delivered the opinion of the court.
This is а 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 Pox and Illinois rivers within the city, or in its immediate vicinity. Other bonds, of the. same issue were involved in
Hackett v. Ottawa,
The facts on which this case rests are, in brief, these r
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 thаt 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 voté 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, 18.51, 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 dаm 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 stoсk 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 fhat the act itself was unсonstitutional.
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 advantagés of thе city for manufaeuring 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 *120 another ordinance, directing the mayor to issue thé bonds and deliver them to William H. W. Cushman, “ tо 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 havе 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 Avriting 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 ef the contract. No arrangements were made or contemplated for providing the city-with water.'
Cushman was one of the original corporators of the manufacturing comрany, 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, thе 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, Eаmes sold them to William H. Carey, the plaintiff below, who paid value for them, Avith full knowledge of all that was known by Eames about their issue.
*121 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 оf 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 Eámés, nor the manufacturing company, nor Cushman, were purchasers' without notice. - Carey and Eames both paid valuе, 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 tíities cannot be invested with power to levy and ' collect taxes except for corporate purposes. This has long been settled.
Weightman
v.
Clark,
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 Hill, on Mun. Corp., § 89, 3d ed., and сases there cited. To the extent of their authority they can bind the people and the property subject to their regulation *122 and governmental control by what they do, but beyond their corporate powers their acts are of no effect.
It is not claimed that express authority was given the city of Ottawa to develop, or aid in developing, the natural advantages of its rivers for manufacturing purposes, and what we are now called on to decide is not whether, if such a power had been given, it would be within the generаl scope of the purposes of a city government, and thus a corporate purpose, within the meaning of that term as used in the Constitution, but whether it has been granted by the legislature. Much is said by the Supreme Court of Illinois, in
Taylor
v. Thompson,
As power in a municipal corporation to borrow money and issue bоnds therefor implies power to levy a tax for the payment of the obligation that is incurred, unless the contrary clearly appears, Ralls County Court v. The United States, 105. U. S. 733, it follows that the power contained in the charter to borrow money did not authorize the issue of the bonds in this case,., unless they wеre issued for a corporate purpose, there being a constitutional prohibition against taxation by the city, except for corporate purposes. The question then is whether the city has been invested with power to raise money by public taxatiоn to be donated to private persons or private corporations' as a bonus for developing, the water power in the'city or its vicinity for manufacturing purposes.
The charter confers all the powers usually granted to a city
*123
for the purposes of local government, but that has never been supposed of itself to authorize taxes for everything which, in the opinion of the city authorities, would “ promote the general prosperity and welfare of the'municipality.” Undoubtedly the development of the water рower in the rivers that traverse the city would add to the commerce and wealth of the citizens, but certainly power to govern the city does not imply power to expend the public money to' make the water in the rivers' available for manufacturing purposеs. It is because railroads are supposed to add to the general prosperity that municipalities are given power to aid in their construction by subscriptions to capital stock or donations to the corporations engaged in their construction; but-in аll the vast number of cases involving such subscriptions and donations that have come before this court for adjudication since
The Commissioners of Knox County
v.
Aspinwall,
decided twenty-five years ago, and reported in the 21st Howard, 539, it has never been supposed that the. power to govern -of itself implied рower to make such subscriptions or such donations. On the contrary, it has been over and over again held, and as often, as the question was presented, that unless the specific power was granted, all such subscriptions, and all such donations, as well as the corрorate bonds issued for their payment, were absolutely void, even as against
bona fide
holders of the bonds.
Thomson
v.
Lee County,
3 Wall 327;
Marsh
v.
Fulton County,
In the present case there is nothing whatever to indicate any special authority in this city to pay a bonus for the work that was to be done. It did have power to provide the city with watеr, but there is nowhere anything looking to such a purpose in this transaction. The object here was to bring the water into use as power, to be leased or sold at reasonable rates! An attempt was made by the legislature to authorize a subscription to the stock of the manufacturing company,, but that was of no avail, because in the form adopted the legislation was confessedly unconstitutional. The charter therefore stands the same *124 as though no such attempt had been made, and what was done did not create а corporate purpose to effect an improvement of the power. But even if there had been power to subscribe to the stock, it would not follow there was power to make a donation by way of a bonus to the company to aid in the improvement. In Chicago, Danville and Vincennes R. R. Co. v. Smith, supra, it was indeed said that the distinction between a donation to aid a company and a subscription to its stock “ was more apparent than real,” but that was said in reference to the question of making subscriptions and. donations for corporate purрoses, and not with reference to the effect of a power to subscribe as-conferring a power to donate. In no case to which' our attention has been called has it been held that a power to subscribe for stock would of itself authorize a donation.
The case of
Hickling
v.
Wilson,
decided by the Supreme Court of Illinois in June of last year, and reported in
The present case was submitted at the last term,, and at a former day in this term a decision was announced rеversing the-judgment, but in the opinion reasons were assigned for the reversal .different from those now given. That judgment was afterwards, upon application for a rehearing, set aside and a ■ reargument ordered. Upon further consideration of the whole case, we рrefer to rest the decision on the ground that as between Cushman and the city the bonds in question were, illegal and void, and as the present holder occupies no better position' than Cushman, he and all those under whom he claims having bought with full knowledge of all the facts, .the judgment should have been in favor of the city.
The judgment of the circuit court is reversed, and the cause remanded, with instructions to enter judgment in fa/oor of the city on the fads found.