The record-union., 1896-01-02
THE CITY AND HER BONDHOLDERS
VIII Soon Have Battle Before the
Supreme Court.
Arguments to be Heard on the 11th
on w. 5. KendalI's Appeal From
Judge Johnson's Decision.

On the 18th of this month the su-
breme Court will take up the matter of
the appeal of w S. Kendall from the
Judgment of the Superior Court Of this
county in the suit brought by him to
compel the city Of Sacramento 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
bends of 1889 must be paid before the
interest on the bonds of 1888.
Kendalrs action was in the nature of
q petition for a writ of mandate re-
curing Treasurer Porter to pay the
Interest. The city interposed demur-
rer, and Judge Johnson sustained it.
1t was from this order that Kendall ap-
pealed.
The case is a very important one to
the city, for if the Supreme Court
should not sustain Judge Johnson's de-
cision it will have to pay some 100000
of interest money on expired coupons.
At the hearing on the 18th Corporation
Counsel r. T. Devlin will appear on
behalf of the city, S. S. Holl for the
Bonded Debt Commission, and Free
man & Bates for Kendall and the other
bcndholders who are behind him in his
action against the city and who are so
largely concerned in the outcome of the
case.
Members of the Bond Commission say
that the debt that has hung like pail
over the city for more than thirty years
will be obliterated in three years from
now unless the city should lose the pres
ent suit But even if the Supreme
Court should hold-as only those whose
interests are involved claim it will
that the city is liable for interest on
coupons after their maturity, there is
money enough in the hands of the Bond
Commission to pay all such claims.
That money is needed, however, for bet
ter and more legitimate purpOses-the
payment of just claims against the city,
and it is believed there is little cause to
fear that it will have to be paid out for
interest on those old and expired cou-
pons.
These bonds were issued under the
Act of April a, 1858. Up to the time of
maturity they bore interest at the rate
of per cent. per annum. The interest
was represented by a coupon attached
to the bond, there being one coupon for
each years interest up to the time of
maturity.
Kendall contends that he was entitled
t. interest on the principal after the
maturity of the bonds, and claimed in
terest from that time as we'll as his
principal The city was and is willing
to pay the principal but declines to pay
any interest from the date of maturity
of the bonds.
Judge Johnson's decision was rem
dered on the Sd of last May, SO long ago
that the public has probably forgotten
the points involved, and as the case is
to be argued in a few days before the
Supreme Court the Importance of the
issue justifies its reproduction. After
briefly reciting the nature of the action
the court said:
Litigation respecting the bond issue
of this city under the Act of 1858 has
been quite frequent and varied in its
character. 1t seems, however, that the
precise question here presented has
never been disposed of, but so many
questions affecting the validity and
construction of that Act have been set
tied by our courts Of last resort that but
one question needs to be determined
here, and that is whether the petitioner,
under the Act, can receive interest on
the bonds after they have matured.
BY reference to the Act it will be seen
that il is a special one; that it was
drawn by its authors with evident care
and caution. It on one hand created
specific funds and sources from which
the creditor was to be pai6, and at the
same time protected the city from the
annoyance of unfortunate creditors by
providing that it should not be sued,
attached or proceeded against as an
ordinary debtor. In other words, the
Act becomes a contract between the
parties, to be strictly construed, and
each party to rely upon it's terms. The
bonds in question were issued 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 a large outstanding indebted
ness against the city, and it was pro-
posed by the Act to fund the debt, and
to provide a means for it's 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 liqui-
dated or paid except as therein pro-
vided.
By Section So 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 consecutive
~ numbered.
That this Act is a special one, and that
the parties are to be held to a strict
compliance with its provisions is no
longer an open question. It has been
so held in Porter VS.. Davis, &c Cal. 65S;
Bates VS.. Gerber, 50 Cal $50: Davis VS..
City of Sacramento, 81 Cal 562. To
the same effect is Louisiana VS.. Pills.
bury, 105 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 6 per cent.
per annum.
No provision is made in the Act for
the payment of any interest after ma
turity.
The Act itself says no officer or any
person has power to contract a debt
against the municipality for any pur-
pose or under any pretext whatever.
Then he who received one of the bonds
did so with the full knowledge that the
Act provided for the no x,,,,.a,t ~ +o,-es4