United States Court of Appeals

FOR THE EIGHTH CIRCUIT

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No. 95-3666

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Anne C. Trostel; Harry A. Holman, *

Jr.; H. L. Van Metre; Charles H. *

Van Metre; Dorothy Hurley; *

Terrance M. Hurley, Cmdr.; Carol *

Sabey, Mrs.; *

Plaintiffs - *

Appellants *

Norwest Bank Fort Collins, N.A. *

Trustee - Appellant * District Court for the Southern

v. *

American Life & Casualty *

Insurance Company; *

*

Defendant - Appellee *

Hawkeye Bank of Des Moines *

Movant *

*

*

* Appeal from the United States

* District of Iowa.

*

*

*

*

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Submitted: November 18, 1997

Filed: January 15, 1998

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Before BOWMAN, BEAM, and MURPHY, Circuit Judges.
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___________

MURPHY, Circuit Judge.

This case involving a gold clause in a real estate lease comes before

us on remand from the Supreme Court for further consideration in light of

Congressional action subsequent to our decision of August 14, 1996.

Trostel v. American Life & Cas. Ins. Co., 92 F.3d 736 (8th Cir. 1996),

vacated, 117 S.Ct. 939 (1997). We were asked to consider the impact of a

statutory amendment which went into effect on September 30, 1996, but

before oral argument Congress acted again to eliminate the language added

in 1996. The parties have now briefed and argued their conflicting views

about the possible impact of these legislative changes on this litigation.

The real estate lease covers a commercial building in downtown Des

Moines, Iowa. It was originally entered into in 1917 to run for ninety

nine years. The annual rent for the final forty five years was set at

$18,000, and the lessor was given the option to demand payment in gold coin

as a protection against future inflation. See Trostel, 92 F.3d at 738.

During the lease period public policy changed in regard to gold. Congress

declared in 1933 that gold clauses were against public policy and were

therefore dischargeable dollar for dollar in United States currency. Joint

Resolution of June 5, 1933, 48 Stat. 112, 113 (1933) (formerly codified at

31 U.S.C. § 463) (codified as amended at 31 U.S.C. § 5118(d)(2)). More

than forty years later the policy changed once more. On October 28, 1977,

Congress amended the underlying statute to make gold clauses enforceable

again if they were part of an obligation issued after October 27, 1977.

Act of October 28, 1977, Pub. L. No. 95-147, § 4(c), 91 Stat. 1227, 1229

(codified as amended at 31 U.S.C. § 5118(d)(2)).

The lease was ultimately assigned in 1990 to American Life and

Casualty Insurance Company (American Life), and in 1993 the lessors

demanded payment of the rental obligation in gold coin. American Life

refused, and the lessors sought a
The amendment also provided that it would not apply to gold clause obligations 1

finally adjudicated before its passage.

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declaratory judgment to enforce their demand. The district court granted

summary judgment to American Life. We reversed after determining that the

gold clause was enforceable under the 1977 statutory amendment because in

the 1990 assignment American Life had assumed all obligations of the

original lease. Trostel, 92 F.3d at 740-41. 

Shortly thereafter Congress amended the underlying statute by adding

a provision to the otherwise unrelated Economic Growth and Regulatory

Paperwork Reduction Act of 1996. With the new amendment the statute read

in pertinent part:

An obligation issued containing a gold clause or governed by a

gold clause is discharged on payment (dollar for dollar) in

United States coin or currency that is legal tender at the time

of payment. This paragraph does not apply to an obligation

issued after October 27, 1977. This paragraph shall apply to

any obligation issued on or before October 27, 1977,

notwithstanding any assignment or novation of such obligation

after October 27, 1977, unless all parties to the assignment or

novation specifically agree to include a gold clause in the new

agreement.

31 U.S.C. § 5118(d)(2) (1996 amendment highlighted). 

1

The Supreme Court then granted certiorari and remanded the case to

this court “for further consideration in light of the Economic Growth and

Regulatory Paperwork Reduction Act of 1996, P.L. No. 104-208, Sec. 2609.”

117 S.Ct. 939 (1997). A briefing schedule was established, stayed at

request of both sides to permit discussions of possible settlement, and then

reinstated with modified dates. Before oral argument could be heard,

Congress acted again. This time it eliminated the provision it had
The parties have sought permission to file post-argument briefs addressing

2

retroactivity issues, and their motions are granted.

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added to the gold clause statute in 1996. Public Law 105-61, § 641. The

legislation, signed into law on October 10, 1997, stated that: 

[s]ection 5118(d)(2) of title 31 United States Code, is amended

by striking “This paragraph shall” and all that follows through

the end of the paragraph.

Oral argument was then postponed to permit additional briefing on the

implications of the new legislative action.2

The parties disagree as to the significance of the amendments.

American Life asserts that the gold clause in the lease cannot be enforced

because the 1996 amendment was written to be retroactive and the parties did

not “specifically agree” to include the gold clause in the 1990 assignment.

It therefore is only obligated to pay the lease amount of $18,000 per year

on the building. It says the 1997 amendment has no effect here because it

is not retroactive, citing Landgraf v. U.S.I. Film Products, 114 S.Ct. 1483

(1994). The lessors argue that the gold clause in this lease continues to

have effect under either statute. They contend that the 1997 amendment is

retroactive, making the 1996 amendment now irrelevant. They also say that

even if the 1996 amendment applies to this lease, the gold clause is

enforceable because American Life explicitly agreed in the assignment to be

bound by “all of the terms and conditions” of the 1917 lease, and one of the

terms of that lease was the gold clause. 

American Life argues that the resolution of this case is a simple

matter of applying the Landgraf holding which requires a clear expression

of Congressional intent before a statute will be given retroactive effect.

It is unable to cite a case, however,
The statutory background in Landgraf was strikingly different from the one here. 3

The statutory provisions at issue there were part of fundamental changes in civil rights

law and resulted from a lengthy deliberative process. See id. at 1491, 1493. After

Congress considered and rejected a version of the Civil Rights Act which had express

retroactive language, it ultimately enacted a statute with none. See id. at 1491-92.

Initiatives by the parties in respect to the legislation were discussed at oral

4

argument.

The 1997 repeal was a small part of a voluminous act entitled “Treasury, Postal 5

Service and General Government Appropriations, 1998.”

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where the presumption was employed in a situation similar to the one here.3

The 1996 amendment says that it “shall apply to any obligation issued on or

before October 27, 1977 . . .,” thus indicating on its face a retroactive

intent. See Landgraf, 114 S.Ct. 1483. The 1997 enactment simply states

that the prior amendment is stricken. It does not use the type of language

normally associated with retroactive effect. See id. Its apparent intent,

however, is to eliminate the effect of the previous year’s enactment, and

to apply it in that way here would not implicate the policy interests

underlying the presumption against retroactivity. This policy “has

consistently been explained by reference to the unfairness of imposing new

burdens on persons after the fact.” Id. at 1500. As to the parties in this

case, the interests of “fair notice, reasonable reliance and settled

expectations,” id. at 1499, would weigh in favor of interpreting the 1997

amendment to return the law to its former state as it existed in 1990 at the

time of the assignment to American Life. 

The sequence of the legislative amendments and the involvement of

these parties in that process are part of the full context of this case.4

Each amendment reflected a desire to influence its outcome, and each was

passed as a small item in an otherwise unrelated statute. The 1997

5

amendment provided for the elimination of the entire 1996 amendment, and

there is nothing to suggest that the language was carefully crafted to

prevent its application here.
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If a requirement of explicit statutory language commanding

retroactivity is necessary for the 1997 amendment to have an effect on this

case, however, then we must consider the effect of the 1996 amendment as

controlling. The 1996 amendment required that a gold clause be specifically

agreed to in order to be effective. The 1990 Warranty Assignment and

Assumption agreement which controlled the assignment of the lease to

American Life contains a reference to the original lease and provides that

the assignor transfers the leasehold interest and that American Life, the

assignee:

hereby accepts, assumes and agrees to be bound by all

of the terms and conditions to be kept, observed, and

performed by the lessee in said lease, as amended

above described, from and after August 1, 1990. . .

.

We previously held that this assignment amounted to a novation. This

meant that the gold clause was enforceable under the 1977 statute since

under Iowa law the 1990 novation amounted to a new obligation issued after

the key statutory date. See Klipp v. Iowa Grain Indemnity Fund Board, 502

N.W.2d 9, 11 (Iowa 1993); Eitzen’s Estate v. Lauman, 3 N.W.2d 546, 549-50

(Iowa 1942). Under the 1996 amendment a gold clause is not enforceable

“notwithstanding any assignment or novation” of a contract including such

a clause unless the parties “specifically agree to include a gold clause in

the new agreement.” 31 U.S.C. § 5118(d)(2). The substituted contract must

therefore demonstrate explicit intent to include a gold clause in the new

obligation or it is not enforceable. 

The substituted contract in this case satisfies the 1996 statutory

requirement because it specifically included each clause of the original

contract as a new term. American Life expressly assumed “all of the terms

and conditions” (emphasis added) of the 1917 contract, and the gold clause

in that contract was enforceable under the statute as it existed at the time

of the 1990 assignment and as amended in 1996. Under
This resolution makes it unnecessary to consider the lessors’ arguments that the 6

1996 amendment is beyond the power of Congress under the Commerce Clause or that

the lease is commercially impracticable or voidable because of a failure of a

fundamental condition.

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Iowa law an assignment is a contract subject to the traditional rules of

construction and where unambiguous, its words will be interpreted according

to their common meaning. Broyles v. Iowa Dep’t of Soc. Services, 305 N.W.2d

718, 721-22 (Iowa 1981) (citing 6A C.J.S. Assignments § 2 (1975); Kinney v.

Capitol-Strauss, Inc., 207 N.W.2d 574, 576-77 (Iowa 1973)). The terms of

this assignment reveal the parties’ intent to agree to include all original

lease clauses, including the gold clause, in the new agreement created in

1990, thus satisfying the requirements of the 1996 amendment.

American Life claims that even if it specifically agreed to include

the gold clause, the lessors did not. The statutory requirement is not

satisfied unless “all parties” to the contract have agreed. American Life

argues the lessors did not even realize that they could demand payment under

the gold clause until 1991. The original lessor agreed in 1917 to all

future assignments of the lease, however, and thus there was no need for

them to agree to the gold clause contemporaneously with the 1990 novation.

The statute only requires that all parties specifically agree to include a

gold clause, not that all parties contemporaneously agree to include the

clause. The original lessor specifically agreed to all clauses in the 1917

lease, including the gold clause, as well as to all future assignments, and

lessors are the successors in interest. This is sufficient to satisfy the

specific agreement requirement.

After reviewing the pertinent legislation subsequent to our earlier

decision and the arguments raised by the parties, we conclude that the gold

clause in this lease is enforceable and we reinstate our prior decision.

Accordingly, we remand the case to the district court for further

proceedings consistent with this opinion and Trostel v. American Life & Cas.

Ins. Co., 92 F.3d 736 (8th Cir. 1996).6
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A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT