Conseco ordered to pay rent in gold by court
By Yukari Iwatani
CHICAGO, Oct 6 (Reuters) - The U.S. Supreme Court, validating a 99-year old lease, has ordered financial services company Conseco Inc. to pay 8,000 ounces of gold in back rent in a rental dispute, a company official confirmed Wednesday.
The court ruling, issued on Monday, in effect requires Conseco (NYSE:CNC - news) to pay about $2.5 million in gold coins.
The decision was the result of a five-year battle waged by the owners of a Des Moines, Iowa office building, who sought to enforce a 1919 lease, which called for tenants to pay rent in gold.
``We're pleased that this long court case has come to an end. It's been difficult because we have been embroiled in this court case when we had a legitimate lease. We look forward to receiving the amount of money we're entitled to,' Anne Galbraith, a member of the Trostel family, which owns the building, said in a telephone interview.
The original lease agreement, which was transferred to Conseco in the early 1990s when it bought American Life & Casualty, a tenant of the building, asked for a monthly rent of 92.72 troy ounces of fine gold in U.S. coins, more than $360,000 at the current price.
Until now, Conseco was paying only $23,000 a year in accordance with a Depression-era federal order banning gold clauses in rent contracts.
Although the ban was lifted in 1977 for new leases, the Trostel family was not able to take advantage of it until an old tenant transferred the lease, which eventually landed in Conseco's lap.
``We continue to believe that the court improperly applied an archaic gold clause standard in this case, but we're ready to comply with the court,' Jim Rosensteele, a spokesman for Conseco, said in a telephone interview.
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