Evening star., 1933-11-27


ance Corporation, have just been made
rs follow:
Mr.. Reed argued:
I have before me draft No. 2. dated
october 29, l933 of a resolution pro-
posed for consideration by the board
of directors of the Reconstruction
Finance Corporation relating to an
issue OF s50,O0O.0Oo of the short
term obligations OF this corporation
subject to the approval of the Sec
retary of the Treasury and upon the
terms and conditions stated in said
resolution You ,ohs1,e,, have a asked ed my my
posed issue in accordance with the
terms of the draft I have the honor
to advise that. in my ,tS judemsnt' np nrn an
posed resolution would be within the
power Of the corporation and that
the obligation so .ssued would be
binding upon the corporation and
upon the United States of America,
the guarantor of this issue.
My reasons for this conclusion are
as follows:
/. Facts. 1t is provided in Sec
tiCn 9 of the Reconstruction Finance
CORPORATION act that:
The corporation is authorized and
empowered, with the approval Of the
Secretary of the Treasury. to issue.
and to have outstanding at any one
time in an amount aggregating not
more than three times its subscribed
capital, its notes. debentures, bonds,
or other such obligations; such obli-
cations to mature not more than five
years from their respective dates of
issue. to be redeemable at the option
Of the corporation before maturity
in such manner as may be stipulated
in such obligations, and to bea. such
rate or rates Of interest as may be
determined bv the corporation, Pro-
vided. that the corporation, with the.
approval of the Secretary of the Treas
ury. may sell on a discount basis
short-term obligations payable at ma
turity without interest. Such
obligations may be issued in payment
of any loan authorized by this act
or may be offered for sale at such
price or prices as the corporation may
determine with the approval of the
Secretary of the Treasury"
Question of Sale Considered.
1t has been proposed that the Re-
construction Finance Corporation issue
shoIt-term, non-interest bearing obliga-
tions which it will offer for sale to the
public 1t has been further proposed
that the Reconstruction Finance Cor
poration receive gold in payment for
such obligations and only such gold as
may be imported from abroad after a
specific date. or such gold as may be
recovered from natural deposits in the
United States or any place subject to
the jurisdiction therof after April S.
1888 and not held in noncompliance
with the terms of any executive order
and or Treasury regulations.
2. Issue. 1t is desired to ascer-
tain whether a transaction so carried
out would be sale within the terms
OF section 8 OF the Reconstruction
Finance Corporation act:
Such obligations may be issued in
payment of any loan authorized by this
act or may be offered for sale at such
price or prices as the corporation may
determine with the approval of the
Treasury"
3. Argument The above transac-
tion is sale within the terms of section
9 OF the Reconstruction Finance Corpo-
ration act because:
ca The word sale" does not neces-
sarily import an exchange for money
only. The word sale" has variety of
definitions. In section of "Meecham
on Sales it is pointed out that:
1t seems impossible for courts
and text writer's to agree as to the
meaning of the word cSale') or as to
the essential elements of the idea which
it represents.
Definitions of "SaIe" Quoted.
But its definition is rarely limited TO
an exchange for money only Thus.
while a sale is sometimes defined as a
transfer OF property from one to
another in consideration of price
named or agreed to be paid in current
money d.arrabee VS.. Klostermann, IS
Nebr., 40 N. w, 112: Madison Avenue
Baptist Church VS.. Oliver Street Baptist
Church, 46 N. y. 1871. II Is more usual
to find that sale is "the exchange of
for money or its equivaent" Mansfield
VS.. District Agricultural Association, 144
Callf, 4j, 95 Pac., 4jO), or, "a parting
with ones interest in anything for a
274): or, held to include barter and
any transfer of personal property for
any valuable consideration" CIartwig vs.
~
"a delivery OF an article at fixed price"
tState VS.. Betz, 207 Mo, $50; 106 S. W.,
64).
The issue has never been presented to
the Federal courts and their dictum has
not been clear. A recent case, Ferguson
VS.. Commissioner of Internal Revenue,
As Fed. I'd, 573 1880, lists several
definitions, including "a transfer for
any consideration" "a transfer in con-
sideration of payment or promise of
certain price in money" "a certain price
in current money" "a fixed price in
money or its equivalent" but never
chooses among them. since this part of
the definition is not pertinent to the
issue. 1t is worthy of note, however,
that the Supreme Court in the per
cent cases, ITO U. S., All 1888. de-
fined a sale as "a transfer of property
lent" 1t would seem that the "equiva-
lent must be some personal property,
the value of which is measured and
stipulated in money. See Meecham,
infra
Other Decisions Cited.
The application these definitions have
received is likewise pertinent for it
iChCdlo CildI biOdO Ille
word sale is not limited to transac-
tion of particular class. Thus. it was
held in Boardman agt. Petch, 1876 Cal.
476, 1919 Pac. 1047 192D, in an action
fer compensation which was to be
given percentage of the sale of the
assets of corporation that, in the alb
sence of statutory or contractual pro-
visions confining sales to an exchange
of property for money, an exchange of
assets for the bonds of a corporation
was a sale. In Cobb agt. Hills. "a N.
E. 203, mass, 191D. in an action on a
contract of purchase of sale" the plain
tiff received Judgment. although ''the
walnuts were to be paid for by furnish
ing to the plaintiff as he might call for
them other goods of equivalent value"