Home Building & Loan Association v. Blaisdell

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 and upholding the Minnesota statute. Writing for the Court, Hughes noted that, "While emergency does not create power, emergency may furnish the occasion for exercise of power." The state, he said, had always held the power to protect its 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 national economic 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 that came 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 plan to "pack" the Court with additional justices who shared his views. Although this plan was ultimately defeated, Roosevelt succeeded in breaking up the conservative voting block on the Court and instituting New Deal reforms.