Court Opinion

ID: 3269790
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:38:11.462742+00
Date Added: 2024-06-11T14:00:08.974570
License: Public Domain

I cannot agree with the  majority, either in holding that the act has no application to future contracts, or in holding that the act is unconstitutional as to existing contracts.
The one statement in the majority opinion, however, to which we may all agree is the following: "The evident purpose of the Legislature was to relieve a present condition by applying the poultice of the act to the sore spot of deficiency judgments in foreclosures of mortgages caused by decline in realty values."
While the decline in realty values was partly the cause of the sore spot, it was not the whole cause. It is a matter of common knowledge that many loans were made in this State on real estate in 1920, and the years immediately following 1920, where the amount of the loan was fifty per cent. or less of the value of the property. In many instances the mortgage was on the homestead.
Many persons paid on these mortgages until 1930. In 1930 prices were so low that the price the farmer received for his crops was, in many instances, not more than the cost of producing the crop. It was therefore impossible for them to pay during that year. Many mortgagees took advantage of the accelerating clause in the contract, declared the entire amount due, foreclosed, purchased the property at foreclosure sale for less than twenty-five per cent. of its value, and secured a deficiency judgment for the balance. The money lender, therefore, in these instances, collected approximately half the money that he had loaned, took the farmer's home, and had a judgment against him for the balance. This is evidently the sore spot mentioned in the majority opinion. *Page 657 
I think, when conditions as described above existed, and the mortgagee took advantage of the accelerating clause in the contract, and, being the only bidder, purchased the property at less than twenty-five per cent. of its normal value, that this constitutes inequitable conduct, and should justify the court in ordering another sale where the mortgagee is the only bidder at the first sale. This court, however, has held to the contrary.
The court is bound to know the conditions. A court cannot blind its eyes to the knowledge of a fact which is notorious throughout its jurisdiction. There is no one of ordinary intelligence who does not know that since 1922 land values have gone down, until in 1931 it was practically impossible to sell lands in this State for one-fourth of their value in normal times. See Federal Land Bank of St. Louis v. Ballentine, 186 Ark. 141,52 S.W.2d 965.
I think it was to relieve the people who were oppressed, as above described, that this act was passed.
Mr. Justice BUTLER, in a concurring opinion, has in my judgment shown very clearly that act 57 applies to future contracts. I agree with what he has said on this subject, and shall not discuss that feature of it at length. I think the entire act is valid.
The majority opinion cites and relies on the case of McCracken v. Haywood, 2 Howard 608. That case was decided nearly 100 years ago, and is based largely on the case of Bronson v. Kinzie, 1 Howard 311. In the last case mentioned, the court said:
"If the laws of the State passed afterwards had done nothing more than change the remedy upon contracts of this description, they would be liable to no constitutional objection. For, undoubtedly, a State may regulate at pleasure the modes of proceeding in its courts in relation to past contracts as well as future. * * * Regulations of this description have always been considered, in every civilized community, as properly belonging to the remedy, to be exercised or not by every sovereignty, according to its own views of policy and humanity. It must reside in every State to enable it *Page 658 
to secure its citizens from unjust and harassing litigation, and to protect them in those pursuits which are necessary to the existence and well-being of every community. And, although a new remedy may be deemed less convenient than the old one, and may in some degree render the recovery of debts more tardy and difficult, yet it will not follow that the law is unconstitutional."
It therefore appears to me that the very cases relied on by the majority hold acts affecting the remedy constitutional.
It was also said in the case of Bronson v. Kinzie, supra: "Mortgages made since the passage of these laws must undoubtedly be governed by them; for every State has the power to prescribe the legal and equitable obligations of a contract to be made and executed within its jurisdiction."
But the majority says that act 57 does not apply to future contracts. It says that the act does not, in express terms, apply to foreclosures on mortgages and deeds of trust on real estate to be hereafter executed.
The act is copied in the majority opinion and discussed at length by Mr. Justice BUTLER, but what the majority opinion says about the act not in express terms applying to future contracts may be said of seventy-five per cent. of the laws enacted in the last fifty years.
I am unable to understand how the court could reach the conclusion that act 57 applies to existing contracts only. The same reasoning would lead to the conclusion that most of the acts passed by the Arkansas Legislature apply to existing conditions and not to the future.
While the authorities are not entirely uniform, I think the great weight of authority is to the effect that one can have no vested right in a remedy, and that changing the remedy or depriving one of a remedy does not impair the obligation of a contract if it leaves him an efficient remedy.
"To deprive a person of the only legal remedy he has by which to enforce his rights is either to impair the obligation of a contract or deprive him of property *Page 659 
without due process of law. One may have a vested right to a remedy on contracts. He has no vested right to a particular remedy. A statute which said that he shall have no remedy whatever for the enforcement of an existing right is essentially different in its operation from one which withholds some particular pre-existent remedy and leaves him to the choice of those which remain to him. The decisions are almost uniform that, though a law which deprives one of all remedy is a law impairing the obligation of a contract, or one taking private property without due process of law, it is equally true that any particular remedy may be abrogated at the pleasures of the lawmaker, provided it leaves a substantial means of enforcing the right." Wade on Retroactive Laws, 201.
In the case of Conkey v. Hart, decided by the Court of Appeals of New York, 14 N.Y. R. 22, the court said:
"Between the execution of the lease and the issuing of the warrant the Legislature had passed an act entitled, `An act to abolish distress for rent, and for other purposes,' the first section of which is in these words: `Distress for rent is hereby abolished.' The Supreme Court held that this act in its application to a lease like the present, existing at the time of its passage, was in violation of that clause in the Constitution of the United States which forbids any State to pass a law impairing the obligation of contracts. The correctness of this determination is therefore to be considered.
"It is not to be overlooked that the stipulations of parties, with which the statute is supposed to interfere, relate to the remedy for a breach of the principal provision of the contract which provides for the payment of the rent. That obligation the statutes does not interfere with, but it may be enforced by all the means which the State furnished for the enforcement of other contracts. In this particular the question presented in this case differs from that in any of the cases which have been considered in the Supreme Court of the United States. * * *  All the cases recognize the obvious distinction between impairing the obligation of the contract and altering the remedy for a breach of it, and acknowledge *Page 660 
the power of the State over the latter, while maintaining its want of power to impair the obligation of the contract."
It was stated in the case of People v. La Fetra,230 N.Y. 429, 130 N.E. 601, 16 A.L.R. 152, that a State may establish regulations reasonably necessary to secure the general welfare of the community by the exercise of its police power, although the rights of private property are thereby curtailed and freedom of contract thereby abrogated.
The Legislature evidently knew the conditions existing in this State at the time of the passage of this act, and passed this act for the purpose of giving some relief.
The Supreme Court of Arizona said: "We understand the rule to be that parties have no vested right in particular remedies or modes of procedure, and that Legislature may change existing remedies or prescribe new modes of procedure without impairing the obligation of contracts, provided an efficacious remedy remains for its enforcement." Brotherhood of American Yoemen v. Manz, 23 Ariz. 610, 306 P. 403.
The Court of Appeals of Kentucky, in discussing the statute changing the remedy as to liability of stockholders, said:
"The statutes bear upon the remedy only. The liability of the stockholders remains the same as it was prior to their passage. * * *
"Thus where, at the time of the insolvency, the only remedy against the shareholders was by proceedings in equity on the part of the bill holders, and subsequently, pending the liquidation of the affairs of the bank, a new statute was passed creating the machinery of the Bank Commissioner, and providing a simple and expeditious means whereby they could enforce collections from shareholders, it was held that the shareholders in the already insolvent bank could not object to the application of this new statute to their own case. It bore on the remedy only, not upon the liability." Hughes v. Marvin, 216 Ky. 190, 287 S.W. 561.
The Supreme Court of Arizona held a law valid which contained the following paragraph: "All mortgages *Page 661 
of real property and all deeds of trust in the nature of mortgages shall, notwithstanding any provision contained in the mortgage, be foreclosed by action in a court of competent jurisdiction."
The court said: "This is a remedial statute, and it is well settled that laws changing the remedy or substituting another and different remedy are valid, so long as they do not impair the obligation of contracts." Schwertner v. Provident Mut. Bldg.-Loan Ass'n, 17 Ariz. 93,148 P. 910.
"Modes of procedure in the courts of a State are so far within its control that a particular remedy existing at the time of the making of a contract may be abrogated altogether without impairing the obligation of the contract if another and equally adequate remedy for the enforcement of that obligation remains or is substituted for the one taken away." Ry. Co. v. La.,157 U.S. 219, 15 S. Ct. 581.
"It is well settled that while, in a general sense, the laws in force at the time a contract is made enter into its obligation, parties have no vested right in the particular remedies or modes of procedure then existing. It is true the Legislature may not withdraw all remedies, and thus, in effect, destroy the contract; nor may it impose such new restrictions or conditions as would materially delay or embarrass the enforcement of rights under the contract according to the usual course of justice as established when the contract was made. Neither could be done without impairing the obligation of the contract. But it is equally well settled that the Legislature may modify or change existing remedies or prescribe new modes or procedure, without impairing the obligation of contracts, provided a substantial or efficacious remedy remains or is given, by means of which a party can enforce his rights under the contract." Oshkosh Waterworks Co. v. Oshkosh, 187 U.S. 437,23 S. Ct. 234; Nat. Surety Co. v. Architectural Decorating Co., 226 U.S. 276, 33 S. Ct. 17; Wright v. Wimberly,94 Or. 1, 184 P. 740.
Act 57 was evidently passed by the Legislature with a view of relieving the people of Arkansas from an *Page 662 
intolerable condition. While I might cite many other cases, the above citations are sufficient to show how the courts generally hold on questions of this kind.
The obligation of the contract is not impaired by the act, and the mortgagee is not deprived of a remedy by which he can enforce the collection of his debt. He may bring a suit at law on the note or bond, obtain a judgment, sell the mortgaged property, and, if it does not sell for enough to pay the debt. He can sell any other property belonging to the debtor. If he does not want to go into court, he may advertise and sell under the power of sale in the mortgage, purchase the property himself, make a deed to himself, and then sue at law for the difference between the amount of the debt and the amount for which the property was purchased.
The enactment of this law did not deprive the mortgagee of the right to bring his suit at law, nor deprive him of the right to sell under the power of sale in the mortgage, and, by the great weight of authority, act 57 does not impair the obligation of a contract.
I think the act is valid and should be upheld. Mr. Justice HUMPHREYS agrees with me that the act should be upheld.