Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/313

 PART III.] ACTS BEfOtfD THE CORPORATE POWERS. [§ 322. in any way for any purpose to an amount, including existing indebtedness, in the aggregate exceeding five per cent, on the value of the taxable property therein, bonds issued in excess cannot be recovered on. 1 Further, a constitutional provision prohibiting the creation of indebtedness by a direct loan of municipal credit does not permit an indirect use of such credit for the same purpose. 2 § 322. A statute authorizing a municipal corporation to lend its credit to a specified railroad company and "to R .,, any other railroad company duly incorporated and not yet in organized for the purpose of constructing railroads' 1 leading in a direction specified, empowers the corporation to lend its credit to a railroad company duly incorporated sub- sequently to the passage of the act, as well as to one in ex- istence when the act was passed. 3 And municipal bonds will before the limit was reached are the valid ones. Daviess County v. Dick- inson, 117 U. S. 657. i Buchanan v. Litchfield, 102 U. S. 278. See School District v. Stone, 106 U. S. 83 ; § 332. But if the bouds expressly recite that the issue is not in excess of the limitation, and nothing in the bonds shows it to be in excess, the recital is conclusive, unless the purchaser knows the limit to have been passed (Doon Township o. Cummins, 142 U. S. 366), or is bound to take notice of records which would show the fact to be otherwise than as recited in the bouds. Chaffee County v. Potter, 142 U. S. 355; Gunnison County Com. v. Rollins, 173 U. S. 255; Waite u. Santa Cruz, 184 U. S. 302; Nesbit v. Riverside Independent Dist., 144 U. S. 611; Sherman County v. Si- mons, 109 U. S. 735; Dallas County i McKenzie, 110 IT. S. 686; Marcy v. Township of Oswego, 92 U. S. 637; HumboldtTownship v. Long, 92 U. S. 642. See as to effect of recitals, §§ 329, etc. In Louisiana v. Wood, 102 U. S. 294, it was held when a city borrows money on its bonds concededly in- valid for want of registration, the money paid for them may be recov- ered back with lawful interest. Qucere, whether this last decision would apply if the bonds for which the money was paid had been issued in contravention of a constitutional restriction ? 2 Jarrolt v. Moberly, 103 U. S. 580. An act forbidding, under certain pen- alties, the officers of a municipal corporation from subscribing for railroad stock, without the previous assent of two-thirds of the qualified voters, is in itself no authority to loan money when such assent is given. lb. 3 James v. Milwaukee, 16 Wall. 159. A city authorized " to obtain money on loan, on the faith and credit of said city, for purposes of contribut- ing to works of internal improve- ment," may guarantee bonds of a railroad company whose road runs through the city. City of Savannah v. Kelly, 108 U. S. 184. In regard to the meaning of the phrase " corpo- rate purposes," see City of Ottawa v. Carey, 108 U. S. 110. 293