*It must follow that, if in any case a party assumes to [* 196] deal with a corporation on the supposition that it possesses powers which it does not, or to contract in any other manner than is permitted by the charter, he will not be allowed, notwithstanding he may have complied with the undertaking on his part, to maintain a suit against the corporation based upon its unauthorized action. Even where a party is induced to enter upon work for a corporation by the false representations of corporate officers, in regard to the existence of facts on which by law the power of the corporation to enter upon the work depends, these false representations cannot have the effect to give a power which in the particular case was wanting, or to validate a contract otherwise void, and therefore can afford no ground of action against the corporation; but every party contracting with it must take notice of any want of authority which the public records would show. This is the general rule, and the cases of unau 470; Hamlin v. Meadville (Sup. Ct. 1 The common council of Williams burg had power to open, regulate, grade, and pave streets, but only upon petition signed by one-third of the persons owning lands within the assessment limits. A party entered into a contract with the corporation for improving a street upon the false representations of the council that such a petition had been presented. Held, that the provision of the law being public, and all the proceedings leading to a determination by the council to make a particular improvement being matters of record, all persons were chargeable with notice of the law and such proceedings; and that, notwithstanding the false representations, no action would lie against the city for work done under the contract. Swift v. Williamsburg, 24 Barb. 427. “If the plaintiff can recover on the state of facts he has stated in his complaint, the restrictions and limitations which the legislature sought to impose upon the powers of the common council will go for nothing. And yet these provisions are matters of substance, and were designed to be of some service to the constituents of the common council. They were intended to thorized action which may bind the corporation are exceptional, and will be referred to further on. protect the owners of lands and the tax-payers of the city, as well against the frauds and impositions of the contractors who might be employed to make local improvements, as against the illegal acts of the common council themselves in employing the contractors. But if the plaintiff can recover in this action, of what value or effect are all these safeguards? If the common council desire to make a local improvement, which the persons to be benefited thereby, and to be assessed therefor, are unwilling to have made, the consent of the owners may be wholly dispensed with, according to the plaintiff's theory. The common council have only to represent that the proper petition has been presented and the proper proceedings have been taken, to warrant the improvement. They then enter into the contract. The improvement is made. Those other safeguards for an assessment of the expenses and for reviewing the proceedings may or may not be taken. But when the work is completed and is to be paid for, it is found that the common council have no authority to lay any assessment or collect a dollar from the property benefited by the improvement. The contractor then brings his action, and recovers from the city the damages he has sustained by the failure of the city to pay him the contract price. The ground of his action is the falsity of the representations made to him. But the truth or falsity of such representations might have been ascertained by the party with the use of the most ordinary care and diligence. The existence of the proper petition, and the taking of the necessary initiatory steps to warrant the improvement, were doubtless referred to and recited in the contract made with the plaintiff. And he thus became again directly charge able with notice of the contents of all these papers. It is obvious that the restrictions and limitations imposed by the law cannot be thus evaded. The consent of the parties interested in such improvements cannot be dispensed with; the responsibility, which the conditions precedent created by the statute impose, cannot be thrown off in this manner. For the effect of doing so is to shift entirely the burden of making these local improvements, to relieve those on whom the law sought to impose the expense, and to throw it on others who are not liable either in law or morals." So where the charter of Detroit provided that no public work should be contracted for or commenced until an assessment had been levied to defray the expense, and that no such work should be paid or contracted to be paid for, except out of the proceeds of the tax thus levied, it was held, that the city corporation had no power to make itself responsible for the price of any public work, and that such work could only be paid for by funds actually in the hands of the city treasurer, provided for the specific purpose. 279. Goodrich v. Detroit, 12 Mich. But if the city receives the fund and misappropriates it, it will be liable. Lansing v. Van Gorder, 24 Mich. 456. Parties dealing with the agents or officers of municipal corporations must, at their own peril, take notice of the limits of the powers both of the municipal corporation, and of those assuming to act on its behalf. State v. Kirkley, 29 Md. 85; Gould v. Sterling, 23 N. Y. 464; Clark v. Des Moines, 19 Iowa, 209; Veeder v. Lima, 19 Wis. 280; East Oakland v. Skinner, 94 U. S. Rep. 255; Dillon, Mun. Corp. § 381. * Corporations by Prescription and Implication. [* 197] The origin of many of the corporate privileges asserted and enjoyed in England is veiled in obscurity, and it is more than probable that in some instances they had no better foundation than an uninterrupted user for a considerable period. In other cases the royal or baronial grant became lost in the lapse of time, and the evidence that it had ever existed might rest exclusively upon reputation, or upon the inference to be drawn from the exercise of corporate functions. In all these cases it seems to be the law that the corporate existence may be maintained on the ground of prescription; that is to say, the exercise of corporate rights for a time whereof the memory of man runneth not to the contrary is sufficient evidence that such rights were once granted by competent authority, and are therefore now exercised by right and not by usurpation. And this presumption concludes the crown, notwithstanding the maxim that the crown shall lose no rights by lapse of time. If the right asserted is one of which a grant might be predicated, a jury is bound to presume a grant from that prescription.2 In this particular the claim to a corporate franchise stands on the same ground as any claim of private right which requires a grant for its support, and is to be sustained under the same circumstances of continuous assertion and enjoyment. And even the grant of a charter by the crown. will not preclude the claim to corporate rights by prescription; a new charter does not extinguish old privileges.1 for A corporation may also be established upon presumptive evidence that a charter has been granted within the time of memory. Such evidence is addressed to a jury, and, though not conclusive. upon them, yet if it reasonably satisfies their minds, it will justify 1 Introduction to Willcock on Municipal Corporations; The King v. Mayor, &c. of Stratford upon Avon, 14 East, 360; Robie v. Sedgwick, 35 Barb. 326. See Londonderry v. Andover, 28 Vt. 416. 2 Mayor of Hull v. Horner, Cowp. 108, per Lord Mansfield. Compare People v. Maynard, 15 Mich. 470; State v. Bunker, 59 Me. 366. 8 2 Kent, 277; Angell & Ames on Corp. § 70; 1 Kyd on Corp. 14. 4 Hadduck's Case, T. Raym. 439; The King v. Mayor, &c. of Stratford upon Avon, 14 East, 360; Bow v. Allenstown, 34 N. H. 366. See Jameson v. People, 16 Ill. 259. "There is a them in a verdict finding the corporate existence. great difference," says Lord Mansfield, "between length of time which operates as a bar to a claim, and that which is only used by way of evidence. A jury is concluded by length of time that operates as a bar; as where the Statute of Limitations is pleaded in bar to a debt; though the jury is satisfied that the debt is due and unpaid, it is still a bar. So in the case of prescription. If it be time out of mind, a jury is bound to conclude the right from that prescription, if there could be a legal commencement of the right. But any written evidence, showing that there was a time when the prescription did not exist, is an answer to a claim founded on prescription. But length of time used merely by way of evidence may be left to the consideration of the jury, to be credited or not, and to draw their inference one way or the other according to circumstances." 1 The same. ruling has been had in several cases in the courts of this country, where corporate powers had been exercised, but no charter could be produced. In one of these cases, common reputation that a charter had once existed was allowed to be given to the jury; the court remarking upon the notorious fact that two great fires in the capital of the colony had destroyed many of the public records.2 In other cases there was evidence of various acts which could only lawfully and properly be done by a corporation, covering a period of thirty, forty, or fifty years, and done with the knowledge of the State and without question. The inference of corporate powers, however, is not one of law; but is to be drawn as a fact by the jury. Wherever a corporation is found to exist by prescription, the same rule as to construction of powers, we apprehend, [*198] would apply as in other cases. *The presumption as to the powers granted would be limited by the proof of the usage, and nothing could be taken by intendment which the usage did not warrant. 1 Mayor of Hull v. Horner, Cowp. 108, 109; citing, among other cases, Bedle v. Beard, 12 Co. 5. 2 Dillingham v. Snow, 5 Mass. 552. And see Bow v. Allenstown, 34 N. H. 351; Bassett v. Porter, 4 Cush. 487. 3 Stockbridge v. West Stockbridge, 12 Mass. 400; New Boston v. Dun barton, 13 N. H. 409, and 15 N. H. 201; Bow v. Allenstown, 34 N. H. 351; Trott v. Warren, 2 Fairf. 227. 4 New Boston v. Dunbarton, 15 N. H. 201; Bow v. Allenstown, 34 N. H. 351; Mayor of Hull v. Horner, 14 East, 102. Corporations are also said sometimes to exist by implication. When that power in the State which can create corporations grants to individuals such property, rights, or franchises, or imposes upon them such burdens, as can only be properly held, enjoyed, continued, or borne, according to the terms of the grant, by a corporate entity, the intention to create such corporate entity is to be presumed, and corporate capacity is held to be conferred so far as is necessary to effectuate the purpose of the grant or burden. On this subject it will be sufficient for our purpose to refer to authorities named in the note.1 In these cases the rule of strict construction of corporate powers applies with unusual force. Municipal By-Laws. The power of municipal corporations to make by-laws is limited in various ways. 1. It is controlled by the Constitution of the United States and of the State. The restrictions imposed by those instruments, and which directly limit the legislative power of the State, rest equally upon all the instruments of government created by the State. If a State cannot pass an ex post facto law, or law impairing the obligation of contracts, neither can any agency do so which acts under the State with delegated authority.2 By-laws, therefore, which in their operation would be ex post facto, or violate contracts, are not within the power of municipal corporations; and whatever 1 Dyer, 400, cited by Lord Kenyon, in Russell v. Men of Devon, 2 T. R. 672, and in 2 Kent, 276; Viner's Abr. tit. Corporation; " Conservators of River Tone v. Ash, 10 B. & C. 349; s. c. 10 B. & C. 383, citing case of Sutton Hospital, 10 Co. 28; per Kent, Chancellor, in Denton v. Jackson, 2 Johns. Ch. 325; Coburn v. Ellenwood, 4 N. H. 101; Atkinson v. Bemis, 11 N. H. 46; North Hempstead v. Hempstead, 2 Wend. 109; Thomas . Dakin, 22 Wend. 9; per Shaw, Ch. J., in Stebbins v. Jennings, 10 Pick. 188; Mahony v. Bank of the State, 4 Ark. 620. * Angell & Ames on Corporations, § 332; Stuyvesant v. Mayor, &c. of New York, 7 Cow. 588; Brooklyn Central Railroad Co. v. Brooklyn City Railroad Co., 32 Barb. 358; Illinois Conference Female College v. Cooper, 25 Ill. 148. The last was a case where a by-law of an educational corporation was held void, as violating the obligation of a contract previously entered into by the corporation in a certificate of scholarship which it had issued. See also Davenport, &c. Co. v. Davenport, 13 Iowa, 229; Saving Society v. Philadelphia, 31 Penn. St. 175; Haywood v. Savannah, 12 Geo. 404. |