The record-union., 1895-05-04
DRAW NO INTEREST.
Judge Johnson Sustains the Demurrer
in KendalI's Suit.
Neither Bonds Nor Coupons of 1883
Bring Their Owners Revenue
After Maturity.


After Maturity.
Superior Judge Johnson yesterday sus
tanned the demurrer to the petition Of w.
s. Kendall for writ of mandate to com-
pei City Treasurer ]. n. Porter to pay
81, 900 and interest on three of the city
bonds of 1888. Payment was refused on
the ground that no interest is due, and
that the principal only is payable. The
Treasurer held that coupons of the bonds
of 1889 must be paid before the interest
on the bonds of 1888. Judge Johnson's
decision in full is as follows:
This is petition for writ of mandate
to compel the defendant, as Treasurer of
the city of Sacramento, to pay three sew
eral bonds issued by the city of Sacra-
mento and payable February l, 1888, to-
gether with interest from date of maturity.
These bonds were issued under the Act
of April "a, 1858. Up to the time of ma
turitv they bore interest at the rate OF
per cent. per annum. The interest was
represented by coupon attached to the
bond, there being one coupon for each
years interest up to the time OF maturity.
The petitioner contends that he is en-
the maturity of the bonds, and claims
interest from that time as we'll as his
principal. The respondent is willing TO
pay the principal. but declines to pay any
interest from the date OF maturity.
Litigation respecting the bond issue of
this city under the Act OF 1858 has been
quite frequent and varied in its charac-
ter. 1t seems, however, that the precise
question here presented has never been
disposed OF, but so many questions al
fecIing the validity and construction of
that Act have been settled by our courts
of last resort that but one question needs
to be determined here, and that is whether
petitioner, under the Act, can receive in
terest Oh the bonds after they have ma
tured.
By reference to the Act, it will be seen
that 1t is special one; that it was drawn
by its authors with evident care and eau
ton. 1t on the one hand created specific
funds and sources from which the cred
itor was to be paid, and at the same time
protected the city from the annoyance of
importunate creditors by providing that
it should not be sued, attached or pro-
ceeded against as an ordinary debtor. In
other words, the Act becomes a contract
between the parties, to be strictly con-
strued, and each party to rely upon its
terms. The bonds in question were is
sued under the provisions Of the Act, and
must look to it for their construction
and meaning.
AT the time of the passage of the Act
there was large outstanding Indebted
ness against the city, and it WAS proposed
by the Act to fund The debt, and to pro-
vide means for its payment. Section 81
provides for the issuance of bonds, the
time of their maturity, the interest to be
paid. etc., and provides that none Of the
claims should be liquidated or paid ex
cept as therein provided.
By Section 30 of the Act certain por-
tions of certain taxes, licenses, harbor
dues, water rents and Police Court fines
were set apart and appropriated for the
payment of the annual interest and final
redemption.
By Section 40 it is made the duty of the
Treasurer to pay the interest on the
bonds when the same falls due out of the
interest fund as provided in the Act.
In Section 81 provision is made for
coupons to be attached to the bonds for
the interest. said coupons to be signed by
the Treasurer, and to be consecutively
numbered.
That this Act is a special one, and that
the parties are to be held to strict COM
pliance with its.provisions is no longer an
open question. 1t has been so held in
Porter VS.. Davis. 66 Cal. 65S; Bates VS..
Gerber, 81 Cal. $50; Davis vs.. City of
Sacramento, 50 Cal. 562. To the same
effect is Louisiana vs.. Pilsbury, los U.
S. 27S.
When bonds were issued under the
Act. coupons were attached to each, the
bond and coupon thus certifying that at
certain day the bond would be paid in
full, and up to that day that interest
would be paid at the rate of per cent.
per annum.
No provision is made in the Act for the
payment of any interest after maturity.
The Act itself says no officer or any
person has power to contract debt
against the municipality for any pur-
pose or under any prete2t whatever.
Then he who received one OF the bonds
did 30 with the full knowledge that the
Act provided for the payment of inter-
est only up to the time of its maturity,
aud that the officers of the city could not
make contract on it's behalf for the
payment of interest for any further time.
That the special funds set aside for the
purpose of Hquidating this debt could
only be used for the payment of the prin-
cipaI aud the interest as represented by
the coupons.
1t has been twice held by our Supreme
Court that interest could not be collected
upon overdue coupons created unda>g the
Act (See Bates vs.. Gerber, 81 Cal. 552,
and Davis VS.. City OF Sacramento. 81
Cal. 562).
| can see no distinction between such
case and this. In one case the interest
was due and unpaid, the coupon had ma
tured, the owner was entitled to the
money represented by it. In the other
the bond had matured-the holder was
entitled to his money. The liability to
pay in one instance was as strong as in
the other. Why should the one bear in
terest and not the other?
In the case OF Bates vs.. Gerber, just
cited, Justice Fox, IN concurring opin-
ion, takes the ground that these bonds do
not bear interest, and While his opinion
III this respect becomes only dictd, from
the fact that this question was not raised
i'll that case, yet still it is entitled to great
weight because, that in order to reach the
conclusion that the coupons did not bear
interest, he, by sound reason, arrived at
tho conclusion that the bonds themselves
did not bear interest.
In doing SO, he quotes from our Su-
preme Court in the case of Sober VS.. SUI
pervsors of Calayeras County (39 Cal.
l34: when no provision is made in
funding statute for the payment of inter-
est after the bonds issued under it have
become due, no interest will accrue
thereon after that date" Again, he cites
the same court In Beals VS.. Supervisors
of Calaveras County Us Cal. 400, as fol-
lows: There is no express contract 10
pay interest, and no rule of law inde-
pendent of statutory provisions that
would require interest to be paid"
Here no provision was made for the
payment OF such interest. On the con-
trary, every lntendment Of the Act goes
! to show that such interest was not in
| tended 10 be paid. l cannot see why
| petitioner can here expect to recover any
other interest upon his principal except
that represented by coupons.
Again, as l before stated, the annual
interest upon the bonds were to be repre-