22 V V V V s mziasan. mtroxmuz. _ V·;;·. z-
is bound by false recitals as to the existence of its power to issue
negotiable bonds. The soundness of that proposition is not questioned.
Undoubtedly, as `respects the power of a public corporation to issue
bonds, recitalsiin the bonds themselves cannotloperate by way of
estoppel as the equivalent of a statute conferring the power.
A But this principle has no application to the case at bar. This is
not a suit against the state. It is a suit against the payee and trans-
ferrer of state bonds, containing recitals which, if true, made the
bonds what they purported on their face to be,~legal and binding
- obligations of the state.   p
And the rule is that the payee of negotiable paper, who transfers
it for value, thereby guaranties the genuineness of the paper, and the
truth of every recital on its face material to its validity and value.
Byles, Bills, [157;] 2 Pars. Notes &»Bi1ls, 39.
The railroad company had the power to negotiate the state bonds,
and to ineurall- theobligations impliedby that act. ,It received
them for thattpurpose, and is as completely cstopped to deny the
truths of its representations, made by recitals in the bonds, asa
natural person would be under rlikecircumstances. The recitals do
not bind thefstate, but, as between the company and those who pur-
chased thebonds from it, they do bind the company. The distinc-
tion here adverted to isso well understood that in the Florida case
it went without the saying. ' l »
· Every purchaser of a bond from the railroad company had the _
right, therefore, to assume that these recitals, which the company in-
dorsedias ·true by putting the bonds on the market, were true in
` fact. And, as between the purchaser of the bond and the railroad
company, the former was not required to look or inquire further.
The purchaser, by reference to the act referred•t0 in the recital in
the bonds, would see that while thebond was the bond of the state,
the debt was in fact the debt of the railroad company, which was
bound to provide the state with funds to pay it, and that the payment
· of this debt was secured by a statutory lien on the railroad, and its in-
come and earnings. And knowing these facts, the purchaser would
also know that, if for any reason the state declined to pay the bonds,
he would be entitledto be subrogated to the rights of the state, "
under the statutory lien, to secure payment of the debt represented
by the bonds. · This is no new doctrine. It is founded on principles
of reason and justice, as old as equity jurisprudence itself. Mr.
*Sheldon,' in his work on Subrogation, says; ·· ‘