Lucius Quintus Cincinnatus Lamar

“ Justice BRADLEY, clearly illustrated the fundamental distinction between issuing bonds merely as evidence of a debt or loan and issuing bonds for negotiation and sale generally, with respect to the powers of a municipal corporation. It said: 'That a municipal corporation which is expressly authorized to make expenditures for certain purposes may, unless prohibited by law, make contracts for the accomplishment of the authorized purposes, and thereby incur indebtedness, and issue proper vouchers therefor, is not disputed. ”

“ Our opinion is that mere political bodies, constituted, as counties are, for the purpose of local police and administration, and having the power of levying taxes to defray all public charges created, whether they are or are not formally invested with corporate capacity, have no power or authority to make or utter commercial paper of any kind, unless such power is expressly conferred upon them by law, or clearly implied from some other power expressly given, which cannot be fairly exercised without it;' citing Police Jury v. ”

“ Such papers in the hands of innocent parties for value cannot be enforced without reference to any defense on the part of the corporation, whether existing at the time or arising subsequently. Municipal corporations are established for purposes of local government, and, in the absence of specific delegation of power, cannot engage in any undertakings not directed immediately to the accomplishment of those purposes. Private corporations created for private purposes may contract debts in connection with their business, and issue evidence of them in such form as may best suit their convenience. ”

“ But this only brings us back to the question, does the implied power to borrow money or contract a loan carry with a further implication of power to issue funding negotiable bonds for that amount, and sell them in open market, as commercial paper? Let us see. Section 3342 is unquestionably a limitation upon the power to borrow money. Its very language is that of mandatory negation: 'No incorporated town shall have the power to borrow money, or incur any debt,' unless certain conditions precedent are complied with. The conditions which the statute prescribes, the statute means to be performed. ”

“ We think the proposition that, under the laws of Indiana, a town has an implied authority to borrow money, or contract a loan, under the conditions and in the manner expressly prescribed, cannot be controverted. ”

“ In the case before us the power in question is not, in our opinion, indispensable to the exercise of the express or implied powers conferred upon the town by law. The utmost that can be said is that it was deemed more convenient or expedient to issue the bonds in that form than in the mode prescribed. ”

“ The proceeds of the sales of such bonds shall be paid to the said school trustees, to enable them to erect or complete such building or buildings and pay such debt. But before payment to them such school trustees shall file with the county auditor a bond, payable to the state of Indiana, in a sum not less than the full amount of the said money so to be paid to them, and with security to be approved by said auditor, conditioned for the faithful and honest application of such money to the purpose for which the same was provided ”

“ Bonds once issued for a lawful purpose must be paid by taxation. This is manifest from the provision which requires a tax to be levied each year 'sufficient to pay the annual interest, with an adit ion of not less than five cents of the hundred dollars to create a sinking fund for the liquidation of the principal.' When bonds are once issued for a lawful purpose, the town is functus officio as to that matter. To argue that the old bonds are a debt for school purposes, which may be liquidated by new bonds, is a refinement of construction which the sound sense of the law rejects. ”

“ But the board did depart from the prayer, for it did not borrow money nor contract a loan; but it ordained, in so many words, that the town issue bonds for negotiation and sale at not less than 94 cents on the dollar. Wethi nk the words of Chief Justice MARSHALL in Head v. Insurance Co., 2 Cranch, 127, 169, aptly characterizes this transaction, and bear upon the points which are the subject of this controversy. Speaking of bodies corporate which have only a legal existence, he said: 'The act of incorporation is to them an enabling act. It gives them all the power they possess. ”

“ Justice BRADLEY in a case before referred to (Mayor v. Ray) evinces a thorough comprehension of the whole question, and, in our judgment, is sound in every proposition it advances, and must become the law of this country. ”

“ The same may be said of the act of the legislature of that state which took effect August 24, 1879, expressly conferring upon the towns in that state power to fund their indebtedness by issuing bonds and negotiating them for that purpose, under certain specified terms, restrictions, and limitations. We are not unmindful that in several of the cases in the supreme court of Indiana, cited by counsel for plaintiff in error, there may be found abstract propositions susceptible of a construction in support of the position he seeks to maintain ”

“ Rep. 489, it was held that the statutes of Tennessee, which conferred upon counties in that state the power to erect a court-house, jail, and other necessary county buildings, did not authorize the issue of commercial paper as evidence of or security for a debt contracted for the construction of such a building. Referring to the view of the court below in that case, which held that, as the county had power to erect a court-house, that power implied the power to contract out the work, and to issue negotiable bonds of a commercial character in payment thereof, Mr. ”