Guaranty Trust Co. v. Henwood
307 U.S. 247 (1939)

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U.S. Supreme Court

Guaranty Trust Co. v. Henwood, 307 U.S. 247 (1939)

Guaranty Trust Co. v. Henwood

No. 384

Argued February 8, 9, 1939

Decided May 22, 1939*

307 U.S. 247




Railroad bonds, secured by trust mortgage, which were sold in this country for dollars in 1912, were expressed to be payable here in gold coin of the United States equal to the then standard of weight and fineness or, at the option of the holder, to be payable in several foreign countries, including Holland, in specified amounts of the moneys there current, which amounts were the 1912 exchange equivalents of American dollar value per bond. In a bankruptcy reorganization proceeding, holders of the bonds asserted their option of payment abroad in Dutch guilders, and asked that their claims be allowed at their guilder value, greater in dollars than the face of their bonds.


1. In determining the nature of the obligation, bonds and mortgages must be construed together. P. 307 U. S. 253.

2. The bonds and mortgage are domestic obligations, to be interpreted and enforced according to the law of this country. P. 307 U. S. 254.

3. The bonds are obligations "payable in money of the United States," within the meaning of the Joint Resolution of June 5, 1933, and, under that Resolution, are payable dollar for dollar in present legal tender. P. 307 U. S. 256.

Page 307 U. S. 248

The promises of payment, with interest, in alternative currencies were not in barter for commodities. Interest is not paid on commodities, but on monetary obligations. These promises are not separate and independent contracts or obligations, but parts of one and the same monetary obligation of the debtor. P. 307 U. S. 255.

4. The proposition that the obligation was never payable in United States money because the option to receive payment in dollars had never been exercised is rejected. P. 307 U. S. 256.

5. The proposition that the Resolution, if construed to forbid enforcement of the option to demand payment in guilders, nullifies contractual rights in violation of the Fifth Amendment is rejected. P. 307 U. S. 258.

Domestic contracts between private parties cannot create vested rights restricting the exercise of a power of Congress.

98 F.2d 160, 179, affirmed.

Certiorari, 305 U.S. 588, 594, to review decrees of the court below which affirmed orders of the District Court fixing allowances to holders of railroad bonds in a reorganization case.

Page 307 U. S. 249

MR. JUSTICE BLACK delivered the opinion of the Court.

In the bankruptcy reorganization of the St. Louis Southwestern Railway Company, a Missouri Corporation, petitioners filed claims for bondholders. They asserted a right under the bonds to be paid in Dutch guilders, and asked that their claims -- based upon guilder value -- be allowed for $37,335,525.12. The trustee in bankruptcy contended, and the courts below held, that the Joint Resolution of June 5, 1933, [Footnote 1] made the bonds dischargeable by payment of current legal tender United States money, [Footnote 2] and petitioners' claims were accordingly allowed for $21,638,000, the face amount of their bonds in dollars.

These bonds, secured by a trust mortgage, were issued and sold in the United States in 1912. Purchasers paid and the railroad received United States dollars, and, until 1936, interest was regularly paid in dollars.

The asserted right to guilder payment rests upon a provision of the bonds concededly granting holders an

Page 307 U. S. 250

option to elect. payment in dollars, guilders, pounds, marks, or francs. This multiple currency provision was authorized by the following terms of the mortgage securing the bonds:

". . . the . . . Bonds may be payable at the option of the holder, both as to principal and interest at some one or more of the following places in addition to the City of New York, and in the moneys current at such respective places of payment at the following rates of exchange or equivalents of $1,000, viz.: In London, England,

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