Citizen's Bank of Moultrie v. Rockdale County, 152 Ga. 711, 720 ( 111 S.E.2d 434) (1922) (addressing the predecessor to Art. 9, Sec. 5, Para. 5 of our current Constitution, which permitted temporary borrowing to supply "casual deficiencies of revenue"). See City of Jefferson v. Holder, 195 Ga. 346, 356 ( 24 S.E.2d 187) (1943);Wallace Tiernan Co. v. Williams, 192 Ga. 149, 151-52 ( 14 S.E.2d 747) (1941). 2. Nonetheless, the City argues that three written agreements between it and the Development Authority exceeded the scope of the State Constitution's Intergovernmental Contracts Clause.

A second reason why equitable estoppel is inapplicable to this case is that equitable estoppel will not apply so as to frustrate or contravene a governmental function of a governmental unit. "`Municipalities act in both a governmental and a proprietary capacity, and an estoppel is not asserted if such will embarrass a municipality in its capacity as a governing body or operate to prevent it from exercising its police power . . .'" City of Jefferson v. Holder, 195 Ga. 346, 355 ( 24 S.E.2d 187) (1943). In regulating zoning, a municipality is exercising its police power.

Our appellate courts have stated many times that when a person enters into a contract with an entity purporting to be a corporation, and such entity is described in the contract by its corporate name, such person admits the legal existence of the corporation with reference to any action brought to enforce the contract, and for the purpose of that action will not be allowed to question the legality of the corporate existence. Imboden v. Etowah Battle Branch c. Mining Co., 70 Ga. 86; Orr v. McLeay, 6 Ga. App. 417 ( 65 S.E. 164); Brown v. Atlanta R. c. Co., 113 Ga. 462, 468 ( 39 S.E. 71); Rogers v. McKinley, 52 Ga. App. 161 ( 182 S.E. 805); West v. Flynn Realty Co., 53 Ga. App. 594, 595 ( 186 S.E. 753); City of Jefferson v. Holder, 195 Ga. 346 ( 24 S.E.2d 187). Under the new Georgia Business Corporation Code effective April 1, 1969, there is no longer any concept of a de facto corporation as far as that doctrine applies to defectively incorporated domestic corporations.

Held: Pretermitting many questions raised in the appeal under the decision of this court in the case of Plantation Pipe Line Co. v. City of Bremen, 227 Ga. 1, since an independent school system exists in the City of Jefferson ( City of Jefferson v. Holder, 195 Ga. 346, 349 ( 24 S.E.2d 187)), the proposed annexation across political subdivision lines into the Jackson County School District under the Act of 1966 (Ga. L. 1966, p. 409; Code Ann. § 69-904) was void and the judgment of the trial court denying the plaintiffs' prayers to declare the annexation ordinance void must be reversed. Judgment reversed. All the Justices concur.

The Court of Appeals, in the body of the opinion, held: "The maintenance of a water system is a proprietary, private and nongovernmental function of the municipal corporation as to the acts in the performance of which an equitable estoppel or estoppel in pais may be applied just as though it were a private corporation." Four cases by this court are cited in support of this ruling, as follows: City of Atlanta v. Gate City Gas Light Co., 71 Ga. 106; Mayor c. of Athens v. Georgia R., 72 Ga. 800; City of Jefferson v. Holder, 195 Ga. 346 ( 24 S.E.2d 187); and City of Summerville v. Georgia Power Co., 205 Ga. 843 (2) ( 55 S.E.2d 540). While these cases hold that a municipal corporation, under some circumstances, may be estopped by acts of its governing officials, a distinction is clearly drawn between those acts which are ultra vires and those which are an irregular exercise of a granted power.

As to acts and conduct respecting its proprietary or private powers, equitable estoppel may be applied to a municipality just as it can be to a private corporation. City of Atlanta v. Gate City Gas Light Co., 71 Ga. 106; Mayor c. ofAthens v. Georgia Railroad, 72 Ga. 800; City of Jefferson v. Holder, 195 Ga. 346 ( 24 S.E.2d 187); City of Summerville v. Georgia Power Co., 205 Ga. 843 (2) ( 55 S.E.2d 540); Beadles v. Smyser, 209 U.S. 393 ( 28 Sup. Ct. 522, 52 L. ed. 849); 21 C. J. 1190, § 193. In City of Atlanta v. Gate City Gas Light Co., supra, it was said: "Upon every principle of equity this failure to notify the complainant of their intention [not to allow the gas company to lay its pipe along their streets] until this heavy expenditure had been made, would estop them.

In these circumstances, the doctrine of equitable estoppel may be invoked to estop the city from denying the validity of the franchise because it failed to comply with certain charter precedent conditions. In City of Jefferson v. Holder, 195 Ga. 346, 355 ( 24 S.E.2d 187), this court quoted with approval from 19 Am. Jur. 820, § 168, as follows: "The doctrine of estoppel is not applied as freely against a municipal corporation as against an individual. Municipalities act in both a governmental and a proprietary capacity, and an estoppel is not asserted if such will embarrass a municipality in its capacity as a governing body or operate to prevent it from exercising its police power. . . While a municipality is not estopped to deny the validity of a contract wholly beyond its powers, it may be estopped by the exercise of contractual powers legally vested in it, and even by the exercise of governmental powers, to prevent manifest injustice and wrongs to private persons, where the restraint placed upon a municipality to accomplish that purpose does not interfere with the exercise of governmental powers of the municipality.

While a municipality is not estopped to deny the validity of a contract wholly beyond its powers, it may be estopped by the exercise of contractual powers legally vested in it, and even by the exercise of government powers, to prevent manifest injustice and wrongs to private persons, where the restraint placed upon a municipality to accomplish that purpose does not interfere with the exercise of governmental powers of the municipality." City of Jefferson v. Holder, 195 Ga. 346, 355 ( 24 S.E.2d 187) (1943). Accord City of Summerville v. Ga. Power Co., 205 Ga. 843 (2), 846 ( 55 S.E.2d 540) (1949).

Furthermore, appellees issued receipts to the corporation for its payments on the note before its default. See Cahoon v. Ward, supra; City of Jefferson v. Holder, 195 Ga. 346, 353 ( 24 S.E.2d 187) (1943); Planters' and Miners' Bank v. Padgett, 69 Ga. 159, 164 (1) (1882); Rogers v. McKinley, 52 Ga. App. 161 ( 182 S.E.2d 805) (1935). 2.

The defendant Browning appeals. Held: 1. The defendant first contends that the plaintiff travel agency having contracted with the corporation was estopped to deny its existence as a corporation, citing City of Jefferson v. Holder, 195 Ga. 346 ( 24 S.E.2d 187). He further contends that the travel agency, in dealing with Slaughter, did so at its peril and should have ascertained the scope and extent of the agent's authority to bind the principal, citing Diamond Hill Gin Co. v. Swift Co., 27 Ga. App. 95 ( 107 S.E. 350). However, the plaintiff contends and shows by evidence that this ticket was originally ordered by defendant Williams, one of the businessmen involved in this transaction, and that they were dealing on a cash basis and never dealt with the corporate entity.