Argument for Plaintiff in Error.

However, under both constitutions, it has been held that a subscription in aid of railroads was a corporate purpose, and counties and towns had the right to lend aid and credit, and levy taxes to pay the same. Nichol v. Nashville, 9 Humphreys, 250, 252; Louisville & Nashville Railroad v. Davidson County, 1 Sneed, 637 ; S. C. 62 Am. Dec. 424; City of Memphis V. Gayoso Gas Co., 9 Heiskell, 518; Winston v. Tenn. Pacific Railroad, 1 Baxter, 60.

We insist that there was express legislative authority for the issuance of these bonds, and that they were executed in strict conformity therewith.

[Mr. Poston then examined the statutes of Tennessee, and continued:] We further insist that, upon questions of commercial securities, Federal courts are not bound by state decisions. Oates v. National Bank, 100 U. S. 239, 246; Pine Grove v. Talcott, 19 Wall. 666, 677.

II. Our second proposition presents the simple question. whether the defendant, having the power to make the subscription and lend the credit, had the implied power and authority to execute and deliver bonds negotiable in form, independent of any express authority conferred.

All the authorities agree that where a municipal corporation has the implied power to borrow money or lend credit, it has the implied power to execute all proper bonds, notes or other negotiable securities to accomplish these purposes. Seybert v. Pittsburg, 1 Wall. 272; Commonwealth v. Pittsburg, 41 Penn. St. 278; Police Jury v. Britton, 15 Wall. 566, 572; Hull v. Marshall County, 12 Iowa, 142; Gause v. City of Clarkville, 5 Dillon, 165; Commonwealth v. Pittsburg, 34 Penn. St. 496; Griffin v. Inman, 57 Georgia, 370; Black v. Cohen, 52 Georgia, 621; Ketchum v. Buffalo, 14 N. Y. 356.

This implied power is thoroughly indoctrinated into the laws and decisions of the State of Tennessee, as will be seen by reference to the cases.

On this point, see Union Bank v. Jacobs, 6 Humphreys, 515; Nichol v. Mayor of Nashville, 9 Humphreys, 264; Adams v. Memphis & Little Rock Railroad Co., 2 Coldwell, 645; Moss v. Harpeth Academy, 7 Heiskell, 283.

Opinion of the Court.

III. In any event this court should hold the defendant as upon non-negotiable bonds or notes, treating the issuance of negotiable bonds as an excess of authority only, and not invalidating the loan with interest as agreed upon. Nashville v. Ray, 19 Wall. 468.

Mr. T. B. Turley for defendants in error. Ill was with him on the brief.

Mr. Sparal

MR. JUSTICE BLATCHFORD, after stating the case, delivered the opinion of the court.

It is insisted by the plaintiff in error that there was express legislative authority for the issue of these bonds. The first statute relied on is the act of the legislature of Tennessee, approved January 23, 1871, chapter 50 of the acts of 1870-71, entitled "An Act to Enforce Article 2, Section 29, of the Constitution, to Authorize the several Counties and Incorporated Towns in this State to Impose Taxes for County and Corporation Purposes." This statute has been fully considered by us in the case of Kelley v. Town of Milan, just decided, and shown to have conferred no such authority.

The act approved December 16, 1871, chapter 122 of the Acts of 1871, entitled "An Act to legalize and authorize subscription by incorporated Cities and Towns for the benefit of Railroad Companies created by law," applies only to cases where an incorporated town or city had subscribed to the capital stock of a railroad company prior to the passage of that act. The subscription in the present case was not made until May 10, 1873, the election having been held on July 6, 1872; and the entire act relates only to the validity and the legality of the subscription to stock, and in no manner touches the question of the issue of bonds.

It is also contended that express authority to issue the bonds in question was granted by section 20 of an act passed February 26, 1869, chapter 59 of the acts of 1868-69, which section is as follows: "SEC. 20. Be it further enacted, That it shall be lawful for the town of Dyersburg to make a cor

Opinion of the Court.

porate subscription to the capital stock of the Mississippi River Railroad Company, not to exceed fifty thousand dollars in amount, payable in not exceeding four years by annual assessments levied by the Board of Trustees of said town, and collected as other moneys are, and bonds of the town may be issued in anticipation of such collections, collected for town purposes: Provided, however, That before the Board of Trustees or Aldermen of said town shall make any such subscription, the question shall have been first submitted to the qualified voters of said town, and shall have received a majority of the votes cast therefor after twenty days' notice of the time and place of holding said election, and of the amount proposed to be subscribed."

Reliance is also placed upon section 18 of an act passed February 8, 1870, chapter 55 of the acts of 1869-70, which section is as follows: "SEC. 18. Be it further enacted, That stock which has been subscribed, or may hereafter be subscribed, by any county, city, or incorporation, to said railroad companies may be payable in six annual payments; and it shall be lawful for county courts and the corporate authorities of any city or town making such subscription to issue short bonds bearing interest at the rate of six per cent per annum, to said railroad companies, in anticipation of the collection of annual levies, if thereby the construction of the roads can be facilitated."

As to the act of 1869, the subscription to the stock, not to exceed $50,000, was made payable, by section 20, in not exceeding four years, by annual assessments of taxes. The express limitation was to the four years, but authority was given to issue the bonds of the town in anticipation of the collections of taxes. Of course, under this provision the bonds were to be paid by the four annual collections of the taxes levied by the four annual assessments. That was the fund provided for their payment. No authority was given for the issue of bonds other than such as were to be paid, one-fourth in one year, one-fourth in two years, one-fourth in three years, and one-fourth in four years; and no authority was given for the issue of any bond payable in ten years.

Opinion of the Court.

As to section 18 of the act of 1870, it gave no power to the town of Dyersburg beyond that conferred by the act of 1869, to subscribe for stock or to issue bonds. The only pos sible effect it could have as to that town was to modify section 20 of the act of 1869, so as to make the subscription to stock payable in six annual payments, instead of four annual payments, and to authorize the issue of bonds in anticipation of the collection of the annual tax levies, the bonds to be payable in not exceeding six annual instalments, instead of four; but each set of bonds to be still payable by an annual tax levy, and to fall due annually for six years, at the time of the maturity of the levy for each year.

That these statutory provisions did not authorize the issue of bonds payable in ten years is entirely clear. Pulaski v. Gilmore, decided by the Supreme Court of Tennessee, and published in 21 Fed. Rep. 870; Milan v. Railroad Co., 11 Lea, 329.

The cases of Louisville & Nashville Railroad v. County Court of Davidson, 1 Sneed, 683, and The State v. Anderson County, 8 Baxter, 249, do not sustain the position of the plaintiff in error. While, in each of those cases, the statute provided that not more than one-third of the amount of the subscription should be collected in any one year, it did not prohibit its distribution into more numerous instalments, each of less amount. Here, the acts in question prohibited any extension of time beyond four or six years, and the vote of the town distinctly varied the terms fixed by the statute.

It is also contended by the plaintiff in error that the grant of power to subscribe for the stock carried with it the implied authority to issue negotiable bonds therefor. None of the cases cited by the plaintiff in error, decided outside of the State of Tennessee, establish such doctrine. The cases cited in Tennessee, Union Bank v. Jacobs, 6 Humphreys, 515; Nichol v. Mayor of Nashville, 9 Humphreys, 252; Adams v. Memphis and Little Rock Railroad Co., 2 Coldwell, 645; Moss v. Harpeth Academy, 7 Heiskell, 283; The State v. Anderson County, 8 Baxter, 249; and Williams v. Railroad Co., 9 Baxter, 488, do not maintain the doctrine contended for.

Opinión of the Court.

In the case in 6 Humphreys, it was held that a railroad company, a private corporation, could contract a debt for a corporate purpose, and give a negotiable promissory note therefor. In the case in 9 Humphreys, there was express legislative authority to subscribe for stock and issue bonds, and the point decided was that a subscription by a municipality to railroad stock was a county or corporation purpose, within the provision of the constitution empowering the legislature to authorize counties and towns to impose taxes for county and corporation purposes. The case in 2 Coldwell was considered by this court in Nashville v. Ray, 19 Wall. 468, 479, and it was there said that the doctrines propounded in the opinion in 2 Coldwell, with reference to the implied powers of municipal corporations, were not necessary to the decision of that In the case in 7 Heiskell, the question was as to the power of a private corporation to borrow money. In the case in 8 Baxter there was express authority to issue the bonds, and the question of implied power did not arise, as was said by this court in Claiborne County v. Brooks, 111 U. S. 400, 411. In the case in 9 Baxter, the question now under consideration does not appear to have been raised or discussed, the only question involved being whether the original subscription to the stock of the railroad company was valid.

case.

On the contrary, the decision of the Supreme Court of Tennessee, in the cases of Pulaski v. Gilmore and Milan v. Railroad Cc., above cited, was distinctly, that express legislative authority to issue bonds like those involved in the present suit was necessary. In harmony with this view is the fact of the numerous instances in which the legislature of Tennessee, after granting authority to municipalities to subscribe for stock in railroad companies, has also expressly granted the power to issue bonds therefor.

The views of this court on the subject of the implied power to issue municipal bonds were fully expressed in the cases of Wells v. Supervisors, 102 U. S. 625, and Claiborne County v. Brooks, 111 U. S. 400. In the first of those cases it was held, that the mere authority given to a municipality to subscribe for stock in a railroad company did not carry with it.