The record-union., 1898-02-15

founded on express written promises the
fund is appropriated by the Act under
which the bonds were issued.
And if the petitioner can maintain
this proposition as to his bonds so can
every other holder of the bonds of 1888,
1898, etc, and the result may be that
somewhere in the twentieth century
holders of the bonds of 1898 will be
drawing interest up to date while cou-
pons belonging to this century will re-
main unpaid.
This, however, is the very thing which
according to the cases above quoted
cannot be done. The principle of those
decisions, one and all, is that the Act
of 1858 embodies the contract between
the City Of Sacramento and the hold
ers of these securities, and that moth
ing can be claimed by the latter under
the general law relating to coupon
bonds which is inconsistent with or
would defeat the purposes of, or impair
the rights secured by the Act of 1858.
All the bondholders have claims upon
that fund-a fund insufficient to satisfy
their claims as they mature-and the
only thing to do is to pay them as the
funds arise in the order of their matur-
ity. To pay the holders of the bonds
of 1888 interest which in any view they
did not earn. until after 1890, and leave
unpaid the interest accrued on other
bonds before that date would be the
grossest injustice. 1t would be giving
to one set of bonds an enhanced value
at the expense of other bonds payment
of which both as to principal and inter-
est would be unduly postponed. 1t
would violate the principle of our for
mer decisions and take away vested
rights of those who have dealt in
these securities upon the faith of the
doctrine so established And besides
the fact that those decisions are guard
ed by the principle Of stare decisis,
have no doubt that they are correct,
not only in the points decided, but in
the reasons upon which they were
based. To my mind it is plain that the
duty of the Treasurer is to pay these
bonds and coupons only at their face
and only in the following order:
First-The coupons in the order of
their maturity to January l, 1888, next.
the bonds of February. 1888, in their
serial order; next, the coupons Of
1889 90 81 1898 in order of maturity;
next, the bonds of February so in their
serial order, and 50 on to the end. In
this way only can the behests of the
statute be obeyed and the relative
rights Of the creditors be preserved. The
only answer to this position is that it
would unjustly deprive the bondhold-
ers Of interest on their overdue bonds
to which the obvious reply is that the
right to interest on overdue bonds is
-;<rla% 10 ;t,<a
est on overdue coupons, and it has
been held that no interest can be paid
on overdue coupons without giving to
one creditor what belongs to another.
I think / have shown that the payment
of interest on overdue bonds involves
the same consequences.
There are other grounds from which
the same conclusion-that these bonds
after maturity do not bear interest
would seem to follow. In Sawyer vs.
Colgan, 102 Cal, 2S3, it was contended
that bonds and coupons of the State
bore interest after maturity by virtue
of Sections 1917-1S of the Civil Code,
but it was held that they do not apply
to bonds of the State because payment
of interest after maturity is not part
of the contract, and the State cannot
be bound without its consent In Hop
kins VS.. Contra Costa County, 100 Cal,
BIZ, the same exception was made in
favor Of county on the ground that
counties are political subdivisions of
the State. It is not easy to see why
in any case municipal corporations
city and county-should not enjoy the
same exemption. But in this case
there is a special reason for holding
that it obtains. These obligations of
the City and County of Sacramento
were authorized by an Act the first
section of which declared that no ac-
ton should be maintained upon them.
Kennedy VS.. Sacramento, 10 Sawyer.
30 The State in other words granted
to the city and county the same i'm
munity from suits that ii enjoyed it.
self, and so far as it had the power
brought the municipality within the
reason and protection of the rule which
exempts the State from the obligation
to pay interest on its overdue coupons
and bonds.
The judgment of the Superior Court
should be affirmed. BEATTY, C. ].
l concur, Van Fleet, J.
n; Il h,v% iox, Arl~~.J