Pierce on Railroads, 19, 20. Taxation to subsidize them cannot therefore be justified on the ground of any public character they possess, any more than to subsidize banks or mining companies. It is truly said that it has long been the settled doctrine that the right of eminent domain may be employed in their behalf, and it has sometimes been insisted with much earnestness that wherever the State may aid an enterprise under the right of eminent domain, it may assist it by taxation also. But the right of taxation and the right of eminent domain are by no means coextensive, and do not rest wholly upon like reasons. The former compels the citizen to contribute his proportion of the public burden; the latter compels him to part with nothing for which he is not to receive pecuniary compensation. The tax in the one case is an exaction, the appropriation in the other is only a forced sale. To take money for private purposes under pretence of taxation is, as has been often said, but robbery and plunder; to appropriate under the right of eminent domain for a private corporation robs no one, because the corporation pays for what is taken, and in some cases, important to the welfare and prosperity of the community, and where a public convenience is to be provided, as in the case of a grist mill, it has long been held competent to exercise the one power, while the other was conceded to be inadmissible. Few persons would attempt to justify a tax in aid of a mill-owner, on the ground that laws appropriating lands for his benefit, but at his expense, have been supported.

The truth is, the right to tax in favor of private corporations of any description must rest upon the broad ground that the power of the legis

lature, subject only to the express restrictions of the constitution, is supreme, and that, in the language of some of the cases, "if there be the least possibility that making the gift will be promotive in any degree of the public welfare, it becomes a question of policy, and not of natural justice, and the determination of the legislature is conclusive." (Post, p. *489.) But nothing is better settled on authority than that this strong language, though entirely true when it refers to the making provision for those things which it falls within the province of government to provide for its citizens, or to the payment for services performed for the State, or the satisfaction of legal, equitable, or moral obligations resting upon it, is wholly inadmissible when the purpose is to impose a burden upon one man for the benefit of another. Many such cases might be suggested in which there would not only be a possibility,' but even a strong probability, that a small burden imposed upon the public to set an individual up in business, or to build him a house, or otherwise make him comfortable, would be promotive of the public welfare; but in law the purpose of any such burden is deemed private, and the incidental benefit to the public is not recognized as an admissible basis of taxation.

In Allen v. Inhabitants of Jay, 60 Me. 124, s. c. 11 Am. Rep. 185, it became necessary to reaffirm a doctrine, often declared by the courts, that however great was the power to tax, it was exceeded, and the legislature was attempting the exercise of a power not legislative in its character, when it undertook to impose a burden on the public for a private purpose. And it was also held that the raising of money by tax in order to

loan the same to private parties to enable them to erect mills and manufactories in such town, was raising it for a private purpose, and therefore illegal. Appleton, Ch. J., most truly remarks in that case, that "all security of private rights, all protection of private property, is at an end, when one is compelled to raise money to loan at the will of others for their own use and benefit, when the power is given to a majority to lend or give away the property of an unwilling minority." And yet how plain it is that the benefit of the local public might possibly have been promoted by the proposed erections! See to the same effect Loan Association v. Topeka, 20 Wall. 655, where the whole subject is carefully considered and presented with clearness and force in an opinion by Mr. Justice Miller; also Commercial Bank v. Iola, 2 Dill. C. C. 353; s. c. 9 Kan. 700; Weismer v. Douglas, 64 N. Y. 91; s. c. 21 Am. Rep. 586.

These cases are not singular: they are representative cases; and they are cited only because they are among the most recent expressions of judicial opinion on the subject. With them may be placed Lowell v. Boston, 111 Mass. 454, in which the Supreme Court of Massachusetts, after the great fire of 1872 in Boston, denied the power of the Commonwealth to permit taxation in order to loan the moneys out to the persons who had suffered by the fire. A like decision is found in State v. Osawkee, 14 Kan. 418. These decisions of eminent tribunals indicate a limit to legislative power in the matter of taxation, and hold, what has been decided very many times before, that it is not

necessary the constitution should forbid expressly the taxing for private purposes, since it is implied in the very idea of taxation that the purpose must be public, and a taking for any other purpose is unlawful confiscation. Cooley on Taxation, 67 et seq.

One difference there undoubtedly is between the case of a railroad corporation and a manufacturing corporation; that there are precedents in favor of taxing for the one and not for the other. But if the precedents are a departure from sound principle, then, as in every other case where principle is departed from, evils were to have been expected. A catalogue of these would include the squandering of the public domain; the enrichment of schemers whose policy it has been, first, to obtain all they can by fair promises, and then avoid as far and as long as possible the fulfilment of the promises; the corruption of legislation; the loss of State credit; great public debts recklessly contracted for moneys often recklessly expended; public discontent because the enterprises fostered from the public treasury and on the pretence of public benefit are not believed to be managed in the public interest; and, finally, great financial panic, collapse, and disaster. At such a cost has the strong expression of dissent which all the while has accompanied these precedents been disregarded and set aside.

1 The following States have such provisions in their constitutions: Colorado, Connecticut, Illinois, Mississippi, Missouri, and New Hampshire. Many of the State constitutions expressly forbid State aid to private corporations of any sort, and it is

21 Iowa, 566; Smith v. Cheshire, 13 Gray, 318; People v. Gray, 23 Cal. 128; 23 Cal. 447. Compare Emery v. Mariaville, 56 Me. 315; Sherrard v. Lafayette Co., 3 Dillon, 236.

1 There is consideral confusion in the cases on this subject. If the corporation has no authority to issue negotiable paper, or if the officers who assume to do so have no power under the charter for that purpose, there can be no doubt that the defence of want of power may be made by the corporation in any suit brought on the securities. Smith v. Cheshire, 13 Gray, 318; Gould v. Sterling, 23 N. Y. 458; Andover v. Grafton, 7 N. H. 298; Clark v. Des Moines, 19 Iowa, 209; M'Pherson v. Foster, 43 Iowa, 48; Bissell v. Kankakee, 61 Ill. 249; Big Grove v. Wells, 65 Ill. 263; Elmwood v. Marcy, 92 U. S. Rep. 289; Concord v. Portsmouth Savings Bank, 92 U. S. Rep. 625; St. Joseph v. Rogers, 16 Wall. 644; Pendleton Co. v. Amy, 13 Wall. 297; Marsh v. Fulton Co., 10 Wall. 676; East Oakland v. Skinner, 94 U. S. Rep. 255; South Ottowa v. Perkins, 94 U. S. Rep. 260; McClure v. Oxford, 94 U. S. Rep. 429. And in any case, if the holder has received the securities with notice of any valid defence, he takes them subject thereto. But where the corporation has power to issue negotiable paper in some cases, and its officers have assumed to do so in cases not within the charter, whether a bona fide holder would be chargeable with notice of the want of authority in the particular case, or, on the other hand, would be entitled to rely on the securities themselves as sufficient evidence that they were properly issued when nothing appeared on their face to apprise him of the

contrary, is a question still open to some dispute.

In Stoney v. American Life Insurance Co., 11 Paige, 635, it was held that a negotiable security of a corporation which upon its face appears to have been duly issued by such corporation, and in conformity with the provisions of its charter, is valid in the hands of a bona fide holder thereof without notice, although such security was in fact issued for a purpose, and at a place not authorized by the charter of the company, and in violation of the laws of the State where it was actually issued. In Gelpecke v. Dubuque, 1 Wall. 203, the law is stated as follows: "Where a corporation has power, under any circumstances, to issue negotiable securities, the bona fide holder has a right to presume they were issued under the circumstances which give the requisite authority, and they are no more liable to be impeached for any infirmity in the hands of such holder than any other commercial paper." See also Commissioners of Knox Co. v. Aspinwall, 21 How. 539; Russell v. Jeffersonville, 24 How. 287; Lexington v. Butler, 14 Wall. 282; Thorn v. Commissioners of Miami Co., 2 Black, 722; De Voss v. Richmond, 18 Grat. 338; San Antonio v. Lane, 32 Tex. 405. In Farmers' and Mechanics' Bank v. The Butchers' and Drovers' Bank, 16 N. Y. 125, it is said: "A citizen who deals directly with a corporation, or who takes its negotiable paper, is presumed to know the extent of its corporate powers. But when the paper is, upon its face, in all respects such as the corporation has authority to issue, and its only defect consists in some extrinsic fact, such as the purpose or object for which it

was issued, to hold that the person taking the paper must inquire as to such extraneous fact, of the existence of which he is in no way apprised, would obviously conflict with the whole policy of the law in regard to negotiable paper." In Madison and Indianapolis Railroad Co. v. The Norwich Savings Society, 24 Ind. 461, this doctrine is approved, and a distinction made, in the earlier case of Smead v. Indianapolis, &c. Railroad Co., 11 Ind. 104, between paper executed ultra vires and that executed within the power of the corporation, but, by an abuse of the power in that particular instance, was repudiated. In St. Joseph r. Rogers, 16 Wall. 644, it was decided that where power is conferred to issue bonds, but only in a particular manner, or subject to certain regulations, conditions, or qualifications, and the bonds are actually issued with recitals showing compliance with the law, the proof that any of the recitals are incorrect will not constitute a defence to a suit on the bonds, "if it appears that it was the sole province of the municipal officers who executed the bonds to decide whether or not there had been an antecedent compliance with the regulation, condition, or qualification which it is alleged was not fulfilled." And see Moran v. Commissioners of Miami Co., 2 Black, 722; Pendleton Co. v. Amy, 13 Wall. 297; Chute v. Winegar, 15 Wall. 355; Venice v. Murdoch, 92 U. S. Rep. 494; Marcy v. Oswego, 92 U. S. Rep. 637; Humboldt v. Long, 92 U. S. Rep. 642; Douglas Co. v. Bolles, 94 U. S. Rep. 104; Johnson Co. v. January, 94 U. S. Rep. 202; Deming v. Houlton, 64 Me. 254; s. c. 18 Am. Rep. 253; Carpenter v. Lathrop, 51 Mo. 483; Vicksburg v. Lombard, 51 Miss. 111; Pollard v. Pleasant Hill, 3 Dillon,

195; Davis v. Kendallville, 5 Biss. 280. That neither irregularities in issuing bonds nor fraud in obtaining them will be a defence in the hands of bona fide holders, see foregoing cases, and also Maxcy v. Williamson Co., 72 Ill. 207; Nicolay v. St. Clair, 3 Dillon, 163; East Lincoln v. Davenport, 94 U. S. Rep. 801. In Halstead v. Mayor, &c. of New York, 5 Barb. 218, action was brought upon warrants drawn by the corporation of New York upon its treasurer, not in the course of its proper and legitimate business. It was held that the corporation under its charter had no general power to issue negotiable paper, though, not being prohibited by law, it might do so for any debt contracted in the course of its proper legitimate business. But it was also held that any negotiable securities not issued by the defendants in their proper and legitimate business, are void in the hands of the plaintiff, although received by him without actual notice of their consideration. This decision was affirmed in 3 N. Y. 430. In Gould v. Town of Stirling, 23 N. Y. 464, it was held that where a town had issued negotiable bonds, which could only be issued when the written assent of two-thirds of the resident persons taxed in the town had been obtained and filed in the county clerk's office, the bonds issued without such assent were invalid, and that the purchaser of them could not rely upon the recital in the bonds that such assent had been obtained, but must ascertain for himself at his peril. Say the court: "One who takes a negotiable promissory note or bill of exchange, purporting to be made by an agent, is bound to inquire as to the power of the agent. Where the agent is appointed and the power conferred, but the right to exercise the power