Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/310

 § 320.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. VII. And this it is competent for a legislature to do, with or with- out the popular vote of the municipality, 1 although the pro- jected railroad lie outside of the county or even the state ; pro- vided the building of the road will give the county a desirable connection with some other region. 2 The constitutionality of such legislation is based on the view that the construction of a railroad is of such general utility that taxation in aid thereof is constitutional, being for a public purpose. 3 § 320. In order that municipal bonds issued in aid of a rail- road may have any validity in the hands of any one, special authority must have been given by the legis- lature to the municipality to issue them. This is un- with notice, questionable law. 4 And every holder of municipal Special authority requisite. Holders charged 103 U. S. 110. Contra, People v. Salem, 20 Mich. 452; Whiting v. She- boygan, etc., R. R. Co., 25 Wis. 167; Hanson v. Vernon, 27 Iowa, 28. The last case was virtually overruled in Stewart v. Polk County, 30 Iowa, 1. In the cases cited in the following notes the constitutionality of such legislation is affirmed or assumed. The power to issue municipal bonds imports the power to sell and make them payable beyond the limits of the state. Lynde v. The County, 16 Wall. 6. 1 Railroad Co. v. County of Otoe, 16 Wall. 667; Otoe County v. Bald- win, 111 U. S. 1. 2 Railroad Co. v. County of Otoe, 16 Wall. 667. See Kirkbride v. La- fayette County, 108 U. S. 208. 3 See Olcott v. Supervisors, 16 Wall. 678; and cases in last note but one. Accordingly, legislation authorizing an issue of municipal bonds to aid a private business enterprise is uncon- stitutional, and the bonds are void. Loan Ass'n v. Topeka, 20 Wall. 655; Parkersburg v. Brown, 106 U. S. 487; Osborne v. County of Adams, 106 U. S. 181; Cole v. Lagrange, 113 U. S. 1. Where, however, a statute declares all custom grist-mills to be " public 290 mills," and regulates their manage- ment, the legislature may authorize a municipal corporation to issue bonds in aid of such a mill, although it is owned by a private individual. Township of Burlington v. Beasley, 94 U. S. 310; Blair v. Cuming County, 111 U. S. 363; but compare C. B. U. P. R. Co. v. Smith, 23 Kan. 745. 4 Wells o. Supervisors, 102 U. S. 625; Welch v. Post, 99 111. 471; Hayes v. Holly Springs, 114 U. S. 120; Jonesboro City v. Cairo, etc., K. R. Co., 110 U. S. 192; Concord v. Robin- son, 121 U. S. 165. See Allen v. Louisiana, 103 U. S. 80; and cases in next note. Where there is a total want of authority to issue municipal bonds, there can be no bona fide hold- ing of them. Township of East Oak- land v. Skinner, 94 U. S. 255. See Welch v. Post, supra. And the au- thority must not have been revoked before the actual issue of the bonds. Town of Concord v. Portsmouth Sav- ings Bank, 92 U. S. 625. The charter of a railroad company authorized the county commissioners of a county through which the railroad passed, to subscribe for stock and issue bonds, provided a majority of qualified voters of the county should vote in