Bank of Commonwealth v. Van Vleck

Clerke, J. The judge, at special term, has found, as a matter of fact, that the plaintiffs loaned to the defendants — 520 — ten thousand dollars in gold; that the defendants agreed to repay this loan in gold; and .that they have repeatedly since the loan promised to return gold to that amount, but that they .have never done so. Does the act of congress, commonly called the legal tender act, apply to this transaction ? In Rodes v, Bronson, (34 N. Y. Rep. 649,) it was held that an obligation contained in a mortgage, executed the 16th of December, 1851, that the mortgagors would pay $1400, on the 1st of-January, 1857, “in gold or silver coin, lawful .money of the United States,” may be satisfied in United States legal tender notes; the grantee of the mortgaged property having tendered to the defendant, on the 10th of January, 18.65, in payment of the mortgage, United States treasury - notes of "an equivalent denomination. When the mortgage in that case was executed, gold and silver constituted the legal currency, and the only legal currency, of the United - States; and it would have been considered a most monstrous and chimerical idea, at that happy period, to suppose that any other material would be substituted in their place .by the. national legislature. That, indeed, were a calamity deemed so 'demoralizing, so disorganizing, so fatal to financial" and commercial stability, that the most desponding or despairing would not venture to predict it. But this calamity has fallen upon us ; and while gold and silver then álóne constituted the currency of the United States, treasury notes now- alone'constitute it, and alone constituted it, when the tender was made in the case "of Bodes v. Bronson. The obligation in that case was, in fact, to pay “ in lawful money of the United States,” the words “.in gold or silver coin ” being, deemed mere surplusage. The gist of the promise was, that the debt should be satisfied with whatever might be lawful money of the United States at the time it should become payable. By the acts of congress, passed on the 25th February and 11th July, 1862, United States treasury notes were, in effect, declared to be the only lawful currency of .the — 521 — nation; they were, as I have said, substituted as such, for what had ever been before, since the adoption of the federal constitution, regarded as the only lawful currency. The provisions of these acts, making treasury notes lawful money, and legal tender in payment of debts, have been solemnly pronounced by the highest court of appellate jurisdiction in this state valid, and in all respects in perfect accord and harmony with the federal constitution, hi ever before had it been disputed that the obligations of a debtor to his creditor were inviolable, except when the former took shelter under laws regulating bankruptcy or insolvency. The constitution itself, in the section containing the restrictions and prohibitions upon the authority of the states, plainly shows that those obligations were so regarded by its framers ; but these acts compel creditors, who were thus' entitled to payment in gold and silver coin, to accept, in lieu thereof, paper promises at some indefinite time in the distant future. It may, therefore, be contended with some semblance of plausibility, that the effect of this was nothing more or less than confiscation; confiscation of one half, one third, or the one fourth of vested rights, or whatever proportion it might be, according to the varying value of the paper promises at th# time of payment. That high tribunal, however, has decreed that the acts authorizing these wholesale confiscations are necessary and proper for carrying into execution some of the enumerated powers delegated by the states to congress, such as the power to borrow money and to regulate commerce. I am uncertain whether a very startling proposition, urged (dare we say argued ?) with . recondite zeal by one of the counsel of the successful party, has been adopted or repudiated by the court; namely, that the issuing of promises to pay money at an indefinite period, engraved' on small pieces of colored paper, is the exercise of the power to “ coin money ” under the constitution. {See art. I, § 8, sub. 5.) That is to say, a promise to pay money (which refers to the future) is the coining of money (which refers and appertains to the present.) — 522 — Although the question has not been settled by the Supreme Court of the United States, we are of course bound to follow these decisions, in whatever degree they may shock our well-matured and long cherished convictions. None of them, however, in my opinion, affect the case before us. Paper promises having been substituted as the national currency in the place of gold an'd silver, the latter have disappeared as currency; they no longer possess the functions of national instruments of exchange; and they have become, whatever may be their form, whether in bullion or in coin, merely articles of commerce, having the same characteristics, and being liable to the same legal disposition as other articles of commerce, when they are the subject matter of a contract. Therefore, since the passage of the acts of 1862, when a person promises, for any valid consideration, to return gold or silver, instead of the national currency, he is bound to return those specific things, precisely as he would be bound to return a specific quantity and quality of cotton, if he had promised to do so for a valid consideration. There can be no possible difference; the fact that the one commodity at a former time constituted the legal currency, is no reason why it should be regarded in a different light from other commodities when it is no longer recognized or employed in that capacity. No one would hesitate, for a moment, to declare what the obligations of the defendants were, if instead of goM they borrowed cotton, and promised to return the same commodity of equal quantity and quality; and I presume there would be as little hesitation, if, in the present case, instead of indicating the quantity and quality of the gold lent and the gold to be returned, by employing the word “ dollars,” they mentioned gold of a specific weight to indicate the quantity; and of a certain proportion of alloy, or number of carat grains, to indicate the quality, or that it should be what, in the trade, is called jewelers’ gold, or mosaic gold. But, surely, the employment of the word “ dollars” can make no difference in the face of the manifest intent of the contracting parties. The word was obviously — 523 — employed merely for the purpose of signifying the quantity and the quality of the article lent and to be returned. At the time of the transaction, it was notorious that the word dollar in paper, was a very different thing from what it was in gold ;• and we all know, by sad daily experience, that the difference soon greatly increased, and that it is great even now. Thus the defendants promised to do something different from paying an ordinary debt; they promised- to return tb the plaintiffs gold of the same quantity and quality as that which they received from them; and the character of the promise is, in no respect, altered by their employment of the word “ dollars,” to designate the quantity and quality, instead of stating-the specified weight, and specified proportions of alloy, or specified carat grain; as they would have done, if the gold borrowed was in the form of bullion instead of coin. The plaintiffs, therefore, are entitled to damages for breach of this contract, unless they have expressly, or impliedly, released the defendants from its obligation. II. Have the plaintiffs done this P The judge holds, as a matter of fact, that on the 9th of December, 1863, the defendants directed the plaintiffs to write up the bank book, with a view to close their account, having previously found that on the 1st of September, a few minutes after .the loan of the gold to the defendants, they delivered to the plaintiffs their check for '$10,000 ; that the plaintiffs received the money for said check in legal tender notes ; that the check was credited to the defendants in the general account which they kept with the bank, and on closing this account a balance of about $700 was found to be due to the defendants, which the' plaintiffs paid. He finds, also, that the accounts so settled were made up exclusively of the defendants’ deposits on one side, and the drafts against these deposits on the other, and did not include any charge of gold or premium as sold to the defendants. The check of $10,000 was received as a deposit, like any other deposit, and, as we have seen, was credited, like any other, to-the defendants. — 524 — [New York General Term, June 3, 1867. •He also finds, that after the payment of the balance due to the defendants on the bank account, the cashier demanded the return of the gold, and the defendants promised to return it, and that the plaintiffs did not intend, by receiving the check for $10,000, to satisfy or discharge the defendants’ obligation under the contract, by which the gold was borrowed. Consequently, there was no release,- and if I am right in concluding that the defendants are bound by the contract to return $10,000 in gold, the judgment should be reversed, and a new trial ordered, costs to abide the event. Leonard, P. J. concurred. Welles, J. .dissented. Hew trial granted. Leonard, Clerke and Welles, Justices.]