They both “love gooooooooooooold!”

As Howard Bashman writes:

An opinion in a case captioned 216 Jamaica Avenue v. S & R Playhouse has perhaps a better than average chance at involving erotic entertainment, but alas that proved not to be the case with regard to this decision that the U.S. Court of Appeals for the Sixth Circuit issued today. Yet the opinion remains of interest because the decision considers the enforceability of a contractual provision, contained in a lease executed in 1911, stating that “[a]ll of said rents shall be paid in gold coin of the United States of the present standard of weight and fineness.” The trial court had held that the provision was unenforceable. But today, in an opinion by Circuit Judge Jeffrey S. Sutton, the Sixth Circuit reaches the opposite conclusion.

Orin Kerr at the Volokh Conspiracy comments as well:

The question, in simplified form: If a 99-year lease signed in 1912 specifies that the lease payments are $35,000 per year, payable “in gold coin of the United States,” can the lessor almost 100 years later demand that the payment be the value of 35,000 gold coins rather than $35,000?

For 90 years, the lessor only demanded payment of the dollars themselves, essentially ignoring the “gold coin” provision. And from 1933 to the 1970s, the “gold coin” clause was unenforceable under federal law thanks to U.S. monetary policy. But in 2006, a new company bought the property and began demanding the value of 35,000 gold coins instead of just $35,000. Does the language of the contract entitle the company to the value of the gold coins rather than just $35,000? In a very interesting opinion, Judge Sutton concludes that it does. Seems pretty persuasive to me, although I don’t know much about the topic.

Facebooktwitter
Print  •  Email