Court Opinion

ID: 9543410
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:45:22.436348+00
Date Added: 2024-06-11T15:10:18.825890
License: Public Domain

HODGES, Justice,
dissenting.
I respectfully dissent from the majority’s pronouncement that stare decisis dictates that 62 O.S.Supp.1986 §§ 492, 493 (the Act)1 is unconstitutional as violative of the *594contract clauses of the United States and Oklahoma Constitutions,2 and further viola-tive of Article II, § 6 of the Oklahoma Constitution.3
I do not believe the Act so closely parallels Section 1 of the Oklahoma Mortgage Moratorium Act found unconstitutional by this Court in State ex rel. Roth v. Waterfield, 167 Okl. 209, 29 P.2d 24 (1933).4 In Waterfield, while recognizing the existence of the national emergency of economic depression warranted a temporary interference with contract rights, the Court found Section 1 was not an appropriate exercise of the police power of the State. In so holding this Court reasoned that the provision did not provide for the protection of the rights of the mortgagee during the period of delay, and it applied to all actions to foreclose a real estate mortgage without regard to whether the delay is necessary or equitable in a particular case. This Court in its supplemental opinion on rehearing distinguished Section 1 of the Oklahoma Act from the provisions of the Minnesota Mortgage Moratorium Law which had been recently upheld on constitutional grounds by the United States Supreme Court in Home Building & Loan Asso. v. Blaisdell, 290 U.S. 398, 54 S.Ct. 231, 78 L.Ed. 413 (1934). Blaisdell is the leading case concerning the constitutional restrictions of the contract clause upon mortgage morato-ry legislation referable to economic depression.
As correctly noted in the majority opinion today, the appropriate standard in cases involving a contract clause challenge is to first determine whether the legislation has substantially impaired contractual rights. If substantial impairment is found, the legislation must have a significant and legitimate public purpose, such as remedying a broad and general social or economic problem. Lastly, the means selected must be based upon reasonable conditions and is of a character appropriate to the public purpose justifying the legislature’s adoption.5
Undoubtedly the subject of the Act in question is within the scope of the police *595power of the state. In Blaisdell, 290 U.S. at 339-340, the Court observed:
“And if state power exists to give temporary relief from the enforcement of contracts in the presence of disasters due to physical causes such as fire, flood or earthquake, that power cannot be said to be nonexistent when the urgent public need demanding such relief is produced by other and economic causes.”
Farm relief legislation has been held to be a sovereign governmental function as the public welfare ultimately relies upon agriculture.6 The agricultural industry during times of economic depression has been found to be affected with a public interest. And farm relief legislation has been based on the police power of the state that is exercised for the general welfare.7
It is immaterial whether the legislation enacted in the exercise of the police power affects contracts incidentally, directly or indirectly provided that the public purpose sought to be served sufficiently outweighs the effect on private rights.8 Therefore, the question dispositive of this matter is whether the legislation is appropriate to the existing emergency and is based upon reasonable conditions.9
It is well settled that emergency legislation is presumed reasonable and, thus, valid. And excessive and oppressive abuse of power must be clearly established to find the legislation unconstitutional.10 The determination of reasonableness depends upon the particular facts of each case.11 Under general principles of constitutional law the means necessary to achieve the public purpose is primarily within the discretion of the legislature and the courts are usually precluded from challenging the necessity thereof.12
Moratory legislation enacted as emergency legislation has been upheld as not to impair the obligation of contracts in other jurisdictions.13 These cases have espoused the view that the legislation is a necessary or reasonable exercise of the state’s police power14 and that the law affects merely the remedy and not any substantive contract right.15 Impairment of a remedy by economic emergency mortgage moratory statutes has been found constitutionally permissible in many cases where the period of suspension prescribed is for a definite and reasonable time,16 and proper means are provided to care for the interests of the *596mortgagee.17
The grave financial condition of the American agricultural industry that led to the challenged legislation must be considered by this Court in determining whether the mortgage moratory legislation here under review is appropriate and reasonable. The legislative history of the Farm Credit Amendments Act of 198518 poignantly details the distressed economic condition of the agricultural industry as follows:
“The Nation’s agriculture economy is in a depression. American farmers and ranchers today must cope with problems as severe as any their industry has faced since the 1930’s. Low commodity prices, high interest rates, expensive production costs, instability in the export market, and plummeting farmland values have made it impossible for tens of thousands of farm operators to service their debt loads.
“According to the U.S. Department of Agriculture, half of all farmers have a negative cash flow and cannot meet operating or family living expenses from combined farm and off-farm earnings. Average farm real estate values nationwide have fallen by more than one-third since 1981, and in many states the decline has been well over 50 percent. Most economists forecast an additional 20 percent erosion in farmland values nationwide by 1987. U.S. farm exports have declined from the 1981 peak of nearly $44 trillion to an estimated $32 billion in 1985.” See also Harl, The Architecture of Public Policy: The Crisis in Agriculture, 34 U.Kan.L.Rev. 425 (1986).
The present legislation does not divest permanently mortgagees of the existing remedy of foreclosure nor temporarily of all remedy. First, the operation of the statute is expressly limited for a definite period of one year under § 493.
Secondly, the legislation when viewed in the context of other remedies available under federal law adequately protects the interests of the Federal Land Bank of Wichita and its Associations. The Farm Credit Amendments Act of 198519 created the Farm Credit System Capital Corporation as a new Farm Credit System institution that is authorized to raise funds within the System and to serve as a central and ready source of financial assistance to Farm Credit institutions that are experiencing difficulty. It acts as a system-wide warehouse to which System institutions may sell acquired properties and loans on which farmers have not made payment. The Capital Corporation may refinance, reamortize, or otherwise adjust debts for borrowers on any such purchased loans, or eventually liquidate loans if necessary.20 It is to be used “primarily as a means to keep farmers on the land rather than as a means to foreclose and force them off the land.”21
Section 2216a enumerates the purposes for which the new Capital Corporation is established, which mandates it shall:
“(2) acquire from other Farm Credit System institutions and participate with such institutions in nonperforming assets of such institutions;
“(3) hold, restructure, collect, and otherwise administer nonperforming assets acquired from or participated in with other Farm Credit System institutions, and guarantee performing assets held by other Farm Credit institutions;”
In addition, § 2216f establishes the general powers of the Capital Corporation, subject *597to Farm Credit Administration regulations, and includes the power to:
“(16) purchase at fair market value from any other System institution, on the request of such institution, loans (or interests in loans) that have been placed in nonaccrual status and assets (or interest in assets) in the account for acquired properties;
“(20) refinance, reamortize, guarantee, or compromise indebtedness, and otherwise provide debt adjustment assistance, with respect to any loan to a borrower of a System institution purchased under paragraph (16) or participated in by the Capital Corporation, and, after a determination by the Capital Corporation that the borrower could not reasonably be anticipated to meet loan servicing charges under a refinanced, reamortized, or otherwise restructured loan under reasonable terms and conditions acceptable to the Capital Corporation, liquidate any such loan,”22
The challenged legislation is reasonably limited to the Federal Land Bank of Wichita and any Federal Land Bank Association inasmuch as the Federal Land Bank of Wichita, which serves Oklahoma, is the only system entity in Oklahoma that makes long-term loans to farmers for real estate purposes, and other non-system lenders do not have the remedy of requesting the Capital Corporation to purchase their bad loans at fair market value. By authorizing the Capital Corporation to initiate a foreclosure action the Act explicitly provides for an exception to the prohibition of initiation of foreclosure actions during the moratorium. In my view, the Act is of a character appropriate to the economic emergency of the agricultural industry and is based upon reasonable conditions that afford safeguards to protect the Federal Land Bank’s interests.
I believe the farm foreclosure moratorium under the Act provides adequate protection for the Federal Land Bank of Wichita and its Federal Land Bank Associations inasmuch as any Federal Land Bank may sell nonaccrual loans to the Capital Corporation at fair market value. In addition, the Capital Corporation may initiate foreclosure actions where the loans are ineligible for restructuring assistance. The farm foreclosure moratory legislation neither impairs the integrity of the mortgage indebtedness nor alters the contract rate of interest. The Federal Land Bank and its Associations are not left without reasonable protection of their investment security. The present circumstances substantially differ from those in Waterfield, supra. Unlike today, there was no federal remedy available to the mortgagees nor was the moratorium restricted to Farm Credit System institutions.
I would therefore find that under the authority of Blaisdell, supra, the Act does not violate the state and federal contract clauses and Article II, § 6 of the Oklahoma Constitution. For the foregoing reasons, I respectfully dissent.
I am authorized to state that LAVENDER and SUMMERS, JJ., concur in the views herein expressed.

. The terms of 62 O.S.Supp.1986 §§ 492, 493 provided:
§ 492. Definitions
“As used in this act:
“1. ‘Farm Credit System' means the Farm Credit System as defined in the Farm Credit Act of 1971, P.L. 92-181, as amended;
"2. ‘Federal Land Bank' means a federal land bank within the Farm Credit System pursuant to the provisions of the Farm Credit Act of 1971, P.L. 92-181, as amended;
"3. ‘Federal Land Bank Association’ means a federal land bank association which is within the Farm Credit System pursuant to the provisions of the Farm Credit Act of 1971, P.L. 92-181, as amended; and
"4. ‘Capital Corporation’ means the Federal Credit System Capital Corporation as defined in the Farm Credit Amendments Act of 1985, P.L. 99-205.”
§ 493. One year deferment on certain foreclosure actions
*594"There is hereby declared a period of deferment of not longer than one (1) year from the date of the enactment of this act, during which time the Federal Land Bank of Wichita and any Federal Land Bank Association are prohibited from initiating a foreclosure action in the courts of this state. However, nothing in this act shall prohibit the Capital Corporation from initiating a foreclosure action from and after this date so long as the Capital Corporation has determined that the loan or loans held by the borrower or borrowers are ineligible for restructuring assistance.”

. U.S. Const, art. I, § 10, cl. 1 and Okla. Const, art. II, § 15.

. Okla. Const, art. II, § 6 provides:
"The courts of justice of the State shall be open to every person, and speedy and certain remedy afforded for every wrong and for every injury to person, property, or reputation; and right and justice shall be administered without sale, denial, delay, or prejudice.”

. Section 1 of Chapter 16 of the 1933 Okla.Sess. Laws provided for a fixed extension of delay of nine months to answer in actions to foreclose mortgages and read as follows:
‘In all actions now pending in the courts of this State, for the foreclosure of mortgages or other liens upon real estate, where the answer of the defendant or defendants has not been filed, such defendant or defendants shall not be held to answer therein until the expiration of nine (9) months after the date of the service of summons upon the defendant who is the record owner of the real estate, at the time of the filing of suit upon which the mortgage or other lien is sought to be foreclosed, and "In all actions hereafter filed in the courts of this State for the foreclosure of mortgages or other liens upon real estate, the defendant or defendants shall not be held to answer therein until the expiration of nine (9) months after the date of the service of summons upon the defendant who is the record owner of the property at the time of the filing of suit upon which the mortgage or other lien is sought to be foreclosed, and
"In all actions now pending in the courts of the State, for the foreclosure of mortgages or other liens upon real estate, in which the answer of defendant or defendants has already been filed, no trial shall be had, and no court of this state shall render judgment therein, until the expiration of nine (9) months after the passage and approval of this Act, upon which the mortgage or other lien is sought to be foreclosed."

.Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400, 411-12, 103 S.Ct. 697, 704-05, 74 L.Ed.2d 569, 580-81 (1983); Seal v. Corporation Com’n, 725 P.2d 278, 292 (Okla.1986).

. Green v. Frazier, 253 U.S. 233, 40 S.Ct. 499, 64 L.Ed. 878 (1920); North Dakota-Montana W.G. Ass’n, v. United States, 66 F.2d 573, 578 (8th Cir.1933).

. Dickey v. Raisin Proration Zone, 24 Cal.2d 796, 151 P.2d 505 (1944); State v. Klein, 63 N.D. 514, 249 N.W. 118 (1933).

. Blaisdell, supra; State v. Oklahoma Gas and Electric Company, 536 P.2d 887, 891 (Okla.1975).

. East New York Sav. Bank v. Hahn, 326 U.S. 230, 66 S.Ct. 69, 90 L.Ed. 34 (1945); Blaisdell, supra; City of Guthrie v. Pike & Long, 206 Okla. 307, 243 P.2d 697 (1952).

. Reherman v. Oklahoma Water Resources Bd., 679 P.2d 1296, 1300 (Okla.1980); Jack Lincoln Shops v. State Dry Cleaners' Board, 192 Okl. 251, 135 P.2d 332, 335 (1943).

. Von Hoffman v. City of Quincy, 71 U.S. (4 Wall.) 535, 554, 18 L.Ed. 403 (1866); Boyle County Stockyards Co. v. Com., Dept. of Agriculture, 570 S.W.2d 650, 654 (Ky.Ct.App.1978).

. See Blaisdell, supra; In re Supreme Court Referendum Petition, Etc., 530 P.2d 120, 121 (Okla.1974); Gray v. State, 601 P.2d 117, 121 (Okla.Crim.1979); Stockburger v. Jordan, 10 Cal.2d 636, 76 P.2d 671 (1938); Norris v. Mayor and City Council of Baltimore, 172 Md. 667, 192 A. 531 (1937).

. See Poteat, State Legislative Relief for the Mortgage Debtor During the Depression, 5 Law & Contemp.Probs. 517 (1938).

. E.g., Hahn, supra; Blaisdell, supra; Des Moines Joint Stock Land Bank v. Nordholm, 217 Iowa 1319, 253 N.W. 701 (1934); Metropolitan Life Ins. Co. v. Morris, 181 La. 277, 159 So. 388 (1935); Wilson Banking Co. Liquidating Corporation v. Colvard, 172 Miss. 804, 161 So. 123 (1935); Honeyman v. Hanan, 275 N.Y. 382, 9 N.E.2d 970 (1937); Virginian Joint Stock Land Bank v. Shaffer, 32 N.E.2d 862 (Ohio 1936).

. Eg., Reiman v. Rawls, 188 Ark. 983, 68 S.W.2d 470 (1934); Tusha v. Eberhart, 218 Iowa 1065, 256 N.W. 740 (1934); Craig v. Waggoner, 218 Iowa 876, 256 N.W. 285 (1934).

. Hahn, supra; Blaisdell, supra.

. E.g., Blaisdell, supra; Rhodes v. Marengo County Bank, 205 Ala. 667, 88 So. 850 (1921); In re Davis, 103 Neb. 703, 173 N.W. 695 (1919).

. H.R.Rep. No. 425, 99th Cong., 1st Sess. (1985), reprinted in 1985 U.S.Code Cong. and Ad.News 2587, 2592-2593.

. 12 U.S.C. § 2001 et seq.

. 1985 U.S.Code Cong, and Ad.News, supra note 18, at 2588.

.See Recommendation number 5 of the Comm. on Government Operations, Farm Credit Administration's Role in the System's Crisis, H.R. Doc. No. 561, 99th Cong., 2d Sess. 324 (1986) (based on a study made by its Government Information, Justice, and Agriculture Subcommittee). Among the findings of the Committee it found, “The system tended to use foreclosure on delinquent loans as a first resort, rather than attempting to work out problems before foreclosure." Id. at 3.

. See also 12 C.F.R. § 611.1142(i) and (j).