Nash v. El Dorado Co.

• Decision Date: 06 July 1885
• Citation: 24 F. 252
• Parties: NASH v. EL DORADO CO.
• Court: United States Circuit Court, District of California

24 F. 252

NASH v. EL DORADO CO.

United States Circuit Court, D. California.

July 6, 1885

B. S Brooks, for plaintiff.

A. L Rhodes, for defendant.

SAWYER C.J., (orally.)

This is an action brought upon bonds of El Dorado county, issued by the county in pursuance of the statute, for the purpose of aiding in the construction of the Sacramento Valley Railroad. The action is brought upon the bonds and the coupons for interest upon the bonds. The bonds, in this instance, have 12 years to run, the bonds and coupons calling for the payment of interest semi-annually. The bonds provide for the payment of interest at 10 per cent. per annum, at specified times semi-annually, 'on surrender of the coupons for interest ' Coupons were attached for interest running over the entire period till the maturity of the bonds. The action is, in form, upon the bonds, and for interest, with no separate counts upon the coupons. The main question relied upon is as to what, and for how long a period, interest can be recovered in view of the statute of limitations. The demurrer goes to the amount of the recovery, rather than the general sufficiency of the complaint. The object seems to be to get the ruling of the court as to what rate of interest the bonds and the coupons bear after maturity,-- the interest called for in the bond being ten per cent. per annum,-- and as to the effect of the statute of limitations on the coupons. That being the object, and these points having been argued, notwithstanding the difficulty of reaching the point by demurrer, I have no objection to expressing my views upon the subject now. It is claimed that the county is not liable to be sued at all. But the act of 1854, Statutes 1854, p. 45, authorizes counties to be sued. That act was in force until the adoption of the Code. Section 4000, Pol. Code, constitutes counties corporations, and sections 4002 and 4003 authorize them to be sued. Under that statute, and under the present Codes, then, the county, since 1854, has been, and it now is, subject to be sued on its bonds. It is alleged, for the purpose of avoiding the statute of limitations, that, for a certain period during the running of the statute on these bonds, there was no board of supervisors for El Dorado county, the members having all resigned for the express purpose of evading service of summons in a suit, so that no valid service could be made upon anybody. But, under the statute of limitations, no service is necessary to constitute the commencement of a suit. Code Civil Proc. Sec. 350.

The suit is commenced within the meaning of the statute by the filing of the complaint; so there is not time that suit could not have been commenced, within the meaning of the statute, against El Dorado county. Suit could have been commenced at any time in such sense as to stop the running of the statute of limitations. Coupons do not bear interest until they become due. I have no doubt that they bear interest from the date of their maturity at the legal rate. It has been repeatedly so held by the supreme court of the United States. All of the cases decided in the supreme court of the United States hold that the statute of limitations runs upon coupons from the date of their maturity. Though incidental to the principal agreement, they are independent obligations intended to be cut off from the bonds, and passed from hand to hand; and, it is held, whether cut off or not, that the right of action accrues upon them as soon as they fall due. But it is claimed by the complainant here that he has counted upon his bonds alone, claiming interest not on an independent contract, but only as an incident to and a part of the bond itself. The bonds provided that interest should be paid at specified times semi-annually, as designated in the coupons attached. The money fell due at specified times, the bond not being yet due, and the right of action accrued, and the holder could commence an action upon the maturity of those coupons. They could be cut off and transferred separately as independent negotiable paper. If I were to execute a mortgage to secure, say $6,000 borrowed money, giving three notes for $2,000 each, payable, respectively, one of $2,000 in one year, one in two years, and one in three years, there can be no doubt that an action would accrue on each as it matured. So, also, if instead of notes I should give a bond for $6,000, payable $2,000 in one year, $2,000 in two, and $2,000 in three years, it would be the same as in the case of the notes. Each installment matures at a particular time, and at that time the payee is entitled to his money; the right of action accrues, and an action may be commenced, at any time within the time prescribed by the statute of limitations after the right of action accrues. I have no doubt, therefore, that the right of action upon the coupons accrues upon the maturity of the coupons, and do not think the statute will be evaded in consequence of the coupons being for interest, and attached to the bonds. As to those coupons, then, against which the statute has run more than four years since their maturity before the commencement of the action, the action is barred under the statute of limitations. But, in this particular case, another point arises. A special act was passed in 1876 (St. 1875-76, p. 686, Sec. 6) which suspended the running of the statute upon these particular bonds and coupons until the meeting of the next legislature; and in 1878 (St. 1877-78, p. 76, § 5) the same provision was again enacted, which suspended the running of the statute of limitations until the meeting of the following legislature,-- the two periods in the aggregate amounting to over three years. On each occasion the running of...