BRONSON v. KINZIE 1 Howard 311 (1843)

As a result of the depression of 1837 many states passed debtors' relief legislation to assist property holders who were losing their farms and homes by foreclosure. Illinois, for example, provided that foreclosed property could not be sold at auction unless it brought two-thirds of its appraised value, and that the property sold at foreclosure might be repurchased by the debtor within one year at the purchase price plus ten percent. Such legislation, which operated retroactively on existing contracts, did not directly affect their obligation, the duties of the contracting parties toward each other; it affected their remedies, the means by which the obligation of contracts can be enforced.

By a vote of 7–1 the Supreme Court held the Illinois statutes unconstitutional on the ground that they violated the contract clause. The opinion of Chief Justice roger b. taney remained the leading one on the subject for ninety years, until distinguished away by home building loan association v. blaisdell (1934). Taney conceded that the states have power to change the remedies available to creditors confronted by defaulting debtors, on condition that the changed remedy does not impair the obligation of existing contracts. "But if that effect is produced, it is immaterial whether it is done by acting on the remedy or directly on the contract itself." Taney reasoned that the rights of a contracting party could be "seriously impaired by binding the proceedings with new conditions and restrictions, so as to make the remedy hardly worth pursuing." In this case he found that if the state could allow the debtor to repurchase his lost property within a year, it might allow still more time, making difficult a determination of how much time the state might allow. Taney did not say why one year was too long, or why the Court could not fix a rule. He did say that the state requirement fixing two-thirds of the value as the minimum purchasing price "would frequently render any sale altogether impossible." He offered no test by which the state could know whether a change in the remedy adversely affected the obligation of a contract. Justice joseph story privately wrote, "There are times when the Court is called upon to support every sound constitutional doctrine in support of the rights of property and of creditors."

Leonard W. Levy
(1986)