A state law, passed subsequently to the execution of a mortgage,
which declares that the equitable estate of the mortgagor shall not
be extinguished for twelve months after a sale under a decree in
chancery, and which prevents any sale unless two-thirds of the
amount at which the property has been valued by appraisers shall be
bid therefor, is within the clause of the tenth section of the
first article of the Constitution of the United States, which
prohibits a state from passing a law impairing the obligation of
contracts.
MR. CHIEF JUSTICE TANEY delivered the opinion of the Court.
This case comes before the Court upon a division of opinion in
the Circuit Court of the United States for the District of Illinois
upon certain questions which arose in the case and which have been
certified to this Court according to the act of Congress.
It appears from the record that on 13 July, 1838, John H. Kinzie
executed a bond to Arthur Bronson conditioned for the payment of
$4,000 on the 1st of July, 1842, with interest thereon, to be paid
semiannually, and in order to secure the payment of the said sum of
money and interest, Kinzie and wife, on the same day, conveyed to
the said Bronson in fee simple, by way of mortgage, one undivided
half part of certain houses and lots in the Town of Chicago, with
the usual proviso that the deed should be null and void if the said
principal and interest were duly paid, and Kinzie, among other
things, covenanted that if default should be made in the payment of
the principal or interest or any part thereof, it should be lawful
for Bronson or his representatives to enter upon and sell the
mortgaged premises at public auction, and, as attorney of Kinzie
and wife, to convey the same to the purchaser, and out of the
moneys arising from such sale to retain the amount that might then
be due him on the aforesaid bond, with the costs and charges of
sale, rendering the overplus, if any, to Kinzie.
The interest not having been paid, Bronson, on 27
Page 42 U. S. 312
March, 1841, filed his bill to foreclose the mortgage. In the
meantime, after the mortgage was made and before the bill was
filed, the Legislature of Illinois, on 19 February, 1841, passed a
law the 8th section of which provided that mortgagors and judgment
creditors should have the same right to redeem mortgaged premises
sold by the decree of a court of chancery that had been given to
the debtors and judgment creditors by a previous law passed in
1825, in cases where lands were sold under execution. The law of
1825 authorized the party whose lands should be sold by execution
after that law took effect to redeem them within twelve months from
the day of sale by repaying the purchase money with interest at the
rate of 10 percent, and if the debtor did not redeem it within the
time limited, any judgment creditor was authorized to do so upon
the like terms within fifteen months from the sale. This act, which
took effect on 1 May, 1825, was held, it seems, not to extend to
sales of mortgaged premises under a decree of foreclosure, and the
Act of February 19, 1841, above mentioned, was passed to embrace
them.
By another Act of the Legislature of Illinois approved 27
February, 1841, it was directed that
"When any execution should be issued out of any of the courts of
the state, and be levied on any property, real or personal, or
both, it should be the duty of the officer levying such execution
to summon three householders of the proper county, one of whom
should be chosen by such officer, one by the plaintiff, and one by
the defendant in the execution, or in default of the parties'
making such choice, the officer should choose for them, which
householders, after being duly sworn by such officer so to do,
should fairly and impartially value the property upon which such
execution was levied, having reference to its cash value, and that
they should endorse the valuation thereof upon the execution or
upon a piece of paper thereunto attached signed by them, and when
such property should be offered for sale, it should not be struck
off unless two-thirds of the amount of such valuation should be bid
therefor."
It further provided, among other things, that all sales of
mortgaged property should be made according to the provisions of
that act whether the foreclosure of said mortgage was by judgment
at law or decree in chancery. It also directed that the
provisions
Page 42 U. S. 313
of this law should extend to all judgments rendered prior to 1
May, 1841, and to all judgments that might be rendered on any
contract or cause of action accruing prior to that day, and not to
any other judgments than as before specified. These are, in
substance, the provisions of these acts as far as they are material
to the present controversy.
On 19 June, 1841, after the laws above mentioned had been
passed, the Circuit Court of the United States for the District of
Illinois adopted the following rules:
"Ordered that when the marshal shall levy an execution upon real
estate, he shall have it appraised and sold under the provisions of
the law of this state entitled 'An Act regulating the sale of
property,' approved February 27, 1841, if the case come within the
provisions of that law; and any two or three householders selected
under the law, agreeing, may make the valuation of the premises
required."
"Before the sale of any real estate on execution, the marshal
shall give notice thirty days in a newspaper published in the
county where the land lies, and if there be no paper published in
the county, then the notice shall be given thirty days before the
sale, by notice, as the statute requires. The court adopts the 8th
section of the act of this state to amend the act concerning
judgments &c., passed 19 February, 1841, which regulates the
sale of mortgaged premises &c., except where special direction
shall be given in the decree of sale."
After these rules were adopted -- that is to say, at December
term, 1841 -- the bill filed by Bronson, as hereinbefore mentioned,
came on for final hearing in the circuit court, and thereupon the
complainant moved the court for a final decree of strict
foreclosure of said mortgage or that the mortgaged premises should
be sold to the highest bidder without being subject to said rule
and the act referred to. This motion was resisted on part of
defendants, who moved that the decree should direct the sale
according to said rule and act.
And the judges being opposed in opinion on the following points,
to-wit:
1. Whether the decree in this case should be so entered as to
direct the sale of the said mortgaged premises according to the
said statute of the State of Illinois above mentioned, or
whether
Page 42 U. S. 314
the same premises should be sold at public auction, to the
highest bidder, without regard to the said law.
2. Whether the decree in this case shall or shall not direct the
sale of the mortgaged premises without being first valued by three
householders and without requiring two-thirds of the amount of the
said valuation to be bid, according to the said act of the State of
Illinois.
3. Whether the terms of the mortgage in this case do or do not
require it to be excepted from the operation of the rule above
recited.
On motion of the complainant, it was ordered and directed that
this cause, with said points, be certified to the Supreme Court in
pursuance of the act of Congress. And it is upon these questions,
thus certified, that the case is now before us, and the 8th section
of the Act of February 19, and the entire act of February 27, are
set forth at large in the record as the laws referred to in the
above-mentioned rules of the circuit court. The case has been
submitted to the court for decision by a written agreement between
the counsel on both sides. On the part of the complainant, a
printed argument has been filed, but none has been offered on
behalf of the defendant. As the case involves a constitutional
question of great importance, we should have preferred a full
argument at the bar. But the parties are entitled by the rules of
the court to bring it before us in the manner they have adopted,
and it being our duty to decide the questions certified to us by
the circuit court, we have bestowed upon the subject the careful
and deliberate consideration which its importance demands.
Upon the points certified, the question is whether the laws of
Illinois, of the 19th and the 27th of February, 1841, come within
that clause of the 10th section of the 1st article of the
Constitution of the United States, which prohibits a state from
passing a law impairing the obligation of contracts.
The laws of a state regulating the process of its courts and
prescribing the manner in which it shall be executed, of course, do
not bind the courts of the United States, whose proceedings must be
governed by the acts of Congress. The act of 1792, however, adopted
the process used in the state courts as it stood in 1789, and since
then the act of 1828, on the same subject
Page 42 U. S. 315
has been passed, and the 3d section of this law directs that
final process issued on judgments and decrees in any of the courts
of the United States, and the proceedings thereupon, shall be the
same, except their style, in each state, respectively, as were then
used in the courts of such state, and authorizes the courts of the
United States, if they see fit in their discretion, by rules of
court so far to alter final process as to conform the same to any
change which might afterwards be adopted by the legislatures of the
respective states for the state courts. Any acts of a state
legislature, therefore, in relation to final process passed since
1828 are of no force in the courts of the United States unless
adopted by rules of court according to the provisions of this act
of Congress. And although such state laws may have been so adopted,
yet they are inoperative and no force if in conflict with the
Constitution or an act of Congress.
As concerns the obligations of the contract upon which this
controversy has arisen, they depend upon the laws of Illinois as
they stood at the time the mortgage deed was executed. The money
due was indeed to be paid in New York. But the mortgage given to
secure the debt was made in Illinois for real property situated in
that state, and the rights which the mortgagee acquired in the
premises depended upon the laws of that state. In other words, the
existing laws of Illinois created and defined the legal and
equitable obligations of the mortgage contract.
If the laws of the state passed afterwards had done nothing more
than change the remedy upon contracts of this description, they
would be liable to no constitutional objection. For 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, not 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
Page 42 U. S. 316
harassing litigation, and to protect them in those pursuits
which are necessary to the existence and wellbeing 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.
This subject came before the Supreme Court in the case of
Green v. Biddle,
decided in 1823 and reported in 8 Wheat. 1. It appears to have been
twice elaborately argued by counsel on both sides and deliberately
considered by the Court. On the part of the demandant in that case,
it was insisted that the laws of Kentucky passed in 1797 and 1812
concerning occupying claimants of land impaired the obligation of
the compact made with Virginia in 1789. On the other hand it was
contended that these laws only regulated the remedy, and did not
operate on the right to the lands. In deciding the point, the Court
said
"It is no answer that the acts of Kentucky now in question are
regulations of the remedy, and not of the right to the lands. If
these acts so change the nature and extent of existing remedies as
materially to impair the rights and interests of the owner, they
are just as much a violation of the compact as if they directly
overturned his rights and interests."
And in the opinion delivered by the Court after the second
argument, the same rule is reiterated in language equally strong.
See pages
21 U. S. 75-76,
and
21 U. S. 84.
This
Page 42 U. S. 317
judgment of the Court is entitled to the more weight because the
opinion is stated in the report of the case to have been unanimous,
and Judge Washington, who was the only member of the Court absent
at the first argument, delivered the opinion of the second.
We concur entirely in the correctness of the rule above stated.
It is difficult, perhaps, to draw a line that would be applicable
in all cases between legitimate alterations of the remedy and
provisions which, in the form of remedy, impair the right. But it
is manifest that the obligation of the contract and the rights of a
party under it may in effect be destroyed by denying a remedy
altogether, or may be seriously impaired by burdening the
proceedings with new conditions and restrictions, so as to make the
remedy hardly worth pursuing. And no one, we presume, would say
that there is any substantial difference between a retrospective
law declaring a particular contract or class of contracts to be
abrogated and void and one which took away all remedy to enforce
them or encumbered it with conditions that rendered it useless or
impracticable to pursue it. Blackstone, in his Commentaries on the
Laws of England, 1 vol. 55, after having treated of the declaratory
and directory parts of the law, defines the remedial in the
following words:
"The remedial part of the law is so necessary a consequence of
the former two that laws must be very vague and imperfect without
it. For in vain would rights be declared, in vain directed to be
observed, if there were no method of recovering and asserting those
rights when wrongfully withheld or invaded. This is what we mean
properly when we speak of the protection of the law. When, for
instance, the declaratory part of the law has said that the field
or inheritance which belonged to Titius' father is vested by his
death in Titius, and the directory part has forbidden anyone to
enter on another's property without the leave of the owner; if
Gaius, after this, will presume to take possession of the land, the
remedial part of the law will then interpose its office, will make
Gaius restore the possession to Titius, and also pay him damages
for the invasion."
We have quoted the entire paragraph because it shows in a few
plain words and illustrates by a familiar example the connection of
the remedy with the right. It is the part of the municipal law
Page 42 U. S. 318
which protects the right and the obligation by which it enforces
and maintains it. It is this protection which the clause in the
Constitution now in question mainly intended to secure. And it
would be unjust to the memory of the distinguished men who framed
it to suppose that it was designed to protect a mere barren and
abstract right, without any practical operation upon the business
of life. It was undoubtedly adopted as a part of the Constitution
for a great and useful purpose. It was to maintain the integrity of
contracts and to secure their faithful execution throughout this
Union by placing them under the protection of the Constitution of
the United States. And it would but ill become this Court under any
circumstances to depart from the plain meaning of the words used
and to sanction a distinction between the right and the remedy
which would render this provision illusive and nugatory -- mere
words of form, affording no protection and producing no practical
result.
We proceed to apply these principles to the case before us.
According to the long settled rules of law and equity in all of the
states whose jurisprudence has been modeled upon the principles of
the common law, the legal title to the premises in question vested
in the complainant upon the failure of the mortgagor to comply with
the conditions contained in the proviso, and at law he had a right
to sue for and recover the land itself. But in equity this legal
title is regarded as a trust estate to secure the payment of the
money, and therefore when the debt is discharged there is a
resulting trust for the mortgagor.
Conard
v. Atlantic Insurance Company, 1 Pet. 441. It is
upon this construction of the contract that courts of equity lend
their aid either to the mortgagor or mortgagee in order to enforce
their respective rights. The court will, upon the application of
the mortgagor, direct the reconveyance of the property to him upon
the payment of the money, and upon the application of the mortgagee
it will order a sale of the property to discharge the debt. But as
courts of equity follow the law, they acknowledge the legal title
of the mortgagee, and never deprive him of his right at law until
his debt is paid, and he is entitled to the aid of the court to
extinguish the equitable title of the mortgagor in order that he
may obtain the benefit of his security. For this purpose it is his
absolute and undoubted right, under an ordinary mortgage deed,
Page 42 U. S. 319
if the money is not paid at the appointed day, to go into the
court of chancery and obtain its order for the sale of the whole
mortgaged property (if the whole is necessary), free and discharged
from the equitable interest of the mortgagor. This is his right by
the law of the contract, and it is the duty of the court to
maintain and enforce it without any unreasonable delay.
When this contract was made, no statute had been passed by the
state changing the rules of law or equity in relation to a contract
of this kind. None such, at least, has been brought to the notice
of the Court, and it must therefore be governed, and the rights of
the parties under it measured, by the rules above stated. They were
the laws of Illinois at the time, and therefore entered into the
contract and formed a part of it without any express stipulation to
that effect in the deed. Thus, for example, there is no covenant in
the instrument giving the mortgagor the right to redeem by paying
the money after the day limited in the deed and before he was
foreclosed by the decree of the court of chancery. Yet no one
doubts his right or his remedy, for, by the laws of the state then
in force, this right and this remedy were a part of the law of the
contract, without any express agreement by the parties. So also the
rights of the mortgagee, as known to the laws, required no express
stipulation to define or secure them. They were annexed to the
contract at the time it was made and formed a part of it, and any
subsequent law impairing the rights thus acquired impairs the
obligations which the contract imposed.
This brings us to examine the statutes of Illinois which have
given rise to this controversy. As concerns the law of February 19,
1841, it appears to the Court not to act merely on the remedy, but
directly upon the contract itself, and to engraft upon it new
conditions injurious and unjust to the mortgagee. It declares that
although the mortgaged premises should be sold under the decree of
the court of chancery, yet that the equitable estate of the
mortgagor shall not be extinguished, but shall continue for twelve
months after the sale, and it moreover gives a new and like estate,
which before had no existence, to the judgment creditor, to
continue for fifteen months. 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
Page 42 U. S. 320
interest 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. This law gives to
the mortgagor and to the judgment creditor an equitable estate in
the premises, which neither of them would have been entitled to
under the original contract, and these new interests are directly
and materially in conflict with those which the mortgagee acquired
when the mortgage was made. 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.
The second point certified arises under the law of February 27,
1841. The observations already made in relation to the other act
apply with equal force to this. It is true that this law apparently
acts upon the remedy, and not directly upon the contract. Yet its
effect is to deprive the party of his preexisting 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. And this law is still more objectionable because it is
not a general one and prescribing the mode of selling mortgaged
premises in all cases, but is confined to judgments rendered and
contracts made prior to 1 May, 1841. The act was passed on 27
February in that year, and it operates mainly on past contracts,
and not on future. If the contracts intended to be affected by it
had been specifically enumerated in the law and these conditions
applied to them, while other contracts of the same description were
to be enforced in the ordinary course of legal proceedings, no one
would doubt that such a law was unconstitutional. Here a particular
class of contracts is selected and encumbered with these new
conditions, and it can make no difference in principle whether they
are described by the names of the parties or by the time at which
they were made.
In the case before us, the conflict of these laws with the
obligations of the contract is made the more evident by an express
covenant contained in the instrument itself whereby the mortgagee,
in default of payment, was authorized to enter on the premises and
sell them at public auction, and to retain out
Page 42 U. S. 321
of the money thus raised the amount due, and to pay the
overplus, if any, to the mortgagor. It is impossible to read this
covenant and compare it with the laws now under consideration
without seeing that both of these acts materially interfere with
the express agreement of the parties contained in this covenant.
Yet the right here secured to the mortgagee is substantially
nothing more than the right to sell, free and discharged of the
equitable interest of Kinzie and wife, in order to obtain his
money. Now at the time this deed was executed, the right to sell,
free and discharged of the equitable estate of the mortgagor, was a
part of every ordinary contract of mortgage in the state, without
the aid of this express covenant, and the only difference between
the right annexed by law and that given by the covenant consists in
this: that in the former case, the right of sale must be exercised
under the direction of the court of chancery upon such terms as it
shall prescribe, and the sale made by an agent of the court; in the
latter, the sale is to be made by the party himself. But, even
under this covenant, the sale made by the party is so far subject
to the supervision of the court that it will be set aside and a new
one ordered if reasonable notice is not given or the proceedings be
regarded in any respect, as contrary to equity and justice. There
is therefore in truth but little material difference between the
rights of the mortgagee with or without this covenant. The
distinction consists rather in the form of the remedy than in the
substantial right, and as it is evident that the laws in question
invade the right secured by this covenant, there can be no sound
reason for a different conclusion where similar rights are
incorporated by law into the contract and form a part of it at the
time it is made.
Mortgages made since the passage of these laws must undoubtedly
be governed by them, for every state has the power to prescribe the
legal and equitable obligations of a contract to be made and
executed within its jurisdiction. It may exempt any property it
thinks proper from sale for the payment of a debt, and may impose
such conditions and restrictions upon the creditor as its judgment
and policy may dictate. And all future contracts would be subject
to such provisions, and they would be obligatory upon the parties
in the courts of the United States as well as in those of the
state. We speak, of course, of contracts
Page 42 U. S. 322
made and to be executed in the state. It is a case of that
description that is now before us, and we do not think it proper to
go beyond it.
Upon the questions presented by the circuit court, we therefore
answer:
1. That the decree should direct the premises to be sold at
public auction to the highest bidder, without regard to the law of
February 19, 1841, which gives the right of redemption to the
mortgagor for twelve months, and to the judgment creditor for
fifteen.
2. That the decree should direct the sale of the mortgaged
premises, without being first valued by three householders and
without requiring two-thirds of the amount of the said valuation to
be bid according to the law of February 27, 1841.
The decision of these two questions disposes of the third. And
we shall direct these answers to be certified to the circuit
court.
MR. JUSTICE McLEAN dissented.
The Act of Illinois of 27 February, 1841, does not apply to the
case under consideration. The rule of the circuit court adopting
that act limits it to executions on judgments at law. It can have
no application, therefore, to any proceeding in chancery. The only
rule adopted in relation to a chancery proceeding is that which
gives the mortgagor a year within which to redeem the premises sold
on the payment of the purchase money and 10 percent interest,
agreeably to the 8th section of the Act of 19 February, 1841. And
that rule was to operate only in decrees of foreclosure and sale,
where a different order was not made. So that in fact no positive
rule was adopted in Illinois by the circuit court in relation to
sales of mortgaged premises under a decree.
By the rules regulating chancery proceedings adopted by this
Court at its last term, it is supposed the above rule and all
others regulating the practice in chancery was rescinded. But this
is not material. The points certified would be answered by saying
that the acts of the legislature referred to can have no
operation
Page 42 U. S. 323
in the case, as no state law can govern the proceedings of a
chancery court of the United States.
Under such circumstances, I cannot but regret that the Court has
deemed it necessary or proper to consider the constitutionality of
the above acts and to hold that they are unconstitutional. The
decision of the matters before the court does not require this
judgment. And it is the more to be regretted as there was no
argument, written or oral, to sustain these laws. Heretofore this
Court has not deemed it proper to act on so grave a subject as the
constitutionality of a state law unless the question were
essentially involved in the decision of the case before them.
The Act of 27 February, 1841, is held to be unconstitutional as
regards all contracts or mortgages entered into prior to its
enactment because it requires real property levied on by execution
to be appraised and to sell for two-thirds of its value.
As preliminary to an examination of this question, I will take a
cursory review of the policy and laws of the federal government in
respect to state process. By the Act of 29 September, 1789, it is
provided
"That the forms of writs and executions, except their style, in
the circuit and district courts in suits at common law shall be the
same in each state respectively as are now used or allowed in the
supreme court of the same."
Again, by the Act of 8 May, 1792, the above provision is
reenacted
"subject to such alterations and additions as the courts
respectively shall, in their discretion, deem expedient, or to such
regulations as the Supreme Court of the United States shall think
proper from time to time by rule to prescribe to any circuit court
district court concerning the same."
In the 8th section of the Act of 2 March, 1793, it is
provided
"That where it is now required by the laws of any state that
goods taken in execution on a writ of
fieri facias shall
be appraised previous to the sale thereof, it shall be lawful for
the appraisers appointed under the authority of the state to
appraise goods taken in execution on a
fieri facias issued
out of any court of the United States in the same manner as if such
writ had issued out of a state court."
And it is made the duty of the marshal to summon appraisers,
&c.
Under the foregoing process acts, a question was made in the
State of Kentucky whether the executions from the circuit court
Page 42 U. S. 324
of the United States should be governed by the laws of that
state. In the case of
Wayman v.
Southard, 10 Wheat. 1,
23 U. S. 2, among
several points certified from the circuit court for the decision of
this Court were the two following:
"That if the statutes of Kentucky in relation to executions are
binding on this Court,
viz., the statute which requires
the plaintiff to endorse on the execution that bank notes of the
Bank of Kentucky or notes of the Bank of the Commonwealth of
Kentucky will be received in payment, or that the defendant may
replevy the debt for two years, are in violation of the
Constitution of the United States."
"That all the statutes of Kentucky which authorize a defendant
to give a replevin bond in satisfaction of a judgment or execution
are unconstitutional and void."
This Court held that the process acts of 1789 and of 1792 did
not apply to states subsequently admitted into the Union, and that,
as the act regulating executions had not been adopted by the
Circuit Court of the United States for Kentucky, it could not
regulate final process in that court. But the Court did not deem it
necessary or proper to decide on the constitutionality of the laws
referred to.
In the case of
Bank of the United States v.
Halstead, 10 Wheat. 51, a point was certified from
the Circuit Court of Kentucky involving the question whether
"the Act of Assembly of Kentucky of 21 December, 1821, which
prohibits the sale of property taken under executions for less than
three-fourths of its appraised value was repugnant to the
Constitution of the United States."
And this Court held, Judge Thompson giving the opinion, as in
the case of
Wayman v. Southard, that the law of the state
did not apply to the courts of the United States, it never having
been adopted. And it remarked: "This renders it unnecessary to
inquire into the constitutionality of the law of Kentucky."
These cases in principle are analogous to the one under
consideration. The only rule of Court affecting a proceeding in
chancery having been repealed or rescinded by the general rules
adopted by this Court at its last term, and if not repealed, does
not apply; the laws of the State of Illinois, as regards the
proceeding under consideration, are as inapplicable as were the
laws of Kentucky
Page 42 U. S. 325
in the above cases. And it is a subject of regret that the
precedent of the above cases has not been followed in the present
decision.
Out of the above decisions grew the Process Act of 19 May, 1828.
That act declares
"That writs of execution and other final process issued on
judgments and decrees rendered in any of the courts of the United
States, and the proceedings thereupon, shall be the same as are now
used in the courts of the state."
And power was given to
"the courts, if they shall see fit in their discretion by rules
of court so far to alter final process in said courts as to conform
the same to any change which may be adopted by the legislatures of
the respective states for the state courts."
The above enactments show that the settled policy of the federal
government is to adopt the state laws regulating final process. And
so far as the acts of Congress have operated, state laws have
governed executions in the federal courts.
In Virginia, real estate is not liable to be sold on execution.
In Connecticut and, I believe, in Massachusetts, lands are taken in
satisfaction of judgments on a valuation. In Ohio and in many of
the other states, real estate must be sold for one-half or
two-thirds of its valuation. In Indiana and in some of the other
states, the defendant has a right within twelve months to redeem
his land sold on execution, on paying some 10 or 12 percent
interest. In Virginia, Mississippi and some of the other states,
forthcoming bonds are given which suspend further proceedings on
executions and in some degree change the security under the
judgment.
Now these laws prevail in some of the states, and there is no
reason why, under the Constitution, they may not be adopted in all
of them. If Virginia may withdraw her lands from execution and Ohio
admit them to be sold under a valuation, why may not Illinois do
the same?
But I understand the objection to the Illinois statute is its
limited operation and its applicability to prior contracts.
The 2d section of the act provides that it
"shall extend to all judgments rendered prior to 1 May, 1841,
and to all judgments that may be rendered on any contract or cause
of action, accruing prior to 1 May, 1841. "
Page 42 U. S. 326
This provision may seem to be somewhat capricious and of
doubtful policy, but the inquiry must be does it violate the
Constitution of the United States? On 27 February, 1841, this law
was enacted, and although it is limited in its effects, yet it is
general in its provisions. And I know of no power in the
Constitution to limit the legislative discretion of the states as
to the duration of their enactments. The only question under this
act as to its constitutionality must be whether it impairs the
obligations of contracts entered into before it was passed. And in
this view, the question arises whether the remedy, in the sense of
the Constitution, can be considered as a part of the contract.
That the law objected to is remedial no one can controvert. It
does not purport to act upon contracts, but modifies the remedy for
the enforcement of contracts. But my brethren suppose that as this
remedy may be retarded by the limitation on the sale of land under
judgments, the obligation of the contract is thereby impaired. This
conclusion can only be sustained on the ground that the remedy is a
part of the contract. On this hypothesis, every contract embraces
the existing remedy, and that remedy cannot be protracted by the
legislature. This is a question of constitutional power, and cannot
be affected by any notions of expediency. If the remedy be so
modified as to protract the recovery of a debt a week or a month,
in the view now taken by the Court, it impairs the obligation of
the contract as clearly as any longer period of time. The question
cannot in any degree depend upon time. What could be more
preposterous than to say the legislature of a state may prolong the
remedy a week, a month, or three months, but cannot prolong it
beyond that period? Where shall this judicial discretion find a
limit? There must be some limit. If the legislature may not modify
the remedy at their discretion in regard to existing contracts,
they must be prohibited from making any change. Any departure from
this rule of construction must depend upon the arbitrary decision
of the courts. And each court in this respect may exercise its own
discretion until the question shall be settled by this
tribunal.
But the question may be asked, suppose the legislature shall
repeal all remedy -- is the contract not thereby impaired? This
question may be asked with no more propriety and effect than
Page 42 U. S. 327
many others. May not a state fail to appoint judges, clerks, and
other officers essential to the administration of justice?
I am aware that in the case of
Green v.
Biddle, 8 Wheat. 17, this Court said:
"It is no answer that the acts of Kentucky now in question are
regulations of the remedy, and not of the right to lands. If these
acts so change the nature and extent of existing remedies as
materially to impair the rights and interests of the owner, they
are just as much a violation of the compact as if they directly
overturned his rights and interests."
The above question arose under the compact between Virginia and
Kentucky, which declared
"That all private rights and interests of lands within Kentucky
derived from the laws of Virginia prior to such separation shall
remain valid and secure under the laws of the proposed state, and
shall be determined by the laws then existing in the State of
Virginia."
The above article, said the Court in its opinion,
"declares in the most explicit terms that all private rights and
interests of lands derived from the laws of Virginia shall remain
valid and secure under the laws of Kentucky and shall be determined
by the laws then existing in Virginia. It plainly imports,
therefore, that these rights and interests, as to their nature and
extent, shall be exclusively determined by the laws of Virginia,
and that their security and validity shall not be in any way
impaired by the laws of Kentucky. Whatever law, therefore, of
Kentucky does narrow these rights and diminish these interests is a
violation of the compact, and is consequently
unconstitutional."
And again, the court observes:
"The only question, therefore, is whether the acts of 1797 and
1812 have this effect. It is undeniable that no acts of a similar
character were in existence in Virginia at the time when the
compact was made, and therefore no aid can be derived from the
actual legislation of Virginia to support them."
These acts were held to abridge the rights of the holder under
the Virginia title, and, whether remedial or otherwise, were
consequently repugnant to the compact. By the compact, the rights
and interests of the Virginia claimant, both as to their nature and
extent, said the Court, were to be exclusively determined by the
laws of Virginia. In other words, where rights are to be determined
by one law, another and a repugnant law can have no influence upon
them. And this was the point
Page 42 U. S. 328
adjudged in the case of
Green v. Biddle. The question
did not arise under the Constitution of the United States, but
under the compact.
In the case of
Sturges v.
Crowninshield, 4 Wheat. 200, the late Chief Justice
says:
"The distinction between the obligation of a contract and the
remedy given by the legislature to enforce that obligation has been
taken at the bar, and exists in the nature of things. Without
impairing the obligation of the contract, the remedy may certainly
be modified as the wisdom of the nation shall direct."
This is the true principle laid down in explicit terms.
The doctrine that the remedy constitutes a part of the contract
is a mere abstraction, which cannot be carried into practical
operation. If the doctrine be sound, it secures the means for the
enforcement of the contract at its date.
Now does anyone doubt that a state legislature may abolish
imprisonment for debt, as well on past as future contracts. Here is
a modification of the remedy which takes away a means, and often a
principal means, of enforcing the payment of the debt. And yet this
is admitted by all to be a constitutional law. Nor does anyone
doubt the constitutionality of a statute of limitations. This
operates upon contracts entered into before its enactment, and bars
the right of action.
Now if the remedy existing at the time of the contract is a part
of the contract, the state legislature cannot modify the remedy,
much less, as by the above statute, take it away. It is no answer
to this argument to say that the statutory bar is only interposed
where the obligee has been grossly negligent. There was no such
condition of vigilance at the date of the contract, and if the
above argument be sound, no subsequent action of the legislature
can impair its obligation by materially retarding its enforcement,
much less by barring the remedy.
The argument in favor of the statute is that it does not act
upon the contract, but withdraws the remedy. Now if this be a
constitutional exercise of power by a state legislature, surely the
exercise of the lesser power, by modifying the remedy at
discretion, must also be constitutional. Does not the greater power
include the lesser? The power, whether exercised in passing a
statute of limitations or in modifying the laws in relation to
Page 42 U. S. 329
judgments and executions, acts upon the remedy. In both
instances, the enactments constitute the laws of the forum. And, in
my judgment, they depend upon the same power over the remedy.
But if the remedy be a part of the contract, how must it be
applied? Instead of looking to the laws regulating judicial
proceedings at the time the action is brought, the Court must look
to the date of the contract and the laws then in force. The
contract, in this view, gives vitality to laws annulled by the
legislature, and the law of the remedy becomes as diversified as
the contracts to which it is applied. Can such a rule of
construction be enforced?
How is a contract made in one state to enforced in another? If
the remedy in the state where the contract is made enter into it,
does it carry this remedy into another jurisdiction? This will not
be contended -- and why not? If the contract within the state
include the law of the remedy, why does it not carry into a foreign
jurisdiction the same conditions? Every contract does this, which
is governed by the local law. A contract for the payment of money,
made and to be performed in the State of New York, bears 7 percent
interest. And this rate of interest is recovered on the contract in
a state where 7 percent would be usurious. And so of every other
contract made under a local law, however repugnant may be its
conditions to the laws and policy of the jurisdiction where the
remedy is sought. This is emphatically the law of the contract. And
if the remedy be also the law of the contract, it must follow the
contract wherever it shall be prosecuted. If this be not the case,
the argument falls; the remedy exists independently of the
contract, and does not constitute a part of it.
A contract void by the local law on the ground of usury, or
because it is against the policy of the law, can be enforced
nowhere. There is no exception to the principle that where a
contract is entered into under the sanctions of a state law, that
law governs the contract in whatever jurisdiction suit may be
brought on it. And so where a contract is made in one state to be
performed in another, the place of performance gives the law of the
contract. But in no case does the remedy attach itself to the
contract, so as to constitute a part of it. Such an idea is too
abstract for practical operations. At most, it could only affect
contracts sued on in the state where they were made. Such a
principle
Page 42 U. S. 330
could not be carried out. It would diversify the remedy to an
impracticable extent.
Every contract is entered into with a supposed knowledge by the
parties that the lawmaking power may modify the remedy. And this it
may do at its discretion so far as it acts only on the remedy. It
may regulate the mode in which process shall be issued and served
-- how the pleadings shall be filed, and at what term judgment
shall or may be entered. And it may also regulate final process. It
may require that the personal property of the defendant shall be
levied on and sold before land shall be taken in execution. It may
say what notice shall be given on the sale of real estate on
execution, and also require that it shall sell for one-half or
two-thirds of its value. A valuation law in those states where it
has been adopted has been found salutary in guarding the rights of
debtor and creditor. A debtor, under this law, cannot defeat the
claim of his creditor by purchasing the real estate levied on,
through the agency of a friend at a nominal price, and this
protects the rights of the creditors of the defendant generally.
There may be some cases of hardship to creditors under such a law,
but they must be few and unimportant in comparison with the
benefits secured by the law both to creditors and debtors. Some
restriction on the sale of land on execution is required by a sound
policy, especially in new and rising states, where real property
can scarcely be said to have a final value.
But this law is supposed to be unconstitutional from its
retrospective effect. I had supposed that such a supposition could
not be raised under the decision of this Court.
In the case of
Satterlee v.
Matthewson, 2 Pet. 407,
"the plaintiff, at the trial, set up a title under a warrant
dated 10 January, 1812, founded upon an improvement in the year
1785, which it was admitted was under a Connecticut title, and a
patent dated 19 February, 1813."
"The defendant claimed title under a patent issued to John
Wharton in the year 1781, and a conveyance by him to Satterlee in
1812."
Sometime in the year 1790, the defendant had come into
possession as tenant to the plaintiff, and it was insisted that the
defendant was estopped from setting up his title. The court of
common pleas decided in favor of the plaintiff, but on a writ of
error the Supreme Court of Pennsylvania held that "by the
Page 42 U. S. 331
settled law of that state, the relation of landlord and tenant
could not subsist under a Connecticut title." Upon which ground the
judgment was reversed and a
venire facias de novo was
awarded.
On 8 April, 1826, and before the second trial of the cause took
place, the legislature of that state passed a law declaring
"That the relation of landlord and tenant shall exist, and be
held as fully and effectually between Connecticut settlers and
Pennsylvania claimants as between other citizens of this
commonwealth on the trial of any cause now pending or hereafter to
be brought within this commonwealth, any law or usage to the
contrary notwithstanding."
Under the instruction of the court in accordance with that
statute, the jury found a verdict for the plaintiff, on which
judgment was entered. This judgment on being removed by writ of
error to the Supreme Court of Pennsylvania, was affirmed. On the
ground that the above statute impaired the obligation of the
contract between Satterlee and Matthewson, the cause was removed to
this Court from the Supreme Court of Pennsylvania, by a writ of
error.
In its opinion this Court said,
"If the effect of the statute in question be not to impair the
obligation of the contract, is there any other part of the
Constitution of the United States to which it is repugnant? It is
said to be retrospective. Be it so, but retrospective laws which do
not impair the obligation of contracts or partake of the character
of
ex post facto laws are not condemned or forbidden by
any part of that instrument."
And again,
"The objection is urged that the effect of this act was to
divest rights which were vested by law in Satterlee. There is
certainly no part of the Constitution of the United States which
applies to a state law of this description, nor are we aware of any
decision of this or of any circuit court, which condemned such a
law upon this ground."
Here was a direct legislation not only on existing rights
growing out of contracts, but such an effect was given to the law
as to divest vested rights. And yet this act was held not to be in
violation of the Constitution of the United States.
What vested right is there or can there be, in the nature of
things, in the holder of a contract to the particular remedy for
its enforcement which existed at its date? But if there were such a
vested right as to the remedy, which there is not, it may,
under
Page 42 U. S. 332
the above authority, be divested by law. If the decision do not
mean this, it means nothing.
A state legislature cannot impair the contract by changing the
time or manner of its performance. By the contract, the parties
have fixed their rights and obligations, and these are guarded by
the Constitution. But the remedy for the enforcement of the
contract, being established by the lawmaking power, may be modified
at its discretion. This is admitted as regards subsequent
contracts, but the same rule applies to prior ones. So far as the
mere remedy is concerned, in my judgment, no sound and practical
distinction can be drawn between prior and future contracts.
I think, in the case under consideration, that the laws of
Illinois referred to do not apply, and therefore I agree to the
answers given by the Court to the points certified.
Order
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the District of
Illinois, and on the points and questions on which the judges of
the said circuit court were opposed in opinion and which were
certified to this Court for its opinion agreeably to the act of
Congress in such case made and provided, and was argued by counsel.
On consideration whereof it is the opinion of this Court, 1st, that
the decree should direct the premises to be sold at public auction
to the highest bidder, without regard to the law of February 19,
1841, which gives the right of redemption to the mortgagor for
twelve months, and to the judgment creditor for fifteen; 2d, that
the decree should direct the sale of the mortgaged premises without
being first valued by three householders and without requiring
two-thirds of the amount of the said valuation to be bid according
to the law of February 27, 1841; and that the decision of these two
questions disposes of the third. It is thereupon now here ordered
and adjudged by this Court that it be so certified to the said
circuit court.
** Present MR. CHIEF JUSTICE TANEY, and Justices THOMPSON,
MCLEAN, BALDWIN, WAYNE, CATRON, and DANIEL.