Court Opinion

ID: 7990971
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:31:02.031823+00
Date Added: 2024-06-11T16:35:22.149676
License: Public Domain

Smith, J.,
delivered the opinion of the court.
. The validity of the bonds here under consideration is-not challenged, their validity being conceded by all parties. The contention is that the bondholders are not entitled to the interest on the bonds which had accrued at the time of their purchase. Two questions are submitted to us for decision: (1) Is a district attorney authorized to institute this suit? (2) What is the meaning of the word “par,” as used in the “act authorizing the issuance of the bonds for the purpose of defraying the expenses of the government of. the state of Mississippi, ’ ’ approved April 14, 1910? Should the first question be answered in the negative, it would be our duty to reverse the judgment of the court below, and to decline to answer the second question, for the reason we would then be without jurisdiction so to do. We are not in accord as to what the answer to this question should be, and since, even should we answer it in the affirmative, our response to the second would necessarily result in a reversal of the judgment of the court below, we have determined to pretermit any discussion of, and to express no opinion upon, the first question.
The word “par” is taken from the Latin, without change of form, and means “equal,” “equality.” In commercial and financial parlance, it is used to denote ‘ ‘ a state of equality or equal value; an equality of actual with nominal value.” It is universally held, so far as the research of counsel, supplemented by our own, has enabled us to ascertain, that the equal, or par, or par value of an interest-bearing bond, on the date of its issuance, is a value equal to the principal thereof; on any day subsequent to its issuance, it is a value equal to the principal plus accrued interest, or, to be more accurate, plus the then value of the accrued interest. The nominal value of such a bond necessarily increases with each passing day by the amount of the accrued interest, which, on its face, it promises to pay.
*873In State of Illinois v. Delafield, 8 Paige (N. Y.), 527; Delafield v. State of Illinois, 26 Wend. (N. Y.) 192, and Id., 2 Hill (N. Y.) 159, it was held “that, where the legislature of a state authorized its officers to borrow moneys for the nse of the state and to sell its bonds for that purpose, but not for less than their par value, a sale of bonds which were to draw interest from the time of sale, but which were to be paid for in future installments only and without interest, was a sale of such bonds for less than their par value, and that they were not binding upon the state, because its agents had exceeded their authority.” When the matter was before the chancellor, he said: “If the officers could issue bonds which would draw interest immediately, and still be allowed to give the purchaser of such bonds the use of the money loaned for ten months, without interest, they could with the same propriety, so far as the statutory prohibition was concerned, have sold the bonds upon a contract that they should be delivered and draw interest immediately and that the purchaser might advance the nominal amount of the bonds in installments of from one to five years, as the same might be wanted by the complainant to carry on her public works. . . . The very idea of a sale of a bond, or draft, or other security for the payment of money, at par, is that it is to be sold dollar for dollar of the amount due and payable thereon. . . . Such is the popular or generally received meaning of the terms ‘par’ or ‘par value,’ and this was unquestionably the sense in which these terms were used by the legislature of Hlinois, in the statute under which the officers of the state were authorized to issue these bonds. ’ ’ When the case reached the court of errors, Judge Bronson said that “if par value does not mean in this case a dollar in money for every dollar of security, the wit of man cannot tell us what it does mean.” Senator Yerplank, referring to the same subject, said: “If the payment be now made to the state in New York funds, the ‘par’ value *874would, in the common language of the stock market, as well as the natural interpretation of the phrase, independent of usage, be the amount due on the face of the certificate. But the actual sale is made on terms which on the three hundred thousand dollars sale gave the appellant an advantage of one hundred and three days ’ interest, and on the two hundred and eighty-three thousand dollars sale of above ten months. I cannot, upon any understanding of the words, consider this a sale at par value, any more than if there had been an undisguised discount at the same rate.” Village of Ft. Edwards v. Fish, 156 N. Y. 363, 50 N. E. 973, The only difference between that case .and the one at bar is that there the bonds were sold, but not paid for until several months’ interest had accrued thereon, while here several months’ interest had accrued on the bonds at. the time they were purchased. The principle governing the two cases must therefore be the same. In Village of Ft. Edwards v. Fish, supra, it was held that “when village water bonds draw interest from their date, and are deposed of by by the commissioners after their date, with accrued interest attached, their face or par value, within the meaning of the statute, is the. sum of the principal and the accrued interest.” To the same effect, see Duvall v. Knight, 42 Fla. 366, 29 South. 408; Hogg’s Appeal, 22 Pa. 479, and Bank v. Greenburgh, 173 N. Y. 215, 65 N. E. 978.
The only other case dealing with the par value of interest-bearing bonds, which has come under our observation, is the case of Evans v. Tillman, 38 S. C. 238, 17 S. E. 49. This case is not in point here, for the reason that the court pretermitted any discussion of the meaning of the words “par value,” as used in the financial and commercial world, and rested its decision upon a ground peculiar to the statute under consideration by it, and which has no bearing on the case at bar. In Smith v. Elder, 7 Smedes & M. 507, it was held that the word “par” means *875“without discount or premium.’’ If the móney received for these bonds had been less than the principal thereof, they would, of course, have been sold at a discount, or less than par. This would have been true, even if the full amount of the principal had been paid, and a part thereof afterwards returned to the purchasers. If these coupons are to be- collected in full, that is just what will occur here; for in that event the state will pay to the purchasers a sum of money not earned as interest, and which could only represent a refund on the price paid for the bonds. In Hunt v. Fawcett, 8 Wash. 396, 36 Pac. 318, the court held that “to sell the bonds at their face value, and at the same time pay a large commission to the purchaser, is not to sell at par.” The cases of Dexter v. Phillips, 121 Mass. 178, 23 Am. Rep. 261; State National Bank v. Board of Commissioners, 121 La. 269, 46 South. 307; Yesler v. City of Seattle, 1 Wash. 309, 25 Pac. 1014; Commonwealth v. Lehigh Ave. R. R. Co., 129 Pa. 417, 18 Atl. 414, 498, 5 L. R. A. 367 and Newark v. Benjamin Elliott et al., 5 Ohio St. 113, cited and relied upon in the court below, are not in point.
But it is said that an examination of the statutes passed by the various legislatures, authorizing the issuance of bonds, discloses the fact that the words “par” and “face” value have been used in these statutes as synonomous, that consequently the legislature must have so used the word “par” in the statute now under consideration, and that the face value of an interest-bearing bond is the principal thereof, excluding interest.. The rule of construction thus invoked by counsel for appellee is that in a case of doubt and uncertainty the court may, in construing a statute, look to prior statutes in order to ascertain the meaning of the words used in the statute under consideration; but this rule can never be invoked where the words used have a plain and well-settled meaning, or where to do so would not remove, but create, an ambiguity. It is true, 'also, that where the legislature by *876means of a series'of statutes running through a number of years has been engaged in building up a general scheme or system, as, for instance, a system of drainage, all of these statutes must be construed together in order to arrive at the legislative intent, and the words of the later statutes will be given the same meaning as was given to them by the legislature in the former statutes; but such is not the case here. It may be that counsel are in error in assuming that the face value of an interest bearing bond is the principal thereof, excluding interest, as to which we are not called upon to express an opinion. It is true that the term is so defined by the lexicographers, and three cases are cited in support of this definition: Osgood v. Bringolf, 32 Iowa 265; Olson v. Tanner, 117 Wis. 544, 94 N. W. 305, and Marriner v. Roper Co., 112 N. C. 164, 16 S. E. 906.
In the first of these cases it does not appear whether the instrument, in that case a judgment, bore interest on its face or not; so that the decision is consequently of no value here. In the second case the instrument under consideration did not on its face bear interest, and this fact was made the ground of the court’s decision. In discussing this matter the court, among other things, said (italics ours): “There is nothing ambiguous about the words ‘face value’ as applied to such a paper; therefore it would be useless to spend time discussing what they might be held to mean in the light of rules for judicial construction. Being used clearly in their plain, ordinary sense, there is no room for construction. It is considered here that the common meaning thereof in the relation under discussion is the amount named in the paper, not including interest or anything determinable by computation of evidence aliunde especially where the right to interest does not appear upon the face of the paper. It will be observed that the subject of interest is not even alluded to on the face of the certificates. That presents the clearest hind of a case for confining the term *877‘face value’ to the money value expressed in the language of the paper. . . . Respondents’ counsel bring to our notice with much confidence Delafield v. Illinois, 26 Wend. (N. Y.) 192; Id., 2 Hill (N. Y.) 159; and Meixell v. Kirkpatrick, 29 Kan. 679. Those cases, however, do not treat of the meaning of ‘face’ or ‘face value’ as regards an instrument merely naming a sum of money, as in this case. They deal with prima facie value of obligations to pay money, saying, in effect, that the apparent worth thereof is the amount due upon the face of .the instruments, including interest. The obligation before the court in each ease, it will be noted, indicated upon its face that the principal sum drew interest. If such adjudications bear at all on the questions here for decision, they are certainly not sufficiently persuasive to cause us to hesitate to apply what appears to be the common, ordinary, and well-recognized meaning of the words under discussion, where used in an instrument containing no reference whatever to. the subject of interest.” In the last case, Marriner v. Roper Co., the instrument under consideration by the court did not bear interest on its face, and the question of interest in fact was not involved. It was simply an order or ticket issued by a corporation to its employees, payable in merchandise.
On the contrary, the only cases dealing with the face value of an interest-bearing instrument are State v. Delafield, Village of Ft. Edwards v. Fish, and Duvall v. Knight, supra; and in the first of these it was impliedly, and in the other two expressly, held that the face value of such an instrument is the principal plus accrued interest. The promise, on the face of the bonds, is to pay a certain sum plus interest. It follows from the foregoing views that the bondholders are not entitled to the unearned interest on these bonds.
The judgment of the court below is reversed and the cause dismissed.
*878ON SUGGESTION OF ERROR.
The assistant attorney-general again calls our attention to the evidence in this case which he states we seem to ignore.” This testimony was not referred to in our former opinion, for the reason that there is no controversy between the counsel relative thereto, and for the further reason that most of it is wholly immaterial, having no bearing on the legal questions involved. This evidence discloses that pursuant to section 2 of chapter 99 of the acts of 1910 the bonds were offered for sale to the public by means of advertisements in the newspapers, and- that no bids were received therefor; that thereupon the governor with considerable difficulty succeeded in selling the bonds at private sale to various parties and at various times, the last sale being made on the 29th day of December, 1910, all sales being made “with the advice and consent of the treasurer and auditor.” The bonds were dated on and bear interest from July 1, 1910. All parties being under the mistaken impression that the “par” of an interest-bearing bond is the principal thereof, excluding accrued interest, no account was taken of. this interest in the sale of the bonds; but all of them were sold for the amount of the principal thereof, which was the highest price that could be obtained for them. This evidence simply shows that the bonds were sold in good faith under the mistaken belief that the law was being complied with. The question before us, however, is not the good faith of the parties, but whether the law under which the bonds were sold was in fact complied with.
It does not appear when the contract for lithographing the bonds was made, except that it was shortly after the 6th day of June, 1910. They were not delivered by the party with whom this contract was made until the 13th day of September following. Some of the purchasers agreed to take part of the bonds prior to the *87913th day of September; but they were not delivered, and the money to be paid therefor was not paid into the treasury, until after that date. These facts can have no bearing upon the right of the purchasers to collect the unearned interest. The sale of the bonds did not in fact take place until they were delivered and the money paid into the treasury.
Again, it. is said that the general manager of the Merchants’ Bank & Trust Company of Jackson, Mississippi, testified without contradiction that the par value of an interest-bearing bond is the principal thereof, excluding accrued interest, except where such interest is represented'by a coupon which has matured, matured coupons being included in ascertaining the par value of the bond ; that this was the definition of the term acted upon by the business world generally, arid by his bank particularly, in all transactions involving the par value of such instruments. This evidence was really incompetent and is wholly immaterial, for the reason that the words “par” and “par value,” as applied to commercial paper, have a well-settled meaning in commercial law, as shown in our original opinion, and consequently are not subjects of expert testimony.
The suggestion of error is overruled. Overruled.