Willard v. Tayloe
Encyclopedia
Willard v. Tayloe, 75 U.S. 557
(1869), was a decision by the Supreme Court of the United States
that courts of equity deciding issues of contract
have discretion to determine the form of relief based on the circumstances of each individual case. The Court established a new rule to determine the form of relief: Relief should serve the ends of justice, and should be withheld if it appears likely to produce hardship or injustice to either party.
In the instant case, the Court held that plaintiff
Henry Willard had not acted in bad faith
by tendering United States Note
s as down payment
for the sale of property, even though the contract in question specified payment in gold or silver coin
. Nonetheless, the contract specified payment in coin, and payment in coin must be made. The Court also held that fluctuations in the price of the property between the date on which the contract was agreed and the date the down payment was made do not create issues of equity.
John Tayloe III built six two-story
row houses
facing Pennsylvania Avenue
at 14th Street NW in the city of Washington, D.C.
, in 1816. Col. Tayloe leased them in 1817 to John Tennison, who turned them into a hotel
under the name "Tennison's Hotel." The structures served as a hotel for the next three decades, the leaseholder and name changing several times: Williamson's Mansion Hotel, Fullers American House, and the City Hotel.
Col. Tayloe died on March 23, 1828, and his son, Benjamin Ogle Tayloe
, inherited the property. Mr. Tayloe renovated the properties in 1843 and 1844. But by 1847 the structures were in disrepair and he was eager to find a tenant who would maintain them and run the enterprise profitably.
A chance encounter led to a new lease and the eventual sale of the property. Tayloe had become engaged to Phoebe Warren, a wealthy young woman from Troy, New York
. Miss Warren was traveling on the steamer Niagara (a vessel which traveled up and down the Hudson River
) when she met Henry Willard, a Chief Steward
aboard the vessel. Warren was so impressed with the way Willard handled the ship's and passengers' needs that she recommended him to her fianceé. Willard visited Washington, D.C., in October 1847 to meet with Tayloe, who subsequently leased the six buildings to him for use as a hotel. Willard combined the six structures into one building in 1850, added two additional stories, and called the new business the Willard Hotel
.
In 1854, Tayloe leased the property again to Willard, this time for 10 years at a rate of $1,200 per year. The lease contained a provision that Willard could purchase the entire property at any time during the life of the lease for $22,500—$2,000 in "cash" down payment and another $2,000 a year (plus interest) thereafter until the mortgage was paid. During the lease, the American Civil War
broke out and property values in Washington, D.C., skyrocketed. Nearly all Northern
banks suspended the use of specie
due to runs
, and the federal government followed suit shortly thereafter. In 1863, Congress passed the National Banking Act
, which authorized the federal government to issue United States Notes (paper money) rather than coins made of gold or silver. The U.S. Notes were not convertible into gold, and quickly depreciated in value.
On April 15, 1864, two weeks before the lease was due to expire, Willard tendered the down payment to Tayloe in paper money. Tayloe refused to issue the mortgage and turn over the deed, claiming that the hotel was now worth much more than $22,500 and that Willard had not paid in gold (the only form of cash available in 1854) as specified in the lease. Worse, due to inflation, the Notes were worth only about half what gold specie was worth. Willard sued for relief.
The Supreme Court of the District of Columbia held in favor of Tayloe. Willard appealed to the U.S. Supreme Court, which granted certiorari
.
Associate Justice
Stephen Johnson Field
delivered the unanimous opinion of the Court.
Justice Field concluded that contract law usually required courts to apply the terms of the contract as specified. But relief in cases of equity is a matter of discretion: "When a contract is of this character, it is the usual practice of courts of equity
to enforce its specific execution upon the application of the party who has complied with its stipulations on his part or has seasonably and in good faith offered and continues ready to comply with them. But it is not the invariable practice. This form of relief is not a matter of absolute right to either party; it is a matter resting in the discretion of the court, to be exercised upon a consideration of all the circumstances of each particular case." That the initial contract was a fair one was not in dispute, Field noted: The sale price ($22,500) was much higher than the assessed value ($15,000), and no one could have foreseen that property values would more than double over the next 10 years.
The majority held that if "the contract[is] fair in its terms," discretion regarding relief may be exercised "if ... subsequent events, or even ... collateral circumstances... would work hardship or injustice to either of the parties." "[E] stablished doctrines and settled principles of equity" should be employed to determine the relief to be imposed, and the "specific relief will be granted when it is apparent from a view of all the circumstances of the particular case that it will subserve the ends of justice, and that it will be withheld when from a like view it appears that it will produce hardship or injustice to either of the parties."
Two issues now confronted the Court.
The first was the nature of the "cash" which the contract specified be used as the down payment in 1854. Justice Field concluded that "cash" meant gold coin, as no other form of legal tender existed in 1854. The creation of paper currency subsequent to the 1854 contract did not alleviate Willard of the requirement that the down payment be made in "cash" (e.g., gold coin), Field held. But the issue did not end there. Had Willard acted in good faith
in offering the U.S. Notes? If not, then no relief was likely. The contract had expired, and Willard had not acted in a timely fashion to secure his rights under it. But if he had, then Willard would be able to seek relief from courts of equity. The constitutionality
of the National Banking Act was not at issue, the Court said, because the issue before the Court was not whether paper currency constituted "cash" but whether Willard acted in good faith (e.g., had assumed in good faith that U.S. Notes constitute cash, as Congress had said they did). Field laid out extensive reasons for why Willard had acted in good faith:
The second issue confronting the Court was the effect which inflation
had on the sale price of the property. The Court flatly refused to overturn the contract on grounds of equity simply because the assessed value had exceeded the anticipated rate of inflation. The parties had considered the effect inflation might have, and had agreed on the terms. No objection had been raised at any time by either party prior to agreement, and the contract was (as Field previously noted) fair. But the Court also recognized that forcing Tayloe to accept currency valued at one-half that of coin would also be unjust.
The Court also dispensed with a third issue, which Mr. Tayloe had raised. Willard had transferred a half-interest in the deed to the property to his brother. Tayloe argued this rendered the contract void because he had not agreed to make the brother a party to the agreement. But the majority rejected this argument: "that is a matter with which the defendant has no concern."
The majority remanded the case back to the district court with the instruction that Willard make the down payment, subsequent purchase price payments, interest payments, and yearly rent to Tayloe in gold and silver coin. Upon satisfaction of the down payment, Tayloe must convey the deed to Willard. The price of the property, however, was not adjusted.
Salmon P. Chase
and Associate Justice Samuel Nelson
concurred in the decision regarding payment in gold and silver coin, but not the reasoning behind the holding.
Henry Willard successfully purchased the property from Benjamin Ogle Tayloe, and the Willard Hotel became one of Washington, D.C.'s, landmark hotels. It still exists, although the name has changed to the Willard InterContinental Hotel, and it is one of the city's best-known luxury hotels.
Willard v. Tayloe was an important decision of the Chase Court. The case went directly to the heart of Chase's core convictions regarding banking and monetary policy. While Chase favored a banking system that was national and centralized, he was initially opposed to the introduction of paper money and (contrary to President
Abraham Lincoln
's policy) believed U.S. Bank Notes should be convertible into gold. Willard v. Tayloe and the Legal Tender Cases
were "the most significant set of cases decided by the Chase Court".
The Willard decision is a classic example of a "conditional order of specific performance." Courts of equity often use a monetary calculus to judge hardship. Frustration of purpose
can occur when the terms of a contract are applied literally and automatically without taking into consideration radical changes in the economic or physical environment.
The Willard court was also wrestling with a 19th century concept of money
that was quickly becoming outmoded. This concept, known as "nominalism," assumed that money had an intrinsic value which did not change. The value of a gold coin of a certain size was always the value of such a gold coin, and inflation did not exist. Metallism
(using coins of some valuable metal like gold or silver) is a nominalistic money system, one which the United States had moved away from with the National Banking Act of 1863. Nominalism was critical to the development of the law of contract and the modern industrial economy. Most nations adhered to it until the 20th century but abandoned it thereafter. This trend away from nominalism was under way at the time the Willard case came before the Supreme Court, and it represents the Court's attempt to reconcile this modern economics with contract law.
The Supreme Court's ruling in Willard also was certainly influenced by the forthcoming Legal Tender Cases
. The Court was ready to take up Hepburn v. Griswold
, a case it would decide in 1870 and which would hold that the issuance of U.S. Notes was unconstitutional. Within a year, however, the Supreme Court would overrule Hepburn v. Griswold, and in Knox v. Lee
, 79 U.S. 457 (1871) and Parker v. Davis, 79 U.S. 457 (1871) uphold the constitutionality of the Legal Tender Act of 1862. It would more broadly do so again in Juilliard v. Greenman
, 110 U.S. 421 (1884). The problem for the Willard court was how to craft a conditional order of specific performance, for any adjustment in the amount of paper currency tendered by Willard would have tacitly indicated that paper currency was valid (e.g., constitutionally issued).
The decision is also notable for being the only one of four major Supreme Court decisions on equity which invoked the English
common law
roots of American equity jurisprudence. Even so, Justice Field never addressed the main point of English common law equity, which was to protect public interests.
For many years, the Willard decision was the leading case in contract
law regarding intent and enforcement. The case is still considered the leading decision on frustration of purpose regarding inflation in contracts. The Willard Court's conclusion that coin rather than paper currency be the form of payment (even though coin was no longer used) has drawn criticism from modern commentators, who found it inequitable. At least one modern commentator has characterized the decision "temporizing and cautious". Another has observed that the ruling never attempts to distinguish legitimate inflation from speculation
or economic bubble
s. The fact-specific nature of the Court-fashioned relief has also tended to limit the ruling's applicability. In part, this may be because modern contracts often require an independent re-appraisal
of the land prior to sale.
A 1978 United States district court
case, Iowa Elec. Light & Power Co. v. Atlas Corp., 467 F. Supp. 129 (N.D. Iowa), has called into question the Supreme Court's assertion of discretion in equity cases, arguing that courts only have the ability to alter the time, place, and manner of payment and not the actual price.
Case citation
Case citation is the system used in many countries to identify the decisions in past court cases, either in special series of books called reporters or law reports, or in a 'neutral' form which will identify a decision wherever it was reported...
(1869), was a decision by the Supreme Court of the United States
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
that courts of equity deciding issues of contract
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
have discretion to determine the form of relief based on the circumstances of each individual case. The Court established a new rule to determine the form of relief: Relief should serve the ends of justice, and should be withheld if it appears likely to produce hardship or injustice to either party.
In the instant case, the Court held that plaintiff
Plaintiff
A plaintiff , also known as a claimant or complainant, is the term used in some jurisdictions for the party who initiates a lawsuit before a court...
Henry Willard had not acted in bad faith
Bad faith
Bad faith is double mindedness or double heartedness in duplicity, fraud, or deception. It may involve intentional deceit of others, or self deception....
by tendering United States Note
United States Note
A United States Note, also known as a Legal Tender Note, is a type of paper money that was issued from 1862 to 1971 in the U.S. Having been current for over 100 years, they were issued for longer than any other form of U.S. paper money. They were known popularly as "greenbacks" in their heyday, a...
s as down payment
Down payment
Down payment is a payment used in the context of the purchase of expensive items such as a car and a house, whereby the payment is the initial upfront portion of the total amount due and it is usually given in cash at the time of finalizing the transaction.A loan is then required to make the full...
for the sale of property, even though the contract in question specified payment in gold or silver coin
Coin
A coin is a piece of hard material that is standardized in weight, is produced in large quantities in order to facilitate trade, and primarily can be used as a legal tender token for commerce in the designated country, region, or territory....
. Nonetheless, the contract specified payment in coin, and payment in coin must be made. The Court also held that fluctuations in the price of the property between the date on which the contract was agreed and the date the down payment was made do not create issues of equity.
Background
ColonelColonel
Colonel , abbreviated Col or COL, is a military rank of a senior commissioned officer. It or a corresponding rank exists in most armies and in many air forces; the naval equivalent rank is generally "Captain". It is also used in some police forces and other paramilitary rank structures...
John Tayloe III built six two-story
Storey
A storey or story is any level part of a building that could be used by people...
row houses
Terraced house
In architecture and city planning, a terrace house, terrace, row house, linked house or townhouse is a style of medium-density housing that originated in Great Britain in the late 17th century, where a row of identical or mirror-image houses share side walls...
facing Pennsylvania Avenue
Pennsylvania Avenue
Pennsylvania Avenue is a street in Washington, D.C. that joins the White House and the United States Capitol. Called "America's Main Street", it is the location of official parades and processions, as well as protest marches...
at 14th Street NW in the city of Washington, D.C.
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....
, in 1816. Col. Tayloe leased them in 1817 to John Tennison, who turned them into a hotel
Hotel
A hotel is an establishment that provides paid lodging on a short-term basis. The provision of basic accommodation, in times past, consisting only of a room with a bed, a cupboard, a small table and a washstand has largely been replaced by rooms with modern facilities, including en-suite bathrooms...
under the name "Tennison's Hotel." The structures served as a hotel for the next three decades, the leaseholder and name changing several times: Williamson's Mansion Hotel, Fullers American House, and the City Hotel.
Col. Tayloe died on March 23, 1828, and his son, Benjamin Ogle Tayloe
Benjamin Ogle Tayloe
Benjamin Ogle Tayloe was an American businessman, bon vivant, diplomat, and influential political activist in Washington, D.C. during the first half of the 19th century. Although he never held elective office, he was a prominent Whig and influential in presidential electoral politics in the 1840s...
, inherited the property. Mr. Tayloe renovated the properties in 1843 and 1844. But by 1847 the structures were in disrepair and he was eager to find a tenant who would maintain them and run the enterprise profitably.
A chance encounter led to a new lease and the eventual sale of the property. Tayloe had become engaged to Phoebe Warren, a wealthy young woman from Troy, New York
Troy, New York
Troy is a city in the US State of New York and the seat of Rensselaer County. Troy is located on the western edge of Rensselaer County and on the eastern bank of the Hudson River. Troy has close ties to the nearby cities of Albany and Schenectady, forming a region popularly called the Capital...
. Miss Warren was traveling on the steamer Niagara (a vessel which traveled up and down the Hudson River
Hudson River
The Hudson is a river that flows from north to south through eastern New York. The highest official source is at Lake Tear of the Clouds, on the slopes of Mount Marcy in the Adirondack Mountains. The river itself officially begins in Henderson Lake in Newcomb, New York...
) when she met Henry Willard, a Chief Steward
Chief Steward
A chief steward is the senior unlicensed crew member working in the Steward's Department of a ship. Since there is no purser on most ships in the United States Merchant Marine, the steward is the senior person in the department, whence its name...
aboard the vessel. Warren was so impressed with the way Willard handled the ship's and passengers' needs that she recommended him to her fianceé. Willard visited Washington, D.C., in October 1847 to meet with Tayloe, who subsequently leased the six buildings to him for use as a hotel. Willard combined the six structures into one building in 1850, added two additional stories, and called the new business the Willard Hotel
Willard InterContinental Washington
The Willard InterContinental Washington is an historic luxury Beaux-Arts hotel located at 1401 Pennsylvania Avenue NW in Washington, D.C. Among its facilities are numerous luxurious guest rooms, several restaurants, the famed Round Robin Bar, the Peacock Alley series of luxury shops, and voluminous...
.
In 1854, Tayloe leased the property again to Willard, this time for 10 years at a rate of $1,200 per year. The lease contained a provision that Willard could purchase the entire property at any time during the life of the lease for $22,500—$2,000 in "cash" down payment and another $2,000 a year (plus interest) thereafter until the mortgage was paid. During the lease, the American Civil War
American Civil War
The American Civil War was a civil war fought in the United States of America. In response to the election of Abraham Lincoln as President of the United States, 11 southern slave states declared their secession from the United States and formed the Confederate States of America ; the other 25...
broke out and property values in Washington, D.C., skyrocketed. Nearly all Northern
Union (American Civil War)
During the American Civil War, the Union was a name used to refer to the federal government of the United States, which was supported by the twenty free states and five border slave states. It was opposed by 11 southern slave states that had declared a secession to join together to form the...
banks suspended the use of specie
Hard money (policy)
Hard money policies are those which are opposed to fiat currency and thus in support of a specie standard, usually gold or silver, typically implemented with representative money....
due to runs
Bank run
A bank run occurs when a large number of bank customers withdraw their deposits because they believe the bank is, or might become, insolvent...
, and the federal government followed suit shortly thereafter. In 1863, Congress passed the National Banking Act
National Banking Act
The National Banking Acts of 1863 and 1864 were two United States federal laws that established a system of national charters for banks, and created the United States National Banking System. They encouraged development of a national currency backed by bank holdings of U.S...
, which authorized the federal government to issue United States Notes (paper money) rather than coins made of gold or silver. The U.S. Notes were not convertible into gold, and quickly depreciated in value.
On April 15, 1864, two weeks before the lease was due to expire, Willard tendered the down payment to Tayloe in paper money. Tayloe refused to issue the mortgage and turn over the deed, claiming that the hotel was now worth much more than $22,500 and that Willard had not paid in gold (the only form of cash available in 1854) as specified in the lease. Worse, due to inflation, the Notes were worth only about half what gold specie was worth. Willard sued for relief.
The Supreme Court of the District of Columbia held in favor of Tayloe. Willard appealed to the U.S. Supreme Court, which granted certiorari
Certiorari
Certiorari is a type of writ seeking judicial review, recognized in U.S., Roman, English, Philippine, and other law. Certiorari is the present passive infinitive of the Latin certiorare...
.
Majority opinion
Associate Justice of the Supreme Court of the United States
Associate Justices of the Supreme Court of the United States are the members of the Supreme Court of the United States other than the Chief Justice of the United States...
Stephen Johnson Field
Stephen Johnson Field
Stephen Johnson Field was an American jurist. He was an Associate Justice of the United States Supreme Court of the United States Supreme Court from May 20, 1863, to December 1, 1897...
delivered the unanimous opinion of the Court.
Justice Field concluded that contract law usually required courts to apply the terms of the contract as specified. But relief in cases of equity is a matter of discretion: "When a contract is of this character, it is the usual practice of courts of equity
Court of equity
A chancery court, equity court or court of equity is a court that is authorized to apply principles of equity, as opposed to law, to cases brought before it.These courts began with petitions to the Lord Chancellor of England...
to enforce its specific execution upon the application of the party who has complied with its stipulations on his part or has seasonably and in good faith offered and continues ready to comply with them. But it is not the invariable practice. This form of relief is not a matter of absolute right to either party; it is a matter resting in the discretion of the court, to be exercised upon a consideration of all the circumstances of each particular case." That the initial contract was a fair one was not in dispute, Field noted: The sale price ($22,500) was much higher than the assessed value ($15,000), and no one could have foreseen that property values would more than double over the next 10 years.
The majority held that if "the contract
Two issues now confronted the Court.
The first was the nature of the "cash" which the contract specified be used as the down payment in 1854. Justice Field concluded that "cash" meant gold coin, as no other form of legal tender existed in 1854. The creation of paper currency subsequent to the 1854 contract did not alleviate Willard of the requirement that the down payment be made in "cash" (e.g., gold coin), Field held. But the issue did not end there. Had Willard acted in good faith
Good faith
In philosophy, the concept of Good faith—Latin bona fides “good faith”, bona fide “in good faith”—denotes sincere, honest intention or belief, regardless of the outcome of an action; the opposed concepts are bad faith, mala fides and perfidy...
in offering the U.S. Notes? If not, then no relief was likely. The contract had expired, and Willard had not acted in a timely fashion to secure his rights under it. But if he had, then Willard would be able to seek relief from courts of equity. The constitutionality
Constitutionality
Constitutionality is the condition of acting in accordance with an applicable constitution. Acts that are not in accordance with the rules laid down in the constitution are deemed to be ultra vires.-See also:*ultra vires*Company law*Constitutional law...
of the National Banking Act was not at issue, the Court said, because the issue before the Court was not whether paper currency constituted "cash" but whether Willard acted in good faith (e.g., had assumed in good faith that U.S. Notes constitute cash, as Congress had said they did). Field laid out extensive reasons for why Willard had acted in good faith:
-
- Congress had declared the Notes to be legal tenderLegal tenderLegal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation. Paper currency is a common form of legal tender in many countries....
for all debts, and the National Banking Act made no distinction between debts contracted before or after this change. - Gold was no longer used for currency, and U.S. Notes constituted almost the entire currency.
- Almost every state court had upheld the constitutionality of the National Banking Act.
- Tayloe had left the city before the expiration of the contract, preventing Willard from discussing with him the nature of the "cash" to be used for the down payment.
- Willard had petitioned the courts in a timely matter, expressing his desire to fulfill the contract in good faith.
- Congress had declared the Notes to be legal tender
The second issue confronting the Court was the effect which inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
had on the sale price of the property. The Court flatly refused to overturn the contract on grounds of equity simply because the assessed value had exceeded the anticipated rate of inflation. The parties had considered the effect inflation might have, and had agreed on the terms. No objection had been raised at any time by either party prior to agreement, and the contract was (as Field previously noted) fair. But the Court also recognized that forcing Tayloe to accept currency valued at one-half that of coin would also be unjust.
The Court also dispensed with a third issue, which Mr. Tayloe had raised. Willard had transferred a half-interest in the deed to the property to his brother. Tayloe argued this rendered the contract void because he had not agreed to make the brother a party to the agreement. But the majority rejected this argument: "that is a matter with which the defendant has no concern."
The majority remanded the case back to the district court with the instruction that Willard make the down payment, subsequent purchase price payments, interest payments, and yearly rent to Tayloe in gold and silver coin. Upon satisfaction of the down payment, Tayloe must convey the deed to Willard. The price of the property, however, was not adjusted.
Concurrence
Chief JusticeChief Justice of the United States
The Chief Justice of the United States is the head of the United States federal court system and the chief judge of the Supreme Court of the United States. The Chief Justice is one of nine Supreme Court justices; the other eight are the Associate Justices of the Supreme Court of the United States...
Salmon P. Chase
Salmon P. Chase
Salmon Portland Chase was an American politician and jurist who served as U.S. Senator from Ohio and the 23rd Governor of Ohio; as U.S. Treasury Secretary under President Abraham Lincoln; and as the sixth Chief Justice of the United States Supreme Court.Chase was one of the most prominent members...
and Associate Justice Samuel Nelson
Samuel Nelson
Samuel Nelson was an American attorney and an Justice of the Supreme Court of the United States....
concurred in the decision regarding payment in gold and silver coin, but not the reasoning behind the holding.
Impact of the case
Willard v. Tayloe was an important decision of the Chase Court. The case went directly to the heart of Chase's core convictions regarding banking and monetary policy. While Chase favored a banking system that was national and centralized, he was initially opposed to the introduction of paper money and (contrary to President
President of the United States
The President of the United States of America is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces....
Abraham Lincoln
Abraham Lincoln
Abraham Lincoln was the 16th President of the United States, serving from March 1861 until his assassination in April 1865. He successfully led his country through a great constitutional, military and moral crisis – the American Civil War – preserving the Union, while ending slavery, and...
's policy) believed U.S. Bank Notes should be convertible into gold. Willard v. Tayloe and the Legal Tender Cases
Legal Tender Cases
The Legal Tender Cases were a series of United States Supreme Court cases in the latter part of the nineteenth century that affirmed the constitutionality of paper money. In the 1870 case of Hepburn v. Griswold, the Court had held that paper money violated the United States Constitution. The...
were "the most significant set of cases decided by the Chase Court".
The Willard decision is a classic example of a "conditional order of specific performance." Courts of equity often use a monetary calculus to judge hardship. Frustration of purpose
Frustration of purpose
In the law of contracts, frustration of purpose is a defense to enforcement of the contract. Frustration of purpose occurs when an unforeseen event undermines a party's principal purpose for entering into a contract, and both parties knew of this principal purpose at the time the contract was made...
can occur when the terms of a contract are applied literally and automatically without taking into consideration radical changes in the economic or physical environment.
The Willard court was also wrestling with a 19th century concept of money
Money
Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past,...
that was quickly becoming outmoded. This concept, known as "nominalism," assumed that money had an intrinsic value which did not change. The value of a gold coin of a certain size was always the value of such a gold coin, and inflation did not exist. Metallism
Metallism
Metallism is a type of monetary system in which silver, gold or other metals are used as money.Usually, that word refers to a system where that kind of money is a legal tender.-Metallism versus fiat monetary systems:...
(using coins of some valuable metal like gold or silver) is a nominalistic money system, one which the United States had moved away from with the National Banking Act of 1863. Nominalism was critical to the development of the law of contract and the modern industrial economy. Most nations adhered to it until the 20th century but abandoned it thereafter. This trend away from nominalism was under way at the time the Willard case came before the Supreme Court, and it represents the Court's attempt to reconcile this modern economics with contract law.
The Supreme Court's ruling in Willard also was certainly influenced by the forthcoming Legal Tender Cases
Legal Tender Cases
The Legal Tender Cases were a series of United States Supreme Court cases in the latter part of the nineteenth century that affirmed the constitutionality of paper money. In the 1870 case of Hepburn v. Griswold, the Court had held that paper money violated the United States Constitution. The...
. The Court was ready to take up Hepburn v. Griswold
Hepburn v. Griswold
Hepburn v. Griswold, 75 U.S. 603 , was a Supreme Court of the United States case in which the Chief Justice, Salmon P. Chase, speaking for the Court, declared certain parts of the legal tender acts to be unconstitutional...
, a case it would decide in 1870 and which would hold that the issuance of U.S. Notes was unconstitutional. Within a year, however, the Supreme Court would overrule Hepburn v. Griswold, and in Knox v. Lee
Knox v. Lee
Knox v. Lee, 79 U.S. 457 , was an important case for its time where the Supreme Court of the United States reversed Hepburn v. Griswold . The Court held that making paper money legal tender through the Legal Tender Act did not conflict with Article One of the United States Constitution.Mrs...
, 79 U.S. 457 (1871) and Parker v. Davis, 79 U.S. 457 (1871) uphold the constitutionality of the Legal Tender Act of 1862. It would more broadly do so again in Juilliard v. Greenman
Juilliard v. Greenman
Juilliard v. Greenman, 110 U.S. 421 , was a Supreme Court of the United States case in which issuance of greenbacks as legal tender was challenged in peacetime.The Legal Tender Acts of 1862 and 1863 were upheld....
, 110 U.S. 421 (1884). The problem for the Willard court was how to craft a conditional order of specific performance, for any adjustment in the amount of paper currency tendered by Willard would have tacitly indicated that paper currency was valid (e.g., constitutionally issued).
The decision is also notable for being the only one of four major Supreme Court decisions on equity which invoked the English
English law
English law is the legal system of England and Wales, and is the basis of common law legal systems used in most Commonwealth countries and the United States except Louisiana...
common law
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
roots of American equity jurisprudence. Even so, Justice Field never addressed the main point of English common law equity, which was to protect public interests.
For many years, the Willard decision was the leading case in contract
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
law regarding intent and enforcement. The case is still considered the leading decision on frustration of purpose regarding inflation in contracts. The Willard Court's conclusion that coin rather than paper currency be the form of payment (even though coin was no longer used) has drawn criticism from modern commentators, who found it inequitable. At least one modern commentator has characterized the decision "temporizing and cautious". Another has observed that the ruling never attempts to distinguish legitimate inflation from speculation
Speculation
In finance, speculation is a financial action that does not promise safety of the initial investment along with the return on the principal sum...
or economic bubble
Economic bubble
An economic bubble is "trade in high volumes at prices that are considerably at variance with intrinsic values"...
s. The fact-specific nature of the Court-fashioned relief has also tended to limit the ruling's applicability. In part, this may be because modern contracts often require an independent re-appraisal
Real estate appraisal
Real estate appraisal, property valuation or land valuation is the process of valuing real property. The value usually sought is the property's Market Value. Appraisals are needed because compared to, say, corporate stock, real estate transactions occur very infrequently...
of the land prior to sale.
A 1978 United States district court
United States district court
The United States district courts are the general trial courts of the United States federal court system. Both civil and criminal cases are filed in the district court, which is a court of law, equity, and admiralty. There is a United States bankruptcy court associated with each United States...
case, Iowa Elec. Light & Power Co. v. Atlas Corp., 467 F. Supp. 129 (N.D. Iowa), has called into question the Supreme Court's assertion of discretion in equity cases, arguing that courts only have the ability to alter the time, place, and manner of payment and not the actual price.