290 U.S. 398, 54 S.Ct. 231, 78 L.Ed. 413 (1934)
The Blaisdells executed a mortgage on their property in Minneapolis to the Home Building & Loan Association on August 1, 1928.1 The mortgage contained a valid power of sale by advertisement.2 After default, the mortgage was foreclosed and the property sold to the Association on May 2, 1932, for $3700.98.3 The period of redemption under the law then in effect was set to expire on May 2, 1933.4
On April 18, 1933, Minnesota enacted Chapter 339 of the Laws of 1933, known as the Mortgage Moratorium Law.5 The statute authorized district courts to extend the period of redemption from foreclosure sales for such additional time as the court deemed just and equitable, not beyond May 1, 1935, upon condition that the mortgagor pay a reasonable part of the income or rental value toward taxes, insurance, interest, and principal.6 The Blaisdells applied to the District Court of Hennepin County for an extension of the redemption period.7
The district court found that the reasonable rental value of the property was $40 per month and the present market value was $6000. It extended the redemption period to May 1, 1935, requiring the Blaisdells to pay $40 per month to the Association.8 The Supreme Court of Minnesota affirmed the order.9
The Home Building & Loan Association appealed to the United States Supreme Court, which reviewed the judgment sustaining the statute as applied to the preexisting mortgage.10
Whether Chapter 339 of the Laws of Minnesota of 1933 violates the contract clause of Article I, Section 10 of the Federal Constitution?11
The Contract Clause provides that no State shall pass any law impairing the obligation of contracts.12 This clause is not to be applied with literal exactness.13 It is not to be construed as prohibiting the State from enacting any legislation which affects contracts.14 The clause is subject to the implied qualification that the State may exercise its police power in a reasonable manner to protect the public welfare.15
No. The Minnesota Mortgage Moratorium Law as applied to the Blaisdells' preexisting mortgage does not violate the Contract Clause.16 The Court recognized that the clause is qualified by the state's police power to protect vital interests in an emergency.17 The facts show that the Blaisdells' mortgage was executed in 1928 and foreclosed in 1932 with redemption expiring in 1933.18 The 1933 statute allowed extension to 1935 upon payment of $40 monthly rental value, which the district court found reasonable given the $6000 market value.19
This temporary measure during the Great Depression emergency modified the remedy without destroying the obligation, as interest continued and the mortgagee's security was protected by the payments.20 The legislation was addressed to a legitimate end of protecting the community from loss of homes during economic distress.21
The statute does not violate the Contract Clause.22
Related opinions on this issue
Joined by Justices Van Devanter, Mcreynolds, And Butler
Justice Sutherland dissented, arguing that the statute impairs the obligation of the mortgage contract in violation of the Contract Clause.23 He maintained that the clause is absolute in its terms and the existence of an economic emergency does not justify the impairment.24 The extension of the redemption period and the court's authority to fix terms clearly impairs the contract, and the Constitution should not be subordinated to temporary economic conditions.25
Sutherland emphasized that the clause was framed specifically to prevent debtor-relief legislation in times of financial distress, and the majority's approach would allow gradual encroachments on contractual sanctity.26
Whether Chapter 339 of the Laws of Minnesota of 1933 violates the due process clause of the Fourteenth Amendment?27
No. The Minnesota Mortgage Moratorium Law as applied to the Blaisdells' mortgage does not violate the due process clause of the Fourteenth Amendment.30 The statute provided for judicial proceedings with notice and an opportunity to be heard before extending the redemption period.31 The district court determined the reasonable rental value after evidence and set payments applied to taxes, insurance, interest, and principal.32 This process protected the mortgagee's interests while addressing the emergency, and the temporary nature of the relief ensured it was not arbitrary.33
The statute does not violate the due process clause of the Fourteenth Amendment.34
Whether Chapter 339 of the Laws of Minnesota of 1933 violates the equal protection clause of the Fourteenth Amendment?35
The equal protection clause of the Fourteenth Amendment requires that state legislation classify persons in a manner that is rationally related to a legitimate governmental purpose and not arbitrary.36
No. The Minnesota Mortgage Moratorium Law as applied to the Blaisdells' mortgage does not violate the equal protection clause of the Fourteenth Amendment.37 The classification between mortgages executed before and after the Act, and the focus on homesteads and existing foreclosures, was rationally related to addressing the immediate economic emergency affecting homeowners and the stability of the community.38 The legislature could address the general situation without covering every conceivable case.39
The statute does not violate the equal protection clause of the Fourteenth Amendment.40