379 U.S. 497 (1965), 38, City of El Paso v. Simmons

Docket Nº:No. 38
Citation:379 U.S. 497, 85 S.Ct. 577, 13 L.Ed.2d 446
Party Name:City of El Paso v. Simmons
Case Date:January 18, 1965
Court:United States Supreme Court
 
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Page 497

379 U.S. 497 (1965)

85 S.Ct. 577, 13 L.Ed.2d 446

City of El Paso

v.

Simmons

No. 38

United States Supreme Court

Jan. 18, 1965

Argued November 17, 1964

APPEAL FROM THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Syllabus

In 1910, the Texas State Land Board sold some public land by contract calling for a small down payment plus annual interest and principal payments. State law provided for the termination of the contract and forfeiture of the land for nonpayment of interest, and, in such case, the purchaser or his vendee could reinstate his claim on written request and payment of delinquent interest, unless rights of third parties intervened. In 1941, the law was amended limiting reinstatement rights to five years from the forfeiture date. Here, the land was forfeited in 1947, and appellee, who thereafter took quitclaim deeds to the land, filed for reinstatement and tendered payment more than five years later. His application was denied. The State sold the land to the City of El Paso in 1955, and appellee filed this suit to determine title thereto. The District Court granted appellant's motion for summary judgment on the basis of the 1941 statute. The Court of Appeals reversed, ruling that the 1941 law impaired the obligation of contracts in contravention of Art. I, § 10, of the Constitution, but remanded the case to the District Court for consideration of the City's defenses of laches and adverse possession.

Held:

1. Although this appeal was improperly brought under 28 U.S.C. § 1254(2), the Court treats the papers whereon the appeal was filed as a petition for certiorari under 28 U.S.C. § 2103, dismisses the appeal, and grants certiorari. Pp. 501-503.

2. It is not every modification of a contractual promise that impairs the obligation of a contract, any more than it is every alteration of existing remedies that violates the Contract Clause. The prohibition against impairment of the obligation of contract "is not an absolute one, and is not to be read with literal exactness, like a mathematical formula." Home Building & Loan Assn. v. Blaisdell, 290 U.S. 398, 428. Pp. 506-508.

3. The State has reserved power to safeguard the vital interests of its people, which may modify or affect the obligation of contract but not destroy the constitutional limitation; and the reserved power and this limitation must be construed in harmony with each other. Pp. 508-509.

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4. Without affecting the central undertaking of the seller or the primary consideration for the buyer's undertaking, the Texas statute of repose serves significant state objectives: clarification of land titles, elimination of massive litigation over titles, and effective utilization of property. Hence, it impairs no protected right under the Contract Clause. Pp. 509-517.

Appeal dismissed, and certiorari granted; 320 F.2d 541 reversed.

WHITE, J., lead opinion

djQMr. Justice WHITE delivered the opinion of the Court.

Under the applicable statutes existing in Texas in 1910, the year in which the contracts in this case were made, the State Land Board was authorized to sell the public lands allocated to the Permanent Free School Fund on long-term contracts calling for a down payment of one-fortieth of the principal and annual payment of interest and principal. The time for payment of principal was extended periodically, and the principal was never called due. In the event of nonpayment of interest, however, the statutes authorized the termination of the contract and the forfeiture of the lands to the State without the necessity of reentry or judicial proceedings, the land again to become a part of the public domain and to be resold for the account of the school fund.1 The provision chiefly in issue in this case provided:

In any cases where lands have been forfeited to the State for the nonpayment of interest, the purchasers

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or their vendees may have their claims reinstated on their written request, by paying into the treasury the full amount of interest due on such claim up to the date of reinstatement; provided, that no rights of third persons may have intervened. In all such cases, the original obligations and penalties shall thereby become as binding as if no forfeiture had ever occurred.

Tex.Gen.Laws 1897, ch. 129, art. 4218f.

In 1941, the foregoing provisions were amended. Among other things, the offering of forfeited land for sale on a subsequent sale date was made permissive, instead of mandatory, and a provision was added stating that the right to reinstate lands forfeited thereafter "must be exercised within five (5) years from the date of the forfeiture." Tex.Gen. & Spec.Laws 1941, ch. 191, § 3, Vernon's Ann.Civ.Stat., art. 5326. In 1951, the right of reinstatement was limited to the last purchaser from the State and his vendees or heirs. Tex.Gen. & Spec.Laws 1951, ch. 59 § 2, Vernon's Ann.Civ.Stat., art. 5326.2

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In 1910, certain predecessors in title of Simmons, the appellee, executed their installment contracts to purchase school lands from the State of Texas. The original purchasers made a downpayment of one-fortieth of the principal, and made annual interest payments. The purchase contracts were assigned several times, and interest payments fell into arrears during the forties. On July 21, 1947, after a notice of arrears and request for payment, the land was forfeited for nonpayment of interest. A notice of forfeiture and a copy of the 1941 Act allowing reinstatement within five years were sent to the last purchaser of record, but were returned unclaimed. Appellee Simmons, a citizen of Kentucky, thereafter took quitclaim

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deeds to the land in question and filed his applications for reinstatement, tendering the required payments. The applications were denied because they had not been made within five years of the forfeiture, as required by the 1941 statute. In 1955, pursuant to special legislation, the land was sold by the State to the City of El Paso. Simmons then filed this suit in the Federal District Court to determine title to the land in question. In its answer, the City relied upon the 1941 statute as barring Simmons' claim, and also pleaded adverse possession and laches as additional defenses. The District Court granted the City's motion for summary judgment on the [85 S.Ct. 580] ground of the 1941 statute.3 The Court of Appeals reversed, 320 F.2d 541 (C.A.5th Cir.), ruling that the right to reinstate was a vested contractual right, and that the prohibition against impairment of contracts contained in Art. I § 10, of the Constitution of the United States prohibited the application of the 1941 statute to the contract here in question. We noted probable jurisdiction. 377 U.S. 902. We reverse.

I

Although neither party has raised the issue, we deal at the outset with a jurisdictional matter. The appeal in this case is here under 28 U.S.C. § 1254(2) (1958 ed.).4 The Court of Appeals, after holding the Texas statute

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unconstitutional, remanded the case to the District Court to determine the City's defenses of laches and adverse possession. Under a prior interpretation of § 240(b) of the Judicial Code, the predecessor provision of § 1254(2), a final judgment or decree of the Court of Appeals is necessary to the exercise of our jurisdiction over the case by way of appeal, Slaker v. O'Connor, 278 U.S. 188, which was followed without comment in South Carolina Electric & Gas Co. v. Flemming, 351 U.S. 901, and questioned, but not put to rest, in Chicago v. Atchison, Topeka & Santa Fe R. Co., 357 U.S. 77, the judgment in that case being deemed a final one. These questions under § 1254(2) were neither briefed nor argued in this case, and it is not appropriate to resolve them here.

In 1962, Congress expanded the scope of 28 U.S.C. § 2103 to apply to appeals from the United States courts of appeals.5 That section now provides that an appeal improvidently taken from a court of appeals, as well as from a state court, shall not be dismissed for that reason alone, but that the appeal papers shall be regarded and acted on as a petition for a writ of certiorari. The restriction in 28 U.S.C. § 1254(2) (1958 ed.) providing that an appeal from the court of appeals "shall preclude review by writ of certiorari at the instance of such appellant" is no bar to our treating this case as here on a

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petition for certiorari. For this provision means only that, if an appeal is proper and has been taken, certiorari will not thereafter be available; where the appeal is not proper, this Court will still consider a timely application [85 S.Ct. 581] for certiorari.6 Bradford Electric Light Co. v. Clapper, 284 U.S. 221. No timely application for certiorari has been filed in the instant case. But 28 U.S.C. § 2103 (1958 ed., Supp. V) now requires that we treat the papers whereon the appeal was taken as a petition for certiorari. Accordingly we dismiss the appeal and grant the writ of certiorari.

II

We turn to the merits. The City seeks to bring this case within the long line of cases recognizing a distinction between contract obligation and remedy and permitting a modification of the remedy as long as there is no substantial impairment of the value of the obligation. Sturges v. Crowninshield, 4 Wheat. 122, 200; Von Hoffman v. City of Quincy, 4 Wall, 535, 553-554; Honeyman v. Jacobs, 306 U.S. 539. More specifically, it invokes three cases in this Court, two from Texas, that held it constitutionally permissible to apply state statutes allowing forfeiture of land purchase rights to land contracts between private persons and the State made when the law did not provide for forfeiture or permitted it only upon

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court order. Wilson v. Standefer, 184 U.S. 399; Waggoner v. Flack...

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