Home+Building+and+Loan+Association+v.+Blaisdell+_1934_

Home+Building+and+Loan+Association+v.+Blaisdell+_1934_ - t....

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Unformatted text preview: t. A * Depression and Constitutional Crisis: 1933—1936 Home Building & Loan Association v. Blaisdell At first, the Court indicated that it would favor vigorous and novel uses of governmental power to combat the ravages of the Great Depression. For example, in the Minnesota case below, the Court narrowly sustained a state mortgage moratorium statute. In 1933, the state legislature had declared the existence of an emergency fustifying governmental measures to protect the people and promote the general welfare. To prevent the excessive loss of property by foreclosures for prices much below the mortgage indebtedness of the owners, the state provided that courts could postpone sales and extend the time in which mortgaged property might be redeemed. The law was immediately challenged as a'violation of the contract clause, and four members of the Supreme Court agreed. Although Chief Justice Hughes’s majority opinion skirted the constitutional requirements on contracts, its guidelines for the uses of emergency power in extraordinary times soon proved ambiguous. Chief Justice Hughes delivered the opinion of the Court. ppellant contests the validity of Chapter 339 of the Laws of Min— nesota of 1933, p. 514, approved April 18, 1933, called the Minne— sota Mortgage Moratorium Law, as being repugnant to the contract clause (Art. I, § 10) and the due process and equal protection clauses of the Fourteenth Amendment, of the Federal Constitution. The statute was sustained by the Supreme Court of Minnesota . . . and the case comes here on appeal. The Act provides that, during the emergency declared to exist, relief may be had through authorized judicial proceedings With respect to 290 U.S. 398 (1934 ) 365 366 Depression and Constitutional Crisis: 1933-1936 'foreclosures of mortgages, and execution sales, of real estate; that sales may be postponed and periods of redemption may be extended. The Act does not apply to mortgages subsequently made nor to those made previously which shall be extended for a period ending more than a year after the passage of the Act (Part One, § 8). . . . The Act is to remain in effect “only during the continuance of the emergency and in no event beyond May 1, 1935.” .1 . . In determining whether the provision for this temporary and condi- tional relief exceeds the power of the State by reason of the clause in the Federal Constitution prohibiting impairment of the obligations of contracts, we must consider the relation of emergency to constitutional power, the historical setting of the contract clause, the development of the jurisprudence of this Court in the construction of that clause, and the principles of construction which we may consider to he established. Emergency does not create power. Emergency does not increase. granted power or remove or diminish the restrictions imposed upon power granted or reserved. The Constitution was adopted in a period of grave emergency. Its grants of power to the Federal Government and its limi- tations of the power of the States were determined in the light of emer- gency and they are not altered by emergency. What power was thus granted and what limitations were thus imposed are questions which have always been, and always will he, the subject of close examination under our constitutional system. While emergency does not create power, emergency may furnish the occasion for the exercise of power. . . . The constitutional question pre- sented in the light of an emergency is whether the power possessed embraces the particular exercise of it in response to particular conditions. . . .‘When the provisions of the Constituu'on, in grant or restriction, are specific, so particularized as not to admit‘bf construction, no question is presented. . . . But where constitutional grants and limitations of power are set forth in general clauses, which afford a broad outline, the process of construction is essential to fill in the details. That is true of the contract clause. . . . But full recognition of the occasion and general purpose of the clause does not suffice to fix its precise scope. Nor does an examination of the details of prior legislation in the States yield criteria which can be con- sidered controlling. To ascertain the scope of the constitutional prohibi- tion we examine the course of judicial' decisions in its application. These put it beyond question that the prohibition is not an absolute one and is not to he read with literal exactness like a mathematical formula. . . . Not only is the constitutional provision qualified by the measure of control which the State retains over remedial processes, but the State also continues to possess authority to safeguard the vital interests of its people. It does not matter that legislation appropriate to that end “has Home Building (7 Loan Association v. Blaisdell 367 the result of modifying or abrogating contracts already in effect.” . . . Not only are existing laws read into contracts in order to fix obligations as between the parties, but the reservation of essential attributes of sov— ereign power is also read into contracts as a postulate of the legal order. The policy of protecting contracts against impairment presupposes the maintenance of a government by virtue of which contractual relations are worth while,-——-a government which retains adequate authority to secure the peace and good order of society. This principle of harmonizing the constitutional prOhibition with the necessary residuum of state power has had progressive recognition in the decisions of this Court. . . . Undoubtedly, whatever is reserved of state power must be consistent with the fair intent of the constitutional limitation of that power. The reserved power cannot be construed so as to destroy the limitation, nor is the limitation to be construed to destroy the reserved power in its essential aspects. They must be construed in harmony with each other. This principle precludes a construction which would permit the State to adopt as its policy the repudiation of debts or the destruction of con— tracts or the denial of means to enforce them. But it does not follow that conditions may not arise in which a temporary restraint of enforce- ment may be consistent with the spirit and purpose of the constitutional provision and thus be found to be Within the range of the reserved power of the State to protect the vital interests of the community. It cannot be maintained that the constitutional prohibition should be so construed as to prevent limited and temporary interpositions with respect to the en- forcement of contracts if made necessary by a great public calamity such as fire, flood, or earthquake. . . . The reservation of state power appro- priate to such extraordinary conditions may be deemed to be as much a part of all contracts, as is the reservation of state power to protect the public interest in the other situations to which we have referred. And if state power exists to give temporary relief from the enforcement of con— tracts in the presence of disasters due to physical causes such as fire, flood or earthquake, that power cannot be said to be non-existent when the urgent public need demanding such relief is produced by other and economlc causes. . . . It is manifest from this review . . . that there has been a growing appreciation of public needs and of the necessity of finding ground for a rational compromise between individual rights and public welfare. The settlement and consequent contraction of the public domain, the pressure of a constantly increasing density of population, the interrela- tion of the activities of our people and the complexity of our economic interests, have inevitably led to an increased use of the organization of society in order to protect the very bases of individual opportunity. Where, in earlier days, it was thought that only the concerns of individ- uals or of classes were involved, and that those of the State itself. were 368 Depression and Constitutional Crisis: 1933—1936 touched only remotely, it has later been found that the fundamental interests of the State are directly affected; and that the question is no longer merely that of one party to a, contract as against another, but of the use of reasonable means to safeguard the economic structure upon which the good of all depends. It is no answer to say that this public need was not apprehended a century ago, or to insist that what the provision of the Constitution meant to the vision of that day it must mean to the vision of our time. If by the statement that what the Constitution meant at the time of its adoption it means to-day, it is intended to say that the great clauses of the Constitution must be confined to the interpretation which the framers, with the conditions and outlook of their time, would have placed upon them, the statement carries its own refutation. It was to guard against such a narrow conception that Chief Justice Marshall uttered the mem- orable warning—“VVe must never forget that it is a constitution we are expounding” (McCulloch v. Maryland, 4 Wheat. 316, 407) -——-“a consti- tution intended to endure for ages to come, and consequently, to be adapted to the various crises of human aifairs.” 161., p. 415. . . . Nor is it helpful to attempt to draw a fine distinction between the in- tended meaning of fine words of the Constitution and their intended appli- cation. When we consider the contract clause and the decisions which have expounded it in harmony with the essential reserved power of the States to protect the security of their peoples, we find no warrant for the con- clusion that the clause has been warped by these decisions from its proper significance or that the founders of our Government would have inter- preted the clause diiferently had they had occasion to assume that responsibility in the conditions of the later day. The vast body of law which has been developed was unknown to the fathers, but it is believed to have preserved the essential content and the spirit of the Constitution. With a growing recognition of public needs and the relation of individual right to public security, the court has sought to prevent the perversion of the clause through its use as an instrument to throttle the capacity of the States to protect their fundamental interests. This development is a growth from the seeds which the fathers planted. . . . The principle of this development is, as we have seen, that the reservation of the reasonable exercise of the protective power of the State is read into all contracts. . . . Applying the criteria established by our decisions we conclude: 1. An emergency existed in Minnesota which furnished a proper occa— sion for the exercise of the reserved power of the State to protect the vital interests of the community. . . . 2. The legislation was addressed to a legitimate end, that is, the legis— lation was not for the mere advantage of particular individuals but for the protection of. a basic interest of society. 3. In View of the nature of the contracts in question—mortgages of unquestionable validity—the relief afforded and justified by the emer— gency, in order not to contravene the constitutional Provision, could only be of a character appropriate to that emergency and could be granted only upon reasonable conditions. . . . We are of the opinion that the Minnesota statute as here applied does not violate the contract clause of the Federal Constitution. Whether the legislation is Wise or unwise as a matter of policy is a question with which we are not concerned. . . . ...
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This note was uploaded on 02/21/2012 for the course 512 404 taught by Professor Clemens during the Spring '12 term at Rutgers.

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