Opinion
April 20, 1951.
Appeal from the Circuit Court for Bay County, E. Clay Lewis, J.
Isler Welch, Panama City, for appellant.
R.J. Pleus and Joseph P. Lea, Jr., Orlando, for appellee.
The appellee filed suit in the court below to recover on certain coupons representing interest on negotiable bonds of the City of Panama City. The City pleaded, inter alia, the statute of limitations and failure to present the coupons for payment at maturity, to which pleas the appellee demurred. It was agreed by counsel of the respective parties that the trial court should make a ruling on the demurrer to the pleas, and enter final judgment, on the basis of the following stipulated facts: "It is hereby agreed and stipulated by and between counsel for plaintiff and counsel for defendant, as follows: That the coupons sued upon in this action were detached from negotiable bonds of the City of Panama City; that after the coupons were detached, the bonds from which they were detached were either paid or refunded by the issuance of new refunding bonds; that the plaintiff came into possession of said coupons after their maturity; that the coupons were not presented for payment at the time or at the places therein specified, but that the City had no money with the paying agent for the payment of said coupons at the time or at the places therein specified for said payment; that said coupons were presented to the City for payment at par in July, 1947, and payment was refused by the City; that since the maturity of said coupons, the City has posted no money with the paying agent for the purpose of paying said coupons."
The trial court, after hearing the argument of counsel, ruled that the five-year statute of limitations did not apply to the coupons, and that the appellee was entitled to recover interest on the coupons from the date of their maturity. He thereupon entered judgment in appellee's favor, from which the City has appealed.
The appellant's first question is stated as follows: "Are the interest coupons of a municipality, which are not under seal and which have been detached from the bonds which were under seal, barred by the statute of limitations if suit thereon is instituted more than five years after their respective due dates?"
The rule is well settled in federal courts, as well as in practically all state courts, that the statute of limitations applicable to the bonds from which the coupons were detached is likewise applicable to the coupons. City of Kenosha v. Lamson, 9 Wall. 477, 19 L.Ed. 725; Kershaw v. Hancock, C.C., 10 F. 541; Clark v. Iowa City, 20 Wall. 583, 22 L.Ed. 427; McDowell v. North Side Bridge Co., 251 Pa. 585, 97 A. 97; Girard Trust Co. v. Pennsylvania Co. for Ins., etc., 356 Pa. 113, 51 A.2d 623; Broadfoot v. Fayetteville, 124 N.C. 478, 32 S.E. 804; Bailey v. Buchanan County, 115 N.Y. 297, 301, 22 N.E. 155, 6 L.R.A. 562. The reason for this rule is stated by Jones, in his work on Bonds and Bond Securities, 4th Ed., Section 750, as follows: "They [the coupons] are but repetitions, as respects interest payable at stated times, of the contract which the bond itself makes on that subject, and are a device for the convenience of the holder in the way of collecting the interest. They do not change the nature of the security given by the bond for the interest. There is really but one contract for the payment of interest, and that is contained in the bond. When the coupons are cut off, they still partake of the security of the bond. The bonds are specialties, and so are the coupons, and the same statute of limitations applies to both."
The fact that there is a right of action on the detached coupons themselves, without the bonds, is given effect insofar as the time at which the statute begins to run is concerned — that is, from the date of the maturity of such detached coupons, rather than from the date of the maturity of the bond — but does not alter the fact that the bond itself is still the fundamental contract for the payment of the interest represented by the coupons, and the securing of such payment.
We hold, therefore, that the trial court did not err in holding that the five-year statute of limitations was not applicable to the interest coupons.
We are also asked to decide whether or not a demand is necessary to start the running of interest on the matured coupons. (No issue is made as to the recoverability of such interest, since it is settled in this state, in accordance with the great weight of authority, that interest is recoverable upon coupons after their maturity notwithstanding the absence of a provision therefor in the bonds or coupons. Jefferson County v. Hawkins, Trustee, etc., 23 Fla. 223, 2 So. 362; Jones, on Bonds and Bond Securities, 4th Ed., Section 735.)
While this question has not heretofore been decided by this court, it has been held by a majority of the courts of other jurisdictions where this question has been presented, that interest runs from the date of maturity of a negotiable interest coupon, even though no demand for payment be made, unless the obligor is able to show ability and continued readiness and willingness to pay the sums due under the coupon at and after the date of its maturity. North Pennsylvania R. Co. v. Adams, 54 Pa. 94, 93 Am.Dec. 677; Hamilton v. Wheeling Pub. Serv. Co., 88 W. Va. 573, 107 S.E. 401, 21 A.L.R. 433; Walnut v. Wade, 103 U.S. 683, 26 L.Ed. 526; Huey v. Macon County, C.C., 35 F. 481; Board of Com'rs of Ouray County v. Geer, 8 Cir., 108 F. 478.
It was stipulated, in the instant case, that the City had not posted any money with the paying agent for the purpose of paying the coupons, either at their maturity or thereafter, and that, when demand was made in 1947, payment was refused. In the absence of any showing that the City was "ready and willing" to pay the coupons at maturity, and in accordance with the rule above stated, we must affirm the holding of the trial court that the appellee was entitled to interest on the coupons from the dates of maturity thereof.
No error having been shown, the judgment appealed from should be and it is hereby affirmed.
SEBRING, C.J., and CHAPMAN and ADAMS, JJ., concur.