Perry v.
United States
Majority
The
question of damages. In this view of the binding quality of the Government's
obligations, we come to the question as to the plaintiff's right to recover
damages. That is a distinct question. Because the Government is not at liberty
to alter or repudiate its obligations, it does not follow that the claim
advanced by the plaintiff should be sustained. The action is for breach of
contract. As a remedy for breach, plaintiff can recover no more than the loss
he has suffered and of which he may rightfully complain. He is not entitled to
be enriched. Plaintiff seeks judgment for $16,931.25, in present legal tender
currency, on his bond for $10,000. The question is whether he has shown damage
to that extent, or any actual damage, as the Court of Claims has no authority
to entertain an action for nominal damages. Grant v. United States, 7 Wall.
331, 338; Marion R.V. Ry. Co. v. United States, 270 U.S. 280, 282; Nortz v.
United States, decided this day, ante, p. 317. 355 12 Perry v. United States
294 U.S. 330 (1935) Plaintiff computes his claim for $16,931.25 by taking
the weight of the gold dollar as fixed by the President's proclamation of
January 31, 1934, under the Act of May 12, 1933 ( 48 Stat. 52, 53), as amended
by the Act of January 30, 1934 ( 48 Stat. 342), that is, at 15 5/21 grains
nine-tenths fine, as compared with the weight fixed by the Act of March 14,
1900 ( 31 Stat. 45), or 25.8 grains nine-tenths fine. But the change in
the weight of the gold dollar did not necessarily cause loss to the plaintiff
of the amount claimed. The question of actual loss cannot fairly be determined
without considering the economic situation at the time the Government offered
to pay him the $10,000, the face of his bond, in legal tender currency. The
case is not the same as if gold coin had remained in circulation. That
was the situation at the time of the decisions under the legal tender acts of
1862 and 1863. Bronson v. Rodes, 7 Wall. 229, 251; Trebilcock v. Wilson, 12
Wall. 687, 695; Thompson v. Butler, 95 U.S. 694, 696, 697. Before the
change in the weight of the gold dollar in 1934, gold coin had been withdrawn
from circulation. The Congress had authorized the prohibition of the
exportation of gold coin and the placing of restrictions upon transactions in
foreign exchange. Acts of March 9, 1933, 48 Stat. 1; January 30, 1934, 48 Stat.
337. Such dealings could be had only for limited purposes and under license.
Executive Orders of April 20, 1933, August 28, 1933, and January 15, 1934;
Regulations of the Secretary of the Treasury, January 30 and 31, 1934. That
action the Congress was entitled to take by virtue of its authority to deal
with gold coin as a medium of exchange. And the restraint thus imposed upon
holders of gold coin was incident to the limitations which inhered in their
ownership of that coin and gave them no right of action. Ling Su Fan v. United
States, 218 U.S. 302, 310, 311. The Court said in that case: "Conceding
the title of the owner of such coins, yet there is attached to such ownership
those limitations which public policy may require by reason of their quality as
a legal tender and as a medium of exchange. These limitations are due to the
fact that public law gives to such coinage a value which does not attach as a
mere consequence of intrinsic value. Their quality as a legal tender is an
attribute of law aside from their bullion value. They bear, therefore, the impress
of sovereign power which fixes value and authorizes their use and exchange. . .
. However unwise a law may be, aimed at the exportation of such coins, in the
face of the axioms against obstructing the free flow of commerce, there can be
no serious doubt that the power to coin money includes the power to prevent its
outflow from the country of its origin." The same reasoning is applicable
to the imposition of restraints upon transactions in foreign exchange. We
cannot say, in view of the conditions that existed, that the Congress, having
this power, exercised it arbitrarily or capriciously. And the holder of an
obligation, or bond, of the United States, payable in gold coin of the former
standard, so far as the restraint upon the right to export gold coin or to
engage in transactions in foreign exchange is concerned, was in no better case
than the holder of gold coin itself. In its Report of May 27, 1933, it was
stated by the Senate Committee on Banking and Currency: "By the Emergency
Banking Act and the existing Executive Orders gold is not now paid, or
obtainable for payment, on obligations public or private." Sen. Rep. No.
99, 73d Cong., 1st sess. In considering what damages, if any, the
plaintiff has sustained by the alleged breach of his bond, it is hence
inadmissible to assume that he was entitled to obtain gold coin for recourse to
foreign markets, or for dealings in foreign exchange, or for other purposes
contrary to the control over gold coin which the Congress had the power to
exert, and had exerted, in its monetary regulation. Plaintiff's damages
could not be assessed without regard to the internal economy of the country at
the time the alleged breach occurred. The discontinuance of gold payments
and the establishment of legal tender currency on a standard unit of value with
which "all forms of money" of the United States were to be
"maintained at a parity," had a controlling influence upon the
domestic economy. It was adjusted to the new basis. A free domestic
market for gold was non-existent. 13 Perry v. United States 294 U.S. 330 (Plaintiff
demands the "equivalent" in currency of the gold coin promised. But
"equivalent" cannot mean more than the amount of money which the
promised gold coin would be worth to the bondholder for the purposes for which
it could legally be used. That equivalence or worth could not properly
be ascertained save in the light of the domestic and restricted market which
the Congress had lawfully established. In the domestic transactions to which
the plaintiff was limited, in the absence of special license, determination of
the value of the gold coin would necessarily have regard to its use as legal
tender and as a medium of exchange under a single monetary system with an
established parity of all currency and coins. And in view of the control of
export and foreign exchange, and the restricted domestic use, the question of
value, in relation to transactions legally available to the plaintiff, would
require a consideration of the purchasing power of the dollars which the plaintiff
could have received. Plaintiff has not shown, or attempted to show, that in
relation to buying power he has sustained any loss whatever. On the
contrary, in view of the adjustment of the internal economy to the single
measure of value as established by the legislation of the Congress, and the
universal availability and use throughout the country of the legal tender
currency in meeting all engagements, the payment to the plaintiff of the amount
which he demands would appear to constitute not a recoupment of loss in any
proper sense but an unjustified enrichment. Plaintiff seeks to make his
case solely upon the theory that by reason of the change in the weight of the
dollar he is entitled to one dollar and sixty-nine cents in the present
currency for every dollar promised by the bond, regardless of any actual loss
he has suffered with respect to any transaction in which his dollars may be
used. We think that position is untenable. In the view that the facts alleged
by the petition fail to show a cause of action for actual damages, the first
question submitted by the Court of Claims is answered in the negative. It is
not necessary to answer the second question. Question No. 1 is answered
"No."
Minority
By various
orders of the President and the Treasury from April 5 to December 28, 1933,
persons holding gold certificates were required to deliver them, and accept
"an equivalent amount of any form of coin or currency coined or issued
under the laws of the United States designated by the Secretary of the Treasury."
Heavy penalties were provided for failure to comply.
The Act of
March 14, 1900, 31 Stat., c. 41, 45, 47, as amended, in effect until January
31, 1934, provided: "That the dollar consisting of twenty-five and
eight-tenths grains of gold nine-tenths fine, . . . shall be the standard unit
of value, and all forms of money issued or coined by the United States shall be
maintained at a parity of value with this standard,"
By
Executive Orders, April 5, and April 20, 1933, the President undertook to
require owners of gold coin, gold bullion, and gold certificates, to deliver
them on or before May 1st to a Federal Reserve Bank, and to prohibit the
exportation of gold coin, gold bullion or gold certificates. As a consequence
the United States were off the gold standard and their paper money began a
rapid decline in the markets of the world. Gold coin, gold certificates and
gold bullion were no longer obtainable. "Gold is not now paid nor is it
available for payment upon public or private debts" was declared in
Treasury statement of May 27, 1933; and this is still true. All gold coins have
been melted into bars.
The
Gold Reserve Act of January 30, 1934, 48 Stat., c. 6, p. 337, 342, undertook to
ratify preceding Presidential orders and proclamations requiring surrender of
gold but prohibited him from establishing the weight of the gold dollar
"at more than 60 per centum of its present weight." By proclamation,
January 31, 1934, he directed that thereafter the standard should contain 15
5/21 grains of gold, nine-tenths fine. (The weight had been 25.8 grains since
1837.) No such
dollar has been coined at any time. The fundamental problem now presented is
whether recent statutes passed by Congress in respect of money and credits,
were designed to attain a legitimate end. Or whether, under the guise of
pursuing a monetary policy, Congress really has inaugurated a plan primarily
designed to destroy private obligations, repudiate national debts and drive
into the Treasury all gold within the country, in exchange for inconvertible
promises to pay, of much less value. Considering all the circumstances, we must
conclude they show that the plan disclosed is of the latter description and its
enforcement would deprive the parties before us of their rights under the Constitution.
Consequently the Court should do what it can to afford adequate relief.
Considering
all the circumstances, we must conclude they show that the plan disclosed is of
the latter description and its enforcement would deprive the parties before us
of their rights under the Constitution. Consequently the Court should do what
it can to afford adequate relief.
Can the
Government, obliged as though a private person to observe the terms of its
contracts, destroy them by legislative changes in the currency and by statutes
forbidding one to hold the thing which it has agreed to deliver? If an
individual should undertake to annul or lessen his obligation by secreting or
manipulating his assets with the intent to place them beyond the reach of
creditors, the attempt would be denounced as 381 fraudulent, wholly
ineffective. Counsel for the Government and railway companies asserted with
emphasis that incalculable financial disaster would follow refusal to uphold,
as authorized by the Constitution, impairment and repudiation of private
obligations and public debts. Their forecast is discredited by manifest
exaggeration. But, whatever may be the situation now confronting us, it is the
outcome of attempts to destroy lawful undertakings by legislative action; and
this we think the Court should disapprove in no uncertain terms
MR. JUSTICE
McREYNOLDS, MR. JUSTICE VAN DEVANTER, MR. JUSTICE SUTHERLAND, and MR. JUSTICE
BUTLER dissent
Congress responded to the ambiguous Perry ruling
with an additional resolution (Pub. Res. 74–63) that provided sovereign immunity of the federal
government against claims for damage resulting from the devaluation of currency
or other federal obligations
We want a Supreme Court,” declared President Franklin
Roosevelt in March 1937, “which will do justice under the Constitution
— not over it. In our courts, we want a government of laws and not of
men.”
https://www.law.cornell.edu/uscode/text/31/5118
(a)In this section—
(1)“gold clause” means a provision in or related
to an obligation alleging to give the obligee a
right to require payment in—
(A)
gold;
(B)
a particular
United States coin or currency; or
(C)
United States
money measured in gold or a particular United States coin or currency.
(2)
“public debt obligation” means a domestic obligation issued or guaranteed by the
United States Government to repay money or interest.
(b)
The United
States Government may not pay out any gold coin. A person lawfully holding
United States coins and currency may present the coins and currency to the
Secretary of the Treasury for exchange (dollar for dollar) for other United
States coins and currency (other than gold and silver coins) that may be
lawfully held. The Secretary shall make the exchange under regulations
prescribed by the Secretary.
(c)
(1)The Government withdraws its consent given to anyone
to assert against the Government, its agencies, or its officers, employees, or
agents, a claim—
(A)
on a gold clause public debt obligation or interest on the obligation;
(B)
for United
States coins or currency; or
(C)
arising out of
the surrender, requisition, seizure, or acquisition of United States coins or
currency, gold, or silver involving the effect or validity of a change in the
metallic content of the dollar or in a regulation about the value of money.
(2)
Paragraph (1) of
this subsection does not apply to a proceeding in which no claim is made for
payment or credit in an amount greater than the face or nominal value in
dollars of public debt obligations or United States coins
or currency involved in the proceeding.
(3)
Except when
consent is not withdrawn under this subsection, an amount appropriated for
payment on public debt obligations and for United States
coins and currency may be expended only dollar for dollar.
(d)
(1)
In this
subsection, “obligation” means any obligation (except United States
currency) payable in United States money.
(2)
An obligation issued containing
a gold clause or governed by a gold clause is discharged on payment
(dollar for dollar) in United States coin or currency that is legal tender at
the time of payment. This paragraph does not apply to an obligation issued after October 27,
1977.
#GOLDCLAUSECASES hashtag#SCOTUS hashtag#HUGHESCOURT hashtag#LIBERTYBOND hashtag#PERRYVUNITEDSTATES (1)
PERRY V. UNITED STATES 294 US 330 (1935)
PERRY V. UNITED STATES, LIBERTY BOND,
DEUDA PÚBLICA Y CLAUSULA VALOR ORO, SCOTUS, SUPREME COURT OF THE UNITED STATES,
