State of Arkansas vs. Little Rock, Mississippi River and Texas R'y Co.
even in the hands of innocent purchasers, because the authority to contract did not exist at the time the bonds were issued. It is the lack of power to sell, and not the abuse of power in making the sale, which renders the sale void. And upon this distinction as to contracts entered into by the State authorities without power to contract, and that other class of cases, where the power to contract existed, but may have been abused, we rest our decision.
In the first class of cases, it is no repudiation of a contract to deny its payment, because, not being a contract, there can be no repudiation of it. But in the second class, where the power does exist but has been abused, if the bonds passed into innocent hands for a valuable consideration, an obligation may rest upon the State to pay them, and it would be repudiation to refuse payment. States, as well as all other parties who act through agents, lawfully appointed and acting within the pale of their authority, are bound by the acts of such agents, even though they may be prejudicial to the interest of the party conferring the power to contract.
The question of lien upon the road and its effects need not be considered.
We must hold the bonds utterly void. The State is not responsible for them, and, as a consequence, has no debt to be secured by lien, nor has the State any claim upon the road for the coupons paid by her. The road is not responsible for them, and is under no obligation to redeem the coupons of void bonds. To pay them was an act of folly on the part of the State.
Finding no error in the judgment and decision of the Circuit Court, the same is, in all things, affirmed, with costs.
