Des Moines J.S.L. Bk. v. Nordholm

On January 12, 1925, the defendants-appellees, David T. Nordholm and Elsie Marie Nordholm, husband and wife, executed a note for $12,000 to the plaintiff-appellant, Des Moines Joint Stock Land Bank of Des Moines, a corporation. The note was payable according to an amortized plan of $390 on the first days of February and August of each year, until sixty-eight semiannual payments were made. Then a final payment of $388.92 was to be payable on August 1, 1959. Interest at the rate of 5 1/2 per cent per annum, payable semiannually, was to be paid on all deferred payments. In order to secure the note the appellees executed to the appellant a mortgage on certain land in Boone county, Iowa. Although the record is indefinite on the subject, yet it appears that some, if not all, of the installment payments were met by the appellees before August 1, 1931. It definitely appears in the record that the appellees failed to pay the amortized installment of $390 due on August 1, 1931. After the appellees' default in that payment, the appellant, in accordance with the terms of the note and mortgage, declared the entire unpaid portion of the indebtedness due and payable.

Accordingly, on September 8, 1931, the appellant commenced a suit in equity in the district court of Iowa, in and for Boone county, to recover judgment on the note and obtain the foreclosure of the mortgage securing the same. So, on March 25, 1932, the foreclosure suit resulted in a judgment of $12,041.49 in the appellant's favor against the appellees. As a part of that judgment, the mortgage was foreclosed on the Boone county real estate. An execution issued on the judgment, and on May 6, 1932, the sheriff of Boone county offered the real estate for sale. At the sale, the appellant bid $11,000 for the property and the sheriff sold the same to it for that amount. Therefore a deficiency judgment remained. To evidence the appellant's purchase of the real estate at that execution sale, the sheriff, on May 6, 1932, issued to it a sheriff's certificate of sale. Under section 11774 of the 1931 Code, then applicable, the appellees had one year in which to redeem the Boone county land from the execution sale. That section reads:

"The debtor may redeem real property at any time within one year from the day of sale, and will, in the meantime, be entitled to the possession thereof; and for the first six months thereafter such right of redemption is exclusive."

When that statute, therefore, is applied to the facts in the case at bar, the appellees could have redeemed the land from the execution sale at any time within one year from May 6, 1932. If the appellees did not redeem within that period, however, their right of redemption would have terminated and the appellant would have been entitled to a sheriff's deed for the land.

While the year of redemption was passing but before it had passed, the legislature of Iowa, on March 18, 1933, enacted chapter 179 of the Acts of the Regular Session of the Forty-fifth General Assembly. This chapter of the Session Laws is popularly known as a moratorium extending the period of redemption. So far as material, the act provides:

"Section 1. In any action, for a real estate foreclosure of a mortgage or a deed of trust, which has been commenced in any of the courts, and in which a decree has been or may hereafter be entered, but the redemption period, as now provided, has not expired, upon application of the owner or owners of such real estate, the court shall, unless upon hearing upon said application good cause is shown to the contrary, order that no sheriff's deed shall be issued until March 1, 1935, and in the meantime the such owner or owners may redeem such property, and are entitled to possession thereof.

"Provided, the court having jurisdiction of such foreclosure action shall order and direct, that there shall be applied from the income of said real estate so much thereof as is just and equitable, toward the payment of taxes accruing thereon during the period of redemption extension as provided by this act, and any balance distributed as the court may direct, and shall make such provision for the preservation of said property as will be just and equitable during the redemption period, and to this end the court may, in his discretion, in order to carry out the foregoing powers, appoint a receiver of said real estate, and invest said receiver with such powers as the court may find will be just and equitable to all parties to the proceeding.

"Providing, that in the event the said owner or owners do not comply with the orders of the court, the order for extension of redemption period as authorized by this act shall, on proper hearing, be set aside by order of the court.

"Sec. 2. During the period of extension of redemption, as herein provided, the owner or owners of said real estate shall have the exclusive right to redeem, and the rights of redemption of subsequent mortgagees, junior lienholders, and creditors shall terminate within the period as by law now provided, the provisions of this act notwithstanding.

"Sec. 3. During the period of extension of redemption, as herein provided, the clerk of the district court of the county in which such foreclosure action is brought, shall receive and disburse the income from said real estate, as the court shall order as just and equitable.

"Sec. 4. Any provisions of any law or laws now in force, which are in conflict with the provisions of this act, are hereby suspended until March 1, 1935.

"Sec. 5. From and after March 1, 1935, this act shall cease to be in force.

"Sec. 6. If any court of competent jurisdiction finds that any word, phrase, clause, sentence, or part of this act is unlawful it shall not invalidate any other part of this act."

The act carried a publication clause and went into effect immediately.

On April 8, 1933, David T. Nordholm, one of the appellees, filed an application in the district court of Boone county for an extension of the period of redemption on the said real estate until March 1, 1935. In that application, the said appellee agreed to submit to any order of court made "in reference to the income of said real estate during the redemption period as provided by law." A notice of that application for the extension was duly served upon the appellant, and in response to that notice the appellant appeared and filed a resistance to the application for an extension of the time of redemption.

Three objections to the extension are named in the appellant's resistance to the application and referred to in its argument on this appeal. These objections are: First, that chapter 179, Acts of the Regular Session of the Forty-fifth General Assembly, "is unconstitutional because it impairs the obligation of the mortgage contract originally given to appellant, contrary to section 10, article I of the Constitution of the United States, and article I, section 21 of the Constitution of the State of Iowa"; second, that said chapter 179 "is unconstitutional because it deprives appellant of vested property rights without due process of law as required by the Fourteenth Amendment to the Constitution of the United States and article I, section 9, of the Constitution of the State of Iowa"; and, third, that such chapter "cannot be sustained as constitutional on the theory that it is a valid exercise of the police power of the state of Iowa."

The application for the extension, and the resistance thereto, were submitted to the district court on April 21, 1933, and on that date the district court continued the period of redemption until March 1, 1935. As a part of the judgment extending the period of redemption, the district court also provided: First, "that the appellees shall remain in possession of the premises" during the extended period of redemption. Second, but that as a safeguard to that provision of the judgment, the district court declared that the "possession of the defendants * * * shall be conditioned upon the faithful compliance with" chapter 179 enacted by the Forty-fifth General Assembly, "and with the orders of this court (district court) and with the terms of the written leases to be hereinafter executed. Said leases when executed shall provide for a reasonable rental of the premises described in the foreclosure action, which rental shall be one-half of all corn and two-fifths of all small grain raised on said premises, to be delivered to market free of charge, and $4.00 per acre per year for all pasture and hay land, payable at such times and in such installments as said written leases shall more particularly provide. Said leases may be made upon such other terms, and to contain such other and further provisions as are usual and customary in the community in which said farm is located. Said lease shall be made from year to year, beginning March 1, 1933, and terminating March 1, 1935, and shall be upon the rental terms herein provided unless otherwise ordered by the (district) court, and the statutes governing landlord's liens, and enforcement thereof shall in all respects be applicable to such leasehold. That the cash rental provided in said lease shall be paid to the Clerk of the (district) court when the same or a part thereof matures and the proceeds from the sale of the crops raised on said real estate shall be paid to the clerk of (the district) court when the sale thereof is ordered by an agent of (the district) court. Said cash rental and the proceeds of corn and small grain sold shall be distributed by the clerk of (the district) court in the following order:

(a) In the payment of taxes beginning with delinquent taxes, if any;

(b) In the payment of insurance;

(c) In the payment of reasonable and necessary costs of maintenance and upkeep;

(d) Balance, if any, to be paid to the owner of the sheriff's certificate (the appellant)"; and, third, "that Homer Busby, of Boone," is appointed a receiver "to act as the agent of (the district) court for the enforcement of (the) order and of the statute aforesaid." "As such it shall be his duty to negotiate, execute, and report to (the district) court written leases for the use and occupancy of said premises during the period of this continuance, and extension, giving the said defendant David T. Nordholm (appellee) the first right to rent the same under the terms above prescribed. It shall further be his duty to see that said lease is in all respects faithfully observed, that the rents are promptly and faithfully paid to the clerk, as above provided, and that such rents are applied as herein specified. It shall be his duty from time to time to report his doings to the (district) court, to apply from time to time for the orders and directions of (the district) court, and especially to report all violations hereof or dereliction in the complying with the provisions hereof. He shall at all times be the representative, servant, and agent of (the district) court, and as such shall at all times keep the (district) court well informed respecting said premises and the carrying out of the proposed lease and the provisions of this order, and may make his reports and procure orders and directions thereon in term time or in vacation."

From the judgment thus entered the plaintiff appeals.

I. This court is confronted first with the appellant's argument that chapter 179, Acts of the Regular Session of the Forty-fifth General Assembly of Iowa, above quoted, is unconstitutional when applied to the mortgage contract under consideration, because the same is in conflict with section 10, article I, of the Constitution of the United States. That provision of the Federal Constitution is:

"No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility." (Italics supplied.)

It then is incumbent upon this court to determine whether the Iowa moratorium providing for the extension of the time of redemption under mortgage execution sales is, as applied to the facts in the case at bar, in conflict with the above-quoted provision of the United States Constitution. When not speaking of the reserved power of the state to cope with an emergency arising out of a great financial crisis following a war, the Supreme Court of the United States, in Barnitz v. Beverly, 163 U.S. 118, 16 S. Ct. 1042, 1045, 41 L. Ed. 93, said, concerning a Kansas statute extending the period of redemption after a mortgage foreclosure:

"`At all events, the decisions of this court are numerous that the laws which prescribe the mode of enforcing a contract, which are in existence when it is made, are so far a part of the contract that no changes in these laws which seriously interfere with that enforcement are valid, because they impair its obligation, within the meaning of the constitution of the United States.' * * * `If such rights may be added to the original contract by subsequent legislation, it would be difficult to say at what point they must stop. An equitable estate in the premises may, in like manner, be conferred upon others; and the right to redeem may be so prolonged as to deprive the mortgagee of the benefit of his security, by rendering the property unsalable for anything like its value. * * * Any such modification of a contract by subsequent legislation, against the consent of one of the parties, unquestionably impairs its obligations, and is prohibited by the constitution.' * * * We hold that a statute which authorizes the redemption of property sold upon foreclosure of a mortgage, where no right of redemption previously existed, or which extends the period of redemption beyond the time formerly allowed, cannot constitutionally apply to a sale under a mortgage executed before its passage." (Italics supplied.) Bronson v. Kinzie, 1 How. 311, 11 L. Ed. 143; McCracken v. Hayward, 2 How. 608, 11 L. Ed. 397; Gantly's Lessee v. Ewing, 3 How. 707, 11 L. Ed. 794; Howard v. Bugbee, 24 How. 461, 16 L. Ed. 753; Gunn v. Barry, 15 Wall. 610, 21 L. Ed. 212; Walker v. Whitehead, 16 Wall. 315, 21 L. Ed. 357; Edwards v. Kearzey, 96 U.S. 595, 24 L. Ed. 793; Bradley v. Lightcap,195 U.S. 1, 24 S. Ct. 748, 49 L. Ed. 65. Many other cases might be cited to the same effect, but the foregoing will indicate the holdings of the Supreme Court of the United States on the general subject.

Regardless of the declaration in the Constitution of the United States that the state shall pass no law impairing the obligation of contracts, there nevertheless is reserved to the states their police power and the power to sustain their sovereignty and government and their existence as states. Nebbia v. People of the State of New York, 54 S. Ct. 505, 78 L. Ed. 563, 89 A.L.R. 1469. Such police power "is an exercise of the sovereign right of the government to protect the lives, health, morals, comfort, and general welfare of the people, and is paramount to any rights under contracts between individuals." Home Building Loan Assn. v. Blaisdell, 290 U.S. 398, 54 S. Ct. 231, 78 L. Ed. 255, 88 A.L.R. 1481; Nebbia v. People of the State of New York, supra. "The question is not whether the legislative action affects contracts incidentally, or directly or indirectly, but whether the legislation is addressed to a legitimate end and the measures taken are reasonable and appropriate to that end." Home Building Loan Assn. v. Blaisdell, supra. If the state legislation "is addressed to a legitimate end and the measures taken are reasonable and appropriate to that end", all contracts are made subject to the legislation. Home Building Loan Assn. v. Blaisdell (290 U.S. 398), supra.

So, while it is necessary for each state to obey the mandate in the Constitution of the United States against the enactment of legislation impairing the obligation of contract, yet the state does not impair the obligation of contract sought to be protected by that federal constitutional provision when it enacts legislation within its police power and within its reserved power to protect its sovereignty, its government, its people, and their welfare against exigencies that may arise in a great emergency. Nebbia v. People of the State of New York (54 S. Ct. 505), supra; Home Building Loan Association v. Blaisdell (290 U.S. 398), supra; Block v. Hirsh,256 U.S. 135, 41 S. Ct. 458, 65 L. Ed. 865, 16 A.L.R. 165; Marcus Brown Holding Co., Inc., v. Feldman, 256 U.S. 170, 41 S. Ct. 465, 65 L. Ed. 877; Edgar A. Levy Leasing Co., Inc., v. Siegel,258 U.S. 242, 42 S. Ct. 289, 66 L. Ed. 595. While ordinarily the extension of the period of redemption would amount to an impairment of the obligation of the mortgage contract, in contravention of the federal constitutional provision, yet, within the limits above suggested, there may be an extension of such period of redemption without encroaching upon the federal constitutional prohibition. This thought is demonstrated in the opinion of the Supreme Court of the United States, recently adopted in the Minnesota mortgage cases. Home Building Loan Association v. Blaisdell (290 U.S. 398), supra. The Minnesota legislature, on April 18, 1933, approved the so-called Minnesota mortgage moratorium law. Under that law, the mortgagor, under stated conditions, could obtain an extension of the time of redemption after the foreclosure of the mortgage and the execution sale thereunder. John H. Blaisdell and Rosella Blaisdell, debtors, made application, under the Minnesota Moratorium law, for such extension. It was denied them by the trial court on the theory that the Minnesota moratorium act was unconstitutional. They appealed to the Supreme Court of Minnesota. That court allowed the extension (249 N.W. 334, 86 A.L.R. 1507) and overruled the judgment of the trial court. When so doing, the Supreme Court of Minnesota sustained the constitutionality of the Minnesota law. An appeal was taken from the Supreme Court of Minnesota to the Supreme Court of the United States. In that case the Supreme Court of the United States, speaking through Mr. Chief Justice Hughes, stated the facts as follows:

"Appellant (the Home Building and Loan Association) contests the validity of chapter 339 of the Laws of Minnesota of 1933, p. 514, approved April 18, 1933, called the Minnesota Mortgage Moratorium Law, as being repugnant to the contract clause (Article I, sec. 10) and the due process and equal protection clauses of the Fourteenth Amendment of the Federal Constitution. The statute was sustained by the Supreme Court of Minnesota (249 N.W. 893), and the case comes here on appeal.

"The act provides that, during the emergency declared to exist, relief may be had through authorized judicial proceedings with respect to foreclosures of mortgages, and execution sales, of real estate; that sales may be postponed and periods ofredemption may be extended. (Italics supplied.) * * * The act declares that the various provisions for relief are severable; that each is to stand on its own footing with respect to validity. * * * We are here concerned with the provisions of Part One, Section 4, authorizing the district court of the county to extend the period of redemption from foreclosure sales `for such additional time as the court may deem just and equitable.' * * * The extension is to be made upon application to the court, on notice, for an order determining the reasonable value of the income on the property involved in the sale, or, if it has no income, then the reasonable rental value of the property, and directing the mortgagor `to pay all or a reasonable part of such income or rental value, in or toward the payment of taxes, insurance, interest, mortgage * * * indebtedness at such times and in such manner' as shall be determined by the court. The section also provides that the time for redemption from foreclosure sales theretofore made, which otherwise would expire less than thirty days after the approval of the act, shall be extended to a date thirty days after its approval, and application may be made to the court within that time for a further extension as provided in the section. By another provision of the act, no action, prior to May 1, 1935, may be maintained for a deficiency judgment until the period of redemption as allowed by existing law or as extended under the provisions of the act has expired. Prior to the expiration of the extended period of redemption, the court may revise or alter the terms of the extension as changed circumstances may require. * * *

"Invoking the relevant provision of the statute, appellees applied to the district court of Hennepin county for an order extending the period of redemption from a foreclosure sale. Their petition stated that they owned a lot in Minneapolis which they had mortgaged to appellant; that the mortgage contained a valid power of sale by advertisement, and that by reason of their default the mortgage had been foreclosed and sold to appellant on May 2, 1932, for $3,700.98; that appellant was the holder of the sheriff's certificate of sale; that, because of the economic depression, appellees had been unable to obtain a new loan or to redeem, and that, unless the period of redemption were extended, the property would be irretrievably lost; and that the reasonable value of the property greatly exceeded the amount due on the mortgage, including all liens, costs, and expenses."

After stating the nature of the action in the manner and way above indicated, the Supreme Court of the United States, following a thorough and exhaustive discussion of the constitutional aspect of the Minnesota moratorium law, concluded as follows:

"1. An emergency existed in Minnesota which furnished a proper occasion for the exercise of the reserved power of the state to protect the vital interests of the community. The declarations of the existence of this emergency by the Legislature and by the Supreme Court of Minnesota cannot be regarded as a subterfuge or as lacking in adequate basis. * * * The finding of the Legislature and state court has support in the facts of which we take judicial notice. * * * It is futile to attempt to make a comparative estimate of the seriousness of the emergency shown in the leasing cases from New York and of the emergency disclosed here. The particular facts differ, but that there were in Minnesota conditions urgently demanding relief, if power existed to give it, is beyond cavil. As the Supreme Court of Minnesota said (249 N.W. 334, 337 [86 A.L.R. 1507]), the economic emergency which threatened `the loss of homes and lands which furnish those in possession the necessary shelter and means of subsistence' was a `potent cause' for the enactment of the statute.

"2. The legislation was addressed to a legitimate end; that is, the legislation was not for the mere advantage of particular individuals but for the protection of a basic interest of society.

"3. In view of the nature of the contracts in question — mortgages of unquestionable validity — the relief afforded and justified by the emergency, in order not to contravene the constitutional provision, could only be of a character appropriate to that emergency, and could be granted only upon reasonable conditions.

"4. The conditions upon which the period of redemption is extended do not appear to be unreasonable. The initial extension of the time of redemption for thirty days from the approval of the act was obviously to give a reasonable opportunity for the authorized application to the court. As already noted, the integrity of the mortgage indebtedness is not impaired; interest continues to run; the validity of the sale and the right of a mortgagee-purchaser to title or to obtain a deficiency judgment, if the mortgagor fails to redeem within the extended period, are maintained; and the conditions of redemption, if redemption there be, stand as they were under the prior law. The mortgagor during the extended period is not ousted from possession, but he must pay the rental value of the premises as ascertained in judicial proceedings and this amount is applied to the carrying of the property and to interest upon the indebtedness. The mortgagee-purchaser during the time that he cannot obtain possession thus is not left without compensation for the withholding of possession. Also important is the fact that mortgagees, as is shown by official reports of which we may take notice, are predominantly corporations, such as insurance companies, banks, and investment and mortgage companies. These, and such individual mortgagees as are small investors, are not seeking homes or the opportunity to engage in farming. Their chief concern is the reasonable protection of their investment security. It does not matter that there are, or may be, individual cases of another aspect. The Legislature was entitled to deal with the general or typical situation. The relief afforded by the statute has regard to the interest of mortgagees as well as to the interest of mortgagors. The legislation seeks to prevent the impending ruin of both by a considerate measure of relief. * * *

"Although the courts would have no authority to alter a statutory period of redemption, the legislation in question permits the courts to extend that period, within limits and upon equitable terms, thus providing a procedure and relief which are cognate to the historic exercise of the equitable jurisdiction. If it be determined, as it must be, that the contract clause is not an absolute and utterly unqualified restriction of the state's protective power, this legislation is clearly so reasonable as to be within the legislative competency.

"5. The legislation is temporary in operation. It is limited to the exigency which called it forth. While the postponement of the period of redemption from the foreclosure sale is to May 1, 1935, that period may be reduced by the order of the court under the statute, in case of a change in circumstances, and the operation of the statute itself could not validly outlast the emergency or be so extended as virtually to destroy the contracts.

"We are of the opinion that the Minnesota statute as here applied does not violate the contract clause of the Federal Constitution. Whether the legislation is wise or unwise as a matter of policy is a question with which we are not concerned."

So far as material, the Minnesota mortgage moratorium law considered in the Home Building Loan Association case (290 U.S. 398), supra, by the Supreme Court of the United States, is not materially different from chapter 179, Acts of the Forty-fifth General Assembly of Iowa, regular session. Both statutes were enacted for emergency purposes. Each statute provides for a limitation of the moratorium. Also each statute provides for compensation for the mortgagee during the period of redemption. It is said, however, that the Iowa statute does not provide for reasonable compensation to the mortgagee. When the Iowa act is fairly read and due significance given to all of its provisions, it appears beyond peradventure of doubt that the act contemplates and provides for at least a reasonable rental of the mortgaged premises during the year of redemption. The act then authorizes the payment of taxes during the period concerned. Then there is a provision for using a part of the compensation for the preservation of the property. Also it is provided in the act that the balance of the rent shall be distributed "as the court may direct." According to Webster's New International Dictionary, the word "distribute" means: "To divide among several or many." A synonym for the word "distribute" is the word "divide". Webster's New International Dictionary.

To whom is the rent to be distributed under the act? So far as the act contemplates, there are only two persons, generally speaking, interested in such rentals. These persons are: First, the mortgagee; and, second, the mortgagor. This rent, under the act, is to be equitably distributed. There could be no equitable distribution under the act unless the rentals were given to the mortgagee to the extent that the same would reasonably compensate it for its property involved. Any other distribution of the rentals would not be equitable. It is only an equitable distribution of the rentals that is contemplated by the act. Consequently it is presupposed by the act, and, in fact, enjoined upon the district court, that it shall make such equitable distribution of the rents to the mortgagee as will compensate it under the circumstances. If the rentals, in any event, would amount to a sum that would more than compensate the mortgagee under the circumstances, then the balance equitably could be delivered to the mortgagor. Compensation, therefore, to the mortgagee is amply provided for by the Iowa Moratorium Act. Therefore, the legislature did not leave it to the courts to say whether it would be equitable to compensate the mortgagee. This is true because the act itself contemplates and provides, in effect, that equity demands such compensation.

The crisis which brought forth the Minnesota moratorium statute is similar to the crisis which brought forth the Iowa moratorium statute. Minnesota and Iowa are geographically located side by side. Speaking generally, the economic conditions that affect the citizens of one state likewise affect the citizens of the other. Near the time when the Iowa legislature enacted chapter 179, Laws of the Forty-fifth General Assembly, it also enacted chapter 182 of the same laws. That law provides for the continuance of foreclosure cases then pending in the various trial courts of the state. In section 1 of chapter 182 of those laws, the legislature declared:

"The governor of the state of Iowa having declared that an emergency now exists, and the general assembly having determined that such emergency does exist, which is general throughout the state, and that the safety and future welfare of the state as a whole is endangered thereby, the general assembly acting under the power reserved by the people of Iowa, does hereby enact the following:" etc.

Although we are not bound by that legislative finding, yet such finding is entitled to great consideration by us. Many other states of the Union also found that the emergency existed. Manifestly the emergency referred to in chapter 182 equally applied when chapter 179 was enacted. Most, if not all, banks, both state and national, and great insurance companies asked for and obtained from the legislature, moratoriums. The moratorium obtained by the insurance companies prevented policyholders from borrowing on their policies or receiving the cash surrender values under their contracts of insurance. Likewise depositors were prevented from withdrawing money from the banks under their contracts of deposit. Hundreds of mortgagors were threatened to be dispossessed and thrown out upon the highways of the state. These mortgagors, were it not for the moratorium, would have lost their lands and their homes. A material portion of the taxes could not be collected, and the very operations of the state government itself were threatened. Every emergency which existed in Minnesota existed in Iowa at the time in question, and the basis for sustaining the Minnesota act likewise exists in Iowa for the sustaining of the act now under consideration. The Minnesota act provided for the extension of the time of redemption, as does the Iowa act. That provision of the Minnesota act was sustained by the Supreme Court of the United States, as shown by Home Building Loan Association v. Blaisdell (290 U.S. 398), supra. So far as material, there is no difference between the Minnesota act in that respect and the Iowa act relating to the same matter.

It was said by the Minnesota court, and likewise indicated by the Supreme Court of the United States, in the Home Building Loan Association case (290 U.S. 398), supra, that the emergency which justified the calling forth of the state's power to enact the Moratorium Act still exists. Necessarily, if the emergency exists in Minnesota, it must likewise exist in Iowa because the general financial conditions of the two states are very similar. Aside from that, it is obvious that the emergency condition does still exist in Iowa. While some of the banks have been opened, yet many of them still are closed. Generally speaking, the emergency which called forth the moratorium has not passed.

Wherefore, it is apparent that the Iowa Moratorium Act under consideration is not unconstitutional because in conflict with section 10, article I, of the Constitution of the United States. Consequently it was proper for the district court of Boone county to extend the time of redemption to March 1, 1935, but that judgment must be modified to the extent that if the emergency passes before that time, then the appellant shall have the right to have the order for the extension changed. See Home Building Loan Association v. Blaisdell (290 U.S. 398, 54 S. Ct. 231), supra. As said in the Home Building Loan Association case:

"The Court (in the rent cases) also decided that, while the declaration by the Legislature as to the existence of the emergency was entitled to great respect, it was not conclusive; and, further, that a law `depending upon the existence of an emergency or other certain state of facts to uphold it may cease to operate if the emergency ceases or the facts change even though valid when passed.' It is always open to judicial inquiry whether the exigency still exists upon which the continued operation of the law depends." See same case.

II. Next it is argued by the appellant that the statute in question, when applied to the issues in this case, is unconstitutional because it is in conflict with section 21 of article I of the Constitution of Iowa. That section of the Iowa constitution provides:

"No bill of attainder, ex post facto law, or law impairing the obligation of contracts, shall ever be passed."

The suggestion has been made that the above-quoted section of the Iowa constitution must be considered with section 1 of article XII of the same Constitution. According to that section:

"This Constitution shall be the supreme law of the State, and any law inconsistent therewith, shall be void."

Although section 1 of article XII is not pleaded by the appellant as a reason for the unconstitutionality of the legislative act in question, yet no doubt that section may be considered with section 21 of article I, when determining the scope of the last-named section of the Iowa constitution. Our task, then, is to determine whether the Iowa law in question is in conflict with section 21 of article I of the Iowa constitution, because it provides for the extension of the time of redemption after execution sale under a mortgage foreclosure.

Speaking generally upon the subject, this court said in Malony v. Fortune et ux., 14 Iowa 417, reading on page 420:

"When the contract sued on was made, no such right of redemption existed. Section 10 of the Federal Constitution prohibits the passage of any laws by any of the States impairing the obligation of contracts. Article I, section 21, of our State Constitution has a like prohibition against such legislation. The passage of relief laws (during the Civil War) — designed to be retroactive in their operation — in so many of the States, has engaged the attention of not only the State, but also of the Federal Courts, in relation to their constitutionality. The argument against the validity of such laws, repeated in so many decisions, is familiar to the legal mind. It is useless, at this time, to undertake to refer in detail to the reported cases in which this question has been so thoroughly discussed. * * * We only add that in our opinion this act of the Legislature in so far as it affects contracts made prior to its passage is invalid."

That case did not consider the reserved or police power of the state. Likewise that case was decided before the Supreme Court of the United States handed down its opinions in Home Building Loan Association v. Blaisdell (290 U.S. 398, 54 S. Ct. 231), supra; Block v. Hirsh (256 U.S. 135, 41 S. Ct. 458), supra; Marcus Brown Holding Co., Inc., v. Feldman (256 U.S. 170, 41 S. Ct. 465), supra; Edgar A. Levy Leasing Co., Inc., v. Siegel (258 U.S. 242, 42 S. Ct. 289), supra. An historical research will reveal that the prohibition against the impairment of the obligation of contracts, found in the Iowa Constitution, originated in section 10, article I, of the Constitution of the United States. See dissenting opinion in Home Building Loan Association v. Blaisdell (290 U.S. 398, 54 S. Ct. 231), supra. Obviously the prohibition was embodied in the Constitution of Iowa in obedience to, and in conformity with, a similar provision in the Constitution of the United States. In view of the historical relationship of these clauses in the Constitution of the United States and in the Constitution of Iowa, it is apparent that there should be a similarity in construction. The purpose and intent of the contract clause in the Constitution of the United States should be carried out by this court in interpreting the similar provision in the Constitution of Iowa. There is no doubt that this court has the power, in interpreting the Constitution of Iowa, to reach a conclusion on the contract clause different from that reached by the Supreme Court of the United States when interpreting a similar clause of the Federal Constitution; that is to say, so long as the Iowa Constitution, as interpreted by this court, does not violate any provision of the Federal Constitution, there will be no complaint from the federal government.

But assuming that to be true, good policy and a desired consistency between the two Constitutions rather dictate that the interpretation of the two clauses be similar. Such consistency in interpretation will accomplish consistency in operation. Uniformity in the construction of these contract clauses is most desirable, if not absolutely necessary. So when Malony v. Fortune (14 Iowa 417), supra, is read in connection with Barnitz v. Beverly (163 U.S. 118), supra, and other cases of that kind, it is apparent that those cases apply generally, but do not have application when the principles announced in the following cases apply: Home Building Loan Association v. Blaisdell (290 U.S. 398), supra; Block v. Hirsh (256 U.S. 135), supra; Marcus Brown Holding Co., Inc., v. Feldman (256 U.S. 170), supra; Edgar A. Levy Leasing Co., Inc., v. Siegel (258 U.S. 242), supra.

Under the reserved power of this state, it may exercise that power which is generally known as the police power. Contracts are made and enforced subject to the police power of the state. "Societies exercise a positive control as well over the inception, construction and fulfillment of contracts, as over the form and measure of the remedy to enforce them." Ogden v. Saunders, 12 Wheat. 213, 286, 354, and 355, quoted in Home Building Loan Association v. Blaisdell, supra. It was said in Home Building Loan Association v. Blaisdell, supra:

"Emergency does not create power. Emergency does not increase granted power or remove or diminish the restrictions imposed upon power granted or reserved. * * * While emergency does not create power, emergency may furnish the occasion for the exercise of power."

What power, then, is reserved under the contract clause of the state Constitution?

The Ninth Amendment to the Constitution of the United States provides:

"The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people."

And Amendment 10 to the Constitution of the United States continues with the following reservation: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

Section 25, article I, of the state Constitution declares: "This enumeration of rights shall not be construed to impair or deny others, retained by the people."

Such reserved power has relation to particular conditions. Therefore, the power cannot be exercised except in response to the proper conditions. Of course, under this provision of the state Constitution, contracts cannot be destroyed nor can the remedy to enforce them be taken away. On the other hand, the appellant in the case at bar could not enjoy and enforce its contract if it were not for the existence of the government which furnishes the remedy for the enforcement. If that government is destroyed, it cannot afford a remedy to enforce the obligation of a contract. Such state government is necessary to sustain the state Constitution. Without such government, the state Constitution would be ineffective indeed. Plainly, therefore, the contract clause of the state Constitution as well as that of the Federal Constitution presupposes that the state, regardless of the clause, may maintain and sustain itself. What is here said in reference to the contract clause of the Iowa Constitution likewise applies to section 1, article XII, of that Constitution. Obviously the Constitution would not be the supreme law of the land, as provided in section 1 of article XII, if there is no government to sustain the Constitution as such supreme law. Nebbia v. People of the State of New York (54 S. Ct. 505), supra. During its discussion in the Nebbia case, supra, the Supreme Court of the United States said:

"But neither property rights nor contract rights are absolute; for government cannot exist if the citizen may at will use his property to the detriment of his fellows, or exercise his freedom of contract to work them harm. Equally fundamental with the private right is that of the public to regulate it in the common interest. * * *" Again the Supreme Court of the United States, in the Nebbia case, supra, stated:

"Thus has this court from the early days affirmed that the power to promote the general welfare is inherent in government. Touching the matters committed to it by the Constitution the United States possesses the power, as do the states in theirsovereign capacity touching all subjects jurisdiction of which isnot surrendered to the federal government, as shown by the quotations above given (in the Nebbia opinion)." (Italics supplied.)

Among the reserved powers of the state under the contract clause must be such as are "vested in it for the promotion of the common weal" and included in such reserved powers is the sovereign right "to protect the lives, health, morals, comfort, and general welfare of the people." Home Building Loan Association v. Blaisdell (290 U.S. 398), supra; Block v. Hirsh (256 U.S. 135), supra; Marcus Brown Holding Co., Inc., v. Feldman (256 U.S. 170), supra; Edgar A. Levy Leasing Co., Inc., v. Siegel (258 U.S. 242), supra. Contracts are necessarily made and enforced subject to such reserved power of the state.

The Supreme Court of the United States, in Lawton v. Steele,152 U.S. 133, said concerning this power:

"Under this power it has been held that the state may order the destruction of a house falling to decay, or otherwise endangering the lives of passers-by; the demolition of such as are in the path of a conflagration; the slaughter of diseased cattle; the destruction of decayed or unwholesome food; the prohibition of wooden buildings in cities; the regulation of railways and other means of public conveyance, and of interments in burial grounds; the restriction of objectionable trades to certain localities; the compulsory vaccination of children; the confinement of the insane or those afflicted with contagious diseases; the restraint of vagrants, beggars, and habitual drunkards; the suppression of obscene publications and houses of ill fame; and the prohibition of gambling houses and places where intoxicating liquors are sold. Beyond this, however, the state may interfere wherever the public interests demand it, and in this particular a large discretion is necessarily vested in the legislature to determine, not only what the interests of the public require, but what measures are necessary for the protection of such interests." (Italics supplied.) To the same effect, see Loftus v. Department of Agriculture, 211 Iowa 566, 232 N.W. 412.

In Manigault v. Springs, 199 U.S. 473, 50 L. Ed. 274, the Supreme Court of the United States said:

"It is the settled law of this court that the interdiction of statutes impairing the obligation of contracts does not prevent the state from exercising such powers as are vested in it for the promotion of the common weal, or are necessary for the generalgood of the public, though contracts previously entered intobetween individuals may thereby be affected. This power, which, in its various ramifications, is known as the police power, is an exercise of the sovereign right of the government to protect the lives, health, morals, comfort, and general welfare of the people, and is paramount to any rights under contracts between individuals. Familiar instances of this are where parties enter into contracts, perfectly lawful at the time, to sell liquor, operate a brewery or distillery, or carry on a lottery, all of which are subject to impairment by a change of policy on the part of the state, prohibiting the establishment or continuance of such traffic; in other words, that parties, by entering intocontracts, may not estop the legislature from enacting lawsintended for the public good. While this power is subject to limitations in certain cases, there is wide discretion on the part of the legislature in determining what is and what is not necessary, — a discretion which courts ordinarily will notinterfere with." (Italics supplied.)

Our own Supreme Court has made similar declarations with reference to the broad scope of this reserved power. During our discussion in McGuire v. Chicago, B. Q.R. Co., 131 Iowa 340, 108 N.W. 902, we suggested:

"The police power, as that term is commonly employed, may be paraphrased as society's natural right of self-defense, and its definition and limitation vary with the circumstance calling for its exercise. To embalm it in any fixed or rigid formula would be to destroy its value, for it would then be deprived of its indispensable quality of adaptation to changing conditions, and thus defeat the ends it was intended to promote. * * * While protection of public health and public morals and the promotion of social order are peculiarly within its province, these are but instances of its application, and do not limit its sphere of action. * * * The police power of the state is the power to govern men and things within the limit of its dominions. It comprehends all those general laws of internal regulations necessary to secure peace, good order, health, and prosperity of the people, and the regulations and protection of property and property rights."

Another excerpt from an opinion of this court may be chosen which is more applicable to the question here involved. We said in Ætna Insurance Company v. Chicago Great Western Railway Company, 190 Iowa 487, reading on pages 491,492, 180 N.W. 649, 651:

"It is fundamental that a state can by no act deprive itself of the right or authority to enact legislation within the proper scope of its police power, although the effect of a particular enactment be to impair the obligation of private contracts and prevent the enforcement of the terms thereof." (Italics supplied.)

What this court said in the excerpt just quoted from the Ætna Insurance Company case related to the contract clause of the United States Constitution. To the same effect, see McCormick v. Rusch, 15 Iowa 127, and Butler, Keith Co. v. McCall Sypher,15 Iowa 430. But that does not make the theory there announced inapplicable when applied to such clause in the state Constitution.

So then, if as before said, the state legislation "is addressed to a legitimate end" in behalf of the common welfare "and the measures taken are reasonable and appropriate to that end," all contracts, as before indicated, are made subject to the legislation.

This result can be reached even in the face of the contract clause in our state Constitution. That result was reached by the Supreme Court of the United States in the face of the contract clause of the Federal Constitution. Moreover, the Supreme Court of the United States has held that a state Constitution does not prohibit the state from exercising its police power. Manigault v. Springs (199 U.S. 473, 26 S. Ct. 127), supra. In that case the following facts were involved:

"It was also charged that the Constitution of South Carolina, declared that all navigable waters should forever remain public highways, was a privilege annexed to and constituting a part of the value of the lands, and that the damming of the creek, except for the purpose of the public health, welfare, and safety, and without due compensation therefor, was a destruction of the property of the plaintiff, and a deprivation thereof without due process of law. * * * We do not think the provision of the Constitution of South Carolina interferes with these common-law powers of the state over its navigable waters. * * * While all of these cases turned upon the power of the state to authorize the erection of bridges, the same principle applies where the legislature deems it necessary to the public welfare to make other improvements for the reclamation of swampy and overflowed lands, though certain individual proprietors may thereby be subjected to expense."

Such power of the state to legislate in behalf of the public welfare was not only reserved to the state when it became a member of the Federal Union, but also such power was reserved by the people of the state when they adopted their own state Constitution. For instance, section 25 of article 1 of the Iowa Constitution, as before indicated, provides that this enumeration of rights (those contained in the Iowa Bill of Rights) shall not be construed to impair or deny others retained by the people. The sovereignty of the state demands that the people who constitute the state reserve to themselves the power to sustain the state, as before indicated. Nebbia v. People of the State of New York (54 S. Ct. 505), supra. Unless the people, as organized into a state, can sustain and protect themselves as such, they cannot sustain and defend the state Constitution. Contracts are protected and enforced under the Constitution, but if the people who defend and support the Constitution cannot support it, of necessity, then, they cannot protect and enforce private contracts. So, the power of the people to protect, maintain, and sustain their government necessarily carries with it the power to legislate for the common welfare in a great emergency. That is one of the purposes of the police power. Such police power is the power by which the people protect themselves and sustain and maintain their state government. A fundamental part of that police power is the right of the state to protect the general welfare. If the entire economic structure of the state should collapse, it would be difficult, if not impossible, for the people to sustain their government. Necessarily the people need not wait until the destruction of such economic system or the destruction of their government before they may proceed to protect themselves and their government. The police power which preserves the general welfare may be called forth to protect the state in a great economic emergency. Nebbia v. People of the State of New York (54 S. Ct. 505), supra; Home Building Loan Association v. Blaisdell (290 U.S. 398), supra; Block v. Hirsh (256 U.S. 135), supra; Marcus Brown Holding Co. v. Feldman (256 U.S. 170), supra; Edgar A. Levy Leasing Co. v. Siegel (258 U.S. 242), supra.

"The economic interests of the state may justify the exercise of its continuing and dominant protective power notwithstanding interference with contracts." Home Building Loan Association v. Blaisdell (290 U.S. 398), supra. The only question is: First, whether the proper occasion exists for the exercise of such power; and, second, whether the legislation is appropriate enough in its terms and limitations to be within the scope of such power.

Therefore, as previously said, if the state legislation now under consideration "is addressed to a legitimate end and the measures taken are reasonable and appropriate to that end," all contracts are made subject to the legislation. Barnitz v. Beverly (163 U.S. 118), supra; Home Building Loan Association v. Blaisdell (290 U.S. 398), supra; Block v. Hirsh (256 U.S. 135), supra; Marcus Brown Holding Co. v. Feldman (256 U.S. 170), supra; Edgar A. Levy Leasing Co. v. Siegel (258 U.S. 242), supra. See, also, People v. LaFetra, 230 N.Y. 429, 130 N.E. 601; Atlantic Coast Line Railroad Co. v. City of Goldsboro, 232 U.S. 548, 34 S. Ct. 364, (N. Car.); Manigault v. Springs et al. (199 U.S. 473, 26 S. Ct. 127), supra; Louisville Nashville Railroad Co. v. Mottley, 219 U.S. 467, 31 S. Ct. 265; Union Dry Goods Co. v. Georgia Service Corporation, 248 U.S. 372, 39 S. Ct. 117. By analogy, at least, the Supreme Court of the United States has held, in Home Building Loan Association v. Blaisdell (290 U.S. 398), supra, that an economic emergency existed sufficient to constitute the time this legislation was enacted an appropriate occasion for the adoption of such law. Likewise the Supreme Court of the United States in that case held that the Minnesota law was proper in its terms and limitations to be valid under such police or reserved power. At least by analogy, the Supreme Court of the United States, when sustaining that mortgage law, laid the foundation upon which to sustain the Iowa Moratorium Law now under consideration.

Previously we have detailed, in division I of this opinion, the facts constituting the emergency. A repetition of those facts at this place is not essential. It is sufficient here merely to refer to them. The Iowa moratorium law under consideration does not destroy the obligation of the appellant's contract; but rather such law recognizes, sustains, and protects the obligation of that contract. While the appellant cannot enforce his contract through the ordinary remedy for a temporary period, yet, even during that temporary period, the appellant does have a remedy which is suitable for the occasion. At the end of the emergency period the former remedy will be automatically returned to the appellant. In the meantime, the appellant, under the Iowa law, is fully compensated and protected. Manifestly, as thus limited, the Iowa moratorium law is not prohibited by the Iowa Constitution. As said in division I, the district court extended the period of redemption in the case at bar to March 1, 1935. This was proper, providing the emergency which called forth the law does not pass before that time. If the emergency does pass before the date fixed by the district court, then the redemption period shall terminate upon the application of the mortgagee. Home Building Loan Association v. Blaisdell, supra. Subject to that modification, we feel that the judgment of the district court was correct. We have taken the position here announced solely because of, and in order to be in harmony with, the more recent decisions of the Supreme Court of the United States, above cited. All of the arguments made in opposition to this conclusion are fully answered by the Supreme Court of the United States in Home Building Loan Association v. Blaisdell (290 U.S. 398), supra.

III. Continuing its attack upon the Iowa Moratorium Law, the appellant argues that the redemption extension statute under consideration is unconstitutional because it denies it due process of law, contrary to the Fourteenth Amendment to the Constitution of the United States and article I, section 9 of the Constitution of the State of Iowa.

That question was considered by the Supreme Court of the United States in Home Building Loan Association v. Blaisdell (290 U.S. 398), supra. When discussing this phase of the controversy, the Supreme Court of the United States said in that case:

"What has been said on that point (the contract clause of the Federal Constitution) is also applicable to the contention presented under the due process clause. * * * Nor do we think that the statute (The Minnesota redemption moratorium statute) denies to the appellant the equal protection of the laws. The classification which the statute makes cannot be said to be an arbitrary one." To the same effect, see Block v. Hirsh (256 U.S. 135), supra; Marcus Brown Holding Co. v. Feldman (256 U.S. 170), supra; Edgar A. Levy Leasing Co. v. Siegel (258 U.S. 242), supra; Nebbia v. People of the State of New York (54 S. Ct. 505), supra.

We feel, in view of the decision of the Supreme Court of the United States, that it is unnecessary to pursue this phase of the controversy any further. While it is not for us to say whether the Iowa legislation in question is wise or unwise, as a matter of policy, yet, because of the above considerations, we hold that the act is constitutional on the issues raised by the appellant in the case at bar. Accordingly, the judgment of the district court should be modified to the extent indicated, and otherwise affirmed.

Wherefore the judgment and decree of the district court is modified and affirmed. — Modified and affirmed.

EVANS, MITCHELL, ANDERSON, and DONEGAN, JJ., concur.

CLAUSSEN, C.J., and STEVENS, ALBERT, and KINTZINGER, JJ., dissent.