Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1873-03-11
FUNDIEG-DECEsION OF THE sU.
PRWME CsbUIRT


coupons bear no interest, and that the
funding of those which are past due would
be an unnecessary and reckless compound
ing of interest. This latter would be urr
true, even If the former were correct. For
as we cannot pay what is due, we must
either fund or lie under the ban ofrepudia-
ton. 1t is well known to every lawyer
in Nashville that judgments have been
again and again rendered in the Federal
Court in this city since the war to the
amount of tens of thousands of dollars on
coupons, and in every single instance with
interest from the maturity of the coupon.
The authorities upon this subject are unde-
Waiting. We have a decision of our own
Supreme Court upon coupons, which has
direct bearing upon the question before the
Legislature. 1t was in the case of the
Mayor and City Council of Nashville VS..
The First National Bank. The city was
sued upon past due coupons of its bonds,
and judgment was rendered against it with
interest. The case was taken to the Su-
prsme Court. Judge Mcfarland, delivering
the opinion of the Court, said:
The bank sues as the holder of thirty
four interest coupons, alleged to have been
cut from bonds of the corporation of Nash
vile issued under authority of law. The
coupons are from three different classes of
bonds and differ in form. One class is
signed by the Mayor, and is for $50, to bear
er in the city of New York, being a half
years interest due at day stated on bond
No. - 'sNashville improvement Bonds"
Another class are styled interest warrants,
and are signed by the Treasurer, payable at
the company's own Office, or at the bank
of Manhattan Company, New York. The
third class are in the following form: "To
the Cashier of Phoenix Bank, New York:
Pay the bearer thirty dollars, being half
years interest due LIST October, 1866, on
bond No. 4S5 of the Nashville Railroad
Bonds. Signed V. K. Stevenson, President.
Stevenson was the President of the Nash
vile and Chattanooga Railroad Company,
One bond was introduced in evidence. It
is duly executed by the proper
city authority and is payable
to the Nashville and Chattanoo-
ga Railroad Company, and in the
body of the bond is an obligation to pay the
coupons attached. To this bond is cou-
pom attached in the form last above set forth
signed by Stevenson, President.
1t is argued as to this last class of con-
pons, that as they do not purport to have
been executed by the proper authority of
the city corporation, ''no recovery can be
had without showing that they were in fact
cut from the bonds of the company; that
the proof only shows this as TO the one
coupon attached to the bond introduced in
evidence" Bonds of this character have
greatly increased of late years, and form a
large proportion of the securities of trade
and commerce. A coupon may be negoti-
ated after it has been separated from the
bond IS an Independent security and
it is not necessary to produce that
bond to entitle the holder to recover.
See CONS Of Knox county, Indiana VS. As
pinwall, 2lst Howard, $50. Thompson VS.
Commonwealth of Virginia, 18th Grattan,
page 767. This is almost a matter of ne
cessity, for in the great majority of cases,
or at least in many cases, it. would be al.
most impossible for the holder of the coupon
to produce the bond itself These coupons
are made profert of in the declaration, and
it is averred that they were cut from t e
bonds of the corporation, and one bond of
this class is produced showing the coupon
in this precise form. There is no plea
specially denying that these coupons are
sufficient to entitle the holder to recover.
1t is next argued that as these coupons
are in the form of orders or
checks, there can be no recovery
without demand and protest. They are
class of securities in some respects differ
ing from all others; they are intended as
evidence that the holder is entitled to re-
ceiVe the amount at the time and place
specified, and whatever their form the legal
effect is the same. 18th Grattan, Va,
Rept. $50. Though they be in the form of
an order or draft, they are coupons and
subject to the same rules applicable to this
class of securities. 1t would be alike in
convenient and contrary to all usage and
custom to require each coupon to be form
ally protested before suit can be maintain
ed against the maker.
1t is next argued that as to the coupons
in the form of an order or draft, no interest
should be allowed until after demand was
made. If it should appear that the defend
ant held the funds ready to pay the coupons
at maturity, it would not seem reasonable
to charge them with interest until demand
was made, for they could not know who
held the coupons, nor could they pay them
until they were presented. But in this
case it was shown that the defendants pro-
vided no funds and made no provision for
their payment. In such cases The authorities
seem to establish that no demand is
necessary, and the coupons being for the
payment of fixed sum at a given day,
bear interest from that date like promissory
note. 54.h Pennsylvania "a, and the au-
torilies before referred to.
This seems to us 10 be sound doctrine.
1t is not denied in argument by the counsel
OF the city that the coupons, other than
those in the form of an order, bear interest
from maturity; and though different in form,
we hold their legal effect to be the same.
Affirm the judgment.
1t will be seen from this decision of our
Supreme Court that coupons may be held,
owned and sued upon separately and apart
from the bond; that they do not require de-
mand and protest, to hold the maker liable
for their payment; that without demand
and protest they bear interest from the
time they are due if the maker and drawer
has provided no funds for their redemption,
and that coupons being for the payment OF
a fixed sum at given day, bear interest
from that day like promissory note. If
these be correct legal principles, it is clear
that the Vehemence and extravaganza of
declaration of those opponents of
funding, who are interested in de-
preciating State credit, are not
calculated to promote the public
good nor convince the honest inquirer after
truth. Should the State refuse to fund its
past due Indebtedness, what is to prevent
the holders of these obligations from fol-
lowing the course pursued by Furman,
Green & Co., with their ''old issue, and
compel the tax collectors of the State, by
mandGnaS, to take not only the $5,000,0OO
in coupons past due, but also to allow inter-
est on every dollar of them. Where then
would be our State credit ? Where then
would be the means to pay the current ex-
Ill