Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1889-01-16

amount of interest due - is the proner reme.iy =
me oondholder This intimafion can be re
gsrueo, however, simply SIS dictum inasmucl
Is its expression was in no manner necesssr
TO. or involved In, the decision of the piyota
POINT OF the case; nor did the learned Justice re
Ter 70 the legislative inhibition anon SHIFTS h,
oondholders against the cisy
Inc Court must, therefore, determine tn
question now presented in view of the princi
piles heretofore established and in Abe lioht n
the foregoing authorities
IN Kennedy VS.. the City of Sacramento. II
sawyer ~ Judge Sawyer of tie United State
oirSult court, IN an able opinion, held that
unoer the Act OF 1855, ose OF the conditions upor
Whlcn the BONDS in question We're issued by the
CITY, and accepted by the bondholders was thai
no no sun should be maintained thereon asains
the city by the bondholders either upoi, the
ponds or coupons; that the only remedy is t.
proceed by mandamus against the officers of the
cry personally, TO compel them, in proper cases
tlon previously referred to. The Supreme Com,
OF this State, in Freehiil vs. Chamberlain s1lprS
n sSs neu tnat according to the ACT OF April 25
Z looS, no action can be maintained against the
! city upon these bonds or coupons
The PLAINTIFFS counsel while recognizing the
| oihulhg force OF these adjudications seeks 70
+! escape from the principle there enunciated BY
Claiming that the present action is based nnon
iabilty arising after the passage of the Act of
/ Is, 5, and hence, that under the provisions OF
sd ac,, aaowlng the detendantto be sued upon
INTO after the passage of said Act this action is
malnta1nable. His contention is that this sniff
lIoNi tlie heuneuy SUIT, IN that il is not 6
! SUIT upon coupons, bit for interest and damsges
| arising from the defendants failure 10 provide
| Tor the payment of the coupons at maturity .
tnal the actlon hereia Is not upon contract but
| upon Inability arising by operation of law.
Whien labillty results from the defendants de,
fault IN the non performance OF its obligations
to its creditors.
The evidence sustains the contention of
plalntiHs counsel that the defendant did not
annusily levy a tax of 81 upon each $780, as re-
CURED by the Act of 1855; and that it did not
cot noct a.. =
fiscal year. transfer to the interest and sinking
fund the surplus remaining in other funds Az
a part OF the history of the bonded indebtedness
IN question, 1t appears that in consequence of
various m;sfortunes and vic ssitudes the city Of
sacramento became unable TO pay the amount
Que for interest upon its honded indebtedness
as sO Inc same matured. 1t was not until the year
1881 that there was a sufficient accumulation in
the lnte est and sinking fund to discharge the
coupons maturing in the year 1876 and at The
present time the city is at least ten years back
wards IN the payment OF the interest upon its
bonded Indebtedness 80
In Freehill VS.. Chamberlain, supra. the su
preme Court held that bondholdels were not
entitled to payment of either bonds or coupons
until there were funds i'll the treasury nronerIv
applicable thereto F>--'
II would, therefore, seem that this defendant,
independent OF its financial inability was
under no legal obligation to pay the amount of
these coupons, prior to the time when il of
lered to do so, in August 1887; and as the
charter Professionally referred to exnrpsslv forN
bids suits by the bondholders against the CITY
either upon the bonds or coupons it may he
fairly claimed that the plaintiffs right to main
tain them is concluded
Assuming, however for the PURPOSES of This
ueclslon, that the coupons in question were pay
able on the date OF their face maturity viz on
tne ISL DAY OF January, 1876 and 1917 the plain
tiH IS IN no better position because in no sense
can the demand. here sought to be enforced
Tor interest upon matured COUPONS be- in any
sense, resarde' as liability arising upon 'tcon-
tract matter or thing, made or entered into after
the passage of the Act OF April 1863 The Act
OF 1868, re chartering the city of Sacramento
was not designed to impose any additional liza
plllty upon the city in regard to these bonds
1t Is true that in creating the fund for the nav
ment of interest and redemption OF the bonds
an amendment was made in respect to the
t wafer ,ates, Dut IN no other partiulaTs was
ton upon this subject. In view of this con-
sideration it is difficult to understand how the
plsihtil can be prohibited from suing upon his
coupons, and yet can recover, under the guise
OF damages, interest upon such coupons from
the date of their maturity.
section 1915 of the Civil Code provides that
interest is the compensation allowed by law for
the use, torbearance and detention of money
The liability for interest is only an incident to
the principal debt, liability founded either
upon convention, or arising by operation of law
III the latter case 1t is a consequence which the
law visits upon one who is delinquent in
tne performance of a moneyed obligation
at the time 1t becomes due, and is
an incident and result of such delin-
quency. II promissory note designates
the time for the payment of fixed amount
without interest, the law allows interest upon
such an amount from the date thus designated.
Ii the law, however for any reason, forbade
acti on such note, upon its maturity by the
payee against the maker it is difficult to under
stand now the former could sustain an action to
recover from the maker interest as damages for
the non payment of such note. And vet the
supposltlous case, and that under consideration
are in principle alike.
To hold that the present action is N aintaina-
bic Is TO assert that the incident may thus be
greater than the principal, and that an action
may be maintained to recover damages for the
breach of an obligation when none would lie for
its enforcement. The law respects form less than
substance; declares that one shall not gain by
direction.
There is no msgic in the word damages
that VIII enable plaintiff to recover interest
upon his matured coupons by christening this
action as one for damages if it would fail as an
action. co n0Ditne. for the recovery of accrued
interest upon such coupons. There Is no art or
species OF legal Gerry which can thus disguise
the real character or apparent purpose Of this
proceeding, or transmute it from an action for
interest upon coupons into an action for dam
ages Tor breach of official duty If it were 9th
wise the plaintiff, under the form of an action
OF damages for the non-payment of his coupons,
may recover interest at the rate of seven and
ten per ceut per annum thereon from the date
OF their maturity, and yet may not recover the
principle of sad coupons, or six per cent per
annum interest upon the bonded debt.
The purpose of the legislation previously re-
the city, would be defeated if this contention
should be upheld, because the immunity in
question would be yalueless to the city, if 1t did
not protect 1t from suits in the event of its de-
llnquency in the payment of its bonded in
debtecnesS for it is only in the event of such
delinquency that any suit could possibly be
maintained If payments had been promptly
made by the defendant, there could have been
no foundation for an action against it,
This construction. under the light f past ad-
Indications, does not leave the bond or coupon
IN I
the officers OF the defendant. by writ of manda-
mus, to perform the duties erjoined upon
to levy he proper am INT OF t'xes TO pay the
interest upon said bonds, and to properly ar-
portion the money thus collected and whtn
there are funds in baud sufficient for that pur-
pose, they may compel the payment of such in
debtedness, by the Treasurer OF tie defendant
But the plaintiffs claim that the liability
herein sought to be enforced is one
to the passage of the act of 1868, would.
by the same course of reasoning. sustain right
of action against the defendant upon the cou-
pons in question because the obligation to pay
the amount OF these coupons did not arise until
subsequently to the passage OF the Act in qIles-
| ton, viz, until the years SO and 1877.
The matter or thing " which plaintiff claims
constitutes the defendants liability here was
in no sense, made or entered into, in the Ian
guage of the Act of 1858, after its passage the
tached, having been issued in the year 1859 In
Freehill VS.. Chamberlain, supra, decided in
september, 1884, it was expressly held that
under the Act OF 1868 no action could be MAIN
tanned against the city upon its bonds or cou-
pors. The same result would seem to follow
| III respect to interest claimed upon overdue
coupons.
Without, therefore. determining whether the
official delinquency complained of entitled the
plaintiff to the city, or whether his right of
action is against the delinquent officials alone
and without deciding the question. as to time
when the right of action, If any, against the
municipality for such delinqencies accrues it is
sufficient to hold:
ii st-rhat this action is not maintainable
against the defendant.
SeccEd-That II such action were Csintaina-
Bile at all, no right OF action upon his coupons
accrued to plain if until the 10th day of August
| 1887. the date of the demand of plaintiff upon
the defendants Treasurer, and inasmuch as the
Treasurer then offered to pay plaintiff the full
amount due upon the coupons i'll question, the
plaintiff has no cause of action in the premises.
Third--ln view of the conclusion previously
reached, it is unneces sary to consider tn. ques
| ton of the statute OF limitations. 1t would be
useless TO inquire to the time hen the plain
tiff S canse OF action against the CT accrued if
he never b sd such cause of action.
In coDsonance with the foregoing views it is
| therefore ordered that Judgment be entered
herein in favor of the defendant.
HUNT, Judge
The Unr. funded Bonds.