Court Opinion

ID: 9858158
Source: CourtListenerOpinion
Date Created: 2023-09-24 16:17:33.833386+00
Date Added: 2024-06-11T09:53:24.479954
License: Public Domain

Mr. Justice Black
sharply dissented on the basis of Blaisdell, stating that Blaisdell merely:
“ [R] elied on and approved the established distinction between an invalid impairment of a contract’s obligation and a valid change in the remedy to enforce it.” (P.524)
He also emphasized that Blaisdell was based upon a legislative declaration of an emergency of catastrophic proportions. In his dissent, Mr. Justice Black quotes Wright, The Contract Clause of the Constitution, discussing Blaisdell:
“ ‘If any advance has been made, it consists in that economic conditions may create an emergency in which a scrupulously drafted statute may call upon the police power to grant wide discretion to courts in extending temporary and conditional relief to debtors.’ ” (Emphasis supplied.) El Paso, page 526.
Thus, it appears that thirty years after Blaisdell, Mr. Justice White was able to justify the police-power action of the Texas legislature only on the ground that the portion of the contract modified by the legislature was “not the central undertaking.” (El Paso, p. 514) Despite the fact that there was ample evidence that, in the absence of the new legislation, the Texas land title imbroglio would grow worse, Mr. Justice White and the majority were unable to hold that, because the law was in the public interest, the contract could be set aside. Rather, *299the court could only hold that the new law did not really affect the essence of the contract.
None of the cases decided by the United States Supreme Court appear to give the leeway to the state police power that defendants claim the legislature possesses in the face of constitutional prohibitions.
We believe that the view of the state’s police power, as taken by the majority in El Paso or by Mr. Justice Black in his dissent, is unreasonably restrictive of Blmsdell. This court adheres to the basic philosophy of Kuhl, swpra, that an unequivocal legislative declaration of public policy, made either before or after the execution of a contract, becomes a part of that contract if the legislature makes it clear that such is its intention and if it can be determined, either by recitals in the legislation or by judicial notice, that vital public interests will be impaired if the legislation is not given effect and vital interests will be enhanced by enforcement of the legislation.
The vital interest to be served is more apparent in some cases than in others. Chicago & N. W., supra, involved physical safety of the public and railroad employees. Nebbia v. New York (1934), 291 U. S. 502, 54 Sup. Ct. 505, 74 L. Ed. 940, basically was a matter of public health, although outwardly and importantly, it was concerned with the pricing of milk. Kuhl, supra, was concerned with the disparity of bargaining power between a giant automobile manufacturer and a local retailer. The vital interest of the public in the limited alteration of the foreclosure remedy of the mortgage contracts in Blaisdell is abundantly clear. The reasonable relationship of safety legislation to the public interest is usually apparent on the face of the legislation or may readily be demonstrated by judicial notice. In the instant case, the vital interest of the public in permitting a *300substantial impairment of contract rights is not apparent.
Sec. 539 does more than affect a contracting party’s enforcement remedies — it limits and reduces the substantive value of a previously negotiated contract. The impairment of the contract in this case, then, is not limited to a minor change in a contracting party’s remedy, as in Blaisdell or El Paso. Hence, it seems clear that, for the police power of the state of Wisconsin to affect the constitutionally protected right of contract, there should be evidence that the legislation is necessary for the vital interests of the people of the state.
We have not been told what that vital interest of the people is. In Blaisdell, families were actually being turned out of their homes because of the depression. In Blaisdell, the legislature carefully spelled out that vital interest. The courts did not have to guess. In El Paso, the vital interest of the state as a whole in the integrity of land titles was apparent.
We are told by the defendants that to affirm this legislation will grant the equivalent of tax relief to hundreds of thousands of necessitous and deserving tenants. We are also told by the plaintiffs that the affirmations of the act will unjustly grant that relief to all renters of all property — real or personal — to banks which rent computers, and to business and commercial lessees, persons who are not ordinarily objects of the state’s special solicitude. We are also told, and of this we can take judicial notice from the plain words of the statute, that the event is triggered not necessarily by revenue sharing but by any reduction of taxes. Thus, if in a locality a school bond issue is finally paid off and taxes reduced, a credit will be due the tenant from his landlord. What is there different about this situation now than there has been in the past when taxes were reduced for similar reasons? What vital interests are now triggered by such *301a tax reduction? We have not been told, and the pleadings upon which we must rely are not helpful and the legislation does not speak for itself.
We take judicial notice that a reduction of taxes does not necessarily result in a windfall profit to a landlord. It may merely result in a reduced deficit. We have not been shown that a vital interest of the public will be served by abrogating a lessor’s right to receive the rent contracted for, particularly in a period of increasing costs. We take judicial notice of the fact that we are in a period of severe price inflation (13 percent per annum at the latest estimate).
We will presume a constitutional purpose if there is any reasonable basis upon which the legislation can be explained by facts within the knowledge of this court. Those facts can be skeletal in nature and can be apparent from the face of the legislation. We would accept a legislative declaration explaining the purpose to be served by this act, for we presume that such declaration would have been founded upon legislative factfinding. But such facts are totally absent here, and only speculatively can we justify this legislation. Speculation, however, can also lead to conclusions that are contrary to those urged by the defenders of this law. Basically, sec. 539 is an incomplete legislative statement. We are told that, whenever during the period in question the taxes have been reduced, the rents, if the owner is a landlord, must be reduced pro tanto. In broad accounting terms, it is easy to say that the price of a product should bear a relationship to the cost of goods sold. Applying a similar rationale in broad equitable terms, if the cost of being a landlord is reduced by virtue of a tax reduction, the price of the rental unit theoretically can be reduced an equal amount and the profit, if any, will remain. This, of course, assumes that all other costs remain unchanged. Other costs, however, have increased.
*302It is also pointed out that, if the owner of real estate is a manufacturer, a reduction of taxes will reduce the cost of the goods he sells, but he is not obliged to pass that reduced cost along to the ultimate consumer, while a lessor must. This, of course, smacks of the problem of equal protection, but additionally it poses the question of whether it is a matter of vital public concern to pass along a rent reduction to a tenant, if it is not of similar importance to pass along a saving to other consumers.
The defendants conceptualize the tax refund transaction proposed by the legislature as being the expenditure of the government's own tax money for tenants’ rent relief. They seem to be saying that the owner is a conduit by which government funds are being disbursed. It is probably true that the state government could — it does so now in relief cases — grant a stipend in some cases for the payment of rent. This may well be a public purpose. But that is not what will happen under sec. 539, ch. 90, Laws of 1973. It is not the government’s grant of a stipend; it is the landlord’s funds which will be used for the payment. Thus, the problem is not the question of the public purpose of the expenditure of public funds, but the abrogation of a pre-existing contract. The public purpose doctrine as argued by the defendants is not germane to the issue.
The central question remains: What vital purpose is served by depriving the owners here of the rent for which they have bargained? The legislature has not told us, nor have the litigants. We conclude that the present legislation is unconstitutional. Further steps to implement it are enjoined.
A number of additional problems have been posed. We do not deal with them, since the act must fall on the question of impairing the obligation of contracts. We do not foreclose the possibility that a constitutional statute can be drawn which will demonstrate on its face *303the exigent circumstances that impel the legislation. A statute that seeks to modify, by the invocation of the police power, a constitutionally guaranteed right, such as the right of contract, should be carefully drawn to show that the use of such power is necessary and exigent and serves a vital purpose of government. While courts are willing to indulge any reasonable presumption to sustain police-power-type legislation, they ought not be asked to speculate or conjure up possible explanations to support a legislative act.
By the Court. — Sec. 539, ch. 90, Laws of 1973, is declared to be unconstitutional; injunction granted.