Davis v. Cty. of Yuba

California Supreme Court Mar 30, 1888 No. No. 11880Published

Before: Searls

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Holding. The court held that the county could not unilaterally pay off bonds before their twenty-year maturity date using funds raised outside the specific statutory sinking fund provisions, as the bondholders had a contractual right to hold the bonds for the full term subject only to the specific redemption contingencies defined in the authorizing statute.

Issues

Whether the county had the right to pay off bonds before their twenty-year maturity date using funds raised through independent means against the consent of the bondholders.
Whether the plaintiff was entitled to recover interest on coupons from the time they were presented to the county treasurer for payment.

Disposition. reversed

Quotations verified verbatim against the opinion

“The provisions of the statute are to be read in connection with the bonds. They constitute a part of the contract entered into between the county and the bondholders”

“We are of opinion the purchaser of these bonds had a right to hold and collect interest on them for twenty years, subject to the contingency provided in the statute under which they were issued of having them paid sooner”

Synopsis

Bonds—Road Bonds on Yuba County—Time on Payment—Act on Mabch 28, 1872. — Bonds issued by the county of Yuba in pursuance of the act of March 28, 1872, for the purpose of constructing, repairing, and improving wagon-roads and bridges within the county, cannot be paid by the county, without the consent of the holders, prior to the expiration of twenty years from the date of their issue, except in the manner and from the fund provided for in the statute; and an attempt by the county to make a prior payment thereof from a different fund is ineffectual as against a non-consenting holder.

Id. —Coupons — Intebest. — The coupons on such bonds, after they become payable, bear interest from the time they are presented to the county treasurer for payment.

The Court. A rehearing was granted and the ease resubmitted.

After carefully considering the matter, we still adhere-to our former opinion, except that we think the plaintiff should recover interest on his coupons from the time he presented them to the county treasurer for payment.

Judgment and order reversed, and a new trial ordered.

The following is the opinion above referred to, rendered in Bank on the 25th of May, 1887:—

Searls, C. J. This action was brought to recover five thousand six hundered dollars and interest, alleged to be due upon coupons attached to certain bonds issued by the county of Yuba, under an act of the legislature entitled “An act to authorize the county of Yuba to issue sixty thousand dollars of bonds for the purpose of constructing, repairing, and improving wagon-roads and bridges in said county of Yuba,” approved March 28, 1872. The cause was tried by the court, and written findings filed, upon which judgment was entered in favor of plaintiff for four hundred dollars, being for the interest on bonds from the first day of January, 1882, to and including March 30, 1882. Plaintiff appeals from the judgment, and from an order denying a new trial.

If defendant, the county of Yuba, had a right under the law and by virtue of their contract with the bondholders, of whom the plaintiff was one, to pay off the bonds in question on the thirtieth day of March, 1882, the judgment of the court below is correct, and should be affirmed. If, on the other hand, the bonds could not, without the consent of the holders, be paid until the expiration of twenty years from the date of their issue, [454]the court below erred in refusing to render judgment in accordance with the prayer of the complaint.

The act of March 28, 1872 (Stats. 1871-72, p. 662), so far as is necessary to the consideration of this case, reads as follows:—

“ Section 1. The board of supervisors of the county of Yuba, in the name of said county, are hereby authorized, empowered, and directed to make, execute, and issue, from time to time as it shall become necessary, not to' exceed sixty thousand dollars of bonds of said county.

“Sec. 2. Such bonds shall be issued in denominations of one thousand dollars each, and be payable in twenty years from the first day of January, 1873, and shall bear interest at the rate of eight per cent per annum, payable semi-annually on the first day of July and January of each year. Said bonds and interest shall be payable at the office of the treasurer of said county in United States gold coin. Such bonds shall be signed by the chairman of the board of supervisors, countersigned by the county auditor, and indorsed by the treasurer of said county. Forty coupons shall be attached to each bond, and numbered consecutively, and shall express the amount of interest due at such payment, and shall be signed in the same manner as the bonds are required to be signed. . . . . The said chairman of said board of supervisors, county auditor, and treasurer shall proceed to dispose of said bonds for the best sum or price in gold coin of the United States they can procure; provided, that they shall not sell or negotiate the said bonds at less than eighty cents gold coin on the dollar.

Davis v. Cty. of Yuba

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