Clark v. Iowa City - 87 U.S. 583 (1874)
U.S. Supreme Court
Clark v. Iowa City, 87 U.S. 20 Wall. 583 583 (1874)
Clark v. Iowa City
87 U.S. (20 Wall.) 583
1. The statute of limitations of Iowa, which bars actions upon all written contracts within ten years after the cause of action thereon has accrued, commences to run against actions upon coupons for interest annexed to municipal bonds in that state, when they have been detached from the bonds and transferred to parties other than the holders of the bonds, from the maturity of the coupons respectively.
3. Coupons for interest when severed from the bonds to which they were annexed originally are negotiable and pass by delivery. They then cease to be incidents of the bonds, and become independent claims, and do not lose their validity if for any cause the bonds are cancelled or paid before maturity.
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 percent, 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 installments 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 [Footnote 1] and City of Lexington v. Butler, [Footnote 2] 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 1, 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 1, 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 above-mentioned 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.