The city of Des Moines in 1923 issued street improvement bonds to the approximate amount of $616,000, under the provisions of Chapter 8, Title V of the Code of 1897, and in 1. BONDS: conformity with Section 751 of the Supplemental public Supplement of 1915. They were in denominations bonds: of $1,000, and were 616 in number. The plaintiff legal is the owner of Bond No. 616. The more formal acceleration parts being omitted, the following is a copy of of payment. his bond:
"The city of Des Moines, in the state of Iowa, promises to pay as hereafter stated to the bearer hereof on the 1st day of May, 1942, or at any time prior thereto at the option of said city, the sum of one thousand dollars ($1,000.00), with interest thereon at the rate of six (6) per cent per annum, payable annually on the presentation and surrender of the interest coupons hereto attached. Both principal and interest of this bond are payable at the office of the city treasurer in the city of Des Moines, state of Iowa. This bond is issued by the city of Des Moines, Iowa, under and by virtue of Chapter 8 of Title V of the Code of Iowa and the resolution of said city duly passed on the 25th day of June, 1923.
"This bond is one of a series of bonds of like tenor, date and amount, numbered from one (1) to six hundred sixteen (616), and issued for the purpose of defraying the cost of extending, widening, grading and otherwise improving Chestnut Street, now known as Keosauqua Way, as described in said resolution, in said city, which cost is payable by the abutting and adjacent property, as embraced in the assessment district created and established by the resolution of necessity, duly adopted by the city council of the city of Des Moines, Iowa, under and in conformity with Section 751 of the Supplemental Supplement to the Code of Iowa, 1915, and is made by said law a lien on all of said abutting or adjacent property and is payable in twenty (20) annual installments, with interest on all deferred payments at the rate of six (6) per cent per annum, and this bond is payableonly out of the special assessment fund *Page 1354 created by the collection of said special tax, and said fund can be used for no other purpose.
"And it is hereby certified and recited that all the acts, conditions and things required to be done precedent to and in the issuing of this series of bonds have been done, happened and performed in regular and due form, as required by said law and resolution; and for the assessment, collection and payment hereon of said special tax the full faith and diligence of the said city of Des Moines, Iowa, are hereby irrevocably pledged."
The petition alleges, and the answer admits, that the defendant city is about to issue $400,000 of refunding bonds, pursuant to present provisions of the statute (Chapter 115, Acts of the Forty-first General Assembly), and that it proposes to use the proceeds of such refunding bonds as far as necessary to the retirement of the first issue. The prayer of the petition is that the city be enjoined from pursuing such refunding process. The contention of plaintiff is that, inasmuch as his bond was payable out of a specific fund, it may not without his consent be paid before its due date with money obtained from any other source. He contends further that Chapter 115, Acts of the Forty-first General Assembly, having been enacted after the issue of the bonds, may not be made available to the defendant as against a holder of such bond.
It will be noted from a perusal of the bond that it is drawn payable "the 1st day of May, 1942, or at any time prior thereto at the option of said city." As against this specific proviso, the plaintiff brings forward the later provision therein that the bond is to be payable out of a specific fund, and contends that the due date may not be accelerated by mere option of the city, except to the extent that the bond may be paid out of the accumulations of such fund. And such is the purport of the argument. The question presented to us is one of construction of the terms of the bond and of the statute pursuant to which it was issued.
By the express terms of the bond, it is payable on May 1, 1942, "or at any time prior thereto," at the option of the said city. This is equivalent to making the same payable on or before May 1, 1942. There is no room for dispute as to the construction of the language of the bond at this point. The appellant contends, in effect, that the foregoing proviso of the bond is *Page 1355 negatived, or at least qualified, by the later provision that the bond is "payable only out of the special assessment fund," etc. Is the latter proviso an affirmative undertaking on the part of the city that the bond shall not be paid before May 1, 1942, except out of such fund? Or, on the other hand, is it a reservation in favor of the city and for the protection of the city against personal liability for the payment thereof? Is this proviso an addition to the rights of the plaintiff thereunder, or is it a subtraction therefrom? There was no "promise to pay" the bond on the part of the city. The absence of a "promise to pay," and the express limitation upon the rights of the obligee under the bond, are parts of the same thing. Nothing more was pledged to the obligee of the bond than the proceeds of the special assessment. Does it follow from that fact that the bond might not be discharged by actual payment "at any time prior" to the due date? The question may be simplified by an illustration: Suppose an owner of property should execute a mortgage thereon for the security of an obligation, due on or before a given date, and should stipulate that the mortgagee should look to the proceeds of the property solely for payment of his debt without any personal liability on the part of the mortgagor. Could the mortgagor demand a discharge of his property from the lien by paying the debt? Or could the mortgagee resist such demand by insisting that the property be sold and that the proceeds thereof be paid to him? The answer is quite self-evident. If there is any distinction in principle between such a case and the case before us, we are unable to discern it.
It is true that, under this bond, the rights of the bondholder were wholly in rem. It contained no "promise to pay" by any person or entity. There was no personal liability even on the part of the owner whose property was assessed therefor. But such property owner was directly interested in the payment thereof, as a means of discharging his property from the lien. This lien was distributed in each case in 20 annual installments. But under the statute, the property owners were not bound to defer payment for 20 years on any installment. Concededly, any or all of the property owners could have paid the total assessment upon any tax-paying date. An option rested, therefore, with the property owners at all times to act collectively and to retire the entire bond issue. The option granted to *Page 1356 the city of Des Moines is consistent with such right of the property owners', whether we view the city as a representative of the property owners or whether we view it as having a possible interest of its own in the exercise of such option. The city issued the bond and guaranteed its legal validity. Though it did not "promise to pay," it did incur an obligation that might become converted into a money demand. See Hauge v. City of DesMoines, 207 Iowa 1209, and Ft. Dodge Elec. L. P. Co. v. City ofFt. Dodge, 115 Iowa 568. If the collectibility of the bond should become doubtful through defects of legal procedure for which the city was responsible, then the city might well be deemed to have a direct interest in providing for the collection of the bond and in accelerating its maturity.
It is argued that the defendant city formulated the bond and 2. CONTRACTS: selected its phraseology, and that, therefore, construction the terms of the bond should be construed most strict favorably to the holder thereof. The premise is construction faulty. The phraseology of the bond conforms to against sole Section 843 of the Code of 1897. This section drafter. provides:
"Said bonds * * * shall be substantially in the following form, but subject to changes that will conform them to the ordinance (or resolution) of the council, to wit: The city of _____, in the state of Iowa, promises to pay as hereinafter stated, to the bearer hereof, on the ____ day of ____, the sum of _____ dollars."
The optional provision inserted in the bond was fairly within the permission of this section. This optional proviso is not ambiguous. It cannot be said, therefore, that it presents a question of doubt, to be solved against the 3. MUNICIPAL city. The bond must be construed in all its CORPORA- terms, and in the light of other existing TIONS: statutory provisions. The right of a holder of improvement paper to refuse tendered payment and to insist bonds: upon payment of interest to a future date statutory according to its terms is incontrovertible. But form: right such asserted right should be evidenced upon the to modify. face of his paper. It is an express right, if any, and not an implied one. We know no rule of construction that would imply it when it is not expressed, or would solve substantial doubt in its favor.
The appellant challenges the constitutionality of Chapter 115, Acts of the Forty-first General Assembly. This legislation *Page 1357 was enacted subsequently to the issuance of the bond in question. This is the legislation pursuant to which the 4. CONSTITUTION city procures the funds which are to be used in AL LAW: the retirement of the plaintiff's bond. This vested procurement of funds is for the benefit of the rights: property owners, and is charged to their municipal property as a lien. The attacking argument is bonds: that, except for this legislation, the city accelerating could not have procured the means to retire the
maturity. bonds; that the legislation, therefore, is an impairment of the vested rights of the bondholder. The argument is not sound. The right of the bondholder is neither greater nor less because of this legislation. Such right, as already indicated, must be determined by the terms of its bond. If we correctly construe the terms of the bond as giving an option to the city to accelerate the due date, then no vested right of the bondholder's is violated by the exercise of such option. It is true that, if the city had not been able to procure the funds for the purpose of exercising the option, it could not have exercised it. It is doubtless true, also, that the bondholder had a right to speculate upon the improbability of the exercise of such option, and that such speculation may be disappointed by the subsequent legislative power conferred upon the city; but no vested right of the holder's was thereby violated. It is frequently true that, in transactions between creditor and debtor, unlooked-for circumstances may occur which operate to the detriment of one or the other, but which violate none of the rights of either. These may disable a solvent debtor from paying his debt when due, and the creditor may benefit thereby in the way of accruing interest for many months, which he would not otherwise have received. Likewise, it may happen that the maker of a note payable "on or before" may, through circumstances unexpected by either maker or payee, find himself able to pay immediately, and the payee thereby lose a desirable investment. Such circumstances are purely adventitious. They enter as a possibility into every transaction, and are in no sense an infringement upon vested rights. There is nothing in the terms of the legislation which is assailed which purports in any manner to interfere with any right vested in the holder of this bond. The case is simply one where the city had an option, which it would not have exercised if it could not. Whether it could, might not be foreseen either by the city or by *Page 1358 the bondholder. The one had a right to hope that it could, and the other that it could not. The option proviso may have been incorporated for the very purpose of enabling the city to take advantage of such eventualities as might occur. If the city had then the right to so stipulate, it clearly has the same right now to avail itself of the stipulation. We are of opinion that no vested right of appellant's is in any manner infringed by the legislation complained of.
A further suggestion may be made at this point. Appellant's contention that it may refuse payment from any other source than the assessment fund is a strained one. It is true that its only right was in rem. The only remedy available for enforcement of its right was the sale of the property and the turning of the proceeds to the bondholder. This may be termed the extreme right of remedy. The real expectation of the bondholder was that the owner of the property would find it to his interest to pay the assessment. The bondholder looks to such property owner for the payment of its bond, though it has no promise from him. Such moneys so paid the bondholder by the property owner are not necessarily or usually the proceeds of the res (or rem). May the bondholder inquire of the property owner the source of the money which he brings to pay his assessment? May he reject it because it does not come from the proper source? If all the property owners, acting collectively, borrow $400,000 for the purpose of paying their combined assessments, may their tender be rejected because the money in their hands comes from another source than the proceeds of the sale of the assessed property?
Indeed, appellant does not contend that it may inquire into the source from which the property owner receives the money with which he pays his assessment. On the contrary, it concedes that the property owner may pay his assessment upon any tax-due date. Its contention is narrowed down to the proposition that the city may not cause such payment to be made by the use of funds borrowed upon refunding bonds. But both the practical and the legal effect of the action of the city in the premises is precisely the same as though the bondholders had collectively done the very thing which the city is doing for them. So that, from whatever point we view the case, we come back to the initial question: Does the bond by its terms permit the city to accelerate the due date? *Page 1359
In support of its position, the appellant relies for authority upon Sheneberger v. Union Cent. Life Ins. Co., 114 Iowa 578; andLasher v. Union Cent. Life Ins. Co., 115 Iowa 231. In those cases we had occasion to consider an acceleration clause. The same clause was involved in both cases. The obligation was drawn payable at a fixed date, with a conditional proviso for the privilege of partial payments before such due date. The condition imposed upon the exercise of such privilege was that the payment should not be made with money borrowed elsewhere. The maker of the note undertook to pay the same before the due date by the use of borrowed money; whereas the defendant company insisted upon its due date, and was sustained in its contention. The note in that case was not drawn payable "on or before," but was payable upon a fixed future date. The only proviso for earlier payment was the conditional one herein set out. The maker of the note sought to avoid such condition. To eliminate the condition was to eliminate the only proviso in the note permitting acceleration. Without such conditional proviso, there was no proviso at all for the acceleration. Appellant relies also upon Davis v. County ofYuba, 75 Cal. 452 (13 P. 874, 17 P. 533), and Sebern v. Cobb, 41 Idaho 386 (238 P. 1023). Each of these cases involves the construction of a statute. If the statutes thus construed were identical with ours, and were construed in accordance with appellant's contention, even so we could not avoid the responsibility of construing our own statute by merely following a precedent from another state. We should be justified in following such precedent only in the event that we approved it as a proper construction of our own statute. But the statutes involved in those cases were not identical with ours; nor did either of them have any provision corresponding to the decisive provision in our statute which gave to the city the option to accelerate the due date at any time.
It is our conclusion that the appellant has no legal ground of complaint under its bond.
The judgment of the court below is, accordingly, — Affirmed.
STEVENS, FAVILLE, MORLING, and GRIMM, JJ., concur.
KINDIG, J., not participating.
WAGNER and De GRAFF, JJ., dissent.