BETHLEHEM STEEL CO.
v.
ZURICH GENERAL ACCIDENT & LIABILITY INS. CO.
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Bethlehem Steel sought to enforce bond provisions allowing payment in foreign currencies, but the Supreme Court held that the Joint Resolution of June 5, 1933—which declared multiple currency provisions in dollar obligations against public policy—applied to these bonds even though they were held by foreign corporations and some were purchased abroad. The Court reversed the lower court's decision, establishing that Congress constitutionally may prohibit foreign currency payment options in U.S. dollar obligations, and such provisions are unenforceable in U.S. courts regardless of where the bonds were made or sold.
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Mr. Justice Black delivered the opinion of the Court.
As did Nos. 384 and 495, this day decided, ante, p. 247, these cases involve efforts to enforce foreign currency' provisions of bond obligations payable in money of the United States and optional fixed amounts of foreign currencies. The obligations are essentially similar to those in Nos. 384 and 495, but differ in two respects: (1) the bonds, originally sold in this country to a group of bankers,1 were offered by that group not only in this country, but also abroad, and (2) the present holders are foreign corporations, some of whose bonds were bought in foreign countries. These distinctions do not remove foreign holders from the operation of the Joint Resolution of June 5, 1933.
Respondents did not purchase their bonds or elect to demand payment in foreign currency until after the effective date of the Resolution. The court below held the Resolution was not applicable.2
It is respondents’ contention that their bonds represent a form of private international obligation, in no wise subject to the laws of the United States. However, they seek to enforce that obligation in this country and Congress has, as it constitutionally may, provided that multiple currency provisions of dollar obligations are against public policy here and, thus, unenforceable. The Constitution provides “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.” Courts in this country, State and Federal, can no longer enforce the contractual provisions which respondents have proceeded on, irrespective of their place of making.
In the absence of any claim of international rights based upon the treaty provision of the Constitution., it is enough that respondents’ bonds are “obligations payable in the money of the United States,” as we have this day held.
Under the governing principles announced in Nos. 384 and 496, the multiple currency provisions of respondents’ bonds are within the operation of the Resolution, and their coupons are dischargeable dollar for dollar in current legal tender money of the United States.
Reversed. The Chief Justice, Mr. Justice McReynolds, Mr. Justice Butler and Mr. Justice Stone think the judgments in these cases should be affirmed, for reasons stated in the opinion of Mr. Justice Stone in No. 384, Guaranty Trust Co. v. Henwood, and No. 495, Chemical Bank & Trust Co. v. Henwood, ante, p. 247.
Some bonds were originally issued to stockholders in No. 590.
279 N. Y. 495, 790; 18 N. E. 2d 673; 19 N. E. 2d 89.
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Emery Bird Thayer Dry Goods Co. v. Williams, 107 F.2d 965 (8th Cir. 1939)…d fineness or in named amounts of foreign moneys (which were the equivalent of the dollar value when the bonds were issued), with option in the obligees as to medium of payment (Multiple Currency cases, 307 U.S. 247, 59 S.Ct. 847, 83 L.Ed. 1266, and 307 U.S. 265, 59 S.Ct. 856, 83 L.Ed. 1280). We must conclude that the power existed to control the situation where a long term lease called for rent payment in gold bullion, with an option in lessors to require payment in such United States currency as they may…1 / 3