Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1884-02-08
TIE COUPON CASES.
Decision of Judge Armstrong in Bank of
California VS.. the State Controller and
the state Treasurer,

menIo county, IN InS cases OF tne DAnk OF
California VS.. John P. Dunn, State Con.
troller. and said plaintiff vs.. w. a. January,
State Treasurer, delivered on Mondsy last,
and to which reference has heretofore been
made:
In the Superior Court cf the county Of SacrS.
monto, State Of California. Bank Of California vs.
John =. Dunn. On February T. 1851, Hon. John
W. Armstrong, superior Judge, delivered the To-
lowing oral opinion
In the case Of the Bank Of California against I'm
P Dunn, Controller Of State. have given 1t as full
attention the business Of the Court will permit
| viii now announce the conclusions 10 which have
arrived. There are two motions in this case mo-
ton on the part OF the deten iant % Quash the writ
and one on the part Of the plaintiff for peremptory
writ upon the pleadingS- That brings the matter
before the Court up.u the pleadings alone The
motion Of the plaintiff tests the sut,ioucy Of the
answer Of the defendant the motion Of the de
fendant tests the suiceucy Of the affidavit of the
plaintiff. In two respects think sn issue uf fact
Is raised which requires proof on the part Of the
plaintiff The first is this The plaintiff c0rpurs-
ton alleges in its ath i2vit that IL is owner and
holder Of coupon Of SS5 payable on the lst day Of
January, 1854, al the State treasury, and being
OF the coupons attached to bond issuei under the
Act OF 1854 granting aid to the construction Of The
Central Pacific Railroad
II the plaintiff Is not the owner Of that bond Of
course the plaintiff has right to the writ and
the defendant his oath says that the plaintiff is
not the owner and that, il 70 me- presents an
issue. II is true that the defendant AYERS that
upon information and belief. but it Is not to be pre-
sumed that the Controller Of State made that deui
without some information upon which 70 make il
and he is not presumed 70 know who the owner is
and might make the deUial in that form.
II is necessary to the part Of the plaintiff
that the demand was made The plaintiff AYERS it,
and the defendant, upon his oath, says that no de
mand was made on behalf Of the bank. Now II no
demand made on behalf Of the bank Of course
there could be no recovery. During the argument
statements were made by counsel, which l will take
notice Of that they desired introduce proof upon
these tp points If the Court was Uf the opinion
that the deniLs were suiii lent. now state that
will permit proofs 10 be Itruducet on those points
Without them will deny the writ.
1t was also desired ON the part Of counsel on both
siles that opinion should be delivered at this
time upon the entire merits Of this case, and now
Will proceed TO do SO, upon the rpou that the
plaintiff viii be able establish the affirmative of
those issues Ii the plaintiff does not establish
the affirmative Of those two issues Of course the
proceeding viii fail.
The Act under VIII the Central Pacif, Railroad
Company was authorized 10 issue these bonds il
made part Of the atiiiayit Of the plaintiff, aud
shall use that Tor reference. II contains preamble
In reference to the that then existing in the
United States and it states the proprety and uCcrs
sity Of q road across the continent 10 connect us
with the Eastern states for our sot-protection.
The first ction OF the Act reads THE Central
Pacific Railroad Company of Califlruit a corpora.
ton duly organized under the laws of this State for
the construction Of railro2d from the city Of sac
rameuto TO the eastern boundary line OF this State,
and one Of the railroad companies TO which said
Congressional aid that having been referred tul has
been extended, s hereby aut orized and empowered
10 execute and iss at any time hereafter the bonds
OF said company IN sums Of SI 900 each, Leling III
terest at rate not exceeding per cent. per auuum,
commencing on the frs, day of july ls64 and nay
able on the mrs day Of January, 1860 and on the
first days Of July ard January Of each year th,rs-
after; the interest on the first fifteen hundred Cf
said bonds, numbering from one to fifteen hundred,
inclusive, to be made payable at the State Ire isury
and the remainder OF said bonds to be ma le pay
able at such place or places aud in Sich manner
said company may deem proper II will here remark
that another section Of this statute provides that
the interest these fifteen hundred bonds was
made payable at the State Treasury and that pro
ydes that there shall be coupons to be presented To
the Treasurer, which he shall take up and cauceiS
said bonds to DC executed and issued to amount
not exceeding az, QUO, payable not exceeding
20 years from the first day Of January A ID. lS6J,
and said bonds to be secured by one more mort
cages on the railroad, rolling stock, buildings ma
chinery, fixtures ard corporate franchises OF said
company. The principal aud interest Of sail boids
to be payable in United States gold coin provided,
that said bonds shall contain an express condition
that the counties Of Placer, Sacramento and the
city and county OF San Francisco, shall be exempt
from all liability rs st ckhoders Tor the payment Of
the principal or interest upon all Of said bonds
and above the stock Of said counties heretofore sub
scribod to the capital stock Of said company
the construction Of said railroad for the reasons set
forth in the preamble to this Act, there shall be
levied and collected in the year 1861 and annually
thereafter until the expiration Of the time for the
payment Of aid bonds, in the same as other
State revenue is may be collected, tax Of eight
cents on each 500 Of the taxable property in the
State in addition to other taxes, the same TO be paid
in the gold and silver coin of the United States and
the moneys to be derived from such tax shall be and
is hereby Appropriated and set aside to situte
separate fund.- to be known as the Pacific Railroad
Fund out Of which fund the coupons for interest
on sud fifteen hundred bonds herein before de-
scribed, shall be paid as they uay fall due and be
presented for payment frrIn time to time, for said
period Of twenty yeas and ON payment thereof said
coupons shall be taken up and cancelled by the State
Treasurer; and If at any time there should not be
sufficient sum Of money in aid fund 70 pay said
interest when due, then amount sufficient to
make up slch deficiency shall be taken from the
general fund for that purpose the State Treasurer
shall make such other contracts and arrangements
as may be necessary to make up such deficiency
and whenever, on the lst day Of July Cf any YEAR
there shall remain surplus in said fund after the
payment Of the interest said bonds as herein
before provided such surplus shall be paid into the
general fund"
Thus provision vas made authorizing the com
p3ny to issue its bonds and providing for the paying
of these coupons. Bat, it is said th-t the fund
provided for in the Act has been abolished bv the
statute and therefore there Is fund out of which
these coupons can now be psii. That becomes
question TO BE- determined whether it is so or not
1t is cOnteuGed by Judge Mckuue that if that is So
the State cannot be required to paw this interest
though the state agreed to do So Ny examination
of the statutes has led t. a different conclusion
| think the fund is now preserved, and | viii give
my reason for it. On the Is Of April 1872 Section
37l3 OF the Political CO5e was amended So as to 90
into effect Immediately, and that Act is found on
page $50 Of the statutes Of ls71-2 The only differ
euce between this statute and the section il was
originally drafted is tta it shall take effect at once
But will read II, IN order that it may be seen what
hearing IL has this question
The State Board Of Equalization must, )r State
purposes for the twenty fourth and tweuty-tith is
cal years, fix such an ad valorem rate Of taxation
upon each one hundred dollars value OF taxable
property OF this state viii raise for each Of said
years For the general fund, 81, ,l90, 600 For
the school fund, S2i0 goo. 3-For the interest and
sinking fund Of 1851 $4,000 4-Fgr the interest
and sinking fund Of leo, $1,000. . For the State
Capitol fund. 500 OOJ. G-Fur the military fund
S60, COO For the soldiers bounty interest and
sinking fund, $4,000. S-For the soldiers relief
interest and sinking fund, $751; ,000. 9-F1 the Pa
cc Railroad fund ud that Is the fund cut Of which
thesa coupons are 10 be paid, Sl05, coo. l0-For
the State Nom al School Building fund $4,000
I1-For the State Capitol bonds interest aud sink
ing fund, $50 goo.
Sec. > This Act sud the section OF the lltical
Code herein amended shall be in fore and effect
frIn and after the passage o: this Act"
In 1871, It viii be embered, the paCpleOf this
State amended cir Constitution and provided that
EU appropriation for a time longer thIn two years
should no. be made for any purpose. I am not
Uog TO believe that II was the intertion to diyest
any vested lights in appropriation made prior to
that time, and at time when the Constitution did
not prevent the incurring OF Obligation Of that
character, ana making an appropriation in adyauc,
without limitation t. p t. because the Con stitu-
tonal Convention which adopted our original Con
stitutOn had before it the very thought OF longer
appropri tiJrs, and il provided that app~o ristiOus
for M itary purposes suouId not be for greater
length Of than two ears hut flr all other pur-
poses it was left t. the discretion the Legislature
II 1871, IS have stated, an amendment 20 the
Constitution was adopted that app.op1
should be for 4 longer time than two years. Then
for the irst time the L gslature began 10 axe ap-
oprst MS at each Of its sessions for each special
fund. Up 20 that time each 4 I which made an ap.
pr0pIiati0u wss sufficient authority for eyying the
tax And the Act Of 1sGi, noE under consideration
authority sufficient for the levy ug Of a tan for
the payment Of .he interest referred to.
Toe statute Of 1872, which have read is the firlt
aud only one which made any special reference to
the Central Pacific Railroad fund. But On the 2Sh
of March, 1874, the Legislature passed Act which
reads as follows:
"Tne Controller and Treasurer OF State are
hereby authorized to transfer the balance remaining
to the credit OF the interest and sinking fund OF
1860 soldiers relief interest fund PsCiic Railroad
fund, State Capitol bonds interest fund Of 1870 and
State Capitol bonds interest fund Of 1872 to the
interest aud sinking fund OF 1857, which fund shall
be known as the interest and sinking fund" {, tats
1854, page 745)
Now this Act, 1t will be observed, was intended to
consolidate several funds into one but not to de
stroy any one Of them. a transfer of a fund does
not mean abolition Of it, but a transfer Of one
fund to another IS simply consodationof of the fund
transferred 1t provides, as it will be observed
that the fund shall be known as the interest and
snki 2 fund" Two days after that he Legislature
passed another Act and think thisis a legislative