Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1885-07-29
CITY BONDED INDEBTEDNESS.
1t is Now In Position for Favorable
Adjustment.

Adjustment.
The tactics of Daniel Meyer TO gain an
advantage over all other of our bond cred
itors have been defeated, and he must, I'M
der the rulings of the Court, receive his
overdue interest in the order of its matu-
rity, and not in preference to other credit
ors who hold prior claims. The Supreme
Court has decided that the overdue coupons
! do not bear interest and of course the
bonds themselves. after maturity, will not
| bear interest. 1t is also decided that the
provisions of the Consolidation Act of 1858,
relating to the creation of the debt, and the
interest and sinking fund for the payment
of interest upon and the final liquidation of
| the same. is the only law on the subject
The amount provided by that Act for the
interest and redemption of the entire debt
J is fifty-tive per cent. of one per cent. upon
the taxable property of the city and of the
revenue from harbor dues, licenses, water
rates. etc This will net the interest and
sinking fund about $4,000 annually, and is
all the possible revenue for that fund. In
the light of the Act of 1858, when the bonds
| become due there will beno furtherproyision
for interest. Thus there will be the debt of
near 100000 Gncluding unpaid interest,"
! with only the small revenue of, say, so, 00U
annually to be applied for its final redemp-
ton. This sum would not be fair inter
est upon the investment to say nothing
about the liquidation OF the original obi
CATION. Naturally such large amount of
capital would seek better investment and
to that end the holders of the non-interest-
bearing coupons, with only $4,000 an
nually applicable to the redemption would
be anxious to surrender their bonds for
Understanding securities. The CONNER
cial value of such an obligation could be
readily estimated, and in fact interest
| bearing securities of one-half the face of
the original obligations would be more
| desirable. The holders of the bonds under
the original terms of the Act of 1851
would have to wait thirty-fve years after
the bonds became due for the payment Of
the original debt, and this, too, without
amy interest.
This is a condition of affairs evidently
not considered by Meyer and others when
they instituted this harassing litigation
against the city, but has been discovered
more recently, as would appear from the
| fact that Mr.. Never has invoked other
tactics to swell the interest and sinking
| fund-namely, by petitioning for a writ of
mandate to compel the City Treasurer to
transfer all surplus moneys remaining in
certain funds at the end of the fiscal year
| Petitioner relies upon Section SO of the
| Act of 1888, which provides that any sur
plus remaining in the school, salary,
general and sick funds at the end of any
| fiscal year shall be transferred into the in
terest and sinking fund. Of course, the
counsel for the city will resist this applica-
| ton, and show that the entire system OF
! government has been changed by the Leg
| islature and that the several funds, as at
| present constituted, are not subject to any
| such provision Particularly can this be
| said with regard to the school fund, as the
State contributes large sums for educa-
tional purposes, which are not derived
| from municipal taxes. 1t is quite certain,
too. that the Courts will follow the line of
| decision laid down in numerous cases in
the State and Federal Courts, that charter
powers and obligations of a municipal
corporation may be changed by legislative
enactment, and that the Acts of the Legis-
| lature. creating the several funds, rs at
present constituted, will prevail. From
! the present outlook 1t would seem that tho
| city is certainly not in distressed condi-
! ton as regards the bond question. There
can be no suit maintained against the city
! directly-none Of its property is subject to
any process, and after the litigants have
! drawn the money in the interest and sink
ing fund in the order of the maturity Of
their coupons, there will be nothing TO con-
! tend for. The city. through the Funded
FDebt Commission, will come in for about
$4,000 coupons. which, in the main, pre-
cede those Of Meyer. When these matters
are brought to public attention it will be
apparent that the city is in a most favorable
condition for the adjustment of the debt,
and can, in fact, dictate its own terms OF
| fs,,,-,r11t,isc