Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/314

 § 323.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. VII. not be rendered invalid in the bands of a bona fide holder by the fact that the railroad company, in payment for whose stock the bonds were issued, was not in existence when the vote was passed authorizing the subscription. 1 But where a statute au- thorized a town to appropriate money to aid in constructing a certain railroad as soon as its track should havebeen located and constructed through the town, it was held that the town could make no appropriation until the road was so located and con- structed. 2 Likewise where the popular vote, taken in accord- ance with the statute, authorized a subscription to one railroad company, and the bonds were issued to another railroad com- pany, this appearing on the bonds themselves, the lack of au- thority is evident from the face of the bonds, and there can be no bona fide holder of them. 3 § 323. In the case of March v. Fulton County, 4 a railroad company subsequent to its incorporation was divided into three divisions, and each division incorporated as a distinct corporation. A vote of the people of the county had authorized the bonds whose validity was before the court, to be issued to the original corporation ; and the court held that they could not under this vote be validly issued to one of three new corporations. It is to be noticed, however, that the statute which in this case permitted counties to issue their bonds in aid of railroad enterprises, required the notices of election to specify the corporation to which it was proposed to issue them. 5 The Federal Supreme Court has also held that although a subscription to the stock of a railroad company be duly authorized by the requisite vote, yet if before the subscription be actually made the company becomes con- solidated with another, thereby forming a third, a subscription to the stock of the new corporation and the issue of bonds therefor are unauthorized. 6 Effect of a consolida- tion of the railroad company. 1 County of Daviess v. Huidekoper, 98 U. S. 98. 2 Town of Concord v. Portsmouth Savings Bank, 92 U. S. 625. See County of Moultrie e. Savings Bank, 92 U. S. 631; Railroad Co. v. Falco- ner, 103 U.S. 821. Compare County of Randolph v. Post, 93 U. S. 502. 294 8 County of Bates v. Winters, 97 U. S. 83. 4 10 Wall. 676. 5 Municipal bonds voted and deliv- ered to a corporation under a changed name are not by such change invali- dated. Town of Reading v. Wedder, 66 111. 80. 6 Harshman v. Bates County, 92