Home Building v. Loan Association v. Blaisdell

Brief Fact Summary.

Blaisdell obtained a judicial order extending the period of redemption from a foreclosure sale, but this was not allowed under the newly adopted Act by Minnesota. The mortgagee, unable to obtain possession as it would have been able to do had the statute not been enacted, challenged.

Synopsis of Rule of Law.

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.

Facts.

In 1933, during the Great Depression, Minnesota adopted a Mortgage Moratorium Law, which provided that, during the emergency declared to exist, relief may be had through authorized judicial proceedings with respect to mortgage foreclosures and execution sales of real estate, in the form of postponement of sales and extensions of periods of redemption. The law provided that it was to remain in effect only during the continuance of the emergency and in no event beyond May 1, 1935. The courts could not extend the period of redemption or postpone the sale beyond that date. The state courts were authorized to extend the period of redemption pursuant to the state Act enacted prior to this case. Blaisdell invoked the statute and secured a judicial order extending the period of redemption. Because of the extension, the mortgagee was unable to obtain possession as it would have been able to do had the statute not been enacted.

Issue.

Does the provision for temporary and conditional relief exceeds the power of the State by reason of the clause in the Constitution prohibiting impairment of the obligations of contracts?

Held.

No, because an emergency existed in Minnesota which furnished a proper occasion for the exercise of the reserved power of the State to protect the vital interests of the community, and the legislation was addressed to a legitimate end. moreover, the conditions upon which the period of redemption is extended does not appear to be unreasonable and the legislation is temporary in nature, and limited to the exigency which called it forth. Accordingly, Mortgage Moratorium Law, adopted by Minnesota, does not violate the Constitution.

Discussion.

The statute does not impair the integrity of the mortgage indebtedness. The obligation for interest remains. The statute does not affect the validity of the sale or the right of a mortgagee-purchaser to title in fee, or his right to obtain a deficiency judgment, if the mortgagor fails to redeem within the prescribed period. Aside from the extension of time, the other conditions of redemption are unaltered. While the mortgagee-purchaser is debarred from actual possession, he has, so far as the rental value is concerned, the equivalent possession during the extended period. Moreover, the legislation was not for the mere advantage of particular individuals but for the protection of a basic interest of society. In view of the nature of the contracts in question, the relief afforded and justified by the emergency, 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 as here.