U.S. Supreme Court HOME BLDG. & LOAN ASS'N v. BLAISDELL, 290 U.S. 398 (1934)

290 U.S. 398

HOME BUILDING & LOAN ASS'N v. BLAISDELL et ux. No. 370. Argued Nov. 8, 9, 1933. Decided Jan. 8, 1934.

Appeal from the Supreme Court of the State of Minnesota.[ Home Bldg . & Loan Ass'n v. Blaisdell 290 U.S. 398 (1934) ]

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income or rental value, in or toward the payment of taxes, insurance, interest, mortgage ... indebtedness at such times and in such manner' as shall be determined by the court. [Footnote 1] The section also provides that the time for re-

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total amount of the purchase price, with taxes and insurance premiums subsequently paid by appellant, but exclusive of interest from the date of sale, was $4,056.39. The court also found that the property was situated in the closely built-up portions of Minneapolis; that it had been improved by a two-car garage, together with a building two stories in height which was divided into fourteen rooms; that the appellees, husband and wife, occupied the premises as their homestead, occupying three rooms and offering the remaining rooms for rental to others.

The court entered its judgment extending the period of redemption of May 1, 1935, subject to the condition that the appellees should pay to the appellant $40 a month through the extended period from May 2, 1933; that is, that in each of the months of August, September, and October, 1933, the payments should be $80, in two installments, and thereafter $40 a month, all these amounts to go to the payment of taxes, insurance, interest, and mortgage indebtedness. [Footnote 2] It is this judgment, sustained by the Supreme Court of the state on the authority of its former opinion, which is here under review. 249 N.W. 893.

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statute which described the existing emergency in terms that were deemed to justify the temporary relief which the statute affords. [Footnote 3] The state court, declaring that it

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gress, in addition to many extraordinary measures looking to the relief of the economic emergency, had passed an act to supply funds whereby mortgagors may be able within a reasonable time to refinance their mortgages or redeem from sales where the redemption has not expired. With this knowledge the court cannot well hold that the Legislature had no basis in fact for the conclusion that an economic emergency existed which called for the exercise of the police power to grant relief.'

Justice Olsen of the state court, in a concurring opinion, added the following: 'The present nation wide and world wide business and financial crisis has the same results as if it were caused by flood, earthquake, or disturbance in nature. It has deprived millions of persons in this nation of their employment and means of earning a living for themselves and their families; it has destroyed the value of and the income from all property on which thousands of people depended for a living; it actually has resulted in the loss of their homes by a number of our people, and threatens to result in the loss of their homes by many other people in this state; it has resulted in such widespread want and suffering among our people that private, state, and municipal agencies are unable to adequately relieve the want and suffering, and Congress has found it necessary to step in and attempt to remedy the situation by federal aid. Millions of the people's money were and are yet tied up in closed banks and in business enterprises.' [Footnote 4]

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which have always been, and always will be, 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. 'Although an emergency may not call into life a power which has never lived, nevertheless emergency may afford a reason for the exertion of a living power already enjoyed.' Wilson v. New, 243 U.S. 332, 348, 37 S.Ct. 298, 302, L.R.A. 1917E, 938, Ann.Cas. 1918A, 1024. The constitutional question presented in the light of an emergency is whether the power possessed embraces the particular exercise of it in response to particular conditions. Thus, the war power of the federal government is not created by the emergency of war, but it is a power given to meet that emergency. It is a power to wage war sucessfully, and thus it permits the harnessing of the entire energies of the people in a supreme co-operative effort to preserve the nation. But even the war power does not remove constitutional limitations safeguarding essential liberties. [Footnote 5] When the provisions of the Constitution, in grant or restriction, are specific, so particularized as not to admit of construction, no question is presented. Thus, emergency would not permit a state to have more than two Senators in the Congress, or permit the election of President by a general popular vote without regard to the number of electors to which the States are respectively entitled, or permit the States to 'coin money' or to 'make anything but gold and silver coin a tender in payment of debts.' 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. The necessity of construction is not obviated by

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the fact that the contract clause is associated in the same section with other and more specific prohibitions. Even the grouping of subjects in the same clause may not require the same application to each of the subjects, regardless of differences in their nature. See Groves v. Slaughter, 15 Pet. 449, 505; Atlantic Cleaners & Dyers v. United States, 286 U.S. 427, 434, 52 S.Ct. 607

In the construction of the contract clause. the debates in the Constitutional Convention are of little aid. [Footnote 6] But the reasons which led to the adoption of that clause, and of the other prohibitions of section 10 of article 1, are not left in doubt, and have frequently been described with eloquent emphasis. [Footnote 7] The widespread distress following the revolutionary period and the plight of debtors had called forth in the States an ignoble array of legislative schemes for the defeat of creditors and the invasion of contractual obligations. Legislative interferences had been so numerous and extreme that the confidence essential to prosperous trade had been undermined and the utter destruction of credit was threatened. 'The sober people of America' were convinced that some 'thorough reform' was needed which would 'inspire a general prudence and industry, and give a regular course to the business of society.' The Federalist, No. 44. It was necessary to interpose the restraining power of a central authority in order to secure the foundations even of 'private faith.' The occasion and general purpose of

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The obligations of a contract are impaired by a law which renders them invalid, or releases or extinguishes them9 (Sturges v. Crowninshield, supra, 4 Wheat. 197, 198) and impairment, as above noted, has been predicated of laws which without destroying contracts derogate from substantial contractual rights. [Footnote 10] In Sturges v. Crowninshield, supra, a state insolvent law, which discharged the debtor from liability, was held to be invalid as applied to contracts in existence when the law was passed. See Ogden v. Saunders, supra. In Green v. Biddle, 8 Wheat. 1, the legislative acts, which were successfully assailed, exempted the occupant of land from the payment of rents and profits to the rightful owner, and were 'parts of a system the object of which was to compel the rightful owner to relinquish his lands or pay for all lasting improvements made upon them, without his consent or default.' In Bronson v. Kinzie, 1 How. 311, state legislation, which had been enacted for the relief of debtors in view of the seriously depressed condition of business, 11 following the panic of 1837, and which provided that the equitable estate of the mortgagor should not be extin-

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insurance companies, banks, and investment and mortgage companies. 16 These, and such individual mortgagees as are small investors, are not seeking homes or the opportunity to engage in farming. Their chief concern is the reasonable protection of their investment security. It does not matter that there are, or may be, individual cases of another aspect. The Legislature was entitled to deal with the general or typical situation. The relief afforded by the statute has regard to the interest of mortgagees as well as to the interest of mortgagors. The legislation seeks to prevent the impending ruin of both by a considerate measure of relief.

In the absence of legislation, courts of equity have exercised jurisdiction in suits for the foreclosure of mortgages to fix the time and terms of sale and to refuse to confirm sales upon equitable grounds where they were found to be unfair or inadequacy of price was so gross as to shock the conscience. [Footnote 17] The 'equity of redemption' is the creature of equity. While courts of equity could not alter the legal effect of the forfeiture of the estate at common law on breach of condition, they succeeded, operating on the conscience of the mortgagee, in maintaining that it was unreasonable that he should retain for his own benefit what was intended as a mere security, that the breach of condition was in the nature of a penalty, which ought to be relieved against, and that the mortgagor had an equity to redeem on payment of principal, interest and costs,

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notwithstanding the forfeiture at law. This principle of equity was victorious against the strong opposition of the common-law judges, who thought that by 'the Growth of Equity on Equity the Heart of the Common Law is eaten out.' The equitable principle became firmly established, and its application could not be frustrated even by the engagement of the debtor entered into at the time of the mortgage, the courts applying the equitable maxim 'once a mortgage, always a mortgage, and nothing but a mortgage.' [Footnote 18] Although the courts would have no authority to alter a statutory period of redemption, the legislation in question permits the courts to extend that period, within limits and upon equitable terms, thus providing a procedure and relief which are cognate to the historic exercise of the equitable jurisdiction. If it be determined, as it must be, that the contract clause is not an absolute and utterly unqualified restriction of the state's protective power, this legislation is clearly so reasonable as to be within the legislative competency.

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interests of foreigners or the citizens of any other state may be affected.' 6 And on July 13, 1787, Congress in New York, acutely conscious of the evils engendered by state laws interfering with existing contracts,7 passed the Northwest Territory Ordinance, which contained the clause: 'And, in the just preservation of rights and property, it is understood and declared, that no law ought ever to be made or have force in the said territory, that shall, in any manner whatever, interfere with or affect private contracts, or engagements, bona fide, and without fraud previously formed.' [Footnote 8] It is not surprising, therefore, that, after the Convention had adopted the clauses, no state shall 'emit bills of credit,' or 'make any thing but gold and silver coin a tender in payment of debts,' Mr. King moved to add a 'prohibition on the states to interfere in private contracts.' This was opposed by Gouverneur Morris and Colonel Mason. Colonel Mason thought that this would be carrying the restraint too far; that cases would happen that could not be foreseen where some kind of interference would be essential. This was on August 28. But Mason's view did not prevail, for, on September 14 following, the first clause of article 1, 10, was altered so as to include the provision: 'No state shall ... pass any ... law impairing the obligation of contracts,' and in that form it was adopted. [Footnote 9]

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der it the duty of a government in some measure to interfere by passing laws totally or partially stopping courts of justice, or authorizing the debtor to pay by installments; that such regulations had been found necessary in most or all of the states 'to prevent the wealthy creditor and the moneyed man from totally destroying the poor, though industrious debtor. Such times may again arrive.' And he was apprehensive of any proposal which took from the respective states the power to give their debtor citizens 'a moment's indulgence, however necessary it might be, and however desirous to grant them aid.' 10

On the other hand, Sherman and Ellsworth defended the provision in a letter to the Governor of Connecticut. [Footnote 11] In the course of the Virginia debates, Randolph declared that the prohibition would be promotive of virtue and justice, and preventive of injustice and fraud; and he pointed out that the reputation of the people had suffered because of frequent interferences by the state Legislatures with private contracts. [Footnote 12] In the North Carolina debates, Mr. Davie declared that the prohibition against impairing the obligation of contracts and other restrictions ought to supersede the laws of particular states. He thought the constitutional provisions were founded on the strongest principles of justice. [Footnote 13] Pinckney, in the South Carolina debates, said that he considered the section including the clause in question as 'the soul of the Constitution,' teaching the states 'to cultivate those principles of public honor and private honesty which are the sure road to national character and happiness.' [Footnote 14]

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16 Wall. 314, 318; Edwards v. Kearzey, 96 U.S. 595, 604; Barnitz v. Beverly, 163 U.S. 118, 16 S.Ct. 1042, and Bradley v. Lightcap, 195 U.S. 1, 24 S.Ct. 748.

Bronson v. Kinzie was decided at the January term, 1843. The case involved an Illinois statute, extending the period of redemption for a period of twelve months after a sale under a decree in chancery, and another statute preventing a sale unless two-thirds of the amount at which the property had been valued by appraisers should be bid therefor. This Court held both statutes invalid, when applied to an existing mortgage, as infringing the contract impairment clause. No more need now be said as to the points decided. The opinion of the court says nothing about an emergency; but it is clear that the statute was passed for the purpose of meeting the panic and depression which began in 1837 and continued for some years thereafter. [Footnote 15] And, in the light of what is now to be said, it is evident that the question of that emergency as a basis for the legislation was so definitely involved that it must have been considered by the Court.

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As this court has well said, whatever tends to postpone or retard the enforcement of a contract, to that extent weakens the obligation. According to one Latin proverb, 'He who gives quickly, gives twice,' and according to another, 'He who pays too late, pays less.' 'Any authorization of the postponement of payment, or of means by which such postponement may be effected, is in conflict with the constitutional inhibition.' Louisiana ex rel. Ranger v. New Orleans, , 207. I am not able to see any real distinction between a statute which in substantive terms alters the obligation of a debtor-creditor contract so as to extend the time of its performance for a period of two years and a statute which, though in terms acting upon the remedy, is aimed at the obligation (as distinguished, for example, from the judicial procedure incident to the enforcement thereof), and which does in fact withhold from the creditor, for the same period of time, the stipulated fruits of his contract.

I quite agree with the opinion of the Court that whether the legislation under review is wise or unwise is a matter with which we have nothing to do. Whether it is likely to work well or work ill presents a question entirely irrelevant to the issue. The only legitimate inquiry we can make is whether it is constitutional. If it is not, its virtues, if it have any, cannot save it; if it is, its faults cannot be invoked to accomplish its destruction. If the provisions of the Constitution be not upheld when they pinch as well as when they comfort, they may as well be abandoned. Being unable to reach any other conclusion than that the Minnesota statute infringes the constitutional restriction under review, I have no choice but to say so.

I am authorized to say that Mr. Justice VAN DEVANTER, Mr. Justice McREYNOLDS, and Mr. Justice BUTLER concur in this opinion. Footnotes

Footnote 1 That section is as follows:'Sec. 4. Period of Redemption May be Extended.-Where any mortgage upon real property has been foreclosed and the period of redemption has not yet expired, or where a sale is hereafter had, in the case of real estate mortgage foreclosure proceedings, now pending, or which may hereafter be instituted prior to the expiration of two years from and after the passage of this Act, or upon the sale of any real property under any judgment or execution where the period of redemption has not yet expired, or where such sale is made hereafter within two years from and after the passage of this Act, the period of redemption may be extended for such additional time as the court may deem just and equitable but in no event beyond May 1st, 1935; provided that the mortgagor, or the owner in possession of said property, in the case of mortgage foreclosure proceedings, or the judgment debtor, in case of sale under judgment, or execution, shall prior to the expiration of the period of redemption, apply to the district court having jurisdiction of the matter, on not less than 10 days' written notice to the mortgagee or judgment creditor, or the attorney of either, as the case may be, for an order determining the reasonable value of the income on said property, or, if the property has no income, then the reasonable rental value of the property involved in such sale, and directing and requiring such mortgagor or judgment debtor, to pay all or a reasonable part of such income or rental value, in or toward the payment of taxes, insurance, interest, mortgage or judgment indebtedness at such times and in such manner as shall be fixed and determined and ordered by the court; and the court shall thereupon hear said application and after such hearing shall make and file its order directing the payment by such mortgagor, or judgment debtor, of such an amount at such times and in such manner as to the court shall, under all the circumstances, appear just and equitable. Provided that upon the service of the notice or demand aforesaid that the running of the period of redemption shall be tolled until the court shall make its order upon such application. Provided, further, however, that if such mortgagor or judgment debtor, or personal representative, shall default in the payments, or any of them, in such order required, on his part to be done, or commits waste, his right to redeem from said sale shall terminate 30 days after such default and holders of subsequent liens may redeem in the order and manner now provided by law beginning 30 days after the filing of notice of such default with the clerk of such District Court, and his right to possession shall cease and the party acquiring title to any such real estate shall then be entitled to the immediate possession of said premises. If default is claimed by allowance of waste, such 30 day period shall not begin to run until the filing of an order of the court finding such waste. Provided, further, that the time of redemption from any real estate mortgage foreclosure or judgment or execution sale heretofore made, which otherwise would expire less than 30 days after the passage and approval of this Act, shall be and the same hereby is extended to a date 30 days after the passage and approval of this Act, and in such case, the mortgagor, or judgment debtor, or the assigns or personal representative of either, as the case may be, or the owner in the possession of the property, may, prior to said date, apply to said court for and the court may thereupon grant the relief as hereinbefore and in this section provided. Provided, further, that prior to May 1, 1935, no action shall be maintained in this state for a deficiency judgment until the period of redemption as allowed by existing law or as extended under the provisions of this Act, has expired.'

Footnote 2 A joint statement of the counsel for both parties, filed with the court on the argument in this court, shows that, after providing for taxes, insurance, and interest, and crediting the payments to be made by the mortgagor under the judgment, the amount necessary to redeem May 1, 1935, would be $4,258.82.

Footnote 3 The preamble and the first section of the act are as follows:'Whereas, the severe financial and economic depression existing for several years past has resulted in extremely low prices for the products of the farms and the factories, a great amount of unemployment, an almost complete lack of credit for farmers, business men and property owners and a general and extreme stagnation of business, agriculture and industry, and'Whereas, many owners of real property, by reason of said conditions, are unable, and it is believed, will for some time be unable to meet all payments as they come due of taxes, interest and principal of mortgages on their properties and are, therefore, threatened with loss of such properties through mortgage foreclosure and judicial sales thereof, and'Whereas, many such properties have been and are being bid in at mortgage foreclosure and execution sales for prices much below what is believed to be their real values and often for much less than the mortgage or judgment indebtedness, thus entailing deficiency judgments against the mortgage and judgment debtors, and'Whereas, it is believed, and the Legislature of Minnesota hereby declares its belief, that the conditions existing as hereinbefore set forth has created an emergency of such nature that justifies and validates legislation for the extension of the time of redemption from mortgage foreclosure and execution sales and other relief of a like character; and'Whereas, The State of Minnesota passesses the right under its police power to declare a state of emergency to exist, and'Whereas, the inherent and fundamental purposes of our government is to safeguard the public and promote the general walfare of the people; and'Whereas, Under existing conditions the foreclosure of many real estate mortgages by advertisement would prevent fair, open and competitive bidding at the time of sale in the manner now contemplated by law, and'Whereas, it is believed, and the Legislature of Minnesota hereby declares its belief, that the conditions existing as hereinbefore set forth have created an emergency of such a nature that justifies and validates changes in legislation providing for the temporary manner, method, terms and conditions upon which mortgage foreclosure sales may be had or postponed and jurisdiction to administer equitable relief in connection therewith may be conferred upon the District Court, and'Whereas, Mason's Minnesota Statutes of 1927, Section 9608, which provides for the postponement of mortgage foreclosure sales, has remained for more than thirty years, a provision of the statutes in contemplation of which provisions for foreclosure by advertisement have been agreed upon.'Section 1. Emergency Declared to Exist.-In view of the situation hereinbefore set forth, the Legislature of the State of Minnesota hereby declares that a public economic emergency does exist in the State of Minnesota.'

Footnote 4 The Attorney General of the state in his argument before this court made the following statement of general conditions in Minnesota: 'Minnesota is predominantly an agricultural state. A little more than one half of its people live on farms. At the time this law was passed the prices of farm products has fallen to a point where most of the persons engaged in farming could not realize enough from their products to support their families, and pay taxes and interest on the mortgages on their homes. In the fall and winter of 1932 in the villages and small cities where most of the farmers must market their produce, corn was quoted as low as eight cents per bushel, oats two cents and wheat twenty-nine cents per bushel, eggs at seven cents per dozen and butter at ten cents per pound. The industry second in importance is mining. In normal times Minnesota produces about sixty per cent of the iron of the United States and nearly thirty per cent of all the iron produced in the world. In 1932 the production of iron fell to less than fifteen per cent of normal production. The families of idle miners soon became destitute and had to be supported by public funds. Other industries of the state, such as lumbering and the manufacture of wood products, the manufacture of farm machinery and various goods of steel and iron have also been affected disastrously by the depression. Because of the increased burden on the state and its political subdivisions which resulted from the depression, taxes on lands, which provide by far the major portion of the taxes in this state, were increased to such an extent that in many instances they became confiscatory. Tax delinquencies were alarmingly great, rising as high as 78% in one county of the state. In seven counties of the state the tax delinquency was over 50%. Because of these delinquencies many towns, school districts, villages and cities were practically bankrupt. In many of these political subdivisions of the state local government would have ceased to function and would have collapsed had it not been for loans from the state.' The Attorney General also stated that serious breaches of the peace had occurred.

Footnote 5 See Ex parte Milligan, 4 Wall. 2, 120-127; United States v. Russell, 13 Wall. 633, 627; Hamilton v. Kentucky Distilleries & Warehouse Co., 251 U.S. 146, 155, 40 S.Ct. 106; United States v. L. Cohen Grocery Co., 255 U.S. 81, 88, 41 S.Ct. 298, 14 A.L.R. 1045.

Footnote 6 Farrand, Records of the Federal Convention, vol. 2, pp. 439, 440, 597, 610; Elliot's Debates, vol. 5, pp. 485, 488, 545, 546; Bancroft, History of the U.S. Constitution, vol. 2, pp. 137-139; Warren, The Making of the Constitution, pp. 552-555. Compare Ordinance for the Government of the Northwest Territory, art. 2.

Footnote 7 The Federalist, No. 44 (Madison); Marshall, Life of Washington, vol. 5, pp. 85-90, 112, 113; Bancroft, History of the U.S. Constitution, vol. 1, p. 228 et seq.; Black, Constitutional Prohibitions, pp. 1-7; Fiske, The Critical Period of American History (8th Ed.) p. 168 et seq.; Adams v. Storey, Fed. Cas. No. 66, 1 Paine, 79, 90-92.

Footnote 8 Contracts, within the meaning of the clause, have been held to embrace those that are executed; that is, grants, as well as those that are executory. Fletcher v. Peck, 6 Cranch, 87, 137; Terrett v. Taylor, 9 Cranch, 43. They embrace the charters of private corporations. Dartmouth College v. Woodward, 4 Wheat. 518. But not the marriage contract, so as to limit the general right to legislate on the subject of divorce. Id. page 629 of 4 Wheat.; Maynard v. Hill, 125 U.S. 190, 210, 8 S.Ct. 723. Nor are judgments, though rendered upon contracts, deemed to be within the provision. Morley v. Lake Shore Railway Co., 146 U.S. 162, 169, 13 S.Ct. 54. Nor does a general law, giving the consent of a state to be sued, constitute a contract. Beers v. Arkansas, 20 How. 527.

Footnote 9 But there is held to be no impairment by a law which removes the taint of illegality and thus permits enforcement, as, e.g., by the repeal of a statute making a contract void for usury. Ewell v. Daggs, 108 U.S. 143, 151, 2 S.Ct. 408.

Footnote 10 See, in addition to cases cited in the text, the following: Farmers' & Mechanics' Bank v. Smith, 6 Wheat. 131; Piqua Bank v. Knoop, 16 How. 369; Dodge v. Woolsey, 18 How. 331; Jefferson Branch Bank v. Skelly, 1 Black, 436; State Tax on Foreign-held Bonds, 15 Wall. 300; Farrington v. Tennessee, ; Murray v. Charleston, 96 U.S. 432; Hartman v. Greenhow, 102 U.S. 672; McGahey v. Virginia, 135 U.S. 662, 10 S.Ct. 972; Bedford v. Eastern Building & Loan Association, 181 U.S. 227, 21 S.Ct. 597; Wright v. Central of Georgia Railway Co., 236 U.S. 674, 35 S.Ct. 471; Central of Georgia Railway Co. v. Wright, 248 U.S. 525, 39 S.Ct. 181; Ohio Public Service Co. v. Ohio ex rel. Fritz, 274 U.S. 12, 47 S.Ct. 480.

Footnote 11 See Warren, The Supreme Court in United States History, vol. 2, pp. 376-379.

Footnote 12 See Sturges v. Crowninshield, 4 Wheat. 122, 200, 201; Mason v. Haile, 12 Wheat. 370, 378; Beers v. Haughton, 9 Pet. 329, 359.

Footnote 13 Illustrations of changes in remedies, which have been sustained, may be seen in the following cases: Jackson v. Lamphire, 3 Pet. 280; Hawkins v. Barney's Lessee, 5 Pet. 457; Crawford b. Branch Bank, 7 How. 279; Curtis v. Whitney, 13 Wall. 68; Cairo & F.R. Co. v. Hecht, 95 U.S. 168; Terry v. Anderson, 95 U.S. 628; Tennessee v. Sneed, 96 U.S. 69; South Carolina v. Gaillard, 101 U.S. 433; Louisiana v. New Orleans, 102 U.S. 203; Connecticut Mutual Life Insurance Co. v. Cushman, 108 U.S. 51, 2 S.Ct. 236; Vance v. Vance, 108 U.S. 514, 2 S.Ct. 854; Gilfillan v. Union Canal Co., 109 U.S. 401, 3 S.Ct. 304; Hill v. Merchants' Insurance Co., 134 U.S. 515, 10 S.Ct. 589; New Orleans City & Lake R.R. Co. v. Louisiana, 157 U.S. 219, 15 S.Ct. 581; Red River Valley Bank v. Craig, 181 U.S. 548, 21 S.Ct. 703; Wilson v. Standefer, 184 U.S. 399, 22 S.Ct. 384; Oshkosh Waterworks Co. v. Oshkosh, 187 U.S. 437, 23 S.Ct. 234; Waggoner v. Flack, 188 U.S. 595, 23 S.Ct. 345; Bernheimer v. Converse, 206 U.S. 516, 27 S.Ct. 755; Henley v. Myers, 215 U.S. 373, 30 S.Ct. 148; Selig v. Hamilton, 234 U.S. 652, 34 S.Ct. 926, Ann. Cas. 1917A, 104; Security Savings Bank v. California, 263 U.S. 282, 44 S.Ct. 108, 31 A.L.R. 391.

Compare the following illustrative cases, where changes in remedies were deemed to be of such a character as to interfere with substantial rights: Wilmington & Weldon R.R. Co. v. King, 91 U.S. 3; Memphis v. United States, 97 U.S. 293; Virginia Coupon Cases, 114 U.S. 269, 270, 298 S., 299, 330, 5 S.Ct. 903, 962, 207; Effinger v. Kenney, , 6 S.Ct. 179; Fisk v. Jefferson Police Jury, 116 U.S. 131, 6 S.Ct. 329; Bradley v. Lightcap, 195 U.S. 1, 24 S.Ct. 748; Bank of Minden v. Clement, 256 U.S. 126, 41 S.Ct. 408.

Footnote 14 See, also, New Orleans Gas Co. v. Louisiana Light Co., 115 U.S. 650, 673, 6 S.Ct. 252; Offield v. New York, N.H. & H.R.R. Co ., , 27 S.Ct. 72; Cincinnati v. Louisville & Nashville R.R. Co., 223 U.S. 390, 32 S.Ct. 267; Pennsylvania Hospital v. Philadelphia, 245 U.S. 20, 23, 38 S.Ct. 35; Galveston Wharf Company v. Galveston, 260 U.S. 473, 476, 43 S.Ct. 168; Georgia v. Chattanooga, , 44 S.Ct. 369.

Footnote 15 Laws of 1920 (New York), chapters 942-947, 951.

Footnote 16 Department of Agriculture, Technical Bulletin No. 288, February, 1932, pp. 22, 23; Year Book, Department of Agriculture, 1932, p. 913.

Footnote 17 Graffam v. Burgess, 117 U.S. 180, 191, 192 S., 6 S.Ct. 686; Schroeder v. Young, 161 U.S. 334, 337, 16 S.Ct. 512; Ballentyne v. Smith, 205 U.S. 285, 290, 27 S.Ct. 527; Howell v. Baker, 4 Johns Ch. (N.Y.) 118, 121; Gilbert v. Haire, 43 Mich. 283, 286, 5 N.W. 321; Littell v. Zuntz, 2 Ala. 256, 260, 262, 36 Am.Dec. 415; Farmers' Life Insurance Co. v. Stegink, 106 Kan. 730, 189 P. 965; Strong v. Smith, 68 N.J.Eq. 650, 653, 58 A. 301, 64 A. 1135. Compare Suring State Bank v. Giese, 210 Wis. 489, 246 N.W. 556, 85 A.L.R. 1477.

Footnote 18 See Coote's Law of Mortgages (8th Ed.) vol. 1, pp. 11, 12; Jones on Mortgages (8th Ed.) vol. 1, 7, 8; Langford v. Barnard, Tothill, 134, temp. Eliz.; Emmanuel College v. Evans, 1 Rep. in Ch. 10, temp. Car. I; Roscarrick v. Barton, 1 Ca. in Ch. 217; Noakes v. Rice, (1902) A.C. 24, per Lord Macnaghten; Fairclough v. Swan Brewery, 81 L.J.P.C. 207.

[Footnote 1] In such cases it is no more necessary to modify constitutional rules to govern new conditions than it is to create new words to describe them. The commerce clause is a good example. When that was adopted, its application was necessarily confined to the regulation of the primitive methods of transportation then employed; but railroads, automobiles, and aircraft automatically were brought within the scope and subject to the terms of the commerce clause the moment these new means of transportation came into existence, just as they were at once brought within the meaning of the word 'carrier,' as defined by the dictionaries.

[Footnote 2] Thus McMaster (History of the People of the United States, vol. 1, p. 425), after referring to the conditions in Rhode Island, where 'the bonds of society were dissolved by paper money and tender laws'; in New Jersey, where the people nailed up the doors of their courthouses; in Virginia, where the debtors 'set fire to theirs in order to stop the course of justice,' says:'The newspapers were full of bankrupt notices. The formers' taxes amounted to near the rent of their farms. Mechanics wandered up and down the streets of every city destitute of work. Ships, shut out from every port of Europe, lay rotting in the harbors.'

Channing (History of the United States, vol. 3, pp. 410-411, 482-483) paints this graphic picture of the situation:'Nowhere was the immediate prospect more gloomy than in South Carolina. ... In Massachusetts, at the other end of the line, the

case was as bad, if not worse ... the resources of New England were insufficient to pay even what was then owing. The case of New York was even more desperate, and for the moment Philadelphia alone seemed prosperous, for the wastage of the later years of the war had been severely felt in Virginia. ...'... Virginia was honeycombed with debt. ...'In South Carolina, the planters were even more heavily in debt. ... The case of Thomas Bee is to the point. His creditors had secured executions against him; the sheriff had seized his property and had sold it at one-thirteenth of what it would have brought at private sale in ordinary times.'

Nevins (The American States During and After the Revolution, p. 536), says:'The town of Greenwich computed that during each of the five years preceding 1786 the farmers had paid in taxes the entire rental value of their land.'

John Fiske (The Critical Period of American History (8th Ed.) pp. 175, 180) thus describes conditions:'... About the market-places men spent their time angrily discussing politics, and scarcely a day passed without street-fights, which at times grew into riots. In the country, too, no less than in the cities, the goddess of discord reigned. The farmers determined to starve the city people into submission, and they entered into an agreement not to send any produce into the cities until the merchants should open their shops and begin selling their goods for paper (money) at its face value . ... The farmers threw away their milk, used their corn for fuel, and let their apples rot on the ground. ...'... The courts were broken up by armed mobs. At Concord one Job Shattuck brought several hundred armed men into the town and surrounded the court-house, while in a flerce harangue he declared that the time had come for wiping out all debts.'

Dr. David Ramsay (History of the United States (2d Ed.) 1818, vol. 3, pp. 46, 47), a member of the old Congress under the Confederation, and who lived in the midst of the events of which he speaks, says: 'The non-payment of public debts sometimes inferred a necessity, and always furnished an apology, for not discharging private contracts. Confidence between man and man received a deadly wound. Public faith being first violated, private engagements lost much of their obligatory force . ...'From the combined operation of these causes trade languished; credit expired; gold and silver vanished; and real property was depreciated to an extent equal to that of the depreciation of continental money. ...'

And, finally, George Ticknor Curtis, in his History of the Origin, Formation, and Adoption of the Constitution of the United States, vol. 1, pp. 332, 333:'All contemporary evidence assures us that this (1783 to 1787) was a period of great pecuniary distress, arising from the depreciation of the vast quantities of paper money issued by the Federal and State governments; from rash speculations; from the uncertain and fluctuating condition of trade; and from the great amount of foreign goods forced into the country as soon as its ports were opened. Naturally, in such a state of things, the debtors were disposed to lean in favor of those systems of government and legislation which would tend to relieve or postpone the payment of their debts; and as such relief could come only from their State governments, they were naturally the friends of State'Maryland, ... In 1782 ... enacted a not friendly to any enlargement of the powers of the Federal Constitution. The same causes which led individuals to look to legislation for irregular relief from the burden of their private contracts, led them also to regard public obligations with similar impatience. Opposed to this numerous class of persons were all those who felt the high necessity of preserving inviolate every public and private obligation; who saw that the separate power of the States could not accomplish what was absolutely necessary to sustain both public and private credit; and they were as naturally disposed to look to the resources of the Union for these benefits, as the other class were to look in an opposite direction. These tendencies produced, in nearly every State, a struggle, not as between two organized parties, but one that was all along a contest for supremacy between opposite opinions, in which it was at one time doubtful to which side the scale would turn.'

[Footnote 3] Charles Warren, The Making of the Constitution, pp. 5, 6:'The actual evils which led to the Federal Convention of 1787 are familiar to every reader of history and need no detailed description here. As is well known, they arose, in general; ... second, from State legislation unjust to citizens and productive of dissensions with neighboring States-the State laws particularly complained of being those staying process of the Courts, making property a tender in payment of debts, issuing paper money, interfering with foreclosure of mortgages. ... '

Fiske, supra, note 2, p. 168:'By 1786, under the universal depression and want of confidence, all trade had well-nigh stopped, and political quackery, with its cheap and dirty remedies, had full control of the field. ... A craze for fictitious wealth in the shape of paper money ran like an epidemic through the country. There was a Barmecide feast of economic vagaries. ... And when we have threaded the maze of this rash legislation, we shall the better understand that clause in our federal constitution which forbids the making of laws impairing the obligation of contracts.'

Beard, An Economic Interpretation of the Constitution of the United States, pp. 31, 32:'Money capital was ... being positively attacked by the makers of paper money, stay laws, pine barren acts, and other devices for depreciating the currency or delaying the collection of debts. In addition there was a wide-spread derangement of the monetary system. ...'Creditors, naturally enough, resisted all of these schemes in the state legislatures, and ... turned to the idea of a national government so constructed as to prevent laws impairing the obligation of contract, emitting paper money, and otherwise benefiting debtors. It is idle to inquire whether the rapacity of the creditors or the total depravity of the debtors ... was responsible for this deep and bitter antagonism. It is sufficient for our purposes to discover its existence and to find its institutional reflex in the Constitution.'

Fisher Ames, 'Eulogy on Washington,' The Life and Works of Fisher Ames, vol. 2, p. 76:'Accordingly, in some of the States, creditors were treated as outlaws; bankrupts were armed with legal authority to be persecutors; and by the shock of all confidence and faith, society was shaken to its foundations.'

Illuminating comment upon some of this state legislation is to be found in chapter VI (volume 1) of Bancroft's 'History of the Formation of the Constitution of the United States,' under the heading, 'State Laws Impairing the Obligation of Contracts Prove the Need of an Overruling Union,' pp. 230-236.'(In Massachusetts) Repeated temporary stay-laws gave no real relief; they flattered and deceived the hope of the debtor, exasperating alike him and his creditor. ...'... (In Pennsylvania) in December, 1784, debts contracted before 1777 were made payable in three annual instalments. ...'Mayland, ... in 1782 ... enacted a stay-law extending to January, 1784, ...'Georgia, in August, 1782, stayed execution for two rears from and after the passing of the act. ...'... (In South Carolina in 1782) the commencement of suits was suspended till ten days after the sitting of the next general assembly . ... On the twenty-sixth day of March, 1784, came the great ordinance for the payment of debts in four annual instalments. ...'

Ramsay, supra, note 2, vol. 3, pp. 65, 66, 106:'The distrust which prevailed among the people, respecting the punctual fulfilment of contracts, arose from the powers claimed, and, in too many instances, exercised by the state legislatures, for impairing the obligation of contracts. ... These prolific sources of evil were completely done away by the new constitution. ... (continued on p. 460) '... State legislatures, in too many instances, yielded to the necessities of their constituents, and passed laws, by which creditors were compelled, either to wait for payment of their just demands, on the tender of security, or to take property, at a valuation, or paper money falsely purporting to be the representative of specie. These laws were considered, by the British, as inconsistent with ... the treaty. ... The Americans palliated these measures, by the plea of necessity. ...'

Ramsay, The History of South-Carolina (1809) vol. 2, pp. 429, 430:'The effects of these laws, interfering between debtors and creditors, were extensive. They destroyed public credit and confidence between man and man; injured the morals of the people, and in many instances ensured and aggravated the final ruin of the unfortunate debtors for whose temporary relief they were brought forward.'

[Footnote 4] Bancroft, supra, note 3, Vol. I, p. 239.

[Footnote 5] Id. vol. 1, p. 241.

[Footnote 6] Id. vol. 2, p. 136.

[Footnote 7] See Curtis, supra, note 2, volume 2, pp. 366, 367.

[Footnote 8] Ordinance for the Government of the Territory of the United States Northwest of the River Ohio, art. II; Thorpe, American Charters, Constitutions and Organic Laws, vol. 2, pp. 957, 961.

[Footnote 9] Elliot's Debates, vol. 5, pp. 485, 488, 545, 546; Id. vol. 1, pp. 271, 311; Farrand, The Records of the Federal Convention, vol. 2, pp. 439, 440, 596, 597, 610.

[Footnote 10] Elliot's Debates, vol. 1, pp. 344, 376, 377.

[Footnote 11] Id. vol. 1, pp. 491, 492.

[Footnote 12] Id. vol. 3, p. 478.

[Footnote 13] Id. vol. 4, pp. 156, 191.

[Footnote 14] Id. vol. 4, p. 333.

Mr. Warren, in his book, 'The Making of the Constitution,' pp. 552- 555, has an interesting re sume of the proceedings in the Convention and of the conflicting views which were before the state conventions for consideration. He says in part:'The Convention then was asked to perfect their action in favor of honesty and morality, by adding a prohibition on the States which would put an end to statutes enacting laws for special individuals, setting aside Court judgments, repealing vested rights, altering corporate charters, staying the bringing or prosecution of suits, preventing foreclosure of mortgages, altering the terms of contracts, and allowing tender in payment of debts of something other than that contracted for. The State Legislatures had hitherto passed such laws in abundant measure, and the situation was graphically described later by Chief Justice Marshall in one of his most noted decisions (Ogden v. Saunders, 12 Wheat. 213, 354), as follows: "The power of changing the relative situation of debtor and creditor, of interfering with contracts, a power which comes home to every man, touches the interest of all, and controls the conduct of every individual in those things which he supposes to be proper for his own exclusive management, had been used to such an excess by the State Legislatures as to break in upon the ordinary intercourse of society and destroy all confidence between man and man. The mischief had become so great, so alarming, as not only to impair commercial intercourse and threaten the existence of credit, but to sap the morals of the people and destroy the sanctity of private faith. To guard against the continuance of the evil was an object of deep interest with all the truly wise as well as virtuous of this great community, and was one of the important benefits expected from a reform of the government.''To obviate the conditions thus described, King of Massachusetts proposed the insertion of a new restriction on the States. ... Wilson and Madison supported his motion. Mason and G. Morris, however, believed that it went too far in interfering with the powers of the States. ... There was also a genuine belief by some delegates that, under some circumstances and in financial crises, such stay and tender laws might be necessary to avert calamitous loss to debtors. ... The other delegates had been deeply impressed by the disastrous social and economic effects of the stay and tender laws which had been enacted by most of the States between 1780 and 1786, and they decided to make similar legislation impossible in the future.'

[Footnote 15] See Dewey, Financial History of the United States, p. 229 et seq.; Schouler, History of the United States, vol. 4, p. 276 et seq; McMaster, supra, note 2, vol. 6, pp. 389 et seq., 523 et seq., 623 et seq.

[Footnote 16] See Dewey, supra, note 15, p. 243 et seq.; McMaster, supra, note 2, vol. 6, p. 627 et seq., vol. 7, p. 19 et seq.; Centennial History of Illinois, vol. 2, p. 231 et seq.

[Footnote 17] See Dewey, supra, note 15, p. 444 et seq.; Andrews, The Last Quarter Century in the United States, vol. 2, p. 301 et seq.