[* 216] *In some of the cases involving the validity of the subscriptions made or bonds issued by municipal corporations in

ness.

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holder than any other commercial paper." See also Commissioners of Knox Co. v. Aspinwall, 21 How. 539; Russell v. Jeffersonville, 24 How. 287; Thorn v. Commissioners of Miami Co. 2 Black, 722; De Voss v. Richmond, 18 Grat. 338. In Farmers and Mechanics Bank v. The Butchers and Drovers Bank, 16 N. Y. 125, it is said: "A citizen who deals directly with a corporation, or who takes its negotiable paper, is presumed to know the extent of its corporate powers. But when the paper is, upon its face, in all respects such as the corporation has authority to issue, and its only defect consists in some extrinsic fact, such as the purpose or object for which it was issued, to hold that the person taking the paper must inquire as to such extraneous fact, of the existence of which he is in no way apprised, would obviously conflict with the whole policy of the law in regard to negotiable paper." In Madison and Indianapolis Railroad Co. v. The Norwich Savings Society, 24 Ind. 461, this doctrine is approved, and a distinction made, in the earlier case of Smead v. Indianapolis, &c., Railroad Co. 11 Ind. 104, between paper executed ultra vires and that executed within the power of the corporation, but, by an abuse of the power in that particular instance, was repudiated. In Halstead v. Mayor, &c., of New York, 5 Barb. 218, action was brought upon warrants drawn by the corporation of New York upon its treasurer, not in the course of its proper and legitimate busiIt was held that the corporation under its charter had no general power to issue negotiable paper, though not being prohibited by law it might do so for any debt contracted in the course of its proper legitimate business. We quote from the opinion of Edwards, J.: "It was contended on the argument, that the rule of the law merchant which protects the bona fide holder of negotiable paper, without notice, was of universal application; and that, if the defendants had a right to issue negotiable paper, it must ex necessitate be subject to the same rules as the negotiable paper of an individual. This view seems plausible, but will it bear the test of examination? In the first place, the defendants have no general power, either express or implied, to issue negotiable paper. They have only a special or conditional implied power for that purpose; that it is necessary as a condition precedent to the validity of such paper that the debt which forms the consideration should be contracted in the proper legitimate business of the defendant. The act under which they were incorporated is declared to be a public act. Every person who takes their negotiable paper is bound to know the extent of their powers, and is presumed to receive it with a full knowledge that they have only a limited and conditional power to issue it. He is thus put on his inquiry, and takes it at his peril. The circumstances under which a bona fide holder, without notice, receives the negotiable paper of a natural person, or of a corporation having the general express power to issue negotiable paper, are very different. In both those instances, the power to issue such paper is general and unconditional; and hence the rules which have been established by commercial policy, for the purpose of giving currency to mercantile paper, are applicable. It results from the views which have been expressed, that the drafts in question, not having been issued by the defendants in their proper and legiti

aid of internal * improvements, there has been occasion [*217] to consider clauses in the State constitutions designed

mate business, are void in the hands of the plaintiff, although received by him without actual notice of their consideration." This decision was affirmed in 3 N. Y. 430. In Gould v. Town of Stirling, 23 N. Y. 464, it was held that where a town bad issued negotiable bonds, which could only be issued when the written assent of two-thirds of the resident persons taxed in the town had been obtained and filed in the county clerk's office, the bonds issued without such assent were invalid, and that the purchaser of them could not rely upon the recital in the bonds that such assent had been obtained, but must ascertain for himself at his peril. Say the court: "One who takes a negotiable promissory note or bill of exchange, purporting to be made by an agent, is bound to inquire as to the power of the agent. Where the agent is appointed and the power conferred, but the right to exercise the power has been made to depend upon the existence of facts of which the agent may be supposed to be in an especial manner cognizant, the bona fide holder is protected; because he is presumed to have taken the paper upon the faith of the representation as to those facts. The mere fact of executing the note or bill amounts in itself, in such a case, to a representation by the agent to every person who may take the paper that the requisite facts exist. But the holder has no such protection in regard to the existence of the power itself. In that respect the subsequent bona fide holder is in no better situation than the payee, except in so far as the latter would appear of necessity to have had cognizance of facts which the other cannot [must?] be presumed to have known." And the case is distinguished from that of the Farmers and Mechanics Bank v. Butchers and Drovers Bank, 16 N. Y. 125, where the extrinsic fact affecting the authority related to the state of accounts between the bank and one of its customers, which could only be known to the teller and other officers of the bank. See also Brady v. Mayor, &c., of New York, 2 Bosw. 173; Hopple v. Brown Township, 13 Ohio, N. s. 311; Veeder v. Lima, 19 Wis. 280. The subject is reviewed in Clark v. City of Des Moines, 19 Iowa, 209. The action was brought upon city warrants, negotiable in form, and of which the plaintiff claimed to be bona fide assignee, without notice of any defects. The city offered to show that the warrants were issued without any authority from the city council, and without any vote of the council authorizing the same. It was held that the evidence should have been admitted, and that it would constitute a complete defence. See further, Head v. Providence, &c., Co. 2 Cranch, 169; Royal British Bank v. Turquand, 6 El. & Bl. 327; Knox County v. Aspinwall, 21 How. 544; Bissell v. Jeffersonville, 24 How. 287; Sanborn v. Deerfield, 2 N. H. 254; Alleghany City v. McClurkan, 14 Penn. St. 83; Morris Canal and Banking Co. v. Fisher, 1 Stock. 667; Clapp v. Cedar Co. 5 Iowa, 15; Commissioners, &c. v. Cox, 6 Ind. 403; Madison and Indianapolis R. R. Co. v. Norwalk Savings Society, 24 Ind. 457; Bird v. Daggett, 97 Mass. 494. It is of course impossible to reconcile these authorities; but the doctrine in the case of Gould v. Town of Stirling appears to us to be sound, and that, wherever a want of power exists, a purchaser of the securities is chargeable with notice of it, if the defect is disclosed by the corporate records, or, as in that case, by other records where the power is

*

[218] to limit the power of the legislature to incur indebtedness on behalf of the State, and which clauses, it has been urged, were equally imperative in restraining indebtedness on behalf of the several political divisions of the State. The Constitution of Kentucky prohibited any act of the legislature authorizing any debt to be contracted on behalf of the Commonwealth, except for certain specified purposes, unless provision should be made in such act for an annual tax sufficient to pay such debt within thirty years; and the act was not to have effect unless approved by the people. It was contended that this provision was not to apply to the Commonwealth as a mere ideal abstraction, unconnected with her citizens and her soil, but to the Commonwealth as composed of her people, and their territorial organizations of towns, cities, and counties, which make up the State, and that it embraced in principle every legislative act which authorized a debt to be contracted by any of the local organizations of which the Commonwealth was composed. The courts of that State held otherwise. "The clause in question," they say, "applies in terms to a debt contracted on behalf of the Commonwealth as a distinct corporate body; and the distinction between a debt on behalf of the Commonwealth, and a debt or debts on behalf of one county, or of any number of counties, is too broad and palpable to admit of the sup[* 219] position that the latter class of debts was intended to be embraced by terms specifically designating the former only." The same view has been taken by the courts of Iowa, Wisconsin, and Illinois of the provisions in the constitutions of those States restricting the power of the legislature to contract debts on behalf of the State in aid of internal improvements;2 required to be shown. That the powers of the agents of municipal corporations are matters of record, and the corporation not liable for an unauthorized act, see further, Baltimore v. Eschbach, 18 Md. 276; Johnson v. Common Council, 16 Ind. 227. Those who deal with a corporation must take notice of the restrictions in its charter, or in the general law, and see to it that the contracts on which they rely are entered into in the manner the law authorizes. Brady v. Mayor, &c., of New York, 2 Bosw. 173; same case, 20 N. Y. 312; Swift v. Williamsburg, 24 Barb. 427; Marsh v. Supervisors of Fulton Co., recently decided by the Supreme Court of United States. If they are not, no subsequent ratification by the corporation can make them valid. Leavenworth v. Rankin, 2 Kansas, 357.

1

1 Slack v. Railroad Co. 13 B. Monr. 16.

2

Dubuque County v. Railroad Co. 4 Greene (Iowa), 1; Clapp v. Cedar County, 5 Iowa, 15; Clark v. Janesville, 10 Wis. 136; Bushnell v. Beloit, ib.

but the decisions of the first-named State have since been doubted.1

Another class of legislation has recently demanded the attention of the courts, which has not been less troublesome, from the new, varied, and peculiar questions involved, than that in relation to municipal subscriptions in aid of internal improvements. As the power to declare war and to conduct warlike operations rests in the national government, and that government is vested with unlimited. control of all the resources of the country for those purposes, the duty of national defence, and, consequently, to defend all the citizens as well as all the property of all the municipal organizations in the several States, rests upon the national authorities. This much is conceded, though in a qualified degree, also, and subordinate to the national government, a like duty rests doubtless upon the State governments, which may employ the means and services of their citizens for the purpose. But it is no part of the duty of a township, city, or county, as such, to raise men or money for warlike operations, nor have they any authority, without express legislative sanction, to impose upon their people any burden. by way of taxation for any such purpose.2 Nevertheless, when a

195; Prettyman v. Supervisors, 19 Ill. 406; Robertson v. Rockford, 21 Ill. 451; Johnson v. Stark County, 24 Ill. 75; Perkins v. Lewis, ib. 208; Butler v. Dunham, 27 Ill. 474.

1 State v. Wapello County, 13 Iowa, 388. And see People v. Supervisor, &c. 16 Mich. 254. The history of these constitutional provisions would doubtless throw light upon their proper construction. Where a constitutional provision is adopted forbidding the State to engage in internal improvements, and the history of the times shows that it was adopted by way of establishing as a rule of State policy the principle that such improvements should be left to be constructed, controlled, and managed by private enterprise, and not by the public authorities, it is difficult to perceive on what ground it can be held that though the State, in its sovereign capacity, may not burden its citizens with the cost of these works, every inferior subdivision, deriving from the State its whole authority, may nevertheless be allowed to do so. We cannot construe a constitution with the same strictness as a criminal statute, and hold nothing to be within its meaning which is not exactly included in its words; such an instrument establishes general principles in comprehensive terms, and should be construed with liberality to effectuate the intent of the people wherever that intent is sufficiently apparent.

2 Stetson v. Kempton, 13 Mass. 272; Gove v. Epping, 41 N. H. 545; Crowell v. Hopkinton, 45 N. H. 9; Baldwin v. North Branford, 32 Conn. 47; Webster v. Harwinton, ib. 131. See also Claflin v. Hopkinton, 4 Gray, 502; Cover v. Bay

war arises which taxes all the energies of the nation, which makes it necessary to put into the field a large proportion of all the ablebodied men of the country, and which renders imperative a resort to all available means for filling the ranks of the army, recruiting the navy, and replenishing the national treasury, the ques[220] tion becomes a momentous one, whether the local organizations those which are managed most immediately by the people themselves—may not be made important auxiliaries to the national and State governments in accomplishing the great object in which all alike are interested so vitally; and if so, whether there is any constitutional principle which would be violated by making use of these organizations in a case where failure on the part of the central authority would precipitate general dismay and ruin. Indeed, as the general government, with a view to convenience, economy, and promptness of action, will be very likely to adopt, for any purposes of conscription, the existing municipal divisions of the States, and its demand for men to recruit its armies will assume a form seeming to impose on the people whose municipal organization embraces the territory covered by the demand, the duty of meeting it, the question we have stated may appear to be one rather of form than of substance, inasmuch as it would be difficult to assign reasons why a duty resting upon the citizens of a municipality may not be considered as resting upon the corporation itself of which they are the constituents, and if so, why it may not be assumed by the municipality itself, and then be discharged in like manner as any other municipal burden, if the legislature shall grant permission for that purpose.

One difficulty that suggests itself in adopting any such doctrine is, that, by the existing law of the land, able-bodied men between certain specified ages are alone liable to be summoned to the performance of military duty; and if the obligation is assumed by the municipal organizations of the State, and discharged by the payment of money or the procurement of substitutes, the taxation required for this purpose can be claimed, with some show of reason, to be taxation of the whole community for the particular benefit of that class upon whom by the statutes the obligation rests. When the public funds are used for the purpose, it will be insisted that they are appropriated to discharge the liabilities of private individtown, 12 Minn. 124; Fiske v. Hazzard, 7 R. I. 438; Alley v. Edgecomb, 53 Me. 446.