Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1889-01-15
JUDGE HUMPS DECISIONS.
COUPONS DO NOT BEAR INTEREST
AFTER MATURITY.
The City Cannot be Sued-Rights
Forfeited by Laches-FuN Text
of the Decisions.

Judge Hunt, of the Superior Court of San
Francisco, yesterday occupied the bench in
Department One of the Superior Court of
Sacramento county and delivered the fol-
lowing decision
In the Superior Court of the State of Califor-
mia, in and for the county of Sacramento, Hon.
]. Hunt. Judge George Bates vs. Eugene j.
Gregory ct al, Trustees of the city of Sacra-
meDto:
This is an application for writ of mandate
to compel the defendants, the Trustees of the
city of Sacramento, to fund certain bonds held
by petitioner.
The facts of the case are as follows: In
March. 1851, the Legislature of this city adopted
an Act to incorporate the city of Sacramento, by
which charter the government of the city was
reposed in the hands OF the Mayor and Com
mon Council thereafter to be elected. The
latter body was to exercise the corporate powers
delegated in said Act with the right to borrow
money, and pledge the faith of the city therefor
and to levy taxes. The Act further authorized
the said corporate body to sue and be sued.
ferring upon the officials last named, authority
to issue bonds to raise funds for the purpose OF
paying the amount of loans then due by the
city. This Act was followed IN the succeeding
to issue bonds TO pay the expenses of the fire
department of the city, and outstanding de-
mands. Neither the Act OF 1858, nor the Act OF
1854 mentioned any fund, or provided any ways
or means the liquidation of those bonds.
The plaintiff is the holder of three bonds is
sued under these statutes, for an aggregate
amount of 81 5i4 principal. each bond bearing
interest at the rate of ten per cent. per annum,
and maturing July l. 1874, with coupon payable
semi-annually attached.
In 1s5S another charter created the ''City and
County of Sacramento as successor of
the former municipality from May /, 1858, and
all of the income property and revenues of the
former corporation were thereby vested in and
became the property OF the consolidated govern
ment. Provision was also made for funding all
claims existing against the city of Sacramento
on the fl st day of January, 1859, and holders of
such claims were allowed until June l, 1852 to
present their demands. Subsequently this was
extended TO January l, 1862.
In April, 1868, the present corporation, the
city of Sacramento, was chartered under an
Act which forbade suits against it upon any OBJ
legation me de or entered into prior to the pass
age of such Act All of the pr. perty, effects,
income and revenues which on april 80, 1855.
belonged to the Mayor and Common Council of
the city OF Sacramento" were vested in and be-
came the property OF the city of Sacramento.
In April, 1864. another Act was passed provid.
ing plan for the funding of this Indebtedness,
whereby new bonds wers to be issued therefor,
bearing six per cent. per annum interest, and
maturing in February, 1903 This Act fixed no
limitation OF time for the presentation of claims
by creditors for funding; but provided that
such creditors, may present the same to the
bOdIQ OF trustees, anu SdlQ BOaIQ snail cause
TO be issued bonds for all such claims as they
may upon examination, consider legal and
just" On the 18th of october, 1887, the petit
TONER presented his bonds to the defendants,
and demanded the issuance to him of bonds
under the Funding Act of 1864, for the amount
of principal and interest then due thereon. A
demurrer to this petition was interposed, but as
it has not been argued, and as all of the ques-
tionS presented therein are raised by the an
swer of the defendants, the demurrer will be
overruled. The objections interposed by coun-
sci for defendant upon trial herein, to the ad-
mission OF evidence, upon which objections the
Court reserved its ruling, are also overruled.
The application herein is resisted by defend
ants, upon the following grounds:
The statute of 1864 provides that the Board of
Trustees shall fund such claims as they may
consider legal and Just but this provision does
not confer upon them an arbitrary ana exclu-
sive power of determining the legality and JUS
tice of the claim thus presented, inasmuch as it
affords the creditor no opportunity whatever to
be heard The discretion with which the
Trustees, public officers, are thus invested is
a legal discretion that is to say, one guided
and restrained by rules of law The statute
never was intended to confer upon this body
capricious, arbitrary, or oppressive power,
which they might exercise without response
bility either TO Courts of justice or to the law
of the land.
genuineless of the petitioners bonds, and no
claim that the same had been paid. If they
have failed 20 perform their official duty in this
particular the Court can by mandamus COM
sustained by the opinion of the Supreme Court
of this State in Woods VS.. Strother decided July
30, 1888.
1t will be observed that in the charter of 1851,
creating the city of Sacramento. and in the Acts
of 1858 and 1851 under the authority of which
the petitioners bonds we're executed, there was
noinhibition upon the creditors right TO sue the
ION l,frfO on frart fha oh
expressly authorized such suits. Il will also be
observed that the property, franchises and rev.
enues of the municipality the city of Sacra-
mentO, which issued these bonds, were, by the
provisions of the subsequent Acts incorporating
the successor of said city, transferred 10 and be
came the property of such successor.
Under the inhibitions contained in the Acts
of 1855 and 1868 the holder of claims against the
old municipality who had funded such claims
under the conditions OF the ACT of 1858, cannot
sue the present municipality but am at Il loss
to understand why the creditors holding bonds
issued under the Acts of 1853 and 1854, who have
not funded such bonds. cannot sue thereon.
The legislation above referred to could only
constitutionally apply to such indebtedness
against the municipality accrued after its
passage. To deny TO holders of bonds under the
Acts OF 1858 and 1854 the right to enforce them
would amount to an attempted Reputation
thereof a course which the law would not
sanction. Furthermore, such legislation would
be unconstitutional, in that it would impair
vested rights and destroy the obligation ofthe
contract.
Upon principle it is not apparent how mt-
nicipal corporation which succeeds another,
which receives all the property, effects and rev.
enues of the former, can, as against the cred
itors OF the former escape liability for Its obi
cations. As / understand the case, this munich
pal liability was sustained by the Circuit Court
in the case of Fowle VS.. the City of Sacramento,
u Wallace, III.
While municipal corporations are but the
creatures of legislative power. and while the
State, in the absence of constitutional restrict
IONS. may make and unmake them, or enlarge,
alter or restrain their powers ano privileges, it
cannot authorize the performance OF an act
which will impair the obligation of contract.
''lfa municipal corporation becomes indebted,
the rights of creditors cannot be impaired by
any subsequent legislative enactment" Il Dillon
on NJ. C., Sec. 60; San Francisco VS.. Cansysn,
AZ Cal. 5i2) The circumstance that he city of
Sacramento in one instance unsuccessfully
claimed that the Act of 1875 barred suits upon
demands accruing prior TO its passage, does not
estop the defendants herein from asserting the
uoconstitutionality of such statute. Tar es it
endeavors to &C omplish such result. Nor
would this circumstance operate as an estoppel
upon the defendants from maintaining their
contention, because an estoppel only results
where party invoking 1t has re led upon the
Act or representation in question, and would be
injured by allowing its truthfulness to be dis
proved
In this case it does not appear that the petit
toner herein failed TO avail himself OF the priv
ileges conferred upon him by the Acts in ques-
ceedings IN consequence of the pea of the city
of Sacramento, in the case referred to. Nothing
that therein occurred can fairly be urged
either in extenuation of. or as an excuse for the
delay of petitioner in asserting his rights.
For these reasons i am of opinion that the
Acts OF 1855 and 1868 did not impair or affect the
petitioners right to sue upon or enforce his
claim for the Indebtedness represented by his
bonds and coupons; that the statute of limita-
items has been properly p eaded herein, mas
much as the suit is founded upon ali alleged
obligation of the defendants TO perform an Off
ciai duty, TO wit: the funding of the petitioners
premises am of opinion that the statute of
limitations has barred the petitioners claim
herein. The petitioner contends that, inasmuch
as the Funding Act of 1861 unlike the legisla
ton which preceded ii, prescribed no limitation
of the time upon the creditors right or privilege
to avail himself of the benefits thereof. that,
therefore. the statute of limitations could not
and did not, run against the creditor in favor of
the city; that, therefore, the creditor could at
any time before the year 1908, the date fixed for
the maturity of the bonds issued under the
Funding Act, elect to accept the benefit of such
Act.
an act or confers o remedy for the enforcement
of such performance and prescribes no lirnita-
ton OF the time therefor. such act must be per-
formed, OF such remedy sought WITHIN rea-
sonable time; and when the Legislature passed
the Act in question ii contemplated that the
option which it afforded the creditors of the city
should be exercised by them within at least a
reasonable time thereafter If this were not So
then there Is no limitation of the time whatever
upon the creditors right 10 compel the officers
of the city to fund his bonds