issued.1 Taxpayers may enjoin the issue of illegal warrants or scrip.2 § 505 (413). Payable out of a Particular Fund. If by law a particular claim is to be paid out of a special fund, a warrant or order issued therefor should be made payable out of such fund; if made payable from the treasury generally by the officers issuing it, the corporation is not bound by their act. An order or warrant, concluding with the words " and charge the same to the account of Union Avenue," is payable out of the particular fund indicated, and is not a claim against the corporation. But the distinction must be observed between orders payable out of a particular fund, and those which evidence a general corporate liability, but are directed to be charged to a particular account.5 1 Pulaski County v. Lincoln, 4 Eng. (9 Ark.) 320 (1849); Webster County v. Taylor, 19 Iowa, 117; Paris Tp. Trs. v. Cherry, 8 Ohio St. 564 (1858); Glastenbury v. McDonald, 44 Vt. 450 (1872). In Mississippi a board known as the board of police are authorized by law to audit and allow, upon due proof, all claims against the county; and counties in that State cannot be sued directly. The action of the board in allowing claims for matters of county charge, and in ordering warrants to issue therefor, is final and conclusive on the county, in the absence of fraud, until it is reversed or vacated. Carroll v. Board, &c., 28 Miss. (6 Cush.) 38 (1854). But the weight of authority is otherwise. Shirk v. Pulaski County, 4 Dillon, 209 (1877). Effect of issuing new orders for old. See Clark v. Des Moines, 19 Iowa, 199 Chemung Canal Bank v. Chemung Co. Sup., 5 Denio (N. Y.), 517; Lake v. Trustees, 4 Denio (N. Y.), 520; Shirk v. Pulaski County, 4 Dillon, 209 (1877). On warrants or orders the statute of limitations does not begin to run until payment is denied. Justices of Bibb Co. Inferior Court v. Orr, 12 Ga. 137 (1852). See Carroll . Tishamingo County Board of Police, 28 Miss. 38; De Cordova v. Galveston (bonds), 4 Tex. 470; Kenosha v. Lamson (coupons), 9 Wall. 478; supra, sec. 487, note; Baker v. Johnson County, 33 Iowa, 151. In Nebraska, county warrants are not within the limitation statutes. Brewer . Otoe County, 1 Neb. 373. Colburn v. Chattanooga, Tenn.; s. c. 17 Am. Law Reg. N. s. 191; post, secs. 914, 921, 923. 3 Tippecanoe Co. Comm'rs v. Cox, 6 Ind. 403; Campbell v. Polk County, 49 Mo. 214 (1872); Boro v. Phillips County, 4 Dillon, 216, 223 (1877), citing text; post, chap. xx. Lake v. Williamsburgh, 4 Denio, 520 (1847), remedy of holder discussed; distinguished from Kelly v. Mayor, &c. of Brooklyn, 4 Hill (N. Y.), 263; and see McCullough v. Brooklyn, 23 Wend. (N. Y.) 458; Cuyler v. Rochester, 12 Wend. (N. Y.) 165; Argenti v. San Francisco, 16 Cal. 255, and note remarks of Field, C. J.; Martin v. San Francisco, Ib. 285; Kingsberry v. Pettis Co., 48 Mo. 207 (1871). An instrument in this form: DECEMBER, 31, 1836. Treasurer. Pay A. L. or order $1500 for City of Brooklyn, ss. To the City award No. 7, and charge to Bedford road assessment, &c. J. T., Held, 1st. Negotiable, and not payable out of any special fund. 2d. The corporation was not discharged by failure to present and give notice, no damage or injury being sustained in consequence of the omission. Kelley v. Brooklyn, 4 Hill (N. Y.), 263 (1843); Steel v. Davis County, 2 G. Greene (Iowa), 469; Campbell v. Polk County, 3 Iowa, 467. 5 Clark v. Des Moines, 19 Iowa, 199, 222; Edwards on Bills, 143; Pease v. The rule in can § 506 (414). Interest on Corporate Indebtedness. respect to interest on debts against municipal corporations does not ordinarily differ from that which applies to individuals.1 Under the Missouri statute, providing generally that creditors shall be allowed interest at the rate of six per cent per annum, &c., it is held that county warrants draw interest after presentment to the treasury and refusal of payment by the treasurer, the court regarding the general statute as to interest broad enough to embrace all debtors, counties as well as individuals.2 But in Illinois it is held that the debts of municipal corporations are payable at the treasury of the body; that interest on coupons that is, interest on interestnot be recovered, unless there be a special agreement to that effect, since such corporations are not named in the act regulating interest. The court remarks: "Whatever power these corporations may possess to contract for the payment of interest, in the absence of any express legislation on the subject, we are of opinion that their indebtedness, in the absence of such agreement, does not bear interest. If such instruments (coupons) could in any event draw interest without an express agreement, it could only be after a proper demand of payment. Until a demand is made, such a body is not in default. They are not like individuals, bound to seek their creditors to make payments of their indebtedness." Cornish, 19 Me. 191; Campbell v. Polk Co., 3 Iowa, 467; Union Co. Comm'rs v. Mason, 9 Ind. 97; Bayerque v. San Francisco, 1 McAll. C. C. R. 175; Bull v. Sims, 23 N. Y. 570; Montague v. Horan, 12 Wis. 599. In an action on a county order payable out of the three per cent fund, "as fast as the same shall accrue to the county," it must be alleged that the county has received money from the specific fund named applicable to the order in suit, or that the order was fraudulently drawn upon a fund in which the county had no assets. Union Co. Comm'rs v. Mason, 9 Ind. 97 (1857). See chapter on Mandamus, post. The general and sound 18 Wis. 367. If under authority to issue bonds with eight per cent interest, bonds be issued drawing twelve per cent, they are valid and bear interest at the statutory rate. Quincy v. Warfield, 25 Ill. 317. Usury. That usury can be pred icated of a sale or issue by a corporation of its securities, see Danville v. Sutherlin, 20 Gratt. (Va.) 555 (1871); Lynchburg v. Norvell, 20 Gratt. (Va.) 601 (1871); Clark v. Des Moines, 19 Iowa, 199. May be made payable outside the State. Meyer v. Muscatine, 1 Wall. 384; Maddox v. Graham, 2 Met. (Ky.) 56. 8 South Park Commissioners v. Dunlevy, 91 Ill. 49; Pekin v. Reynolds, 31 1 Langdon v. Castleton, 30 Vt. 285 Ill. 529; People v. Salomon, 51 Ill. 52; (action on book account). 2 Robbins v. County Court, 3 Mo. 57 (1831); State v. Pacific, 61 Mo. 155 (1875). In Iowa, coupons on county and city bonds are held to draw interest. Rogers v. Lee County, 1 Dillon C. C. R. 529. See Evansville, &c. R. Co. v. Evansville, 15 Ind. 395; Hollingsworth y. Detroit, 3 McLean, 472; Pruyn v. Milwaukee, Chicago v. People, 56 Ill. 327 (1870); 4 Pekin v. Reynolds, 31 Ill. 529 (1863); 8. P. Chicago v. People, 56 Ill. 327 (1870); People v. Tazewell County, 22 Ill. 147; Johnson v. Stark County, 24 Ill. 75. But if made payable at a place other than the treasury, the bonds are not void, but view, however, is that coupons when due are regarded as in the nature of an independent claim, and draw simple interest, and only simple interest, unless otherwise expressly provided, from the date of maturity.1 § 507. Implied Power to borrow Money and issue Commercial or Negotiable Paper considered. Much conflict of opinion has existed in the American courts touching the implied power of public and municipal corporations to issue commercial or negotiable instruments, that is, instruments free from equities in the hands of innocent holders for value. In respect of public or quasi corporations, such as counties, &c., as distinguished from municipal corporations proper, the general current of authority is against the proposition that, as ordinarily organized, they possess any such implied power. And the power is not incident to the authority to make specified expenditures or to make local improvements, but it may be implied, where there is nothing to rebut it, from other powers, such as the express power to borrow money.2 But in view of the more complex and diversified powers usually conferred upon chartered or municipal corporations proper, there has been a stronger tendency on the part of the courts to hold that only this provision in them. Sherlock v. Winnetka, 68 Ill. 530 (1873). Post, sec. 514, note. In Madison County v. Bartlett, 1 Scam. (2 Ill.) 67, it was held that counties were not liable to pay interest on their orders or warrants, not being named in the statute regulating interest, and the common-law not allowing it to be recovered. So in Pennsylvania. Allison v. County, 50 Pa. St. 351. In that State a county is not suable on its warrants, but suit must be on original claim. Ib. In Ohio coupons due semi-annually have been held to bear interest after maturity. Wilson v. Neal, 23 Fed. Rep. 129. In California when no provision is made for interest, both municipal bonds and their coupons bear interest after maturity at the rate fixed by law, whether the coupons are detached or not. Nash v. El Dorado County, 24 Fed. Rep. 252; post, chap. xx. A city issued warrants or orders on its treasurer, payable when funds should be collected therefor from certain tax sales, with interest. The funds being collected the common council ordered the treasurer to notify holders of warrants, by publica tion in the official paper, to present the 2 Police Jury v. Britton, 15 Wall. 566 (1872). The ordinary powers possessed by counties, as agencies of the State in the administration of public affairs, do not give the incidental authority to issue negotiable bonds and coupons. See Lynde v. Winnebago County, 16 Wall. 6. Distinction between public and munici pal corporations, in the sense referred to in the text, see ante, secs. 22, 54, 58, 66. such corporations, as usually existing in this country, have an incidental or implied power to issue commercial securities. The line of argument is substantially this: Trading and commercial corporations have this power as an incidental means of effecting their objects, why not municipal corporations as well? Municipal corporations are clothed with large powers, which naturally, if not necessarily, oblige them to use credit or to create debts; therefore, if they may create debts, they may borrow the money to pay them; and if they may borrow money, they have the incidental power to do like other borrowers, namely, give a negotiable bill, note, or bond therefor. The whole argument is, in our judgment, unsound. It is true that in this country private business corporations are usually considered to have the incidental power to borrow money or give negotiable paper as an evidence of their indebtedness, but in England it is held that express power is necessary to enable even railway corporations to draw, indorse, or accept bills of exchange. But admit that the American doctrine is otherwise,2 and that it is rightly so, still there is no resemblance between private and public or municipal corporations in this regard. The latter are simply agencies of government. They are not organized for trading, commercial, or business purposes. They have, in general, but one mode of meeting their liabilities, and that is by taxation, and it is upon this resource that creditors must be taken to rely. For hundreds of years in England such corporations have existed, without it ever being contended that they could, without express authority, issue commercial paper. Private corporations are much more vigilant and watchful of their interests than it is possible for public or municipal corporations to be. The frauds which unscrupulous officers will be enabled successfully to practise, if an implied and unguarded power to issue negotiable securities is recognized, and which the corporation or the citizen will be helpless to prevent, is a strong argument against the judicial establishment of any such power. And the argument is unanswerable, when it is remembered that in ascertaining the extent of corporate powers there is no rule of safety but the rule of strict construction; and that such an implied power is not necessary, however convenient it may be at times, to enable the corporation to exercise its ordinary and usual express powers, 1 See observations of Byles, J., in Bateman v. Mid-Wales Railway Co., Law Rep. 1 C. P. 510 (1866). Ante, sec. 488. 2 Stratton v. Allen, 16 N. J. Eq. 229; McCullough v. Moss, 5 Denio (N. Y.), 567; Straus v. Eagle Ins. Co., 5 Ohio St. 59; 2 Kent's Com. 229; 1 Parsons' Notes and Bills, 165; ante, sec. 488; Desmond or to carry into effect the purposes for which the corporation is created. § 507 a. Same subject. The Author's Conclusions. -We regard as alike unsound and dangerous the doctrine that a public or munic ipal corporation possesses the implied power to borrow money for its ordinary purposes, and as incidental thereto the power to issue commercial securities, that is, paper which cuts off defences when it is in the hands of a holder for value acquired before it is due. The cases on this subject are conflicting, but the tendency is towards the view above presented. The opinion of Mr. Justice Bradley, in a case before referred to, 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. This view is confirmed by the almost invariable legislative practice in the States to confer, when it is deemed expedient, upon municipalities and public corporations, in express terms, the power to borrow money or to issue negotiable bonds or securities; and it is of instruments thus authorized that we now proceed to treat. It is an undisputed doctrine that the power of public and municipal corporations to subscribe to the stock of railway companies and to issue bonds therefor must be expressly conferred." The Supreme Court of 1 The Mayor v. Ray, 19 Wall. 478 (1873). It is difficult to understand on what ground the dissenting judges in this case regarded the corporation warrants as "negotiable securities of a commercial character." The cases are almost uniform to the effect that such instruments do not partake of the nature of commercial paper, except that by usage and custom, and sometimes by legislative enactment, they pass by delivery. Post, sec. 509. 2 The cases on this point are collected in sec. 161, note. See further on this subject, ante, sec. 117 et seq. Particular Statutes Construed. Illinois: Harter v. Kernochan, 103 U. S. 562; approved Pana v. Bowler, 107 U. S. 529; Kankakee v. Etna Life Ins. Co., 106 U. S. 668; Prairie v. Lloyd, 97 Ill. 179; Windsor v. Hallett, 97 Ill. 204; Douglas v. Niantic Sav. Bank, 97 Ill. 228. Kansas: Lewis v. Barbour Co. Comm'rs, 105 U. S. 739; Bard v. Augusta, 30 Fed. Rep. 906. For construction of the general statute of Kansas concerning the subscription by municipalities for stock of railroads and the issue of bonds in payment therefor, see McClure v. Oxford, 94 U. S. 429; Anderson County v. Beal, 113 U. S. 227 ; Crow v. Oxford, 119 U. S. 215. Tennessee: Kelley v. Milan, 127 U. S. 139; s. c. below, 21 Fed. Rep. 842; Taylor v. Ypsilanti, 105 U. S. 60 (where by the vote authorizing a subscription, consent was given upon certain conditions). Nebraska: Read v. Plattsmouth, 107 U. S. 568; State v. Babcock, 19 Neb. 230; s. c. Id. 223. As to liability of counties in Nebraska for bonds issued by precincts and the remedy in such cases, see Davenport v. County of Dodge, 105 U. S. 237; Blair v. Cuming County, 111 U. S. 363; Rosenbaum v. Bauer, 120 U. S. 450; Nemaha County v. Frank, 120 U. S. 41. Infra, sec. 509. Califor nia: Liebman v. San Francisco, 24 Fed. Rep. 705. Missouri: Ogden v. Daviess County, 102 U. S. 634; Tipton v. Rogers Loc. Works, 103 U. S. 523. New York: Thompson v. Perrine, 103 U. S. 806 ; approved Same v. Same, 106 U. S. 589; Red Rock v. Henry, 106 U. S. 596. Louisiana: Hall v. New Orleans, 19 Fed. Rep. |