Case Name: East New York Savings Bank, Appellant, v. Alvin Hahn et al., Respondents, et al., Defendants
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1944-12-30
Citations: 293 N.Y. 622
Docket Number: 
Parties: East New York Savings Bank, Appellant, v. Alvin Hahn et al., Respondents, et al., Defendants.
Judges: 
Reporter: New York Reports
Volume: 293
Pages: 622–634

Head Matter:
East New York Savings Bank, Appellant, v. Alvin Hahn et al., Respondents, et al., Defendants.
Argued November 27, 1944;
decided December 30, 1944.
John P. McGrath, Charles H. Heinlein and John J. Buckley for appellant.
I. Moratorium legislation violates the contract clause of the Federal Constitution and will not be sustained by the courts unless it is justified by a serious emergency, temporary in character, requiring the invocation of this drastic remedy for the general welfare of all the people. (First Trust Joint Stock Land Bank of Chicago v. Arp, 283 N. W. 441; Jefferson Standard Life Ins. Co. v. Noble, 188 So. 289; Pouquette v. O’Brien, 100 P. 2d 979; First Trust Co. v. Smith, 277 N. W. 762; Farm Mortgage Holding Co. v. Miller, 57 P. 2d 35; Travelers Ins. Co. v. Marshall, 76 S. W. 2d 1007; Kaelin v. Michelson, 176 Misc. 536; Attala County v. Mississippi Tractor and Equipment Co., 162 Misc. 564; Klinke v. Samuels, 264 N. Y. 144; Home Bldg, & L. Assn. v. Blaisdell, 290 U. S. 398; Chastleton Corp. v. Sinclair, 264 U. S. 543.) II. The court may take judicial notice of the fact that the emergency is at an end. (Jefferson Standard Life Ins. Co. v. Noble, 188 So. 289; Pouquette v. O’Brien, 100 P. 979; First Trust Joint Stock Land Bank of Chicago v. Arp, 283 N. W. 441; Chastleton Corp. v. Sinclair, 264 U. S. 543.)
George B. Fearon for Savings Banks Association of the State of New York, amicus curios, in support of appellant’s position.
I. If the emergency is past, then the statute is unconstitutional and the foreclosure action may proceed to judgment. (Klinke v. Samuels, 264 N. Y. 144.) II. Whether the emergency still exists upon which depends the continued operation of a law designed to relieve the economic emergency, is always open to judicial inquiry. (Home Bldg. & L. Assn. v. Blaisdell, 290 U. S. 398.) I'll. The declaration of the Legislature as to the existence of an emergency is entitled to great respect, but it is not conclusive, and- a law depending upon the existence of an emergency or other certain state of facts to uphold it may cease to operate if the emergency ceases. (Chastleton Corp. v. Sinclair, 264 U. S. 543.) IV. The court should take judicial notice of the facts relating to economic conditions from January 1, 1933, to the present time. (Civ. Prac. Act, § 334-a; Jefferson Standard Life Ins. Co. v. Noble, 185 Miss. 360; Pouquette v. O’Brien, 55 Ariz. 248; First Trust Joint Stock Land Bank v. Arp, 225 Iowa 1331; First Trust Company of Lincoln v. Smith, 134 Neb. 84; Farm Mortgage Holding Co. v. Miller, 57 P. 2d 35; Travelers Ins. Co. v. Marshall, 76 S. W. 2d 1007; Home Owners Corporation of Washington, D. C. v. Oleson, 3 N. W. 2d 880.)
No appearance for respondents.
Nathaniel L. Goldstein, Attorney-General (Orrin G. Judd and Herbert A. Einhorn of counsel), appearing pursuant to section 68 of the Executive Law.
I. The legislative finding embodied in section 1 of chapter 93 of the Laws of 1943 was not arbitrary, unreasonable or without foundation in fact. (Noyes v. Erie & Wyoming Farmers Co-op. Corp., 281 N. Y. 187; Maguire & Co. v. Lent & Lent, 277 N. Y. 694; Ssold v. Outlet Embroidery Supply Co., 274 N. Y. 271; Biddles, Inc., v. Enright, 239 N. Y. 354; People ex rel. Bryant v. Zimmerman, 241 N. Y. 405.) II. Appellant failed to establish beyond a reasonable doubt the unconstitutionality of chapter 93 of the Laws of 1943. (Matter of Buoneto v. Buoneto, 278 N. Y. 284; Atkins v. Herts Drivurself Stations, Inc., 237 App. Div. 31, 261 N. Y. 352, 291 U. S. 641; Matter of Fay, 291 N. Y. 198; Magurie & Co. v. Lent & Lent, 277 N. Y. 694; People ex rel. Cotte v. Gilbert, 226 N. Y. 103; People v. Nebbia, 262 N. Y. 259; Johnson v. City of New York, 274 N. Y. 411; Gardner v. Ginther, 232 App. Div. 296, 257 N. Y. 578.) III. The wisdom of the enactment of chapter 93 of the Laws of 1943 is not a matter for judicial inquiry. (Fearon v. Treanor, 272 N. Y. 268, 301 U. S. 667; Chamberlin, Inc., v. Andrews, 271 N. Y. 1; Pollock v. Farmers’ Loan and Trust Co., 157 U. S. 429; People ex rel. Bryant v. Zimmerman, 241 N. Y. 405; Standard Oil Co. v. Marysville, 279 U. S. 582.)
1. Nathanson, George A. Boland and Seymour C. Simon for Slocum Realty Corporation, amicus curice.
Plaintiff has failed to sustain the burden of proof as against (1) the legislative finding that conditions exist which warrant the continuance of mortgage protection, and (2) the presumption of constitutionality. (National Bank of Aitken v. Showell, 195 Minn. 273; Albert v. Milk Control Board, 200 N. E. 688; Chastleton Corp. v. Sinclair, 264 U. S. 543; People v. Nebbia, 262 N. Y. 259; Wright v. Vinton Branch, 57 Sup. Ct. 556; State v. Newark Milk Co., 118 N. J. Eq. 504; Rohrer v. Milk Control Board, 186 A. 336; German Alliance Ins. Co. v. Kansas, 233 U. S. 389; Home Bldg. & L. Assn. v. Blaisdell, 290 U. S. 398; Mutual Bldg. & L. Assn. v. Moore, 232 Ala. 488.)

Opinion:
Lehman, Ch. J.
The legislative declaration in chapter 793 of the Laws of 1933 that " a serious public emergency, affecting and threatening the welfare, comfort and safety of the people of the state and resulting from the abnormal disruption in economic and financial processes, the abnormal credit and currency situation in the state and nation, the abnormal deflation of real property values and the curtailment of incomes by unemployment and other adverse conditions, exists " did not " create " a legislative power to suspend or change the legal remedies of holders of bonds and mortgages. The existence of conditions " affecting and threatening the welfare, comfort and safety of the people of the state " may, however, furnish the occasion for the exercise of such power. (Home Bldg. & L. Assn. v. Blaisdell, 250 U. S. 398; Matter of People [Tit. & Mtge. Guar. Co.], 264 N. Y. 69, 94.) Concededly the existence of extraordinary conditions in 1933 as set forth in this legislative declaration and as confirmed by common knowledge, justified the extraordinary remedy that till July 1, 1934, no action should be brought to foreclose a mortgage for a default in the payment of principal. (Klinke v. Samuels, 264 N. Y. 144.) Each year thereafter the Legislature on similar findings decreed that the remedy provided in 1933 should remain in force for another year.
In 1943 the Legislature again declared that " The serious public emergency which existed at the time of the enactment of chapter seven hundred and ninety-three of the laws of nineteen hundred thirty-three having continued, in the judgment of the Legislature, to the present time and still existing, the provisions of such chapters seven hundred and ninety-three of the laws of nineteen hundred thirty-three shall remain and be in full force and effect until July first, nineteen hundred forty-four (L. 1943, ch. 93.) The Legislature at the same time provided that an owner of mortgaged premises should not be entitled to claim the benefit of the suspension of the right to foreclose the mortgage unless he amortized the principal at the rate of one per cent per annum. The plaintiff challenges the finding of the Legislature that the " serious public emergency " which existed in 1933 still existed in 1943, and urges that the exercise of the power of the Legislature to provide an extraordinary remedy for extraordinary conditions which was justified in 1933 may not be invoiced in 1943 when the abnormal conditions of an earlier time have disappeared.
The Legislature has the responsibility of determining when extraordinary conditions exist " threatening the welfare, comfort and safety of the people of the state ". Within the limits of its powers as defined by the Constitution of the State and as limited by the Constitution of the United States, choice of the appropriate remedy for such conditions is then vested in the Legislature. When the legislative choice of a remedy is challenged on the ground that it transcends the limits placed by the Constitution of the State or the Constitution of the United States upon the power of the Legislature and that it impairs the obligation of a contract or deprives a person of his property without due process of law, the legislative finding that a threatening public emergency exists is not conclusive. Judicial inquiry is not precluded whether the remedy chosen is within the power of a State Legislature " construed in harmony with the constitutional limitation on that power. ' ' (Matter of People [Tit. & Mtge. Guar. Co.], 264 N. Y. 69, 84) but upon such an inquiry the legislative findings are entitled to great weight . and the legislative remedy will not be stricken down unless its invalidity is clearly established.
An extraordinary remedy which is appropriate and legitimate in an exigency resulting from abnormal conditions may be inappropriate and beyond the limits of the power of a State if temporary impairment of the obligation of a contract is continued after the exigency has passed. (Block v. Hirsh, 256 U. S. 135, 157.) When this court sustained the validity of limitations upon the remedies of the holder of a bond and mortgage created by chapter 793 of the Laws of 1933, we said, that " such legislation, reasonably seeking only temporary relief, is not unconstitutional ". (Klinke v. Samuels, supra; italics are new.) " It is always open to judicial inquiry whether the exigency still exists upon which the continued operation of the law depends." (Home Bldg. & L. Assn. v. Blaisdell, supra, p. 442.)
Doubtless such a judicial inquiry would disclose that many — perhaps all — of the adverse conditions created by the ' ' abnormal disruption in economic processes ' ' which, as the Legislature found, existed in 1933 arid resulted in a " public emergency," disappeared before 1943. The Legislature did not, in 1943, find that these conditions still existed. It found only that the " serious public emergency " existing in 1933 and " resulting " from these conditions, still existed. In 1943 the fact that payrolls and savings bank deposits had increased in. almost unprecedented degree was a matter of common knowledge. The Legislature could not ignore the great changes in the economic situation. On the other hand, an accumulation of past due mortgages resulting from the ten-year-old ban upon actions to foreclose mortgages for default in the payment of principal might reasonably cause apprehension that a flood of foreclosure actions would follow removal of the ban and might itself justify a statute reasonably calculated to stem the impending flood. Reports which legislative committees made to the Legislature in 1938 and 1943 as well as a message of the Governor called to the attention of the Legislature also the fact that abnormal conditions incident to a war economy or resulting from other causes might still constitute a threat " to the welfare, comfort and safety of the people of the state " and might call for the exercise of the legislative power to provide am extraordinary remedy for extraordinary conditions.
The presumption is that the Legislature " inquired and found " that under the conditions then disclosed there was need for a continuance of the suspension, of the right of holders of bonds and mortgages to foreclose for default in the payment of the principal. (Szold v. Outlet Embroidery Supply Co., 274 N. Y. 271, 278.) It is entirely unimportant whether the conditions then existing have created a new emergency, as said by the Governor in his message, or have, as the Legislature said,, resulted in the continuance of an emergency itself created by conditions which have run their course. The question which the court must decide is whether the Legislature in the challenged statute has provided an appropriate remedy to tide over an exigency resulting from present conditions. We have said in an analogous case that: " Whether an emergency exists or not, the test in each case is whether a situation exists which calls for the exercise of the reserved power of the state and whether the remedy adopted by the state is reasonable and legitimate." (Matter of People [Tit. & Mtge. Guar. Co.], supra, p. 94.) We conclude that the challenged statute meets that test.
The judgment should be affirmed, with costs.