Bolles v. Town of Amboy
| Decision Date | 09 February 1891 |
| Citation | 45 F. 168 |
| Parties | BOLLES v. TOWN OF AMBOY. |
| Court | U.S. District Court — Northern District of Illinois |
Morris S. P. Thomas, for plaintiff.
J. K Edsall, for defendant.
The Chicago & Rock River Railroad Company was chartered by the legislature of Illinois March 24, 1869. The act authorized incorporated cities, towns, and townships along or near the route to aid the construction of the road by subscribing for the capital stock, and paying for the same by executing and delivering to the company, bonds bearing interest at a rate not exceeding 10 per cent. per annum. On April 5, 1872, the town of Amboy executed and delivered to the company its coupon bonds in satisfaction of a subscription to the capital stock, and this action was brought to recover the amount due on 30 coupons detached from those bonds, representing interest at the rate of 10 per cent. per annum, one of which all being alike except in number and date of payment, reads as follows:
$50. No. 28.
'INTEREST WARRANT-- TOWN OF AMBOY.
'The Town of Amboy, state of Illinois, will pay the bearer on the 1st of July, A.D. 1880, fifty dollars, at the office of the treasurer of Lee county, being one year's interest on the bond numbered above.
'F R. Dutcher, Supervisor. 'J. T. Tate, Town-Clerk.'
It is not claimed that the coupons draw interest by the mere terms or for of the act, or that the general statute of the state allowing interest on money due, expressly includes the state or any of its municipalities. When the coupons were executed, it was the settled law in Illinois that such instruments did not draw interest. City of Pekin v. Reynolds, 31 Ill. 519, decided in 1863, was a suit on coupons detached from bonds executed and delivered by the city of Pekin in payment of a subscription to the capital stock of the Illinois River Railroad Company, and the court held that neither the state, nor municipalities created by it, were bound to pay interest, unless there was an express agreement authorized by statute to pay interest. In legal effect, the coupons in that suit were not unlike the coupons which are the subject of this suit, and whether or not the latter bear interest is a question of local law. In Holden v. Trust Co., 100 U.S. 72, it was held that where a statute prescribes a given rate of interest for money due, but permits a higher rate to be specially contracted for, such higher rate can be recovered only until the maturity of the debt, and thereafter the statutory rate. But in Phinney v. Baldwin, 16 Ill. 108, it was held that an instrument bearing interest, not at the usual rate, but at a higher authorized rate, bore the latter rate until the debt was paid; and in Ohio v. Frank, 103 U.S. 697, which went from this court on writ of error, the Illinois rule was observed and enforced on the ground that interest was a matter of purely local regulation. In discussing this question, the court said:
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Boswell v. Big Vein Pocahontas Coal Co.
... ... Cromwell v. County, 96 U.S. 51, 61, 24 L.Ed. 681; ... Sherwood v. Moore (C.C.) 35 F. 109; Bolles v ... Town (C.C.) 45 F. 168, 169; Bond v. John V. Farwell ... Co., 172 F. 58, 65, 96 C.C.A. 546 ... ...
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Bond v. John V. Farwell Co.
...of last resort of the states are binding upon the courts of the United States. Ohio v. Frank, 103 U.S. 697, 26 L.Ed. 531; Bolles v. Town of Amboy (C.C.) 45 F. 168. It plain, however, that, unless the present contracts for interest are sustainable under the statute in question, no recovery o......