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THE SUPREME Court. — Though it has been expected, we may almost say, daily, that the Supreme Court would give an opinion on the constitutionality of the Legal Tender Act, they have not done so up to the moment of our going to press. They have, however, delivered opinions on the validity and construction of contracts, payable in gold, which are so important that we insert them at length.
FREDERICK BRONSON, EXEC. OF ARTHUR BRONSON v. PETER Rodes.
A mortgage was made in 1851 to secure the performance of the condition of a bond of even date. The condition was, that the obligor should pay to the obligee the sum of $1,400 in gold and silver coin, lawful money of the United States, with interest also in coin, until repayment. Held, that the tender of $1,400, with interest in legal tender notes, did not discharge the mortgage.
The facts are sufficiently given in the opinion of the court.
CHASE, C.J. - This case comes before us on a writ of error from the Court of Appeals of New York. The facts shown by the record may be briefly stated. In December, 1851, one Christian Metz, having borrowed of Frederick Bronson, executor of Arthur Bronson, $1,400, executed his bond for the repayment to Bronson of the principal sum borrowed on the first day of January, 1857, in gold and silver coin, lawful money of the United States, interest also in coin until such repayment, at the yearly rate of seven per cent. To secure these payments according to the bond at such place as Bronson might appoint, or, in default of such appointment, at the Merchants' Bank in New York, Metz executed a mortgage upon certain real property, which was afterwards conveyed to Rodes, who assumed to pay the mortgage due, and did, in fact, pay the interest until and including the first day of January, 1864. Subsequently, in January, 1865, there having been no demand of payment nor any appointment of a place of payment by Bronson, Rodes tendered to him United States notes for the amount of fifteen hundred and seven dollars, a sum nominally equal to the principal and interest due upon the bond and mortgage. At that time, one dollar in coin was equivalent in market value to two dollars and a quarter of United States notes. This tender was refused, whereupon Rodes deposited the United States notes in the Merchants' Bank to the credit of Bronson, and filed his bill in equity praying that the mortgaged premises might be relieved from the lien of the mortgage, and that Bronson might be compelled to execute and deliver to him an acknowledgment of the full satisfaction and discharge of the mortgage debt. The bill was dismissed by the Supreme Court in Erie County; but on appeal to the Supreme Court in general term, the decree of dismissal was reversed, and a decree was
entered adjudging that the mortgage had been satisfied by the tender, and directing Bronson to satisfy the same of record, and this decree was affirmed by the Court of Appeals.
The question we have to consider, therefore, is this: Was Bronson bound by law to accept from Rodes United States notes equal in nominal amount to the sum due him, as full performance and satisfaction of a contract which still stipulated for the payment of that sum in gold and silver coin, lawful money of the United States ? It is not pretended that any real payment and satisfaction of an obligation to pay $1,507, coined money dollars, can be made by the tender of paper money worth in the market only 670 coined dollars. The question is, Does the law compel the acceptance of such a tender for such a debt? It is the appropriate function of courts of justice to enforce contracts according to the intent and understanding of the parties. We must therefore inquire what was the intent and understanding of Frederick Bronson and Christian Metz when they entered into the contract under consideration, in Decenber, 1851, and this inquiry will be assisted by reference to the circumstances under which the contract was made.
Bronson was an executor charged as a trustee with the administration of an estate; Metz was a borrower from the estate. It was the clear duty of the former to take security for the full repayment of the money loaned to the latter. The currency of the country at that time consisted mainly in the circulating notes of State banks, convertible under the laws of the States into coin on demand. This convertibility, though far from perfect, together with the acts of Congress which required the use of coin for all receipts and disbursements of the National Government, insured the presence of some coin in the general circulation, but the business of the people was transacted almost entirely through the medium of bank-notes. The State banks had recently emerged from a condition of great depreciation and discredit, the effects of which were still widely felt, and the recurrence of a like condition was not unreasonably apprehended by many. This apprehension was, in fact, realized by the general suspension of coin payment which took place in 1857, shortly after the bond of Metz became due. It is not to be doubted, then, that it was to guard against the possibility of loss to the estate from an attempt to force the acceptance of a fluctuating and perhaps irredeemable currency in paper, that the express stipulation for payment in gold and silver coin was put into the bond. There was no necessity in law for such a stipulation at that time, for then no money except gold or silver had been made a legal tender. The bond without any stipulation to that effect would have been legally payable only in coin. The terms of the contract must have been selected, therefore, to definitely fix the contract between the parties, and to guard against any possible claim of the mortgagor that any ordinary currency would be sufficient to discharge the obligation. The intent of the parties is therefore clear; whatever might be the forms or the fluctuations of the note currency, this contract was not to be affected by them; it was to be paid at all events in coined lawful money.
We have just adverted to the fact that the legal obligation of payment in coin was perfect without express stipulation. It will be useful to consider somewhat further the precise import in law of the phrase, “Dollars, payable in gold and silver coin, lawful money of the United States.” To form a correct judgment on this point, it will be necessary to look into the statutes regulating coinage. It would be instructive, doubtless, to review the history of coinage in the United States, and the succession of statutes by which the weight, purity, form, and impression of gold and silver coins have been regulated; but it will be sufficient for our purpose that we examine three only: the Acts of April 2, 1792, of Jan. 18, 1837, and of March 3, 1849. The Act of 1792 established a mint for the purpose of the national coinage. It was the result
of very careful and thorough investigation of the whole subject, in which Jefferson and Hamilton took the greatest part, and its general principles have controlled all subsequent legislation. It provided that the gold of coinage, or standard gold, should consist of eleven parts fine and one part alloy, which alloy was to be silver and copper in convenient proportions, but not exceeding one-half silver; and that the silver of coinage should consist of fourteen hundred and eighty-five parts fine, and one hun. dred and seventy-nine parts of alloy, wholly of copper. The same act established the dollar as the money unit, and required that it should contain four hundred and sixteen grains of standard silver. It provided further for the coinage of half-dollars, quarter-dollars, dimes, and half-dimes, also of standard silver, and weighing respectively one-half, one-quarter, one-tenth, and one-twentieth of the weight of the dollar. Provision was also made for a gold coinage, consisting of eagles, half-eagles, and quarter-eagles, and containing respectively two hundred and seventy, one hundred and thirty-five, and sixty-seven and one-half grains of standard gold, and being of the value respectively of ten dollars, five dollars, and two and a half dollars. These coins were made a legal tender in all payments, according to their respective weights of gold and silver, if of full weight, at their declared value, and if of less, at a proportionate value. And this regulation as to tender remained in full force until 1837. The rule prescribing the composition of alloy has never been changed, but the proportion of alloy to pure gold and silver, and the absolute weight of coins, have undergone some alteration, partly with a view to the better adjustment of the gold and silver circulation to each other, and partly for the convenience of commerce. The only change of sufficient importance to require notice is that made by the Act of 1837. That act directed that standard gold, and standard silver also, should thenceforth consist of nine parts pure and one part alloy ; that the weight of standard gold in the eagle should be two hundred and fifty-eight grains, and in the half-eagle and quarter-eagle, respectively, one-half and one-fourth of that weight precisely; and that the weight of standard silver should be in the dollar four hundred twelve and a half grains, and the half-dollar, quarter-dollar, dime, and half-dime, exactly one-half, onefourth, one-tenth, and one-twentieth of that weight. The Act of 1849 authorized the coinage of gold double-eagles and gold dollars, conformably in all respects to the established standards, and therefore of the weights respectively of five hundred and sixteen grains, and twenty-five eight-tenth grains. The methods and machinery of coinage had been so improved before the Act of 1837 was passed, that unavoidable deviations from the prescribed weight became almost inappreciable, and the most stringent regulations were enforced to secure the utmost attainable exactness both in weight and purity of metal. In single coins, the greatest deviation tolerated in the gold coinage was half a grain in the double-eagle and half-eagle, and a quarter of a grain in the quarter-eagle and gold dollar; and in the silver coinage, a grain and a half in the dollar, a grain in the quarter-dollar, and a half a grain in the dime and half-dime. In 1849, the limit of deviation in weighing large numbers of coins on delivery by the chief coiner to the treasurer, and by the treasurer to the depositor, was still further narrowed. With this and other precautions against the emission of any piece inferior in weight or purity to the prescribed standard, it was thought safe to make the gold and silver dollars of the United States legal tenders in all payments according to their nominal or declared value. This was done by the Act of 1837. Some regulations as to the tender for small sums of coins of less weight and purity have been made, but no other provision than that made in making coined money a legal tender in all payments now exists upon the statute-book.
The design of all this minuteness and strictness in the regulation of coinage is easily seen. It was doubtless the intention of the legislature to give a sure guarantee to the people that the coins made current in payments contained the precise weight of gold or silver of the precise degree of purity declared by the statute. It recognized the fact, accepted by all men throughout the world, that value is inherent in the precious metals, that gold and silver are in themselves values, and being such and being in other respects best adapted to the purpose, are the only proper measures of value, and that these values are determined by weight and purity, and that the form and impress are only certificates of weight and purity, worthy of absolute reliance only because of the known integrity and good faith of the Government which gives them.
The propositions thus stated are believed to be incontestable. If they are so in fact, the inquiry concerning the legal import of the words, “Dollars payable in gold and silver coin, lawful money of the United States,” may be answered without much difficulty. Every such dollar is a piece of gold or silver certified to be of a certain weight and purity, by the form and impress given to it at the mint of the United States, and, therefore, declared to be a legal tender in payment, and any number of such dollars is the number of grains of standard gold or silver in one dollar multiplied by the given number. Payment of money is the delivery by one to another of the amount due. A contract to pay a certain number of dollars in gold and silver coins is therefore, in legal import, nothing else than an agreement to deliver a certain weight of standard gold to be ascertained by a count of coins, each of which is certified to contain a definite proportion of that weight. It is not distinguishable, as we think, in principle, from a contract to deliver an equal weight of bullion of equal fineness. It is distinguishable in circumstance, only by the fact that the sufficiency of the amount to be tendered in payment must be ascertained in the case of bullion by assay and the scales, while in the case of coin, it may be ascertained by the count. We cannot suppose that it was intended by the provisions of the Currency Acts to enforce satisfaction of any contract by the tender of depreciated currency of any description, equivalent only in nominal amount to the real value of the bullion in the coin dollars. Our conclusion, therefore, upon this part of the case is, that the bond under consideration was in legal import precisely what it was in the understanding of the parties, a valid obligation to be satisfied by a tender of actual payment according to its terms, and not by an offer of mere nominal payment. Arguments and illustrations of much force and value in support of this conclusion might be drawn from the possible case of the repeal of the Legal Tender Laws relating to coin and the consequent reduction of coined money to the legal consideration of bullion, and also from the actual condition of partial demonetization to which gold and silver money was reduced by the introduction into circulation of the United States notes and national bank currency.
But we think it unnecessary to pursue this branch of the subject farther, nor do we think it necessary to examine the question whether the clauses of the Currency Act making United States notes a legal tender, are warranted by the Constitution in this case; but we will proceed to inquire whether, upon the assumption that those clauses are so warranted, and upon the further assumption that engagements to pay coined dollars may be regarded as ordinary contracts to pay money, rather than'as contracts to deliver certain amounts of standard gold, it can be maintained that a contract to pay coined money may be satisfied by a tender of United States notes. Is this a performance of the contract within the true intent of the acts ? It must be observed that the laws for the coinage of gold and silver have never been repealed or modified. They remain on the statute book in full force, and the emission of gold and silver coin from the mint continues; the actual coinage during the last fiscal year having erceeded, according to the report of the director of the mint, $19,000,000; nor hare those provisions of the law, which make these coins a legal tender in all payments, been repealed or modified. It follows that there were two descriptions of money in use at the time the tender under consideration was made, both authorized by law, and both made legal tender in payments. The general denomination of both descriptions was “ dollars," but they were essentially unlike in nature. The coined dollar was, as we have seen, a piece of gold or silver of a prescribed degree of purity, weighing a prescribed number of grains; the note dollar was a promise to pay a coin dollar, but it was not a promise to pay on demand, nor at any fixed time, nor was it in fact convertible into a coin dollar. It was impossible, in the nature of things, that these two dollars should be the actual equivalents of each other, nor was there any thing in the Currency Acts purporting to make them such. How far they were at that time from being actually equivalents has been already stated. If, then, no express provision to the contrary be found in the acts of Congress, it is a just, if not a necessary, inference, from the fact that both descriptions of money were issued by the same Government, that contracts to pay in either were equally sanctioned by law. It is indeed difficult to see how any question can be made on this point. Doubt concerning it can only spring from that confusion of ideas which always attends the introduction of varying and uncertain measures of value into circulation as money. The several statements relating to money or legal tender must be construed together. Let it be supposed, then, that the statutes providing for the coinage of gold and silver dollars are found among the statutes of the same Congress which enacted the laws for the fabrication and issue of note dollars, and that the Coinage and Note Acts respectively make coin dollars and note dollars legal tender in all payments as they actually do. What reason can be assigned for saying that a contract to pay coin dollars, must be satisfied by a tender of an equal number of note dollars, which is not equally valid for saying that a contract to pay note dollars must be satisfied by a tender of an equal number of coin dollars? It is not easy to see how difficulties of this sort can be avoided except by the admission that the tender must be according to the terms of the contract.
But we are not left to gather the intent of the Currency Acts from mere comparison with the Coinage Act. The Currency Acts themselves provide for payment in coin. Duties on imports must be paid in coin, and interest on the public debt, in the absence of other express provisions, must be paid in coin ; and it hardly requires argument to prove that this positive requirement cannot be fulfilled if contracts between individuals to pay coin dollars can be satisfied by offers to pay their nominal equivalent in note dollars. The merchant who is to pay duties in coin must contract for the coin which he requires. The bank which receives the coin on deposit contracts to repay the coin on demand. The messenger who is sent to the bank or the custom house, contracts to pay or deliver the coin according to his instructions. These are all contracts, either express or implied, to pay coin. Is it not plain that duties cannot be paid in coin if these contracts cannot be enforced ?
An instructive illustration may be derived from another provision of the same acts. It is expressly provided that all dues to the Government, except for duties on imports, may be paid in United States notes. If, then, the Government, needing more coin than can be collected from duties, contracts with some bank or individual for the needed amount to be paid at a certain day, can this contract for coin be performed by the tender of an equal amount in note dollars ? Undoubtedly it may, if the note dollars are a legal tender to the Government for all dues except duties on imports; and yet a construction which would support such a transaction would defeat a very important intent of the act. Another illustration, not less instructive, may be found in the contracts of the Government with depositors of bullion at the mint, to pay them the ascertained value of their deposits in coin. These are demands against the Govern