Court Opinion

ID: 7035630
Source: CourtListenerOpinion
Date Created: 2022-07-24 06:45:18.906584+00
Date Added: 2024-06-11T16:11:08.015433
License: Public Domain

DISSENTING OPINION.
Hanna, J.
In the' conclusion arrived at by the Court, I can not fully concur, and shall be compelled to occupy some space to give my reasons.
In the tenth section of the first article of the Constitution of the United States, it is, among other things, provided that “no State shall.....pass any.....law impairing the obligation of contracts.” And section twenty-four of the first article of our State Constitution, declares that “no ex post faeto law, or law impairing the obligation of contracts, shall ever be passed.”
The laws of this State, passed at the Special Session of the Legislature in the year 1861, contain an act, approved June 4,1861, the first section of which is as follows:
*577“That whenever, hereafter, any real property, or any interest therein, shall be sold on any execution, or order of sale, issued upon any judgment, decree, or other judicial proceeding within this State, the owner thereof, his heirs, executors, administrators, or any mortgagee, or judgment creditor having a lien upon the same, may redeem such real property or interest therein, at any time within one year from the date of such sale, by paying to the purchaser, his heirs, or assigns, or the clerk of the court from which such execution or order of sale was issued for the use of such purchaser, his heirs, or assigns, the purchase money, with interest thereon, at the rate of ten per cent, per annum.”
The second section points out the duty of the officer making sale; and provides that the judgment debtor shall be entitled to the possession during said year, and, if not redeemed, shall be liable for rents. The third, section gif es a mortgagee, or judgment creditor, who shall redeem, a lien for the money so paid.
The question presented for consideration is, whether contracts in existence at the time this law came in force are subject to its provisions, in view of the prohibitions of the Constitution above quoted.
Judicial investigation has been directed to two points arising under this clause of the Constitution of the United States; first, as to what is a contract within the sense thereof; second, as to what interference, or extent of interference, with a contract, should be considered as impairing the obligation thereof.
In the case at bar there need be no time spent upon the first inquiry, as the contract under consideration clearly falls within the sections quoted. But, see Dartmouth College v. Woodward, 4 Wheat. 518; Fletcher v. Peck, 6 Cranch, 87; Plant. Bank v. Sharp, 6 Howard, 301; The People v. Morris, 13 Wend. 325; Terrett v. Taylor, 9 Cranch, 43; East Hartford v. Hartford Bridge Co., 10 How. 511; Conner v. The City of New York, 1 Selden, 285; The West River Bridge Co. v. Dix, 6 How. 507; The Trustees of Vincennes University v. Indiana, 14 How. 268; Providence Bank v. Billings, 4 Peters, 514; Charles River *578Bridge v. Warren Bridge, 11 Peters, 548, and authorities' cited; The Richmond Railroad Co. v. The Louisa Railroad Co., 13 How. 81; White v. White, 5 Barb. 474; Londonderry v. Chester, 2 N. H. 268; Maguire v. Maguire, 7 Dana, 183; Green v. Biddle, 8 Wheat. 1; New Jersey v. Wilson, 7 Cranch, 164; Sturges v. Crowninshield, 4 Wheat. 122; Ogden v. Saunders, 12 id. 213; Mason v. Haile, id. 370; Fisher v. Lacky, 6 Blackf. 373; Bronson v. Kinzie, 1 How. 311; McCracken v. Hayward, 2 id. 608; Curran v. of State of Arkansas, 15 id. 318; Morse v. Goold, 1 Kernan, 281; Rockwell v. Hubbell, 2 Doug. 197; id. 38; Wilson v. Hardesty, 1 Mar. Ch. 66.
As to the second inquiry: certainly as long hack as the February term, 1819, of the Supreme Court of the United States, a distinction was taken between the obligation of a contract and the remedy given by the Legislature to enforce that obligation. Sturges v. Crowninshield, supra. And that without impairing the obligation, the remedy might he modified. This view of the clause of the Constitution was sustained in Mason v. Haile, 12 Wheat., and Wilkinson v. Leland, 2 Peters, and, aside from the case of Green v. Biddle, 8 Wheat., which appears to have turned upon the compact between Virginia and Kentucky, continued to he the rule of construction in reference to this clause of the Constitution until the January term, 1813, of the same Court, when the case of Bronson v. Kinzie came up, in which it has been generally understood the Court somewhat modified the ruling by narrowing the limits within which the remedy might be affected by State legislation. But still, this case, and those of McCracken v. Hayward, and Curran v. The State of Arkansas following it, viewed in connection with those which had preceded them, upon the same point, would appear to indicate the opinion that State legislation on the remedies of prior contracts would he constitutional if such legislation should still leave substantial and efficient means of enforcing them. This view is sustained by several cases decided by State tribunals. James v. Stull, 9 Barb. 482; Bruce v. Schuyler, 4 Gilm. 221; Stocking v. Hunt, 3 Denio, 274; Howard v. Kentucky, &c. Ins. Co., 13 B. Mon. 285.
*579I do not propose to discuss the questions, whether this apparent conclusion can be supported by sound reasoning, nor whether the real obligation of a contract does not consist of the remedial right to coerce performance, existing at the time the contract is entered into, rather than in the naked agreement, promise, or understanding of the parties, or whether the whole right of prescribing the remedy is in the States, severally. Nor do I propose to examine the questions of who should determine whether substantial and efficient means would remain, upon the enactment of a given statute, to enforce the contract, or whether the obligations thereof were materially impaired thereby. But conceding that the conclusion arrived at is binding upon us, I will examine its bearing upon the case at bar, and as affecting, the statute under consideration.
By the adoption of the clause of the Constitution of the United States, it was assumed that the legislative power of the States possessed the right, unless restrained by fundamental law, to so shape their enactments as to impair the obligations of existing contracts. How far it was agreed they should be prohibited from the exercise of that power, 'has, as we have seen, been the subject of much diversity of opinion. If the law of the contract, as it is termed, that is, the laws which existed at the time the contract is made, enters into and forms' a part of the contract, including the laws giving a remedy on the contract, then, perhaps, the first question would be, under such a construction, should the law of the place where the contract is made, or of the place where its enforcement is attempted, govern, in a case where they are different at its date? The difficulty of this question will be appreciated when we recollect that all laws authorizing original, mesne, or final process — and creating officers to execute, and prescribing their duties in executing the same —creating tribunals to hear and determine suits, prescribing the rules of evidence by which they shall be guided, and otherwise directing their duties, have reference directly, or indirectly to the remedy. It is apparent that if the law of the place when the contract was made, forms a part of the contract, and no State can impair the same as to the remedy, *580it -would operate, in effect, as almost an entire surrender of State sovereignty as to legislation upon such contracts, because a debt contracted in a particular State, but payable generally, *s> operation of law, payable everywhere, and may be enforced wherever the debtor, or his property, can be reached.
•I am not now discussing the applicability of the law of the place of the contract, in expounding the same, except so far as the law of the remedy, in the place where it is sought to enforce the contract, is involved. As to that point there appears but little conflict. Remedies are to be sought according to the forms and order of judicial proceeding prescribed '■by the law of the place where the action may be instituted, without having any reference to the place where the right accrued. 2 Kent’s Comm., § 27; Donn v. Lippman, 5 Clark & Finnell R. 1. In this case Lord Brougham said, that “Whatever relates to the remedy to be enforced, must be determined by the lex fori, the law of the country, to the tribunals of which the appeal is made.......The parties do not necessarily look to the remedy when they make the ‘contract.” As to the application of this general principle of ■law, in regard to a contract made in one State and attempted to be enforced in another, see Bank of the United States v. Donnelly, 8 Peters, 361, in which the Court held this language: “ But whatever may be the legislation of a State as to the obligation or remedy on contract, its acts can have no binding authority beyond its own territorial jurisdiction. Whatever authority they have in other States, depends upon principles of international comity, and a sense of justice. The general principles adopted by civilized nations is, that the nature, validity, and interpretation of contracts are to be governed by the law of the country where the contracts are made, or are to be performed. But the remedies are to be governed by the laws of the country where the suit is brought.” See, as to same point, Fenwick v. Sears, 1 Cranch, 259; Wilcox v. Hunt, 13 Peters, 378; Warren v. Lynch, 5 Johns. R. 239; Jones v. Hooks, Administrator, 2 Rand. Va. R. 303; Pearsall v. Dwight, 2 Mass. R. 84; Hyde v. Goodnow, 3 Comst. 270; Ohio Insurance Company v. Edmondson, 5 Louis. R. 295.
*581In view of tbe general principles of international law, and the consideration given in one State to the judicial proceedings of another, the Supreme Court said, in the case of Sturgis, in 4 Wheat., that “The distinction between tire obligation of a contract, and the remedy given by the Legislature to enforce that obligation, has been taken at the bar, and exists in' the nature of things. Without impairing the obligation of the contract, the remedy may certainly be modified, as the wisdom of the nation may direct.” This was followed up by the Court, in Bronson v. Kinzie, in this language: “ Undoubtedly a State may regulate, at pleasure, the modes of proceeding in its courts in relation to past contracts, as well as future.....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. Whatever belongs merely to the remedy may be altered according to the will of the State, provided the alteration does not impair the obligation of the contract. But if that effect is produced, it is immaterial whether it is done by acting on the remedy, or directly on the contract itself.” In this connection the language used in Green v. Biddle, in regard to the compact between Virginia and Kentucky, is referred to approvingly, and as applicable to contracts, to wit: “It is no answer that the acts of Kentucky, now in question, are regulations of the remedy, and not of the right to the lands. If these acts so change the nature and extent of existing remedies as materially to impair the rights and interests of the owner, they are just as much a violation of the compact as if they directly overturned his rights and interests.”
Upon a slight examination of these and other cases, they would appear scarcely reconcilable. In McElmoyle v. Cohen, 13 Peters, 312, it is said: “But the point might have been shortly dismissed with this safe declaration, that there is no direct constitutional inhibition upon the' States, nor any clause in the Constitution, from which it can be even plausibly inferred that the States may not legislate upon the remedy in suits upon the judgments of other States, exclusive of all interference with their merits.” Now the merits *582would appear, from the decision of the same Court, heretofore quoted, to involve matter affecting the nature, validity, interpretation or discharge of the contract, and not remedies prodded for enforcing the obligations thereby incurred. So it has been repeatedly held, that a binding statute may be enacted, and pleaded in bar of a prior contract, shortening the time within which the obligation may be enforced, thereby defeating the action.
Perhaps these decisions can be reconciled upon the language of Lord Brougham, in the case heretofore referred to: “When both parties reside in the country where the act is done, they look of course to the law of the country in which they reside. The contract being silent as to the law by which it is to be governed, nothing is more likely than that the lea loci eontraetus should be considered at the time the rule; for the parties would not suppose that the contract might afterward come before the tribunals of a foreign country. But it is otherwise when the remedy actually comes to be enforced. The parties do not, necessarily, look to the remedy when they make the contract. They bind themselves to do what the law they live under requires,” &c.
So, in the case of McCracken v. Haywood, the Supreme Court say: “The obligation of the contract between the parties, in this case, was to perform the promises and undertakings contained therein; the right of the plaintiff was to damages for the breach thereof, to bring suit, and obtain a judgment, to take out and prosecute an execution against the defendant till the judgment was satisfied, pursuant to the existing laws of Hlinois. These laws giving these rights were as perfectly binding on the defendant, and as much a part of the contract, as if they had been set forth in its stipulations in the very words of the law relating to judgments and executions.”
Thus, it would appear, that as to contracts sought to be enforced in the place where they were entered into, where the parties reside, they are supposed to have looked to the law of the remedy, as well as that of the obligation; but that where they are being enforced in a place, and under laws, different from that of the contract, the remedy *583is not supposed to have been looked to in making’ the contract.
But even with this view of the cases in our Supreme Court, 1 can not, with due deference to that august tribunal, believe that it was intended, the very broad language used in the latter part of the quotation above set forth, should receive the interpretation which it would, legitimately, bear, namely, that the contract gives to a party the right to enforce it, upon breach, by suit, take judgment, sue out and prosecute executions, in pursuance of the law existing at the time of the contract; and that no law can be made by the Legislature of the State, changing the mode of proceeding, so as to affect the rights thus entering into the contract.
If this is the construction, now to obtain, of the clause of the Constitution of the United States, it rvould overturn a long line of decisions, heretofore quoted, by which it appeared to be settled, that legislation affecting the remedy, only, was within the control of the States, severally. It can not be that in Indiana, in a suit upon a contract, entered into previous to 1842, we are to be remitted to the barbarous custom of imprisonment for debt. This was a part of the execution which might be sought upon judgments previous to that date; and if the language used in the case in 2 Howard is to receive the broad construction it would warrant, such remedy might be a part of the law of the contract. But it has been repeatedly decided that although the law of the remedy would give the right, at the date of the contract, to coerce the performance thereof, by imprisoning the person for a failure; yet, that remedy, although, perhaps, the principal one looked to to secure its performance, may be taken away without impairing the obligation of the contract. So, in the cases I have cited, it has been held to be within the competency of the State Legislatures to shorten the time within which actions shall be instituted, to change existing rules of evidence, and to prescribe new rules of evidence within certain bounds; all to affect past as well as future contracts.
Perhaps the language used in 2 Howard should not be considered as intended to apply to any subject of legislation *584other than that immediately under consideration, namely, the competency of a State Legislature to change, as to existing contracts, the rates at which property should be sold, when remedial laws to enforce such contracts. This would leave the adjudications upon somewhat similar questions still in force, for our guidance.
Viewing the question in this light, and looking to the language of the chief justice, in 2 Howard, to wit, that “ 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.” ■ I am not prepared to consider whether the statute under consideration, “so changes the nature and extent of existing remedies, as materially to impair the rights and interests” of the defendant in this case, 8 Wheat. 1, or whether “the provisions of the law are so unreasonable as to amount to a denial of a right, and call for the interposition of the Court.” Jackson v. Lamphire, 3 Peters, 290.
First, then, as to the obligation of the contract, “in the sense in which those words are used in the Constitution, is that duty of performing it, which is recognized and enforced by the law.” 15 How. 319.
I can not perceive that this statute, except as may be hereafter noticed, so changes the law, previously in force, “ that the means of legally enforcing this duty are materially impaired.” Id. Upon the failure of the defendant to comply with the terms of Ms contract, the law, existing at the time of entermg into the same, and recovering judgment thereon, was the same; as to the right to institute, and the manner of prosecuting to final judgment, a suit to enforce the said contract; and also as to suing out and prosecuting execution upon such judgment as to personalty, and also as to real property, until the sale thereof should be effected ; thus far there is no difference. Up to this point, under the old law, the right vested in the defendant to prevent the title to his land from passing from him, by paying the judgment and accrued interest, &c., at the rate of six per cent, per annum, in ordinary judgments. This law steps in and extends that right for one year, to such defendant, his heirs, &c., by *585Ms paying the amount bid, the purchase money and interest, at the rate of ten per cent, per annum. 'In other words, a clear title can not pass to the purchaser, until one year expires, and in the mean time junior incumbrancers may, by taking certain steps, resort to said real property as a fund for the discharge of their claims. The inquiry presents itself at once, whether tMs “materially impairs the rights and interests” of the plaintiff. What are those rights and interests? As respects the point now being considered, he would have a right to resort to the real property as a fund to satisfy his debt. His interest would be to have the land, upon such enforced sale, pay such debt. His right to resort to such property is not affected. Is the interest he has in malting Ms money out of it? Would it materially decrease the value of the fund which he thus had the right to resort to ? Two parties may he regarded as probable purchasers at such sale, namely, the plaintiff, and strangers to the record. As to the plaintiff, if he purchases he should be viewed as doing so to obtain satisfaction of his debt, and not as a matter of speculation ; and that he thus takes title to the property to enable Mm to ultimately turn it into that which was promised— money. If he should obtain such title immediately after the purchase, he might, in a shorter time than a year, be able to so dispose of such property, or he might not. Conceding that he could, then the result is that, under this law, he would have to be delayed in disposing of it until the expiration of the year, or make such disposition conditionally. I can not see that the injury would be any thing more than the delay; for, in this country, where lands are continually increasing in value, it is not to be supposed the fund, for the payment of the debt, would deteriorate in value. So, if the land should be redeemed at the end of the year, the interest to be paid would be more than he would have been entitled to on an ordinary judgment, and the delay would be all he could complain of. As to mere inconvenience and delay, the reasoning in 1 Howard shows that they do not render the new act unconstitutional.
As to a purchase by a third person, a stranger; it would depend, perhaps, upon the motive with which the purchase *586should be made, whether the property would bring as much when sold under this right to redeem, as without it. If a man desired the property for a home, the chances are that *n a maÍor^ 0j^ suc^ cases ^ would not. If the^purchase was on speculation, I can see nothing to prevent it from selling for as much, subject to the redemption. Indeed, it appears to me it would, in a majority of such instances, bring more; for this reason, if circumstances were such that the bidder should anticipate redemption it would be a safe investment, at a rate of interest higher than usually received. If redemption would not be probable, then I can not see that the mere delay in the execution of the deed by the officer would make a material difference in the amount of the bid.
As it is within the knowledge of the Court, as a part of the public history of the State, that a very large part — much more than a majority of the purchases of real property at forced sales — when made by strangers to the record, are on speculation. I am of opinion that the general effect of the statute will not be to decrease the value of this fund for the payment of creditors; but that it will produce a contrary result.
Thus much as to that paid of the statute affecting sales upon ordinary judgments; as to that part of the same, in reference to proceedings on orders of sale issued on decrees, so far as the same regulate such proceedings on the sale of lands on foreclosure of prior mortgages, a different conclusion would appear inevitable. The question is already settled by the case of Bronson v. Kinzie, supra; and if it was not, the reasons are unanswerable.
The mortgage conveys the legal title to the mortgagee; subject to be defeated though, upon the performance of certain acts therein specified by the mortgagor. Where the mortgage is to secure the payment of money, the legal title thus transferred, is regarded, in equity, as a trust estate for the payment of the same; and after such payment, from said estate, the balance is a resulting trust to the mortgagor. To avail himself of this security, and extinguish the equitable interest of the mortgagor, the mortgagee is entitled to the *587aid of the Court, in procuring the sale of ,such property. IJpon prior contracts of this character, this statute would operate directly, in this, that it might create an equitable estate in such lands in persons not known to such contract; and would extend the time in which the equitable estate or interest of the mortgagor could be finally extinguished, and would thereby, as to duration, increase that estate.
Osear B. Hard, for the appellant.
B. W. Wilson, for the appellee.
I am of opinion, for these reasons, that so much of said law as affects ordinary judgments and proceedings upon prior contracts, is binding and valid; but so far as it may.affect judgments and proceedings upon ordinary mortgages, it is unconstitutional, and, therefore, invalid.
I have thus attempted to show that the law is valid, in view of the adjudications heretofore had in the Supreme Court of the United States upon kindred questions. I have not looked at it as an open question, but as one hedged around by those decisions. If they were out of the way a broader field would be open for discussion, in reference to the question of the validity of such statute, or its consonance with the constitutional provisions.