Opinion ID: 6938526
Heading Depth: 3
Heading Rank: 2

Heading: The 1933 Statute and the 1977 Amendment.

Text: Adams contends that the district court erred in determining that the 1933 Statute continues to render unenforceable gold clauses embodied in obligations issued before October 27, 1977. We reject that contention. As now codified, the 1933 statute and its 1977 amendment are clear on their face. 1 Obligations payable in gold are discharged by payment in any United States legal tender, but that command does not apply to obligations issued after October 27,1977. The legislative history of the 1977 amendment supports this plain meaning. Senator Helms, sponsor of the bill amending the 1933 Statute, stated that the bill would “make enforceable,, gold clause contracts entered into after the enactment of the bill. It is intended to stand neutral with regard to the enforceability of gold clause obligations issued in the past.” 123 Cong. Rec. 638, 635 (1977). Senator Helms was aware of pending cases which were to decide the amendment’s effect on pre-1933 gold bonds, and he stated his intent to allow courts to resolve that issue. See id. Almost immediately, one of the gold clauses in issue in this case was held unenforceable in Feldman v. Great Northern Ry. Co., 428 F.Supp. 979 (S.D.N.Y.1977). Feldman held that gold bonds issued prior to 1933 still could be paid “dollar for dollar, in legal tender of the United States,” and need not be paid in gold. Id. at 987. According to Adams, the 1933 Act (at least when combined with the 1934 abolition of gold as legal tender) created an impossibility defense to the payment of gold to the bondholders. He argues that the 1977 Amendment and the 1985 Act authorizing the use of gold as legal tender removed this “impediment,” reviving the Railroad’s obligations. This interpretation conflicts with the plain meaning of the 1933 statute. That statute does not simply forbid payment in illegal tender; it affirmatively authorizes payment in any tender legal at the time of payment. Indeed, gold was legal tender in 1933 and did not become illegal until enactment of the Gold Reserve Act of 1934, 48 Stat. 337, 340 (1934). The 1985 statute removes the barrier of the 1934 Act, but it does nothing to impair the 1933 statute. The effect of the 1985 statute is to permit the Burlington Northern to make payment in gold coins if it wishes to, but its debts are discharged if it pays in any legal tender. Section 5118(d)(2) so states.