Bates v. Gerber

Fox, J., concurring.

I concur in the judgment. Even if these coupons bear interest after maturity, or after non-payment for want of funds at or after maturity (which is not conceded), the treasurer did all that he was required or authorized to do when he offered to pay the face of the coupons upon condition of their surrendei to him; and the condition was one which he was not only authorized, but which it was his duty, to impose.

The bond from which each coupon was severed, as well as the act under which it was issued, was a part of the contract made between the municipality and the person to whom the bond was issued, at the time it was issued, and all the conditions of that contract followed the bond, and every coupon attached to it, into whoseso*553ever hands it might thereafter go. The act was a special one for the incorporation of a municipality, the funding of the indebtedness of its predecessors, for which it would be liable, and providing for the general government of the new municipality. It constituted the whole law of the state on the special subjects with which it dealt, and for which it provided, — taking those subjects out of the operation of all general laws which might otherwise have been applicable thereto. The holders of claims against the former municipality, or the former county, were not bound to accept its provisions; but if they did, they and their subsequent assignees were bound by them.

Quoad these bonds, and the coupons attached to them, that act became a part of the contract. The act provided for the issuance of the bonds, for the time of their maturity, for the payment of annual interest thereon at the rate of six per cent per annum, payable at the office of the treasurer on the first day of January in each year, and that coupons for the interest should be attached to each bond, and also provided for a fund to meet these several sums as they should fall due. It did not provide for either principal or interest bearing interest after maturity, and provided no fund to meet such an added liability. The holders of the bonds accepted them with full knowledge of these provisions, and that this statute constituted the whole law by which their rights and remedies were to be ascertained and determined; for every man dealing with a municipal corporation is bound to know that its powers are only such as are conferred by the statute under which it is authorized to act, and its obligations can only be such as it is by the statute authorized to assume, or those necessarily incident to the exercise of the powers expressly conferred. Knowing this, they knew that no provision was, or without further legislation could be, made for the payment of interest after maturity upon any of these obligations. They also knew that they could not maintain any action against *554the municipality upon any obligation arising under this act, and accepted their obligations upon that condition. Nothing in the act prohibited them from maintaining any proper action against the officers of the municipality for neglect to perform any of the duties prescribed by the act, but they were forbidden to maintain any action against the municipality itself, upon any liability incurred under the act, and they voluntarily accepted these obligations upon that condition.

This act provided for the funding of the old indebtedness; for the creation of a fund to meet the obligations specially authorized in that behalf; and also for a fund to meet the current expenses of the government of the municipality; but it not onty, ex industria, omitted to provide for any of these obligations bearing interest after maturity, or for the payment of any such interest, but it also expressly provided that no officer nor any person should have power to contract a debt against the municipality for any purpose, or under any pretext whatever. (See section 45.) If any of the officers had made any provision, express or implied, to the effect that any of the obligations which they were authorized to issue under the act should bear interest at a greater rate or for a longer period than that provided in the act itself, to that extent it would have been in direct violation of this provision, and void.

In view, then, of the fact that all the rights and obligations of the parties in relation to these bonds and coupons are limited and controlled by the provisions of this act under which they were issued, the able argument of counsel in support of the proposition that the coupons bear interest after maturity, based upon other statutes and upon decisions rendered under other laws, seems to me to have no application. This act takes the subject-matter upon which it operates out of the general laws in relation to interest and out of the operation of all other laws. Under this act the rule laid down in *555Soher v. Supervisors of Calaveras County, 39 Cal. 134, seems to me the only rule that can be applied: “ When no provision is made in a funding statute for the payment of interest after the bonds issued under it have become due, no interest will accrue thereon after that date.” And the rule that will apply to the bonds will also apply to the coupons. As was said in Beals v. Supervisors of Calaveras County, 28 Cal. 450, “ there is no express contract to pay interest, and no rule of law independent of statutory provisions that would require interest to be paid.” The statute under consideration in the case of Davis v. County of Yuba, 75 Cal. 452, was so widely different from the one now under consideration as to make the decision in that case of no value as an authority in this case. There it was expressly provided that other funds might be resorted to than the one created under the funding act, and that the board might make other provisions than those specified in the act, if those were found insufficient. The payment of interest in consideration of forbearance might well be allowed in that case, as the provisions of the statute were sufficiently liberal to allow that to be done.

It is claimed that the case of Davis v. Porter, 66 Cal. 658, holds that the coupons upon the bonds issued under this act bear interest after maturity; but I do not so read the decision. The effect of that decision is, that, even if it be conceded that they so bear interest, the plaintiff was not entitled to the relief demanded, for the reason that the treasurer was not authorized to pay more than the face of the coupons. It was not necessary in that case to decide that they did (or did not) bear interest, and the language used does not import a decision to that effect. I am unable to find any decision that will support that theory, as applicable to bonds or coupons issued under a statute like the one here under consideration.

But, as said in the case last referred to, and as I have *556said in the beginning, even if these coupons did bear interest after maturity or presentation, the plaintiff is not entitled to this writ, for the reason that the treasurer is not by the act authorized to pay anything more than the face of the obligation, and he offered to pay that upon the only terms and conditions upon which he was authorized to pay it, namely, upon surrender of the coupons. The bond, as well as the act, forms a part of the contract, and every coupon refers to the bond, and declares upon its face that it is for interest upon the bond. The holder is, therefore, bound to look at the bond, as well as the coupon, for the conditions of his contract; and when he does so he finds' it specified in express terms that the interest (for which the coupon is attached) is payable upon surrender of the coupon. Plaintiff was not, therefore, entitled to the payment of even the principal sum named in the coupon, except upon surrender of such coupon.