Argument for Defendant. man in consideration of his contract to build "a good and substantial dam across the Illinois and Fox rivers sufficient to bring into use all the available water," and to protect the city on these bonds in case he did not create the water power, which contract he wholly failed to perform.-V. The statute authorized the commissioners to subscribe to the stock of the manufacturing company, and required them to "raise the money" for payment of the subscription, by issuing and selling bonds at not less than par. The mayor issued the bonds directly to Cushman for delivery to the manufacturing company. Even if the bonds were otherwise free from exception, this disposition of them was illegal. Scipio v. Wright, 101 U. S. 665; Middleport v. Etna Life Ins. Co., 82 Ill. 563. Mr. G. S. Eldredge for defendant.-I. The city of Ottawa had undoubted corporate power to issue the bonds in question, in pursuance of its charter, and they were thus issued for legiti mate corporate purposes. He cited Maher v. Chicago, 38 Ill. 266; Taylor v. Thompson, 42 Ill. 9; Burr v. Carbondale, 76 Ill. 455; Briscoe v. Allison, 43 Ill. 291; Johnson v. Campbell, 49 Ill. 316; Misner v. Bullard, 43 Ill. 470; Chicago R. R. Co. v. Smith, 62 Ill. 268; People v. Depuy, 71 Ill. 651; People v. Trustees of Schools, 78 Ill. 136; Quincy R. R. Co. v. Morris, 84 Ill. 410; Hensley Township v. People, 84 Ill. 544; Pine Grove v. Talcott, 19 Wall. 666; Munn v. Illinois, 94 U. S. 113; People v. Kelly, 76 N. Y. 475; Weismer v. Douglas, 64 N. Y. 91; Livingston v. Darlington, 101 U. S. 407; Hackett v. Ottawa, 99 U. S. 86.—II. The unconstitutionality of the act of February 19th, 1867, providing that commissioners appointed by the legislature in violation of the Constitution of Illinois of 1848 might subscribe for stock in the Ottawa Manufacturing Company on behalf of the city, and thus impose a debt in invitum upon the city. Cites Harward v. St. Clair Drain Co., 51 Ill. 130; Livingston v. Wider, 53 Ill. 302; People v. Chicago, 51 Ill. 17; People v. Salomon, 51 Ill. 37; Gage v. Graham, 57 Ill. 144; Hessler v. Drainage Co., 53 Ill. 105; Marshall v. Silliman, 61 Ill. 218; Middleport v. Ins. Co., 82 Ill. 562; Barnes v. Lacon, 84 Ill. 461.-III. The city is Opinion of the Court. bound by its own construction of its charter power in this instance, and determination as a matter of fact, that the purpose for which the bonds were issued was a municipal purpose, as said by the Supreme Court of Illinois, "to promote the general prosperity and welfare of the municipality." McClurkan V. Alleghany City, 14 Penn. St. 82; James v. Milwaukee, 16 Wall. 159; Van Hostrup v. Madison City, 1 Wall. 291; Meyer v. Muscatine, 1 Wall. 384; Society for Saving v. New London, 29 Conn. 174; Keithsbury v. Frick, 34 Ill. 405; Galena v. Corinth, 48 Ill. 423; Mayor v. Ray, 19 Wall. 468; Orleans v. Platt, 99 U. S. 676; Block v. Commissioners, 99 U. S. 686. -IV. Eames was a bona fide purchaser of the bonds. He was not chargeable with constructive notice of anything but the charter power of the city to issue them; not even gross negligence; nothing short of positive fraud and an attempt on his part, in collusion with the officials of the city, to commit a fraud could impair his right as a bona fide holder; gross negligence, even, alone, would not affect it. Murray v. Lardner, 2 Wall. 120-123; Cromwell v. Sac Co., 96 U. S. 51, 57 to 60; Swift v. Smith, Legal News, Jan. 22d, 1881, 151; National Bank v. Crow, 60 N. Y. 85; Seybel v. National Currency Co., 54 N. Y. 288; Chapman v. Rose, 56 N. Y. 137; Welsh v. Sage, 47 N. Y. 143; Byles on Bills, 115; Comstock v. IIannah, 76 Ill. 530-534; Goodman v. Simmons, 20 How. 343; Murray v. Lardner, 2 Wall. 110; R. R. Co. v. Cowdry, 11 Wall. 459. MR. CHIEF JUSTICE WAITE delivered the opinion of the court. This is a suit to recover upon bonds issued by the city of Ottawa, Illinois, as a donation to aid in the improvement of the water power upon the Fox and Illinois rivers within the city, or in its immediate vicinity. Other bonds of the same issue were involved in Hackett v. Ottawa, 99 U. S. 86, and Ottawa v. First National Bank of Portsmouth, 105 U. S. 342, where it was held, in substance, that, as there was legislative authority to issue bonds for municipal purposes, and it was recited in the bonds then sued on that they were issued for such purposes, the city was estopped from proving, as against bona fide holders, that the recitals were untrue. Neither Hackett nor the bank Opinion of the Court. had any knowledge of the precise purposes for which the bonds were issued, and it was adjudged that they had the right to rely on what was recited. The facts on which this case rests are, in brief, these: The city of Ottawa was incorporated as a city in Illinois on the 10th of February, 1853, and given the ordinary powers of municipal corporations of that class for local government. It was specially authorized "to provide the city with water, to erect hydrants and pumps in the streets for the convenience of its inhabitants," and, upon a vote of the people, "to borrow money on the credit of the city, and to issue bonds therefor, and pledge the revenue of the city for the payment thereof." Our attention has not been called to any other provision of the charter as having a bearing on the questions to be considered. In February, 1851, the Ottawa Manufacturing Company was incorporated by the general assembly of Illinois to build a dam across the Fox river for the purpose of creating a water power to be leased and used. On the 16th of February, 1865, the charter of this company was amended so as to authorize the building of a dam across the Illinois river, and a race to bring the water from that river into the pool of the dam across the Fox. On the 19th of February, 1867, the general assembly passed an act purporting to constitute a board of commissioners to subscribe $100,000 to the capital stock of the manufacturing company for and on behalf of the city, and to pay the subscription by an issue of the bonds of the city. No subscription was ever made under this authority, and we understand the counsel for the defendant in error to concede that the act itself was unconstitutional. On the 15th of June, 1869, an ordinance was passed by the city, submitting to the voters at an election, to be held on the 20th of the same month, the question whether the council should borrow $60,000 on the bonds of the city to be "expended in developing the natural advantages of the city for manufacuring purposes. This election was held, and resulted in a vote by a majority of the legal voters in favor of the project. Thereupon, the city, on the 30th of July, 1869, passed Opinion of the Court. another ordinance, directing the mayor to issue the bonds and deliver them to William H. W. Cushman, " to be used by him in developing the natural resources and surroundings of the city," and authorizing and directing him "to expend the same in the improvement of the water power upon the Illinois and Fox rivers, within the city and in the immediate vicinity thereof, under the franchises and powers which have been granted for that purpose by the legislature of the State, or which may hereafter be granted for that purpose, in the manner which, in his judgment, shall best secure the practical and permanent use of said power to the city and its immediate vicinity." Under this ordinance the bonds were issued and delivered to Cushman on the 2d of August, 1869, as a donation to aid the city in securing the contemplated water power, he agreeing in writing to cause the necessary works to be completed in the two rivers within a reasonable time, and if not, to return the bonds or a part thereof, according to the special provisions of the contract. No arrangements were made or contemplated for providing the city with water. Cushman was one of the original corporators of the manufacturing company, and a director at the time the bonds were issued to him, and he, on the 11th of March, 1871, delivered them to the company "to be used by said company for the purpose of making the improvement hereinbefore mentioned, without further consideration." During the month of June, 1871, the company sold and delivered the bonds involved in this suit to Lester H. Eames, a citizen of Ottawa, for their face value and part of the interest which had accrued after August, 1870. When Eames made his purchase and paid for the bonds, he knew they had been issued as a donation to aid in the completion of the improvement contemplated in the contract with Cushman, and was cognizant of all the proceedings of the council in reference thereto. He also knew of the contract with Cushman. In November, 1879, after the bonds fell due, Eames sold them to William H. Carey, the plaintiff below, who paid value for them, with full knowledge of all that was known by Eames about their issue. Opinion of the Court. Upon these facts, found by the court and set forth in the record, judgment was rendered against the city and in favor of Carey for $72,814.76. To reverse that judgment this writ of error has been brought. This case differs from those of Hackett and the First National Bank of Portsmouth, supra, in that Carey cannot claim protection as a bona fide holder, while Hackett and the bank could. Neither Carey, nor Eames, nor the manufacturing company, nor Cushman, were purchasers without notice. Carey and Eames both paid value, but Carey bought after maturity, and it is expressly found that both he and Eames had actual knowledge of the purposes for which the bonds were issued, and of the contract with Cushman. Under the circumstances of this case, the manufacturing company is chargeable with knowledge of all the facts known to Cushman, one of its directors and the original contractor with the city. The questions then to be considered are such as may arise between the city and a purchaser for value from Cushman with full knowledge of all the facts affecting the validity of the bonds at their inception. In Illinois, under the Constitution of the State, the corporate authorities of cities cannot be invested with power to levy and collect taxes except for corporate purposes. This has long been settled. Weightman v. Clark, 103 U. S. 256, and numerous Illinois cases there cited. What may be made a corporate purpose is not always easy to decide, but it has never been supposed that if legislative authority had not been granted to a municipal corporation to do a particular thing, that thing could be a purpose of that corporation. Municipal corporations are created to aid the State government in the regulation and administration of local affairs. They have only such powers of government as are expressly granted them, or such as are necessary to carry into effect those that are granted. No powers can be implied except such as are essential to the objects and purposes of the corporation as created and established. 1 Dill. on Mun. Corp., § 89, 3d ed., and cases there cited. To the extent of their authority they can bind the people and the property subject to their regulation |