1. The statute of limitations of Wisconsin applies to the
coupons of a municipal bond, whether they be detached from it or
not, and begins to run from the time they respectively mature.
2. The legislature has the constitutional power to provide that
existing causes of action shall be barred unless, within a shorter
period than that prescribed when they arose, suits to enforce them
be brought if a reasonable time is given by the new law before the
bar takes effect.
3. The right to interest upon interest, whether arising upon an
express or an implied agreement, if allowed by the statutes then in
force, cannot be impaired by subsequent legislation declaring their
true intent and meaning. Such legislation can only be applied to
future transactions.
Page 104 U. S. 669
The facts are stated in the opinion of the Court.
MR. JUSTICE HARLAN delivered the opinion of the Court.
The object of this action, which was commenced on the twelfth
day of May, 1880, is to recover the amount due on bonds, with
interest coupons attached, issued on the first day of January,
1857, by the Town of Koshkonong, a municipal corporation of
Wisconsin, pursuant to authority conferred by an act of the
legislature of that state. They were made payable to the Chicago,
St. Paul, and Fond du Lac Railroad Company, or its assigns, on the
first day of January, 1877, at the American Exchange Bank, in the
City of New York, with interest at the rate of eight percent per
annum, payable semiannually, on the presentation of the interest
warrants at that bank on the first day of each July and January,
until the principal sum should be paid. Of the bonds in suit, with
their respective coupons, Burton became the owner by written
assignment from the railroad company, endorsed upon the bonds,
under date of Nov. 16, 1857. None of the coupons has ever been
detached from the bonds nor paid except those maturing July 1,
1857, and Jan. 1, 1858.
The coupons are all alike except as to dates of a maturity. They
are complete instruments, capable of sustaining separate actions
without reference to the maturity or ownership of the bonds.
Commissioners of Knox County
v. Aspinwall et al., 21 How. 539;
Clark v.
Iowa City, 20 Wall. 583;
Amy v. Dubuque,
98 U. S. 470. The
following is a copy of the one last due:
"The Town of Koshkonong will pay to the holder hereof, on the
first day of January, 1877, at the American Exchange Bank, in the
City of New York, forty dollars, being for half-yearly interest on
the bond of said town No. 22, due on that day. S. R. Crosby,
Clerk."
The main question is whether the action, as to coupons maturing
more than six years prior to its commencement, is not barred by the
statutes of limitation of Wisconsin. The court
Page 104 U. S. 670
below being of opinion that no part of plaintiff's demands was
barred, gave judgment for the principal of the bonds, with interest
from the first day of January, 1877, at the stipulated rate of
eight percent per annum until paid, and also for the amount of each
coupon in suit, with interest from its maturity at the rate of
seven percent per annum, the latter being the rate established by
the local law in the absence of a special agreement by the
parties.
The present writ of error questions the correctness of that
judgment as well because it overrules the defense of limitation to
coupons maturing more than six years before the commencement of
this action as because it allows interest upon the amount of each
coupon from its maturity.
The statutes of Wisconsin in force when the bonds and coupons
were issued provided that "all actions of debt founded upon any
contract or liability, not under seal" (except such as are brought
upon the judgment or decree of some court of record of the United
states, or of a state or Territory of the United states) shall be
commenced within six years after the cause of action accrued and
not afterwards, and that all personal actions on any contract not
otherwise limited by the laws of the state shall be brought within
twenty years after the accruing of the cause of action.
Rev.Stat.Wis. 1849, secs. 14-22, pp. 644, 645.
We remark that the foregoing provisions, without substantial
change of language, were taken from the statutes of the Territory
of Wisconsin adopted in 1839. Further, that the revision of 1849
did not in terms prescribe any limitation to actions upon sealed
instruments. They were therefore embraced by the limitation of
twenty years as to personal actions on contracts not covered by
other provisions.
The revision of 1849 was superseded by one made in 1858, which
went into operation on the first day of January, 1859. By the
latter, as modified by an act passed in 1861, civil actions, other
than for the recovery of real property, were required to be
commenced within the following periods: actions upon judgments or
decrees of courts of record of the state, and actions upon sealed
instruments when the cause of action accrued in the state, within
twenty years, Rev.Stat.Wis. 1858,
Page 104 U. S. 671
c. 138, sec. 15; actions upon the judgments or decrees of courts
of record of any state or territory of the United states or of
courts of the United states, and actions upon sealed instruments,
when the cause of action accrued out of the state, within ten years
(sec. 16), and actions upon contracts, obligations, or liabilities,
express or implied, excepting those mentioned in secs. 15 and 16,
within six years, the time to be computed in each case from the
date where the cause of action accrued. Gen.Laws Wis. 1861, p. 302.
The revision of 1858 also contained the general clause that,
"In any case where a limitation or period of law prescribed in
any of the acts hereby repealed [which included the revision of
1849] for the acquiring of any right or barring of any remedy or
for any other purpose shall have begun to run, and the same or any
similar limitation is prescribed in the Revised Statutes, the time
of limitation shall continue to run, and shall have the like
effect, as if the whole period had begun and ended under the
operation of the Revised Statutes."
Id., c. 191, sec. 13, p. 1038.
Thus stood the law of the state until the ninth day of March,
1872 -- a little over fifteen years after these bonds and coupons
were issued -- when an act was passed entitled "An Act to limit the
time for the commencement of action against towns, counties,
cities, and villages on demands payable to bearer." It provided
that
"No action brought to recover any sum of money on any
bond,
coupon, interest warrant, agreement, or promise in writing
made or issued by any
town, county, city, or
village, or
upon any installment of the principal
or
interest thereof shall be maintained in any court
unless such action shall be commenced within six years from the
time when such sum of money has or shall become due when the same
has been or shall be made payable to bearer or to some person or
bearer or to the order of some person, or to some person or his
order,
provided that any such action may be brought within
one year after this act shall take effect; provided
further that this act shall in no case be construed to extend
the time within which an action may be brought under the laws
heretofore existing."
Gen.Laws Wis. 1872, p. 56.
Our attention has also been called to certain sections in the
revision of the statutes of Wisconsin of 1878 which went into
Page 104 U. S. 672
operation on the first day of November of that year, superseding
that of 1858, as well as the act of 1872. Those sections contain,
in substance, the clauses first quoted from the revision of 1858,
with the modifications made by the act of 1872. Rev.Stat.Wis. 1878,
pp. 1015, 1016. It is to be observed in this connection -- for it
has some bearing upon what we shall presently say -- that sec. 4220
of the revision of 1878, in terms, prescribed twenty years as the
limitation for "an action upon a
sealed instrument when
the cause of action accrues within this state, except those
mentioned in sec. 4222," while the latter section embraces, among
others,
"an action upon any bond, coupon, interest warrant or other
contract for the payment of money, whether sealed or otherwise,
made or issued by any town, county, city, village, or school
district in this state"
-- thus indicating that the framers of the revision of 1878
regarded municipal securities for the payment of money as belonging
to the class of sealed instruments. We observe also that the
revision of 1878 contains a provision in reference to those cases
in which limitation had commenced to run similar to that already
quoted from the revision of 1858. Rev Stat. 1878, sec. 4984;
Rev.Stat. 1858, p. 1038.
From the foregoing summary it will be seen that, by the local
law, when the bonds in suit were issued, all civil actions for debt
founded on contract or liability not under seal (except actions
upon judgments or decrees of some court of record of the United
states or of a state or territory) could be brought within six
years after the cause of action accrued and not afterwards, while
such actions, if founded on contract or liability under seal would
not be barred until twenty years after the cause of action accrued.
If, as contended by plaintiff, the question of limitation is to be
determined exclusively by the revision of 1849, in force when the
bonds were issued, and if, as is further insisted, an action on
municipal bonds and coupons such as are here in suit is, within the
meaning of that revision, "founded on contract or liability not
under seal," it is clear that, without reference to the statute of
1872, this action is barred as to all coupons maturing more than
six years before its commencement, whether such coupons were
separated or not from the bonds to which they were originally
attached.
Page 104 U. S. 673
This upon the authority of
Amy v. Dubuque, 98 U. S.
470, with the doctrines of which we are entirely
satisfied. We there said, construing the statutes of Iowa upon the
subject of limitation, that suits upon unpaid coupons such as those
in suit might be maintained in advance of the maturity of the
principal debt; that
"upon the nonpayment at maturity of each coupon, the holder had
a complete cause of action. In other words, he might have
instituted his action to recover the amount thereof at their
respective maturities. From that date, therefore, the statute
commenced to run against them. . . . Upon principle, his failure or
neglect to detach the coupon and present it for payment at the time
when, by contract, he was entitled to demand payment could not
prevent the statute from running."
But we are inclined to the opinion -- although uninformed upon
the subject by any direct decision of the supreme court of the
state to which our attention has been called -- that municipal
bonds and coupons were regarded by the framers both of the revision
of 1849 and that of 1858 as, alike, sealed instruments to which the
limitation of twenty years was applicable. The word "bond," at
common law (and even now as a general rule), imports a sealed
instrument. And although, under some circumstances, a municipal
corporation issuing and delivering bonds and coupons in aid of
railroad enterprises may be liable thereon notwithstanding they are
unattested by its corporate seal, we are satisfied that the
Legislature of Wisconsin intended, by the revision of 1849 as well
as that of 1858, to prescribe the same limitation for actions upon
such obligations as was in terms prescribed for actions upon what,
technically or in common legal parlance, are denominated sealed
instruments.
If this interpretation of the revision of 1849 and 1858 be
correct, it would follow that this action was not, at the passage
of the act of 1872, barred by limitation as to any of the coupons
in suit. Twenty years had not then expired from the maturity of any
of them.
It remains now to inquire as to the effect of the act of 1872
upon municipal obligations executed and outstanding at the date of
its passage. Of the object of that statute there cannot,
Page 104 U. S. 674
it seems to us, be any reasonable doubt. The specific reference
to coupons and interest warrants made or issued by towns, counties,
cities, and villages, without distinguishing such as are sealed
from those unsealed, and the express requirement as to the time
within which actions thereon must be brought or be barred, indicate
a purpose upon the part of the legislature to reverse the policy
which had been pursued by holders of such securities of postponing
the collection of interest coupons until after the bonds to which
they were annexed had matured -- a delay which had the effect in
some instances of compelling municipal corporations to meet all at
once a large indebtedness which the legislature intended, at least
as to the interest accruing thereon, should be provided for in
installments or through a series of years. Whatever considerations,
however, may have suggested that legislation, it is clear that its
object was such as we have indicated.
We are here met with the argument that the act of 1872 neither
in terms nor by necessary implication applies to any municipal
obligations except those "payable to bearer, or to some person or
bearer, or to the order of some person, or to some person or his
order," whereas the bonds in suit are payable to the railroad
company
or its assigns, and the coupons are payable to the
holder thereof. Waiving any expression of opinion as to
whether the phrases "payable . . . to the order of some person," or
"payable . . . to some person or his order" do not, upon a
reasonable construction of the act, embrace the case of a bond
payable to a railroad company or its assigns -- a question which
need not be determined, since it is conceded that the action, as to
the principal of the bonds, is not in any view of the case barred
by limitation -- we are of opinion that a coupon payable to the
holder thereof is, within the meaning of the act and according to
the usages of the commercial world, payable to bearer. Consequently
the suit, as it respects interest coupons, is embraced by the terms
of the act of 1872.
But the further contention of plaintiff's counsel is that the
act of 1872 is unconstitutional as impairing the obligation of the
contract between the town and the holders of its securities. This
objection is founded upon the proviso which declares
Page 104 U. S. 675
that "any such action [of the class specified in the act] may be
brought [only] within one year" after the act takes effect. While
that proviso is very obscurely worded, its meaning is that no
action to recover money due upon a municipal bond, coupon, interest
warrant, or written agreement or promise or upon any installment of
the principal or interest thereof, whether such obligations were
issued before or after the passage of the act, should be maintained
unless brought within six years not from the passage of the act,
but from the time the money sued for became due, except -- and no
other exception is made -- that when the six years from the
maturity of any past-due bond or coupon would expire within less
than a year after the act passed, the action should not be barred
if brought within that year. It was undoubtedly within the
constitutional power of the legislature to require, as to existing
causes of action, that suits for their enforcement should be barred
unless brought within a period less than that prescribed at the
time the contract was made or the liability incurred from which the
cause of action arose. The exertion of this power is, of course,
subject to the fundamental condition that a reasonable time, taking
all the circumstances into consideration, be given by the new law
for the commencement of an action before the bar takes effect.
Terry v. Anderson, 95 U. S. 628;
Hawkins v. Barney's
Lessee, 5 Pet. 457;
Jackson v.
Lamphire, 3 Pet. 280;
Sohn v.
Waterson, 17 Wall. 596;
Christmas
v. Russell, 5 Wall. 290;
Sturges v.
Crowninshield, 4 Wheat. 122;
Osborn v.
Jaines, 17 Wis. 573;
Parker v. Kane, 4
id.
1;
Falkner v. Donman, 7
id. 388. Whether the
first proviso in the act of 1872, as to some causes of action,
especially in its application to citizens of other states holding
negotiable municipal securities, is or not in violation of that
condition is a question of too much practical importance and
delicacy to justify us in considering it unless its determination
be essential to the disposition of the case in hand. And we think
it is not. For if the proviso, in its application to some cases, is
obnoxious to the objection that it does not allow sufficient time
within which to sue before the bar takes effect, and is therefore
unconstitutional as impairing the obligation of the contract
between the town and its existing creditors, it
Page 104 U. S. 676
does not follow that the entire act would fall and become
inoperative. The result in such case would be that the plaintiffs
and other holders of the coupons would have not simply one year,
but -- under the construction we have given to the statutes in
force prior to the act of 1872 -- to a reasonable time after its
passage within which to sue. And if a proper construction of that
act would give the full period of six years after its passage
within which to sue upon coupons maturing before its passage, the
judgment below cannot be sustained. For this action was not
instituted until more than eight years after the passage of the act
of 1872. It is consequently barred by limitation as to all coupons
falling due (and therefore collectible by suit without reference to
the maturity of the bonds) more than six years prior to its
commencement. The bar was complete more than six years before the
revision of 1878 took effect, even if that revision should be
deemed to have any application to this action. There is no escape
from this conclusion unless we should hold that the legislature
could not constitutionally reduce limitation from twenty to six
years as to existing causes of action. But neither upon principle
nor authority could that position be sustained.
The question next to be considered relates to that portion of
the judgment allowing interest upon the amount of each coupon from
its maturity.
The general proposition suggested by this question seems to have
been determined, in 1865, in
Mills v. Town of Jefferson,
20 Wis. 50. That was a suit upon interest coupons attached to bonds
issued by a municipal corporation to a railroad company under the
authority of an act passed in the year 1857. The coupons were
similar to those here in suit. While recognizing the fact that many
courts of high authority had disallowed interest upon interest, the
Supreme Court of Wisconsin expressed its approval of those cases in
which it was adjudged that an express agreement in a note or bond
to pay interest at a specified time, as annually or semiannually,
entitled the holder to interest upon interest from the time it
became due. "For," said the court,
"when a person agrees to pay interest at a specified time and
fails to keep his undertaking,
Page 104 U. S. 677
why should he not be compelled to pay interest upon interest
from the time he should have made the payment? If he undertakes to
pay in a sum at a given time to the owner and makes default, the
law allows interest on the sum wrongfully withheld from the time he
should have made such payment."
To the same effect is
Pruyn v. The City of Milwaukee,
18 Wis. 367, where, without question, so far as we can gather from
the report of the case, interest upon interest was given upon the
amount of coupons from their respective maturities. We remark in
this connection that among the authorities cited by the state court
in
Mills v. Town of Jefferson in support of its conclusion
is
Gelpcke v. City of
Dubuque, 1 Wall. 175, where it was said (the suit
being upon coupons of municipal bonds) that, "if the plaintiffs
recover in this case, they will be entitled to the amount specified
in the coupons, with interest and exchange as claimed." In harmony
with this view are
Aurora City v.
West, 7 Wall. 82,
Town of Genoa v.
Woodruff, 92 U. S. 502,
Amy v. Dubuque, 98 U. S. 470, and
Walnut v. Wade, 103 U. S. 683.
Another question arises upon this branch of the case. The law of
Wisconsin, as declared in
Mills v. Town of Jefferson,
remained, without attempt to change it, until March 3, 1868, when
an act was passed entitled "An Act to construe sections one and two
of chapter 160 of the General Laws of 1859, and to amend section 2
of said chapter." Its first and second sections are as follows:
"1. It was and is the true intent and meaning of sections one
and two of chap. 160 of the General Laws passed in the year 1859,
and of all other laws heretofore enacted in the state prescribing
and limiting the rate of interest, that interest should not be
compounded or bear interest upon interest unless an agreement to
that effect was clearly expressed in writing and signed by the
party to be charged therewith."
"2. Section 2 of chap. 160 of the General Laws of 1859 is hereby
amended by adding thereto the following:"
" And in the computation of interest upon any bond, note, or
other instrument or agreement, interest shall not be compounded,
nor shall the interest thereon be construed to bear interest."
Gen.Laws Wis. 1868, pp. 62, 63.
Page 104 U. S. 678
In the Revised Statutes of 1878, the following provision
appears:
"SEC. 1689. . . . And in the computation of interest upon any
bond, note, or other instrument or agreement, interest shall not be
compounded, nor shall interest thereon be construed to bear
interest, unless an agreement to that effect is clearly expressed
in writing, and signed by the party to be charge therewith."
It is contended that the foregoing enactments govern the present
case and preclude recovery of interest upon the amount of the
respective coupons from their maturities. In this view we do not
concur. By the first section of the act of 1868, the legislature
assumed to declare what was the true intent and meaning of previous
legislation prescribing and limiting the rate of interest. It was
said by Chancellor Walworth in
Salters v. Tobias, 3 Paige
(N.Y.) 338, 344, that
"In England, where there is no constitutional limit to the
powers of Parliament, a declaratory law forms a new rule of
decision and is valid and binding upon the courts not only as to
cases which may subsequently occur, but also as to preexisting and
vested rights. But even then, the courts will not give it a
retrospective operation so as to deprive a party of a vested right
unless the language of the law is so plain and explicit as to
render it impossible to put any other construction upon it. In this
country, where the legislative power is limited by written
constitutions, declaratory laws, so far as they operate upon vested
rights, can have no legal effect in depriving an individual of his
rights or to change the rule of construction as to a preexisting
law. Courts will treat such laws with all the respect that is due
to them as an expression of the opinion of the individual members
of the legislature as to what the rule of law previously was. But
beyond that, they can have no binding effect, and if the judge is
satisfied the legislative construction is wrong, he is bound to
disregard it."
When counsel, in
Ogden v.
Blackledge, 2 Cranch 272,
6 U. S. 277,
announced that to declare what the law is or has been is a judicial
power, to declare what the law shall be is legislative, and that
one of the fundamental principles of all our governments is that
the legislative power shall be separate from
Page 104 U. S. 679
the judicial, this Court interrupted them with the observation
that it was unnecessary to argue that point. Prior to the passage
of the act of 1868, the highest judicial tribunal of the state had
adjudged that when a sum was to be paid at a specified time as
interest, that sum bore interest from that time until paid. This
was an adjudication as to what was the local law in that class of
cases. And the utmost effect to be given to a subsequent
legislative declaration as to what was the proper meaning of the
statutes which had thus been the subject of judicial construction
would be to regard it as an alteration of the existing law in its
application to future transactions, especially where, as was the
case in the act of 1868, that declaration was accompanied by a
distinct provision in terms changing the preexisting law. In
Stockdale v. Insurance
Company, 20 Wall. 331, this Court, speaking by MR.
JUSTICE MILLER, said, that
"Both on principle and authority, it may be taken to be true
that a legislative body may by statute declare the construction of
previous statutes so as to bind the courts in reference to all
transactions occurring after the passage of the law, and may in
many cases thus furnish the rule to govern the courts in
transactions that are past, provided no constitutional right of the
party concerned is violated."
Sedgwick, Contr.Stat. and Const. Law (2d ed.), pp. 214, 227;
Cooley, Const.Lim. 93-94. It is clear, therefore, that neither the
act of 1868 nor the provision quoted from the revision of 1878,
which is but a continuation of the second section of the act of
1868, can be deemed applicable to the case before us. The contract
between the town and the holders of its securities was entered into
prior to those enactments, and the rights of the parties must
necessarily be determined by the law as it was when the contract
was made. It was not within the constitutional power of the
legislature to take from the plaintiff his right, whether arising
on express or implied contract, to interest upon interest, if, when
the coupons were executed and delivered, he, or the then holder
thereof, had such right, under the law of the state.
Without pursuing the case further, it is sufficient to say that
we do not concur with such of the views of the learned district
judge as are inconsistent with those here announced. The
Page 104 U. S. 680
judgment must be reversed, with directions to enter judgment in
behalf of plaintiff for the amount of the bonds, with interest at
the stipulated rate, from their maturity until paid,
Spencer v.
Maxfield, 16 Wis. 185;
Pruyn v. City of Milwaukee,
supra, and also for the respective amounts of those coupons
only which fell due within six years preceding the commencement of
this action, with interest thereon at the rate established by the
law of the state, and it is
So ordered.
MR. JUSTICE GRAY did not sit in this case.