Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/118

 § 127.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. VII. income bonds.' ever, authority to pledge the franchises of a corporation exists, there is implied, as incidental thereto, the power to pledge everything necessary to their enjoyment, including property not yet acquired by the corporation. 1 § 126. Sometimes a corporation, as for instance a railroad , in. a com pan v, issues securities of a peculiar nature, like " Deferred r - ' r " deferred income bonds ; " which may be irredeem- able, and entitled to interest only after a certain percentage of dividends has been paid on the stock. In a re- cent Pennsylvania case, a railroad corporation was held to have the implied power to issue such securities. 2 § 127. Finally, in order to raise money, a corporation is not re- stricted to borrowing on its own securities ; for it has guaranty. ^ een ne ^ tnat a railroad corporation, having power to raise money on its own bonds, may guaranty the bonds of cities and counties which have been lawfully issued to aid the company to build its road; 3 and also that a railroad cor- poration may guaranty the bonds of another railroad company whose road it competently leases. 4 With respect to the amount of money that a corporation may borrow, no more definite rule can be laid down than this general proposition : in the absence of express restriction, 5 it is legally competent for a corporation to borrow Avhatever mone3 T s may be required for its business. 6 A^t^ *f ^&CkL ^£<t, <?<*&. ^<v where it was said that the right to mortgage might be inferred from the terms of a statute not expressly au- thorizing it. See §§ 304, 305. 1 Phillips v. Winslow, 18 B. Mon. (Ky.) 431; see §§676, 817. 2 Phila. and Reading R. R. Co. v. Stichter, 21 Am. Law Reg. N. S. 713. But in Taylor v. Phila. and Reading R. R. Co., 7 Fed. Rep. 386 (U. S. Cir. Ct. ), it was decided to be beyond the power of the same corporation to issue these very bonds; the court tak- ing the view that the transaction was not a loan, there being no promise to return the principal. See Kent t;. Quicksilver Mining Co., 78 N. Y. 159, 177. 98 3 Railroad Co. v. Howard, 7 Wall. 392; see Bonner v. City of New Or- leans, 2 Woods, 135; Ellerman v. Chi- cago Junction Rys., 49 N. J. Eq. 218. 4 Low v. Cal. Pacific R. R. Co., 52 Cal. 53. But see Northside Ry. Co. o. Worthington, 88 Tex. 562; Mining Co. v. Iron Co., 22 U. S. App. 334. Compare Bank v. Flour Co., 41 O. St. 525; Holm v. Brewing Co., 21 N. Y. App. 204. 5 See Ossipee H. and W. Co. v. Canney, 54 N. H. 295; Auerbach v. LaSeur Mill Co., 28 Minn. 291; also § 286. Barry v. Merchants' Exchange Co., 1 Sandf. Ch. 280, 308.