Home Building and Loan Association v. Blaisdell eText - Primary Source

Primary Source

During the Great Depression, many people became too poor to make their mortgage payments. They often lost their farms or houses as a result, leaving them homeless like this family. AP/WIDE WORLD PHOTOS. REPRODUCED BY PERMISSION. During the Great Depression, many people became too poor to make their mortgage payments. They often lost their farms or houses as a result, leaving them homeless like this family. AP/WIDE WORLD PHOTOS. REPRODUCED BY PERMISSION. Published by Gale Cengage AP/WIDE WORLD PHOTOS. REPRODUCED BY PERMISSION.

Supreme Court decision

By: Charles Evans Hughes

Date: January 8, 1934

Source: Home Building and Loan Association v. Blaisdell, 290 U.S. 398 (1934). Available online at (accessed February 6, 2003).

About the Author: Charles Evans Hughes (1862–1948), a conservative reformer, served as chief justice of the U.S. Supreme Court from 1930 to 1941. Earlier in his career, he began working for a law firm in 1884 and later taught at Cornell Law School. He gained a reputation as an independent-thinking Republican when he headed several investigations of corruption in industries during the Progressive Era, a period when a vibrant antitrust movement sought to regulate corporations. Hughes was elected governor of New York in 1906 and served two terms. He served as an associate justice to the Supreme Court from 1910 to 1916. He ran for president against incumbent Woodrow Wilson (served 1913–1921) and later served as secretary of state from 1921 to 1925.


During the Great Depression of the 1930s many states enacted laws under "Little New Deals"—or social and economic legislation much like the national New Deal of Franklin D. Roosevelt's administration. Because they expanded the powers of government to regulate social and economic activities in the United States, some of these state laws were eventually challenged in the Supreme Court.

One case, Home Building and Loan Association v. Blaisdell, was appealed to the Supreme Court in November 1933. Minnesota legislators had passed the Mortgage

Moratorium Law to provide relief to homeowners by exempting property from foreclosure. A property owner in Minneapolis, John Blaisdell, faced foreclosure on his property when he was unable to make payments to his lending agency, the Home Building and Loan Association. Under Minnesota's new law, Blaisdell attempted to prevent the foreclosure. Meanwhile the Home Building and Loan Association challenged the law, arguing that the law violated the contract clause of the U.S. Constitution as well as the due process and equal protection clauses of the Fourteenth Amendment. The Fourteenth Amendment had been ratified by the states in 1868, giving citizens of the United States equal protection under the law and empowering Congress to enforce it through legislation.

The Supreme Court upheld the constitutionality of the Minnesota law by a narrow 5-4 margin. The majority reasoned that "while emergency does not create power, emergency may furnish the occasion for the exercise of power." Chief Justice Charles Evans Hughes argued that because the contract clause of the Constitution was not absolute, a state had the authority to treat the clause with flexibility to protect the interests of its citizens. In a dissenting opinion, Justice George Sutherland argued that the contract clause of the U.S. Constitution should be interpreted literally and that even national emergencies could not justify states interfering with contracts. Sutherland stated, "If the provisions of the Constitution be not upheld when they pinch, as well as when they comfort, they may as well be abandoned."

In addition to upholding a state law as a precedent to the federal New Deal legislation to come, the narrow split between the justices illustrated the division on the Supreme Court over responding to the national crisis of the Great Depression.


For the Supreme Court of the United States, the period between 1930 to 1941 under Chief Justice Charles Evans Hughes was probably one of the most significant ones in the Court's history since its formative years. The landmark case Home Building and Loan Association v. Blaisdell highlighted a shift on the Court. A narrow majority willing to uphold congressional powers to regulate the economy was at odds with conservatives on the court. During the New Deal (from 1933 until the United States entered World War II in 1941), Hughes voted as a moderate reformer. While in 1935 the Court held that the National Recovery Act gave the federal government broader powers than were necessary, it supported state and federal regulatory powers in Home Building and Loan Association v. Blaisdell. In the late 1930s, the Court supported New Deal legislation in such cases as National Labor Relations Board v. Jones and Laughlin Steel Corp. in 1937, which upheld the National Labor Relations Act.

The Supreme Court's decision in Home Building and Loan Association v. Blaisdell provided an early example of how the groundswell of local demands for relief from the Depression eventually pressured the federal government to produce social and economic reforms.

Primary Source: Home Building and Loan Association v. Blaisdell [excerpt]

SYNOPSIS: In this excerpt from the landmark case Home Building and Loan Association v. Blaisdell, Chief Justice Charles Evans Hughes, who wrote the majority opinion, argues that in a time of national emergency states have the authority to exercise their powers to protect the interests of their citizens, even if in doing so they violate the contract clause of the Constitution. The case was decided on January 8, 1934.

Mr. Chief Justice Hughes delivered the opinion of the Court.

Appellant 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 (Art. I, § 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, 189 Minn. 422, 448, 249 N.W. 334, 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 of redemption may be extended. The Act does not apply to mortgages subsequently made, nor to those made previously which shall be extended for a period ending more than a year after the passage of the Act (Part One, § 8). There are separate provisions in Part Two relating to homesteads, but these are to apply "only to cases not entitled to relief under some valid provision of Part One." The Act is to remain in effect "only during the continuance of the emergency and in no event beyond May 1, 1935." No extension of the period for redemption and no postponement of sale is to be allowed which would have the effect of extending the period of redemption beyond that date. Part Two, § 8.

The Act declares that the various provisions for relief are severable; that each is to stand on its own footing with respect to validity. Part One, § 9. We are here concerned with the provisions of Part One, § 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," subject to the above described limitation. 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. Part One, § 5.

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.

On the hearing, appellant objected to the introduction of evidence upon the ground that the statute was invalid under the federal and state constitutions, and moved that the petition be dismissed. The motion was granted, and a motion for a new trial was denied. On appeal, the Supreme Court of the State reversed the decision of the District Court. 189 Minn. 422, 249 N.W. 334. Evidence was then taken in the trial court, and appellant renewed its constitutional objections without avail. The court made findings of fact setting forth the mortgage made by the appellees on August 1, 1928, the power of sale contained in the mortgage, the default and foreclosure by advertisement, and the sale to appellant on May 2, 1932, for $3,700.98. The court found that the time to redeem would expire on May 2, 1933, under the laws of the State as they were in effect when the mortgage was made and when it was fore-closed; that the reasonable value of the income on the property, and the reasonable rental value, was $40 a month; that the bid made by appellant on the foreclosure sale, and the purchase price, were the full amount of the mortgage indebtedness, and that there was no deficiency after the sale; that the reasonable total amount of the purchase price, with taxes and insurance premiums subsequently paid by appellant, but exclusive of interest from the date of sale, was $4,056.39. The court also found that the property was situated in the closely built-up portions of Minneapolis; that it had been improved by a twocar garage, together with a building two stories in height which was divided into fourteen rooms; that the appellees, husband and wife, occupied the premises as their homestead, occupying three rooms and offering the remaining rooms for rental to others.

The court entered its judgment extending the period of redemption to May 1, 1935, subject to the condition that the appellees should pay to the appellant $40 a month through the extended period from May 2, 1933, that is, that, in each of the months of August, September, and October, 1933, the payments should be $80, in two installments, and thereafter $40 a month, all these amounts to go to the payment of taxes, insurance, interest, and mortgage indebtedness. It is this judgment, sustained by the Supreme Court of the State on the authority of its former opinion, which is here under review. 189 Minn. 448, 249 N.W. 893.

The state court upheld the statute as an emergency measure. Although conceding that the obligations of the mortgage contract were impaired, the court decided that what it thus described as an impairment was, notwithstanding the contract clause of the Federal Constitution, within the police power of the State as that power was called into exercise by the public economic emergency which the legislature had found to exist. Attention is thus directed to the preamble and first section of the statute, which described the existing emergency in terms that were deemed to justify the temporary relief which the statute affords. The state court, declaring that it could not say that this legislative finding was without basis, supplemented that finding by its own statement of conditions of which it took judicial notice. The court said:

In addition to the weight to be given the determination of the legislature that an economic emergency exists which demands relief, the court must take notice of other considerations. The members of the legislature come from every community of the state and from all the walks of life. They are familiar with conditions generally in every calling, occupation, profession, and business in the state. Not only they but the courts must be guided by what is common knowledge. It is common knowledge that, in the last few years, land values have shrunk enormously. Loans made a few years ago upon the basis of the then going values cannot possibly be replaced on the basis of present values. We all know that, when this law was enacted, the large financial companies which had made it their business to invest in mortgages had ceased to do so. No bank would directly or indirectly loan on real estate mortgages. Life insurance companies, large investors in such mortgages, had even declared a moratorium as to the loan provisions of their policy contracts. The President had closed banks temporarily. The Congress, in addition to many extraordinary measures looking to the relief of the economic emergency, had passed an act to supply funds whereby mortgagors may be able within a reasonable time to refinance their mortgages or redeem from sales where the redemption has not expired. With this knowledge, the court cannot well hold that the legislature had no basis in fact for the conclusion that an economic emergency existed which called for the exercise of the police power to grant relief. 189 Minn. 429, 249 N.W. 336.

Justice Olsen of the state court, in a concurring opinion, added the following:

The present nationwide and worldwide business and financial crisis has the same results as if it were caused by flood, earthquake, or disturbance in nature. It has deprived millions of persons in this nation of their employment and means of earning a living for themselves and their families; it has destroyed the value of and the income from all property on which thousands of people depended for a living; it actually has resulted in the loss of their homes by a number of our people and threatens to result in the loss of their homes by many other people, in this state; it has resulted in such widespread want and suffering among our people that private, state, and municipal agencies are unable to adequately relieve the want and suffering, and congress has found it necessary to step in and attempt to remedy the situation by federal aid. Millions of the people's money were and are yet tied up in closed banks and in business enterprises. 189 Minn. 437, 249 N.W. 340.

We approach the questions thus presented upon the assumption made below, as required by the law of the State, that the mortgage contained a valid power of sale to be exercised in case of default; that this power was validly exercised; that, under the law then applicable, the period of redemption from the sale was one year, and that it has been extended by the judgment of the court over the opposition of the mortgagee-purchaser, and that, during the period thus extended, and unless the order for extension is modified, the mortgagee-purchaser will be unable to obtain possession, or to obtain or convey title in fee, as he would have been able to do had the statute not been enacted. The statute does not impair the integrity of the mortgage indebtedness. The obligation for interest remains. The statute does not affect the validity of the sale or the right of a mortgagee-purchaser to title in fee, or his right to obtain a deficiency judgment if the mortgagor fails to redeem within the prescribed period. Aside from the extension of time, the other conditions of redemption are unaltered. While the mortgagor remains in possession, he must pay the rental value as that value has been determined, upon notice and hearing, by the court. The rental value so paid is devoted to the carrying of the property by the application of the required payments to taxes, insurance, and interest on the mortgage indebtedness. While the mortgagee-purchaser is debarred from actual possession, he has, so far as rental value is concerned, the equivalent of possession during the extended period.

In determining whether the provision for this temporary and conditional relief exceeds the power of the State by reason of the clause in the Federal Constitution prohibiting impairment of the obligations of contracts, we must consider the relation of emergency to constitutional power, the historical setting of the contract clause, the development of the jurisprudence of this Court in the construction of that clause, and the principles of construction which we may consider to be established.

Emergency does not create power. Emergency does not increase granted power or remove or diminish the restrictions imposed upon power granted or reserved. The Constitution was adopted in a period of grave emergency. Its grants of power to the Federal Government and its limitations of the power of the States were determined in the light of emergency, and they are not altered by emergency. What power was thus granted and what limitations were thus imposed are questions which have always been, and always will be, the subject of close examination under our constitutional system.

While emergency does not create power, emergency may furnish the occasion for the exercise of power.…

Undoubtedly, whatever is reserved of state power must be consistent with the fair intent of the constitutional limitation of that power. The reserved power cannot be construed so as to destroy the limitation, nor is the limitation to be construed to destroy the reserved power in its essential aspects. They must be construed in harmony with each other. This principle precludes a construction which would permit the State to adopt as its policy the repudiation of debts or the destruction of contracts or the denial of means to enforce them. But it does not follow that conditions may not arise in which a temporary restraint of enforcement may be consistent with the spirit and purpose of the constitutional provision, and thus be found to be within the range of the reserved power of the State to protect the vital interests of the community. It cannot be maintained that the constitutional prohibition should be so construed as to prevent limited and temporary interpositions with respect to the enforcement of contracts if made necessary by a great public calamity such as fire, flood, or earthquake. See American Land Co. v. Zeiss, 219 U.S. 47. The reservation of state power appropriate to such extraordinary conditions may be deemed to be as much a part of all contracts as is the reservation of state power to protect the public interest in the other situations to which we have referred. And if state power exists to give temporary relief from the enforcement of contracts in the presence of disasters due to physical causes such as fire, flood or earthquake, that power cannot be said to be nonexistent when the urgent public need demanding such relief is produced by other and economic causes.…

When we consider the contract clause and the decisions which have expounded it in harmony with the essential reserved power of the States to protect the security of their peoples, we find no warrant for the conclusion that the clause has been warped by these decisions from its proper significance, or that the founders of our Government would have interpreted the clause differently had they had occasion to assume that responsibility in the conditions of the later day. The vast body of law which has been developed was unknown to the fathers, but it is believed to have preserved the essential content and the spirit of the Constitution. With a growing recognition of public needs and the relation of individual right to public security, the court has sought to prevent the perversion of the clause through its use as an instrument to throttle the capacity of the States to protect their fundamental interests. This development is a growth from the seeds which the fathers planted. It is a development forecast by the prophetic words of Justice Johnson in Ogden v. Saunders, already quoted. And the germs of the later decisions are found in the early cases of the Charles River Bridge and the West River Bridge, supra, which upheld the public right against strong insistence upon the contract clause. The principle of this development is, as we have seen, that the reservation of the reasonable exercise of the protective power of the State is read into all contracts, and there is no greater reason for refusing to apply this principle to Minnesota mortgages than to New York leases.

Applying the criteria established by our decisions we conclude:

  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.…
  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 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.…
  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.

What has been said on that point is also applicable to the contention presented under the due process clause. Block v. Hirsh, supra.

Nor do we think that the 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. Magoun v. Illinois Trust & Savings Bank,170 U.S. 283; Clark v. Titusville,184 U.S. 329; Quong Wing v. Kirkendall, 223 U.S. 59; Ohio Oil Co. v. Conway, 281 U.S. 146; Sproles v. Binford, 286 U.S. 374.

The judgment of the Supreme Court of Minnesota is affirmed.

Further Resources


Bartholomew, Paul C., and Joseph F. Menez. Summaries of Leading Cases on the Constitution, 13th ed. Savage, Md.: Rowman and Littlefield, 1990.

Hendel, Samuel. Charles Evans Hughes and the Supreme Court. New York: Russell and Russell, 1951.


FDR and the Supreme Court. "The Little New Deal Goes to Court: Blaisdell and Nebbia." Available online at http://newdeal.feri.org/court/essay02.htm; website home page: http://newdeal.feri.org (accessed March 3, 2003).