SUPREME COURT OF NEVADA.

LIVINGSTON ET AL. v. THE STATE.

Filed September 8, 1884.

PURCHASE OF BONDS FOR SCHOOL FUND-HOW TO BE PAID, HOW DETERMINED.-In determining the amount to be paid by the commissioners for the purchase of territorial bonds for the benefit of the school fund, (under the statute of 1979, 15, section 3,) the method of computation is, to take the bonds at the date of delivery, calculate the interest thereon at nine and one-half per cent. per annum until March 1, 1887, when the bonds would become due; add the interest to the principal; then discount this amount by four and one-half per cent., and the balance is the amount to be paid under the statute. To ascertain the true discount, divide the amount of the principal and interest on the bonds by one dollar plus the product of the rate multiplied by the time in years, the quotient is the sum to be paid by the state for the bonds. Subtract this sum from the amount of the debt and the true discount remains. Subtract the principal sum, without interest, from the quotient and the premium remains.

APPEAL from a judgment of the second judicial district court, Ormsby county, entered in favor of the defendant.. The opinion states the facts.

R. M. Clarke, for the appellants.

The Attorney General and W. E. F. Deal, for the respondent.

HAWLEY, C. J. The act of the legislature providing for the purchase of the territorial bonds for the benefit of the school fund, declares that the commissioners therein named are authorized to purchase the bonds, "if they can purchase the whole issue ($380,000), and not otherwise, if such purchase can be made at such rate of premium as would guarantee to the purchaser four and one-half per cent. per annum interest on the amount paid during the life of the bonds so purchased:" Stats. 1879, 15, sec. 3.

In pursuance of the provisions of this act the commissioners purchased the bonds from appellants. One hundred and sixty thousand dollars were delivered February 1, 1879, and two hundred and twenty thousand dollars were delivered April 1, 1879. At the time of the purchase there was six thousand, three hundred and thirty-threo dollars and thirty-three and one-third cents interest due on the one hundred and sixty thousand dollar bonds, and one thousand, seven hundred and forty-one dollars and sixty-six and two-thirds cents. on the two hundred and twenty thousand dollar bonds. The amount paid for interest to date of purchase was eight thousand and seventyfive dollars. The amount paid for the bonds was four hundred and ninety-one thousand six hundred and twenty-seven dollars and fifteen cents, making the total amount paid to appellants four hundred and ninety-nine thousand seven hundred and two dollars and fifteen cents.

The territorial bonds so purchased were issued on March 1, 1872, and were made payable in fifteen years, with interest thereon at nine and one-half per cent. per annum. Interest coupons were attached to the bonds and were made payable September 1st, and March 1st of each year. The bonds would be due March 1, 1887.

At the time of the delivery of the bonds to the commissioners, appellants claimed that there was an error in the method of computation, in arriving at the amount that should be paid, and this suit was instituted by them for the recovery of the sum of sixteen thousand one hundred and eighty-five dollars and seventeen cents, a balance alleged to be due them on the purchase of the bonds.

Accepting as correct the theory contended for by appellants, that the amount to be paid is to be ascertained by an interpretation of the statute, and waving all the preliminary and technical objections urged by respondent's counsel against the right of applicants to recover in this action, we are called upon to answer the question: "What is the sum which the state, under the terms of the law, is to pay for the bonds ?"

Appellants claim that, inasmuch as the interest on the bonds is payable semi-annually, the state must settle every year with itself, and must pay interest on its bonds every six months; that the owners of the bonds were entitled to have this interest taken into the calculation at the end of each year instead of at the end of the life of the bonds; that the rule of settlement should be to "compute the interest on the principal sum from the time when the interest commenced to the time of the first payment in each case, then settle. Deduct the excess of interest due to Livingston from the sum due to the state. The balance will be a new principal, and so on to the end." The authorites cited in favor of this method of computation have reference, solely, to the rule of computing interest in cases of partial payments on notes, or other evidences of indebtedness, and the rule is stated as follows: "Compute the interest on the principal sum from the time when the interest commenced to the first time when a payment was made, which exceeds, either alone or in conjunction with the preceding payments, if any, the interest at that time due; add that interest to the principal, and from the sum subtract the payment made at that time, together with the preceding payments, if any, and the remainder forms a new principal, on which compute and subtract the interest, as upon the first principal; and proceed in this manner to the time of the judgment:" 2 Parson's Notes and Bills, 425, and authorities there cited.

This rule is one of almost universal application in the class of cases referred to, and is always to be applied in such a manner as to prevent the interest forming a part of the principal so as to carry interest. It cannot, therefore, be invoked in favor of the rule, as claimed by appellants, in a case like this, because if the interest on the bonds in question is to be added to the principal each year, a settlement then made, and a new principal given, it requires no argument to show that such a computation would result in the interest drawing some interest.

Other authorities are cited to the effect that the interest coupons attached to the bonds were negotiable securities, and that the holders thereof might collect interest thereon after they became due, if the same was not paid at maturity. These principles will be ad

mitted as correct, as they have not been questioned, and have no special application to the facts of this case.

No question is raised as to the power of the legislature to pass a law authorizing a computation to be made upon the method claimed by appellants. The question is whether the law, as passed, authorizes such a method of computation.

If the bonds had not been purchased the state would only have been required to pay the holders the amount of the principal and interest thereon at the rate of nine and one-half per cent. per annum for the life of the bonds. Of course the bonds were of greater value to the holders on account of the interest being made payable semi-annually, because the interest when paid could be invested in other securities. A banking house or capitalist engaged in the business of loaning money and discounting debts, due at a future time, would naturally take this fact into consideration in ascertaining the present value of the bonds, and would doubtless give more for the bonds than if the interest was not to be paid until the maturity of the bonds. Appellants might, therefore, have refused to sell the bonds to the state, on the ground that they were of greater value than the sum offered, and if they thought the method of computation invoked by the commissioners and other experts was not just and equitable they ought to have refused to deliver the bonds upon such terms. The law could not, and did not attempt to, compel appellants to sell the bonds. The sale was optional upon their part. They were at liberty, if they saw fit, to sell the bonds for a less amount than they received; but in no event can they recover any greater amount than the statute authorizes to be paid. Upon what method of calculation is this sum to be determined?

Whatever may be the rules of banking houses, or the methods adopted in the United States treasury deparment, as to the computation of interest on bonds, it is evident, to our minds, that the statute in question did not contemplate that the method of computation, as claimed by the appellants, should be adopted in arriving at the amount to be paid by the commissioners for the state.

The statute is clear, plain and unambiguous. The purchase was to be made at such rate of premium as would guarantee to the state four and one-half per cent. per annum interest during the life of the bonds. It is not a question as to the real marketable value of the bonds. The law itself fixes the sum which the commissioners are authorized to pay. It may be that the bonds would have commanded a greater premium in the financial markets than the state was willing to give. But the law is positive and direct in its terms that the purchase is to be made "at such rate of premium as would guarantee to the purchaser four and one-half per cent. per annum interest on the amount paid, during the life of the bonds so purchased."

The question is one of computation, to be determined by the ordinary rules of arithmetic governing the method of ascertaining the true discount on notes and bonds. Take the bonds at date of deliv-

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ery, calculate the interest thereon at nine and one-half per cent. per annum until March 1, 1887, (when the bonds would become due). Add the interest to the principal; then discount this amount by four and one-half per cent. per annum for the same time, and we will have the sum that is to be paid under the provisions of the statute. By this method the state realizes four and one-half per cent. per annum interest on the amount paid, during the life of the bonds, which the statute says must be guaranteed to it.

To ascertain the true discount, divide the amount of the debt (principal and interest on the bonds) by $1 plus the product of the rate multiplied by the time in years, the quotient will be the sum that the State will pay for the bonds. Subtract this sum from the amount of the debt, and you have the true discount. Subtract the principal sum (without interest) from the quotient, and you have the premium.

Under this method, what is the result?

One hundred and sixty thousand dollars, purchased February 1, 1879, with interest at nine and one-half per cent. per annum, until March 1, 1887 (eight years and one month), amounts to $282,866.66 6663-1000. The interest on one dollar at four and one-half per cent. per annum for eight years and one month would be $0.36 375 100. Plus $1, under the rule above stated, makes $1.36 375-1000. Divide $282,866.66 6663-1000 by $1.36 375-1000, and we have the sum of $207,418.27 069-1000. This subtracted from the amount of the principal sum and interest leaves $75,448.39 596-1000 as the discount, which is equal to the interest on the sum of $207,418.27 069-1000 at four and one-half per cent. per annum for eight years and one month. The premium to be paid is $47,418.27 069-1000.

Two hundred and twenty thousand dollars, delivered April 1, 1879, with interest at nine and one-half per cent. per annum, until March 1, 1887 (seven years and eleven months), amounts to $385,458.33 3333-1000. The interest on $1 at four and one-half per cent. per annum for seven years and eleven months would be $0.35 6251000; plus $1 makes $1.35 625-1000. Divide $385,458.33 3331-1000 by $1.35 625 1000, and we have the quotient $284,208.90 937-1000 as the sum which the state is to pay for the bonds. This subtracted from the principal amount, with interest, leaves $101,249 42 3961000 as discount, which is equal to the interest on the sum paid for the purchase at the rate of four and one-half per cent. per annum during the life of the bonds. The premium to be paid is $64,208.90 937-1000.

This was the method adopted by the commissioners in making the computation, and, in our opinion, it is the only method of computation that is warranted by the statute.

The judgment of the district court is affirmed.

RICKARDS v. HUTCHINSON.

Filed September 16, 1884.

STATUTES OF LIMITATIONS-TIME LIMITED FOR SUING ON DEATH OF PARTY.-A person in whose favor a cause of action has accrued, has the same length of time to bring suit thereon, notwithstanding the death of the party against whom such cause of action has accrued, as he would have had had such latter person lived. Section 23 of the act defining the time of commencing civil actions, does not limit the time in which an action can be brought to one year from the death of such party, in all instances. The object of such action is to prolong, not to curtail, the period for suing, given in other sections of such act.

APPEAL from a judgment of the seventh judicial district court, Washoe county, entered in favor of plaintiff. The opinion states the facts. The opinion on the first hearing is reported in 1 West Coast Reporter, 659.

Thomas E. Haydon, for the appellant.

Roger Johnson, for the respondent.

HAWLEY, C. J. A rehearing was granted in this case for the purpose of considering the question whether section 23 of the act defining the time of commencing civil actions (1 Comp. L., 1,038) is applicable to this case, and whether, under its provisions, this action was barred by the statute of limitations, it not having been commenced within one year after the issuing of letters testamentary on the estate of Mrs. Wheat.

Appellant claims that when a cause of action has matured, and the statute of limitations has commenced to run before the death of the party against whom such cause of action accrued, no suit can be maintained unless brought within one year from the death of the party; that the presence of the executor, or administrator, in, or his absence from, the state makes no difference with reference to the running of the statute.

We do not think this position is sustained by the authorities cited in its support.

We are of opinion that the plaintiff was entitled to have person in esse within this state, against whom she could bring suit, for the full period of time prescribed in section 16 (1 Comp. L., 1,031), and that the object of section 23 was to extend the time, in certain cases, within which the actions might be commenced, and was not intended -and should not be so construed-to limit the time given by other sections of the act.

If Mrs. Wheat had lived and been absent from the state for the same length of time as the administratrix was, the suit would have been commenced in time. Is the plaintiff not entitled to bring her suit within the time it could have been commenced, under similar conditions, if Mrs. Wheat had lived?

In California there is a provision in the code identical with section 23 of our statute. In Smith v. Hall, the supreme court of that state said: "That the object of the section was not to curtail, but to prolong the period for suing in the given category:" 19 Cal., 86.

In Lowell v. Kier, the action was brought within the period limited for the commencement against the deceased party, had he lived.