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the usual powers of administration conferred in specific matters, and the power to levy taxes to defray necessary corporate expenditures.' It is thought in Pennsylvania, that whenever the municipality has authority to contract a debt by borrowing money or otherwise, so that the legislature must have contemplated its giving securities of some sort in payment, it has then by implication authority to eviaence the same by bill, note, bond, or other negotiable instrument. But we do not perceive that mere authority to contract a debt carries with it necessarily the idea that money must be borrowed, or the authority to execute negotiable instruments Municipal corporations in order to

. exercise municipal functions, such as opening streets, etc., must come under obligation to pay those who do the work. Taxation is the ordinary method of raising revenue for such purposes, and debts so contracted should be paid out of the municipal revenues raised by taxation. This subject is elsewhere discussed in this work, and it is not necessary here to elaborate it. The views of Judge Dillon, as expressed in a recent essay on the Law of Municipal Bonds, seem to us eminently sound, and worthy of approbation.

$ 421. Officers empowered to act for public corporations. —The common council of a city or town is the legislative

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* Police Jury v. Britton, 15 Wall., 572, post, $ 422; Clemens on Corporate Securities, 26, 27. See also Mayor v. Ray, 19 Wall., 468, and post, § 427.

* City of Williamsport v. Commonwealth, 84 Penn. St., 501. *See post, vol. 2, § 1530.

* See post, vol. 2, § 1527 et seq. See Dillon on Municipal Bonds, $ 6, p. 12-13 et seq., where it is said: “There is no resemblance between private and public or municipal corporations in this regard. The latter are not organized for trading, commercial or business purposes. They have in general but one mode of meeting their liabilities, and that is by taxation, and it is upon this resource that creditors must be taken to rely. For hundreds of years in England, such corporations have existed, without it ever being contended that they could, without express authority, issue commercial paper. . . . . We regard as alike unsound and dangerous the doctrine that a public or municipal corporation possesses the implied power to borrow money for its ordinary purposes, and as incidental to that, the power to issue commercial securities. The cases on this subject are conflicting, but the tendency is toward the view above indicated.”

branch of the municipal government; and when the city or town has the power to execute the instrument, that body would be the proper agency, by whom, or under whose directions, it should be exercised, and would have the implied authority to execute the power of the corporation. But the executive officers of cities and towns, and the supervisors, trustees, or representative officers of a county, parish, or other local jurisdiction, invested with the usual powers of administration in specific matters, and the power to levy taxes to defray the necessary expenditures of the jurisdiction, have no implied authority to issue negotiable securities of such a kind as to be unimpeachable in the hands

a of bona fide holders.

$ 422. Thus, it has been held that the mayor of a city could not execute the bond of the city, although he had received express authority from the council to borrow money from a bank, and to execute a note therefor. So it has been held that county supervisors had no implied power to execute negotiable instruments, Field, J., saying : “Were it otherwise, it is easy to see that the county would be entirely at the mercy of the board.”? Nor have the trustees or supervisors of towns, villages, and townships ;4 nor the selectmen of towns and villages ;5 nor the auditors of cities,

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* Little Rock v. State Bank, 3 Eng. (Ark.), 227.

* People v. Supervisors El Dorado Co., 11 Cal., 175. To same effect, see Hubbard v. Town of Lyndon, 28 Wis., 675; Chemung Canal Bank v. Supervisors, 5 Den., 517.

* Lake v. Trustees, 4 Den., 520; Hubbard v. Town of Lyndon, 28 Wis., 674. * Inhabitants v. Weir, 9 Ind., 224.

Rich v. Errol, 51 N. H., 350. In Smith v. Inhabitants of Cheshire, 13 Gray, 318, it was held that an order or draft of the selectmen of Cheshire on the treas. urer of the town, payable to Westcott or bearer, was not negotiable ; and that an action could not be brought in any name but that of the party to whom it was issued. Bigelow, J., after saying that such orders were common, but the right of the holder to sue depended on the question whether the selectmen had power by virtue of their office, and without special authority from the town, to issue to persons having claims on the town negotiable notes, bills of exchange, or orders, on which a town can be held liable to indorsers or holders other than those to whom they were originally issued, continued : “ The powers and duties of selectmen are not very fully defined by statute. Many of the acts usually performed by them on behalf of towns, and which are recognized as within their appropriate sphere, have their origin and foundation in long-continued usage.

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who are mere executive agents. And it has recently been

" held by the United States Supreme Court that there was no implied power to execute a negotiable bond in the police jury of a parish, Bradley, J., saying: “It would be an anomaly justly to be deprecated, for all our limited territorial boards charged with certain objects of necessary local administration, to become fountains of commercial issues, capable of floating about in the financial whirlpools of our large cities."? So there is no such implied power in the clerks of county courts, though such courts constitute the auditing boards of the counties;: nor in the clerks of boards of supervisors to issue a negotiable warrant.“ Nor in county judges, who are special limited agents;5 nor in the mayor and recorder of a city; nor in the mayor

alone.? $ 423. Difference between Public and Private Corporations.-If private corporations, to increase their profits, em

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The management of the prudential affairs of towns necessarily requires the exercise of a large discretion, and it would be quite impossible by positive enactment to place detinite limits to the powers and duties of selectmen to whom the direction and control of such affairs are intrusted. Speaking generally, it may be said that they are agents to take the general superintendence of the business of a town, to supervise the doings of subordinate agents, and the disbursement of money appropriated by vote of the town to take care of its property and perform other similar duties. But they are not general agents. They are not clothed with the general powers of the corporate body for which they act. They can only exercise such powers and perform such duties as are necessarily and properly incident to the special and limited authority conferred on them by their office. They are special agents empowered to do only such acts as are required to meet the exigencies of ordinary town business. : ... The rule of law is well settled that a special agent has no authority to bind his principal by a promissory note, bill of exchange, or other negotiable paper. Such power can be conferred only by the direct authority of the party to be bound." Taft v. Pittsford, 28 Vt., 289 (which seems to overrule Dalrymple v. Whittingham, 26 Vt., 245). But see Andover v. Grafton, 7 N. H., 302, and Great Falls Bank v. Farmington, 41 N.

H, 33.

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Dana v. San Francisco, 19 Cal., 486; People v. Gray, 23 Cal., 125; Keller v. Weeks, 22 Cal., 460.

· Police Jury v. Britton, 15 Wall., 566 (1872). To same effect, see Bcarman v. Board of Police, 42 Miss., 238.

: Parcel v. Barnes, 25 Ark., 261. * Clark v. Polk County, 19 Iowa, 248.

• Hyde v. County of Franklin, 27 Vt., 186; Daviess County Court v. Howard, 13 Bush (Ky.), 102.

• Clarke v. Des Moines, 19 Iowa, 200.

* Short v, City of New Orleans, 4 La. Ann., 281 ; Goldschmidt v. New Or. eans, 5 La. Ann., 436.

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bark in enterprises not authorized by their charter, still, as to third persons, and when necessary for the advancement of justice, the stockholders will be presumed to have assented, since it is in their power to restrain their officers when they transgress the limits of their chartered authority." But municipal corporations stand upon a different ground. They are not organized for gain, but for the

. ernment; and debts illegally contracted by their officers can not be made binding upon the taxpayers from the presumed assent of the latter.

The principle is applicable to both public and private corporations, as it is to individuals, that where they borrow money from a bank or other institution, it does not lie in their mouth to show that the transaction was of a character prohibited by the charter of such bank or other institution.

"Lloyd v. West Branch Bank, 15 Penn. St., 174. It was held that, although a bank had no authority to receive certain notes on deposit, yet, if received, it was liable for them. Coulter, J., said: “ The recognized and' known functionaries, and especially the officers of a bank, are held out to the world as having authority to act according to the general usage, practice, and course of the business of such institutions. If it were otherwise, there would be no safety for the public in doing business with any one of such institutions; because their charters differ in some respects, and individuals can not be presumed to carry these documents in their pockets as a vade-mecum. Their acis, therefore, within the scope of such usage, practice, and course of business, will bind the corporation in favor of third persons transacting business with them, and who did not know at the time that the officer was acting beyond and above the scope of his authority. The property of stockholders is not bound by the irregular, unauthorized transactions or declarations of their officers, beyond the just sphere of their legal action. But if stockholders, without objection or interference, witness a course of business, usage, and practice on the part of their officers, this justifies third persons in believing that such usage of the officers is sanctioned by the principle and authorized by law."

* Bradley v. Ballard, 55 III., 420. * Township of Pine Grove v. Talcott, 19 Wall., 619, and cases therein cited.

CHAPTER XV.

DRAFTS OR WARRANTS OF ONE CORPORATE OFFICER UPON

ANOTHER.

SECTION 1.

DRAFTS OR WARRANTS OF PRIVATE CORPORATIONS.

$ 424. In the first place, as to drafts, orders, or warrants of private corporations.—Sometimes, in dealing with corporations, one agent or officer draws upon another, and in respect to private corporations the doctrine may be regarded as settled by weight of authority, and by principle, that,

, provided the act be not ultra vires, an instrument so drawn is, in effect, the draft of the corporation upon itself, and may be treated either as an accepted bill, or as a promissory note. Such drafts come within a statutory provision respecting “bills and notes for the direct payment of money.”? They are frequently given for mere convenience in keeping accounts, and providing concurrent vouchers, and as it is not necessary, when bills and notes are drawn payable at a particular place, to aver or prove presentment there as a condition precedent to binding the acceptor or maker, so it is considered that it is not necessary to aver or prove presentment to the drawee in person, or at his place of business or residence, or to give notice of non-payment, before suing the corporation, which is regarded as acceptor or maker. This view has been applied in numerous cases . where the president and secretary of a water company drew

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