possess all the incidents of negotiability; and if issued, it is subject to all defenses in the hands of a transferee to which it would be subject in the hands of the original holder. (6) Although a municipal corporation proper, in the execution of its ordinary corporate powers and the discharge of its corporate duties, may make contracts and create debts, and may, when not restrained, evidence the liabilities thus incurred, yet if the instrument is made to assume the form of negotiable paper, such paper is always open to defenses in the hands of transferees when it is issued without express authority from the Legislature, or authority fairly to be implied from the charter or legislation applicable to the municipality." Judge Dillon then states the true doctrine to be that merely as incidental to the discharge of its ordinary corporate functions, no municipal or public corporation has the right to invest any instrument it may issue, whatever its form, with that supreme and dangerous attribute of commercial paper which insulates the holder for value from defenses and equities which attach to its inception.13 Express power to a municipal corporation to borrow money is usually held to include the power to issue its negotiable bonds, or other securities to the lender. 14 d. Power of officers to issue negotiable instruments. The powers and duties of municipal officers are prescribed by statute. It has been held that agents, officers, or even a city council of a municipal corporation, cannot bind the corporation by any act which transcends their lawful or legitimate powers; and this rule applies to the issue of negotiable as well as unnegotiable evidences of debt.15 Every person dealing with the officers of a municipal corporation must, at his peril, make inquiry as to the corporate powers of the municipality and the power of such officers to exe 13. Dillon on Municipal Corporations, § 126. 14. Commonwealth v. Pittsburg, 34 Pa. St. 496, 511; Middletown v. Allegheny County, 37 Pa. St. 241; Indianapolis & C. R. Co. v. Evansville, 15 Ind. 395, 412, followed in Evansville v. Dennett, 161 U. S. 135; s. c., 20 C. C. A. 142, 73 Fed. 966. officers of the corporation, including the legislative or governing body, are merely the public agents of the corporators. Their duties and their powers are prescribed by statute. Everyone, therefore, may know the nature of these duties and the extent of these powers. These considerations, as well as the dangerous nature of the 15. Clark v. City of Des Moines, 19 opposite doctrine, demonstrate the Iowa, 199, in which Judge Dillon said: reasonableness and necessity of the "This doctrine rests upon reasonable rule that the corporation is bound grounds. The body corporate is con- only when its agents, by whom, from stituted of all of the inhabitants the very necessities of its being, it within the corporate limits. The in- must act if it acts at all, keep within habitants are the corporators. The the limits of their authority." cute the contract.16 Every such person is charged with a knowledge of the powers of such officers.17 If an officer transcends his power in the execution of negotiable securities, such securities are invalid.18 The officers of a municipal corporation have no implied power virtute officii to execute negotiable instruments which will be free from all equities in the hands of purchasers.19 16. Marsh v. Fulton County, 10 Wall. (U. S.) 676; Lovejoy v. Inhabitants of Foxcroft, 91 Me. 367, 40 Atl. 141; McAleer v. Angell, 19 R. I. 688, 36 Atl. 588; Clements v. Lee, 114 Ind. 397, 16 N. E. 799; Boston Elect. L. Co. v. Cambridge, 163 Mass. 64, 39 N. E. 787; Turney v. Town of Bridgeport, 55 Conn. 412, 12 Atl. 520. 17. Boston Elect. L. Co. v. Cambridge, 163 Mass. 64, 39 N. E. 787. 18. Judge Dillon says (Municipal Corporations, § 445): "There is a broad distinction between the acts of an officer or agent of a public or municipal corporation, and those of an agent for a private individual. In cases of public agents the public corporation is not bound unless it manifestly appears that the agent is acting within the scope of his authority, or he is held out as having authority to do the act, or is employed in his capacity as a public agent to make the declaration or representation for the government." Hainer, in his work on Municipal Securities (§ 21), has said: "The rule is firmly established that municipal corporations may, by their officers and duly authorized agents, make contracts the same as individuals and other corporations in matters that relate to the municipality, and are within the scope of their powers. However, it seems that municipal officers more and their agents are limited strictly within the prescribed powers than officers and agents of private concerns, and there are many cases in which it has been held that a contract made by the agent of a municipal corporation did not bind the principal in the absence of authority." Citing Louisville City R. Co. v. Louisville, 8 Bush (Ky.), 415; Parsel v. Barnes, 25 Ark. 261; Mayor, etc., of Baltimore v. Musgrave, 48 Md. 272; City of Coldwater v. Tucker, 36 Mich. 474, 24 Am. Rep. 601; Lyon v. Adamson, 7 Iowa, 509; Blanchard v. Blackstone, 102 Mass. 343; Goodrich v. City of Waterville, 88 Me. 39, 33 Atl. 659. 19. Clark v. City of Des Moines, 19 Iowa, 199, 214. He has no In the case of Lovejoy v. Inhabitants of Foxcroft, 91 Me. 367, 40 Atl. 141, the court held that "The town treasurer is not the town's financial agent, and has no power whatever, as such, to bind the inhabitants of the town to repay money borrowed by him for the town and used by him in discharging liabilities of the town. more authority than a highway surveyor in this respect. He is unlike the cashier of a bank or the treasurer of a trading corporation. He is simply a public officer charged by law, not by the town, with the duty of receiving and guarding the public money, and disbursing it upon lawful warrant." CHAPTER III. Form and Requisites. 33. Statutory Provision as to Form. § 34. Instrument Must be in Writing; Signature. a. Must be in writing. b. Signature. c. Ratification of unauthorized signature. ↑ 35. Promise or Order to Pay. a. In general. b. Promise to pay. c. Order to pay. 36. Promise or Order to Pay Must be Unconditional. a. In general. b. Examples of conditional promises. c. When order or promise is unconditional; statutory provision. d. Order or promise to pay out of a particular fund. 37. Must be Payable in Money. a. In general. b. Definitions; money; currency; legal tender. c. Instruments payable in current funds or currency. d. Payable in foreign money. e. Payment in money optional. f. Act in addition to payment of money. 38. Certainty as to Sum. a. In general. b. What constitutes certainty as to sum; statutory provision. c. Payment of interest. d. Payment in installments. e. Provision for exchange. f. Costs of collection and attorney's fees. 39. Time of Payment. a. In general. b. Payment in installments. c. Payable on demand; statutory provision. d. Instruments expressing no time for payment. 39. Time of Payment-continued. e. Instruments indorsed when overdue. f. What constitutes determinable future time; statutory provision. g. Instrument payable at fixed period after date or sight. h. Instrument payable on or before a certain date. i. Instrument payable at a fixed time after a specified event. j. Instrument payable upon a contingency. k. Instrument payable on day certain, or on happening of event. 1. Effect of provision for extension of time. 40. Instrument Must be Payable to Order or Bearer. a. In general. b. What are words of negotiability. c. When payable to order. (1) Statutory provision. (2) Instrument payable to drawer or maker. (3) Instrument drawn by agent, officer, or partner. (4) Instrument payable to order of drawee. (5) Instrument payable to joint payees. (6) Instrument payable to one or some of several payees. (7) Instrument payable to holder of an office for time being. (8) Payee to be indicated with reasonable certainty. d. When payable to bearer. (1) Statutory provision. (2) Instrument made expressly payable to bearer. (3) Instrument payable to order of fictitious person. (4) When name of payee does not purport to be that of any person. (5) When only a last indorsement is in blank. § 41. Additional Provisions not Affecting Negotiability. a. Statutory provision. b. Provision authorizing sale of collaterals. c. Provision authorizing confession of judgment. d. Waiver of benefits of a law intended for protection of obligor. e. Option with holder requiring something in lieu of money. § 42. Omissions not Affecting Validity and Negotiability. a. Statutory provision. b. Necessity of date. c. Use of words "for value received," or equivalent. d. Omission of place of execution or payment. $ 43. Instruments Bearing Seal. a. General rule. b. Statutory rule. $ 44. Date of Instrument. a. In general. b. Presumption as to date; statutory provision. c. Ante and post-dated instruments. d. When date may be inserted; statutory provision. $45. Instruments in Blank; Completion by Holder and Effect Thereof. a. In general. b. Statutory provision. c. Incomplete instrument not delivered. 46. Delivery. a. Statutory provision. b. Necessity of delivery. c. What constitutes delivery. d. Mode of delivery. (1) In general. (2) Conditional delivery. e. Presumption of valid delivery. (1) Conclusive as to holder in due course. f. Presumption of intentional delivery by placing signature on instrument. 47. Construction when Instrument is Ambiguous. a. In general. b. Discrepancy between words and figures expressing amount. c. When interest begins to run if no date is specified. d. Failure to date. e. Conflict between written and printed provisions. f. Doubt as to whether instrument is bill or note. g. When person deemed indorser. h. Words "I promise to pay" in instrument signed by two or more persons. § 48. Liability of Person Signing in Trade or Assumed Name. a. Statutory provision. b. Reason and application of rule. 33. Statutory provision as to form. The Negotiable Instruments Law contains the following, which must be deemed controlling in all those States where the law has been adopted, and is of great importance in all other States, since it must be recognized as an authoritative declaration of the law upon the questions involved: "An instrument to be negotiable must conform to the following "requirements: "1. It must be in writing and signed by the maker or drawer; "2. Must contain an unconditional promise or order to pay a sum certain in money; "3. Must be payable on demand, or at a fixed or determinable "future time; "4. Must be payable to order or to bearer, and |