## Facts

- During the Civil War, Congress enacted the Legal Tender Acts (1862–1863), authorizing United States notes (“greenbacks”) and declaring them legal tender for “all debts, public and private.”
- Mrs. Lee, a loyal U.S. citizen residing in Pennsylvania, owned a flock of sheep located in Texas and left them in the care of a shepherd when the rebellion began.
- In March 1863, Confederate authorities seized and sold Lee’s sheep under Confederate confiscation statutes treating certain property as belonging to “alien enemies.”
- Knox purchased the sheep at the Confederate sale, paying in Confederate currency that had substantially less value than the same nominal amount in coin.
- After the war, Lee sued Knox in federal circuit court (Western District of Texas) for trespass and conversion, seeking damages for the taking of the sheep.
- Knox argued that the Confederate confiscation and sale gave him valid title and barred Lee’s claim; the circuit court rejected that defense.
- The case proceeded to a jury on damages. The trial judge instructed that any money judgment could be paid in United States legal tender notes.
- Knox challenged (1) the rejection of his Confederate-title defense and (2) the legal-tender instruction, then sought Supreme Court review by writ of error.
- The Supreme Court considered *Knox v. Lee* together with *Parker v. Davis* under the caption “Legal Tender Cases,” revisiting and overruling *Hepburn v. Griswold* on the constitutionality of legal tender as applied to preexisting debts.

## Issues

1. Whether a purchase under Confederate confiscation statutes enacted in aid of the rebellion could transfer valid title to the property of a loyal U.S. citizen as against that owner.
2. Whether Congress had constitutional power to make United States notes legal tender for the payment of debts contracted before the Legal Tender Acts (antecedent debts), and whether *Hepburn v. Griswold* should stand.
3. Whether Congress had constitutional power to make United States notes legal tender for debts contracted after the Legal Tender Acts.
4. Whether the trial court erred by instructing that damages awarded to Lee could be satisfied in United States legal tender notes.

## Decision

- The Court held that a purchase of a loyal citizen’s property under a confiscation and sale conducted pursuant to Confederate statutes passed in aid of the rebellion is void and conveys no title against the loyal owner.
- The Court held that the Legal Tender Acts are constitutional as applied to contracts made before their passage, overruling *Hepburn v. Griswold* on that point.
- The Court held that the Legal Tender Acts are also constitutional as applied to contracts made after their enactment.
- Because United States notes were valid legal tender, the trial court did not err by instructing that any damages awarded could be paid in such notes.
- The Court affirmed the judgment for Lee (and resolved the consolidated *Parker v. Davis* consistently with its legal-tender holdings).

## Legal Principles

- Acts and transactions under Confederate confiscation statutes passed in aid of the rebellion cannot divest a loyal U.S. citizen’s property rights in a manner recognized in United States courts; purchases at such sales are void as against the loyal owner.
- Congress may issue obligations of the United States in the form of paper notes and, as a means of carrying into execution its fiscal and war-related powers (including borrowing money and supporting the war effort), may declare those notes legal tender for the payment of private debts.
- The Necessary and Proper Clause permits Congress to select reasonable means to execute enumerated powers; the Constitution does not expressly bar Congress from making United States notes legal tender.
- The Legal Tender Acts may constitutionally apply to debts contracted both before and after their enactment; creditors generally have no constitutional entitlement to payment in coin when a debt is stated in “dollars,” absent a lawful, enforceable agreement requiring a specific medium.
- When United States notes are valid legal tender, a court may allow judgments and damages stated in dollars to be satisfied with those notes.

## Conclusion

In *Knox v. Lee* (decided with *Parker v. Davis* as the “Legal Tender Cases”), the Supreme Court held that Confederate confiscation sales could not pass title against loyal Union owners and upheld Congress’s power to make United States notes legal tender for private debts, both for obligations created before and after the Legal Tender Acts, expressly overruling *Hepburn v. Griswold* on antecedent debts and affirming the judgment for Mrs. Lee.


Knox v. Lee, 79 U.S. 457, 12 Wall. 457 (1871)