CINCINNATI (CN) – The owners of a building in downtown Cleveland have the right to ask for payment in gold coins, the 6th Circuit ruled.
The landowner, 216 Jamaica Avenue, sued S&R Playhouse Realty to enforce a “gold clause” in the original lease for the Halle Building, which was signed in 1912.
Instead of being paid the annual $35,000 rent in cash, Jamaica asked to be paid in 35,000 gold coins. The district court declined to enforce the clause, but Judge Sutton reversed the decision.
Gold clauses were used as a safety net against the effects of inflation until they were outlawed by Congress in 1933. Forty-four years later, Congress reversed field and allowed gold clauses to be enforced again.
Despite this winding road, Sutton ruled that the 99-year lease signed by the Halle brothers in 1912 is still standing because the 1982 assignment agreement between the two parties obligated S&R to the terms of the lease.
“The parties to a contract are free to structure it however they wish, so long as they do not offend a constitutional, statutory or common-law prohibition,” Judge Sutton wrote.
The judge also refuted S&R’s objection that there was no “meeting of the minds” by noting that the assignment agreement quoted extensively from the 1912 contract.
“That clarity precludes S&R from establishing that the parties failed to have an objective meeting of the minds,” Sutton wrote.
Since the gold clause is enforceable, Sutton remanded the case to district court to determine how much S&R will have to pay.