Clark v. Iowa City

ERROR to the Circuit Court for the District of Iowa. The case was thus:

On the 1st of March, 1856, Iowa City issued a number of bonds, dated on the day just named, promising in each to pay to the bearer, on the 1st of January, 1876, the sum of $500, with interest at 10 per cent., payable on the 1st of January in each year. For this interest ten coupons, or interest warrants in negotiable form, for $50 each, were annexed to the bonds. From ten of these bonds the coupons were subsequently cut off, and long before the commencement of this suit-which was on the 31st of January, 1874-were negotiated and by purchase and delivery became the property of a certain Clark. The ten bonds themselves, from which the coupons were thus severed, were paid off and satisfied by the company prior to the said date; Clark not being at the time owner or holder of any of them.

In this state of things Clark, on the said 31st of January, 1874, sued the city on ten coupons representing the instalments due on the 1st of January, 1860. More than fourteen years had thus elapsed since the coupons had become due, and since suit might have been brought on them.

The statute of limitations in Iowa, making no distinction between simple contracts and specialties, enacts that all actions 'founded on written contracts' must be brought within ten years after the cause of action accrued.

In bringing his suit so long after the coupons became due, the plaintiff's idea, founded on his interpretation of the decisions in The City of Kenosha v. Lamson and The City of Lexington v. Butler, in this court, was that the statute began to run against the coupons only from the maturity of the bond, and as the bond would not be barred until January 1st, 1886, that his suit on the coupons, though brought more than fourteen years after they became due, was still in time.

The defendant's position was that the cases just mentioned and relied on by the plaintiff were misinterpreted by him; that suits on the coupons were barred in ten years after their own maturity, or barred January 1st, 1870, more than four years before this suit was brought.

The defendant accordingly pleaded the statute of limitations, alleging that more than ten years had elapsed since the cause of action arose and before the bringing of the suit.

He pleaded further the facts abovementioned about the coupons and bonds; to wit, that the plaintiff got them by purchase in the market after they had been severed from the bonds; that long before the suit brought the bonds had been satisfied, and that the plaintiff was not owner of them when they were so paid.

To this plea the defendant demurred, assigning for cause 'that the statute had not run for ten years against the covenant in the bonds to pay the interest, and that the payment of the bonds to another person than the holder of the coupons did not bar his remedy on the coupon, his right of action running on the coupons until the remedy thereon was barred by running of the statute against the bond itself.'

A point thus made was—

'Does the statute of limitation commence to run upon the coupons in suit from their own maturity respectively, or does it commence to run upon the coupons only from the maturity of the bonds to which said coupons belonged?'

The judges being opposed in opinion on the question, they certified it to this court for answer.

Mr. James Grant, for the plaintiff:

As we interpret the decisions of this court, the point raised has been decided here in our favor.

In The City of Kenosha v. Lamson, in 9th Wallace, a suit on coupons which, not having been under seal, were barred as a simple contract by the statute, though the bond which was under seal was, as a specialty, not barred, Nelson, J., giving the judgment, says:

'The coupon is not an independent instrument,. . . but is given for interest thereafter to become due upon the bond, which interest is part of the bond and partakes of its nature, and the bond. . . is not barred by lapse of time short of twenty years.'This language may perhaps be capable of two interpretations, but the most reasonable seems to be that which would make it say that all rights belonging to the creditor on the bonds belong to him also on the coupons. If that is its meaning, then as suit on the bond in this case would not be barred till January 1st, 1886, neither will suit on the coupons be. That the meaning which we assume to be the true meaning of this case was subsequently understood in this court to be so, appears by the case of The City of Lexington v. Butler, in 14th Wallace. There Clifford, J., says expressly, and in a way which leaves no doubt as to the conception by that learned justice of the former case, and of his meaning in the one then before the court:

'It is well-settled law that a suit upon a coupon is not barred by the statute of limitations unless the lapse of time is sufficient to bar also a suit upon the bond, as the coupon, if in the usual form, is but a repetition of the contract in respect to the interest, for the period of time therein mentioned which the bond makes upon the subject, being given for the interest thereafter to become due upon the bond, which interest is parcel of the bond, and partakes of its nature, and is not barred by lapse of time except for the same period as would bar a suit, unless it is barred on the bond to which it was attached.'

Mr. L. B. Patterson, contra.

Mr. Justice FIELD delivered the opinion of the court.