Edwards v. Bates County/Opinion of the Court

by Edward Douglass White

United States Supreme Court

163 U.S. 269

Edwards  v.  Bates County

We are solely concerned in this case in determining whether or not the circuit court possessed jurisdiction over the claim asserted in the petition. Act March 3, 1891, c. 517, § 5.

From the facts heretofore detailed the following questions arise:

First. Should the circuit court have taken into consideration, for the purpose of ascertaining the adequacy of the jurisdictional amount, the claim of plaintiff upon the interest coupons attached to the two $1,000 bonds?

Second. Did the court rightly hold that the amount of the claim upon the funding bonds was not an item 'in dispute' between the parties, and therefore not proper to be taken into account in determining whether the court possessed jurisdiction?

As to the first point. By the act of congress of March 3, 1887, as amended August 13, 1888 (25 Stat. 434), original jurisdiction was conferred upon circuit courts of the United States, 'concurrent with the courts of the several states, of all suits of a civil nature at common law or in equity, * * * in which there shall be a controversy between citizens of different states in which the matter in dispute exceeds, exclusive of interest and costs, the sum or value of two thousand dollars.'

It is contended that an indebtedness for the face amount of coupons is an indebtedness for 'interest' within the meaning of the statute.

The nature of a coupon was thus defined in Aurora v. West, 7 Wall. 82, where this court said (page 105):

'Coupons are written contracts for the payment of a definite sum of money on a given day, and, being drawn and executed in a form and mode for the very purpose that they may be separated from the bonds, it is held that they are negotiable, and that a suit may be maintained on them without the necessity of producing the bonds to which they were attached.' Each matured coupon upon a negotiable bond is a separable promise, distinct from the promises to pay the bond or other coupons, and gives rise to a separate cause of action. Nesbit v. Independent Dist., 144 U.S. 610, 12 Sup. Ct. 746. In that case this court said (page 619, 144 U.S., and page 746, 12 Sup. ct.):

'Each matured coupon is a separable promise, and gives rise to a separate cause of action. It may be detached from the bond, and sold by itself. Indeed, the title to several matured coupons of the same bond may be in as many different perso s, and upon each a distinct and separate action be maintained. So, while the promises of the bond and of the coupons in the first instance are upon the same paper, and the coupons are for interest due upon the bond, yet the promise to pay the coupon is as distinct from that to pay the bond as though the two promises were placed in different instruments upon different paper.'

Not only may a suit be maintained upon an unpaid coupon, in advance of the maturity of the principal debt, but the holder of a coupon is entitled to recover interest thereon from its maturity. Amy v. Dubuque, 98 U.S. 470, 473. The logical effect of these rulings is that when the interest evidenced by a coupon has become due and payable the demand based upon the promise contained in such coupon is no longer a mere incident of the principal indebtedness represented by the bond, but becomes really a principal obligation. Clearly, such would be the nature of the claim of one who, as owner of the coupons, and not of the bonds, brought his action to enforce payment of the indebtedness evidenced by the coupons. So, also, before maturity of the bonds, their holder could still have sued upon the matured coupons as an independent indebtedness, and not as a mere accessory to a demand for a recovery of the face of the bonds. No good reason, therefore exists for creating a distinction between such cases and the case at bar, in which there is coupled with the demand to recover upon the coupons a demand for judgment upon the bonds. The confusion of thought to which we alluded in the case of Brown v. Webster, 156 U.S. 328, 15 Sup. Ct. 377, is also involved in the decision below; that is, the failure to distinguish between a principal and accessory demand. The claim made by the plaintiff on the coupons was in no just sense accessory to any other demand, but was in itself principal and primary. In ascertaining, therefore, the jurisdictional sum in dispute, the sum of the coupons should have been treated as an independent, principal demand, and not as interest; and in holding otherwise the lower court erred to the prejudice of the plaintiff in error.

As the face of the bonds amounted to the sum of $2,000, the addition of the demand based upon the coupons brought the sum in dispute within the jurisdiction of the circuit court. It is therefore unnecessary to consider whether the controversy as to the funding bonds did not involve a real matter 'in dispute' between the parties.

The judgment is reversed, and the cause is remanded, with directions to set aside the order dismissing the action for want of jurisdiction, and for further proceedings in conformity to law.

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