Doctrine of the Federal Courts as to the Validity of Irregular Municipal Bonds

Authors

Charles L. Dibble

Abstract

The power to issue negotiable bonds is not identical with the power to become indebted, though usually concomitant with it; for municipal indebtedness may be incurred--by the issue of warrants or non-negotiable notes. The power to become indebted is not an inherent power of American municipalities. It is conferred by the state, either expressly, or by implication as being a necessary or reasonable agent in the execution of other powers expressly conferred; and the limits of the doctrine of implication are in dispute. But with the power to become indebted this paper is not concerned. Similarly the power to issue negotiable paper is not inherent. It, too, must be conferred either expressly or by implication. It is conferred by implication whenever a city is authorized to incur indebtedness and it appears from the circumstances that mere warrants and non-negotiable notes would not fulfill the intention of the legislature. (In the case of a county or other quasi-corporation power by implication seems to be more limited than in the case of a city.) But we are not concerned, either, with the manner in which power to issue negotiable instruments is conferred. This paper will deal simply with the manner in which the power to issue such 'bonds' is exercised and the effect of a non-compliance with the legal restrictions surrounding its exercise.

Recommended Citation

Charles L. Dibble, Doctrine of the Federal Courts as to the Validity of Irregular Municipal Bonds, 4 Mich. L. Rev. 497 (1906).
Available at: https://repository.law.umich.edu/mlr/vol4/iss7/1