Knox v. Lee
12 Wall. 457 (1871)
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Rule of Law:
The United States Congress has the constitutional authority under its aggregate and implied powers, particularly those related to war, borrowing, and national self-preservation, to make United States Treasury notes a legal tender for the payment of both pre-existing and future debts.
Facts:
- During the Civil War, the Confederate government's agents seized a flock of sheep in Texas belonging to Mrs. Lee.
- These agents then sold the sheep to Mr. Knox.
- After the war, Lee brought a suit against Knox to recover the value of the confiscated sheep.
- In a separate case, a contract for the sale of a parcel of land was made between Parker and Davis prior to the passage of the Legal Tender Acts.
- The contract specified a payment of a certain number of 'dollars'.
- When payment became due after the passage of the acts, Davis tendered the amount in United States legal tender notes.
- Parker refused the tender, demanding payment in gold or silver coin.
Procedural Posture:
- In Parker v. Davis, Parker sued Davis in the Supreme Judicial Court of Massachusetts for specific performance of a land sale contract. The state court held that Davis's tender of U.S. notes was valid. Parker, the plaintiff, appealed to the U.S. Supreme Court.
- In Knox v. Lee, Lee sued Knox in a U.S. Circuit Court for the value of sheep converted by Knox. The trial court instructed the jury that the damages must be assessed in gold and silver coin. Knox, the defendant, appealed the resulting judgment to the U.S. Supreme Court.
- The U.S. Supreme Court consolidated the two cases for hearing because both involved the constitutionality of the Legal Tender Acts.
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Issue:
Do the Legal Tender Acts, which authorize the issuance of United States Treasury notes and make them legal tender for all public and private debts, exceed the constitutional authority of Congress?
Opinions:
Majority - Justice Strong
No, the Legal Tender Acts do not exceed the constitutional authority of Congress. The power to make Treasury notes legal tender is not an express power, but it is an implied power that is 'necessary and proper' for the execution of the aggregate of enumerated powers, including the power to declare and conduct war, to raise and support armies, to borrow money, and to provide for the common defense. During the national exigency of the Civil War, when government credit was exhausted and specie was unavailable, making the notes legal tender was an appropriate and plainly adapted means for the essential end of national self-preservation. This power is an attribute of sovereignty, and the government must be able to employ every means not prohibited by the Constitution to fulfill its duties. The acts do not violate the Fifth Amendment, as they are not a direct appropriation of property, and the obligation of contracts clause does not apply to the federal government. This decision overrules Hepburn v. Griswold.
Concurring - Justice Bradley
No, the Legal Tender Acts are constitutional. The United States is a national government possessing all the inherent and implied powers essential to sovereignty and self-preservation. The power to issue bills of credit and make them a legal tender is a prerogative of every government, unless explicitly restrained by its constitution. The framers intended to leave this power unimpaired for the federal government to use in national exigencies. It is a necessary means of anticipating national resources, and in a crisis, the government has a right to demand that its credit be accepted to prevent national paralysis and ensure its continued existence. The interests of every citizen are bound up with the fate of the government, and the temporary compulsory acceptance of government credit is a minor burden compared to the subversion of the government itself.
Dissenting - Chief Justice Chase
Yes, the Legal Tender Acts exceed Congress's constitutional authority. Making Treasury notes a legal tender was not a 'necessary and proper' means for executing any enumerated power. The circulation of the notes could have been supported sufficiently by making them receivable for taxes and government loans. The legal tender provision was valuable only for dishonest purposes, allowing debtors to pay less than they owed, and it violated the spirit of the Fifth Amendment by depriving creditors of property without due process of law. The power 'to coin money' was intended to establish a metallic standard, and Congress cannot substitute paper currency for it. The assertion of a power derived from an 'aggregate of powers' is a dangerous doctrine that would make the government practically absolute and unlimited.
Dissenting - Justice Clifford
Yes, the Legal Tender Acts exceed Congress's constitutional authority. A detailed historical analysis demonstrates that 'money' in the constitutional sense means metallic coins of gold and silver. The power 'to coin money' is a power to fabricate and stamp precious metals as a permanent standard of value. The framers, scarred by the experience of worthless continental currency, deliberately withheld from Congress the power to make paper emissions a legal tender. To substitute paper promises for the constitutional standard of value violates the plain intent of the Constitution, which was designed to provide a uniform, stable, and intrinsically valuable currency.
Dissenting - Justice Field
Yes, the Legal Tender Acts exceed Congress's constitutional authority. The power to make paper a legal tender is not granted and is repugnant to the power 'to coin money.' The debates in the Constitutional Convention reveal a clear intent to forever prohibit paper money as legal tender. The acts directly impair the obligation of contracts, which violates the fundamental principles of justice upon which all constitutional government is founded. Words in contracts must be construed as the parties understood them at the time; a contract for 'dollars' before 1862 was a contract for coin. The doctrine of unenumerated powers resulting from the general purposes of government would transform our system from one of limited powers to one of unrestrained congressional will.
Analysis:
This decision significantly broadened the scope of federal power by endorsing the doctrines of implied and aggregate powers, particularly in times of national emergency. It established that Congress's authority is not strictly limited to its enumerated powers but extends to any means appropriate for national self-preservation. By overruling Hepburn v. Griswold just one year after it was decided, following the appointment of two new justices, the case highlighted the potential for the Court's constitutional interpretation to shift with its composition. The ruling solidified Congress's control over the national currency and remains a cornerstone of federal monetary and emergency powers jurisprudence.
