The herald., 1897-06-28
Superior Court Passes on
Important Point
OF INTEREST TO CAPITALISTS
THOUSANDS OF SECURITIES ARE
AFFECTED
f" PAYABLE in Gold Coin or Lawful
Money Of the United States"
Essential Wording

| The supreme court Of the state has de-
cided that the words payable in gold
coin or lawful money Of the United
States" must be inserted in all bonds, and
that a municipality or other public cor
poration could not elect to leave out the
words "or lawful money and use only
gold coin Of the United States in pre-
scribing how the bonds should be re-
deemed This is one Of the most I'M
portant decisions ever rendered by the
court, and affects every municipality
and corporation in the state. At the re-
quest of number Of attorneys, repre-
senting large interests, the court has
granted rehearing. and the case will be
considered in bank. In discussing the
decision the San Francisco Examiner OF
Saturday says:
Moneyed men all over the state are much
exercised over the recent decision in the
case of P. w. Murphy vs. the city of San
Luis Obispo, rendered by the supreme
court. The opinion was written by Su-
preme Court Commissioner Chapman. Two
points were involved. 1t was question as
to the legality Of a certain bond election.
The other question is of general interest.
because 1t called for decision as to the
use of certain words, and the consequent
legality or illegality of the bonds. the is
suance Of which the plaintiff sought to
enjoin.
The decision held that the words, "pay
able in gold coin or lawful money of the
United States" were essential. and that
municipality or other public corporation
could not elect to leave out the words ''or
lovx .f,,1 ord nn1x
of the United States" in prescribing how
the bonds should be redeemed. The ef-
feet of this decision will be to prevent the
sale of any municipal bonds. unless the de-
cision be reversed, or until the law is
amended The reason is that financial men
and money-lending institutions will not
pay gold for bonds which may be re-
deemed either in currency or silver. The
question has been also raised regarding the
legality of bonds issued since 1893 in which
the alternative "or lawful money" has
been omitted.
So anxious are moneyed men to have
the question reheard that no less than
eight petitions for a rehearing were filed
by attorneys as 'amici curiae," that is to
say by attorneys, who. though not parties
in interest in the particular case, yet felt
that the interests of their clients were so
affected that they begged to enter as
friends of the court" The rehearing has
been granted, and the supreme court, ap-
preciating the Importance of the matter
will pass upon the question in bank. An
endeavor will be made to have the court
pass not alone upon the necessity of the
entire phrase, payable in gold coin or
lawful money of the United States" but
also on the question of the legality of bonds
in which the alternative phrase has been
omitted.
Rosenbaum & Scheeline have petitioned
in the case. They took a most active in-
terest in it, because it was through them
that the law stands on the statutes as it
is today. They have advised their clients
that the words "or lawful money" were not
essential in describing the terms of the
redemption of the bonds. In speaking of
the matter yesterday, Mr.. Rosenbaum
said:
1.-The act OF 1889 omitted to state how
bonds should be redeemed and so, in 1898,
I prepared an amendment to the effect
that they should be payable in gold coin
of the United States A Populist chair
man Of the legislative committee who de-
sired to force financial men to accept any
lawful money, wanted to have the clause
read payable in lawful money of the
United States and finally I was obliged
to accept the compromise form in which
the law now stands-'payable in gold coin
or lawful money of the United States I
have always held that the alternative ex-
preston enabled the municipality or pub
lice corporation issuing the bonds to elect
which way they should be redeemed. AS
the corporation could not sell bonds for
gold and expect them to be redeemed in
anything but gold, the alternative phrase
has, as a matter of course, always been
omitted. The decision written by Mr.
Chapman sets this aside and insists that
the whole phrase be used, hence the anx-
iety for rehearing."