To hold otherwise "would enable the State to set a trap for its creditors by inducing them to subscribe for bonds, and then withdrawing their own security."

§ 1526. More recently the United States Supreme Court has taken a step farther, and held that questions relating to bonds issued in a negotiable form involve questions relating to commercial securities; and that whether under the Constitution of the State such securities are valid or void belongs to the domain of general jurisprudence. And, accordingly, that the decisions of the highest court of the State relating to such bonds will not be respected by that tribunal, when not satisfactory to its judges, and the question arises upon a bond in the hands of a bona fide holder who is a citizen of another State or a foreigner.55

SECTION II.

EXPRESS AND IMPLIED POWERS OF MUNICIPAL CORPORATIONS.WHEN THEY MAY ISSUE NEGOTIABLE BONDS.

§ 1527. The powers of corporations have been divided judiciously into three classes: (1) Those granted in express words. (2) Those necessarily implied or necessarily incident to the powers expressly granted. (3) Those absolutely essential to the declared purposes and objects of the corporation, not simply convenient, but indispensable.56 Whatever power is implied is as effectual as what is expressed.57

§ 1527a. General doctrines as to municipal powers. In the United States the following propositions are sustained by weight of authority:

1. That whenever a municipal corporation has power conferred

Debolt, 16 How. 432.] To same effect, see also Havemeyer v. Iowa Co., 3 Wall. 294; Larned v. Burlington, 5 Wall. 275; Mitchell v. Burlington, 5 Wall. 274; Thomson v. Lee County, 3 Wall. 327; Lee v. Rogers, 7 Wall. 181; City of Kenosha v. Lamson, 9 Wall. 486; Campbell v. Kenosha, 5 Wall. 194; Clemens on Corporate Securities, 32, 33; Township of Elmwood v. Many, 92 U. S. (2 Otto) 298; Douglass v. County of Pike, 101 U. S. (11 Otto) 679. 54. Wade v. Travis County, 174 U. S. 499, 19 Sup. Ct. Rep. 715.

55. Township of Pine Grove v. Talcott, 19 Wall. 667. See ante, § 10, vol. I. 56. Dillon on Municipal Corporations (2d ed.), 173, § 55; Merriam v. Moody's Exrs., 25 Iowa, 163; Tucker v. City of Virginia, 4 Nev. 20.

57. United States v. Babbitt, 1 Black, 61; Gelpcke v. Dubuque, 1 Wall. 221; Lynde v. County of Winnebago, 16 Wall. 13.

to contract a debt, borrow money, or issue a negotiable security, it is to be regarded quoad hoc as a private corporation."

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2. That a municipal corporation has implied power to contract a debt whenever necessary to carry out any power conferred upon it.59

3. That whenever it may contract a debt, it may borrow money to pay it.60

4. That whenever it may contract a debt or borrow money, it may issue its negotiable coupon bonds for its payment.'

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§ 1528. The first proposition cannot be sustained, in our judgment. The differences between the public and the private corporation, indicated in the beginning of this chapter, show that their natures have little if anything in common. A municipal corporation, indeed, cannot be empowered to act for private purposes. Its character as a government cannot be divested. And in no sense can it be looked upon as anything else than as a local arm of the sovereign power."

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§ 1529. The second proposition is undoubtedly correct, but the authorities differ as to the facts which justify its application. If a municipal corporation be empowered to erect public buildings, courthouses, markets, etc., it must necessarily contract debts for the material furnished, and services rendered. And it has been held that it may execute its negotiable bonds for the amounts

58. De Voss v. City of Richmond, 18 Gratt. 338, 345, quoting Moodalay v. East India Co., 1 Brown C. C. 469; Touchard v. Touchard, 5 Cal. 307; City of Galena v. Corwith, 48 Ill. 424.

59. Lynde v. County, 16 Wall. 12.

60. Lynde v. County, 16 Wall. 12; City of Galena v. Corwith, 48 Ill. 424; City of Gladstone v. Throop, 18 C. C. A. 61, 71 Fed. 341.

61. De Voss v. City of Richmond, 18 Gratt. 338; Railroad Co. v. Evansville, 15 Ind. 395; Commonwealth v. Pittsburg, 34 Pa. St. 496; Middleton v. Alleghany County, 37 Pa. St. 241; Reinbath v. Pittsburg, 41 Pa. St. 278; Galena v. Corwith, 48 Ill. 423; Orchard v. School District, 14 Nebr. 378; German-Am. Bank v. City of Brenham, 35 Fed. 185.

62. Roosevelt v. Draper, 23 N. Y. 318, 325; Darlington v. Mayor, 31 N. Y. 164. Judge Dillon says in his Treatise on Municipal Corporations (2d ed., p. 152, note), that "the private character ascribed to it (a municipality) is difficult exactly to comprehend," and pertinently inquires, "Are not all pow

ers conferred upon municipalities, whether many or few, and given only, for their better regulation and government, and to promote their welfare as parts of the State at large?" He evidently discountenances the idea of a municipality being regarded as private in any regard.

But if the statute law be

agreed to be paid to the contractors.63 such as to indicate that taxation, and not the contraction of debts, was contemplated by the Legislature as the method of raising money to accomplish the proposed objects, that method alone can be relied on; for authority to issue obligations must be conveyed in express terms, or by necessary implication."

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§ 1530. The third proposition, that, whenever the municipality may contract a debt, it may borrow money to pay it, has been illustrated in numerous cases. Thus it has been held that, where the town of Chillicothe was empowered to purchase real estate, and erect public buildings, its power to borrow money for these purposes was implied, and its bonds for money borrowed valid.65 The like decision has been rendered where money was borrowed to carry out authority to a municipal corporation to build markets; the court saying, that "corporations may resort to the usual and convenient means of carrying out powers granted," and that no means is more usual for the execution of such objects than that of borrowing money." 66 So where a county was authorized to construct a courthouse, and levy a tax for that purpose, it was held that the county judge (the officer designated) had authority to borrow money, and issue negotiable county bonds therefor; and to sell the bonds outside of the State to raise money for the purpose indicated.67

But there is a fundamental difference between contracting a debt to one person, and borrowing money from another to pay it. It may be convenient to do so, but it cannot be necessary. And the power to contract a debt to A. cannot, by any reasonable intendment, be construed into a power to borrow money from B. In the one case the application of the credit is secured to the advancement of the authorized object, while money borrowed is liable to be lost, to be squandered, or to be diverted to illegitimate purposes. And the logic of the cases which impress this view seems

63. Lynde v. County, 16 Wall. 12: Mills v. Gleason, 11 Wis. 470; Bank v. Chillicothe, 7 Ohio, pt. II, 31.

64. Wells v. Supervisors, 102 U. S. (2 Otto) 625.

65. Bank v. Chillicothe, 7 Ohio, pt. II, 31 (1836).

66. Mills v. Gleason, 11 Wis. 470; State v. Madison, 7 Wis. 688.

67. Lynde v. County of Winnebago, 16 Wall. 12 (1872), Chase, C. J., and Field and Miller, JJ., dissenting. See Wells v. Supervisors, 102 U. S. (12 Otto)

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to us unanswerable.68 Recognizing the fact that corporation officers are special agents, and that municipal corporations are themselves but special agents of government, it is difficult to see how the power of the corporation or of its officers (who are agents of agents) can be so broadly extended by implication, as some of the cases maintain. If the corporation be authorized to contract with A. to build a courthouse, its bonds given for the amount due him would be good. But enlarging the power to authorize the borrowing of money, and, under color of building one courthouse, municipal officers might flood the markets with millions of negotiable bonds for money borrowed from different persons, which they might put in their pockets, and leave the building still unpaid for. In other words, a county officer, authorized, as in the case cited below, to provide a single county edifice, may dissolve the whole property of the county in the twinkling of an eye, and by the magic of a negotiable bond, into his pocket. Courts which tolerate such doctrines, and support them by the narrow technicalities of estoppel, seem to us not exempt from that "epidemic insanity" which has induced extravagant corporate subscriptions to public works, and which has been so much deprecated.70 In Louisiana the charter of a municipal corporation granted authority to it to give such bonds as might be necessary, to conduct its litigation, or on the current administration of its affairs. It was held that this did not authorize the issue of bonds for raising money; and that bonds issued for such a purpose were void, even in the hands of a bona fide holder;" and this seems now to be the settled doctrine of the United States Supreme Court." 72

68. Ketchum v. City of Buffalo, 14 N. Y. 256; Richmond, etc. v. Town of West Point, 94 Va. 668, 27 S. E. 460; The Mayor v. Ray, 19 Wall. 468; Lynchburg R. Co. v. Dameron, 95 Va. 545, 28 S. E. 951; Louisiana State Bank v. New Orleans Navigation Bank, 3 La. Ann. 294.

69. Lynde v. County of Winnebago, 16 Wall. 12.

70. See Mercer County v. Hacket, 1 Wall. 96, and post, § 1541.

71. In Wilson v. City of Shreveport, 29 La. 678 (1877), Marr, J., said: "The creditor of a corporation is bound to see that the contract or obligation of which he claims the benefit is within the power which the corporation may lawfully exercise. The fact that the obligation is in the shape of a negotiable instrument, or that it was acquired in good faith, for a valuable consideration, before maturity, in no manner enlarges the power of the corporation, or gives any additional force or validity to its unauthorized acts."

72. See § 1532. But see Lehman v. City of San Diego, 27 C. C. A. 668, 83 Fed. 669, contra.

§ 1531. As to the fourth proposition, when the power to borrow the money is clear, it necessarily involves in its exercise the execution of a security for its repayment; and negotiable coupon bonds, being the common and most acceptable form of municipal securities, when given for money legitimately borrowed, would undoubtedly be valid, as has been stated.73 And it is generally considered that when the municipality has authority to contract a debt it has the power to evidence the same by a bill, note, bond, or other instrument.74

The power to borrow money includes the power to issue bonds. and other usual securities."

§ 1532. Decisions of United States Supreme Court. The United States Supreme Court has held that authority to a city to subscribe to stock in a railway company" as fully as an individual," imported power to subscribe to the stock on credit, and issue its negotiable bonds in payment.76 So that authority to a city" to borrow money for any object in its discretion," authorized it to subscribe to a railroad corporation, and to borrow money upon its negotiable bonds to pay for it." It has carried its doctrines on this subject to great lengths, and has held that authority to "borrow money for any public purpose," authorized the city of Burlington to subscribe to railroad stock, and to issue its negotiable bonds to the company to be sold by it, the proceeds realized by the company to be appropriated to pay for the stock.78 But borrowing money

73. See ante, § 1527; Ashley v. Board of Supervisors, 8 C. C. A. 455, 60 Fed. 55.

74. City of Williamsport v. Commonwealth, 84 Pa. St. 500; Dorian v. City of Shreveport, 23 Fed. 287; Holmes v. City of Shreveport, 31 Fed. 113, in which case it was held that the officials of a municipal corporation empowered to issue bonds or notes as the evidence of contract price of public works, are authorized to issue bonds or notes which will be protected in the hands of a bona fide holder, upon the principle that express authority to an agent to buy or provide a thing for his principal's use, carries with it the implied power to execute the negotiable note of the latter for the price of the thing. Lehman v. City of San Diego, 27 C. C. A. 668, 83 Fed. 669, contra; City of Cadillac v. Woonsocket Inst. for Savings, 7 C. C. A. 574, 58 Fed. 935.

75. Bunch v. Fluvana Co., 86 Va. 452, 10 S. E. 532.

76. Seybert v. City of Pittsburg, 1 Wall. 372; Commonwealth ex rel. Reinbath v. Pittsburg, 41 Pa. St. 278.

77. Meyer v. Muscatine, 1 Wall. 387.

78. In Rogers v. Burlington, .3 Wall. 654, Field, J. (with whom concurred Chase, C. J., and Miller and Grier, JJ.), dissented, in an opinion of rare ability. "Here," he said, "the authority is to borrow money, yet no money