Legal Tender Cases (Knox v. Lee; Parker v. Davis), 12 Wallace (78 U.S.) 457; 20 L. Ed. 287 (1871)
Facts—Congress provided for the issuance of paper money and made such money legal tender for the payment of private debts. Knox had purchased a number of sheep that had been confiscated under the Confederacy in Texas during the Civil War. Lee, after the war, brought suit to recover the value of the sheep and won. The payment was to be made in U.S. Treasury certificates called “greenbacks,” which were of less value than gold or silver. When Knox was about to pay the debt in greenbacks, Lee appealed the case to secure payment in gold or silver. In the second case, Davis asked for a writ of specific performance to compel Parker to transfer real estate upon payment of a set sum of money that Davis had previously offered to pay in legal tender notes.
Question—Does Congress have the power to make the Treasury notes legal tender applicable to both previous and subsequent contracts?
Reasons—J. Strong (5–4). “And here it is to be observed it is not indispensable to the existence of any power claimed for the federal government that it can be found specified in the words of the Constitution, or clearly and directly traceable to some one of the specified powers. Its existence may be deduced fairly from more than one of the substantive powers expressly defined, or from them all combined. And it is of importance to observe that Congress has often exercised, without question, powers that are not expressly given nor ancillary to any single enumerated power. Powers thus exercised are what are called by Judge Story, in his Commentaries on the Constitution, resulting powers, arising from the aggregate powers of the government.”
The statute here was passed as a war measure to obtain credit for the equipment of armies and the employment of money to an extent beyond the capacity of all ordinary sources of supply. If nothing else would have supplied the necessities of the Treasury, these acts would be valid. To say that some other means might have been chosen is mere conjecture, and if it be conceded, it proves nothing more than that Congress had the choice of means for a legitimate end, each appropriate and adapted to that end. The Court could not say that Congress ought to have adopted one rather than the other.
C.J. Chase authored a dissent arguing for reaffirmation of an earlier decision in Hepburn v. Griswold. Chase did not believe the actions of the government were necessary and proper, believing them to be in violation of contract rights.
Note—This case reverses the first legal tender case, Hepburn v. Griswold, 8 Wallace 603 (1870), one of the earliest uses of substantive due process. The legal tender cases were tinged by politics and charges of Court-packing by President Grant.