delivered the opinion of the court, February 23d, 1885.
The single question presented by tins record is, whether the interest upon municipal and other corporation bonds can be apportioned. The Auditing Judge, following a decision of the late Judge King, in Earp’s Will, 1 Parson’s Select Equity Cases., 453; held that they could not be apportioned. Upon exceptions filed the Orphans’ Court reversed the decree of the Auditing Judge and apportioned the income. The bonds about which the contention arose, were bonds of the City of Pitts-burg, -and the mortgage bonds of the Philadelphia & Reading Coal & Iron Company.
The rule at common law was that the interest on money loans was apportionable, and in this respect it differed from other periodical payments like dividends, rent, pensions and annuities. The reason for the distinction is that in the case of money at interest, the interest accrues de die in diem, which cannot be said of some at least of the other payments mentioned.
That this rule is inequitable, and to some extent arbitrary, may be assumed from the fact that modern legislation and *347judical decision have steadily tended to narrow the rule and enlarge the exceptions. Thus, Courts of Equity have extended the doctrine of apportionments to cases of settlements or annuities for maintenance, upon the ground of the presumed intention of the settlor or donor to provide for the support of the beneficiary down to the determination of the gift by death, marriage, or arrival at majority as the case may be: Gheen v. Osborn, 17 S. & R., 171; Blight v. Blight, 1 P. F. S., 420.
In this state the rigor of the common law has been relaxed in favor of the tenant for life so far as regards rents, by the Act of February 24th, 1834, and in England, by statute 34 and 35 Victoria, it is declared that “All rents, annuities, dividends, and other periodical payments in the nature of income, shall, like interest on money lent, be considered as accruing from day to day, and shall be apportionable in respect of time accordingly.”
The Orphans’ Court, while not a Court of Equity, administers the law upon equitable principles, and is not bound to enforce a common law rule admittedly obnoxious to equity further than it is constrained by authority, and the reason upon which the rule itself rests.
There seems to be a reason why dividends declared by stock companies should not be apportioned. Such dividends are not interest accruing from day to day, but profits upon business operations which in a strict sense cannot be said to accrue at all, but are declared at the pleasure of a board of managers, with nothing to show during what portion of the year they were earned. So, too, of annuities. In such cases, there is no earning of interest upon anything; they are fixed sums payable at stated days, and until those days arrive, there is nothing earned and there is nothing due.
The principle has long been settled in England that income derived from the public funds is not apportionable. It was so ruled in Pearly v. Smith, 3 Atkyns, 260, in the case of The South Sea annuities: and in Sherrard v. Sherrard, Id., 502. These cases were followed by many others affirming the same doctrine. It is needless to cite them as there is no dispute about the English rule. In Earp’s Will, Judge King adopts the English rule and applies it to municipal and corporation bonds. We do not know to what extent Judge King’s decision has been followed by other Orphans’ Court and Common Pleas judges throughout the state, but as presented here it is a new question. We have no decisions of our own, therefore, to embarrass us. The decision of so eminent a jurist as Judge King is entitled to much respect, but it is not authority beyond its reason.
We have not the case of United States and state loans before' *348us, and no question in regard to them will be decided, and they will be considered only so far as they are necessarily involved in the discussion of municipal and other corporation bonds. I am unable to see any distinction between them upon principle; if any is made it must be an arbitrary one, and because some rule of policy requires it.
It is manifest from a careful study of Judge King’s opinion that he did not consider, and probably entirely overlooked the peculiar character of the English consols, and their marked difference from the public debt of this country. In many of the English-cases the- question arose upon annuities, such as the South Sea annuities. The English consols are but annuities ; the interest only is paid, the principal is never reimbursable, and the government can only redeem them by buying them in the market.
The reasoning, of the English cases, goes upon the ground that the interest does not accrue day by day,which is entirely true of their consols. In Pearly v. Smith, supra, Lord Hardwicke stated it as tersely as it can be put, when he says: “ If the security had continued a mortgage, the claimant would have been entitled to the demand he now makes, because there interest accrued every day for forbearance of the principal, though notwithstanding it is usual in mortgages to make it payable yearly.” The same distinction between mortgages and funded debt is recognized in Sherrard v. Sherrard; supra, and many other' English cases. And it is an obvious distinction as applied to South Sea annuities, and British consols generally. But the distinction between a mortgage, and bonds of the City of Pittsburg, and the bonds of The Philadelphia & Reading Coal & Iron Company secured by a mortgage, is difficult to see. In either case it is a loan, and the interest accrues from day to day as the consideration of the forbearance. That the principal is not due is not to the point, for money is loaned for a term of years upon mortgages as well as city or corporation bonds.
No reason other than the one just stated has or can be given why the income from municipal bonds may not be apportioned. The learned- court below, however, attempted to take municipal bonds- out of the English rule in regard to government securities, by showing that municipal and other corporations may be compelled to pay, which is not the case with either the National or State government. The conclusion is correct but we do not assent to the reasoning. It is true the government is sovereign; it cannot be sued and compelled to pay like an ordinary debtor, while municipalities which are the creatures of the state may be so compelled. This however is outside of the question. If the sovereign *349does not pay there is nothing to apportion. No question of apportionment can be raised until there is actual payment of the interest, and when payment is made the question whether it was a voluntary or a forced payment has no bearing upon the principle of apportionment.
Nor is there any question about government policy or treasury convenience. This was clearly shown by Judge King in Earp’s Will, supra, where he said: “ It is a mistake to suppose that the rule in equity had any original connection with government policy or treasury convenience. From the time of its establishment by Lord Hardwicke, in 1744, such an idea is not intimated in any decided case. And this for the simple reason that the treasury had no interest in the subject.” Judge King then proceeds to give what he conceived to be the reason of the rule in equity. It was substantially that the funded debt carries with it the idea of permanency, and becomes a favorite investment with persons desirous of having a fixed income; that the interest of such investments may be applicable to a series of persons for a long time. These maybe very good reasons to induce persons who desire permanent investments to buy such securities, and perhaps why the income of English consols and South Sea annuities should not be apportioned, as the interest thereon does not accrue from day to day. But the interest on these municipal and corporation bonds does accrue de die in diem precisely as in the casé of an ordinary bond and mortgage, and we are wholly unable to distinguish one from the other in principle. The applicability of this rule to federal and state securities will be decided when the cases arise; they have been referred to here only for the purpose of illustration, and, in so far as such allusion was necessary to a proper discussion and understanding of the case before us.
The decree is affirmed and the appeal dismissed at the costs of the appellant.