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Ignoring the fact that the Contracts Clause binds the states (not the federal government)... How is this different from Blaisdell, where the court found that M

Ignoring the fact that the Contracts Clause binds the states (not the federal government)... How is this different from Blaisdell, where the court found that Minnesota could extend the time needed to redeem a mortgage from foreclosure, on account of the Great Depression? Under Kansas Power & Light, there's a three part test: - extent of the impairment of the contract - a significant and legitimate purpose behind the regulation, such as the remedying of a broad and general social or economic problem - reasonable and appropriate for its intended purpose. Point #2 is a slam dunk, and I think you could make the case, under #1, that the mortgage holder will still get paid slightly later, the time value of that money is very low (the yield on a 3 month T-Bill is a comically low 0.09%), and there are programs to tide over anyone who might be in a bind.

henryfjordan 7y ago
This post piqued my interest so I went and read the two rulings you mentioned, Blaisdell and Kansas Power & Light. These are my (a layman) musings about them in case anyone else is interested: The Court in Blaisdell basically recognized that passing any law can potentially interfere with a contract and refused to let the state's emergency authority be trumped by the contracts clause. In that case, the law in question extended the time a person has to "redeem" their mortgage but also required the person to pay rent to the bank in the interim, which seemed important as they cited other similar laws that were ruled "repugnant to the constitution" which lacked a similar provision. They also highlight the difference between modifying a contract and modifying your remedies, which applies now to California (and other states) because we've suspended processing of evictions. CA didn't modify anyone's rental agreement to extend the eviction process, they just refuse to give landlords a remedy. Kansas Power & Light was a lot more straight-forward but it basically brushed away the Contracts Clause forevermore. That case was about a natural gas contract that had been governed by Federal regulation but then the fed said "we don't want to deal with this any more, let the states regulate the price of gas" and the court ruled that Kansas hadn't interfered with the contract because the contract assumed regulation and it didn't matter much who was doing that regulation. I actually thought the court's reasoning here was pretty weak, but I support the outcome. They basically read the Contracts Clause out of the Constitution unless the state itself is party to the contract or has passed something openly nefarious, which should have been done via an amendment to the Constitution, but I have some extreme views around that. After reading these two cases and considering whether a state government could pause mortgages/rent for a month in light of the contracts clause, I think that mattkrause's opinion is correct, that they could get away with it as long as the banks are made whole in some way.

henryfjordan 7y ago

This post piqued my interest so I went and read the two rulings you mentioned, Blaisdell and Kansas Power & Light. These are my (a layman) musings about them in case anyone else is interested: The Court in Blaisdell basically recognized that passing any law can potentially interfere with a contract and refused to let the state's emergency authority be trumped by the contracts clause. In that case, the law in question extended the time a person has to "redeem" their mortgage but also required the person to pay rent to the bank in the interim, which seemed important as they cited other similar laws that were ruled "repugnant to the constitution" which lacked a similar provision. They also highlight the difference between modifying a contract and modifying your remedies, which applies now to California (and other states) because we've suspended processing of evictions. CA didn't modify anyone's rental agreement to extend the eviction process, they just refuse to give landlords a remedy. Kansas Power & Light was a lot more straight-forward but it basically brushed away the Contracts Clause forevermore. That case was about a natural gas contract that had been governed by Federal regulation but then the fed said "we don't want to deal with this any more, let the states regulate the price of gas" and the court ruled that Kansas hadn't interfered with the contract because the contract assumed regulation and it didn't matter much who was doing that regulation. I actually thought the court's reasoning here was pretty weak, but I support the outcome. They basically read the Contracts Clause out of the Constitution unless the state itself is party to the contract or has passed something openly nefarious, which should have been done via an amendment to the Constitution, but I have some extreme views around that. After reading these two cases and considering whether a state government could pause mortgages/rent for a month in light of the contracts clause, I think that mattkrause's opinion is correct, that they could get away with it as long as the banks are made whole in some way.