Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1889-01-16
DECISIONS THAT SAVE THE CITY
a LARGE sum.

Francisco-sitting in the Superior Court
of Sacramento county-concern matters
relating to the bonded Indebtedness Of this
city that are of the highest importance to
the community. The Court held in one
case that interest is not recoverable upon
overdue coupons of the bonds of the city of
Sacramento. By implication, the reason
ing of the Court, applied to the question
Of interest upon overdue bonds, frees the
city from liability to pay any claim for
interest upon such overdue bonds That
being the case, the city saces, at the logest
estimate, $250590e. In the second case the
Court holds that because the holders OF
the bonds under the Acts of lS53-1S54
have restedstoo long upon their right to
refund, such as have not presented their
claims havelest their right to do so. Under
thus dects'onthe city saces at the tocest estimate
$4,000. In the aggregate, therefore, The
city sdces by these decisions moi less than
100000 hard-earned coin to the tar-payers
Since such Importance attaches to the
decisions, and they have such direct in
fuence upon the prosperity OF the city, a
resume of the opinions will be of value
in ascertaining precisely the views Of the
Court, and illustrating the conclusions at
which we have arrived.
In the case of Davis VS.. the City OF
Sacramento Mr.. Davis holding bonds
of the city with attached coupons
for the interest, judgment for the city
is given. Under the city government
created in 1851 bonds were issued for in
debtedness incurred bearing 10 per cent.
interest Under the subsequent CONSOLE
dated government the Indebtedness was
assumed and new bonds issued with inter-
est at 6 per cent. OF some of these bonds
and coupons plaintiff is owner. By the
Act of 1858 tax levy was provided for
interest payment and bond redemption,
and the Treasurer was required to pay
the coupons as they fell due out of the
sinking and interest fund. 1t was alleged
that the city failed to levy the tax for
several years, and that from 1881 to 1886
refused to pay the coupons in order at
maturity, and failed to transfer money to
the interest fund properly due it. A de-
felt resulted. That in August, 1887, Davis
demanded payment of his coupons, with
interest thereon since maturity, the addi-
tional interest claimed exceeding the
principal of the coupons. Davis sued for
legal interest on the coupons since ma
turity.
The questions to be decided were: Do
the coupons bear legal interest after date
of maturity? If so, can the city be sued
therefor ? If Davis had a cause of action,
has it been barred by the statute of limi-
tations?
The Court holds, first, that as a gen.
eral proposition coupons do bear legal
Interest after maturity, as they have the
qualities of negotiable commercial paper.
But the decision does clearly show that as
to these coupons, they do not bear interes.
after maturity, for no means is provided
for recovery of interest, or for raising
money for such interest, and because the
city cannot be sued
The charter of 1858 provided that the
city should not be sued, nor its property or
revenue be subject to process. The charter
of 1863 gives the right to sue the city
upon bonds issued or arising out of con-
tracts after the date of the charter. The
prior decisions in Sacramento bond litiga-
ton establish that the Treasurer may be
compelled to pay the sums due OIL matured
coupons cut of the sinking and interest
fund, but the right to such payment ac-
crues Only when there is money in the
fund, and until there is, the statute of linz
itations does not begin to run; that the
provision of 1868 for devotion of 30 per
cent of the water rates to the sinking and
interest fund, related to the gross not the
net water receipts; that the law does not
require the Treasurer to pay more than
the face of overdue coupons; that the city
bondholders cannot maintain suits against
the city upon either bonds or coupons
their remedy being mandamus to compel
the city officers to perform their duties.
But, says Judge Hunt, Mr.. Davis tries
to escape these adjudications by the claim
that his action is upon liability arising
after the passage of the Act of 1868, and
hence the action may be maintained, az ii
is an action fer interest and damages due
to the city's failure to provide for payment
of the bonds at maturity. 1t is true that
the city did fail To levy the tax required
by the Act Of 1853, and in some instances
it failed to transfer to the interest fund
money applicable to it, and not until 1857
was there enough in the fund to pay the
coupons matGring in 1876 and the city
is now ten years behind in It's interest nsx-
ment upon its bonds. Bet the bondholder
is not entitled to payment of bond c.
coupons until there are funds in the
treasury for that purpose. In August,
1887, 1t offered to pay the Davis coupons,
and as the charter forbi9s suits upon
bonds or coupons, BaFis is nat entitled to
maintain his action.
But the Court holds. further, that even
ii 1t is assumed that the coupons were
payable on face maturity, January, 1876
and 1877, the claim Cor Interest upon the
mat1sed coupons cannot be regarded as
resting upon a liability arising OF. of a
contract or matter entered into after the
passage Of the Act of 1865 which re-
chartered the city. That Act did cot
create ans new or additional liability in
regard TO these bonds. While i. made az
amendment as TO water rates, il did not
otherwise change conditions Is Mr..
Davis cannot sue upon his COUPONS, he
certainly cannot recover as damages y
interest upon the coupons from the date of
their maturity. when no action will lie
to enforce an obligation, certainly none
can he mn fsair,ed IN recnvar Gan,a,,a, e.