Hepburn v. Griswold
The Supreme Court ruled that the wartime law making paper 'United States notes' legal tender could not be applied to debts contracted before the law was passed in February 1862, because doing so forced creditors to accept depreciated paper instead of the gold or silver their contracts actually called for.
The Court held that this went beyond Congress's implied powers and violated the spirit of the Constitution's protections for contracts and property, striking down the legal tender requirement as applied to pre-existing debts even though it left the broader currency system untouched.
“It is difficult to conceive what act would take private property without process of law if such an act would not.”
The Court explains why forcing creditors to accept depreciated paper money amounted to taking property without due process.
How it got here: The Kentucky Court of Appeals ruled for the creditor, rejecting payment in paper notes; the debtor sought review by the Supreme Court by writ of error.
The Case in Depth
What happened
During the Civil War, Congress authorized paper "United States notes," or greenbacks, and declared them legal tender for debts. Griswold held a promissory note from Hepburn that had been signed before the law took effect. When Hepburn tried to pay the note using greenbacks, which had depreciated sharply against gold, Griswold refused, insisting he was owed payment in gold or silver coin as originally agreed.
The question before the Court
Could Congress force a creditor to accept paper "greenback" money, instead of gold or silver, in payment of a debt that had been contracted before Congress made that paper money legal tender?
Why it matters
Anyone owed money under a contract signed before 1862 could now demand payment in gold or silver rather than paper currency that had lost much of its value, protecting creditors from being forced to accept a fraction of what they were actually owed. The ruling also limited how far Congress could stretch its implied powers to reshape private contracts, though the decision proved short-lived and controversial.
What changes now
The ruling affirmed the Kentucky Court of Appeals and meant creditors holding debts contracted before February 25, 1862, could demand payment in gold or silver rather than depreciated paper currency. This was a final decision on the merits, not a temporary order. The holding proved highly contested and was itself overturned within a couple of years once new justices joined the Court, so its practical effect on the broader legal tender question was short-lived.
What this does not decide
The Court did not question the general constitutionality of Congress issuing paper currency or making it legal tender for debts created after the 1862 law. The ruling was limited to debts that existed before the law was passed, leaving the broader wartime currency system otherwise intact.
Concurrences and dissents
Dissent — Justice Miller
“It substitutes our ideas of policy for judicial construction, an undefined code of ethics for the Constitution, and a court of justice for the National legislature.”Miller's core objection that the majority struck down the law based on vague notions of fairness rather than constitutional text.
Justice Miller argued that making the notes legal tender was clearly necessary and proper to finance the Civil War, pointing to the government's desperate need to pay soldiers and borrow money when credit and coin were exhausted. He argued courts should defer to Congress's judgment about necessity in exercising implied powers, citing McCulloch v. Maryland, and that the majority's due process and contracts arguments were too abstract and dangerous a basis for striking down economic legislation.
How the Court got there
The legal reasoning, step by step
- The Court first had to decide whether the word 'debts' in the Legal Tender Act of 1862 covered debts already in existence when the law passed, or only debts created afterward. Looking at the statute's language and the debates in Congress, the Court concluded that Congress did intend the law to reach pre-existing debts.
- Because Congress can only exercise powers the Constitution actually grants it, either directly or as a necessary and proper means of carrying out a granted power, the Court applied the test from McCulloch v. Maryland: a law is valid only if it uses means that are appropriate, plainly adapted to a legitimate end, and not prohibited by the Constitution's letter or spirit.
- Applying that test, the Court found that making notes a legal tender for old debts added little or nothing to the government's ability to wage war, borrow money, or regulate commerce, since the notes already circulated widely because they were accepted for taxes and government payments, not because of their legal-tender status.
- The Court also concluded that forcing creditors to accept devalued paper for debts that had been contracted for payment in gold impaired the obligation of contracts and, under the Fifth Amendment's guarantee that no one be deprived of property without due process of law, effectively took private property from creditors for the benefit of debtors.
- Weighing these findings together, the Court held that applying the legal tender clause to debts contracted before the law's passage was not an appropriate or permissible means of executing any power granted to Congress, and was therefore inconsistent with, and prohibited by, the Constitution.
Doctrinal impact
Cases affected by this decision
Distinguishes Bronson v. Rodes
The Court says its earlier ruling on gold-payment contracts does not control this case about ordinary money debts.
Reaffirms McCullough v. The State of Maryland
The Court relies on Chief Justice Marshall's test for implied powers as the correct constitutional standard.