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.
Statutes of a second group have for their purpose prohibiting debts of a public corporation in excess of a certain limit, which is either a fixed sum or a percentage on the valuation of the taxable property within the corporate limits. Contracts in excess of such limit are invalid,1 and no recovery can be had oh quantum meruit.2 In some states, however, such a contract is voidable, but not void.3 A later statute will not be presumed to repeal the earlier statute though it does not in terms re-enact it.4 A "general welfare" clause does not authorize the issue of bonds in excess of the amount specifically fixed by statute.5
Where such limitation is found in the state constitution the legislature cannot authorize a debt in excess thereof.6 So if it is created by the federal statute for the government of a territory the territorial legislature cannot authorize further indebtedness.7 A statute will be presumed to refer to the constitutional limitation though it does not repeat it expressly.8 A statute authorizing the issuing of railroad aid bonds "to any amount" will be construed as meaning to any amount within constitutional limits.9 Such a limitation, whether created by statute10 or by a constitutional provision,11 does not invalidate a pre-existing valid debt.12 If the limit is not reached when the contract is made, an unlawful diversion of public funds,13 as a loss due to a bank failure,14 cannot make such contract invalid.
1 Litchfield v. Ballou, 114 U. S. 190; Rathbone v. Kiowa County, 73 Fed. 395; Sutro v. Rhodes, 92 Cal. 117; 28 Pac. 98; Laporte v. Game-well, etc., Co., 146 Ind. 466; 58 Am. St. Rep. 359; 35 L. R. A. 686; 45 N. E. 588; Mosher v. School District, 44 Ia. 122; McPherson v. Foster, 43 Ia. 48; 22 Am. Rep. 215; Helena Waterworks Co. v. Helena, 27 Mont. 205; 70 Pac. 513.
2 McGillivray v. School District, 112 Wis. 354; 88 Am. St. Rep. 969; 58 L. R. A. 100; 88 N. W. 310.
3 Sioux City, etc., Co. v. Trust Co., 173 U. S. 99.
4 Beck v. St. Paul, 87 Minn. 381; 92 N. W. 328.
5 Grace v. Mayor, etc., of Hawk-insville, 101 Ga. 553; 28 S. E. 1021.
6 Doon Township v. Cummins, 142 U. S. 366; Hodges v. Crowley, 186 111. 305; 57 N. E. 889; Reynolds v. Waterville, 92 Me. 292; 42 Atl. 553.
7 Martin v. Territory, 5 Okla. 188; 48 Pac. 106; Spencer v. Gray, 5 Okla. 216; 48 Pac. 110.
8 Swanson v. Ottumwa, 118 Ia. 161; 59 L. R. A. 620; 91 N. W. 1048.
9 Germania Savings Bank v. Darlington, 50 S. C. 337; 27 S. E. 846.
10 City of Mitchell v. Smith, 12 S. D. 241; 80 N. W. 1077.
11 Myers v. Jeffersonville, 145 Ind. 431; 44 N. E. 452; McCreight v.