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Law School Case Brief

Legal Tender Cases - 79 U.S. (12 Wall.) 457 (1870)

Rule:

The acts of Congress known as the Legal Tender are constitutional, when applied to contracts made before their passage. Hepburn v. Griswold (8 Wallace, 603, 1869), on this point overruled.

Facts:

Two disputes arose surrounding the use of paper money. In a series of acts enacted in part to finance the Civil War in 1862 and on-going, Congress authorized the use of greenbacks as the legal tender in the payment of all debts. Opponents of the acts argued that the power to authorize the use of greenbacks was not embraced in the authority given Congress to coin money, the power could not be implied from the power to regulate the value of money, the exercise of the legal tender power was not necessary to carrying into execution any of the powers expressly delegated, the power could not be assumed as a necessary inherent sovereign right, the history of the Constitution and the country indicated that the power was referred to the people, and the legal tender power was unconstitutional and impaired the obligation of contracts. 

Issue:

Did the Legal Tender Act violate the due process clause of the Fifth Amendment to the United States Constitution?

Answer:

No

Conclusion:

The court held that the acts were constitutional as applied to contracts made either before or after their passage. The United States Supreme Court held that the acts were a proper exercise of Congress' authority to coin money. "Let the end be legitimate; let it be within the scope of the Constitution, and all the means which are appropriate, which are plainly adapted to that end, and which are not prohibited, but consist with the letter and spirit of the Constitution, are constitutional. "We must inquire, therefore, to the exercise of which one of the powers delegated to government "it is necessary and proper," it is even "appropriate and plainly adapted," that treasury notes should be made a legal tender for antecedent debts. Is it appropriate and plainly adapted to the power to borrow money, to regulate commerce, to raise and support armies, to provide and maintain a navy, to suppress insurrections or repel invasions, or even to any of these powers united? For it is true that Congress had occasion to exercise every one of these powers at the time when these notes were issued. Moreover, the Court explicitly overruled the 1869 case, Hepburn v. Griswold, which had held that Legal Tender Act was unconstitutional.  Hepburn had not held that Congress lacked the power to issue paper notes; however, paper notes could not be used as tender for pre-existing debts.  Here, in overruling that specific point in Hepburn, pre-existing debts could be paid with greenbacks. 

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