This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
The Confederate government maintained a de facto existence for several years and was recognized as a belligerent by foreign powers. The result of the Civil War was to end its existence as a de facto government. After the war full effect was given to the acts of the various states of the Confederacy, other than those which were intended to aid in the prosecution of war against the United States. No recognition was given to the public acts of the Confederacy after its de facto existence was terminated, especially since its public acts were intended as a means of carrying on war against the United States. At the same time, Confederate currency was the only circulating medium in the greater part of the South for the greater part of the Civil War. Because of these reasons, a number of different questions were presented for determination after the end of the Civil War had terminated the existence of the Confederacy. Since the public acts of the Confederacy were not recognized, a creditor who had not agreed to accept Confederate money was not bound to accept it in payment of a debt; and if he refused to accept it, the debt was not paid, no matter what provisions for compelling creditors to accept Confederate money had been made by the Confederacy.1 On the other hand, if the creditor had made an express agreement to accept payment in Confederate money, such provision was not illegal, since it aided the Confederacy in carrying on the war only as a mere incident to doing business within the limits of the Confederacy; and payment of such debt could be made in Confederate money.2 Even if the debt was not made payable in Confederate money by its terms, a payment in Confederate money where such money was current which was received by the creditor as payment, was a discharge of the obligation,3 as long as the creditor's acceptance of it as payment was not due to duress on the part of the Confederacy or on the part of the debtor. If payment in Confederate money was accepted by the creditor under duress, he could avoid such transaction in the same way that transactions entered into under duress could be avoided; that is, as soon as the duress ceased to operate, the creditor could return the money which was paid to him, repudiate such payment, and demand payment in legal tender of the United States.4 The right of the debtor to avoid payments in Confederate currency was greatly limited by the fact that the courts held that military and executive orders requiring creditors to accept payment in Confederate currency did not of themselves amount to duress,5 even though very serious consequences might follow refusal to accept Confederate money in payment and although the creditor might not venture to incur such consequences. It was also held that the creditor could not avoid the payment unless he returned the identical bills which were paid over to him.6 A combination of these two rules made it practically impossible, in many cases, for the creditor to avoid the consequences of payment wherever he had accepted Confederate money as payment of an obligation.
9 Smith v. Bettger, 68 Ind. 254, 34 Am. Rep. 256; Bangor v. Warren, 34 Me. 324, 56 Am. Dec. 657; Arnold v. Sprague, 34 Vt. 402; Schierl v. Baumel, 76 Wis. 69, 43 N. W. 724.
10 Hall v. Stevens, 116 N. Y. 201, 5 L R. A. 802, 22 N. E. 374.
1 Love v. Johnston, 72 N. Car. 415; Alley v. Bogers, 60 Va. (19 Gratt.) 366. 2 Planters' Bank v. Union Bank, 83 U. S. (16 Wall.) 483, 21 L. ed. 473; Hives v. Duke, 105 U. S. 132, 26 L. ed. 1031; Wintz v. Weakes, 57 Tenn. (10 Heisk.) 593.
If a contract provides for the payment of money in a foreign country, and especially if such contract is made in such foreign country, it will be presumed that payment is to be made in the medium which is current in such country at the time of payment.7 If an action is brought in this country upon such a contract, the amount for which judgment should be rendered is the value of the payment in such foreign currency, reduced to terms of legal tender of the United States.8 If an action is brought in the United States to recover a deposit of Mexican currency, made in Mexico, judgment should be rendered for the value of such currency in United States money.9 No effect will be given to the decree of a foreign government, fixing the rate at which such money is to be taken,10 at least if such government is not recognized by the government of the United States.11
3 Van Hoose v. Bush, 54 Ala. 342; Ewing v. Litsey, 70 Ky. (7 Bush.) 496; Robinson v. International Life Assurance Society, 42 N. Y. 54. 1 Am. Rep. 400; Ritchie v. Sweet, 32 Tex. 333, 5 Am. Rep. 245.
4 McCartney v. Wade, 49 Tenn. (2 Heisk.) 360; Mann v. Lewis, 3 W. Va. 215, 100 Am. Dec. 747.
5 Glenn v. Case, 25 Ark. 616; Davis v. Mississippi Central Ry., 46 Miss. 552.
6 Emerson v. Lee, 18 La. Ann. 134, 89 Am. Dec. 648.
7 San Juan v. St. John's Gas Co., 195 U. S. 510, 49 L. ed. 299; Worm-ser v. Marroquin, 249 Fed. 428; Corn-stock v. Smith, 20 Mich. 338; Rasst v. Morris, 133 Md. 187, 108 Atl. 7S7.
8 San Juan v. St. John's Gas Co., 195 U. S. 510, 49 L. ed. 299; Rasst v. Morris, 133 Md. 187, 108 Atl. 787; Comstock v. Smith, 20 Mich. 338; Stewart v. Chambers, 2 Sandf. Ch. (N. Y.) 382.
It has been said that a contract made in Porto Rico before its annexation to the United States, which provides for the payment of dollars "in the circulating foreign money in commerce" requires payment in money of the United States after the annexation of Porto Rico to the United States;12 and the subsequent use of the term "currency" in the same contract, and apparently referring to the same kind of money, must be given the same meaning.13
If, on the other hand, the contract evidently contemplated payment in the kind of money then in general circulation, and, by the subsequent conquest or annexation of such country, a different kind of money is circulated, though bearing in part, at least, the same name, the contract will be construed as providing for payment in the kind of money in general circulation when the contract was made.14