Herbert & Gessler v. Easton , 43 Ala. 547 ( 1869 )

B. F. SAFFOLD, J.

On the 20th of October, 1864, the appellants purchased from the appellee certain lots of land in the city of Mobile, and gave him five promissory notes therefor, the payment of which they secured by a mortgage on the lots. In the mortgage it was stipulated that these notes might be paid at any time before the maturity of the last one, in Confederate treasury-notes. All of the notes were paid within the time specified, except the last one, which was for $8,500, due on the 1st of April, 1865. The appellee having filed a bill to foreclose his mortgage, the chancellor, in his decree of reference, directed the register to ascertain the amount due on the mortgage, by obtaining a sum which should bear the same proportion to the value of the property at the date of the sale, as the nominal sum then due bore to the nominal sum agreed to be paid. This ruling is assigned as error.

The proof of the value of the premises, though conflicting to some extent, sustains the report of the register, and unless there is error in the basis of adjustment .propounded by the chancellor, the decree must be affirmed.

The determination of this question involves the validity and construction of the third section of an ordinance adopted by the State convention of 1865, on the 28th of September of that year, known as ordinance 26. The section enacts that “ In all suits upon contracts, made between the 1st of September, 1861, and the 1st of May, 1865, parol evidence shall be admissible to prove what was the consideration thereof, and whether or not the parties thereto understood or agreed that the same should be discharged by, a payment in Confederate currency, or treasury-notes; and if so, or if it appears so from the contract, then to show what was the real or true value of the consideration of the said contract, and what amount the plaintiff is legally, justly, and equitably entitled to receive, according to the contract, by the judgment of said court.”

It is manifest that this law seeks to establish a rule of evidence respecting certain past transactions. If it does no more than this, it cannot be said to impair the obligation of contracts. Laws which change the rules of evidence, relate to the remedy only ; and while such laws may, on general principles, be applied to existing causes of action, it is plain that they are not precluded from such application by the constitutional provision which we are considering. — Cooley’s Const. Limitations, p. 288.

The contract between these parties was the exchange of land for a sum of money. The vendor having complied "with his part of it, the obligation of the contract on the vendees was to do what they promised. The notes and mortgage are proofs of what they undertook to do. These do not show that the debtors were to pay in specie, or its equivalent, the nominal amount of dollars expressed. On the contrary, the mortgage says, that at any time before the last payment became due, all of the notes might be paid in Confederate currency. It cannot be concluded that a person would seriously contract in 1864 to sell property for sixteen thousand dollars in gold or in Confederate currency, at the option of the purchaser. It appears, therefore, from the contract, that the obligation was not to pay in specie or its equivalent. But if it did not, and proof aliunde was needed for this purpose, it might be supplied under the ordinance without constitutional objection. — See authorities above quoted.

That the written agreement did not express the obligation of the parties being proven, the inquiry arises, what was the obligation; and this involves the value of the consideration.

The appellants contend that a contract to pay in Confederate currency, is equivalent to a contract to pay in chattels. Chattels are things recognized by law as property. Our laws do not so recognize Confederate currency. The Confederate laws represented it as money, and “ money hath been accounted not to be goods or chattels.” — Jacobs’ Law Dictionary.

It may with more propriety be said of such an agreement, that no kind of currency was contracted for, other than such as might be in use when payment was made, and no price was fixed other than the value of the thing sold.

In 1781 the legislature of Yirginia passed a law substantially in the terms of the seotion of the ordinance we are required to construe, and intended to meet a similar exigency. The second section of the Yirginia law enacted that, “ all debts and contracts entered into or made in the current money of this State or the United States, excepting, at all times, contracts entered into for gold and silver coin, tobacco, or any other specific property, between the 1st day of January, 1777, and the 1st'day of January, 1782, now remaining due and unfulfilled, or which may become due at any future day or days, for the payment of any sum or sums of money, shall be liquidated, settled and adjusted agreeably to a scale of depreciation hereinafter mentioned and contained; that is to say, by reducing the amount of all such debts and contracts to the true value in specie, at the days or times the same were incurred or entered into, and upon payment of said value so found, in specie or other money equivalent thereto, the debtors or contractors shall be forever discharged of and from the said debts or contracts, any law, custom or usage to the contrary in anywise notwithstanding.” The fifth section enacted, “ That where a suit shall be brought for the recovery of a debt, and it shall appear that the value thereof hath been tendered and refused; or where it shall appear that the nonpayment thereof hath been owing to the creditor ; or where other circumstances arise which, in the opinion of the court before whom the cause is brought to issue, would render a determination agreeable to the above table unjust; in either case, it shall and may be lawful for the court to award such judgment as to them shall appear just and equitable.”

Chief-Justice Marshall, in the lucid and conclusive interpretation of this act, in the case of Faw v. Marsteller, which his great knowledge of the law, and accurate perception of justice so eminently qualified him to give, says: “ The act is applied directly to the date of the contract, and the motive for making it was, that contracts entered into during the circulation of paper money, ought in justice to be discharged by a sum differing in intrinsic value from the nominal sum mentioned in the contract, and that when the legislature removed the delusive standard, by which the value of the thing acquired had been measured, they ought to provide that justice should be done to the parties.” He says further: “In enquiring what ‘judgment will be just and equitable,’ the court can perceive no other guide by which its opinion ought, in this case, to be regulated, but the real value of the property at the time it was sold.” “ The value at the date of the contract must be the sum which in equity and justice the lessee ought to pay. In finding this .value, however, the jury ought not to be governed by the particular difficulty of obtaining gold and silver coin at the time, but their conduct ought to be regulated by the real value of the property, if a solid equivalent for specie had been made receivable in lieu thereof.” The decree of the court directed an issue to be tried in order to ascertain what was the actual annual value in specie, or in other money equivalent thereto, of the property at the date of the sale.—Faw v. Marsteller, 2 Cranch, 10.

The appellants further insist, that the latter part of the section of the ordinance under consideration, impairs the obligation of the contract in authorizing the court to determine the value of the consideration when it had already been fixed by the contract of the parties. The above cited case is not an authority on the constitutional question, as the law therein construed was anterior to the federal constitution. The objection can not be maintained. If the contract itself, as it does in this case, or if parol testimony, which is shown by authorities may be allowed, manifests that the parties did not determine the value of the consideration by any standard recognized by law, the basis of the objection is removed.

I apprehend that the law of the contract would have been the same without the ordinance, under the doctrine of usage, and perhaps of the lex loci. Evidence of usage or custom is received for the purpose of ascertaining the sense and understanding of parties by their contracts, which are made with reference to such usage or custom.—Renner v. Bank of Columbia, 9 Wheaton, 581.

Eor the purpose of argument, we may assert that at the time this contract was made, the usage of the people of Alabama, in temporary contracts at least, was to contract in view of payment in Confederate currency. The term “ dollar,” at that time in this State, was more commonly used to designate Confederate currency, than specie or United States treasury-notes. If this be so, the third section of the ordinance does not even change the rule of law which precludes the admission of parol evidence to contradict or substantially vary the legal import of a written instrument.

In Kirtland v. Molton, (41 Ala. 548,) this court held that 'the first clause of this section simply changes a rule of evidence, but that the residue, in its obvious meaning of making the value of the consideration the measure of the recovery to which the plaintiff is legally, justly and equitably entitled, does violate the obligation of the contract.

Mr. Justice Judge, in response to an application for a rehearing in that case, sums up the essence of that decision in a few expressive words. He says: “A contract which may be discharged by a payment in Confederate currency, is not one payable in money, with a condition that it may be discharged either in money or in Confederate currency.” The court evidently regarded the Confederate currency as property, as uncurrent money. In this is the difference of opinion between them and us. We can not so esteem it. No law recognizes it as either. We can not deny that it had value during the war. We must also recognize that it was not the intention of the parties to a contract which might be discharged by a payment of this currency, that if it became valueless by the triumph of the "United States, the contract was on that account to become void. There was in the minds of every one a general impression that a quantum valebat or quantum meruit, somehow to be ascertained, was to be paid. We think this is the legal effect of such a contract, and perhaps we may say it was an implied agreement of the parties.

We do not propose to disturb the former decisions of this court, that, where payment is to be made in any specific property, the measure of damages is the value of the property at the maturity of the obligation.

The agreement of the parties has become impossible of execution. The delusive standard by which the value of the thing acquired had been measured has vanished, and the value of the property, at the time it was sold, is the guide to the “just and equitable” judgment. We believe that such would have been the law without the ordinance, and that the ordinance does not impair the obligation of contracts.

The judgment is affirmed.