*1 argument There is behalf that the privileges his immunities of the Fourteenth Amendment as well clause as the clause has been flouted process judg- due ment. Dow, supra, 584, all the p. gives
Maxwell v. answer that necessary. is judgment
The is
Affirmed. Mr. Butler dissents. Justice EXECUTOR,
SMYTH, v. UNITED STATES.* 13, Argued December 1937. 18, 19, 1937. No. 42. November Decided * States, 43, Dixie Terminal Co. United also v. Together with No. Claims; 198, and No. the Court United certiorari on writ of certiorari to the Circuit Court of Machen, writ on States v. Circuit. Fourth Appeals for the *3 A. for and 43. petitioners
Mr. Robert Nos. Taft *11 Reed, Attorney with Solicitor General whom General Cummings, Attorney Whitaker, Assistant General Jones, Harry LeRoy First, Messrs. Edward V. Clarence Opper, Bernstein the brief, Bernard were on for the United States. *14 198. Eney Machen,- for No. Vernon respondent
H.Mr. *17 an- by of the Court Opinion Cardozo, Justice Mr. nounced Justice. Chief single a of question: a Was notice present
Three cases Treasury for the re- Secretary of by the call issued effective to terminate Liberty Loan bonds demption designated on the bonds from the running of interest redemption date? $10,000 in a First
Petitioner No. is the owner of serial number 1932-1947, bond Liberty Loan 3%% pursuant April was to the Act of 6670. The bond issued Department Circular (40 35), Treasury Stat. and 24, 1917 by peti and was May 14, 1917, purchased dated 78, No. $10,362.50 and accrued December, 1934, for tioner material, read as provisions, interest. Its so far as follows: value received United of America for
“The States Ten Thousand pay to the bearer sum promises at 1947, with interest day June, Dollars the 15th on pay- annum per per the rate and one-half centum of three and June 15 each semi-annually able on December 15 payable, upon be year principal until hereof shall coupons the interest hereto presentation and surrender of and principal The they severally attached as mature. in United States payable of this bond shall be interest All . . . or present value, standard of gold coin of may this of the series of which is one any of the bonds pleasure United paid at of the States be redeemed 1932, any or on semi-annual interest 15, after June on or at the face value thereof and in- dates, date or redemption, date of on notice pub- at the accrued terest prior redemption to the date, three months lished at least from time to time during thereafter said published Secretary as the of the period Treasury months three redemption desig- . . From the date of direct. . shall interest on the bonds any such notice called for nated coupons maturing and all thereon cease, redemption shall .” be void. . . after date shall said 14, 1935, Secretary Treasury pub- March On redemption 15, 1935, a notice of call for the on June lished notice is hereby of all the bonds so issued. “Public given: Liberty 1. All First Loan bonds outstanding of 1932-47 *18 hereby redemption for on June 15, are called 1935. The (all of which Loan bonds Liberty First of issues
various follows: are call) in this included are (First of 1932-47 bonds percent Loan Liberty First 3% .. . 15, 1917; June 3%’s), dated Loan Liberty First outstanding on all such Interest 2. 15, 1935.” date, June redemption cease on said will bonds Secretary of the 22, 1935, the Thereafter, April on Circular, No. (Department a circular issued Treasury Liberty of First redemption rules for 535) prescribing as fol- things, other among and bonds, providing, Loan Loan Liberty First outstanding any “Holders lows: and such bonds redeemed to have bewill entitled bonds in full to that interest 15, 1935, with on June par at paid accrue on interest will not 15, 1935, After June date. bonds.” Liberty Loan any First notice years publication before Nearly two the Joint Resolution of had Congress adopted of call (48 112) by every obligation which Stat. 5, 1933 June in or a particular kind of payable gold to be purporting money of the United or an amount currency, or coin thereby, discharged upon pay was to be measured States dollar, any currency coin or which at ment, dollar for legal public was tender for and payment the time of Nearly publication four weeks before the debts. private call, validity notice of of that Joint Resolution subject adjudication by court in the had been this Co., Cases, Norman Baltimore & R. Ohio Gold Clause v. States, Nortz v. United 240, S. 294 U. 317, 294 U. S. States, United Perry v. 330, 294 U. S. all decided February18, may 1935. We that the call was issued presume knowledge rulings. with of those designated About six months after the date for redemp- on tion, petitioner, 28, 1935, presented December his bond detached) due on (with coupons 15, 1935, and before June to the Treasurer of the United States, demanded the by the redemption 10,000 gold each dollars
COlO H was gold fine, 25.8 nine-tenths which containing grains in re- gold the content of a dollar 1917. The Treasurer comply demand, fused to with that offered payment but of the face amount of the tender coin principal legal in or other than Peti- currency gold gold or certificates. tioner declined to the tender and accept retained Thereafter, bond. on the same day, petitioner presented to the Treasurer of the United States, the interest coupon for the six months period June 15 15, 1935, to December and demanded payment in either or gold legal coin tender currency. The Treasurer refused on payment the ground that the bond to which coupon was attached had been called for redemption on June 15, 1935.
An action followed in the Court of Claims, petitioner claim resting upon his the interest coupon only, and lim- iting his demand to recovery a in current dollars.1 The gave judgment Court for the United States on ground designated on the redemption date, all coupons for that later interest became void. Because the important interests, public private, by affected judgment, a writ of certiorari granted by was court. this is
Petitioner No. 43 the owner of a $50 Fourth Liberty Loan of 1933-1938, bought bond which it 4%% 9, on 1935. pursuant March The bond was issued to the Act of September 24, (40 288) amended, 1917 Stat. Treasury Department Circular, No. 121. It towas 1938, mature on October 15, subject, re- however, Aug. (49 27, 938, 1 The 1935 939), Joint Resolution of with Stat. drawing of the to suit where the the consent United States 'claimant “upon against right, privilege power any gold-clause or asserted it a or for interest thereon” securities of United States makes an any by 1936, exception begun January 1, any pro suit as well as ceeding no claim made for in an “in which is or credit nominal amount in of the face or value in dollars of the securi excess ties, pro currencies of United involved in such coins or States brought himself each ceeding.” has within branch of Petitioner exception.
demption 15, or later. The terms of on October is redemption 121, are stated Circular which No. by into the bond itself. Six incorporated reference Treasury re- Secretary was months notice any redemption designated the date of “Prom quired, redemption for shall interest on bonds called notice, such 1933, the Treas- 12, Secretary On October cease.” *20 redemption April on a notice of call for ury published The bond now 1934, of this issue. 15, of certain bonds were of them. tenders by is one There petitioner owned the already in to those described and refusals similar in the the An action followed of other case. statement the judgment for in prayed Petitioner of Claims. Court coupon interest for the of the $1.07, of the amount sum 15, The court ending October 1934.2 period months six the is here on certiorari. the claim and case dismissed $1,000 a First is the owner in 198. of No. Respondent Liberty Loan 3½% 1932-1947, 47084, pur of No. bond This the 1933, $1,011.25. is March for 22, on chased in No. 42. Re involved and described issue same bond on his bond for either present not did spondent did the present or later. He not date redemption the However, the foundation of the suit. which is coupon that the Treasurer of the United States stipulated is fact agents any have not at time been directed and other fiscal in Secretary Treasury of the to redeem bonds by the have re coin, but been authorized and directed to gold currency. in The fact tender is also legal stipulated deem a for pay coupons there was refusal similar inter that redemption. Respondent of after the date accruing est coupon in the Dis brought upon suit his United States will coupon 2 The reads as follows: “The United States of America Treasury Department, 15, 1934, pay to bearer on October at being designated agency, $1.07, six months’ Washington, or at a of Liberty $50 Loan Gold Bonds on Fourth interest then due 414% redemption.” previous called for 1933-1938 unless
CO CJL CO Court for the District of The District Maryland. trict in favor The gave judgment Court of the United States. Court of for the Fourth Circuit and or Appeals reversed (87 a trial F. (2d) declining dered new to follow 594), which had been made ruling Court of Claims. here on certiorari of petition The case is on the Gov ernment.
Hereafter, for reference, convenience of the bondholder the three each of cases will be spoken “peti- a tioner,” adverting without fact to the that one of (No. 198) them is actually he a respondent.
First. The so-called redemption
provisions
the bonds
are provisions for the acceleration of maturity at
pleasure
Government,
upon publication
for the period
notice
call
stated in the bonds the new
became substituted for the old
if
date
one as
there from
beginning.
The
explicit.
contract is
“From the date of redemption
designated
any such notice interest on the bonds
*21
redemption
called for
shall
all
cease, and
coupons thereon
after
shall
maturing
said date
be void.” The contract is
not to the effect that
interest shall
upon
cease
or after
Cf.
payment.
Sterling H.
Co.,
v.
F. Watson
United in- of natural expiration, in had at date suit matured the. automatically ended, have whether the terest would bonds at a different and Maturity were or not. accel- paid obligation erated date does not make the In the greater. obligation one case as the other the interest ends, it simple says this for the reason that the contract that Upon original shall end. at the non-payment principal if maturity, bondholder, unpaid, remedy by has a suit not principal, overdue, recover with interest then but Upon non-payment interest thereafter. at principal date, a remedy, the accelerated he has like but no other. if any, there has been is as Default, ineffective one situation as the other to keep interest alive. insist, however, that Petitioners the notices of call were not adequate maturity, to accelerate with the result that if given. interest continued as notice had not been This if surely is not so we look to form alone and put extrinsic
facts “All outstanding aside. First Liberty Loan bonds of 1932-47 are hereby 15, called for redemption on June “All 1935.” outstanding Liberty Fourth Loan per 4% 1933-38, cent bonds of hereinafter referred to as Fourth 4%’s, bearing serial numbers which have been deter- lot in the mined manner prescribed by Secretary Treasury, 15, are called for on redemption April 1934, follows,” (the serial numbers being thereupon stated). Nothing simpler, could be nothing clearly more adequate, unless the notices are to be supplemented by facts, subject resort to extrinsic notice, of judicial which neutralize their terms. Petitioners maintain that such extrinsic In facts exist. their view, each of two forms of notice must be read as if it incorporated within *22 itself the Joint Resolution of 5, 1933, June promised and payment in the manner called by for that Resolution, and in any not way. other Thus supplemented, told, we are the notice is a for nullity, payment that it promises the payment is not under owing the letter of the bond. redemption of the bonds was of call for The notice Secretary Treasury not a The of the notice, promise. a to make to the duty any promise not under a was He did not undertake to make payment. any. medium of devolving at upon The the United States obligation designated date measured and the law by law, was as well includes Constitution as statutes resolu- tions. The medium of lawful at the time of call different from issuing might be that prevailing maturity. at the accelerated might This as a happen consequence an amendment of might statute. It happen through judicial decisions a adjudging statute equally through judicial valid decisions adjudging a statute The interval void. between notice and redemp- tion three was months the case of the First Liberty it bonds; was six months for the Fourth. The Secretary Treasury understood possibilities these when he
sent out his for the redemption notices of the bonds in Indeed, suit. Perry States, v. United supra, had already been decided when bonds the First Liberty issue were subject made the call. his In form each of notice the implications the call are clear. What the bondholders were told was neither more nor less than this, at that accelerated maturity they would be entitled to payment form such and in such measure as would discharge the obligation. The Secretary’s beliefs or expectations as to what proper form or measúre would be at the ap- pointed time are of no controlling even if importance, they were shown. The obligation was not his; it was that of the United States. His own beliefs and expectations and even those of the Government might be changed or frustrated subsequent events. The bondholders had the assurance that the bonds would be redeemed, and they were entitled to no other. Whatever medium of pay- ment would discharge the obligation if maturity had been through attained would, the natural lapse of time dis- *23 356 The maturity. at an accelerated completely it as
charge “re- also to serve money “pay” that would would same the reason believe that one situa- There is no to deem.” the from other the minds of distinguished the tion was The sum total of law— contracting parties. existing decisions, controlling even and statutes and Constitution any say if were how much was due. there —would analysis it it the If is carries with conclu sound, this the the call did not Government either sion that commit byor indirection a forbidden medium of expressly pay to valid, The for if must rest petitioners, ment. case suggested basis. A basis is that upon some other more of the Joint Resolution amounted without existence breach, which made the notice re anticipatory to an of if was inception, void from its there an elec demption though notice it, tion to treat and this left so But the law open. rule of is settled payment medium of breach has no anticipatory general doctrine that the contracts, particularly to unilateral to application only. payment money for the Roehm contracts such Co., Horst, 17; 1, 178 U. Nichols v. Scranton S. Steel v. N. 471, 561; Kelly Security Y. 33 E. v. Mu 487; 137 N. N. 78 16; 584; Williston, Y. Co., Ins. N. E. tual Life 1328; vol. Con Contracts, ed., 5, Restatement, § rev. 316, exceptions recog 318. Whatever have been tracts, §§ hand. not the case at New York Ins. do touch nized Life 680. 679, S. an Viglas, 672, Moreover, 297 U. an Co. v. if it out, were made could ef ticipatory breach, have no right complaining bondholders to upon fect to payment the time of natural date postpone The if to them maturity. effect, any, sole would be clothe overdue, to declare which is privilege with a they seeking that are to avoid. The result precisely that for purpose therefore follows conclusion would be the breach immaterial even controversy present unreality But its is the feature we it not unreal. if were prefer to upon. dwell The Government subject was not to a duty keep the content of the dollar constant dur *24 period the ing intervening between promise and per formance. The erroneous assumption of the existence of duty such a any argument vitiates in favor of the peti tioners as to an anticipatory breach just it as vitiates argument their as to the implications of the call1. The of the duty Government its only and one was to the pay bonds when due. If the statutes had been amended be fore the date of redemption ifor the courts had decided that payment must be in made in gold or currency pro portioned to the earlier content of the dollar, there is little likelihood that any one would judge the efficacy of the by notice the test of the in law force at the date of its announcement.
The petitioners being dislodged from the position that the notices of call were in void their inception per are force driven to the stand they that became there nullities after, when the statutes unrepealed were at the desig nated date. But at designated the date the accelerated maturity already was an accomplished fact. duty The payment did not in arise advance of In maturity. very things the nature of presupposes it maturity as a If preliminary condition. there had been any different intention, the bonds would have provided that interest should upon payment cease or lawful and tender, not from the in redemption date of stated the call. This is not a case of mutual promises or covenants with performance given to be rendered on each side at a time and place. obligees The were not under a to duty do at anything all at the accelerated maturity, though they privi were if leged, they to pleased, present the for payment. bonds learning dependent Most of the as to and independent in (Loud promises the law of bilateral v. Po contracts Co., mona Land & W. 153 U. 564, 576) S. is thus beside the mark. This is a case of a unilateral contract where bonds,
the the of the only performance, payment act of owing obligor, by hypothesis was from the arose one upon maturity whether maturity, and not before. Let accepted a accelerated, postulate, normal or be change it will not payment follow that default must to for again. date If Government were come designated ward with a tender a or a week after day rejection date, obligees not be a would sustained original on date theory that maturity delay. had If the ob been restored ligees date, the Gov designated were to sue after the that because of say ernment would not be heard im proposed default acceleration was payment, perfect already, the bond pointed and inchoate. As out *25 been when the notice had entitled, holders became once payment and of suffi published, to a measure medium If Acts discharge existing debts. the then cient to the be were would Congress altogether, of valid If currency. made in then prevailing if the sufficient degree, in invalid, wholly either or some the Acts were being how something more, of much might there be need of implied obligation, an dependent upon operation the ren by process construction, a of to read the bonds into the measure, form Whatever the equivalent. der an they it. if had chosen to invoke remedy a had bondholders a in given the effect of notice now not determine We do intention to per- a withhold preconceived with bad faith nearly form of con- every vitiates later. Fraud formance not but fraud has been by taint, proved its duct affected no charged. not There is reason to has and indeed been Treasury willing the who Secretary a of was that doubt de- knowledge of after of the redemption give to notice Perry United States understood that the obli- cision in v. by would be measured the gation of the Government in far by any statute, not so the two Constitution and as in for might found be conflict. Never a moment be
n CO '05 -XO supremacy to the submission complete less than was there toas mistake there was honest utmost, of At the law. precedent. situation without liabilities in a rights clarity. a acquires new case eliminated, the being Fraud confusing putting matter, heart of the When we reach the ob- the essentials, gaze upon our fixing verbiage aside and simplifying in a expressed can be of the bonds ligation 15, on June payable be “This bond shall paraphrase. of by Secretary the months notice or three 1947, (upon or interest date any 15, 1932, June Treasury) on That substance was meant. That is what thereafter.” is what was said.3 in the de- is involved of law
No constitutional question cor- here as to the question is of these cases. No cision or toas States, United Perry v. rectness of decision there announced. meaning or of the opinion effect unnecessary to are aside inquiries put All such of Irrespective before us. problem solution now of the any invalidity part the whole or validity or ma- devaluing dollar, years of recent legislation by notice. in suit was accelerated valid turity the bonds to interest right consequence a of such As acceleration gone. has not act Treasury did Secretary The
Second. without the calls powers issuing excess his lawful conferred Congress further from the than was authority *26 the statutes under the bonds were issued. by which 3Important ignored, exist, differences and are not to be between the (Sterling Co., supra; of of stock v. H. retirement shares F. Watson 165; 218), Corp., Atl. Corbett v. McClintic-Marshall 17 Del. Ch. 151 money obligations, and and also between the accelerated of obligations and those of the acceleration of of the Government the obligors. liability private obligations, other In a for the case until interest and survives the acceleration of the debt continues payment. obligations, not In the interest does case of Government agreement) (in absence of statute or maturity continue after though payment is made. not
360 contrary is with argument
The inconsistent plain of the statutes and also of the provisions bonds themselves. power
There was also confirmation of his subsequent Act, 6, Loan 40 Victory Liberty 1311, § enactments. Stat. 2, 42 amended, 1923, March c. 179, 1427, Stat. and 30, 14 January 1934, (b), 48 344; § Stat. Gold Reserve 1934, 14, Act of 48 Stat. Act 343; 4, 1935, February § 2, 4, 20. §§ 49 Stat. In calls,
Third. issuing Secretary the Treas- ury was not 18, (R. limited Act March 1869 S. 3693; 1) 16 day placed Stat. which its upon restrictions redemption by the Government of interest-bearing bonds.
The aim of that statute was protection of holders obligations of United States not bearing interest, that “greenbacks” of era. “The bonds of the United States are not to be paid before maturity, while the note- are to be kept holders without their redemption, unless the note-holders are able at the same time to convert their coin.” notes into Statement of Robert C. Schenck, one of the House Managers, Congressional Globe, 3, March 1869, 1879. p. Upon the resumption of specie payments in 1879 the aim of the statute was achieved, and its longer are no binding. restrictions 42 judgments The Nos. and 43 should be affirmed, that in No. 198 and reversed. 43,
Nos. affirmed. 198, No. reversed. Dissenting: Me. Justice McReynolds, Mr. Justice Mr. Sutherland Justice Butler. See post, p. 364. Justice Stone. Mr. in the
I result. concur F, below, I think the court in the case, Machen 594, (2d) correctly interpreted the bonds involved in
361 privilege the reserving government to as these cases maturity paying their them or stand- accelerating of according any to them on interest date ing pay ready upon giving specified fixing tenor, and notice to their redemption.” The words and of “redeemed” the “date in the bonds1 in point way as used “redemption” to exercised privilege plainly was be as as when which the in private Lynch written the bonds of a lender. they are States, 571, 579; 292 U. cf. v. Perry United S. United v. States, If 330, U. S. 352. or payment, 294 readiness to in with accordance their essen- pay the bonds terms was other, or “redemption,” the one with equally tial to a of notice, condition required was acceleration. in obligation bonds, the light long The read of and of own in Holyoke custom our decision established Writing Power Co. v. American Paper Co., Water 300 324, 336, decided since the I Perry think, U. S. case, must, a “gold to be value” undertaking be taken in pay gold weight specified dollars and or fineness their equiv currency. Compare alent lawful Norman v. B. & O. R. Co., U. S. 302. 240, Feist v. Société Intercommunale Beige, &c., L. R. [1934] A. C. 172, The 173. suppression as gold money, the use and the restriction on its export its and of use international exchange, by acts redemption The clause is as follows: principal “The and interest of this payable bond shall be in United gold present coin of the value, States standard of any ... All or of the bonds of the series of which this is may one be redeemed paid pleasure at of the United States on or after June 15, any or on semi-annual interest 1932, date dates, or at the face value thereof and interest accrued at the date of redemp- tion, published on notice at least prior three months to the redemp- date, published tion thereafter from time to during time said period Secretary three months Treasury shall direct. . . . redemption designated From the date of any such notice interest bonds called for redemption on the shall cease, and coupons all maturing thereon after said date shall be void. . . *28 not govern of did relieve the Congress, 1, 337, 48 Stat. to value gold its the obligation pay stipulated ment of of in it has not com currency. the bonds lawful Hence ready one of the two plied, comply, or ever stood to with “may the upon performance conditions of which bonds be in advance their due date— paid” redeemed and of currency equivalent the the ‘tothe bondholder of payment of value. stipulated gold the say performance not to that of this condi-
It will do the by adoption tion or with dispensed can be avoided in it of form of the notice. Nor can be said any words in the of intention to what- declaration, notice, pay that a case, supra, in the court, Perry ever can be collected see cur- pay a of to the equivalent is to notice readiness 354, to gold paid, of the equivalent stipulated value be rency of will pay or that a statement to what consti- purpose although the debt to tutionally suffices accelerate satisfy currency equivalent no is made or con- the It or statutes. follows that templated permitted is for the bondholders unless Joint judgment go must the 5, of June 48 Stat. re- Congress 1933, 112, of Resolution of all for discharge gold obligations the “dollar quiring currency, declaring in void as against lawful dollar” obligations of such for calling all public policy provisions pronounced to be is constitutional. gold payments, question being in my of the constitutional Decision I to shortly am moved state unavoidable, now opinion not government for view that bonds do the my reasons from in- footing private any those on different stand the Joint Resolution in one case, the and that dividuals power a constitutional exercise was other, in the as money. Compare Norman v. value regulate to elaborating 309. Without Co., supra, 304, R. B. & O. say present purposes to that enough for it is point, to in pay obligations its of the United States undertaking to thwart the exercise of the binding, operates if gold, constitutional power same manner and to degree same pro tanto do by private bonds issued in- dividuals, B. Norman & Co., supra, v. O. R. 311 et seq., except insofar government sovereign as the resorts its immunity from suit. the undertaking Had been given any force the Gold Clause Cases, or which meaning we have since attributed to it when private used con- tracts, it if would, valid but for immunity from suit, have defeated government policy suspension *29 gold of payments and devaluation the dollar. of Com- the pare case, Norman supra, with mem- concurring the orandum in Perry States, v. United supra, 360-361. very
The fact of the existence of such which immunity, of admits the of creation only government obliga- such tions as are at enforceable the will the sovereign, of is persuasive that power the to borrow “on the money credit” the of United cannot States be taken be a to limitation power the regulate of to the money. Looking value of the purposes power to for which that is conferred upon national government, justified the its if exercise, all, at is as essential in case of the gov- bonds national in states, ernment as it is the case of bonds municipali- of and private ties individuals. See Norman v. B. & O. R. Co., supra, 313 et Its effect on seq. the is bondholders Compare B. every the same case. Norman v. & O. R.
Co., supra, States, with Nortz v. United U. S. 317. of public policy reason or principle No construction of the instrument itself has ever been suggested, so far I am would aware, explain why power which to which regulate currency, is not by restricted any Fifth Amendment in the case of obligation, is con- government trolled, by the case of bonds, the borrow- no ing imposes obligation gov- clause which which the to discard at any ernment is not free time through its I immunity say from suit. cannot that the borrowing compel which without force to the sovereign is clause to government pay powerless nevertheless renders the to specifically granted authority regulate exercise the to money with which to be value is made. Black, Mr. Justice concurring.
Agreeing altogether opinion with of Mr. Justice only deals with the construction which Cardozo, I rights flowing from find notice, contract inappropriate express and therefore unnecessary it Joint the-validity of the Resolution of opinion as to any devaluing legislation the dollar. acts of 1933 or other McReynolds, dissenting.* Justice Mr. I Mr. Justice Butler Sutherland, Justice
Mr. ma- approved by in the conclusion acquiesce cannot it an act gives In our effect to of the Court. view jority repudiation. wrong- Its upholds patent faith and of bad presented the circumlocution fulness is betokened defense. in currency today the face
The suit is to recover *30 a originally a attached to three past coupon value of due one-half cent bond of the United States issued in per nothing 1917 and else. payable 1947— the Circuit Court of opinion Appeals, The of to which out added, little can be sets the important facts and ade- its quately supports judgment. 1917,
In coins gold grains when 26.8 to contained the dollar, the United States obtained needed funds sell- by coupon among them the ing one here involved. bonds— solemnly to They agreed pay the holder one thousand 1947, on June with 15, dollars semi-annual in interest, present of the “gold coin standard of value” subject to following or option: any of the bonds of the —“All * opinion only in was entitled one of the three cases, This No. 198. series of which may this is one be paid redeemed1 and at pleasure of the United after 15, States on or June on 1932, any semi-annual interest payment dates, date or at the face value thereof and accrued at the interest date of redemption, on notice published at least three months to prior . redemption date. . From . of date redemption designated any notice, such on interest bonds called for redemption shall cease, and all coupons maturing thereon after such date shall be void.” promise The is to pay one thousand gold dollars in coin, 1917 The standard. face value of the bond is one gold The option thousand dollars. reserved is to redeem pay after by giving notice the holder that number required dollars. The notice nothing of such is less than a declaration of bona purpose to redeem or pay off fide obligation as written —no other right was reserved. A notice that purpose divorced from could amount nothing than more a dishonest effort to defeat the com and defraud the creditor. It not tract would come within fair intendment of contract; not, truth, would a “date designate redemption”; and, therefore, could maturity hasten the or principal not cause interest All this if obvious, seems is respect to cease. to be ac- ordinary rules of corded to construction and principles governing law contracts. obligation by of the bond was The declared this Court States, Perry v. United 330, 294 U. 351, 353, S. 354, a pledge of the credit the United States and to be an stipulated as which Congress had assurance ignore. or to withdraw “The United power no States their much bound contracts as are as individuals. are they repudiate obligations, their it is much repudia- If *31 buy up obligation off, of, by To take or remove the Redeem —5. rendering consideration; some to redeem payment or of bank with coin.
367 in the for was payment “The notice the bond calling that it would but form; question usual there is no and of interest running have had the effect of the stopping 1935, 15, June maturing and the after avoiding coupons cur- the affecting for except Congress the of legislation of the Secretary the rency, which limited the of power At the time Treasury and must into the notice. be read of stand- the issuance of dollar was the gold the bond by ard of in our was defined monetary system value and law as of tenths consisting twenty-five eight grains and of gold 41, of Mar. c. sec. 14, 1900, nine-tenths fine. Act 1, 45, pro- 31 Stat. 31 U. S. C. A. the statutes 314. And vided for the gold exchange. use of coin as a of medium 31, R. S. 3511. By January Presidential Proclamation of 1934, (38 52, issued 1933 May 12, under the act of Stat. 53), 30, (48 of Stat. by January amended the act 1934 342), the content of the dollar was reduced to 15-5/21 grains gold and, of at time of the fine; nine-tenths publication of the bond for calling payment, notice coin from gold been withdrawn its circulation, pos- had session had been prohibited penalty, payment under and in coin gold by the United States had been prohibited. 337, By joint 48 Stat. 340. 5, resolution of June (48 112, 113), Stat. in payment gold clause bonds any legal currency tender 'dollar for dollar’ au- had been it thorized; paper currency was based on the and 15-5/21 dollar, else, and that in nothing pay- was offered grain gold clause bonds which were called for payment ment of Treasury. redemption calling The notice of in question equivalent, therefore, bond for was to a notice that States elected to redeem the United currency dollar, based on a paper grain bond 15-5/21 payable that it was coin notwithstanding gold based on a dollar grain might only be redeemed at its 25-8/10 .. face value. .
“It that is manifest when the bonds were payable issue, at standard value the time of coin gold to e., grains proposal i. a gold dollar, 25-8/10 money them in paper upon grains redeem based 15-5/21 to the was a them gold proposal dollar not to redeem at face a value; government notice that would *33 redeem them on basis, such which is what the in notice question means when considered as it in must be connec- legislation tion with the binding upon the Secretary Treasury, the was a not such notice as the bonds pre- for scribed the exercise the option by retained government.”
We not now are concerned with power of the discharge United States to obligations maturity at in de- currency or coin. preciated clipped they Did cause re- spondent’s bond to mature before the ultimate due date by proper option exercise reserved they when sent a in out notice which effect stated that would not made as provided bond, be but otherwise? ought The answer not to be difficult where men anxiously that a uphold doctrine contractual obligation “re- binding upon mains conscience of sovereign” fix reverently gaze Eighth their on the Commandment. in tersely We concur the views expressed in the follow- ing excerpted from paragraph opinion below— argument
“No amount of can obscure the real situation. government It is "this: the has promised to pay the bonds in question gold in coin of the standard of value prevail- ing By 1917. their it terms, permitted is to redeem them only by paying them at their face value. It pro- is them, to redeem not posing by paying them at that face in paper money only value but worth about thereof. 59% which it The notice has issued nothing means this and a notice is else. Such not accordance with the con- redemption specified dition of the bond and conse- not quently stop running does of interest or avoid coupons.” challenged judgment The was correct and should be affirmed. notes Dictionary. New International Webster’s wrong reproach that term implies, and all the tion, with had been a State or a repudiator the it be if as would power Congress “The a citizen.” municipality or own engage- the substance of its repudiate to alter or money under the authority ments when it has borrowed was there denied. “The confers” which the Constitution the of the United is promise of States binding quality pledged. Having the credit which is so of the essence of obligations of definite power to authorize issue this Congress money borrowed, the has for the of alter authority with to or destroy vested those not been may The fact that the United States not be obligations. procedure is a matter of without its consent which sued binding character legal and of its not affect does under Congress duty is no to pro- contracts. While through courts, contractual vide obli- remedies and, infirmities of despite procedure, gation still exists of the sovereign.” conscience binding upon remains at pay redeem and the bond face right value The to nothing else. Did the United after notice was reserved — purpose a bona so to redeem notice of give States fide claim they properly If cannot to have not pay? obligation. mature That option their to exercised with this comply necessary pre- honestly not they did upon consideration of the liminary becomes obvious legislation. pertinent circumstances concerning the here Government question There is no notice out through itself sent the Secre- committing or to a Treasury indirectly of forbid- tary expressly No an question anticipatory payment. den medium simply contract. Government has not in breach of The a condition precedent. faith with It has good complied to purpose pay obligation notice given never ac- suggestion Its cording to its terms. was make pay- ment kind. of another The said— Appeals Circuit Court well