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.
Held:
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, �205.15.2 Sterling, or in
Amsterdam, Holland, 2490 guilders, or in Berlin, Germany, 4200
marks, D.R.W., or in Paris, France, 5180 francs. . . ."
The bonds themselves provide:
"St. Louis Southwestern Railway Company, . . . for value
received, hereby promises to pay to the bearer, or, if registered,
to the registered holder, of this bond, on the first day of
January, 1952, at its office or agency in the Borough of Manhattan,
City and New York, One Thousand Dollars in gold coin of the United
States of America, of or equal to the standard of weight and
fineness as it existed January 1, 1912, or in London, England, �205
15s 2d or in Amsterdam, Holland, 2490 guilders, or in Berlin,
Germany, marks 4200, D.R.W., or in Paris, France, 5180 francs, and
to pay interest thereon at the rate of five percent. per annum,
from the first day of January, 1912, in said respective currencies,
semi-annually. . . ."
Since the parties agree that the terms of the bonds granted
holders an option to elect payment in guilders, we must determine
whether, despite this option, the Joint Resolution operated to make
the bonds dischargeable in current United States legal tender -- a
dollar of legal tender to be repaid for every dollar borrowed.
Page 307 U. S. 251
Analysis of the terms of the Resolution [
Footnote 3] discloses, first, the Congress declared
certain types of contractual provisions against public policy in
terms so broad as to include then existing contracts, as well as
those thereafter to be
Page 307 U. S. 252
made. In addition, future use of such proscribed provisions was
expressly prohibited, whether actually contained in an obligation
payable in money of the United States or separately "made with
respect thereto." This proscription embraced "every provision"
purporting to give an obligee a right to require payment in (1)
gold; (2) a particular kind of coin or currency of the United
States; or (3) in an amount of United States money measured by gold
or a particular kind of United States coin or currency.
Having thus unmistakably stamped illegality upon both
outstanding and future contractual provisions designed to require
payment by debtors in a frozen money value, rather than in a dollar
of legal tender current at date of payment, Congress -- apparently
to obviate any possible misunderstanding as to the breadth of its
objective -- added, with studied precision, a catchall second
sentence sweeping in "every obligation," existing or future,
"payable in money of the United States," irrespective
Page 307 U. S. 253
of "whether or not any such provision is contained therein or
made with respect thereto." The obligations hit at by Congress were
those "payable in money of the United States." All such obligations
were declared dischargeable "upon payment, dollar for dollar, in
any coin or currency [of the United States] which, at the time of
payment, is legal tender for public and private debts." It results
that, if petitioners' claims rest upon "obligation[s] . . . payable
in money of the United States," by the terms of the Resolution,
they shall be discharged upon payment of current legal tender
dollars equal to the number of dollars promised in gold or a
particular kind of money. Decision must therefore turn upon the
nature of the "obligation[s] . . . incurred" by the railroad in its
bond contracts of 1912.
These bonds provide that,
"For a description of the property and franchises mortgaged, the
nature and extent of the security, the rights of the holders of
said bonds under the same and the terms and conditions upon which
such bonds are issued and secured, reference is made to the . . .
Mortgage."
In determining the nature of the railroad's obligation, we
accordingly look both to the mortgage and the bonds. It appears
that:
The railroad executed the mortgage in 1912 to the Guaranty Trust
Company of New York as trustee, to secure forty-year mortgage
bonds
"limited to an aggregate principal amount of One Hundred Million
Dollars ($100,000,000.00) at any one time outstanding . . . to be
payable on the first day of January, 1952, with interest at the
rate of five percent per annum payable semi-annually . . . ;"
the bonds are payable optionally in foreign currencies as
indicated above; registration in New York is required of bonds
subjected to registration; to be valid, all bonds must be
authenticated by the Guaranty Trust Company in New York; noncoupon
bonds and
Page 307 U. S. 254
coupon bonds are interchangeable upon request, but noncoupon
bonds contain no option for payment in foreign currencies; the New
York trustee is granted broad supervisory powers (for the benefit
of the bondholders) over finances and operations of the railroad;
the railroad is required to keep an office in New York where bonds
and coupons can be presented for payment, but is not required to
keep any foreign offices; in the event of default in payment of
bonds or coupons, the New York trustee is authorized, through its
agents or attorneys, to take charge of the mortgaged property, to
sell under foreclosure proceedings in the United States, and to
protect bondholders' interests by employment of attorneys and
institution of judicial proceedings either in law or equity, "for
the equal benefit of all holders of . . . outstanding bonds and
coupons;" should the Guaranty Trust Company resign as Trustee, the
bondholders may designate another which, however, "must always be a
trust company having an office in the Borough of Manhattan, in the
City of New York, N.Y."
The mortgaged property is located in the United States; the
trustee was required to be a New York trust company; enforcement of
the trust security, collection of bonds and interest, employment of
attorneys, institution of legal proceedings and distribution of
assembled assets, were all responsibilities placed upon the trustee
located in New York, and obviously contemplated that any necessary
judicial proceedings would be had in this country under the
governing law of the United States. Both the mortgage and bonds are
domestic obligations, and the law of this country must determine
their interpretation, their nature, and the obligations enforceable
under them. [
Footnote 4] The
Joint Resolution thus must govern if the
Page 307 U. S. 255
bonds are, within its terms, "obligation[s] . . . payable in
money of the United States."
In their construction of the bonds, petitioners urge that each
of the alternative promises to pay in a foreign currency is a
separate and independent "obligation" to pay. From this they argue
that the only "obligation" for which enforcement is here sought is
one "payable" in guilders, which must be treated as though it were
an entirely separate and independent promise of the railroad. But
the railroad undertook only a single obligation to repay the money
it borrowed. Repayment of that money might be called for in any
one, but only one, of the five different types of money. This,
however, did not divide the railroad's undertaking to repay into
five separate and independent obligations to repay the same loan.
Payment under the contract in any one of the currencies selected by
the bondholder would discharge the entire single obligation of the
debtor. Payment in guilders, after payment in guilders was elected,
would nonetheless discharge an obligation which, prior to such
election and payment, was an obligation also payable in United
States dollars. The language of the Joint Resolution was intended
to refer to a monetary obligation its entirety. That which the
Joint Resolution made dischargeable was the debt -- the monetary
obligation to pay. This debtor's obligation was a monetary
obligation. The foreign currencies promised were not bartered for
as commodities, but their function was that of money to be paid in
countries in which they were legal tender, and upon them interest
was to be paid. [
Footnote 5]
Interest is not paid on commodities, but on monetary obligations.
And these
Page 307 U. S. 256
promises in alternative currencies were not separate and
independent contracts or obligations, but were parts of one and the
same monetary obligation of the debtor.
The point is made, however, that this obligation of the railroad
was never payable in United States money, because the option to
receive payment in dollars has has never been exercised. Conceding
that one meaning of "payable" is "capable of being paid,"
petitioners nevertheless urge that the use of this meaning should
not be attributed to Congress, but that, instead, we must narrow
and restrict "payable" to mean an absolute and unconditional
obligation. But the railroad, since the day its bonds were issued,
was under obligation to hold itself prepared to pay United States
money -- or any one of the optional currencies. And, on the date
the Resolution went into effect, no election had been made, so that
the railroad was at that time still under obligation to pay
dollars. If, prior to election by the holders, the railroad was
under no obligation to pay United States money, it was likewise
under no obligation to pay any money, United States or otherwise,
although it then had outstanding a $100,000,000 mortgage on all of
its properties. Neither in logic nor law can it be said that the
railroad's promise, secured by a $100,000,000 mortgage, to pay in
any one of five currencies was not an obligation payable in any
currency until express election of payment in a particular currency
was made. Legal rights and obligations came into existence when the
contracts for purchase of the bonds were completed. Since the words
"obligation[s] . . . payable in money of the United States" are
clearly broad enough to require inclusion of these multiple
currency obligations, there is no justification here for
restricting the meaning of these words of the Resolution.
Consideration of the evils aimed at leaves no doubt but that such
restriction would do violence to the intention of the Congress.
The report of the Senate Committee on the Resolution opens with
words revealing its purpose. It is there stated
Page 307 U. S. 257
that
"Certain questions of interpretation have arisen with respect to
the legislation empowering the President to prevent the withdrawal
and hoarding of gold and the provision of the Thomas amendment
[
Footnote 6]
making all
coins and currencies legal tender for all debts. Additional
and immediate legislation is necessary to remove the disturbing
effect of this uncertainty and to insure the success of the policy
by closing possible
legal loopholes and removing
inconsistencies. [
Footnote
7]"
(Italics supplied.) The comprehensive language of the Resolution
was intended -- as, by its terms, it did -- to close "legal
loopholes" contributing to
"dislocation of the domestic economy which would be caused by
such a disparity of conditions in which, it is insisted, those
debtors under gold clauses should be required to pay $1.69 in
currency while respectively receiving their taxes, rates, charges,
and prices on the basis of $1 of that currency. [
Footnote 8]"
Here, the admitted purpose of the multiple currency provision
supplementing the gold clause was the same as that of the gold
clause itself -- that is, to afford creditors of United States
debtors on domestic money obligations contractual protection
against possible depreciation of United States money. It was a
plan, wholly legal when contrived, specifically designed to require
debtors to pay 1912 gold dollars or fixed amounts in foreign
currencies which were the exact equivalents of gold dollars in
1912. In purpose, pattern, and, as shown here, in result, the
multiple currency provision is identical with the practice Congress
declared to be against public policy, and it furthers a mischief
which the Resolution was enacted to end.
The mischief Congress intended to end will not end if the
multiple currency provision of these bonds is held to
Page 307 U. S. 258
be unaffected by the Resolution. Congress sought to outlaw all
contractual provisions which require debtors who have bound
themselves to pay United States dollars to pay a greater number of
dollars than promised. The Resolution intended that debtors under
obligation to pay dollars should not have their debts tied to any
fixed value of particular money, but that their entire obligations
should be measured by and tied to the actual number of dollars
promised, dollar for dollar. A multiple currency provision was
inserted in these bonds in order to tie this debtor to a fixed
value of particular money, and, relying upon this provision,
petitioners demand more dollars than promised in the bonds. The
provision is thus clearly at cross-purposes with the Resolution. By
a simple mathematical calculation translating guilder value into
dollar value, petitioners will, if the Resolution is not applied to
them, enforce the obligations of this debtor not dollar for dollar,
as the Resolution provides, but more than a dollar and a half for
every dollar borrowed, and the purpose of Congress that no such
premium need be paid will be completely defeated.
When the Joint Resolution was enacted, the railroad had, by its
promise, assumed obligations to pay its bonds in dollars; its
obligations were therefore "payable in money of the United States,"
and so fall squarely within the letter, as well as the spirit, of
the Resolution making obligations dischargeable by payment of
current United States legal tender money.
There remains the argument of petitioners 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 to the Constitution. But, as has already been pointed
out, the contracts on which the claims for guilders rest are
domestic obligations, controlled by and to be interpreted under the
law of the United States. And contracts between
Page 307 U. S. 259
private parties cannot create vested rights which serve to
restrict and limit an exercise of a constitutional power of
Congress. [
Footnote 9] These
bonds and their securing mortgage were created subject not only to
the exercise by Congress of its constitutional power "to coin
Money, regulate the Value thereof, and of foreign Coin," but also
to "the full authority of the Congress in relation to the
currency." The extent of that authority of Congress has been
recently pointed out:
"The broad and comprehensive national authority over the
subjects of revenue, finance, and currency is derived from the
aggregate of the powers granted to the Congress, embracing the
powers to lay and collect taxes, to borrow money, to regulate
commerce with foreign nations and among the several states, to coin
money, regulate the value thereof, and of foreign coin, and fix the
standards of weights and measures, and the added express power 'to
make all laws which shall be necessary and proper for carrying into
execution' the other enumerated powers. [
Footnote 10]"
Under these powers, Congress was authorized -- as it did in the
Resolution -- to establish, regulate, and control the national
currency and to make that currency legal tender money for all
purposes, including payment of domestic dollar obligations with
options for payment in foreign currencies. Whether it was "wise and
expedient" to do so was, under the Constitution, a determination to
be made by the Congress. [
Footnote 11] The Resolution that made these creditors'
bonds dischargeable in the same United States legal tender which
other creditors in this country must accept does not contravene the
Fifth Amendment.
Page 307 U. S. 260
Our conclusion that the Joint Resolution makes petitioners'
claims in bankruptcy allowable dollar for dollar renders
consideration of subsidiary questions unnecessary.
The judgments are
Affirmed.
* Together with No. 495,
Chemical Bank & Trust Co.,
Trustee v. Henwood, Trustee, also on writ of certiorari to the
Circuit Court of Appeals for the Eighth Circuit.
[
Footnote 1]
48 Stat. 112, 31 U.S.C. § 463.
[
Footnote 2]
98 F.2d 160;
Chemical Bank & Trust Co. v. Henwood,
98 F.2d 179. The Circuit Court of Appeals for the Second Circuit
previously held to the contrary,
Anglo-Continentale Treuhand,
A.G. v. St.L. Southwestern Ry. Co., 81 F.2d 11,
cert.
denied, Henwood v. Anglo-Continentale Treuhand, A.G., 298 U.S.
655, and the Court of Appeals of New York did likewise in
Zurich General & A.L. Ins. Co. v. Bethlehem Steel Co.
and
Anglo-Continentale Treuhand v. Bethlehem Steel Co.,
279 N.Y. 495, 18 N.E.2d 673, and 279 N.Y. 790, 19 N.E.2d 89;
post, p.
307 U. S. 265.
Because of the divergence of views on this important question, we
granted certiorari, 305 U.S. 588.
[
Footnote 3]
"
JOINT RESOLUTION"
"To assure uniform value to the coins and currencies of the
United States."
"Whereas the holding of or dealing in gold affect the public
interest, and are therefore subject to proper regulation and
restriction; and"
"Whereas the existing emergency has disclosed that provisions of
obligations which purport to give the obligee a right to require
payment in gold or a particular kind of coin or currency of the
United States, or in an amount in money of the United States
measured thereby, obstruct the power of the Congress to regulate
the value of the money of the United States, and are inconsistent
with the declared policy of the Congress to maintain at all times
the equal power of every dollar, coined or issued by the United
States, in the markets and in the payment of debts. Now therefore
be it"
"
Resolved by the Senate and House of Representatives of the
United States of America in Congress assembled, That (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 such 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 resolution, 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."
"Sec. 2. The last sentence of paragraph (1) of subsection (b) of
section 43 of the Act entitled 'An Act to relieve the existing
national economic emergency by increasing agricultural purchasing
power, to raise revenue for extraordinary expenses incurred by
reason of such emergency, to provide emergency relief with respect
to agricultural indebtedness, to provide for the orderly
liquidation of joint-stock land banks, and for other purposes,'
approved May 12, 1933, is amended to read as follows:"
" All coins and currencies of the United States (including
Federal Reserve notes and circulating notes of Federal Reserve
banks and national banking associations) heretofore or hereafter
coined or issued, shall be legal tender for all debts, public and
private, public charges, taxes, duties, and dues, except that gold
coins, when below the standard weight and limit of tolerance
provided by law for the single piece, shall be legal tender only at
valuation in proportion to their actual weight."
"Approved, June 5, 1933, 4.40 p.m."
[
Footnote 4]
Liverpool & G. W. Steam Co. v. Phenix Ins. Co.,
129 U. S. 397,
129 U. S. 453,
129 U. S. 459;
United States v. North Carolina, 136 U.
S. 211,
136 U. S. 222;
R. v. International Trustee, [1937] 2 All E.R. 164;
Mount Albert Borough Council v. Australasian, T. & G.S.
Life Assurance Soc., [1938] A.C. 224; Judgment of the Supreme
Court of Sweden, (Jan. 30, 1937), reported in Bulletin de
L'Institut Juridique International, April, 1937, pp. 327, 334
[
Footnote 5]
Holyoke Water Power Co. v. Paper Co., 300 U.
S. 324,
300 U. S.
335-336;
Norman v. B. & O. R. Co.,
294 U. S. 240,
294 U. S.
302.
[
Footnote 6]
48 Stat. 51, § 43.
[
Footnote 7]
Sen.Rep. No. 99, 73d Cong., 1st Sess.
[
Footnote 8]
Norman v. B. & O. R. Co., supra, 294 U. S.
315-316.
[
Footnote 9]
Norman v. B. & O. R. Co., supra, 294 U. S.
306-311;
cf. Home Bldg. & L. Assn. v.
Blaisdell, 290 U. S. 398,
290 U. S.
435.
[
Footnote 10]
Norman v. B. & O. R. Co., supra, 294 U. S.
303.
[
Footnote 11]
Juilliard v. Greenman (Legal Tender Case), 110 U.
S. 421,
110 U. S.
448-450.
MR. JUSTICE STONE, dissenting.
Without considering the question whether the bondholders in
these cases have properly exercised their options, I cannot agree
that the Joint Resolution of Congress of June 5, 1933, has set at
naught the promise of the bonds to pay guilders to the holders at
their election.
In each case, the bonds contain alternative and mutually
exclusive undertakings. The holder could, if he wished, demand
payment in United States gold dollars of a fixed standard or their
equivalent in United States currency. The alternative promise is
for payment abroad of specified amounts of any one of several
foreign currencies, without reference to their gold value at the
time of payment. Its performance is as independent of gold or gold
value as if it had called for the delivery of a specified amount of
wheat, sugar, or coffee, or the performance of specified
services.
Any construction of the gold clause resolution which would, in
the circumstances of the present case, preclude payment in foreign
money would equally forbid performance of an alternative promise
calling for the delivery of a commodity or the rendition of
services. Hence, the decisive question is whether the resolution
admits of a construction which would compel one whose contract
stipulates for delivery at his option of a cargo of sugar to accept
instead payment of a specified amount in legal tender dollars,
merely because by the terms of his contract he might have demanded,
though he did not, an equal number of gold dollars.
Page 307 U. S. 261
When the Joint Resolution was adopted, there were many
obligations of American citizens payable abroad exclusively in
foreign currency, and the attendant devaluation of the dollar
greatly increased the burden of performance of such contracts
through the necessity of purchasing with depreciated dollars the
foreign exchange required for their fulfillment. But it must be
conceded that Congress did not undertake to relieve any American
citizen of that burden, and it is not contended that the Joint
Resolution provided for the discharge of any obligations payable in
foreign currency, not measured in gold, except in the case where
the promise to pay in foreign money is an alternative for the
promise to pay in dollars. After devaluation of the dollar, the
burden on American citizens of meeting obligations abroad by
payment in foreign currencies may well have been as great whether
the undertaking was unconditional or to pay upon a condition which
had happened, or whether the obligation was to pay in a foreign
currency or to supply goods which must be acquired by the
expenditure of depreciated dollars.
We can find nothing in the legislative history of the Joint
Resolution or its language to suggest any Congressional policy to
relieve from the one form of obligation more than another, or to
indicate that the resolution was aimed at anything other than
provisions calling for payment in gold value or gold dollars or
their equivalent, which Congress explicitly named and described as
the evil to be remedied, both in the Joint Resolution itself and in
the committee reports attending its adoption.
See Sen.Rep.
No.99, 73d Cong., 1st Sess.; H.R.Rep. No.169, 73d Cong., 1st
Sess.
The Joint Resolution of Congress and the committee reports make
no mention of obligations dischargeable in foreign currencies or by
delivery of commodities or performance of services. If it was the
purpose of Congress
Page 307 U. S. 262
to control such obligations through the exercise of its power to
regulate the value of money, that fact must be discoverable from
the language of the resolution, or from some underlying public
policy to which its words and the records of Congress give no clue.
Shortly before the adoption of the resolution, Congress had
authorized the President to devalue the dollar. By appropriate
legislation and executive action, gold payments by the Treasury had
been suspended, the hoarding of gold and its exportation had been
prohibited, and all persons had been required to deliver gold owned
by them to the Treasury.
See Norman v. Baltimore & Ohio R.
Co., 294 U. S. 240,
294 U. S. 295
et seq.. It was obvious that these measures, aimed at the
suppression of the use of gold as a standard of currency value,
would fail of their purpose unless all payments in gold of the
established standard or its equivalent were outlawed. The reports
of the Congressional committees recommending the adoption of the
resolution indicate clearly enough that such was its purpose. They
give no hint that more was intended.
See Sen.Rep. No.99,
73d Cong., 1st Sess; H.R.Rep. No.169, 73d Cong., 1st Sess.
The recitals of the Joint Resolution declare that it is aimed at
"the holding of or dealing in gold," and the
"provisions of obligations which purport to give the obligee a
right to require payment in gold or a particular kind of coin or
currency of the United States, or in an amount in money of the
United States measured thereby."
No other purpose is suggested. The enacting part of the
resolution proscribes
"every provision . . . 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,"
and declares,
"Every obligation, heretofore or hereafter incurred, whether or
not any such provision is contained therein or made with respect
thereto, shall be
Page 307 U. S. 263
discharged upon payment, dollar for dollar, in any coin or
currency which at the time of payment is legal tender. . . ."
"Obligation," it states, "means an obligation . . . payable in
money of the United States." Thus, the resolution proclaims that it
is aimed at gold clauses, and declares, if language is to be taken
in its plain and most obvious sense, that provisions requiring
payment in gold dollars or measured by gold are illegal, and that
every promise or obligation "payable in money of the United States"
(not in guilders) shall be discharged "dollar for dollar" in legal
tender currency.
To arrive at the conclusion that the resolution compels that
present bondholders to accept dollars instead of the guilders for
which they have contracted, it is necessary to say that
"obligation," which the Joint Resolution defines as obligation
"payable in money of the United States" and requires to be
discharged "dollar for dollar" in legal tender, includes the
obligation payable in guilders. This difficulty is bridged by
recourse to a major operation of statutory reconstruction. It is
said that "obligation" means not the obligation or promise which is
defined by the resolution as that "payable in money of the United
States" and in which the gold clause provision is "contained" and
"with respect" to which the provision is "made," but includes all
obligations, although not dischargeable in money of the United
States or in gold, which may be written into the instrument or
document containing alternative promises, one of which is to pay in
dollars. The "obligation" of the resolution "with respect" to which
the gold clause is "made" is thus treated as synonymous with the
instrument containing the multiple obligations, and all the
provisions in it (not alone the promise to pay dollars) are now
held to be dischargeable in dollars merely because one of the
alternative promises "contained" a provision payable in "money of
the United States," although the bondholder is entitled by his
contract to demand performance of a promise to pay guilders
Page 307 U. S. 264
not measured by gold. Thus, starting with a resolution avowedly
directed at gold clauses, we are brought to the extraordinary
conclusion that a promise to pay foreign currency is void if
expressed in an instrument containing an alternative promise to pay
in money of the United States, whether of gold standard or not.
The argument is not persuasive, because it rests both upon a
strained and unnatural construction of the resolution and upon an
assumption that there was a Congressional policy to strike down
provisions for the alternative discharge of dollar obligations by
payment in foreign currency not tied to gold, which lends no
support in the language of the Joint Resolution or its legislative
history. It seems fair to suppose that, if Congress proposed to end
all possibility of creating an international market for bonds
payable in dollars or alternatively abroad in foreign currencies,
both without gold value, it would have given some more explicit
indication of that purpose than is exhibited by the Joint
Resolution. Even if we assume that Congress would have struck down
such alternative currency clauses had it considered the matter, we
are not free to do what Congress might have done but did not, or
what we may think it ought to have done, to lessen the rigors of
our own currency devaluation for those who had made contracts for
payment abroad in foreign currency without gold value.
In any case, it seems plain that, if Congress had made the
attempt, it would not have chosen to do so in terms which, if the
Court's construction of the Joint Resolution be accepted, are broad
enough to strike down every conceivable provision for payment in
foreign currency, delivery of commodities, or performance of
services as an alternative for a promise to pay dollars, whether of
gold standard or not.
THE CHIEF JUSTICE, MR. JUSTICE McREYNOLDS, and MR. JUSTICE
BUTLER concur in this opinion.