Smith v. State

• Decision Date: 29 May 1911
• Citation: 99 Miss. 859,56 So. 179
• Court: Mississippi Supreme Court
• Parties: E. J. SMITH v. STATE, EX REL

56 So. 179

99 Miss. 859

E. J. SMITH v. STATE, EX REL

Supreme Court of Mississippi

May 29, 1911

March 1911

APPEAL from the circuit court of Hinds county, HON.W. A. HENRY Judge.

Suit by the state on the relation of M. S. McNeil, district attorney against E. J. Smith, state auditor. From an adverse judgment defendant appeals.

The facts are as follows:

This suit was instituted by M. S. McNeil, district attorney, at the instance of Mrs. Emma Edwards, the holder of certain bonds of the state of Mississippi, dated July 1, 1910, issued and sold under chapter 99 of the acts of the legislature of 1910, and is brought against E. J. Smith, auditor, and Geo R. Edwards, treasurer, to compel the auditor to issue a warrant and the treasurer to pay same for interest coupons maturing January 1, 1911. Payment of these coupons had been refused by the treasurer, because it is alleged that the bonds had not been sold in accordance with the provisions of chapter 99, Laws of 1910, in that they had been sold below par. The Law of 1910 provides that the governor, treasurer, and auditor shall advertise for sealed bids for the bonds authorized, and after due advertisement award them to the highest and best bidder, and, in case there are no bids, the governor, with the advice and consent of the auditor and treasurer, "may negotiate same at private sale for a price not less than par." There were no bids, and the governor, with the advice and consent of the auditor and treasurer, at various times between July 1, 1910, and January 1, 1911, sold the bonds authorized to be issued at their face value with the interest coupons attached, thereby giving to the purchasers the benefit of that portion of the interest which had accrued to the date of sale, upon the agreement with the purchaser that the interest coupons would be paid in full upon maturity. It is the contention of the petitioner below that the word "par," as used in the act, is equivalent to "face value," and that a sale of the bonds at face value is legal; while the contention of the state officials is that the sale was below par, because the accrued interest to date of sale was given to the purchasers.

There was a demurrer which raised two points: First, that there was a misjoinder of parties defendant, and that the suit was not brought by the state; and, second, that the petitioner had no right to maintain his suit, since the holders of the interest coupons had a remedy. The court sustained the demurrer as to misjoinder of parties, and dismissed the suit, as to Edwards treasurer, and permitted an amendment so as to show the state of Mississippi as petitioner, on the relation of the district attorney, and overruled that part of the demurrer questioning the right of the district attorney to maintain the suit. The auditor then answered, and the case proceeded to trial on pleadings and proof, resulting in a judgment for the petitioner, granting the writ of mandamus prayed, and commanding the auditor to issue his warrants for the matured interest coupons.

Suggestion of error overruled.

Potter & Hindman and J. A. P. Campbell, for appellant.

The only question in this case is, where the bonds of the state sold "for a price not less than par?" Was a sale for five hundred dollars of a bond whose value was five hundred and ten dollars, or nearly that, a sale for a price not less than par? When the legislature appropriated twelve thousand dollars to pay interest on six hundred thousand dollars from July 1st, to December 31, 1910, did it intend to pay that, or any part of it, for money not in the treasury but in the pockets of buyers of bonds who should be induced to buy a gift of interest coupons?

Is it not clear that the legislature expected the bonds to go at four per cent interest and be sold before July 1, 1910, and the coupon due January 1st next would go to the buyer; that the thought of giving away interest was entertained on this assumption.

Par is not a technical term, but one in common use. Webster defines it as "equal value-equality of nominal and actual value." "A term applied to any two things of equal value" is the definition of Zell's Cyclopedia. "Of equal nominal and actual value" is the definition in 'New Century Book of Facts.' "All authorities agree in these definitions. The word par is also used for the value expressed in a certificate of stock or other security. That is the meaning in our code chapter on corporations and in the revenue law as to banks and other corporations.

"For a price not less than par" means a sum of money equal to the value of the bonds when sold, which included interest. Did the legislature know of the mysterious doctrine of apportionment of interest as applied to these bonds? Was it aware that a coupon is of no value until it is due as held below? That, if the bonds had been sold January 1, 1911, the coupons would have been worth the sum named in it, but a sale on December 31, 1910, carried the coupon as a bonus to the buyer of the bond because interest cannot be apportioned said the court, unsupported by any authority in the world.

Par means of equal value--equal to what? The bonds with or without coupons? Were not the coupons part of the bonds? Were they not the inducement to the purchase? Would anybody desire a bond without coupons, unless the body of it stipulated for interest? The plainness of the question involved in this case embarresses the effort to make it plainer.

The language of the law is significant. It is not at par merely but for a price not less than par plainly meaning their value or worth when sold which might be when several coupons had matured by their terms.

I deny the assertion of the court below that the highest bidder even below par would have been entitled to the bonds. It would have been the duty of the officers to reject all bids below par, otherwise, a sale at seventy-five cents on the dollar would have been valid. Will anybody agree to that?

If the legislature intended the bonds to go at face value with coupons as a bonus, why did it not say so? Face value means without accrued interest, while par means full value.

All testimony as to the meaning and practice of bankers and bond dealers was incompetent and should have been excluded. The legislature did not employ language with reference to their practice. It did not consult them as to the language used and such testimony is both useless and incompetent. The books define words and courts go by them and not the notions of witnesses. Besides, what one banker might think a hundred others might contradict. Dexter v. Phillips, 121 Mass. 178, relied on as decisive of this case, has no application to it, not even a remote bearing on it. It simply darkened counsel and confused the court. It was a totally different subject. Par and value were not mentioned in it, because it involved a wholly different subject. It was a contest between the residuary legatees of the will of Dexter, who were directed by his will to pay income to Phillips. Dexter owned bonds of various kinds and real estate rented and died when bonds and rents were not due and the only question in the case was, whether these rents and interest were income or capital, and the court, overruling a former decision of the court held on reasoning I do not comprehend, that they were not capital but income. The case would seem to be authority against the view of the court below in this case because it considered immature interest and rent as income and that immature coupons did not go with the bonds, while in this case immature' coupons were considered as nothing; and go with the bonds. I do not think that Dexter v. Phillips was ever cited before in any case involving the question of par or value. It speaks of bonds not due, the court below of interest not due. Not one of the citations in the opinion of the court below furnished any support whatever.

The case in Sm. & M. 507 was a suit on a promissory note payable "in the notes of the chartered bonds of Mississippi at par." Held, the notes were to be taken at par. Of course. Does that throw any light on this case?

State v. Simmons, 70 Miss., presents no such question as is involved in this case. The reference to former statutes of this state for sale of bonds throws no light on the Act of 1910, which must be interpreted by its own terms. These are all independent acts, each determinable by its own provisions.

Evans v. Tillman, 38 So. Co. 238, claimed to be directly in point, utterly fails to support the conclusion drawn from it. The act interpreted by the court not only used the term "face value," but in several sections used that expression in the sense of principal without accrued interest, said the court, and besides authorized commissions for placing bonds, on which these judges held the sale should not be enjoined. Chief Justice McKiver dissented. There were but few days of interest involved and the commissioners authorized for placing the bonds were doubtless sufficient to cover the interest involved.

State National Bank v. Board of Commissioners, 46 So. 307, lends no countenance to the decision of this case below. The law gave the board power to sell the bonds with or without the coupons attached. It advertised them for sale with coupons attached. The bank bid offering a premium and the court held the sale valid. Of course, the wonder is that there was any dispute about it.

Yesler v. Seattle, 1 Wash. 309, is inapplicable. There is nothing about par, or face value, or accrued interest. It involved the validity of a change by the municipal authorities of some of the terms of the bonds after a vote by the people in favor of a bond issue. The change was within the terms of the law. There was no selling below par or giving a bonus as in the pending...