ities for fraud and public plunder, and led almost inevitably, at last, to discontent; sometimes even to disorder and violence. Ohio, &c., R.R. Co. v. Ridge, 5 Blackf. 78; Roanoke, &c., R.R. Co. v. Davis, 2 Dev. & Bat. 451; Dearborn v. Boston & M. R.R. Co., 4 Fost, 179; Trustees, &c., v. Auborn, &c., R.R. Co., 3 Hill, 570; Tinsman v. Belvidere, &c., R.R. Co., 2 Dutch. 148; Thorpe v. Rutland, &c., R.R. Co., 27 Vt. 155; Alabama R.R. Co. v. Kidd, 29 Ala. 221; Turnpike Co. v. Wallace, 8 Watts, 316; Seymour v. Turnpike Co., 10 Ohio, 476; Ten Eyck v. D. & R. Canal, 3 Harr. 200; A. & A. on Corp., § 30-36; Redf. on Railw. c. 3, § 1; Pierce on Railroads, 19, 20. Taxation to subsidize them cannot therefore be justified on the ground of any public character they possess, any more than to subsidize banks or mining companies. It is truly said that it has long been the settled doctrine that the right of eminent domain may be employed in their behalf, and it has sometimes been insisted with much earnestness that wherever the State may aid an enterprise under the right of eminent domain, it may assist it by taxation also. But the right of taxation and the right of eminent domain are by no means coextensive, and do not rest wholly upon like reasons. The former compels the citizen to contribute his proportion of the public burden; the latter compels him to part with nothing for which he is not to receive pecuniary compensation. The tax in the one case is an exaction, the appropriation in the other is only a forced sale. To take money for private purposes under pretence of taxation is, as has been often said, but robbery and plunder; to appropriate under the right of eminent domain for a private corporation robs no one, because the corporation pays for what is taken, and in some cases, important to the welfare and prosperity of the community, and where a public convenience is to be provided, as in the case of a grist mill, it has long been held competent to exercise the one power, while the other was conceded to be inadmissible. Few persons would attempt to justify a tax in aid of a mill-owner, on the ground that laws appropriating lands for his benefit, but at his expense, have been supported. The truth is, the right to tax in favor of private corporations of any description must rest upon the broad ground that the power of the legislature, subject only to the express restrictions of the constitution, is supreme, and that, in the language of some of the cases, "if there be the least possibility that making the gift will be promotive in any degree of the public welfare, it becomes a question of policy, and not of natural justice, and the determination of the legislature is conclusive." (Post, p. 489.) But nothing is better settled on authority than that this strong language, though entirely true when it refers to the making provision for those things which it falls within the province of government to provide for its citizens, or to the payment of services performed for the State, or the satisfaction of legal, equitable, or moral obligations resting upon it, is wholly inadmissible when the purpose is to impose a burden upon one man for the benefit of another. Many such cases might be suggested in which there would not only be a "possibility," but even a strong probability, that a small burden imposed upon the public to set an individual up in business, or to build him a house, or otherwise make him comfortable, would be promotive of the public welfare; but in law the purpose of any such burden is deemed private, [* 215] * Assuming that any such subscriptions or securities may be authorized, the first requisite to their validity and the incidental benefit to the public is not recognized as an admissible basis of taxation. In Allen v. Inhabitants of Jay, 60 Me., it became necessary to reaffirm a doctrine, often declared by the courts, that however great was the power to tax, it was exceeded, and the legislature was attempting the exercise of a power not legislative in its character, when it undertook to impose a burden on the public for a private purpose. And it was also held that the raising of money by tax in order to loan the same to private parties to enable them to erect mills and manufactories in such town, was raising it for a private purpose, and therefore illegal. Appleton, Ch. J., most truly remarks in that case, that "all security of private rights, all protection of private property, is at an end, when one is compelled to raise money to loan at the will of others for their own use and benefit, when the power is given to a majority to lend or give away the property of an unwilling minority." And yet how plain it is that the benefit of the local public might possibly have been promoted by the proposed erections! This case was decided near the same time with one in the United States Circuit Court of Kansas, in which Dillon, Circuit J., held a law authorizing the town of Iola to issue its bonds in aid of a manufactory proposed to be established in its midst was void, as an attempt to exercise the taxing power for private purposes. These cases are not singular: they are representative cases; and they are cited only because they are among the most recent expressions of judicial opinion on the subject. With them may be placed Lowell v. Boston, also a very recent case not yet reported, in which the Supreme Court of Massachusetts, after the great fire of 1872 in Boston, denied the power of the Commonwealth to permit taxation in order to loan the moneys out to the persons who had suffered by the fire. These three decisions of eminent tribunals indicate a limit to legislative power in the matter of taxation, and hold, what has been decided very many times before, that it is not necessary the constitution should forbid expressly the taxing for private purposes, since it is implied in the very idea of taxation that the purpose must be public, and a taking for any other purpose is unlawful confiscation. One difference there undoubtedly is between the case of a railroad corporation and a manufacturing corporation; that there are precedents in favor of taxing for the one and not for the other. But what we insist is, that the precedents are a departure from sound principle, and that, as in every other case where principle is departed from, evils have resulted. A catalogue of these would include the squandering of the public domain; the enrichment of schemers whose policy it has been, first to obtain all they can by fair promises, and then avoid as far and as long as possible the fulfilment of the promises; the corruption of legislation; the loss of State credit; great public debts recklessly contracted for moneys often recklessly expended; public discontent because the enterprises fostered from the public treasury and on the pretence of public benefit are not believed to be managed in the public interest; and, finally, great financial panic, collapse, and disaster. At such a cost has the strong expression would seem, then, to be a special legislative authority to make or issue them; an authority which does not reside in the general words in which the powers of local self-government are usually conferred,1 and one also which must be carefully followed by the of dissent which all the while has accompanied these precedents been disregarded and set aside. Some most remarkable illustrations may be found in our legislative history of the devices and shifts that will be resorted to for the plunder of the public when the doctrine is once submitted to, that private corporations may be subsidized from the public treasury. In this place we content ourselves with mentioning one. The people of Illinois by constitutional provision have expressly forbidden such subsidies. Unfortunately for the State, a number of towns and counties had previously voted considerable sums to railroad companies, which still remain unpaid. Some of these constituted such burdens upon the municipalities voting them that the local authorities did not venture to impose the necessary taxes to pay the interest, much less to provide for the principal. What should be done under such circumstances? The holders of the debts wanted their pay: the municipalities wanted to get rid of their obligations. It would seem that nothing was to be done but for the one party to pay or the other to resort to the proper legal remedy. With millions at stake, however, ingenious men were not wanting who could suggest some other plan, and the one suggested was, that these local obligations should be saddled upon the State. It seems incredible, but it is nevertheless true, that such influences were brought to bear as secured legislation which, covertly and by indirection, imposed upon the State the burden. So gross and palpable a disregard of the constitutional principle which requires taxation to be gathered from those upon whom the burden justly rests (post, p. 493–4) is not often known. As denying the right to tax in aid of railroad corporations, reference is made to Stokes v. Scott County, 10 Iowa, 166; State v. Wapello County, 13 Iowa, 388; Myers v. Johnson County, 14 Iowa, 47; Smith v. Henry County, 15 Iowa, 385; Ten Eyck v. Keokuk, ib. 486; Clark v. Des Moines, 19 Iowa, 212; McClure d. Owen, 26 Iowa, 243; Hanson v. Vernon, 27 Iowa, 28; People v. Township Board of Salem, 21 Mich. 11; Bay City v. State Treasurer, 23 Mich. 499; Whiting v. Sheboygan R.R. Co., 25 Wis. 167; Phillips v. Albany, 28 Wis. 357; and to dissenting opinions in many of the cases where a majority of the Court sustained the right, Compare also what is said by Church, Ch. J., in People v. Flagg, 46 N. Y. 401. 1 Bullock v. Curry, 2 Met. (Ky.) 171. A general power to borrow money or incur indebtedness to aid in the construction of " any road or bridge" must be understood to have reference only to the roads or bridges within the municipality. Stokes v. Scott County, 10 Iowa, 173; State v. Wapello County, 13 Iowa, 388; La Fayette v. Cox, 5 Ind. 38. There are decisions in the Supreme Court of the United States which appear to be to the contrary. The city charter of Muscatine conferred in detail the usual powers, and then authorized the city "to borrow money for any object in its discretion," after a vote of the city in favor of the loan. In Meyer v. Muscatine, 1 Wall. 384, the court seem to have municipality in all essential particulars, or the subscription or security will be void. And while mere irregularities of action, not going to the essentials of the power, would not prevent parties who had acted in reliance upon the securities enforcing them, yet as the doings of these corporations are matters of public record, and they have no general power to issue negotiable securities, any one who becomes holder of such securities, even though they be negotiable in form, will take them with constructive notice of any want of power in the corporation to issue them, and cannot enforce them when their issue was unauthorized.1 construed this clause as authorizing a loan for any object whatever; though such phrases are understood usually to be confined in their scope to the specific objects before enumerated; or at least to those embraced within the ordinary functions of municipal governments. See Lafayette v. Cox, 5 Ind. 38. The case in 1 Wallace was followed in Rogers v. Burlington, 3 Wall. 654, four justices dissenting. See also Mitchell v. Burlington, 4 Wall. 270. A municipal corporation having power to borrow money, it is held, may make its obligations payable wherever it shall agree. Meyer v. Muscatine, 1 Wall. 384. But some cases hold that such obligations can only be made payable at the corporation treasury, unless there is express legislative authority to make them payable elsewhere. People v. Tazewell County, 22 Ill. 147; Pekin v. Reynolds, 31 Ill. 529. Such corporations cannot give their obligations all the qualities of negotiable paper, without express legislative permission. Dively v. Cedar Falls, 21 Iowa, 565. See Thomas v. Richmond, 12 Wall. 349; Dillon, Mun. Corp. §§ 406. 407. 1 There is considerable confusion in the cases on this subject. If the corporation has no authority to issue negotiable paper, or if the officers who assume to do so have no power under the charter for that purpose, there can be no doubt that the defence of want of power may be made by the corporation in any suit brought on the securities. Smith v. Cheshire, 13 Gray, 318; Gould v. Sterling, 23 N. Y. 458; Andover v. Grafton, 7 N. H. 298; Clark v. Des Moines, 19 Iowa, 209. And in any case, if the holder has received the securities with notice of any valid defence, he takes them subject thereto. But where the corporation has power to issue negotiable paper in some cases, and its officers have assumed to do so in cases not within the charter, whether a bona fide holder would be charge able with notice of the want of authority in the particular case, or, on the other hand, would be entitled to rely on the securities themselves as sufficient evidence that they were properly issued when nothing appeared on their face to apprise him of the contrary, is a question still open to some dispute. In Stoney v. American Life Insurance Co., 11 Paige, 635, it was held that a negotiable security of a corporation which upon its face appears to have been duly issued by such corporation, and in conformity with the provisions of its charter, is valid in the hands of a bona fide holder thereof without notice, although such security was in fact issued for a purpose, and at a place not authorized by the charter of the company, and in violation of the laws of the State where it was actually issued. In Gelpecke v. Dubuque, 1 Wall. 203, the law is *In some of the cases involving the validity of the sub- [* 216] scriptions made or bonds issued by municipal corporations 66 stated as follows: "Where a corporation has power, under any circumstances, to issue negotiable securities, the bona fide holder has a right to presume they were issued under the circumstances which give the requisite authority, and they are no more liable to be impeached for any infirmity in the hands of such holder than any other commercial paper." See also Commissioners of 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: San Antonio v. Lane, 32 Tex. 405. 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 business. It 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 |