This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Other statutes provide that, either in air cases or where the debt has reached a certain amount, no contract is valid unless a means is provided by taxation for paying principal and interest.1 It is generally necessary to impose such a tax as will keep the interest down and form a sinking fund which will discharge the principal within the time specified by law. Where such provision is found in the constitution the statute authorizing the debt need not fix the tax rate, but may leave it to county officers,2 and it is complied with by a tax to begin at a considerable time in the future.3 There must be a specific levy for the sinking fund, a general levy being insufficient.4 Such provision applies to a contract of compromise of a prior claim.5 If the contract price exceeds the amount to be raised by such tax, the excess over the amount raised by taxation cannot be recovered.6 Such statutes apply only to interest-bearing contracts extending over a term of years, and not to contract to be paid out of the taxes of the current year.7 Such a provision does not apply to a long time contract for a water supply payable in installments.8
580; 63 N. E. 1043; affirming 97 111. App. 651.
7 Louisville v. Gosnell (Ky.), 61 S. W. 476.
8 Neumeyer v. Krakel, 110 Ky. 624; 62 S. W. 518.
9 Belding, etc., Co. v. Belding, 128 Mich. 79; 87 N. W. 113.
1 Brazoria Co. v. Bridge Co., 80 Fed. 10; 25 C. C. A. 306; John Hancock, etc., Co. v. Huron, 80 Fed. 652; affirmed, 100 Fed. 1001; 40 C. C. A. 683; Wilkins v. Waynesboro, 116 Ga. 359; 42 S. E. 767; Epping v. Columbus, 117 Ga. 263; 43 S. E. 803; Dawson v. Waterworks Co., 102 Ga. 594; 29 S. E.
755; Howard v. Smith, 91 Tex. 8; 38 S. W. 15; Mineralized Rubber Co. v. Cleburne, 22 Tex. Civ. App. 621; 56 S. W. 220.
2 Mitchell County v. Bank, 91 Tex. 361; 43 S. W. 880; reversing 15 Tex. Civ. App. 172; 39 S. W. 628.
3 City of Boise City v. Trust Co., 7 Ida. 342; 63 Pac. 107 (tax to begin in 1909).
4 Wade v. Travis County, 72 Fed. 985.
5 Austin v. McCall, 95 Tex. 565; 68 S. W. 791; reversing (Tex. Civ. App.) 67 S. W. 192.
6 Gray v. Bourgeois, 107 La. 671; 32 So. 42.