Smyth v. United States Dixie Terminal Co v. Same United States v. Machen 198
| Decision Date | 13 December 1937 |
| Docket Number | Nos. 42,43,s. 42 |
| Citation | 114 A.L.R. 807,82 L.Ed. 294,302 U.S. 329,58 S.Ct. 248 |
| Parties | SMYTH v. UNITED STATES. DIXIE TERMINAL CO. v. SAME. UNITED STATES v. MACHEN. , and 198 |
| Court | U.S. Supreme Court |
[Syllabus from pages 329-331 intentionally omitted] Mr. Robert A. Taft, of Cincinnati, Ohio, for petitioners Smyth and Dixie Terminal Co.
[Argument of Counsel from pages 332-341 intentionally omitted]
Mr. Stanley F. Reed, Sol. Gen., of Washington, D.C., for the United states.
[Argument of Counsel from Pages 341-344 intentionally omitted]
Mr. H. Vernon Eney, of Baltimore, Md., for respondent Machen.
[Argument of Counsel from Pages 345-347 intentionally omitted]
Three cases present a single question: Was a notice of call issued by the Secretary of the Treasury for the redemption of Liberty Loan bonds effective to terminate
the running of interest on the bonds from the designated redemption date?
Petitioner in No. 42 is the owner of a $10,000 First Liberty Loan 3 1/2 per cent. bond of 1932—1947, serial number 6670. The bond was issued pursuant to the Act of April 24, 1917 (40 Stat. 35), and Treasury Department Circular No. 78, dated May 14, 1917, and was purchased by petitioner in December, 1934, for $10,362.50 and accrued interest. Its provisions, so far as material, read as follows: * * *'
On March 14, 1935, the Secretary of the Treasury published a notice of call for the redemption on June 15, 1935, of all the bonds so issued.
'Public notice is hereby given:
'1. All outstanding First Liberty Loan bonds of 1932-47 and hereby called for redemption on June 15, 1935. The
various issues of First Liberty Loan bonds (all of which are included in this call) are as follows:
'First Liberty Loan 3 1/2 percent bonds of 1932-47 (First 3 1/2's), dated June 15, 1917; * * *
Thereafter, on April 22, 1935, the Secretary of the Treasury issued a circular (Department Circular, No. 535) prescribing rules for the redemption of First Liberty Loan bonds, and providing, among other things, as follows:
Nearly two years before the publication of the notice of call Congress had adopted the Joint Resolution of June 5, 1933 (48 Stat. 112, 31 U.S.C.A. §§ 462, 463), by which every obligation purporting to be payable in gold or a particular kind of coin or currency, or in an amount in money of the United States measured thereby was to be discharged upon payment, dollar for dollar, in any coin or currency which at the time of payment was legal tender for public and private debts. Nearly four weeks before the publication of the notice of call, the validity of that Joint Resolution had been the subject of adjudication by this court in the Gold Clause Cases, Norman v. Baltimore & Ohio Railroad Co., 294 U.S. 240, 55 S.Ct. 407, 79 L.Ed. 885, 95 A.L.R. 1352, Nortz v. United States, 294 U.S. 317, 55 S.Ct. 428, 79 L.Ed. 907, 95 A.L.R. 1346, and Perry v. United States, 294 U.S. 330, 55 S.Ct. 432, 79 L.Ed. 912, 95 A.L.R. 1335, all decided February 18, 1935. We may presume that the call was issued with knowledge of those rulings.
About six months after the date designated for redemption, petitioner, on December 28, 1935, presented his bond (with coupons due on and before June 15, 1935, detached) to the Treasurer of the United States, and demanded the redemption by the payment of 10,000 gold dollars each
containing 25.8 grains of gold nine-tenths fine, which was the gold content of a dollar in 1917. The Treasurer refused to comply with that demand, but offered payment of the face amount of the principal in legal tender coin or currency other than gold or gold certificates. Petitioner declined to accept the tender and retained the bond. Thereafter, on the same day, petitioner presented to the Treasurer of the United States, the interest coupons for the six months' period June 15 to December 15, 1935, and demanded payment either in gold coin or legal tender currency. The treasurer refused payment on the ground that the bond to which the coupon was attached had been called for redemption on June 15, 1935.
An action followed in the Court of Claims, petitioner resting his claim upon the interest coupon only, and limiting his demand to a recovery in current dollars.1 The Court gave judgment for the United States on the ground that on the designated redemption date, all coupons for later interest became void. Because of the important interests, public and private, affected by the judgment, a writ of certiorari was granted by this court, 301 U.S. 679, 57 S.Ct. 941, 81 L.Ed. 1339.
Petitioner in No. 43 is the owner of a $50 Fourth Liberty Loan 4 1/2 per cent. bond of 1933—1938, which it bought on March 9, 1935. The bond was issued pursuant to the Act of September 24, 1917 (40 Stat. 288), as amended (31 U.S.C.A. § 752 et seq.), and Treasury Department Circular, No. 121. It was to mature on October 15, 1938, subject, however, to re-
demption on October 15, 1933, or later. The terms of redemption are stated in Circular No. 121, which is incorporated by reference into the bond itself. Six months notice by the Secretary of the Treasury was required. 'From the date of redemption designated in any such notice, interest on bonds called for redemption shall cease.' On October 12, 1933, the Secretary of the Treasury published a notice of call for redemption on April 15, 1934, of certain bonds of this issue. The bond now owned by petitioner is one of them. There were tenders and refusals similar to those described already in the statement of the other case. An action followed in the Court of Claims. Petitioner prayed for judgment in the sum of $1.07, the amount of the interest coupon for the six months' period ending October 15, 1934.2 The court dismissed the claim, and the case is here on certiorari.
Respondent in No. 198 is the owner of a $1,000 First Liberty Loan 3 1/2 per cent. bond of 1932—1947, No. 47084, purchased on March 22, 1933, for $1,011.25. This is the same bond issue involved and described in No. 42. Respondent did not present his bond for payment either on the redemption date or later. He did not present the coupon which is the foundation of the suit. However, the fact is stipulated that the Treasurer of the United States and other fiscal agents have not at any time been directed by the Secretary of the Treasury to redeem the bonds in gold coin, but have been authorized and directed to redeem in legal tender currency. The fact is also stipulated that there was a refusal to pay similar coupons for interest accruing after the date of redemption. Respondent brought suit upon his coupon in the United States Dis-
trict Court for the District of Maryland. The District Court gave judgment in favor of the United States. The Court of Appeals for the Fourth Circuit reversed and ordered a new trial (Machen v. U.S., 87 F.2d 594), declining to follow the ruling which had been made by the Court of Claims. The case is here on certiorari on the petition of the Government.
Hereafter, for convenience of reference, the bondholder in each of the three cases will be spoken of as a 'petitioner,' without adverting to the fact that in one of them (No. 198) he is actually a respondent.
First. The so-called redemption provisions of the bonds are provisions for the acceleration of maturity at the pleasure of the Government, and upon publication of the notice of call for the period stated in the bonds the new date became substituted for the old one as if there from the beginning.
The contract is explicit. 'From the date of redemption designated in any such notice interest on the bonds called for redemption shall cease, and all coupons thereon maturing after said date shall be void.' The contract is not to the effect that interest shall cease upon or after payment. Cf. Sterling v. H. F. Watson Co., 241 Pa. 105, 110, 88 A. 297. The contract is that interest shall cease upon the date 'designated' for payment. The rule is established that in the absence of contract or statute evincing a contrary intention, interest does not run upon claims against the Government even though there has been default in the payment of the principal. Angarica v. Bayard (U.S. v. Bayard), 127 U.S. 251, 8 S.Ct. 1156, 32 L.Ed. 159; United States v. North Carolina, 136 U.S. 211, 10 S.Ct. 920, 34 L.Ed. 336; United States v. North American Transportation...
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