Bronson v. Kinzie/Dissent McLean
Mr. Justice McLEAN dissented.
The act of Illinois of the 27th 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 per cent. interest, agreeably to the 8th section of the act of 19th 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by this court at its last term, it is supposed the above rule and all others regulating the practice in chancery was rescinded.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 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 have 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 have 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 the 27th of 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 the 29th 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 the 8th of May, 1792, the above provision is re-enacted, '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 the 2d 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 of the United States should be governed by the laws of that state. In the case of Wayman v. Southard, 10 Wheat. 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 the 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 the 21st 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 they remark: '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 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 the 19th 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 courts, 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 per cent. interest. In Virginia, Mississippi, and some of the other states, forthcoming bonds are given, which suspend further proceedings on executions, and in some degree changes 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 the 1st of May, 1841, and to all judgments that may be rendered on any contract or cause of action, accruing prior to the 1st May, 1841.' 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 the 27th 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 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 say: '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, say the court in their 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 observe: '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, say 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 requgnant law can have no influence upon them. And this was the point 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 any one 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 any one 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, not subsequent action of the legislature can impair its obligation by materially retarding its enforcement, much less by barring the remedy.
The argument in favour 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 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 per cent. interest. And this rate of interest is recovered on the contract, in a state where 7 per cent. 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 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 law-making 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 Peters, 407, 'the plaintiff, at the trial, set up a title under a warrant dated the 10th January, 1812, founded upon an improvement in the year 1785, which it was admitted was under a Connecticut title, and a patent dated 19th 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.' Some time 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 favour of the plaintiff; but on a writ of error, the Supreme Court of Pennsylvania held, that 'by the 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 the 8th day of 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 their opinion this court say, '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 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 law-making 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 may 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.
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 19th, 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 27th, 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.