Source: https://supreme.justia.com/cases/federal/us/326/230/
Timestamp: 2019-04-24 00:50:15+00:00

Document:
1. Chapter 93 of the Laws of New York of 1943, which extended for a further period of one year moratory legislation first enacted in 1933, whereby as to mortgages executed prior to July 1, 1932, the right of foreclosure for default in the payment of principal was suspended, held not repugnant to the contract clause of the Federal Constitution. Pp. 326 U. S. 231, 326 U. S. 234.
2. The incidence of mortgage moratorium legislation on an isolated contract must be considered in the light of the right of the State to safeguard the interests of its people. P. 326 U. S. 232.
3. Home Bldg. Assn. v. Blaisdell, 290 U. S. 398, and later cases followed; Chastleton Corp. v. Sinclair, 264 U. S. 543, differentiated. Pp. 326 U. S. 231, 326 U. S. 235.
of principal that had become due in 1924. The trial court held that the foreclosure proceeding was barred by the applicable New York Moratorium Law. 182 Misc. 863, 51 N.Y.S.2d 496. This Law, Chapter 93 of the Laws of New York of 1943, extended for another year legislation first enacted in 1933, whereby the right of foreclosure for default in the payment of principal was suspended for a year as to mortgages executed prior to July 1, 1932. [Footnote 1] Year by year (except in 1941 when an extension for two years was made), the 1933 statute was renewed for another year. The New York Court of Appeals, one judge dissenting, affirmed the trial court's judgment. 293 N.Y. 622, 59 N.E.2d 625. Upon claim duly made below that the Moratorium Law of 1943 was repugnant to the Contract Clause of the Constitution of the United States, Art. I, § 10, the case is here on appeal under § 237(a) of the Judicial Code, 28 U.S.C. § 334(a). The validity of the statute is likewise challenged under the Fourteenth Amendment, but too feebly to merit consideration.
Since Home Bldg. & L. Assn. v. Blaisdell, 290 U. S. 398, there are left hardly any open spaces of controversy concerning the constitutional restrictions of the Contract Clause upon moratory legislation referable to the depression. The comprehensive opinion of Mr. Chief Justice Hughes in that case cut beneath the skin of words to the core of meaning. After a full review of the whole course of decisions expounding the Contract Clause -- covering almost the life of this Court -- the Chief Justice, drawing on the early insight of Mr. Justice Johnson [Footnote 2] in Ogden v.
Saunders, 12 Wheat. 213, 25 U. S. 286, as reinforced by later decisions cast in more modern terms, e.g., Manigault v. Springs, 199 U. S. 473, 199 U. S. 480; Marcus Brown Co. v. Feldman, 256 U. S. 170, 256 U. S. 198, put the Clause in its proper perspective in our constitutional framework. The Blaisdell case and decisions rendered since (e.g., Honeyman v. Jacobs, 306 U. S. 539; Veix v. Sixth Ward Assn., 310 U. S. 32; Gelfert v. National City Bank, 313 U. S. 221; Faitoute Co. v. Asbury Park, 316 U. S. 502), yield this governing constitutional principle: when a widely diffused public interest has become enmeshed in a network of multitudinous private arrangements, the authority of the State "to safeguard the vital interests of its people," 290 U.S. at 290 U. S. 434, is not to be gainsaid by abstracting one such arrangement from its public context and treating it as though it were an isolated private contract constitutionally immune from impairment.
199 U.S. at 199 U. S. 480. Once we are in this domain of the reserve power of a State, we must respect the "wide discretion on the part of the legislature in determining what is and what is not necessary." Id. So far as the constitutional issue is concerned, "the power of the State when otherwise justified," Marcus Brown Co. v. Feldman, 256 U. S. 170, 256 U. S. 198, is not diminished because a private contract may be affected.
p. 9), and the Law now under attack was enacted. It is relevant to note that the New York Legislature, in subsequent extensions of the moratorium, again took note of changed economic conditions by increasing the amortization rate to 2% in 1944 (L.1944, c. 562) and to 3% in 1945 (L.1945, c. 378).
"the sudden termination of the legislation which has dammed up normal liquidation of these mortgages for more than eight years might well result in an emergency more acute than that which the original legislation was intended to alleviate."
New York Legislative Document (1942) No. 45, p. 25. It would indeed be strange if there were anything in the Constitution of the United States which denied the State the power to safeguard its people against such dangers. There is nothing. Justification for the 1943 enactment is not negatived because the factors that induced and constitutionally supported its enactment were different from those which induced and supported the moratorium statute of 1933.
It only remains to say that, in Chastleton Corp. v. Sinclair, 264 U. S. 543, which was strongly pressed on us, the Court dealt with quite a different situation. The differentiating factors are too glaring to require exposition.
The 1943 Moratorium Law made the payment of interest, taxes, insurance, and amortization charges a prerequisite to suspension of foreclosure. These conditions concededly were met, and the only default here was in unpaid principal.

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