Payment of securities by sinking fund provisions, 373. Provisions for payment at time debt was incurred, 374. Constitutional provisions relative to levy of taxes when self executing, 375. Bendition of judgment gives creditor no additional rights of taxation, 414. Mandamus an ordinary and available remedy to compel exercise of power, 420. 1272 INDEX [references ABE TO SECTIONS] TAXATION— Power of regarded as mandatory exercise compelled by mandamus, 420, 422. Operation of writ of mandamus prospective, 422. In absence of power of cannot be compelled by mandamus, 426. Discretionary power of taxation cannot be controlled by mandamus, 428. Failure of public oflBcials to exercise power of taxation no defense in mandamus proceedings, 431. TAXES— Coupons and bonds receivable for taxes, when, 80, 81, 82, 83. Issue of negotiable securities limited by tax rate, 100. Cannot be levied for private purposes, 146. Injunction, when granted at instance of tax payer against illegal levy of taxes, 161. Where relief will be denied to tax payer, 161a. Irregularities and informalities not ordinarily ground for relief, 161a. Tax payer estopped by laches or acquiescence from attacking legality of tax, 162. Provision for levy of taxes as basis of issue of refunding and renewal securities, 203. Levy of taxes to pay interest on securities operates as an equitable estoppel, 319. Power of public corporation to levy taxes for payment of public se- curities, 358. Implied power to levy taxes for payment of public securities, 359. "When power will not be implied, 360. Grant of direct power to levy taxes for payment of public securities, 361. Levy compelled by writ of mandamus, 420. Public securities subject to taxation unless specially exempt, 444. Situs for taxation usually follows domicile of owner, 444. Exemption from taxation of public securities, 444. Eule of exemption in respect to Federal and territorial securities, 444. Special state exemption for public securities, 445. Arranged alphabetically by states, 445 Warrants when receivable for taxes, 455, 462. When taxes due can be deducted from sum due on warrant, 461. TAX PAYEE— Eight to restrain issue of securities, 151 et seq. See "Proceedings to Eestrain or Compel Issue of Securities," "In- junction." TEMPOEAEY INJUNCTION— See "Injunction." TEEMINUS, TEEMINALS— See "Eailway Aid." INDEX 1273 [references are to sections] TIME— Of maturity of public securities, 352. Substantial compliance with provisions in respect to time of payment only necessary, 353. Certainty in respect to time of payment, 353. See subject indexed in detail under "Payment." Coupons "For- malities Eequired for Issue of Negotiable Securities." title- To public securities. See "Bona Fide Holding." Error in copying title of act will not affect validity of bonds, 288. Validity of legislative act as affected by title, 438. Subject of act to be expressed in title, 438. Eeasons for rule above noted, 438. Sufficiency of title, 438. TORTS— Liability for torts excluded in determining total debt of public cor- poration, 70. TOWNSHIP SECURITIES— See "Negotiable Securities," "Warrants." TRANSFER OP SECURITIES— See "Sale of Negotiable Securities," "Purchase of Negotiable Se- curities. ' ' TRANSFEREE OF BONA FIDE HOLDER— See "Bona Fide Holding." TRANSFERRER— Warrants of tranusferrer of public securities, 264. That signatures are genuine, 264. No warrant of validity unless by express stipulation, 264i TRUST PROPERTY— Control of legislature over trust property held by public corpora- tion, 30. ULTRA TIRES— Ultra vires contracts of public corporations, 48. Classes of, 49. Enforcement of ultra vires contracts, 50. Strict and liberal rules relative to enforcement, 50. UNAUTHORIZED SECURITIES— Se§ "Negotiable Securities," "Validity of Negotiable Securities." 1274 INDEX [REFERENCES ARE TO SECTIONS] UNCERTAINTY OF AMOUNT PAYABLE— See ' ' Negotiable Securities. ' ' UNEAENED INTEREST— Not considered a debt in determining total liabilities of public cor- poration, 70. UNITED STATES— Power of to issue negotiable securities, 80. Securities of, exempt from taxation, 444. USE— Validity of securities not affected by illegal use of proceeds, 263. USURY— When involved in sale of public securities at less than par, 246. VALIDATION— OFFICIAL— Reference to states containing provisions for, 174. Purpose of official validation, 174. Cases construing Georgia statutes in respect to validation, 175. VALIDITY OF NEGOTIABLE SECURITIES— Invalidity of old debt as affecting character of refunding and renewal securities, 206. Invalidity of old debt, when not affecting legal status of new obliga- tions, 206. Want of power to issue refunding and renewal securities, 206. Invalidity of refunding and renewal securities as affecting old obliga- tions, 207. Of securities not affected by irregularities in sale, 241. Of public securities as affecting sale, 244. Prospective purchaser cannot be required to take securities of ques- tionable validity, 244. Of public securities not affected by illegal use of proceeds, 263. Presumption in favor of validity exists, 26o. That holder acquired before maturity for valuable consideration, 265. Presumption that conditions precedent have been performed, 265. That lawful authority to issue exists, 265. That officers and agents possess authority to act, 265. Presumption of validity throws burden of proof on one denying le- gality, 265. Securities issued by de facto corporations valid, 266. Rule sustained by doctrine of de facto corporations, 266. Also by doctrine of estoppel, 266. Defense of de facto corporations cannot be used against validity of securities, 266. Validity of acts of de facto corporations issuing securities, 266. [EEFERENCES ARE TO SECTIONS] VALIDITY OF NEGOTIABLE SECUEITIES— Validity of securities as affected by adverse decisions of a state court, 267. When validity not affected by adverse decisions of a state court, 267. Validity of securities not affected by subsequent legislation, 268. Contract obligation of securities cannot be affected by subsequent leg- islation, 268. Validity of securities, by what court decided, 269. Doctrine followed by Federal courts, 269. Construction of state statutes generally followed by Federal courts, 269a. Not followed where decisions affect rights granted by Federal con- stitution, 269a. Decisions of state courts when followed by Federal courts, 269a. When state decisions will not be followed by Federal courts, 270. When contract obligation impaired, 270. When process or proceedings in Federal courts impaired, 270. When to follow state decisions would be an absolute denial of jus- tice, 271. Federal courts exercise independent judgment in absence of state diecision, 272. Decisions of state court not controlling on general questions of com- mercial law, 273. The validity of negotiable securities as affected by the doctrine of es- toppel, 274. Estoppel by delivery of securities, 275. Validity as affected by recitals in securities, 276 et seq. For detail indexing of this subject, see "Eecitals in Negotiable Securities. ' ' The doctrine of estoppel applies only to bona fide holders, 277. The legal effect of recitals, 278. Leading and illustrative cases discussed, 279. The doctrine of recitals as followed in the state courts, 280. Absence of recitals, effect upon validity of securities, 281. Eecitals contrary to statutory provisions, 282. Express and general recitals, 283. Eecitals to contain what and their construction, 284. Eecitals as to lawful authority, statutory provisions, 285. Eecitals of legislative authority, 286. Eecitals of authority, ordinances, court orders, 287. Misrecitals of legal authority, 288. Eecitals of purpose for which issued, 290. Sufficiency of recitals, 290. Sufficiency of rule in respect to doctrine of estoppel as applied to re- citals of purpose, 291. 1276 INDEX [eefeeences are to sections] VALIDITY OF NEGOTIABLE SECUEITIES— Estoppel by recitals as applied to elections and matters pertaining thereto, 292. The effect of no election, 293. The doctrine of no election in the state courts, 294. Bonds issued in excess of legal limitation, effect of recitals, 295. The doctrine of estoppel when applied in case of no recitals, 296. The effect of recitals general in their character, 297. Express recitals and their effect, 298. Validity of limitations whether statutory or constitutional, 299. The doctrine of estoppel as affected by the rule requiring an examina- tion of records, 300. Board of County Commissioners of Chaffee County v. Potter, 301. Board of Commissioners of Gunnison County v. E. H. Eollins & Sons, 302. When officials charged with duty of determining debt limit, 303. Validity of issue of securities in excess of legal authority, 304. "When securities issued in excess held valid, 305. Excess securities held void in toto, 306. Excessive issue held valid in part, 307. The doctrine of sealing down of excess securities, 308. Hedges v. Dixon County, 309. Eeeitals of miscellaneous facts when operating as an estoppel, 310. Validity of securities as based upon an express statutory recital, 311. Eeeitals operate only when power exists to make, 312. Authority to make. How given, 313. Eeeitals without authority, 314. Estoppel by judgment, 315. Collusive judgment, collateral attack, 316. When examination of original cause of action will be made, 317. Estoppel by the payment of interest, 308. Equitable estoppel as based upon other grounds, 319. Equitable estoppel to deny validity of securities, the doctrine of laches, 320. Estoppel by ratification further discussed, 321. Act of ratification. How performed, 322. Valid ratification equivalent to an original grant of authority, 323. Curative legislation as affecting validity of securities, 324. Curative legislation, character of and construction, 325. Curative legislation in case of original want of authority, 326. Curative legislation as affecting other conditions, 327. In respect to excessive issue, 327. Unauthorized subscriptions, 327. Election irregularities, 327. Unauthorized election, 327. Failure to hold election, 327. INDEX 1277 [references are to sections] VALIDITY OF NEGOTIABLE SECtJEITIES— Informalities in oflScial proceedings, 327. Defects in original act of authority, 327. Questions for investigation in determining validity, 342. Not affected by failure to levy sinking fund taxes, 376. Burden of proof in actions upon negotiable securities, 400, 402. Burden when shifted, 403. Validity of warrants and miscellaneous forms of indebtedness, 453 et seq. See subject indexed in detail under "Warrants." Of legislation, 434 et seq. See subject indexed in detail under "Legislation." VALUATION OF PEOPEETY— As basis of indebtedness, 76. VEEDICT— See "Pleading and Practice." Form of in County of Presidio v. Noel- Young Bond & Stock Com- pany, 212 U. S. 558, 537. VEEIFICATION OF PETITION— See "Petition." VILLAGES— See "Public Corporation." VOID— Ordinances. See ' ' Ordinances, " " Legislature. ' ' Bonds. See "Negotiable Securities," "Validity of Negotiable Securi- ties. ' ' Contracts. See "Contracts." VOID SECUEITIES— Payments for may be recovered in an action for money had and re- ceived, 380. Doctrine of implied liability on, 380. Eule as stated in the Federal courts, 380. Eule as stated in state courts, 380. City of Litchfield v. Ballon to the contrary, 381. Other authorities holding to the contrary, 382. VOLUNTAEY DEBTS— When excluded from computations to determine total debt of cor- poration, 71. VOTE— Affirmative vote as precedent to valid issue of negotiable securities, 122. Number required to confer authority to issue negotiable securities, 134. See ' ' Election. ' ' Necessity of affirmative vote for issue of warrants, 453. 1278 INDEX [REFERENCES ARE TO SECTIONS] VOTEES— Written assent of necessary to issue of negotiable securities, 123, 453. VOXJCHBBS— See "Warrants." WAIVEEr— Of conditions precedent required of railways, 115. Of conditions required for issue of securities, 311. Of. conditions requisite to legal issue of bonds, 332. WANT OF POWEK^ Want of power as a defence in action on negotiable securities. See "Defences." Defect in original grant of authority when remedied by curative legis- lation, 327. See "Curative Legislation." Defeats title of bona fide holder, 231. WAERANTS— Definition of, 12. Warrants issued in anticipation of taxes levied not usually a debt in ascertaining total debt of corporation, 74. County warrants or orders refunded, when, 204. Definition, by whom drawn, 446. When considered a debt, 446. Power of officers and agents to issue, 446. When duty to issue ministerial only, 446. Allowance and audit of claims, 446. Funds for payment of, need not be immediately available, 446. Necessity for appropriation for payment of claim, 446. Fund from which payable, 447. May be payable from specific fund only, 447. When payable from general funds or revenues, 447. No guarantee of funds for payment of warrants, 447. Eiule as to diversion or misappropriation of special funds for pay- ment of, 447. Duty of public corporations to collect special fund, 447. Formal issue and sale, 448. Audit and allowance of claim as preliminary to issue of warrants, 449. The legal character of warrants, 450. Not regarded as negotiable instruments, 450. Form of warrant, 451. How executed, 451. Phraseology of warrants, 451, 452. When purpose of issue should be recited in warrant, 452, Validity of warrants, 453, INDEX 1279 [REPERT5NCES ABE TO SECTIONS] WAEEANTS— Legal authority must exist for issue, 453. Presumption of law in favor of validity, 453. Valid when issued by de facto corporations, 453. Validity of as affected by debt limitation, 453a. Necessity for affirmative vote of electors, 453a. Warrants when considered a compulsory indebtedness, 453a. Purpose for which issued must be public, 454. Invalid when issued for a private purpose, 454. Invalidity resulting from character as violating constitution of the United States in respect to emitting bills of credit, etc., 455. Validity of warrants as affected by character of original debt, 456. Circumstances under which refunding warrants can be issued, 456. Interest, rules in respect to payment of interest upon warrants, 457. Actions upon warrants, 458. Eights of holder when warrant payable from special fund, 458. Mandamus, the usual and appropriate remedy for collection of, 458. Duty to levy taxes for payment of may be compelled by mandamus, 458. Lack of funds for payment no defence in action upon warrants, 458. Statutes of limitation as ailecting payment, 458. Demand for payment as basis for action on, 458. Presumption of validity of warrants, 458. Payment of warrants, 459. If funds available, payment not discretionary, 459. Payment of illegal warrants may be enjoined, 459. Begistration and record as affecting payment, 459. Neglect to register does not affect rights of holder to enforce pay- ment, 459. Presentation of warrant, necessity for, 460. Amount recovered on warrant, 461. When issued at a discount, 461. When taxes due from holder can be deducted, 461. Manner and medium of payment, 462. Terms of warrant in respect to, can be enforced, 462. May be receivable for debts due to public corporations issuing them, 462. Time of payment of warrants, 463. Partial payments can be made upon them, 463. To whom payable, 464. Warrants are assignable and may be collected by holder subject to prior equities, 464. Assignee may demand and sue upon refusal to pay, 464. Eights of transferee may be affected by statutory provisions, 464. Burden of proof in action on warrants, 464. Possession of and dominion over establishes prima facie case of owner- ship, 464. 1280 INDEX [REFBEENCES AKE TO SECTIONS] WAERANTS— Miscellaneous forms of indebtedness, 465. Including school orders, 465. County orders, 465. Negotiable certificates, 465. Validity of, 465. When regarded as negotiable securities and when not, 465. If nonnegotiable equities between original parties may be inquired into, 465. Principles in respect to form, payment, etc., controlled by those applying to warrants, 465. Legal character of as determined by provisions in United States Con- stitution, relative to emitting bills of credit, legal tender, etc., 466. Manner of payment, time, fund from which payable controlled by rules applying to warrants, 468. WA.TBE SUPPLY— Issue of negotiable securities for considered a public purpose, 106. YEAS AND NAYS— Call of when required in passage of laws, 440, 443.