1859
To the Governor, Auditor, and Treasurer of the State of Illinois.
 

GENTLEMEN:

In reply to your inquiry; requesting our written opinion as to what your duty requires you to do in executing the latter clause of the Seventh Section of "An Act in relation to the payment of the principal and interest of the State debt," approved Feb'y 22, 1859, we reply that said last clause of said section is certainly indefinite, general, and ambiguous in its description of the bonds to be issued by you; giving no time at which the bonds are to be made payable, no place at which either principal or interest are to be paid, and no rate of interest which the bonds are to bear; nor any other description except that they are to be coupon bonds, which in commercial usage means interest-paying bonds with obligations or orders attached to them for the payment of annual or semiannual interest; there is we suppose no difficulty in ascertaining, if this act stood alone, what ought to be the construction of the terms "coupon bonds" and that it, would mean bonds bearing interest from the time of issuing the same. And under this act considered by itself the creditors would have a right to require such bonds. But your inquiry in regard to a class of bonds on which no interest is to be paid or shall begin to run until January 1, 1860, is whether the Act of February 18, 1857, would not authorize you to refuse to give bonds with any coupons attached payable before the first day of July, 1860. We have very maturely considered this question and have arrived at the conclusion that you have a right to use such measures as will secure the State against the loss of six months' interest on these bonds by the indefiniteness of the Act of 1859. While it cannot be denied that the letter of the laws favor the construction claimed by some of the creditors that interest-bearing bonds were required to be issued to them, inasmuch as the restriction that no interest is to run on said bonds until 1st January, 1860, relates solely to the bonds issued under the Act of 1857. And the Act of 1859 directing you to issue new bonds does not contain this restriction, but directs you to issue coupon bonds. Nevertheless the very indefiniteness and generality of the Act of 1859, giving no rate of interest, no time due, no place of payment, no postponement of the time when interest commences, necessarily implies that the Legislature intended to invest you with a discretion to impose such terms and restrictions as would protect the interest of the State; and we think you have a right and that it is your duty to see that the State Bonds are so issued that the State shall not lose six months' interest. Two plans present themselves either of which will secure the State. 1st. If in literal compliance with the law you issue bonds bearing interest from 1st July, 1859, you may deduct from the bonds presented three thousand from every $100,000 of bonds and issue $97,000 of coupon bonds; by this plan $3000 out of $100,000 of principal would be extinguished in consideration of paying $2910 interest on the first of January, 1860--and the interest on the $3000 would forever cease; this would be no doubt most advantageous to the State. But if the Auditor will not consent to this, then, 2nd. Cut off of each bond all the coupons payable before 1st July, 1860.

One of these plans would undoubtedly have been prescribed by the Legislature if its attention had been directed to this question.

May 28, 1859.