Chisholm vs. The City of Montgomery.

Thompson v. Lee County, 3 Wall., 327; Town of Guilford v. Supervisors of Chenango County, 13 N. Y., 143; Brewster v. The City of Syracuse, 19 id., 116.

5. What is implied is as effectual as what is expressed. Croxall v. Sherrard, 5 Wall., 283; United States v. Babbitt, 1 Black, 61; Haight v. Holley, 3 Wend., 258; Gouch v. Stowell, Plowden, 366.

6. A ratification, whether express or implied, is equivalent to an original authority. City of Kenosha v. Lampson, 9 Wall., 478; Beloit v. Morgan, 7 id., 619; Campbell v. City of Kenosha, 5 id., 194.

7. A contract originally void may be made binding by an act of the legislature. Wilkinson v. Leland, 2 Pet., 627.

IV. Independent of the mere contract set out in the agreed facts, the plaintiff has the right to recover. By its transactions the city incurred liabilities which the law will enforce.

1. If a county obtains the money or property of others without authority, the law, independent of any statute, will compel restitution or compensation. Marsh v. Fulton County, 10 Wall., 684; Maher v. The City of Chicago, 38 Ill., 266-273; Gas Co. v. San Francisco, 9 Cal., 469, 473.

2. The legal effect of the city's transaction, as set out in the agreed facts, was a loan of money for which the bonds sold by the plaintiff to the city were issued. Rogers v. Burlington, 3 Wall., 666, 667. The plaintiff can, therefore, recover on his count for money loaned.

Messrs. John A. Elmore and Wm. A. Gunter, for defendant: I. The city had no power to issue the bonds:

1. When a power, exercised by the officers or agents of a municipal corporation, is not expressly given by the charter, and is not necessary and proper to carry out the purposes of the incorporation, the corporation is not bound. It is unnecessary to cite authorities on this point.

2. When the power is given, but the charter requires it to be exercised by particular persons or bodies, or in a specified mode, or for a specified purpose, if not so exercised, the act is as much ultra vires and void as if the power had not been conferred. Zottman v. San Francisco, 20 Cal., 96; McSpedon v. Mayor

Chisholm vs. The City of Montgomery.

of New York, 7 Bos., 601; City of Leavenworth v. Rankin, 2 Kan., 351; Butler v. Charlestown, 7 Gray, 12; Mayor of Baltrmore v. Eschback, 18 Md., 276; The Floyd Acceptances, 7 Wall., 666; Head v. Insurance Co., 2 Cranch, 127; White v. New Orleans, 15 La. An., 667; Dey v. Jersey City, 19 N. J. Eq., 412; Baltimore v. Reynolds, 20 Md., 1; Bank of U. S. v. Dandridge, 12 Wheat, 64; Diggle v. Railway Co., 5 Exchr., 442; Homersham v. Wolverhampton Waterworks Co., 4 Eng. L. & E., 426; Trustees v. Cherry, 8 Ohio St., 564; McCracken v. San Francisco, 16 Cal., 591; Argenti v. San Francisco, 16 id., 255; Pimental v. San Francisco, 21 id., 251; Peterson v. Mayor of New York, 17 N. Y., 449.

3. There is a class of cases in which it has been held that when a power is given to be exercised by certain persons upon prerequisites to be ascertained by them and they exercise the power, a holder for value of negotiable securities issued thereunder need not go behind the authority. But in all cases of this class there was express legislative authority to issue the bonds upon certain conditions, and they were issued by the body entrusted with the power to do so, and with the power of determining that the conditions had been complied with. Of this class are the following cases: Commissioners of Knox County v. Aspinwall, 21 How., 544; Bissell v. City of Jeffersonville, 24 id., 287; Moran v. Commissioners of Miami County, 2 Black, 723; Mercer County v. Hackett, 1 Wall., 85; Gelpcke v. Dubuque, 1 id., 175; Van Hostrup v. Madison City, 1 id., 271; Rogers v. Burlington, 3 id., 654; Supervisors v. Schenck, 5 id., 783; Lee County v. Rogers, 7 id., 181.

4. A distinction must be drawn between the cases of municipal and private corporations. The officers of a private corporation may, under certain circumstances, without authority, or even against positive instructions, bind the corporation. Farmers' Bank v. Butchers' Bank, 14 N. Y., 623; Merchants' Bank v. State Bank, 10 Wall., 604. On the other hand, all persons who deal with a public corporation, or its officers, are bound at their peril to know whether the act done by its officers is authorized or not, or has been exercised as required by the terms of the charter. Brady v. The Mayor, 20 N. Y., 312; City of Leaven

Chisholm vs. The City of Montgomery.

worth v. Rankin, 2 Kan., 357-371; Swift v. Williamsburg, 24 Barb., 427; Halstead v. The Mayor, etc., 3 N. Y., 430; Marsh v. Fulton County, 10 Wall., 676; Horn v. Baltimore, 30 Md., 218; Bridgeport v. Railroad Company, 15 Conn., 475; Haynes v. Covington, 13 Sm. & Mar., 408, Taft v. Pittsford, 28 Vt., 286; Steam Navigation Company v. Dandridge, 8 Gill & J., 248; Hodges v. Buffalo, 2 Denio, 110; Dill v. Inhabitants, etc., 7 Met., 438; Branham v. San Jose, 24 Cal., 585; Sturtevant v. Alton, 3 McLean, 394; Wallace v. San Jose, 29 Cal., 180; State v. Haskell, 20 Ia., 276.

5. The city charter gave no power to the city authorities to subscribe to the stock of a plankroad company, and to issue bonds therefor. (a) A special authority to borrow money, when once exercised, is exhausted. Savings Bank v. Winchester, 8 Allen, 109. (b) The power of a corporation can never be extended by construction beyond the object of its creation. Cooley on Con. Lim., 195, note 2; Pearce v. Madison & Indiana Railroad Company, 21 How., 441.

II. The bonds having been issued without authority, are void in the hands of all persons. Marsh v. Fulton County, 10 Wall., 676; Clay v. Nicholas County Court, 4 Bush (Ky.), 154; Logansport v. Legg, 20 Ind., 315; Pimental v. San Francisco, 21 Cal., 351; Price v. Railroad Company, 13 Ind., 58; State v. Bergen, 33 N. J., 39.

III. There has been no ratification of these bonds.

1. Where contracts are ratified the ratification must be by a person or body having the power to ratify. Delafield v. The State of Illinois, 2 Hill., 159; Hotchin v. Kent, 8 Mich., 526; Marsh v. Fulton County, 10 Wall., 676; Dubuque Female College v. Dubuque, 13 Ia, 555; Estey v. Inhabitants of Westminster, 97 Mass., 324.

2. If the act be without the scope of the corporate authorities, no sort of ratification by them can make it good. Peterson v. Mayor of New York, 13 N. Y., 449; Brady v. Mayor, 20 id., 313; Hodges v. Buffalo, 2 Denio, 110; Gates v. Hancock, 45 N. H., 528; Reilly v. Philadelphia, 60 Penn. St., 467; Hood v. N. Y. & N. H. Railroad Company, 22 Conn., 502; Tread

Chisholm vs. The City of Montgomery.

well v. Commissioners, 11 Ohio St., 183; Hopple v. Brown Township, 13 id., 311.

3. The act of the legislature authorizing an "extension" of the bonds on a condition therein specified was no ratification of the bonds. (a) The act was to take effect upon a condition that never happened. (b) The city of Montgomery before the passage of the act was no more liable for these bonds than if they had never been made. To create a liability on the bonds by statute would be to make a contract between the parties. a matter beyond the power of legislation. Hoke v. Henderson, 4 Devereux, 15; People v. Haws, 37 Barb., 440; Hasbrouck v. Milwaukee, 13 Wis., 37; Medford v. Learned, 16 Mass., 215.

IV. The plaintiff cannot recover on the common counts. When a contract is void because entered into by a corporation in violation of or without authority of its charter, the party can neither recover upon the contract nor upon any implied liability in any form. Brady v. The Mayor, 20 N. Y., 317; Hodges v. Buffalo, 2 Denio, 110; Halstead v. The Mayor of New York, 3 N. Y., 430; Boom v. The City of Utica, 2 Barb., 104; Grogan v. San Francisco, 18 Cal., 590; Swift v. Williamsburg, 24 Barb.,

427.

BRADLEY, Circuit Justice. This action was brought to recover the amount of certain bonds and coupons thereto attached, issued by the corporate authorities of the city of Montgomery in the years 1850 and 1852, to aid in the construction of the Montgomery South Plankroad, and the Montgomery and Wetumpka Plankroad respectively, extending from points within said city to certain points several miles outside of its bounds.

The main question raised in the case is, whether the city authorities had any legal authority or power to issue said bonds. If they had, it is admitted that the plaintiffs are bona fide holders thereof, and entitled to recover; if they had not, no recovery can be had.

The original charter of the city was an act of the legislature of Alabama, passed December 23, 1837, which remained without material alteration, so far as the question involved in this case

Chisholm vs. The City of Montgomery.

is concerned, until the bonds in question were issued. A careful examination of this charter does not disclose any authority to make or issue bonds or other commercial securities of a negotiable character. It confers upon the corporation the ordinary police powers which are given to municipal bodies such as the power to pass by-laws and ordinances necessary and proper to prevent contagious and infectious diseases, to preserve the public health, to prevent and remove nuisances, to license and regulate shows and theatrical amusements, to restrain gaming, to establish night watches and patrol, to make, alter and regulate streets, to regulate the wharves, to erect and regulate markets, the conveyance of water, etc.

In 1846, a special act was passed authorizing the city council. to raise seventy-five thousand dollars by the issue of bonds to that amount; which was immediately done, and the money was applied to the erection of the state capitol in said city. The power was exhausted and became extinct. This very act, however, shows the public sense as to the incapacity of the city to issue bonds without special authority.

The mode pointed out in the charter for raising revenues to meet the public expenditures was by taxation. Indebtedness incurred by the authorities at any time, in carrying out any of the prescribed objects of the charter, is undoubtedly binding on the city; but such indebtedness, and the ordinary certificates or vouchers given as evidence thereof, stand on a very different ground from that of commercial securities issued by the city officials, the consideration of which cannot be inquired into in the hands of a bona fide holder, and which might be issued to an extent involving the financial ruin of the city. It is the latter species of securities for the issue of which no authority can be found in the charter; and the power to issue these is not implied from the ordinary police powers given to a municipal corporation. The Mayor v. Ray, 19 Wall., 468.

In the next place, the charter contains no authority to aid or subscribe for stock in private corporations created for constructing works of internal improvement. The bonds in question were issued for this purpose, as is shown by a printed memorandum in their margin.

VOL. II.-38