CONSTITUTIONAL LAW-FORCE AND EFFECT OF CLAUSES PROVIDING FOR PAYMENT OF PRIVATE INDEBTEDNESS IN GOLD

Authors

Abstract

A recent English case decided in the Court of Appeal, In re Société lntercommunale Belge D'Eléctricité, Feist v. The Company, suggests questions of interesting application to American constitutional law. In that case a debtor's obligation specified payment "in sterling in gold coin of the United Kingdom of or equal to the standard of weight and fineness existing on September 1, 1928." When payment became due, however, gold was no longer available - England had discontinued gold payments and left the gold monetary standard, gold was subject to being commandeered by the government, and gold coins were redeemable at their nominal rather than their bullion value, so that banknotes were the only legal tender available. The paper pound was quoted at a substantial discount on the foreign exchanges. The creditor sought to enforce payment in paper to an amount that would enable him to buy up, at the then quoted price, sufficient gold to satisfy the terms of the obligation. The Court of Appeal held, however, that the contract was essentially one for payment of money, that the legislature had made it payable in banknotes even though the debtor had agreed to pay in gold, and that therefore the gold payment clause was inoperative and the debt dischargeable in banknotes according to their face value.

Recommended Citation

CONSTITUTIONAL LAW-FORCE AND EFFECT OF CLAUSES PROVIDING FOR PAYMENT OF PRIVATE INDEBTEDNESS IN GOLD, 31 Mich. L. Rev. 953 (1933).
Available at: https://repository.law.umich.edu/mlr/vol31/iss7/4