where they have set up as a defense that they had themselves been guilty of a usurpation of power. * * * A different rule of construction ought to prevail where a corporation is endeavoring to extend its power to the injury of others, or where it sets up by way of defense to an action brought against it, that it has itself been guilty of a usurpation of power." Similarly, in 2 Cold., 660, our own Supreme Court ruled that, while the power under which the Mayor and Aldermen of Memphis had acted was doubtful, it did not lie in the mouths of the city authorities to repudiate their own acts. These cases would seem to hold the corporations liable for action beyond their chartered powers. We hardly think, however, that their true meaning as limited by the implied reference to the facts of the cases, goes farther than this, namely, that the courts will strongly lean against defenses growing out of nice constructions of chartered power. For it is distinctly held that the person dealing with the corporation is bound to take notice of the extent of this power. But we shall see that, where the power exists in the corporation, it is held liable for the acts of its agents and officers, even where they have failed to comply with the requirements as to the modes and pre-requisites of its exercise. And this is the category containing the vast bulk of the cases against corporations upon their obligations for money.

The leading case in the national jurisprudence upon this subject is that of Commissioners of Knox County vs. Aspinwall, 21 How., 540, a suit on coupons from county bonds, issued for subscription to the Ohio & Mississippi Railroad Co. The defense was that the statute authorized the Commissioners to subscribe only after an election properly held, and a majority vote in favor of the subscription; and that the election had not been properly held, and so the requisite sanction never been given. The Court said: "The act in pursuance of which the bonds were issued is a public statute; and it is undoubtedly true that a person dealing in them is chargeable with a knowledge of it; and, as this board was acting under delegated authority, he must show that the delegated authority has been properly conferred. The Court must, therefore, look into the statute for the purpose of determining this question. Upon looking into it, we find that full power is conferred upon the board to subscribe for the stock and issue the bonds, when a majority of the voters of the county should have determined in favor of the subscription, after due notice of the time and place of election. The case assumes that the requisite notices

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were not given of the election, and hence that the vote was not in conformity with the law. This view would seem to be conclusive against the authority of the board, but for a question that underlies it, and that is, who is to determine whether or not the election has been properly held and a majority of the votes of the county cast in favor of the subscription? Is it to be determined by the Court in this collateral way, or by the Board of Commissioners, as a duty imposed upon it before making the subscription? The Court is of opinion that the question belonged to the board. * We do not say that in a direct proceeding to inquire into the facts previously to the execution of the power, and before the rights and interests of third persons had attached, the decision of the Board would be conclusive; but after the authority has been executed, the stock subscribed, the bonds issued, and in the hands of innocent holders, it would be too late, even in a direct proceeding, to call it in question. Much less can it be called in question to the prejudice of a bona fide holder of the bonds in this collateral way. * * Another answer to the defense is, that the purchaser of the bonds had a right to assume that the vote of the county which was made a condition to the grant of the power had been obtained, from the fact of the subscription by the board to the stock of the railroad company, and the issuance of the bonds. The bonds on their face import a compliance with the conditions of the grant of the power. This principle was recently applied in a case in the Court of Exchequer in England, 6 Ellis and Blackburn p. 327. The British Royal Bank vs. Tarquand. The defense was a want of power under the deed of settlement or charter, to give the bond. One of the clauses in the charter provided that the directors might borrow money on bonds in such sums as should from time to time, by a general resolution of the company, be authorized to be borrowed. The resolution was considered defective. Jervis, C. B., in delivering the judgment of the Court, observed: 'We may now take it for granted that the dealings with these companies are not like dealings with other partnerships, and that parties are bound to read the statute and deed of settlement. But they are not bound to do more. And the party here, on reading the deed of settlement, would find not a prohibition from borrowing, but a permission to do so on certain conditions. Finding that the authority might be made complete by a resolution, he would have the right to infer the fact of a resolution authorizing that which on the face of the document appear

ed to be legitimately done.' See also 5 Ellis and Blackburn, p. 245, and 25 E. S. & Eq., p. 114. The principle we think sound, and it is entirely applicable to the question before us."

The English Bank here referred to, was incorporated under a general statute providing for an instrument called a deed of settlement, defining the powers and liabilities of the bank, which when duly recorded became its charter.

To the same effect is a series of decisions by the same tribunal, to which our space allows us merely to refer e. g. Commissioners Knox Co. vs. Wallace, 21 How., 540; Bissell vs. City of Jeffersonville, 24 How., 287; Gelpeke vs. Dubuque, 1 Wal., 175; Van Hostrop vs. Madison City, 1 Wal., 297; Supervisors vs. Schenck, 5 Wal., 783; Lee County vs. Rogers, 7 Wal., 183, etc., etc.

In the second mentioned of these cases-Bissell vs. Jefferson Citythe Act had provided that the subscription should be made subject to the following restrictions, etc., and in no other way whatever; the restrictions being: 1. That the subscription should be designated, advised and recommended by a grand jury of the county; 2. That, in no case, should the bonds be sold under par; 3. That the acceptance by the railroad company of the Act authorizing the subscription should be deemed and taken as their acceptance of the Erie Gauge Act of March 11, 1851.

The defense was, that no grand jury had ever made the recommendation required; that the bonds were sold at 663 cents on the dollar; and that the railroad company had distinctly and expressly repudiated the Erie Gauge Act. But the Court said: "We have decided in Commissioners Knox Co. vs. Aspinwall, that when bonds, on their face, import a compliance with the law under which they were issued, the purchaser is not bound to look farther." In Gelpecke vs. Dubuque, 1 Wal., 175, Judge Swayne said: "When a corporation has power, under any circumstances, to issue negotiable securities, the bona fide holder has the right to presume that they were issued under the circumstances which give the requisite authority, and they are no more likely to be impeached in the hands of such holder for any infirmity, than any other commercial paper." In this case, which came from Iowa, the Supreme Court of the United States decided in conflict with the decisions of the State Supreme Court. Similarly, in Mercer Co. vs. Hackett, which came from Pennsylvania, and in a case from Illinois, the Supreme Tribunal of the Nation held contrary to the decisions of the highest courts of these respective. VOL. I.-4

States. Judge Miller, of Iowa, steadily and with much feeling, dissented from these decisions, adhering to the Iowa ruling of the bonds. He appears to have been much exercised at the rulings of the United States Supreme Court, which he vainly resisted, saying, in Briggs vs. Johnson Co., 6 Wal., 201, in reference to Gelpeke vs. Dubuque: "After this decision, no matter how illegal, fraudulent and void were corporation bonds, no defense could be made to them in the Federal Courts; and, of course, they were all sued on in those courts."

In the Floyd Acceptances, 7 Wallace, this Judge does not, of course, assume to decide anything in conflict with the principles distasteful to him, so often affirmed by the Court. But he takes occasion to relieve his wrath by throwing out some dicta criticising the doctrine announced by the Supreme Court in Gelpeke vs. Dubuque, and reiterated in Supervisors vs. Schenck. There is, however, no conflict in the cases. In the case in 7 Wallace, the acceptances are pronounced void, because, if they were given in payment of supplies furnished, as claimed, they were payments in advance, and specially prohibited by the Act Jan. 21, 1823.

In the second place, the Court say that, under existing laws, there could be no lawful occasion for any officer of the United States Government to accept drafts on the Government: See p. 681. If, under any circumstances, the drafts could have been properly accepted, then the principle decided in Gelpeke vs. Dubuque, etc., would have come in play. But if, under no circumstances, the law authorized the acceptances, of course the holder could not claim the benefit of bona fides.

This is the vast distinction between this case and the others referred to. The powers of an officer of the United States are derived from a statute, which every one is bound to notice. But the power of officers of corporations, municipal or private, are usually conferred by the by-laws or ordinances, which the person dealing with the corporation is not bound to look to. The purchaser of the corporate obligations is only held to a knowledge of the charter, and need not look to the action of the officers acting under it. And when, by the charter or some special law, certain prerequisites are to be complied with before the paper of the corporation is issued, the corporate officers are impliedly made the judges as to the fact of such compliance, and their action estops the corporation from denying their power This principle is clearly set forth in Farmers' and Mechanics' Bank

vs. Drovers' Bank, 16 N. Y., 128, which was a suit on a certified check. The defense was, that the Teller, merely as such, had no right to certify the check, and that, so far from being authorized, he had been forbidden to do so, unless the drawer had funds enough on hand to cover the check, and that here there were no funds on hand. But the Court held that the Teller's act in certifying was an implied declaration that he had the power to certify, and that this estopped the Bank, inasmuch as third persons could not know what powers had been given him, but must accept his statement; and the Bank, by putting him in a place of trust, had held him out to be trusted by the public. In Gould vs. Town of Sterling, 23 N. Y., 459, the Legislature had authorized Commissioners of the town to subscribe to a railroad, after a petition had been filed, signed by three-fourths of the tax-payers. The bonds were issued without the necessary petition being filed. The Court, indeed, held them void, but because the Commissioners were not the regular officers of the town, being specially foisted on it by the Legislature for a particular purpose. The Court expressly say that the principle of the Bank Teller case would have controlled the case, if the Commissioners had been the regular officers of the town. They say, p. 4C3: "The reason upon which this rule is founded is given by Lord Holt, 1 Salk., 289, that where one of two innocent persons must suffer through the misconduct of another, it is reasonable that he who had employed the delinquent party, and thus held him to the world as worthy of confidence, should be the loser." To the same effect is De Voss vs. City of Richmond, 18 Grattan, 338.

These doctrines have found a pertinent application in the decision of suits brought in the Federal Court at Nashville, on the checks or warrants, and the bonds and coupons of the city. These have been held, of course, to be entitled to all the presumptions incident to negotiable paper, viz: that they were given for a legitimate purpose; and that the holder took them for value, before dishonor, in the usual course of business. And inasmuch as the checks were ordinarily issued by the Recorder upon allowances made by the Board, and were afterwards countersigned by the Mayor, the issuance by the Recorder implies an assertion upon his part of what he was the official charged specially with the knowledge of, namely, that the proper allowances had been made where the checks were issued. The principle of the Bank Teller case estops the city to deny this. The holder, since the Mayor and Recorder were elected by the corpora