Appellant
Home Building & Loan Association
Appellee
John H. Blaisdell
Appellant's Claim
That the 1933 Minnesota Mortgage Moratorium Law, intended to avert mortgage foreclosures during the Great Depression, violated the Contract Clause of Article I of the Constitution, which bars state impairment of the obligations ofcontracts.
Chief Lawyers for Appellant
Karl H. Covell, Alfred W. Bowen
Chief Lawyers for Appellee
Harry H. Peterson, William S. Ervin
Justices for the Court
Louis D. Brandeis, Benjamin N. Cardozo, Charles Evans Hughes (writing for theCourt), Owen Josephus Roberts, Harlan Fiske Stone
Justices Dissenting
Pierce Butler, James Clark McReynolds, George Sutherland, Willis Van Devanter
Place
Washington, D.C.
Date of Decision
8 January 1934
Decision
By a vote of 5-4, the Supreme Court upheld the Minnesota statute.
Significance
Blaisdell is important not just because it upheld a significant Depression-era law modeled on the New Deal, but because the close vote in the caseillustrates the deep schism between those who endorsed a radically progressive approach to the nation's woes and those who wanted to perpetuate the Court's laissez-faire attitude towards economic matters.
In 1933, in the midst of the Great Depression, Minnesota passed the MortgageMoratorium Law. The law was modeled on President Franklin D. Roosevelt's NewDeal program for national economic relief and attempted to provide protectionto farmers and other property owners against mortgage foreclosure "during the continuance of the emergency and in no event beyond 1 May 1935." It authorized the Minnesota state courts to consider exempting troubled mortgagors fromforeclosure if the mortgagors requested such judicial consideration.
Mr. and Mrs. John H. Blaisdell owned a house and a parcel of land in HennepinCounty, Minnesota, for which the Home Building & Loan Association held the mortgage. When the Blaisdells defaulted on their loan payments, the mortgage lender prepared to foreclose on their home. Unable to obtain a new loan, the Blaisdells applied in state district court for an extension of the mortgage redemption period to enable them to find another lender or otherwise raisethe needed money.
The court decided in the Blaisdells' favor, and the decision was upheld by the Supreme Court of Minnesota. The lender then appealed this decision to the U.S. Supreme Court, claiming that the Minnesota Mortgage Moratorium Law violated the Contract Clause of Article I of the Constitution, which provides that"No State shall enter into any . . . law impairing the Obligation of Contracts."
Supreme Court Finds That the Contract Clause Is Not Absolute
Chief Justice Hughes and swing vote Justice Roberts joined the more liberal members of the Court to create a one-vote majority favoring the Blaisdells andupholding the Minnesota statute. Writing for the Court, Hughes noted that, "While emergency does not create power, emergency may furnish the occasion forexercise of power." The state, he said, had always held the power to protectits citizens. While under normal conditions the Contract Clause would preempt the exercise of this power, owing to the dire economic circumstances that gave rise to the Great Depression, other considerations must prevail:
Writing for the four dissenting justices, Justice Sutherland refused to concede that the Contract Clause could be overridden. Instead, he insisted, it must be read literally. If state legislatures were allowed to create laws that interfered with existing contracts between individuals--even during a nationaleconomic emergency--soon other excuses would be found for violating contractual relationships. Sutherland was addressing what had for decades been the Supreme Court's most pronounced characteristic: its belief in the sanctity of contracts and laissez-faire attitude towards nearly all economic matters thatcame before it.
Justice Sutherland and the three other dissenting justices--Butler, McReynolds, and Van Devanter--made up the so-called "Four Horsemen" (after the biblical Four Horsemen of the Apocalypse who wreaked havoc on the land) who consistently voted against Roosevelt's attempts to pull the country out of its economic doldrums. In 1937, frustrated by these rebuffs, Roosevelt developed a planto "pack" the Court with additional justices who shared his views. Althoughthis plan was ultimately defeated, Roosevelt succeeded in breaking up the conservative voting block on the Court and instituting New Deal reforms.
Related Cases
Size of the Supreme Court
There are currently nine justices serving on the Supreme Court: one chief justice and eight associate justices. The number was established in 1869 and hasnot been altered since. According to Article III, Section 1 of the Constitution, Congress has the power to determine the structure and jurisdiction of the federal judicial system. Congress has changed the size of the Supreme Courton seven different accessions throughout American history, often as a resultof westward expansion, but occasionally driven by an underlying political motive. For example, when Andrew Johnson nominated Henry Stanbey to replace Justice John Catron in 1865, Congress changed the number of justices from ten toseven in an attempt to stack the deck against Johnson's Reconstruction initiatives.
The most radical, and blatantly political, attempt to change the size of theSupreme Court came from Franklin D. Roosevelt who, in 1937, moved to increasethe number of justices to 15 in an effort to pack the Court with justices sympathetic to his New Deal legislation. Roosevelt's efforts were not in vain,however, as the Court, fearing legislative and executive encroachment on itspowers, began upholding some of Roosevelt's policies.
The Great Depression
The Great Depression was a period of U.S. and worldwide economic depression during the 1930s, characterized by failing businesses, rampant unemployment, and decreased prices for agricultural products. The Great Depression began with the stock market crash of 1929 and lasted for roughly a decade--the longestdepression experienced by industrialized nations. Due to decreasing value ofassets caused by the stock market crash, many banks failed. In 1933 11,000 out of 25,000 of the banks in the United States went out of business.
Prior to the Great Depression it was uncommon for governments to intervene infree market economies because of the widely held belief that a capitalist economy had the inherent ability to stabilize itself. President Roosevelt introduced a series of legislative proposals know as New Deal including public works programs, the Emergency Banking Act, and the FDIC legislation to counteract the effects of the Depression. This radically changed the complexion of theU.S. economy. As a result of the Depression the federal government began intervening in economic affairs to previously unheard of proportions. Ironically, it was not until the outbreak of World War II, which caused an increase indemand for production and new jobs, that the U.S. and world economies began to stabilize.
Sources
World Book Encyclopedia, 1993, p. 364.
Home Building & Loan Association
Appellee
John H. Blaisdell
Appellant's Claim
That the 1933 Minnesota Mortgage Moratorium Law, intended to avert mortgage foreclosures during the Great Depression, violated the Contract Clause of Article I of the Constitution, which bars state impairment of the obligations ofcontracts.
Chief Lawyers for Appellant
Karl H. Covell, Alfred W. Bowen
Chief Lawyers for Appellee
Harry H. Peterson, William S. Ervin
Justices for the Court
Louis D. Brandeis, Benjamin N. Cardozo, Charles Evans Hughes (writing for theCourt), Owen Josephus Roberts, Harlan Fiske Stone
Justices Dissenting
Pierce Butler, James Clark McReynolds, George Sutherland, Willis Van Devanter
Place
Washington, D.C.
Date of Decision
8 January 1934
Decision
By a vote of 5-4, the Supreme Court upheld the Minnesota statute.
Significance
Blaisdell is important not just because it upheld a significant Depression-era law modeled on the New Deal, but because the close vote in the caseillustrates the deep schism between those who endorsed a radically progressive approach to the nation's woes and those who wanted to perpetuate the Court's laissez-faire attitude towards economic matters.
In 1933, in the midst of the Great Depression, Minnesota passed the MortgageMoratorium Law. The law was modeled on President Franklin D. Roosevelt's NewDeal program for national economic relief and attempted to provide protectionto farmers and other property owners against mortgage foreclosure "during the continuance of the emergency and in no event beyond 1 May 1935." It authorized the Minnesota state courts to consider exempting troubled mortgagors fromforeclosure if the mortgagors requested such judicial consideration.
Mr. and Mrs. John H. Blaisdell owned a house and a parcel of land in HennepinCounty, Minnesota, for which the Home Building & Loan Association held the mortgage. When the Blaisdells defaulted on their loan payments, the mortgage lender prepared to foreclose on their home. Unable to obtain a new loan, the Blaisdells applied in state district court for an extension of the mortgage redemption period to enable them to find another lender or otherwise raisethe needed money.
The court decided in the Blaisdells' favor, and the decision was upheld by the Supreme Court of Minnesota. The lender then appealed this decision to the U.S. Supreme Court, claiming that the Minnesota Mortgage Moratorium Law violated the Contract Clause of Article I of the Constitution, which provides that"No State shall enter into any . . . law impairing the Obligation of Contracts."
Supreme Court Finds That the Contract Clause Is Not Absolute
Chief Justice Hughes and swing vote Justice Roberts joined the more liberal members of the Court to create a one-vote majority favoring the Blaisdells andupholding the Minnesota statute. Writing for the Court, Hughes noted that, "While emergency does not create power, emergency may furnish the occasion forexercise of power." The state, he said, had always held the power to protectits citizens. While under normal conditions the Contract Clause would preempt the exercise of this power, owing to the dire economic circumstances that gave rise to the Great Depression, other considerations must prevail:
[T]he question is no longer merely that of one party to a contract as against another, but of the use of reasonable means to safeguard the economic structure upon which the good of all depends.
Writing for the four dissenting justices, Justice Sutherland refused to concede that the Contract Clause could be overridden. Instead, he insisted, it must be read literally. If state legislatures were allowed to create laws that interfered with existing contracts between individuals--even during a nationaleconomic emergency--soon other excuses would be found for violating contractual relationships. Sutherland was addressing what had for decades been the Supreme Court's most pronounced characteristic: its belief in the sanctity of contracts and laissez-faire attitude towards nearly all economic matters thatcame before it.
Justice Sutherland and the three other dissenting justices--Butler, McReynolds, and Van Devanter--made up the so-called "Four Horsemen" (after the biblical Four Horsemen of the Apocalypse who wreaked havoc on the land) who consistently voted against Roosevelt's attempts to pull the country out of its economic doldrums. In 1937, frustrated by these rebuffs, Roosevelt developed a planto "pack" the Court with additional justices who shared his views. Althoughthis plan was ultimately defeated, Roosevelt succeeded in breaking up the conservative voting block on the Court and instituting New Deal reforms.
Related Cases
- Railroad Commission Cases, 116 U.S. 307 (1886).
- Block v. Hirsch, 256 U.S. 135 (1921).
- Marcus Brown Holding Co. v. Feldman, 256 U.S. 170 (1921).
- Edgar A. Levy Leasing Co. v. Siegel, 258 U.S. 242 (1922).
- Stephenson v. Binford, 287 U.S. 251 (1932).
Size of the Supreme Court
There are currently nine justices serving on the Supreme Court: one chief justice and eight associate justices. The number was established in 1869 and hasnot been altered since. According to Article III, Section 1 of the Constitution, Congress has the power to determine the structure and jurisdiction of the federal judicial system. Congress has changed the size of the Supreme Courton seven different accessions throughout American history, often as a resultof westward expansion, but occasionally driven by an underlying political motive. For example, when Andrew Johnson nominated Henry Stanbey to replace Justice John Catron in 1865, Congress changed the number of justices from ten toseven in an attempt to stack the deck against Johnson's Reconstruction initiatives.
The most radical, and blatantly political, attempt to change the size of theSupreme Court came from Franklin D. Roosevelt who, in 1937, moved to increasethe number of justices to 15 in an effort to pack the Court with justices sympathetic to his New Deal legislation. Roosevelt's efforts were not in vain,however, as the Court, fearing legislative and executive encroachment on itspowers, began upholding some of Roosevelt's policies.
The Great Depression
The Great Depression was a period of U.S. and worldwide economic depression during the 1930s, characterized by failing businesses, rampant unemployment, and decreased prices for agricultural products. The Great Depression began with the stock market crash of 1929 and lasted for roughly a decade--the longestdepression experienced by industrialized nations. Due to decreasing value ofassets caused by the stock market crash, many banks failed. In 1933 11,000 out of 25,000 of the banks in the United States went out of business.
Prior to the Great Depression it was uncommon for governments to intervene infree market economies because of the widely held belief that a capitalist economy had the inherent ability to stabilize itself. President Roosevelt introduced a series of legislative proposals know as New Deal including public works programs, the Emergency Banking Act, and the FDIC legislation to counteract the effects of the Depression. This radically changed the complexion of theU.S. economy. As a result of the Depression the federal government began intervening in economic affairs to previously unheard of proportions. Ironically, it was not until the outbreak of World War II, which caused an increase indemand for production and new jobs, that the U.S. and world economies began to stabilize.
Sources
World Book Encyclopedia, 1993, p. 364.
- Butler, Henry N. The Corporation and the Constitution. Washington, DC: AEI Press, 1995.
- Lash, Joseph P. Dealers and Dreamers: A New Look at the New Deal.New York: Doubleday, 1988.
- Leuchtenburg, William Edward. The Supreme Court Reborn: The Constitutional Revolution in the Age of Revolution. New York: Oxford University Press, 1995.
User Comments Add a comment…
about 1 year ago
efto1 lbrt_franklin ((at)) yahoo dot com
If Baroque really wants to create a national stimulus package, he should stick with what would end the war in both Iraq and Afghanistan that's by giving back money taken from former black African Christians who were cast into slavery in the Americas and the West Indies. Otherwise, he will need to show demonstrate that South American nations which in the past borrowed money from the United States are on the brink of going under, as Bear Stearns got Democrats to cough up [$38 billion dollars] even more than what Bush wanted to pay them [$2.3 million dollars]. Baroque will need to address in detail, and declare it a fallacy, bankers and money lenders them inceased home foreclosures up from normally 800 thousand per year to an astounding 1.8 million per annum by playing the latest stock market instrument which he will neeed to say has absoultely zilch to do with rogue bankers and money lenders who played the latest stock market instrument though they didn't make a single time, as a Las Vegas casino-hotel of the same name, HEDGED MONTE-CARLO, seemed to have caught fire!