Emery Bird Thayer Dry Goods Co. v. Williams

• Decision Date: 06 November 1939
• Docket Number: No. 10853,10854.,10853
• Citation: 107 F.2d 965
• Parties: EMERY BIRD THAYER DRY GOODS CO. et al. v. WILLIAMS et al. WILLIAMS et al. v. EMERY BIRD THAYER DRY GOODS CO. et al.
• Court: U.S. Court of Appeals — Eighth Circuit

107 F.2d 965 (1939)

EMERY BIRD THAYER DRY GOODS CO. et al. v. WILLIAMS et al. WILLIAMS et al. v. EMERY BIRD THAYER DRY GOODS CO. et al.

Nos. 10853, 10854.

Circuit Court of Appeals, Eighth Circuit.

November 6, 1939.

William D. Whitney, of New York City, and Armwell L. Cooper, of Kansas City, Mo. (Frederick H. Wood, of New York City, Ellison A. Neel, William E. Kemp, and Wallace Sutherland, all of Kansas City, Mo., Harold F. McGuire, of Washington, D. C., Frank E. Atwood, of Jefferson City, Mo., Cravath, deGersdorff, Swaine & Wood, of New York City, and Cooper, Neel, Kemp & Sutherland, of Kansas City, Mo., on the brief), for appellants and appellees Emery Bird Thayer Dry Goods Co. and others.

Barton Corneau, of Boston, Mass. (Henry M. Channing, of Boston, Mass., Robert B. Caldwell, of Kansas City, Mo., Channing, Corneau & Frothingham, of Boston, Mass., and McCune, Caldwell & Downing, of Kansas City, Mo., on the brief), for appellees and appellants Moses Williams.

Paul R. Stinson, of Kansas City, Mo., amicus curiæ.

Before STONE, SANBORN, and THOMAS, Circuit Judges.

STONE, Circuit Judge.

This case involves the applicability of the "Gold Clause" Joint Resolution of June 5, 1933, 48 Stat. 112, 113, U.S.C.A. title 31, Section 463, to a ninety-nine year lease of real estate executed in 1890. The case is here on cross-appeals. Plaintiffs-appellants are the assignee of the lease and the sub-lessee from the assignee. Defendants are the lessors. An earlier determination of these appeals (8 Cir., 98 F.2d 166, certificate to Supreme Court dismissed and motion to take up case on entire record denied 302 U.S. 651, 58 S.Ct. 269, 82 L.Ed. 505) was set aside on a petition for rehearing.

To understand the determinative issues on these cross-appeals which are necessary to our determination, a brief statement as to certain provisions of the lease, as to some of the (undisputed) evidence, and as to the decree entered by the trial court is required. The lease provided that, during the first seven years of the lease, the rental should be paid quarterly in designated amounts of dollars "in gold coin of the United States of the present standard of weight and fineness" — the last three quarterly payments of the seventh year being $6,000 in such gold coin. During the following ninety-two years of the lease, the lessee was required to satisfy the annual rent with "five hundred and fifty-seven thousand, two hundred and eighty (557,280) grains of pure, unalloyed gold, in four quarter-yearly instalments, each in advance, of one hundred and thirty-nine thousand, three hundred and twenty (139,320) grains each, * * the first delivery of such pure gold to be made on the First day of April, 1897.

"Provided, however, that the lessors may, from time to time, at their option, require in lieu of any such quarter-yearly delivery of pure, unalloyed gold, the payment at the time and place appointed for such delivery, of the sum of six thousand dollars ($6,000), in such lawful currency of the country as the lessors may designate." The lease was subject to forfeiture and the property to reentry, at the option of the lessors, upon failure of the lessee to perform any condition of the lease.

Up to January 1, 1934, all payments of rent were made by checks or drafts, which were accepted and cashed without question. By the above date, the Gold Clause Joint Resolution, the Emergency Banking Act of March 9, 1933, 48 Stat. 1, U.S.C.A. Title 12, Section 248 (n), and the order of the Secretary of the Treasury of December 28, 1933, had all become effective. Thus, on January 1, 1934, it became and ever since has been impossible for plaintiffs to deliver gold, as provided in the lease.

December 19, 1933, the lessors wrote demanding payment of quarterly rent due January 1, 1934, and thereafter, by delivery to them of 139,320 grains of pure gold or by "your bank check for a number of dollars equal to the amount which the government would then pay for a like amount to of newly mined gold." At that time and thereafter, the dollar value of the above grains of gold has been $10,158.75.

Under protest and duress of threats of forfeiture of the lease, payment of $10,158.75 was made for each of the quarters in 1934 and for the first and second quarters of 1935. This action was filed May 15, 1935, seeking to enjoin defendants from attempting to forfeit the lease or to collect more than $6,000 as quarterly rental; and for recovery of the excess rental theretofore paid under protest and duress. Plaintiffs pleaded an offer, pending the litigation, to pay $6,000 to lessors unconditionally and to pay the claimed excess rental to defendants or into court to be disposed of in accordance with the decree on the merits. By amended complaint, plaintiffs prayed that the court decree (1) the provision of the lease requiring delivery of gold to be unlawful and void; (2) that the quarterly rental would be satisfied by payment of $6,000 in lawful currency of the United States; (3) that defendants be enjoined from forfeiting or attempting to forfeit the lease so long as quarterly rent of $6,000 was promptly paid and the other covenants of the lease performed by plaintiffs; and (4) for general relief.

The answer and cross complaint denied the applicability of the Joint Resolution or other Acts to the lease; challenged their constitutionality, if applicable; and prayed a decree of forfeiture of the lease for non-delivery of gold since January 1, 1934.

The decree of the trial court held that the Joint Resolution was not applicable to the lease; that plaintiffs were not entitled to recover the excess rent paid to defendants and the excess rent deposited in court pendente lite; that the equivalent in value ($10,158.75 quarterly) of the gold in lawful currency would constitute compliance with the lease requirement for gold (this because gold was unobtainable); and denied forfeiture for failure to deliver gold, so long as gold remained unobtainable and the equivalent value in currency was paid.

The primary issue involved in the appeals is the applicability of the Joint Resolution. Upon the determination of that issue, depends which of the other issues are necessary to be considered. If the Resolution is applicable, there next comes the issue of constitutionality of the Resolution so applied. Whether the Resolution is applicable or not and whether, if applicable, it is or is not constitutional as so applied, there are other issues (though dependent upon determination as to such applicability or validity) which will be considered in order.

I. Applicability of Joint Resolution.

For reasons of practical convenience, we treat this issue from the standpoint of the reasons urged by defendants why the Resolution is not applicable. If any one of these reasons is sound and excludes the lease from the Resolution that is enough. These contentions of defendants are, in essence, as follows:

(a) Under the lease, the rent was dischargeable by delivery of gold — as a commodity — with no option in lessee to substitute money for gold;

(b) lessors' option to require payment of a fixed sum ($6,000 quarterly) in lieu of gold was never exercised — being merely an offer by lessee which gave rise to no duty or right;

(c) the Resolution applies only to United States money obligations payable in money of the United States and not to gold bullion rentals.

Each of these contentions has been ably presented but such separate treatment, while accentuating the immediate matter, has resulted in some entirely natural if not indeed unavoidable repetition of thought. Such procedure is not to be criticised in a brief or in an argument. If possible, it should be absent from an opinion. Therefore, we shall endeavor to treat all of the above matters in the course of one discussion instead of taking them up separately.

The lease provides¹ that the lessee shall "deliver to the lessors, as yearly rental for said demised premises," at indicated places within the United States certain designated amounts of dollars "in gold coin of the United States of the present April 11, 1890 standard of weight and fineness, in your quarterly yearly instalments, each in advance" — such method of payments to continue for seven years, that is, up to the payment due April 1, 1897. During the remainder of the time (ninety-two years), the annual rental was to be "Five hundred and fifty-seven thousand, two hundred and eighty (557,280) grains of pure, unalloyed gold, in four quarter-yearly instalments, each in advance, of one hundred and thirty-nine thousand, three hundred and twenty (139,320) grains each * * * Provided, however, that the lessors may, from time to time, at their option, require in lieu of any such quarter-yearly delivery of pure, unalloyed gold, the payment * * * of the sum of six thousand dollars ($6,000), in such lawful currency of the country as the lessors may designate."

As contended by defendants, the above outlined provision of the lease as to rent (applicable to the period here involved) does require payment in bullion with an optional right in lessors alone to require currency as to any payments designated by them. Also, gold bullion is often dealt in purely as a commodity to be employed in commercial, trade, artistic or scientific uses. Also, gold in form of bullion is not dollars nor any kind of money.

However, the determination that this lease requirement of delivery of bullion is one for gold in a form which is not money but is susceptible of and often used for various purposes as a commodity, does not necessarily result in the conclusion that the Resolution cannot apply to this lease provision. This is true because gold has, in addition to the above uses, been (until recently and since this lease was executed) long employed as the basic money metal in this country as well as all of the important commercial nations, of the world. It is this intimate relation of gold to money which introduces a decisive element...