Wilson B. Co. Liq. Corp. v. Colvard

Our mortgage moratorium statute is substantially the same as the Minnesota moratorium statute held to be constitutional by the Supreme Court in Home Building Loan Association v. Blaisdell,290 U.S. 398, 54 S.Ct. 231, 78 L.Ed. 413, 88 A.L.R. 1481. That decision, however, is not binding on the courts of the states having contract provisions in their Constitutions similar to that in the federal Constitution. It is only advisory and is of little value as advice because the court in several, previous, well-considered cases, whose soundness had gone unchallenged for more than seventy-five years, advised exactly to the contrary. Bronson v. Kinzie, 1 How, 311, 11 L.Ed. 143; McCracken v. Hayward, 2 How. 608, 11 L.Ed. 397; Gantly 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. 314, 21 L.Ed. 357; Edwards v. Kearzey, 96 U.S. 595, 24 L.Ed. 793; Barnitz v. Beverly, 163 U.S. 118, 16 S.Ct. 1042, 41 L.Ed. 93; Bradley v. Lightcap, 195 U.S. 1, 24 S.Ct. 748, 49 L.Ed. 65. The contract clause in our Constitution and in that of the United States is exactly the same in meaning, and practically the same in language. If the Supreme Court holds a legislative act of a state violative of the federal Constitution, its decision is binding upon the state. But the converse is not true; if it holds that the state statute is not violative of the federal Constitution, the question is left open for the state courts to determine whether it is valid under its own Constitution.

The economic and financial depression in the 1840's was much worse than the one we have had for the last four years, which brought forth our mortgage moratorium statute. The state legislation involved in the Bronson, McCracken, and Gantly Cases, supra, was enacted in an effort to alleviate that emergency. The Illinois statute in the Bronson Case extended the period of redemption for twelve months after foreclosure decree, and prevented a sale unless two-thirds of the amount at which the property had been valued by appraisers should be paid. The McCracken Case dealt with the same Illinois statute and followed the Bronson Case. The Gantly Case involved an Indiana statute providing that no real property should be sold under execution for less than one-half of its appraised value. The statute, like the Illinois statute, was adopted for the benefit of hardpressed debtors. The court held both statutes violative of the contract clause of the federal Constitution.

The obligation of a contract in the constitutional sense is not only the stipulations in the contract, but the means provided by the law for its enforcement. Whatever legislation lessens the efficacy of either impairs its obligation; if it tends to postpone or retard the enforcement of the contract, its obligation is, to that extent, weakened. The obligation of a contract is the law under which the contract was made and includes the remedies for its enforcement which belonged to it at the time and place of its creation, or remedies equally adequate and effective. Hendrickson v. Apperson,245 U.S. 105, 38 S.Ct. 44, 62 L.Ed. 178; Selover, Bates Co. v. Walsh, 226 U.S. 112, 33 S.Ct. 69, 57 L.Ed. 146; White v. Hart, 13 Wall. 646, 20 L.Ed. 685; Gunn v. Barry, supra; In re Ayers,123 U.S. 443, 8 S.Ct. 164, 31 L.Ed. 216; Nevitt v. Bank, 6 Smedes M. 513; Commercial Bank v. Chambers, 8 Smedes M. 9; Briscoe v. Anketell, 28 Miss. 361, 61 Am.Dec. 553; Price v. Harley,142 Miss. 584, 107 So. 673; Coffman v. Bank of Kentucky, 40 Miss. 29, 90 Am. Dec. 311. Those decisions of the Supreme Court and of our court are much more ably reasoned than the decision of the Supreme Court in the Minnesota moratorium case (Home Building Loan Association v. Blaisdell, 290 U.S. 398, 54 S.Ct. 231, 78 L.Ed. 413, 88 A.L.R. 1481).

In order to uphold our statute the Coffman Case must be overruled, and the principles laid own in the other Mississippi cases referred to destroyed. This ought not to be done. The majority opinion does it. The Coffman Case, supra, had under consideration the act of 1865, Laws 1865, page 236, which provided that all laws for the collection of debts on bonds, promissory notes, bills of exchange, open accounts or any other contract or liability for the payment of money should be suspended until the first day of January, 1868 (a period of two years), or until otherwise provided for by law, except in cases of official liability, and provided no creditor should be deprived of his remedy by attachment or distress; that the act should not apply to causes pending in courts where the parties agree to proceed with the trial, and that the statute should not apply to contracts made after its passage, unless founded upon an indebtedness existing prior to its passage. The court held the statute violative of the contract clause of both the state and federal Constitutions, and also violative of section 24 of the Bill of Rights, which provides that all courts shall be open, and every person, for an injury done him in his lands, goods, person, or reputation, shall have remedy by due course of law, and right and justice shall be administered without sale, denial, or delay. The court held that the suspension of the right to sue closed the courts in violation of this provision of the Constitution. That statute was adopted to meet the economic and financial emergency following the Civil War. The court that decided that case was composed of Judges Handy, Harris, and Ellett, Mississippians — not carpet baggers — and able judges. Judge Handy wrote the opinion for the court. In discussing the conditions that brought about the enactment of the statute he used this language:

"It is a delicate duty under any circumstances, for this court to pronounce an act of a co-ordinate department of the government unconstitutional and void; and the duty is especially painful when the act proceeded, as this evidently did, from the well-meant policy of relieving, as far as might be, the pecuniary distresses and prostration of a people unparalleled in our history — a state of things which appeals almost irresistibly to every benevolent mind, in which we all sympathize, and by which the interests of us all are most seriously affected. But, sitting here as the court of last resort of the State, and charged by the constitution with the duty to support that constitution and to sit in judgment upon the constitutional validity of the acts of the other departments of the government, we are not permitted to yield to feelings of delicacy to the legislature, or of personal sympathy for the misfortunes of our people when called on to discharge this high duty; but we are bound, by the most solemn obligations, to respond, truly and in the exercise of our best judgment, to the question, whether the act is in violation of the Constitution of the United States or of this State. If this question were merely doubtful, we should defer to the wisdom of the legislature and act upon the presumption that the act is within their legitimate powers. But when it is the clear and deliberate conviction of our judgments that the act is repugnant to either of these constitutions, we must perform the duty committed to us and pronounce our judgment accordingly. Convinced as we all are, for the reasons above stated, that such is the character of the act of the legislature in question, we must hold it to be inoperative and void."

Judge Handy might have appropriately said more. For at least two decades before the Civil War the South had reached a state of high prosperity. There was practically no tenant class, the people were home owners. It was almost exclusively an agricultural country. Many of the plantation owners not only had the necessities and comforts, but also the luxuries, of life — carriages and fine horses and negro drivers in livery for social visiting and church going, servants to do everything. Even the overseers were furnished servants by the plantation owners. The necessities and comforts of life were general; almost every one had them. The War ended all this. About four million slaves were set free with nothing except the clothes on their backs to be cared for by their former masters. The larger part of the plow stock was gone, either dead or appropriated by the enemy. In fact, there was little left except the land. Then, added to that, came the curse of the carpet baggers and the scalawags. The white people of the South were equal to the emergency; they got out their spinning wheels and looms of pioneer days and spun and wove the cloth and made their own clothes; they tanned the leather and made their own shoes. The women did their own washing, ironing, and housework, and in addition many of them worked in the fields. Instead of carriages and drivers in livery many of them went to church in mule wagons and ox wagons. On account of the scarcity of mules and horses, oxen were also often used for plowing. Shuck collars were used exclusively and grape vines were often used for trace chains. All food was produced at home, both for man and beast. It was not uncommon for the people to dig up the earth in smokehouses and boil the salt out of it for table use. Sorghum was almost exclusively used for sugar, and parched corn and wheat were often used for coffee. Still there was no starvation or freezing among the people. The present depression compared with that is as a mole hill to the highest mountain. The outgrowth of all these hardships was a strong, independent, self-reliant citizenship led by statesmen who were moulders of right thinking on public questions — statesmen of whom Mississippi should always be proud — Lamar, George, Walthall, Williams, Stone, Allen, Money, McLaurin, Catchings, and others.

The question involved in this case, as was in the Minnesota moratorium case, is whether the Constitution is a mere scrap of paper to be thrown aside when the people are confronted with unusual financial depression. The people have to pay the penalty for their economic wrongs; there is no escape from it; the payment may be delayed, but it has got to come. The verdict of the civilized world was against human slavery, that it was wrong both morally and economically. That verdict prevailed. The South paid the penalty, but in doing so, as above stated, the people in the long run were benefited instead of harmed.

The mortgage and the note it was given to secure stipulated a certain due date; it also expressly provided for the right of foreclosure by advertisement for three weeks and sale by a trustee as authorized by section 2167, Code 1930. The law provided also for foreclosure in chancery, which without unnecessary delay would have taken place within six months after the filing of the bill for that purpose. At the option of the mortgagor the statute takes away entirely the remedy by foreclosure through a trustee, and at his option the foreclosure in chancery may be delayed for a period of two years. In other words, the enforcement of the statute might delay the payment of the note secured by the mortgage for two years after its maturity, and in addition sweep away entirely the remedy of foreclosure through a trustee, and materially impair the remedy of foreclosure in chancery. The statute, as was held in the Coffman Case, violates both the contract clause and that section of the bill of rights requiring the courts to be open to all litigants at all times and that justice be administered without delay. It is true that the statute does not close the door of the courts completely for the two-year period as the statute considered in the Coffman Case did, but in the administration of the statute that exact result might follow. The mortgagee may go into court, but the mortgagor, under the conditions named in the statute, could keep him there for two years. The door to the courts must be kept wide open, not partially open, and must stay open and justice administered without delay. That the mortgagee is given the net income from the property during the moratorium does not help the statute. Under his contract he had the right of foreclosure and purchase at the sale, if he was the highest and best bidder, and if not, to receive the proceeds of the sale up to a sufficiency to discharge his indebtedness. As purchaser he might have improved the property or changed its use to such an extent that the income therefrom during the moratorium period would be largely in excess of the net income in the hands of the mortgagor. If purchased by another, he might have succeeded in investing the proceeds coming to him so as to yield materially more than the net income from the mortgagor during the moratorium. These are valuable rights. They were written into the contract and cannot be taken away by subsequent statute. The contract must be enforced as written through the remedies provided by the laws in existence when it was made, or remedies equally adequate and efficient.

The Constitution was adopted to make safe to the people certain fundamental rights whether in prosperity or in adversity, one of which was the sanctity of contracts. When there is general prosperity, there is no temptation for the Legislature and the courts to disobey the Constitution; it is during adversity that the temptation comes. Prosperity cannot be permanently restored by destroying these fundamental rights.

Dunn v. Love (Miss.), 155 So. 331, 92 A.L.R. 1323, is not decisive of this question. In fact, it has little, if anything, to do with it. In short, the court held in that case that the contract clause was not violated by denying the creditor what he contracted for and giving him instead something of equal value.

To repeat in different language: To uphold this statute is to flout the Constitution as a worthless thing.