City of El Paso v. Simmons, 38

Citation85 S.Ct. 577,379 U.S. 497,13 L.Ed.2d 446
Decision Date18 January 1965
Docket NumberNo. 38,38
PartiesCITY OF EL PASO, Appellant, v. Greenberry SIMMONS
CourtU.S. Supreme Court

William J. Mounce, El Paso, Tex., for appellant.

Greenberry Simmons, Louisville, Ky., for appellee.

Mr. 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 oen-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 non-payment of interest, the purchasers

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

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 down payment 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 f 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 quit-

claim 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 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, 84 S.Ct. 1165, 12 L.Ed.2d 174. 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

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, 49 S.Ct. 158, 73 L.Ed. 258, which was followed without comment in South Carolina Electric & Gas Co. v. Flemming, 351 U.S. 901, 76 S.Ct. 692, 100 L.Ed. 1439 and questioned but not put to rest in Chicago v. Atchison, Topeka & Santa Fe R. Co., 357 U.S. 77, 78 S.Ct. 1063, 2 L.Ed.2d 1174, 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

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 for certiorari.6 Bradford Electric Light Co. v. Clapper, 284 U.S. 221, 52 S.Ct. 118, 76 L.Ed. 254. 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, 4 L.Ed. 529; Von Hoffman v. City of Quincy, 4 Wall, 535, 553 554, 18 L.Ed. 403; Honeyman v. Jacobs, 306 U.S. 539, 59 S.Ct. 702, 83 L.Ed. 972. 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

court order. Wilson v. Standefer, 184 U.S. 399, 22 S.Ct. 384, 46 L.Ed. 612; Waggoner v. Flack, 188 U.S. 595, 23 S.Ct. 345, 47 L.Ed. 609; Aikins v. Kingsbury, 247 U.S. 484, 38 S.Ct. 558, 62 L.Ed. 1226.7 In those cases the Court reasoned that the state statutes existing when the contracts were made were not to be considered the exclusive remedies available in the event of the purchaser's default since there was no promise, express or implied, on the part of the State not to enlarge the remedy or grant another in case of breach.

The Court of Appeals rejected the City's contention. The Texas cases, according to the Court of Appeals, hold

that the reinstatement provision confers a vested right which is not subject to legislative alteration.8 From this it concluded that under state law the five-year limitation on reinstatement was not a mere modification of remedy

but a change in the obligation of a contract. Relying on the theory that it is state law that determines the obligations of the parties, the Court of Appeals found that the 1941 statute abrogated an obligation of the contract and thus violated the Contract Clause of the Constitution.

We do not pause to consider further whether the Court of Appeals correctly ascertained the Texas law at the time these contracts were made, or to chart again the dividing line under federal law between 'remedy' and 'obligation,' or to determine the extent to which this line is controlled by state court decisions, decisions often rendered in contexts not involving Contract Clause considerations.9 For it is not every modification of a con-

tractual promise that impairs the obligation of contract under federal law, any more than it is every alteration of existing remedies that violates the Contract Clause.

Stephenson v. Binford, 287 U.S. 251, 276, 53 S.Ct. 181, 188, 77 L.Ed. 288; Stone v. Mississippi, 101 U.S. 814, 819, 25 L.Ed. 1079; Manigault v. Springes, 199 U.S. 473, 26 S.Ct. 127, 50 L.ed. 274. Assuming the provision for reinstatement after default to be part of the State's obligation, we do not think its modification by a five-year statute of repose contravenes the Contract Clause.

The decisions 'put it beyond question that the prohibition is not an absolute one and is not to be read with literal exactness like a mathematical formula,' as Chief Justice Hughes said in Home Building & Loan Assn. v. Blaisdell, 290 U.S. 398, 428, 54 S.Ct. 231, 236. The Blaisdell opinion, which amounted to a comprehensive restatement of the principles underlying the application of the Contract Clause, makes it quite clear that '(n)ot only is the constitutional provision qualified by the measure of control which the state retains over remedial processes, but the state also continues to possess...

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