Emery Bird Thayer Dry Goods Co. v. Williams

WOODROUGH, Circuit Judge

(dissenting).

The dispute between the landlord and tenant in this case involves the application of the gold clause resolution of June 5, 1933, to their lease. The lease was made in 1890 to run ninety-nine years and calls for rent to be discharged by quarterly deliveries of 139,320 grains of pure unalloyed gold. No question arises about the constitutional power of congress over such a gold clause in a lease contract. The court of last resort has settled that congress had full power to make the rent payable in legal tender. But the landlord claims that the Congress did not word the joint resolution2 so as to reach the gold clause in this lease and make it payable in legal tender. It claims that notwithstanding the joint resolution its right to demand gold continued intact until gold payments became impossible in January of the next year, and thereupon the landlord became entitled to evict the tenant. The tenant insists the joint resolution gave it the right to pay the rent in legal tender for the years of the lease remaining after June 5, 1933.

The occasion for the passage of the joint resolution was the emergency then existing and the apprehension that contracts for payment in gold or in amounts of money measured by gold aggregating many billions of dollars which were outstanding in the United States were being called or would be called by the creditors holding the same, that there was a flight of gold into hiding and export and that gold was or would be so unobtainable that the debtors would be ruined. The resolution recited that the provisions of such obligations obstructed the power of Congress to regulate the value of the money of the United States, and declared that every provision made with respect to any obligation which purports to give the obligee a right to require payment in gold, or in an amount of money of the United States measured thereby, is against public policy and it prohibited such contract provisions entirely for the future.

The main object of the resolution, however, was to meet the emergency caused by the existence of the vast amount of gold obligations already outstanding and to make them payable in legal tender. The most vital part of the resolution is the declaration of the legislative will that every obligation, whether there is a gold clause in it or not, shall be discharged upon payment dollar for dollar in any coin or currency which at the time of payment is legal tender for public and private debts.

The expression “every obligation” in this clause (a) of the resolution is so broad that standing alone it would cover all obligations to deliver commodities of any and every kind and it would make them all discharge-able with legal tender. But such commodity obligations were not within the purview of the resolution. It was not declared in the resolution that obligations to deliver gold as a commodity for use in the arts or sciences or the like obstructed the power of Congress or contravened public policy and there was no purpose of the resolution to affect contracts to deliver gold for such purposes. Accordingly, Congress limited “every obligation” as follows: “(b) As used in this resolution [section] the term ‘obligation’ means an obligation * * * payable in money of the United States.” On reading *177the main legislating clause of the resolution with this definition of “obligation” incorporated in it, the intent is clear that every obligation payable in money of the United States, whether or not it contains a provision which purports to give the obligee a right to require payment in gold, or in any amount of money measured thereby, or in a particular kind of currency, shall be discharged in legal tender.

This limiting definition was appropriate to exclude from the scope of the resolution entirely all obligations to deliver commodities generally or to deliver gold for commodity use, such as in the arts and sciences, because no such obligations are payable in money. But the vast aggregated billions of gold bond obligations in the United States for principal and for interest and of long time gold building and railroad lease indentures have generally been paid in money. The gold clauses have served only as stated in the resolution to measure the amount of money called for. They are capable of being paid in money. They are expected to be paid in money. There was never enough gold in the world to pay but a small fraction of them. They are payable in money because the dictionary and commonly accepted meaning of the word “payable” is, “that can be paid,” “that is to be paid,” “capable of being paid.”

If, therefore, regard is had to the joint resolution as a whole, the intention of Congress clearly appears to require every creditor to accept legal tender in discharge of every obligation excepting only such obligations as call for commodities or for gold as a commodity, distinguished from gold to pay rent or to pay principal and interest of bonds and the like payments in which the commodities of commerce are not used and have no place.

In the first part of the resolution, Congress specifies the gold obligations that obstruct its powers and contravene public policy. Second, it declares the legislative will that every obligation whether it contains such gold clauses as specified or not, shall be discharged in legal tender. And third, it eliminates by definition the commodity transactions of commerce and the arts and sciences. But it leaves subject to the resolution all of those obligations that obstruct and offend public policy, all of those which contain an obligation to pay gold and which contemplate that the gold shall merely measure the amount pf money.

The particular lease in this case comes squarely under the definition of the resolution and is plainly an obligation payable in money within its intendment. The rent has been paid in money of the United States for nearly half a century and no intent to have it paid in any other way can be dug out of the lease instrument without perverting its language. The pure unalloyed gold called for does not exist in actuality. It could not be identified if it did exist. It is used in the lease solely to measure the amount of money payable under the lease. It has always been so used and it can not be used any other way. The number of grains of pure unalloyed gold specified in the lease corresponded exactly with the imaginary pure unalloyed gold in the United States dollar. (That coin was never pure or unalloyed gold.) But the measurement was accurate and the landlord was content. It is not to be imagined that the landlord exercised its option to take six thousand dollars quarterly out of its grace. It took them because they equaled the number of dollars it was entitled to get according to the pure unalloyed gold measuring stick used in the lease.

The obligation of this lease was also payable in money of the United States because gold dollars were part of that money after as well as before the resolution. If the tenant tendered gold dollars enough with all their alloy to make up the specified grains of pure unalloyed gold, on what ground could the landlord have refused to take them? None can be imagined The landlord had to take them. How, then, can it be said that the obligation is not payable in that way ? It is payable in money of the United States within the intendment of the resolution.

The legislative will is that it shall be discharged upon payment dollar for dollar in legal tender.

Turning now to the landlord’s demand for gold. The landlord offers no light on the legislative intent of the Congress declared in the gold resolution or upon the intent of the parties to the lease contract. No possible reason is suggested why Congress should have singled out some particular kind of gold clause obligations like those heretofore considered by the Supreme Court and make them payable in legal tender and at the same time leave out the kind of gold obligations found in this lease. If one kind obstructs the pow*178er of Congress and offends public policy, so does the other, and to the same extent, and there is no evidence that one kind has been used any oftener than the other.

There is a contention that the “139,320 grains of pure unalloyed gold” called for in the lease is' not a measure of money but means gold bullion; that it means a commodity and an article of commerce. But I find nothing to support the contention. No witness is heard to say he ever knew of any pure unalloyed gold in commerce or anywhere else. It is also urged that there is difficulty in ascertaining the dollar for dollar measure for the rental required by the resolution, but I see none. There has been none for the past half century and there will bé none in the next. There were so many grains of imaginary pure unalloyed gold in the United States (alloyed) gold dollar at the time of the resolution and there was no uncertainty how many dollars rent the tenant had to pay. It must pay the same number now and for the rest of the lease period.

The wedge of the landlord’s attack on the resolution is in the word “payable” found in the definition clause (b). The landlord would have that read as though “payable” meant “in terms specifying as the only medium of payment” Then the resolution requiring 'discharge of every obligation in legal tender could be confined to obligations which in terms specified United States money as the only medium of payment and the intent of Congress to meet the menace of gold obligations with legal tender payments could be defeated. Such is practically the meaning ascribed to “payable” in the majority opinion on which its decision turns.

Undoubtedly payable may be used to convey that meaning. But the word “payable” is not limited to such a meaning either in common understanding or as defined in dictionaries, and obviously it cannot be intended to have that meaning in the joint resolution. To give it such meaning would make the main legislative clause of the resolution read: Every obligation in terms specifying money of- the United States as the only medium of payment whether it contains a provision purporting to give the obligee a right to require payment in gold or not shall be discharged in legal tender. That does not make sense. But it demonstrates that Congress intended no such meaning to be given to the word “payable.” The majority decision is in substance that the resolution does not make sense.

If the word “payable” is not misconstrued, but if it is given its natural meaning ; if “payable in money” is construed may be paid in money, then the intent of the joint resolution to make the rent under the lease contract here payable in legal tender is clear. The function of the court and its only function here is to enforce that intent. It ought to compel the landlord to take its rent-in legal tender, dollar for dollar with the number of dollars it was entitled to get and was getting before the resolution.

I suppose that if the court should hold that the rent in this case was not payable in money, and if it holds that the landlord still had the right to require pure unalloyed gold to be delivered to it after the joint resolution, then eviction of the tenant may follow. The good will of the establishment built up in the location over half a century may be destroyed. The employees discharged. The landlord inducted into the buildings the tenant erected, and perhaps so as to thousands of other landlords and holders of gold obligations. They are not going to equity.

But I venture that our history can present no such use of judicial power to turn the aim of Congress from the object to which it was directed. Granting that Congress might have worded its gold resolution more skillfully. Concede that the court must construe the words to bring out the sense. We know as well as the man on the street that the aim of it was to save tenants (like other debtors) from obligation to pay the landlords’ rent in gold or in an amount of money measured by gold. To let them pay legal tender. Congress outlawed gold. What member would vote for a law to put the tenant on the street and the landlord in the buildings which the tenant has put up? The courts have that power. They may turn destruction upon debtors and • forfeit vast properties to landlords and lien holders. But they must find their justification at the bar of opinion by pointing out words of Congress that manifest such an intent with positive certainty. I think the words of Congress refute any such intent.

The court should reverse the decree and order the landlord to accept its rent in legal tender. I also think the decision *179in this case is directly contradictory to the opinion of this court in Guaranty Trust Co. v. Berryman Henwood, Trustee, 98 F.2d 160, just handed down.

“Provision for payment of obligations in gold prohibited; uniformity in value ‘ of coins and currencies.

“(a) Every provision contained in or made, with respect to any obligation which purports to give the obligee a right to require payment in gold or a particular kind of coin or currency, or in an amount in money of the United States measured thereby, is declared to be against public policy; and no such provision shall be contained in or made with respect to any obligation hereafter incurred. Every obligation, heretofore or hereafter incurred, whether or not any such provision is contained therein or made with respect thereto, shall be discharged upon payment, dollar for dollar, in any coin or currency which at the time of payment is legal tender for public and private debts. Any suck provision contained in any law authorizing obligations to be issued by or under authority of the United States, is hereby repealed, but the repeal of any such provision shall not invalidate any other provision or authority contained in such law.

“(b) As used in this section, the term ‘obligation’ means an obligation (including every obligation of and to the United States, excepting currency) payable in money of the United States; and the term ‘coin or currency’ means coin or currency of the United States, including Federal Reserve notes and circulating notes of Federal Reserve banks and national banking associations. (June 5, 1933, c. 48, § 1, 48 Stat. 113)” 31 U.S.O.A. § 463.