DAMAGES - APPLICABILITY OF GOLD CLAUSE RESOLUTION TO OBLIGATION TO DELIVER GOLD BULLION

Authors

William J. Isaacson, University of Michigan Law SchoolFollow

Abstract

Petitioner lessor and respondent lessee entered into a lease for the enjoyment in perpetuity of water power rights. The yearly rental was stipulated to be "a quantity of gold which shall be equal in amount to fifteen hundred dollars of the gold coin of the United States of the standard of weight and fineness of the year 1894, or the equivalent of this commodity in United States currency." In 1934, after the devaluation of the dollar by the Federal Government, the lessors intervened in the lessee's reorganization proceedings and filed a claim for rent. The petitioners requested that the lessees be made to pay the amount of dollars which the Government was paying for newly mined gold of the stated quantity. In behalf of the lessee the contention was that by force of the Joint Resolution of June 5, 1933, the debt was dischargeable, dollar for dollar, in the then prevailing currency. Held, the obligation was one for the payment of money and not for the delivery of gold as upon the sale of a commodity. The gold was a standard with which to stabilize the value of the dollar. In view of the circumstances which plainly showed it was a payment, the fact that it was characterized to be a commodity was of no import. The alternative provision made this conclusion inescapable. Holyoke Water Power Co. v. American Writing Paper Co., (U.S. 1937) 57 S. Ct. 485.

Recommended Citation

William J. Isaacson, DAMAGES - APPLICABILITY OF GOLD CLAUSE RESOLUTION TO OBLIGATION TO DELIVER GOLD BULLION, 35 Mich. L. Rev. 1010 (1937).
Available at: https://repository.law.umich.edu/mlr/vol35/iss6/16