ERROR to the Court of Appeals of the State of New York.
The facts shown by the record were these:
In December, 1851, one Christian Metz, having borrowed of Frederick Bronson, executor of Arthur Bronson, fourteen hundred dollars, executed his bond for the repayment to Bronson of the principal sum borrowed on the 18th day of January, 1857, in gold and silver coin, lawful money of the United States, with 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 of New York, Metz executed a mortgage upon certain real property, which was afterwards conveyed to Rodes, who assumed to pay the mortgage debt, and did, in fact, pay the interest until and including the 1st 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 to the amount of fifteen hundred and seven dollars, a sum nominally equal to the principal and interest due upon the bond and mortgage. These notes had been declared, by the acts under which they were issued, to be lawful money and a legal tender in payment of debts, public and private, except duties on imports, and interest on the public debt.*fn1
At the time of the tender by Rodes to Bronson, one dollar in coin was equivalent in market value to two dollars and a quarter in 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 sitting 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 case was now brought here by Bronson for review.
Mr. C. N. Potter, for the plaintiff in error; a brief being moreover filed at the last term (when the cause was ordered to stand continued for reargument at this) by Mr. J. J. Townsend.
Assuming, for the purpose of this discussion, that Congress had power to declare treasury notes a legal tender in payment of private debts, the question, whether a promise to pay a certain number of secie dollars, can be discharged by a tender of the stipulated number of treasury-note dollars, seems to depend upon whether there be, in fact, legal-tender dollars of different actual values; and if so, whether courts are prevented, either by positive enactment or public policy, from recognizing this existing fact.
1. As a matter of fact, there are four legal-tender dollars of different value:
1. The gold dollar, coined since 1834, of the value of 100 cents (meaning by a cent, 1-100th of a gold dollar of that coinage).
2. The gold dollar, coined before 1834, of the value of 106 of the same cents.
3. The silver dollar, now of the value of 103 of the same cents.
4. The treasury-note dollar, now (December, 1868) of the value of 75 of the same cents.
These differences in the value of the coin dollars were not the result of a design by government to coin dollars of different values; but were the result of changes in the relative values of gold and silver.
Now, if the existing differences between these 'dollars' can be regarded, let us consider the effect of contracts made with reference to such differences.
2. Although these dollars are not equal in actual value, yet, as each is a 'dollar,' it can, therefore, be used to discharge contracts payable simply in 'dollars,' because it complies with the terms of the contract.
When a man lends money, payable merely in 'dollars,' he must receive payment in whatever the law may declare to be 'dollars' when the contract is enforced. So, if a man were to contract to deliver one thousand barrels of apples, a delivery of so many barrels of merchantable apples–whether pippins, greenings, or other variety of apples–would meet the terms of the contract and satisfy it. But where, in fact, different varieties of one article exist, and the parties contract for the delivery of a particular variety, such a contract is not satisfied by the delivery of an inferior variety of the same article. Therefore, if A. were to contract to deliver B. on the thousand barrels of 'pippins,' he could not meet that obligation by tendering on thousand barrels of inferior fruit. Both the pippin and the greening are apples, and each is good to meet a contract payable generally in 'apples.' But the greening is not the equal of the pippin. In no proper sense whatever is it of the same legal value; since a portion only of the latter may be sold or exchanged for enough of the former to meet the contract.
Upon the principle, then, of having respect first 'to that which is agreed, which is the very basis and foundation of law,' and protected by the fundamental law itself, a man who has contracted to deliver one thousand gold dollars of the coinage prior to 1834, should not be allowed to discharge his obligation by the tender of a thousand gold dollars of the present coinage (worth only nine-tenths of the other)–unless, indeed, there be some positive enactment, or some public policy to oblige the court to regard these things, unequal in themselves, as equal in law; nor, having agreed to pay one thousand specie dollars generally (which gives him the choice of coinage), should he be allowed to meet his obligation by the tender of one thousand dollars in paper notes, worth nearly a third less than the same sum in coin.
We have, therefore, to inquire whether parties are prevented from contracting with reference to, or courts are prevented from recognizing, this difference in the actual value of the dollars that government has put out. When the law declared the treasury notes 'lawful money and a legal-tender,' did it mean that a treasury-note dollar should be a lawful dollar, and so meet all contracts payable generally in 'dollars;' or did it further mean that it should be taken and deemed not only as a dollar, but as the equal of the coined dollars?
3. No value has been prescribed for the treasury-note dollar by statute; nor is there anything in the law to prevent private parties from contracting with reference to the actual existing difference in value of the different dollars.
Assuming that Congress had power to pass such a law, it might have declared, not only that treasury notes should be legal dollars, but that in law they should have the same value as coin dollars; and then, in the eye of the law, the paper would have to be regarded as equal to the coin, and by a legal fiction the court would be forced to treat the less and the greater as equal.
But Congress has not so legislated. It has simply declared that the treasury note shall be a legal tender in payment of debts as a 'dollar.' As such, it is efficacious to satisfy all debts, according to the amount of the debts, estimated in dollars. But estimated in which dollars? Estimated in the legal dollar of least value; for it is in that dollar that debts are always computed, since the debtor has the option to pay the debt in such dollars of least value.
There was, indeed, no occasion for legislation, fixing the value of the treasury-note dollar; but the contrary. Probably, not the ten-thousandth part of the debts due in the country, was due in any particular specified dollar, but only in 'dollars' generally; and every possible advantage or credit which could be conferred on government paper was given it, by enabling it to meet obligations payable in 'dollars' generally, in which the great mass of the engagements of the country were expressed.
4. Congress by its legislation, and the government by its practice, have uniformly recognized the difference in value between the coin and paper dollar.
As to the legislation of Congress: The Legal Tender Act itself discriminates (§ 1), against the treasury-note dollar for the payment of duties.
So, subsequent legislation. The act of March 17, 1862, authorized the purchase of coin with treasury notes on the most advantageous terms. The act of June 17, 1864, declared that thereafter loans of coin should not be made unless made payable in coin; thus assuming the legality of all coin loans. The act of March 10, 1866, required all returns of income to state whether made in legal tender currency or coin; and if in coin, then the assessor was to increase the assessment to the equivalent income in paper. The act of March 10, 1866, chapter xv, § 4, assumed loans of coin to be valid; and the various acts of 1861-2 authorized loans, some to be paid specially in coin, and others not.
As to the practice of the government: The government has some loans payable specially in coin and others payable in lawful money generally; it borrows coin to be repaid in coin, and treasury notes to be repaid in treasury notes. It daily issues bills, checks, and obligations payable in 'gold' and payable in 'dollars' simply, i. e., in currency. It keeps its accounts of specie and currency distinct and reports each separately. It sells commodities for coin only, and buys and sells coin for currency. It estimates taxes on sales of gold according to the market value of the gold. In all returns of taxes and income it requires coin to be turned into the equivalent currency. It taxes all legacies of coin at their equivalent in currency, and receives only coin for duties.
5. There is no reason or warrant for holding the different dollars of equal value in law; nor for refusing to recognize the actual existing difference in their values.
If the greater and the lesser dollars are to be regarded as of the same value in law, what must follow?
A. lends B. 1000 sterling, worth to-day $7000 in treasury-note dollars. By this doctrine he can recover for his 1000 only $4844.
A. dies, leaving among his effects 100,000 gold dollars. His administrator takes them, exchanges them for 200,000 treasury-note dollars, distributes to A.'s heirs in treasury notes, one-half of this sum, and pockets the residue.
An army officer seizes 100,000 gold dollars as enemy's property, exchanges it for 200,000 treasury-note dollars, and accounts to his government for only 100,000 of these dollars, and retains the residue for himself.
I deliver $10,000 in coin to a carrier. He may sell the coin for $14,000 of treasury notes, tender me $10,000 of these notes, and so discharge himself and keep the balance.
I deposit $10,000 in coin for safe keeping with my banker. I go for it next week, and if he pleases, I must be content to take $10,000 of treasury notes.
My broker collects my government coupons in gold, and, according to this doctrine, pays me the legal equivalent when he hands me over the same nominal amount of currency dollars.
A merchant sends his clerk with gold to pay duties, and he sells it, keeps the premium, and returns you the like sum in treasury ...