Home Building and Loan Association v. Blaisdell, 290 U.S. 398; 54 S. Ct. 231; 78 L. Ed. 413 (1934)

Facts—The Home Building and Loan Association held a mortgage on the land of Blaisdell, which by reason of default, was foreclosed. Blaisdell appealed to the supreme court of Minnesota, which affirmed his claim on the grounds that “The Minnesota Mortgage Moratorium Law” provided that a party who is unable to pay or retire a mortgage at the date of redemption can, by petitioning the court, be granted a moratorium from foreclosure sales. The Home Building and Loan Association appealed to the Supreme Court of the United States.

Question—

(a) Is the act contrary to the due process and equal protection clauses of the Fourteenth Amendment?

(b) Does it violate the contract clause of the Constitution?

Decisions—

(a) No;

(b) No.

Reasons—C.J. Hughes (5–4). A law impairs the obligations of a contract when the law renders them invalid or releases or extinguishes them. Here the integrity of the mortgage indebtedness was not impaired; interest continued to run, the mortgagor was to pay the rental value of the premises as ascertained in judicial proceedings. The obligation remained.

Also, not only are existing laws read into contracts in order to fix obligations as between the parties, but the reservation of essential attributes of sovereign power is also read into contracts as a postulate of the legal order. This power—called the police power—is paramount to any right under contracts between individuals. “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.”

In dissent, J. Sutherland emphasized his view that the Constitution did not change in times of emergency and that it should be interpreted without reference to the economic depression then in existence.