Von Baumbach v. Bade , 9 Wis. 559 ( 1859 )

By the Court,

Dixon, C. J.

This case comes before the court upon an appeal from the judgment of the circuit court of Milwaukee county, rendered on the 10th day of July, 1858.

The facts, as they appear from the record, are these: On the 2d day of June, 1857, the defendant, Bade, executed and delivered to the plaintiff a bond, conditioned for the payment of six hundred and fifty dollars on the first day of March, 1858, with interest at the rate of twelve per cent, per annum ; and to secure the payment of the suni mentioned in the bond, with the interest, did, at the same time, together with his wife, execute and deliver to the plaintiff a mortgage conditioned for the payment of said sum of money and interest, according to the condition of the bond, by which he mortgaged to the plaintiff in fee, certain lands, situated in the city of Milwaukee. The mortgage also contained the usual covenant or agreement, that in case of a failure to pay the principal sum or any interest which might accrue thereon, or any part thereof, or to pay the taxes, &c; that the plaintiff might sell the same at public auction, pursuant to the provisions of the statute authorizing the foreclosure of mortgages by advertisement

Neither the principal nor interest having been paid, the plaintiff, on the 22d day of May, 1858, by the service of summons on the defendant, commenced his action to foreclose the mortgage. After the making of the mortgage and before the commencement of the action the legislature passed an act, chap 113, Laws of 1858, approved May 15th, and published May 18th, 1858, now repealed, the first section of which provided that, “ in all actions and proceedings at law thereafter commenced under that portion of chapter 34 of the Revised statutes of 1849, entitled, ‘ of the powers and proceedings of courts in chancery on bills for the foreclosure or satisfaction of mortgages/ the defendant or defendants in such actions or proceedings should have six months’ time to answer the bill of complaint filed therein after service of summons or publication of notice, as then required by law; and that no default should be entered in any such action, until after the expiration of such time, any law to the contrary notwithstanding.” The 2d section provided that “ whenever in such action or proceeding, judgment should be entered or an order made by the court for the sale of mortgaged premises, it should before [be for] the sale of said premises, upon six months’ notice of such sale, as thereinafter provided; and that in all cases where before the passage of the act, judgment had been rendered in any of the courts of this state, or in the district court of the United States for the district of Wisconsin, in an action to foreclose a mortgage or mortgages, or where an order or decree had been made by any such court, for the sale of mortgaged premises, the mortgaged premises should be sold only upon six months’ notice given of the time and place of such sale, which notice should be given in the manner provided in the act for giving notices of the sale of mortgaged premises.”

By the 3d section it was made the duty of the sheriff, deputy sheriff, or other officer appointed by the court, to make sale of the premises immediately after receiving a copy of the order for the sale of mortgaged premises, upon which such proceedings had been instituted, to publish, or cause to be published, notice of the sale of such premises, (unless otherwise ordered by the court,) describing the same therein, as then required by law, in some newspaper of general circulation in the county, in which such premises were situated, at least once in each month, for the period of six months before sale of the same; and if no newspaper should be printed or published in said county, then the same should be published in some newspaper in an adjoining county, for the time aforesaid. It was further declared by said section, that no sale of mortgaged premises, under foreclosure by action, should be valid, unless made in accordance with the provisions of said act.

On the 10th day of June following, the defendant, Bade, by his attorneys, gave notice of his appearance in the action. On the 25th, he was served with notice that on the 3d day of July, the plaintiff would apply to the court for judgment. On the 3d. day of July, an order of reference was made by the court to a referee, to ascertain and report the amount due to the plaintiff on the bond and mortgage. The referee made his report which was confirmed, and on the 10th day of July the usual judgment of foreclosure, and for the sale of the mortgaged premises was made, except that the sheriff was directed to give public notice of the time and place of sale by advertisement in a newspaper published in the city and county of Milwaukee once in each week for six successive weeks, and twice a week for the last three weeks of said six. From this judgment the defendant appealed, and insists that it is érroneous and ought to be reversed: 1, Because judgment by default was entered against him before the expiration of the six months, after service upon him of the summons, within which he claimed the right to answer the complaint: and 2, Because the mortgaged premises were ordered to be sold, upon six weeks’ instead of six months’ notice of the time and place of sale.

By the law, as it stood prior to the passage of the act above referred to, defendants in foreclosure, as in all other actions, had but twenty days, after service upon them of the summons, in the manner prescribed by law, in which to answer the complaint, and if no answer was made within that time, j udgment by default might have been taken. There was no statutory provision fixing the time or manner of sale in such cases. The practice, (regulated by rule of court in analogy to sales of real estate on execution,) was to sell on six weeks’ previous notice of the time and place of sales, unless the court otherwise ordered. Such was the law governing at the time of answering, and the entry of judgment by default; and such the practice of the courts, as to notice and time of sale, at the time the bond and mortgage in question were executed and delivered.

On the part of the' plaintiff it is contended that the circuit court properly disregarded the provisions of the act, and proceeded to render judgment and direct a sale of the mortgaged premises as if it had not been passed. His counsel insists that the act is unconstitutional and void, because its provisions in relation to existing contracts violate the first subdivision of § 10, Art. I, of the constitution of the United States; and the 12th section of the first article of the constitution of this state, which prohibit the passing of any law impairing the obligation of contracts. The determination of the case depends upon the correctness of the position here assumed by the counsel for the plaintiff. The circuit court sustained them in it. If they are right the judgment must be affirmed, if wrong it must be reversed. This is not the first case in which this question has been raised an'd discussed at the bar of this court. It has, during the present term, been argued in several cases, but as they were all actions pending at the time of the passage of the act, and as we felt compelled to hold, that the act did not apply to such actions, it became unnecessary and improper for us to consider it. Owing to the vast interests affected by the act, the variety of opinions entertained by different members of the profession in relation to its validity, the conflict of decision upon it in the several circuit courts, and the degree of dissatisfaction and opposition with which it was met in various quarters, the question becomes one of much importance.

The question, whether contracts derive their obligation solely from the acts and stipulations of the parties independently of the remedy given by law at the time they are made, to enforce them, or whether the obligation consists in part in the duty of performance, as it is then recognized and enforced by the laws, has been the source of much perplexing debate and doubt, and in its solution “ all the acumen which controversy can give to the human mind has been employed.” It is not now however either a new or an unsettled question. If it were, or if we were permitted to determine it with reference alone to the provisions of the constitution of this state, as it would have been had § 9, of Art. I, been omitted, then, however much I might be inclined to yield to the powerful logic of Chief Justice Marshall in delivering the opinion of the minority of the court in the case of Ogden vs. Sanders, 12 Wheaton, 322 ; and the forcible reasoning of Mr. Justice McLean dissenting, in the case of Bronson vs. Kinzie, 1 How., 311, and come with them to the conclusion that the former position is correct, and that the legislatures may vary, or repeal remedial laws at their pleasure; yet, as § 9, of Art. I, of the constitution of this state declares that “ every person is entitled to a certain remedy in the laws for all injuries or wrongs which he may receive in his person, property or character and as it has, with reference to the constitution of the United States, been authoritatively determined by the Supreme Court in the case last above cited, and in the subsequent case of McCracken vs. Hayward, 2 How., 608, that the remedy afforded by existing laws, enters into and forms a part of the obligation of contracts, I feel bound in the decision of the question, to be governed by the principles there established, and to treat it with reference to them. The doctrines there established are, so far as I can learn, the settled doctrines of all the states with reference to the same provisions in their own and the federal constitution. See. Morse vs. Gould, 1 Kernan, 281, and cases there cited.

The construction which has been thus put upon that clause of the constitution of the United States, which prohibits the passage of laws impairing the obligation of contracts, makes it equivalent, in its effect, to the section of the constitution of this state, to which I have last referred; and hence the rules which have been established in reference to the former, may be deemed proper guides for our action with respect to the latter. I shall therefore, whilst acknowledging the binding force of the latter as the paramount law of the state, discuss the question with reference to the former provision alone and the adjudications which have been made under it.

It being determined that the remedy, or laws for the enforcement of a contract existing at the time it is made, enter into it and form a part of its obligation, it might perhaps be supposed that any repeal, change, or amendment of such remedy, or laws, which in any manner delayed or rendered the enforcement of the contract less complete and effectual, would be unconstitutional and void. But such is not the case. All the authorities agree that it is within the power of the legislature to repeal, amend, change, or modify the laws governing proceedings in courts, both as to past and future contracts, so that they leave the parties a substantial remedy, according to the course of justice as it existed at the time the contract was made.

In the principal case of Bronson vs. Kinzie, supra, the court say: “ Undoubtedly a state may regulate, at pleasure, the modes of proceeding in its courts in relation to past contracts as well as future. It may, for example, shorten the period of time within which claims shall be barred by the statute of limitations. It may, if it thinks proper, direct that the necessary implements of agriculture, or the tools of the mechanic, or articles of necessity in household furniture, shall, like wearing apparel, riot be liable to execution on judgments. 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 to secure its citizens from unjust and harrassing litigation, and to protect them in those pursuits which are necessary to the existence or 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. 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 either case it is prohibited by the constitution.”

In accordance with the principles here laid down, it has been held that the legislature may enact a statute of limitation, by which the remedy upon existing contracts, if not prosecuted within a specified time, may be entirely defeated or cut off; that laws relieving debtors from imprisonment for debts previously contracted, and recording acts by which the older grant of real estate otherwise valid, is postponed and rendered inoperative and void as to the younger, if the prior conveyance is not recorded within a limited time, are constitutional and valid. Other laws of a similar nature might be named.

The result of the cases seems to be that the legislature may alter or vary existing remedies as it pleases, provided that in so doing their nature and extent is not so changed as materially to impair the rights and interests of the creditors. Practically this rule may seem vague and unsatisfactory, but it is the most certain general one of which the nature of the subject admits. The difficulty of applying its doctrines to particular cases, and of distinguishing between what are legitimate changes of the remedy, and those changes which, in the form of remedy, impair the right, has often suggested itself to the mind of courts when dealing with it. No such difficulty is experienced with regard to that kind of legislation by which the legislature, by attempting to change the terms or conditions of the contract itself, would relieve the parties from the performance of something which they had agreed to do, or compel them to do something which their contract did not require. So far, then, as the constitution of the United States reaches or affects alterations of the remedy, such alterations are, first, matters of sound discretion with the legislature, and, secondly, with the courts. The legislature having the power within the limits above stated, to control, at their pleasure, the remedy, are, in the first instance, to determine for themselves whether any change or modification of remedy is necessary, and if so, what change, and whether parties to contracts are left with a substantial remedy, according to the laws as they existed before such change, subject to a revision in the last particular by the courts.

In disposing of such a question, the greatest safety is in keeping strictly within the line of established precedents; and yet, as remedies are liable to be, and are varied in such a great variety of ways, but little light can be expected from former decisions.

In the case of Bronson vs. Kinzie, laws of 'the state of Illinois, passed subsequently to the execution of a mortgage, which declared that the equitable estate of the mortgagor should not be extinguished for twelve months after a sale, ■under a decree in chancery, and which prevented any sale unless two-thirds of the amount at which the property had. been valued by appraisers, should be bid therefor, were held to be unconstitutional and void. While the judgment obtained in a civil action, may for some purposes be considered a part of the remedy, it is not so for all; and the court say that the ■law did not act on the remedy merely, but upon the contract itself, by engrafting upon it new conditions unjust and in- ■ jurious to the mortgagee; that it declared,after the mortgaged premises were sold under the decree of a court of chancery, the purpose and object of which, according to the laws as ■they stood at the time the mortgage was executed, was to cut ■off the equity of redemption of the mortgagor, and those -claiming under him, subsequent, to the mortgage, that the equitable rights of the mortgagor and judgment creditors should not be extinguished, but should continue as to the mortgagor twelve, and as to creditors, fifteen months after the sale.; that it created in, and gave to the mortgagor and creditors, new .estates, which before its passage had no existence.

As to the prohibition to sell, unless two-thirds of the value of the mortgaged premises, as fixed by appraisers, was bid, they say that although it acts apparently upon the remedy and not directly upon the contract, yet its effect was to de-' prive the party of his pre-existing right to foreclose .the mortgage by a sale of the premises, and to impose upon him conditions which would frequently render any sale altogether impossible. The superadded condition that no sale should be made unless the sum specified was bid, was a denial altogether of the right to sell in cases where bids to that amount could not be obtained, and thus the obligation of the contract which could only be enforced by a sale of the premises, might be done away with and destroyed entirely.

The case of McCracken vs. Hayward, arose under the same statute laws of Illinois, and involved the same question last mentioned, except that it arose upon the sale of real estate upon an execution at law; the provisions of the statute as to valuation and bidding, having been applied as well to sáles of real estate on execution, as to sales under decrees in chancery. The court arrive at the same conclusion in this, as in the former case, and by a like process of reasoning.

In the late case of Curran vs. State of Arkansas, 15 How., 304, the doctrine that the remedy forms, in part, the obligation of the contract, is distinctly repeated and re-affirmed. Mr. Justice Curtis, in delivering the opinion of the court, says: “ But it by no means follows, because a law affects only the remedy, that it does not impair the obligation of the contract. The obligation of a 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 laws. And if the law is so changed that the means of enforcing this duty are materially impaired, the obligation of the contract no longer remains the same.”

In this case it was held that several acts of the legislature of the State of Arkansas, by which they withdrew from the Bank of the State of Arkansas, of which the state was sole stockholder, and which had become insolvent, all its assets, both real and personal, and appropriated them to the use of the state, were, as against the creditors of the bank, unconstitutional and void, for the reason that they entirely defeated the remedy, by leaving nothing out of which the debts could be satisfied. The learned judge, after adverting to the case of McCracken vs. Hayward, says: "The law now in question certainly presents a far more serious obstruction, for it withdraws the real property of the bank altogether from the reach of legal process, provides no substituted remedy, and leaves the creditor, as was truly said by the supreme court of Arkansas, iq its opinion in this case, in the condition in which his rights live but in grace, and his remedies in entreaty only.’ ”

These are all the decisions of the supreme court of the United States which have any direct bearing upon the question now before us. Does it fall within either, or the principles laid down in them ? I think -not. It seems to me that giving them all the force of authority, the legislation here complained of must be sustained. By it the remedy of the mortgagee, as it previously existed, is in all its parts substantially continued. No new conditions are engrafted. The form and mode of proceeding in his action, the nature and extent of his judgment, and of his rights under it remain the very same. It can be carried into as full and complete execution as at any former period. No clogs or impediments are thrown in the way, either of obtaining or finally executing the judgment, except in the matter of the time which is required for those purposes.

Is the time required by law for its accomplishment, so much of the essehce of every legal remedy, that it cannot be changed or extended by the legislature ? If so, then the legislature is shorn of a large share of its power to regulate and control remedies. And if so, then, I do not see how " a state may regulate at pleasure the modes of proceeding in its courts in relation to past contracts as well as future.” The power to limit or extend the time for answering, or within which any other step in an action shall be taken, is, and must be conceded. It has been oftener exercised and less questioned than any branch of legislative power touching remedies. The only limit or qualification to its exercise is, that the legislature shall confine their action within the bounds of reason and justice, and that they shall not so prolong the time within which legal proceedings are to be had, as to render them futile and useless in the hands of the creditor, or seriously impair his rights or securities. Within these limits the legis- ‘ lature may safely exercise this power in such manner as they may deem most beneficial to the policy and internal economy of the state, and the interests of all its citizens.

And although such changes are, in general exceedingly unwise and unjust, yet if from sudden and unlooked for reverses or misfortune, or any other cause, the existing remedies become so stringent in all or a particular class of actions, that great and extensive sacrifices of property will ensue, without benefit to the creditor, or relief to the debtor, a relaxation of the remedies, becomes a positive duty which the state owes to its citizens. The general welfare of the community is committed to its care and keeping, and on fundamental principles of justice, it is bound by reasonable regulations to promote and protect it. In passing upon questions like the present, courts must look behind the statute itself, and take notice of the causes which led to its enactment, for otherwise they would be unable to determine whether its regulations are reasonable or not, or were demanded by the state of the times or the financial situation of the country. By so doing in the present instance, I think it can be clearly demonstrated that the passage of the laws before us, was an exercise of sound discretion on the part of the legislature. But independently of these, or like considerations, and comparing the remedy as it existed before the passage of the law, with it as it was afterwards, I cannot say that the delay occasioned by it is so great, or so unreasonable, or that it so obstructs or embarrasses proceedings for foreclosure on the part of the mortgagees, as to make it, under any circumstances, unconstitutional and void. A complete and substantial remedy was left them, according to the course of justice, as it was administered before its passage, the only difference being that it was less expeditious, but not so much so as materially to affect or diminish their rights. All must admit, I think, that its unconstitutionality is doubtful, and in such cases it is a well settled rule of courts to resolve doubts in favor of the validity of the laws.

I am of opinion, therefore, that the judgment of the circuit court should be reversed, and the cause remanded for further proceedings.