The record-union., 1898-10-29
CITY MUST PAY INTEREST.
JUDGE HUGHES DECIDES IN
FAVOR OF GEO. E. BATES.
Writ of Mandate to Treasurer
Frost to Pay Principal and In
terest of an 'SS Bond.

1888 that has an important bearing on
the time when the bonded Indebtedness
of Sacramento will be liquidated.
1t was the case of George z. Bates
against City Treasurer Frost and
grants a writ of mandate commanding
the Treasurer to pay from the interest
and sinking fund in his possession the
bond, together with interest on it from
February 1, 1888.
The decision is as follows:
The petitioner filed in this court his
petition praying for a writ of mandate
against the Treasurer of the city of
sacramento, directing that official to
pay from the interest and sinking fund
IN his possession a bond for S1,0UO is
sued by the city of Sacramento, pur-
suant to an Act of the Legislature Of
the State of California, approved April
a, 1888, together with interest there
on from February /, 1888.
The petitioner averred that he was
the owner of the bond; that it fell due
on February 1, 1888, and that funds
applicable to its payment and sufficient
for its liquidation were in the City
Treasury, in the possession of the re-
spondent, in December, 1896, and that
at that time petitioner presented his
bond to the Treasurer and demanded
payment of the principal thereof, to
wit: the sum of $1,000, together with
interest thereon at the rate of 6 per
cent. per annum, from February l,
1888; that the Treasurer refused to
pay said bond, or any part thereof,
and, on account Of such refusal, the
petitioner asks this court to issue it's
writ of mandate requiring the Treas
urer to make such payment.
The respondent in his answer denied
the allegations of petitioners petition,
and, as a further defense, insisted that
recovery upon petitioners bond is
barred by the statute of limitations.
Prior to the trial Fred Mier, by leave
of court, filed a complaint in interven-
tion, making substantially the same
defenses as those made by the Treas
urer. The case was tried and argued
by the attorneys for the respective par
ties and submitted for decision
The labor of the court in deciding
this case has been lessened very ma
terially by decisions of the Supreme
Court Of this State made in cases in
Volving questions relating to the Sac
ramento bonded indebtedness created
by the Act of 1858. Litigation relative
to this Indebtedness was first presented
TO the Supreme Court more than fifteen
years ago, and many difficult questions
relating thereto cannot any longer be
considered as open questions. That
the bonds are legal obligations of the
city of Sacramento, and that the Act
of 1898, which provided for their is
suance, formed a contract between the
bondholderS and the city which could
not be repealed or modified was de-
termIned in the case of Never VS.
Brown, reported in 90 Cal at page
0S3. In shat case Judge Ross, deliver
ing the opinion of the court after stat
ing at considerable length the provis-
IONS of the Funding Act said: Hay
ing thus made provision for the pay
~@ment annually of the interest of the
bonds and ultimately for their redemp-
ton, the Legislature offered them in
payment of the legal claims against
the old city government. The offer was
accepted, and the holders of the latter
surrendered their claims, in consiGera-
tion of which the consolidated govern
ment issued to them its bonds pursuant
TO the provisions of the Act The
bonds carried with them the pledge of
an annual tax for municipal purposes
on all real and personal property with
in the city limits, except such as is
exempt by law, of 100 cents on each
500, % per cent. of which to lie set
apart and appropriated to an interest
and sinking fund to be applied to the
payment of the annual interest upon
the bonds and TO their final redemption.
The tax was the chief security offered
the creditors as an inducement to
accept the bonds in payment of their
claims. When the bonds for whose
payment, with interest, provision was
made, We're issued and accepted by the
creditors of the old city government a
contract was made as solemn and bind
Ing, and as much beyond subsequent
legislation, as it would have been if
made between private persons. This
view will be found fully sustained and
amplified in an able opinion recently
rendered by the Supreme Court of the
United States in a case entitled Louisi-
ana VS.. Pillsbury, reported in 100 IT, s.
ZfS. 1t is well occasionally to recall
the fact that there is no more reason
20 permit municipal government to
repud1ate its solemn obligations, en-
tered into for value, than there is to
permit an individual to do so. Good
faith and fair dealing should be ex-
other"
AT the same term of the Supreme
Court the question was presented in
the case of F'reehill VS.. Chamberlain,
Treasurer of the city of Sacramento.
as to whether the statute of limita-
tions operated to bar recovery on
coupons from Sacramento City bonds
where the coupons were more than
four years past due. IN that case it
was insisted by the Treasurer that, if
the provisions of the Funding Act of
1855 had been fully complied with,
there would have been money in the
treasury sufficient to have paid the
coupons in suit in that case at their
maturity, and that it was the busi-
ness of the bondholder to see to it
that the city officials levied the tax
provided for, and in all other respects
complied with the provisions of the
Funding Act. and that, not having
done so, the statute of limitations
would bar recovery as to any obliga-
tions more than four years past due
at the time of bringing suit thereon.
In deciding this case Judge Myrick,
delivering the opinion of the Supreme
Court. said: 1T is urged that as the
coupons in question matured accord
ing to their face on the 1st day of
January, 1872, the statute of limita-
tons bars any proceedings on the part
OF petitioner to enforce payment; that
II the proper amount of taxes We're
not levied in any one year such levy
should have been compelled by man.
damus; that if any step necessary to