monetary law iracs

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1. Case of Mixt Monies 

1604
Facts: Brett owed Gilbert 100 pounds in Dublin and after the queen proclaimed a debased Irish coin lawful money, Brett tendered 100 pounds in that new coin.

Issue: Whether £100 in newly debased coin discharged a debt of 100 pounds

Rule: Royal prerogative over coinage + queens 1601 proclamation = sovereign authority defines lawful tender at nominal value (nominalism)

Application: The queen declared new coins lawful at monetary nominalism, brett tendered 100 pounds in the nominal amount, not a particular weight of silver.

Conclusion: Yes. the payment was valid holding for the debtor because sovereign law made debased coins lawful money

Connection: early nominalist foundation: legal value different from metal value. SO, The creditor bears the risk of a sovereign change in the monetary standard between contracting and payment. This is the foundation of nominalism.

2. McCulloch v. Maryland

1819

Facts: Congress chartered the Second Bank of the United States, Maryland taxed its notes, and McCulloch refused to pay the tax.

Issue: Whether Congress could charter the Second Bank of the United States and whether Maryland could tax it.

Rule: Necessary and Proper Clause, Congress may use implied — the Supremacy Clause, states may not or obstruct a federal instrument.

Application:

The Bank helped Congress tax, borrow, regulate commerce, and wage war, while Maryland’s tax could burden or destroy that federal instrument. “Necessary” does not mean absolutely indispensable.

Conclusion: Yes, Congress could create the bank, and no, Maryland could not tax it because federal law is supreme.

Left open: The Court did not decide that the bank was exempt from every state tax, such as taxes on real property or citizens’ shares.

Craig v. Missouri

1830
Issue: Whether Missouri’s loan certificates were unconstitutional bills of credit

Rule: Article I, §10 forbids states to emit bills of credit.

Application: The certificates were issued by the state, came in small denominations, circulated as money, and were accepted for taxes (pub receivability), so calling them “certificates” did not change their character.

Conclusion: Yes, the certificates were unconstitutional because they functioned as state-issued money.

Conclusion: Yes. The certificates were unconstitutional bills of credit, and the borrowers’ note was void because Missouri issued paper designed to circulate as money.

DISSENTS

Craig dissent — Johnson:

• whether the certificats were bills of credit (looked like loans),

• R: doubtful state monetary law should not be invalidated unless it clearly falls within the constitutional prohibition.

• A: Because the certificates bore interest and represented loans, Johnson believed they were not clearly circulating money.

• C No, the certificates should have been upheld because the state law was at least reasonably capable of being treated as a loan program.

Craig dissent — Thompson

• I Whether certificates backed by a specific state fund were bills of credit.

• R Paper backed by a fund is not necessarily a bill of credit issued on the state’s general faith.

• A the certificates were supported by a designated fund, so they did not represent unlimited state credit.

• C No, the certificates were not unconstitutional because they were backed by a specific fund.

Craig dissent — McLean

• I Whether the state legally forced the certificates to circulate as money.

• R A bill of credit requires state enforcement of its circulation as money.

• A. The state did not make the certificates legal tender or force private parties to accept them.

• C No, the certificates were not bills of credit because their circulation was not legally compelled.

Briscoe v. Bank of the Commonwealth of Kentucky

1837

Facts: Kentucky owned the Bank of the Commonwealth, and the bank issued notes to borrowers who later argued that the notes were unconstitutional bills of credit.
Issue: Whether notes issued by Kentucky’s wholly state-owned bank were bills of credit emitted by the state.

Rule: No state shall omit bills of credit Article 1 section 10 clause 1, directly on the states faith

Application:

1. A bill of credit must be issued by a state, on the faith of the state, and designed to circulate as money. These were formally issued by bank of commonwealth promised in coin which could be suid, adn had no pledge of kentucky faith.

Conclusion: No, the notes were not unconstitutional bills of credit because the bank, not the state, issued them.

Primary rationale: The Court drew a formal line between a state and a corporation the state owns.

Dissent:

Briscoe dissent — Justice Story

• I: Whether Kentucky could avoid the constitutional prohibition by acting through a bank that it owned and controlled.

• R: Courts must examine the substance of the monetary arrangement rather than the formal name or structure of the instrument.

• A Kentucky owned the bank, selected its officers, and used it to issue paper that performed the same function as the paper condemned in Craig.

• C Yes, the notes were unconstitutional because Kentucky issued them indirectly through its bank.

Veazie Bank v. Fenno

1869

Facts: Congress imposed a 10% tax on notes issued by state banks, and the Veazie Bank challenged the tax as unconstitutional.
Issue: Whether Congress could impose a 10% tax on state-bank notes paid out for circulation.

Rule: Article I, Section 8 says congress can “lay and collect taxes” as well as holds the power to “coin money, regulate the value thereof.” A direct tax is only a captiitation or land tax - everything else need only be uniform add something about currency in rule statement can protect own currency

Application:

1. A tax on bank-note circulation was neither a capitation tax nor a land tax, so it was not direct and did not require apportionment. The tax was uniform nationwide. Congress could suppress rival state notes to establish one national .

Conclusion: Yes, the tax was constitutional because Congress could use taxation to exclude competing state notes.

Dissent: Nelson

• I: Whether the federal tax unlawfully destroyed a state-created banking power.

• R: The power to charter banks belongs to the states under the Tenth Amendment, and Congress may not destroy that power indirectly through taxation.

• A: The 10% tax was so severe that it effectively eliminated state bank notes and interfered with state banking authority.

• C No, the tax was unconstitutional because it destroyed a power reserved to the states.

Bronson v. Rodes

1869

Facts: Rodes owed Bronson a bond payable in gold and silver coin but offered greenbacks that had much less value in coin.
Issue: Whether greenbacks could satisfy a debt expressly payable in “gold and silver coin.”

Rule: Legal tender act. Legal Tender Act of 1862,

Application:

Because the bond required gold and silver coin, greenbacks did not satisfy the specific payment promise. Import duties are paid in coin so congress holds contracts

Conclusion: No. No, Bronson did not have to accept the notes because the contract required coin.

Bronson dissent — Justice Miller

• I: Whether the words “gold and silver coin” added anything legally meaningful in an 1851 contract.

• R Dissent Rule: Before greenbacks existed, a debt stated in dollars was already understood to be payable in coin.

• A Dissent Application: The added coin language merely repeated the ordinary meaning of a dollar and did not create a special contractual exception.

• C Dissent Conclusion: Yes, the notes should have been accepted because the contract did not meaningfully require a different form of payment.

Hepburn v. Griswold

1870

Facts: Hepburn owed Griswold money under a note made before the Legal Tender Act and offered greenbacks instead of the coin-based value expected when the debt was created.
Issue: whether greenbacks could be forced onto debts made before the Legal Tender Act.

Rule: Necessary and Proper Clause, fifth ammendment, legal tender act. (due process)

Application:Hepburn’s 1860 note said only “dollars,” but then only coin was legal tender. Issuing greenbacks helped finance the war, but forcing creditors to accept them for old debts was not necessary or properly & impaired the creditor’s property.

Conclusion: No, greenbacks could not be forced onto the old debt because the law violated due process and exceeded Congress’s implied powers

Primary rationale: Issuing paper and forcing private creditors to accept it are separate powers.

Hepburn dissent — Justice Miller

• I Whether Congress could make greenbacks legal tender as part of war finance.

• R Dissent Rule: When Congress has several possible means for carrying out a constitutional power, Congress—not the Court—should choose among them.

• A Dissent Application: Legal tender was necessary to finance the Civil War and maintain the national government’s credit.

• C Dissent Conclusion: Yes, the Legal Tender Act was constitutional because Congress reasonably selected it as a war-financing tool.

Knox v. Lee

1871

Facts: One case involved a preexisting contract paid with greenbacks, while the other involved damages from property taken during the Civil War that were payable after the Legal Tender Act.
Issue: Whether congress could make greenbacks legal tender for old and new debts

Rule: Necessary and Proper Clause, Powers of congress taken together and due process

Application:Legal tender was an appropriate way to finance the war and create a workable national currency, and receiving lawful money later did not constitute a direct taking of property.

Conclusion: Yes, greenbacks could satisfy both old and new debts because Congress possessed broad monetary sovereignty

Primary rationale: A promise to pay money means a promise to pay what federal law recognizes as money at the time of payment.

Concurrence: Justice Bradley said legal tender was incidental to the borrowing power and that Congress decides when an emergency justifies its use.

Knox dissent — Chief Justice Chase and Justices Nelson, Clifford, and Field

• I Whether Congress could make greenbacks legal tender for preexisting private debts.

• R Whether a monetary measure is necessary and proper is a judicial question, and Congress cannot make itself practically unlimited by declaring its own means constitutional.

• A Forcing creditors to accept depreciated paper changed existing contracts and exceeded the Constitution’s specifically granted powers.

• C No, legal tender was unconstitutional as applied to old debts because Congress could not rewrite private obligations.

Juilliard v. Greenman

1884

Facts: Juilliard bought cotton, and Greenman offered United States notes issued during peacetime for part of the purchase price.
Issue: Whether congress could make paper legal tender during peacetime

Rule: legal tender act borrowing powers+coining powers + necessary and proper

Application: Treasury notes supported a national currency, and Congress could decide politically when legal tender was necessary even without a wartime emergency.

Conclusion: Yes. Congress could make its notes legal tender in peacetime because the national currency power is not limited to war.

Juilliard dissent — Justice Field

• I Whether Congress had a peacetime power to force private creditors to accept paper money.

• R The Constitution grants Congress power to borrow and coin money but does not expressly grant a general peacetime power to make paper legal tender.

• A Wartime necessity might justify emergency notes, but no such necessity existed during peacetime.

• C No, Congress could not impose legal tender

Ling Su Fan v. United States

1910
Issue: Whenever congress could restrict export of Pilipine silver pesos.

Rule: The Philippine organic act of 1902, due process, and the act of march 2 1903 which delegated the philopines coinage powers to regulate coins and circulation.

Application: The pesos carried the impress of sovereign power, and Congress could restrict their export even though their bullion value was higher abroad.

Conclusion: No, the restriction did not violate due process because the government could regulate the circulation of its coins.

Primary rationale: Coin is not merely bullion or ordinary private property; it bears the “impress of sovereign power.”

Dissent: None; unanimous.

Nortz v. United States

1935

Facts: Nortz held gold certificates that the Treasury required him to exchange for paper money, and he claimed the difference between the paper amount and the higher value of the gold.
Issue: Whether a holder of gold certificates could recover increased gold value after the government required surrender of gold and paid paper dollars.

Rule: Joint resolution, Congress sovereign monetary power, and fifth amendment. .

Application: Because Nortz could not prove that he could legally obtain the higher market value of the gold, he had not shown an actual financial loss.

Conclusion: No, Nortz was not owed additional compensation because he could not prove an actual loss.

Primary rationale: The government could change the monetary system, and the holder could not demand the prohibited market value of gold.

Dissent: McReynolds van devanter butler sutherland all said cannot use monetary power to destroy priv property

Norman v. Baltimore & Ohio Railroad Co.

1935

Facts: A railroad bond promised payment in gold, but Congress later invalidated gold clauses and required payment in ordinary legal tender after devaluation.
Issue: Whether Congress could void a gold clause in a private railroad bond.

Rule: Congress’s monetary power, supremacy clause, joint resolution.

Application: The gold clause measured the value of money rather than requiring delivery of a physical commodity, so Congress could replace it with dollar-for-dollar legal tender. Norman’s bond contained a gold clause designed to protect him if the dollar was devalued. The Court found that widespread enforcement of gold clauses would undermine Congress’s decision to establish a uniform currency.

Conclusion: Yes, Congress could override the gold clause because private contracts could not prevent federal monetary regulation.

Primary rationale: A gold clause would preserve a private, gold-linked unit of payment after Congress had changed the national monetary standard.

Norman dissent — Justice McReynolds and Justices Van Devanter, Sutherland, and Butler

• I Whether Congress could destroy a private creditor’s express promise to receive gold-value payment.

• R Congress may regulate money but may not use monetary power to destroy vested contractual rights.

• A The bond expressly promised gold of a particular weight and fineness, so replacing it with cheaper paper transferred value from the creditor to the debtor.

• C No, Congress could not invalidate the gold clause because doing so impaired a private contract.

Perry v. United States

1935

Facts: Perry held a United States bond promising gold payment and demanded more than the bond’s face value after the government devalued the dollar.
Issue: Whether Congress could invalidate the gold clause in its own Liberty Bonds.

Rule: Public Debt Clause of the Fourteenth Amendment, the validity of the public debt of the United States “shall not be questioned.” Joint resolution

Application: The government exceeded its borrowing power by invalidating its own gold promise, but Perry could not recover additional damages because he did not prove an actual monetary loss.

Conclusion: No, Congress could not repudiate the gold clause, but Perry recovered nothing beyond the bond’s face value because he showed no compensable loss.

Perry separate opinion — Justice Stone’s concurrence

• I Whether Perry could recover damages even though the government exceeded its constitutional authority.

• R A constitutional violation does not automatically create damages without proof of actual financial loss.

• A Perry received the full face value of the bond and did not prove that the government’s action caused an additional measurable loss.

• C Perry could not recover extra damages because he failed to prove actual loss.