The bonds are payable in the city of New York, to Elias Fassett, or holder. They are negotiable, passing by delivery, and would have been had they been under seal. Their negotiability was *237assumed if not decided in Zabriskie agt. The Cleveland, Columbus & Cincinnati R. R. Co. (23 How. U. S. R. 400.)
Similar bonds have repeatedly been held by the courts to be negotiable. It was so held or assumed recently by the court of appeals of this state, in an action on one or more Harlem railroad bonds under seal, I believe. (See also Redfield'on Rail. §239, and cases cited in note.)
It has been repeatedly held in Ohio, that affixing a seal to such an instrument does not affect its negotiability. (See Bain agt. Wilson, 10 Ohio S. R. 19; Bank of St. Clairsville agt. Smith, 5 Ohio, 222.) The English decisions are, I think, to the same effect. This point is raised by the defendant’s first exception when the case was submitted to the jury. Neither exception was well taken.
In my opinion the judge was right in permitting the plaintiffs to recover interest on the coupons. This point is presented by the defendants’ second exception. The coupons are negotiable promises to pay a certain sum of money on a certain day to the holder, so made as to be cut off and circulated independently of the bond. If not paid when due I think interest should be allowed by way of damages for the delay of payment. They do not contain any express promise to pay interest on the interest, and if they did I think interest would or should be allowed, not by force of the promise, but as compensation for the delay of payment by way of damages. The general rule is that when there is a written contract to pay money on a day, and not a place fixed, and the contract is broken, interest is allowed. (Williams agt. Sherman, 7 Wend. 109; Still agt. Hall, 20 id. 51, 52; Reid agt. Rensselaer Glass Co. 3 Cowen, 436; S. C. in error, 5 id. 587.)
The chancery cases in this state are undoubtedly to the effect that compound interest can only be recovered upon a written agreement to pay it, made after the interest upon which it operates has fallen due. (State of Connecticut agt. Jackson, 1 John. Ch. 13; Van Benschoten agt. Lawson, 6 John. *238Ch. 313; Mowry agt. Bishop, 5 Paige, 98; Quackenbush agt. Leonard, 9 id. 334; Toll agt. Hiller, 11 id. 228.)
In State of Connecticut agt. Jackson Chancellor Kent says: “ Even an original agreement at the time of the loan or contract, that if interest be not paid at the end of the year, it shall be deemed .principal, and carry interest, will not be recognized as valid: such a provision would not amount to usury (Le Grange agt. Hamilton, 4 Term R. 613; 2 H. Black. 144), but this court certainly, and perhaps a court of law, would not give effect to such a provision.”
In Van Benschoten agt. Lawson (supra) the chancellor held that the agreement, though made after the interest had fallen due, must be prospective in its operation, as that the interest then due and payable should carry interest thereafter.
■In Mowry agt. Bishop, (5 Paige, supra,) Chancellor Walworth held that an agreement to pay interest on arrears of interest, which had already become due, was valid, and that if compound interest is voluntarily paid, it could not be recovered back; that the moral obligation of the debtor to make the usual remuneration for the loss of interest sustained by the creditor, was a sufficient consideration to support a subsequent agreement in writing to pay interest on such arrears of interest.
I have some difficulty in seeing if such moral obligation is sufficient to support such subsequent written promise, why it was not right to allow the plaintiffs in the principal case interest upon their coupons without any promise.
In Mowry agt. Bishop the chancellor said that the principle that an agreement to pay interest upon interest to accrue after the making of the agreement, cannot legally be enforced, was adopted merely “ as a rule of public policy to prevent an accumulation of compound interest in favor of negligent creditors who do not call for the payment of their interest when due.”
The reason or ground of the general rule that interest *239upon interest cannot be recovered as thus stated, certainly does not apply to the principal case, and should not have prevented a recovery of the interest on their coupons. There is no danger of railroad creditors being negligent in presenting their coupons for payment; though they may run other risks, railroad corporations certainly do not need protection from want of diligence on the part of their creditors.
In Van Benschoten agt. Lawson (supra) Chancellor Kent said that agreements to pay interest on interest to accrue would not be enforced because they were oppressive.
I repeat, certainly there is no danger of railroad corporations being oppressed from want of diligence on the part of their coupon creditors.
As to how far the general rule or principle before adverted to as established by the chancery cases in this state has been recognized by the courts of law of this state, see Kellogg agt. Hickok, 1 Wend. 521; Jackson agt. Campbell, 5 Paige, 571; Boyer agt. Pack, 2 Denio, 107; Van Rensselaer agt. Jones, 2 Barb. 666, 667; Forman agt. Forman, 17 How. Pr. R. 255; Henderson agt. Hamilton, 1 Hall, (N. Y. Superior Court) 314.
In Van Rensselaer agt. Jones, Judge Willard appeared to think it by no means clear that the cases in this state would prevent a recovery of interest on interest in a case like the principal case.
There is no doubt that in several of the states the plaintiffs would have been permitted by the court to recover interest. (See Catlin agt. Lyman, 16 Vesey, 45; Greenleaf agt. Kellogg, 2 Mass. 548; Hastings agt. Wiswall, 8 Mass. 455; Watkinson agt. Root, 4 Hammond Ohio R. 373; Pierce agt. Rowe, 1 Adams N. H. R. 179; Hollingsworth agt. Detroit, 3 McLean, 472.)
Upon the whole I can find no good reason nor controlling authority for saying that the plaintiffs should not have recovered interest on their coupons.
*240From the transaction I infer that the Piqua company expected to pay interest on their coupons if they were not paid when due.
The judge was right in declining to instruct the jury, as requested by the defendants, that the defendants, being indorsers or guarantors without consideration and for ' accommodation, are only liable to bona fide holders for value received to the extent of the value paid, and the defendants showing that they are mere accommodation indorsers, the burden of proving bona fides and values is on the plaintiffs. The defendants were not accommodation indorsers or guarantors. There was a sufficient consideration expressed on the face of the guarantees. The words “ value received” imported a sufficient consideration. (Miller agt. Cook, 21 How. Pr. R. 66 ; Douglass agt. Howland, 24 Wend. 35.) I think, too, the case shows a sufficient consideration for the guarantees outside of them. A railroad corporation must be presumed to be created, not only for public convenience, but also for private profit.
The arrangement which was entered into between the defendants and the other companies, of which the guarantees were a part, was entered into for the purpose of securing uniform gauge of the connecting roads, and then to increase their business and profits.
The presumption is that the defendants have received the anticipated advantages from the arrangement. I think, therefore, that the defendants’ third exception was not well taken.
In my opinion, the judge was also right in declining to instruct the jury as requested, that the guarantees were unauthorized and unlawful. No doubt the plea of ultra vires raised the question of corporate powers of the defendants . to make the guarantees as between the corporation and the state of Ohio, and not merely the question as between the corporation and its shareholders, whether the making of the guarantees was a breach of trust.
*241A corporation is the mere creation of law, and cannot act at all without law. A contract made by it without authority is void, even in the hands of a bona fide holder for value. Its legal capacity to contract cannot be enlarged by estoppel. But I think the defendants were authorized by the sections of the general railroad laws of Ohio, inserted in the case, to enter into the arrangement with the other companies, and to make the guarantees as a part thereof. These sections declare that “ any railroad company heretofore or hereafter incorporated, may at any time, by means of subscription to the capital stock of any other company, or otherwise, aid such company in the construction of its railroad, for the purpose of forming a connection of said last mentioned road with the road owned by the company furnishing such aid,” &c. There is another clause of these sections which authorizes any two or more, whose lines are connected, to enter into any arrangement for their common benefit.
The counsel for the defendants insists that this last provision evidently refers to arrangements as to the management of the road, price of fare, time of running, number of trains, &c. But I do not see why this limited construction should be given the provision, particularly as against the plaintiffs, who are bona fide holders for value, there being nothing in the case showing that they had notice of any of the defences set up in the answer. The language is broad enough to cover the arrangement which the defendants entered into with the other companies, and the guarantees as a part of it.
Perhaps this question of power may be said to have been decided in Zabriskie agt. Cleveland, Columbus & Cincinnati Railroad Co. (23 How. U. S. R. supra), although that action was brought by Zabriskie as a shareholder.
It is not necessary to inquire or decide whether the acts of the defendants were authorized or ratified by a vote of the stockholders in accordance with' the provisoes of the *242said sections of the Ohio general statutes, if the defendants had the general power to make the guarantees ; for these provisoes were intended for the protection of the shareholders, and relate rather to the mode or manner of the execution of the power; and the plaintiffs had a right to presume that the defendants had done their duty, and had proceeded regularly in the execution of the power. (See Commissioners of Knox Co. Indiana agt. Aspinwall, 21 How. U. S. R. opinion p. 545 ; 6 Ellis & Black, p. 337; The Royal British Bank agt. Tarquand; and Zabriskie against the same defendants, 23 U. S. R. supra.)
This doctrine does not at all interfere with the principle of the limitation of the powers of corporations and its consequences, before stated.
Third parties dealing with a corporation are bound to know the law; that is, they are bound to take notice of the extent of its powers ; but they have a right to assume, in the absence of anything suggesting inquiry, that it has proceeded regularly in the execution of its powers.
I think, therefore, the defendants’ fourth exception was not well taken.
I think the judge was also right in declining to instruct the jury, as requested by defendants, that the plaintiffs could not recover, because the bonds were void under the Ohio act of Dec. 15th, .1852, declaring that no director of a railroad company should purchase any of the bonds of any railroad of which he may be a director, for less than the par value thereof, and that all such bonds, &c. so purchased should be void.
The supreme court of Ohio have decided that these bonds were valid securities, and upon which the holders are entitled to recover the full amount of principal and interest, without reference to the amount paid for them. (Coe agt. Columbus & Piqua R. R. Co. 10 Ohio State R. 395, 399 and 410.) In Zabriskie against these same defendants (23 How. U. S. R. supra), the U. S. supreme court says :
*243“ In deciding upon this contract, we deem it unimportant to settle whether Dennison was a director of the Piqua company on the 25th Feb., 1854, when he signed the contract with the committee of the Piqua board of directors.”
I doubt, too, whether Dennison was a director on the 25th Feb., 1854, within the meaning and intent of the act of Dec. 15th, 1852, although he may have been within the meaning of the Ohio act of Feb. 11th, 1848, declaring that directors shall continue such until their successors are elected and qualified.
I think, therefore, the defendants’ fifth exception was not well taken.
Neither do I think that the defendants’ sixth exception was well taken.
The judge declined to instruct the jury that if the bonds were void the guarantees were void. In the case of Zabriskie, the U. S. supreme court held that it was not necessary to settle whether the bonds of the Piqua company were void. The court said : “ The contract of the guarantors, indorsing the.bonds, is a distinct contract, and may impose any obligation upon them independently of the Piqua company.”
An indorser may be liable, though the maker’s name is a forgery. (Herrick agt. Whitney, 15 Johns. 240 ; Shaver agt. Ehle, 16 Johns. 201; See also 1 Parsons on Contracts, 491, and cases cited in notes.)
It was decided by the general term, in this action—the bonds and coupons being payable here—that the cause of action arose here, and that this court had jurisdiction, though both parties were foreign corporations. (The Conn. Mu. Ins. Co. agt. The C. C. & C. R. R. Co. 23 How. Pr. R. 180.)
My conclusion is, that judgment should be affirmed, with costs.