Page:Federal Reporter, 1st Series, Volume 8.djvu/795

HOPPBR ». TOWN OV CQVINGTON. ^81 �The cases of Gelpcke v. City of Dubuque, 1 Wall. 175 ; Sup'rs v. Schenck, 5 Wall. 772; City of Lexirigton v. Britton, 14 Wall. 296 ; and San Antonio v. Mehaffy, 96 U. S. 314, are cited as showing that when a corporation has power, under any eircumstances, to issue negotiable securities, the bonajide holder has a right to presume that they were issued under the circumstancoB that gave the requisiteauthority; that they are no more liable to be impeached in the hands of such a holder than any other commercial paper,,and that recitals are not necessary to estop the municipality. In three of these cases there was express authority to issue the bonds sued on, aiid they contained recitals showing that the piroper officers had decided the precedent conditions existed upon which the power depenaed ; while in the other, (Sup'r's V. Schenck,) although it does not expressly appear that ihe bonds sued on contained recitals, that is the faif inference, for the coiirt' say it i^ settled law that a negotiable security of a corporation, whibli '(in ito face appears tb have been duly issued, is valid iri theha-nds o'fa iona j^de holder. !;.,,, ■ ,.■ . ■ �It is further urged for the plaintiffthait, even if the bond? and cou- pons mentioned'in the complaint are; impeachable in the ha/nds: of the plaintiff, the question before the court is one of pleading, aud it devolves upon the defendant to sho^ that the bonds were issued without authority. The coupons contain no recitals, and there i^ no allegation in the complaint that t^e,, bonds do. The ,argu,liiecl^; of counsel ou both sides assumes that there are no recitals in the b,QQjia< The plaintiff was bound to know that the bonds were issued Under express legislative authority, for school purposes, and it was hio duty to inquire whether the conditions existed that authorized them to be issued. Power to issue commercial paper was the exception, and nqt the rule, and in the absence of such recitals as would prcclude the municipality from impeaching the bonds in the hands of a 6owa j^de holder, the plaintiff has no right of action, unless he shows ih his complaint that the bonds were issued in substantial compliance -With the legislative enactments, and for a proper purpose. Bonds which are not issued in pursuance of express legislative authority, and in a mode prescribed by it, possess none of the qualities of commercial paper. The legislature was careful, in conferring power on munici- palities to borrow money and issue bonds for school purposes, to pre- scribe the mode and manner of its execution, thereby making the mode of its execution the measure of the power granted. Anthony v. County of Jasper, 101 U. S. 697. Demurrer sustained. ��� �