Sec 143

Municipal corporations occupy, so far as concerns the questions now before us, a distinctive position.

They are not chartered to do business in the sense that a bank or a railroad is chartered to do business.

Their object is municipal government, and what this means is to be learned, not from business usage, but from the legislation of the state. Hence there is a tendency to limit the contracts of municipal corporations much more strictly than the contracts of banks, and of railroad and insurance corporations.2 But when a municipal corporation is authorized to perform certain business duties-e.g., to issue bonds- it will be bound, as against bona fide purchasers, by the recitals of its officers in such bonds to the effect that the conditions of the enabling statute were complied with,3 though it is otherwise when the bond refers to a statute which is mis-recited.4 And the agents of a municipal corporation cannot bind it to objects foreign to the object of its existence.5 It is otherwise, however, as to matters apparently within its range, as to which it cannot refuse, when it has received the benefits of the contract, to perform its part on the ground that the tain the action against the corporation is not to affirm, but to disaffirm the illegal contract. White v. Franklin Bank, 22 Pick. 181; Morville v. American Tract Society, 123 Mass. 129, 137; Cork, etc. Railway in re, L. R. 4 Ch. 748. But when the corporation has actually received nothing in money or property, it cannot be held liable upon an agreement to share in, or to guaranty the profits of, an enterprise which is wholly without the scope of its corporate powers, upon the mere ground that conjectural or speculative benefits were believed by its officers as likely to result from the making of the agreement, and that the other party has incurred expenses on the faith of it."See, also, Franklin Co. v. Lewis-ton, 68 Me. 43; Downing v. R. R., 40 N. H. 230. See to same effect Whitney Arms Co. v. Barlow, 63 N. Y. 62.

Municipal charters subject to stricter limitation.

1 Whitney Arms Co. v. Barlow, 63 N. Y. 62.

2 Thomas v. Richmond, 12 Wall. 349 ; Mayer v. Ray, 19 Wall. 468 ; and see cases cited, supra, sec 140-1.

3 Gelpeke v. Dubuque, 1 Wall. 175 ; Supervisors v. Schenck, 5 Wall. 784; Lexington v. Butler, 14 Wall. 296; Coloma v. Eaves, 92 U. S. 484; Natchez v. Mellery, 54 Miss. 499 ; and cases cited, supra, sec 138-140.

4 McClure v. Oxford, 94 U. S, 429. 5 Dillon, Munic. Corp. 381.

1 Ibid. ; supra, sec 141 ; Hitchcock v. Galveston, 96 U. S. 341; East St. Louis v. Gas Co., 98 111. 415 ; and other cases cited, Big. on Est. 3d ed. 467 ; 12 Cent. L. J. 390.

2 Strong, J., Coloma v. Eaves, 92. U. S. 484; and see Commissioners v. Bolles, 94 U. S. 104; Rock Creek v. Strong, 96 U. S. 271; Davies v. Huide-koper, 98 U. S. 98 ; Hackett v. Ottawa, 99 U. S. 86.

* Supra, sec 141.

4 In Eufaula v. McNab, Sup. Ct. of Ala. 1881 (12 Rep. 484), the question arose under the following section of the act of the legislature chartering the city of Eufaula: "Sec. 24. Be it further enacted, that the council shall have full power and authority to purchase, and provide for the payment of the same, all such real estate and personal property as may be required for the use, convenience, and improvement of the city," etc. The council of Eufaula, in 1872, purchased from the appellee, McNab, thirty-four acres of land located within the corporate limits of the city, and a warranty deed was executed by McNab, conveying the same in fee simple to the city. The consideration paid was $10,000 of the bonds of the city. A bill was filed to enforce the vendor's lien on the land for the accumulated interest, which amounted to about $5000, and also to fix the liability of the city of Eufaula for principal and interest of the bonds. The chancellor made the decree prayed for, and ordered the sale of the lands for its payment, and the city appealed from this decree.

It was held by the Supreme Court, that, as the land in question was not purchased for an exclusively public use, the purchase was ultra vires. "It may be conceded," said Somerville, J., " if the land in question had been purchased for an exclusively public use, as being designed for dedication to a purpose within the usual scope of municipal governments, it might be a proper exercise of corporate power under the above section, and the validity of the contract of purchase would not be affected or rendered invalid by any subsequent perversion of the land to unauthorized uses not shown satisfactorily to have been mutually intended at the time of the purchase. 2 Dillon on Mnn. Corp. sec 444; Weismer v. Douglass, 64 N. Y. 91. But the terms of the charter are imperative that such property must be 'required for the use, convenience, and improvement of the city.' Collateral advantages incidentally resulting in the promotion of the city's commercial or business prosperity will not be sufficient. It is not contemplated or permitted that such property shall be acquired in aid of any private enterprise not of a public character, however laudable may be its purpose, or however useful may be its encouragement. As said by Mr. Justice Miller, in Loan Association v. Topeka, 20 Wall. 655, 660: 'It follows that in this class of cases the right to control must be limited by the right to tax, and if in the given case no tax lawfully be levied to pay the debt, the contract itself is void for want of authority to make it.'

"The doctrine," so it is argued, "grows out of the nature of such institutions, and rests upon solid and reasonable grounds. The inhabitants are the corporators; the officers are but the public agents of the corporation. The duties and powers of the officers or public agents of the corporation are prescribed by statute or charter, which all persons may not only know, but be fraught with such danger and accompanied with such abuse that it would soon end in the ruin of municipalities, or be legislatively overthrown. These considerations vindicate both the reasonableness and necessity of the rule that the corporation is bound only when its agents or officers, by whom it alone can act if it acts at all, keep within the limits of the chartered authority of the corporation. 1 Dillon on Mun. Corp. (2d ed.) sec 381. Municipal corporations, it is obvious, can exercise only such powers as are expressly granted in their charters, and such as may be necessary and proper in order to carry such express or direct powers into effect; but these powers include those which are indispensably necessary to the declared objects and germane to the governmental purpose for which such corporations may be organized. City Council v. Road Co., 31 Ala. 76 ; Mayor v. Yuille, 3 lb. 137 ; 1 Dillon on Mun. Corp. sec 55 ; Ins. Co. v. Ely, 5 Conn. 560. All contracts, therefore, which are unauthorized by these principles are ultra vires, and impose no legal liability upon the corporations which purport to be bound by them. This is conceded to be a most salutary principle, and one of transcendent importance to the protection of the citizen against exorbitant and unauthorized taxation, imposed for ends entirely foreign to legitimate governmental purposes. 1 Dillon on Mun. Corp. sec 55 ; sec 381, note 2. To such an extent is this true, that the law rather favors the application of the doctrine of ultra vires to municipalities and counties which are invested with civil, police, and political functions ; and in case of any ambiguity or doubt arising out of terms used in the charter, they are strictly instructed against the existence of such doubtful powers, and are resolved by construction in favor of the public. Green's Bryce's Ultra Vires, 42, note ; Mayor v. Ray, 19 Wall. 468; Minturn v. Larue, 23 How. 435 ; 1 Dillon on Mun. Corp. sec 55, note 1 ; 2 Kent Com. sec 51, 292; Stetson v. Kempton, 13 Mass. 272."

In Buffalo R. R. v. Falconer, 103 U. S. 821, the evidence was that the town of Ellicott, being authorized by statute to subscribe to the stock of a railroad company, upon petition of the taxpayers, either absolutely or conditionally, the taxpayers petitioned that such subscription should be made, conditionally, upon the railroad being constructed through a certain village. A contract was then made by the town commissioners with the railroad company, before the railroad was so constructed, that they would make the subscription when the condition was complied with. This contract was held to be ultra vires, and without force and effect as against the township.

"We are clearly of opinion," said Bradley, J., "that the agreement made by the commissioners with the railroad company in June, 1872, was ultra vires. Their powers were confined to subscribing for the stock and making and issuing the bonds in payment thereof, when and as the petition of the taxpayers directed-that is, after the road was completed through Jamestown. By the act of 1870 they might also stipulate as to the instalments in which the bonds should be delivered, and the purposes for which they might be applied. But the power to do this being but an incident of the principal power to make and issue the bonds, and being only intended to enable the commissioners to prescribe the time and manner of their issue and the uses to which they should be applied, would not properly arise, and could not be effectively exercised, until the principal power itself arose and became exercisable. Whilst, however, the commissioners had the power, or, rather, would have the power, at the prescribed time, to subscribe for the stock and to execute and issue the bonds, neither the statutes, nor the taxpayers' petition, gave them any power to make a contract to subscribe for stock, nor a contract to deliver bonds to the railroad company. They were not charged with any such duty ; they were not invested with any such power."