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Overview of the Supreme Court Legal Tender Cases
Hepburn v. Griswold, (1870)
Knox v. Lee, (1871)
Julliard v. Greenman (1884)

Julliard v. Greenman (1884)

This is a summary of Julliard v. Greenman, 110 U.S. 421 (1884)
Written By Joel A. Sumner, Esq., LL.M.

 
FACTS
 
Julliard sold and delivered 100 bales of cotton to Greenman for $5,122.90. Greenman tendered $5,100 in United States legal tender notes and the rest in coin, but Julliard would not accept the U.S. notes. The tendered notes were originally issued under an act of Congress passed on February 25, 1862 and March 3, 1863, during the civil war. An act of May 31, 1878 “forbid the further retirement of United States legal tender notes.”
 
ISSUE
 
Can United States legal tender notes that were issued during war and later redeemed during peace and in coin, but then reissued be legal tender in payment of debts?
 
LAW AND ANALYSIS
 
Among the enumerated powers found in the constitution the government can lay and collect taxes, borrow money, regulate interstate commerce, and carry on war. “The sword and the purse … are intrusted to its government.” The government is entitled to make all laws that are ‘necessary and proper’ for executing its enumerated powers.

Necessary and Proper Clause

The necessary and proper clause is not ‘limited to such measures as are absolutely and indispensably necessary.’ As Congress must possess the choice of which means is most appropriate in exercising a power granted by the constitution. In McCulloch v. Maryland the court said, let it be within the scope of the constitution and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional.’

Federal Power to emit bills of credit

The original draft of the constitution provided Congress with the power to emit bills of credit. One of the framers made a motion was made to strike those words and the motion was adopted. Mr. Madison remarked that he was satisfied that striking the words would cut off the pretext for a paper currency, and particularly for making notes a tender, either for public or private debts. However, Mr. Madison did not explain his reason for believing such a fact.  Furthermore, Mr. Madison also put forward a motion to restrain Congress from impairing the obligations of contracts, but he was not seconded.

The Power to Borrow Money

The words in the Constitution allowing the national government ‘to borrow money’ are for the safety and welfare of the whole people, they are not to receive the same restrictive interpretation that they would in a penal statute, or by contract law. Congress has the power promote their notes and to adapt them for general circulation. In Veazie Bank v. Fenno, the Court said that it is settled, Congress may constitutionally emit bills of credit. To impress upon circulating notes the power to be legal tender was a power universally understood to belong to a sovereign.

Power to Coin Money

Congress is expressly authorized by the constitution to coin money, while the states are prohibited from doing so. It has previously been held that Congress can emit bills of credit and provide for their general circulation, thereby definitely making these notes currency. Taking the two powers together, to borrow money, and the coining power, congress is authorized to establish a national currency and make it legal tender.

Impairing Contractual Obligations

When particular powers are vested in Congress, the fact that a power is exercised, but incidental to that act contractual obligations are impaired; there is no constitutional objection. Congress clearly has the power to reduce the amount of metal contained within a coin. When a contract for the payment of money is paid with the reduced coin, the debtor receives less. Therefore, a contract to pay money is satisfied when lawful money is paid. 

CONCLUSION
 
[W]e are irresistibly impelled to the conclusion that the impressing upon the treasury notes of the United States the quality of being a legal tender in payment of private debts is an appropriate means, conducive and plainly adapted to the execution of the undoubted powers of congress, consistent with the letter and spirit of the constitution, and therefore within the meaning of that instrument, ‘necessary and proper for carrying into execution the powers vested by this constitution in the government of the United States.’
 
The Court concluded that the Congress has the power to make U.S. notes legal tender and it is solely up to them to decide if it is “wise and expedient” in both times of war or peace, for it is a political question, not a judicial one.

Mr. Justice FIELD, dissenting:

If there be anything in the history of the constitution which can be established with moral certainty, it is that the framers of that instrument intended to prohibit the issue of legal-tender notes both by the general government and by the states, and thus prevent interference with the contracts of private parties.

When war was raging and the treasury empty, advocates of the legal tender acts rested their support on them as a war measure. The representative who introduced one of the bills into the house declared it a measure of that nature and said it was ‘one of necessity and not of choice.’ Senator Summer said ‘The medicine of the constitution must not become its daily food.’ “The wants of the government could never be the measure of its powers.”
 
Where does the Court find “any authority” to give the words ‘to borrow money’ a different meaning than used in other instruments such as municipal bonds, private corporate bonds, or individual contracts? Where does the government get the audacity to change the meaning of these well understood words within the constitution? It would give the notes more value if the government added the benefit to them by decreeing them admission to amusement parks, or imparting on them the right to private corporate profits. No one, I think, says Justice Field, will pretend that corporations posses this power.
 
The meaning of the terms ‘to coin money’ is not at all doubtful. “It is to mould metallic substances into forms convenient for circulation and to stamp them with the impress of the government.” In the clause authorizing congress ‘to provide for the punishment of counterfeiting the securities and current coin of the United States,’ a distinction is clearly made between debt and coin.
 
“From the decision of the court I see only evil likely to follow.”
 
If congress has the power to make the notes a legal tender and to pass as money or its equivalent, why should not a sufficient amount be issued to pay the bonds of the United States as they nature? Why pay interest on the millions of dollars of bonds now due when congress can in one day make the money to pay the principal? And why should there be any restraint upon unlimited appropriations by the government for all imaginary schemes of public improvement, if the printing-press can furnish the money that is needed for them?
Page last revised : June 03, 2011