Landmark Supreme Court Case: Home Building and Loan Association v. Blaisdell (1934)
Home Building and Loan Association v. Blaisdell (1934) is the 59th landmark Supreme Court case, the 23rd in the Economics module, featured in the KTB Prep American Government and Civics series designed to acquaint users with the origins, concepts, organizations, and policies of the United States government and political system. The goal is greater familiarization with the rights and obligations of citizenship at the local, state, national, and global levels and the history of our nation as a democracy. While there is overlap, these landmark cases are separated into cases addressing:
- Foreign Policy
- Science & Technology
- Public Safety
- Death Penalty
- Speech, Press, and Protest
- Criminal Justice
- Politics, Society, Freedom, and Equality
The Supreme Court
The Supreme Court is the highest court in the United States. Article III of the U.S. Constitution created the Supreme Court and authorized Congress to pass laws establishing a system of lower courts. The Constitution elaborated neither the exact powers and prerogatives of the Supreme Court nor the organization of the Judicial Branch as a whole. Thus, it has been left to Congress and to the Justices of the Court through their decisions to develop the Federal Judiciary and a body of Federal law.
The number of Justices on the Supreme Court changed six times before settling at the present total of nine in 1869. Since the formation of the Court in 1790, there have been only 17 Chief Justices* and 102 Associate Justices, with Justices serving for an average of 16 years. On average a new Justice joins the Court almost every two years.
The Supreme Court of the United States hears about 100 to 150 appeals of the more than 7,000 cases it is asked to review every year. That means the decisions made by the 12 Circuit Courts of Appeals across the country and the Federal Circuit Court are the last word in thousands of cases.
Court of Appeals
In the federal court system’s present form, 94 district level trial courts and 13 courts of appeals sit below the Supreme Court. The 94 federal judicial districts are organized into 12 regional circuits, each of which has a court of appeals. The appellate court’s task is to determine whether or not the law was applied correctly in the trial court. Appeals courts consist of three judges and do not use a jury.
The appellate courts do not retry cases or hear new evidence. They do not hear witnesses testify. There is no jury. Appellate courts review the procedures and the decisions in the trial court to make sure that the proceedings were fair and that the proper law was applied correctly.
A court of appeals hears challenges to district court decisions from courts located within its circuit, as well as appeals from decisions of federal administrative agencies. In addition, the Court of Appeals for the Federal Circuit has nationwide jurisdiction to hear appeals in specialized cases, such as those involving patent laws, and cases decided by the U.S. Court of International Trade and the U.S. Court of Federal Claims.
The nation’s 94 trial courts are called U.S. District Courts. At a trial in a U.S. District Court, witnesses give testimony and a judge or jury decides who is guilty or not guilty — or who is liable or not liable. District courts resolve disputes by determining the facts and applying legal principles to decide who is right.
Trial courts include the district judge who tries the case and a jury that decides the case. Magistrate judges assist district judges in preparing cases for trial. They may also conduct trials in misdemeanor cases.
There is at least one district court in each state, and the District of Columbia. Each district includes a U.S. bankruptcy court as a unit of the district court.
Federal courts have exclusive jurisdiction over bankruptcy cases involving personal, business, or farm bankruptcy. This means a bankruptcy case cannot be filed in state court. Bankruptcy Appellate Panels (BAPs) are 3-judge panels authorized to hear appeals of bankruptcy court decisions. These panels are a unit of the federal courts of appeals, and must be established by that circuit. Five circuits have established panels: First Circuit, Sixth Circuit, Eighth Circuit, Ninth Circuit, and Tenth Circuit.
Home Building and Loan Association v. Blaisdell (1934)
In 1933, Minnesota enacted the Mortgage Moratorium Law in an effort to combat the economic emergency posed by the Great Depression. The law extended the time period in which borrowers could pay back their debts on property to lenders.
A court granted an extension to the Blaisdells under this statute while also requiring them to pay $40 a month during the extended period to Home Building and Loan Association, which was the mortgagor of their home. Home argued that the Minnesota law was unconstitutional under the Contracts Clause of the Constitution but was unsuccessful in state courts.
Q: Did the Minnesota law violate the Contracts Clause?
A: No, the law did not violate the Constitution.
5-4 ruling Minnesota’s suspension of creditor’s remedies was not in violation of the U.S. Constitution. Minnesota Mortgage Moratorium Act upheld. There are limitations on the doctrine embedded in the Contracts Clause (Section 10 of Article I). There may be a public need to restrain private rights to further the public interest when there is an emergency.
The Framers of the Constitution could not have foreseen all possible modern problems, so the Constitution should not be interpreted in too rigid a way to allow for responding to them. The statute met the relevant five-factor test:
- There was a genuine emergency
- The legislation was designed to help the public in general
- The relief was narrowly tailored to the problem
- The mortgagor’s interests were not seriously undermined
- The legislation is temporary.
Since the demands of the Great Depression were vital to all of the state’s citizens, the Court held the law was a legitimate use of Minnesota’s police power. While the Blaisdell judgment itself might have been held to apply only in limited instances of economic emergency, by the late 1930s the emergency exception doctrine had expanded dramatically
Next Economics Case: Nebbia v. New York (1934)
Previous Economics Case: Village of Euclid v. Amber Realty Co. (1926)
Previous Case: Powell v. Alabama (1932)