that in compliance with the ordinance and with the city charter, an election was held, at which the proposition was adopted by a twothirds vote of the qualified voters; and that on September 1, 1872, the plaintiff bought the twenty-five bonds, for value, relying upon the recitals on their face, and without knowledge of any irregularity or defect in their issue; of all which the defendant had notice, by means whereof the defendant became liable and promised to pay to the plaintiff the sum specified in the coupons, according to their tenor and effect.

The answer denied all the allegations of the petition; and for further answer averred that the act of the legislature mentioned in the petition, approved March 9, 1871, attempted to give, and in terms did give, to the city authority to make gifts and donations to private manufacturing associations and corporations; that the city council, purporting to act under such authority, by an ordinance adopted September 22, 1871 (which was referred to in the answer), did submit to a vote of the citizens a proposition to give or donate to the La Grange Iron and Steel Company, a private manufacturing company, formed and established for the purpose of carrying on and operating a rolling-mill, the sum of $200,000; that, in accordance with that ordinance, the bonds of the city were issued to said manufacturing company, which was a strictly private enterprise, formed and prosecuted for the purpose of private gain, and which had nothing whatever of a public character; and that it was incompetent for the legislature to grant authority to cities or towns to make donations and issue bonds to mere private companies or associations having no public functions. to perform, and the act of the legislature and the ordinance of the city were void; wherefore, the bonds and coupons were issued without any legal authority, and were wholly void.

To this answer the plaintiff filed a general demurrer, which was overruled by the court, and the plaintiff electing to stand by his demurrer, judgment was entered for the defendant. 19 Fed. Rep. 871. The plaintiff sued out this writ of error.

Mr. Justice GRAY delivered the opinion of the court. He recited the facts as above stated and continued:

The general grant of legislative power in the constitution of the state does not enable the legislature, in the exercise either of the right of eminent domain or in the right of taxation, to take private property, without the owner's consent, for any but a public object. Nor can the legislature authorize counties, cities or towns to contract for private objects debts which must be paid by taxes. It can not, there fore, authorize them to issue bonds to assist merchants or manufacturers, whether natural persons or corporations, in their private business. These limits of the legislative power are now too firmly established by judicial decisions to require extended argument upon the subject. In Loan Association v. Topeka, 20 Wall. 655, bonds of a city, issued, as appeared on their face, pursuant to an act of the legislature of Kansas, to a manufacturing corporation, to aid it in establishing shops in the city for the manufacture of iron bridges, were held by

this court to be void, even in the hands of a purchaser in good faith and for value. A like decision was made in Parkersburg v. Brown. 106 U. S. 487. The decisions in the courts of the states are to the same effect. Allen v. Jay, 60 Maine 124; Lowell v. Boston, III Mass. 454; Weismer v. Douglas, 64 N. Y. 91; In re Eureka Co., 96 N. Y. 42; Bissell v. Kankakee, 64 Ill. 249; English v. People, 96 Ill. 566; Central Branch Union Pacific Railroad v. Smith, 23 Kan. 745.

We have been referred to no opposing decision. The cases of Hackett v. Ottawa, 99 U. S. 86, and Ottawa v. National Bank, 105 U. S. 342, were decided, as the chief justice pointed out in Ottawa v. Carey, 108 U. S. 110, 118, upon the ground that the bonds in suit appeared on their face to have been issued for municipal purposes, and were therefore valid in the hands of bona fide holders. In Livingston v. Darlington, 101 U. S. 407, the town subscription was toward the establishment of a state reform school, which was undoubtedly a public purpose, and the question in controversy was whether it was a corporate purpose, within the meaning of the constitution of Illinois. In Burlington v. Beasley, 94 U. S. 310, the grist mill held to be a work of internal improvement, to aid in constructing which a town might issue bonds under the statutes of Kansas, was a public mill which ground for toll for all customers. See Osborne v. Adams County, 106 U. S. 181, and 109 U. S. 1; Blair v. Cuming County, 111 U. S. 363. Subscriptions and bonds of towns and cities, under legislative authority, to aid in establishing railroads, have been sustained on the same ground on which the delegation to railroad corporations of the sovereign right of eminent domain has been justified, the accommodation of public travel. Rogers v. Burlington, 3 Wall. 654; Queensbury v. Culver, 19 Wall. 83; Loan Association v. Topeka, 20 Wall. 661, 662; Taylor v. Ypsilanti, 105 U. S. 60. Statutes authorizing towns and cities to pay bounties to soldiers have been upheld because the raising of soldiers is a public duty. Middleton v. Mullica, 112 U. S. 433; Taylor v. Thompson, 42 Ill. 9; Hilbish v. Catherman, 64 Pa. St. 154; State v. Richland, 20 Ohio St. 362; Agawam v. Hampden, 130 Mass. 528, 534.

The express provisions of the constitution of Missouri tend to the same conclusion. It begins with the Declaration of Rights, the sixteenth article of which declares that "no private property ought to be taken or applied to public use without just compensation." This clearly presupposes that private property can not be taken for private use. St. Louis County Court v. Griswold, 58 Mo. 175, 193; 2 Kent Com. 339 note, 340. Otherwise, as it makes no provision for compensation except when the use is public, it would permit private property to be taken or appropriated for private use without any compensation whatever. It is true that this article regards the right of eminent domain, and not the power to tax; for the taking of property by taxation requires no other compensation than the tax-payer receives in being protected by the government, to the support of which he contributes. But, so far as respects the use, the taking of private prop

erty by taxation is subject to the same limit as the taking by the right of eminent domain. Each is a taking by the state for the public use,

and not to promote private ends.

The only other provisions of the constitution of Missouri having any relation to the subject, are the following sections of the eleventh article:

"Sec. 13. The credit of the state shall not be given or loaned in aid of any person, association or corporation, nor shall the state-hereafter become a stockholder in any corporation or association, except for the purpose of securing loans heretofore extended to certain railroad corporations in the state.

"Sec. 14. The general assembly shall not authorize any county, city, or town to become a stockholder in, or loan its credit to, any company, association or corporation, unless two-thirds of the qualified voters of such county, city or town, at a regular or special election, to be held therein, shall assent thereto."

Both these sections are restrictive and not enabling. The thirteenth section peremptorily denies to the state the power of giving or lending its credit to or becoming a stockholder in any corporation whatever. The aim of the fourteenth section is to forbid the legislature to authorize counties, cities or towns, without the assent of the tax-payers, to become stockholders in or to lend their credit to any corporation however public its object; State v. Curators State University, 57 Mo. 178; not to permit them to be authorized, under any circumstances, to raise or spend money for private purposes.

It is averred in the answer, and admitted by the demurrer, that the La Grange Iron and Steel Company, to which the bonds were issued, was "a private manufacturing company, formed and established for the purpose of carrying on and operating a rolling-mill," and "was a strictly private enterprise, formed and prosecuted for the purpose of private gain, and which had nothing whatever of a public character." The ordinance referred to shows that the mill was to manufacture railroad iron; but that is no more a public use than the manufacture of iron bridges, as in the Topeka case, or the making of blocks of stone or wood for paving streets. There can be no doubt, therefore, that the act of the legislature of Missouri is unconstitutional, and that the bonds expressed to be issued in pursuance of that act are void upon their face.

As for this reason the action can not be maintained, it is needless to dwell upon the point that the answer demurred to, besides the special defense of the unconstitutionality of the act, contains a general denial of the allegations in the petition. That point was mentioned and passed over in the opinion of the circuit court, and was not alluded to in argument here, the parties in effect assuming the general denial in the answer to have been withdrawn or waived, and the case submitted for decision upon the validity of the special defense. Judgment affirmed.

Note. Subscriptions by municipal corporations. There is no implied authority to subscribe. 1863, Gelpcke v. Dubuque, 1 Wall. (U. S.) 175; 1873, State v.

Saline Co. Ct., 51 Mo. 350; 1880, Weightman v. Clark, 103 U. S. 256; 1883, City of Jonesboro v. Cairo, etc., 110 U. S. 192; 1888, Kelley v. Milan, 127 U. S. 139.

The legislature may authorize the municipal corporation to subscribe. 1837, Goddin v. Crump, 8 Leigh (Va.) 120; 1852, Slack v. Maysville & L. R., 13 B. Mon. (Ky.) 1; 1853, Sharpless v. Mayor, etc., 21 Pa. St. 147, 59 Am. D. 759; 1858, Knox Co. v. Aspinwall, 21 How. (U.S.) 539; 1871, Leavenworth Co. v. Miller, 7 Kan. 479; 1871, Walker v. Cincinnati, etc., 21 Ohio St. 14, 8 Am. Rep. 24; 1871, Ex parte Selma, etc., 45 Ala. 696, 6 Am. Rep. 722; 1873, Harcourt v. Good, 39 Tex. 456; 1873, Pine Grove Tp. v. Talcott, 19 Wall. (86 U. S.) 666; 1874, Loan Assn. v. Topeka, 20 Wall. (87 U. S.) 655; 1876, Williams v. Duanesburg, 66 N. Y. 129; 1877, Quincy, etc., R. v. Morris, 84 Ill. 410; 1882, Lyons v. Chamberlain, 89 N. Y. 578; 1892, Doon Tp. v. Cummins, 142 U. S. 366; 1893, Barnum v. Okolona, 148 U. S. 393; 1895, Folsom v. Ninety Six, 159 U. S. 611.

But see, contra, 1868, McClure v. Owen, 26 Iowa 243; 1870, People v. Salem, etc., 20 Mich. 452; 1871, People v. State Treas., 23 Mich. 499.

Sec. 133. State or national government.

BANK OF THE UNITED STATES v. PLANTER'S BANK OF GEORGIA.1

1824. IN THE SUPREME COURT OF THE UNITED STATES. 9 Wheat. (U. S.) Rep. 904-913.

[Suit by plaintiff upon promissory notes of defendant payable to a person named or bearer and duly transferred to plaintiff. The defendant bank pleads to the jurisdiction of the United States Circuit Court of Georgia (where the case was tried and certified to the supreme court on a division of opinion), alleging that the state of Georgia was a stockholder, and raising the question as to whether the state was therefore a party defendant in the case.]

* *

MARSHALL, C. J. It is, we think, a sound principle that when a government becomes a partner in any trading company, it divests itself, so far as concerns the transactions of that company, of its sovereign character and takes that of a private citizen. Instead of communicating to the company its privileges and its prerogatives, it descends to a level with those with whom it associates itself, and takes the character which belongs to its associates, and to the business which is to be transacted. Thus, many states of this Union, who have an interest in banks, are not suable even in their own courts, yet they never exempt the corporation from being sued. The state of Georgia, by giving to the bank the capacity to sue and be sued, voluntarily strips itself of its sovereign character so far as respects the transactions of the bank, and waives all the privileges of that charAs a member of a corporation, a government never exercises its sovereignty. It acts merely as a corporator and exercises no other power in the management of the affairs of the corporation than are expressly given by the incorporating act.

acter.

1 Only so much of opinion given as relates to the character of a state as a stockholder.

The government of the Union held shares in the old Bank of the United States; but the privileges of the government were not imparted by that circumstance to the bank. The United States was not a party to suits brought by or against the bank in the sense of the constitution. So with respect to the present bank. Suits brought by or against it are not understood to be brought by or against the United States. The government, by becoming a corporator, lays down its sovereignty so far as respects the transactions of the corporation and exercises no power or privilege which is not derived from the charter. We think, then, the Planter's Bank of Georgia is not exempted from being sued in the federal courts by the circumstance that that state is. a corporator.