Opinion ID: 1947223
Heading Depth: 1
Heading Rank: 1

Heading: The Obligation-Remedy Test

Text: Home Building & Loan Association v. Blaisdell, 290 U.S. 398, 54 S.Ct. 231 (1934), is the most important case in the history of contract clause interpretation. [9] In Blaisdell, the Court upheld a mortgage moratorium statute that Minnesota had enacted to provide relief for homeowners threatened with foreclosure. The statute enabled a court to extend the time for redemption beyond that provided for in the mortgage contract. Though the statute directly affected lenders' foreclosure rights, the Court ruled that it did not violate the contract clause, reasoning that the State ... continues to possess authority to safeguard the vital interests of its people. [10] In its decision, the Blaisdell majority traced the judicial history of the obligation-remedy distinction [11] and the reserved powers doctrine [12] in contract clause analysis. It then concluded: It is manifest from this review of our decisions that there has been a growing appreciation of public needs and of the necessity of finding ground for a rational compromise between individual rights and public welfare... . It is no answer to say that this public need was not apprehended a century ago, or to insist that what the provision of the Constitution meant to the vision of that day it must mean to the vision of our time. .. . The case before us must be considered in the light of our whole experience and not merely in that of what was said a hundred years ago. [13] Having jettisoned the analytical framework which governed prior contract clause cases, the Court formulated a new test against which legislation would be measured: The question is not whether the legislative action affects contracts incidentally, or directly or indirectly, but whether the legislation is addressed to a legitimate end and the measures taken are reasonable and appropriate to that end. [14] Thus, beginning with Blaisdell, the Court began to permit certain reasonable impairments of contractual obligations. [15] This new and more flexible approach to contract clause analysis later was refined and developed by the Court in three major cases. [16]