Farmers' Life Ins. Co. v. Wolters

• Decision Date: 21 November 1928
• Docket Number: (No. 883-4078.)
• Citation: 10 S.W.2d 698
• Parties: FARMERS' LIFE INS. CO. v. WOLTERS et al.
• Court: Texas Supreme Court

10 S.W.2d 698

FARMERS' LIFE INS. CO. v. WOLTERS et al.

(No. 883-4078.)

Commission of Appeals of Texas, Section B.

November 21, 1928.

Error to Court of Civil Appeals of First Supreme Judicial District.

On rehearing. Judgment of Court of Civil Appeals (255 S. W. 666) reversed, and judgment of trial court affirmed, and former opinion modified.

For former opinion, see 263 S. W. 259.

Bryan, Dyess & Colgin, of Houston, and W. W. Searcy, of Brenham, for plaintiff in error.

Wolters, Storey, Blanchard & Battaile, L. A. Adamson, and Green & Boyd, all of Houston, for defendants in error.

SPEER, J.

This suit was brought by plaintiff in error against J. F. Wolters and Mrs. Alma Lane, independent executor and executrix, respectively, of the will of Jonathan Lane, deceased, and against other parties not necessary to name. The purpose of the suit was to recover the title and possession of a tract of 302 acres of land, and in the alternative to recover upon a note for $10,000 executed by Jonathan Lane and to foreclose a deed of trust lien upon the land given to secure the payment of the note. The right to recover the land was predicated upon a trustee's sale under the deed of trust referred to, and this brings to the fore the real question presented by the writ of error, and that is whether or not article 5693, Vernon's Sayles' Texas Civil Statutes 1914, shortening the time within which a sale may be made under a deed of trust from ten to four years from the maturity of the debt secured, is constitutional as applied to this case. On March 1, 1912, Jonathan Lane executed the note and deed of trust in favor of the Continental Trust Company, payable one year after date. At that time the statutes provided that such sale by a trustee might be made at any time within ten years from the maturity of the debt secured. Rev. Civ. Stat. 1911, art. 5693. By amendment effective July 1, 1913 (Laws 1913, c. 123), this article was made to read:

"No power of sale conferred by any deed of trust or any mortgage on real estate heretofore executed, or that may hereafter be executed, shall be enforced after the expiration of four years from the maturity of the indebtedness secured thereby, and any sale under such power after the expiration of such time shall be void, and such sale may be enjoined and the lien created in such mortgages or deeds of trust shall cease to exist four years after the maturity of the debt secured thereby."

The trustee exercised the power and sold the land on January 1, 1918, and the plaintiff in error bought it in. The case was submitted to a jury, and upon the findings and the evidence the court rendered judgment in favor of the plaintiff against all defendants and intervener for the title and possession of the land in controversy. Upon appeal, the Court of Civil Appeals reversed and rendered the judgment in part and reversed and remanded the same in part, holding that the amended statute was constitutional, thereby denying the right of the insurance company to recover under its purchase at the trustee's sale, and that the state of the record demanded a remanding of the cause for trial between the intervener and the other appellants. 255 S. W. 666.

The Farmers' Life Insurance Company sought and obtained a writ of error, and the cause was referred to the Commission of Appeals, whose opinion was adopted wherein the reversal of the judgment of the Court of Civil Appeals and the affirming of that of the district court were recommended. 263 S. W. 259. Subsequently, the cause was withdrawn from the commission, and still later again referred to Section A of the Commission, and, upon a second recommendation being submitted, the cause was again withdrawn, and lastly referred to this section for recommendation.

By section 10, art. 1, of the Constitution of the United States, it is declared:

"No state shall * * * pass any * * * ex post facto law, or law impairing the obligation of contracts."

And section 16, art. 1, of our Bill of Rights, declares:

"No bill of attainder, ex post facto law, retroactive law, or any law impairing the obligation of contracts, shall be made."

These provisions are the supreme law, and control every other consideration. The limitations thus imposed are emphatic, unambiguous, and without exception. They apply alike to all contracts and protect all obligations of such contracts from destruction or impairment by subsequent legislation.

The amendment attacked has already been quoted, and its supposed vice of course consists in its shortening the time within which the trustee under the deed of trust was authorized or permitted to make sale of the mortgaged property; the contention being that the full time allowed by law — that is, ten years — at the time the deed of trust was executed became and was an obligation of the contract and the reduction thereof as was attempted by the amendment was an impairment within the prohibition of the Constitution.

The unusual importance of the question thus presented demands that we give more than the ordinary consideration to the case, and justifies us in recounting some of the elementary considerations that enter into the decision.

First, it is important to ascertain just what is meant by the expression, "obligation of contracts." This inquiry has arisen in a great many cases, and has been answered both by way of academic definition and by illustration, but in the nature of things it will only be possible to examine a few of these cases from those courts whose decisions are most binding upon us.

"An obligation is the charge of the law, by which we are necessarily bound to make some payment, according to the law of the land. * * * The obligation of the contract consists in the power and efficacy of the law which applies to, and enforces performance of the contracts, or the payment of an equivalent for nonperformance." Ogden v. Saunders, 12 Wheat. 213, 6 L. Ed. 606.

The obligation of a contract is the law which binds the parties to perform their agreement. Sturges v. Crowninshield, 4 Wheat. 122, 4 L. Ed. 529.

"The obligation of a contract consists in its binding force on the party who makes it. This depends on the laws in existence when it is made; these are necessarily referred to in all contracts, and forming a part of them as the measure of the obligation to perform them by the one party, and the right acquired by the other. There can be no other standard by which to ascertain the extent of either, than that which the terms of the contract indicate, according to their settled legal meaning." McCracken v. Hayward, 2 How. 608, 11 L. Ed. 397.

In the case of Sturges v. Crowninshield (4 Wheat. 200 ), the late Chief Justice says:

"The distinction between the obligation of a contract, and the remedy given by the Legislature to enforce that obligation has been taken at the bar and exists in the nature of things. Without impairing the obligation of the contract, the remedy may certainly be modified as the wisdom of the nation shall direct."

This is the true principle laid down in the explicit terms. The doctrine that the remedy constitutes a part of the contract is a mere abstraction which cannot be carried into practical operation. If the doctrine be sound, it secures the means for the enforcement of the contract at its date. Now does any one doubt that a state Legislature may abolish imprisonment for debt as well on past as future contracts? Here is a modification of the remedy which takes away a means and often a principal means of enforcing the payment of the debt. And yet this is admitted by all to be a constitutional law. Nor does any one doubt the constitutionality of a statute of limitations. This operates upon contracts entered into before its enactment and bars the right of action.

"The obligation of the contract between the parties, in this case, was to perform the promises and undertakings contained therein; the right of the plaintiff was to damages for the breach thereof, to bring suit and obtain a judgment, to take out and prosecute an execution against the defendant till the judgment was satisfied, pursuant to the existing laws of Illinois. These laws giving these rights were as perfectly binding on the defendant, and as much a part of the contract, as if they had been set forth in its stipulations in the very words of the law relating to judgments and executions. If the defendant had made such an agreement as to authorize a sale of his property, which should be levied on by the sheriff, for such price as should be bid for it at a fair public sale on reasonable notice, it would have conferred a right on the plaintiff, which the Constitution made inviolable; and it can make no difference whether such right is conferred by the terms or law of the contract. Any subsequent law which denies, obstructs, or impairs this right, by superadding a condition that there shall be no sale for any sum less than the value of the property levied on, to be ascertained by appraisement, or any other mode of valuation at a public sale, affects the obligation of the contract, as much in the one case as the other, for it can be enforced only by a sale of the defendant's property, and the prevention of such sale is the denial of a right." McCracken v. Hayward, 2 How. 608, 11 L. Ed. 397.

"`Obligation' is defined to be `the act of obliging or binding; that which obligates; the binding power of a vow, promise, oath or contract' etc. Webster's Dict. * * * The obligation of a contract includes everything within its obligatory scope. Among these elements nothing is more important than the means of enforcement. This is the breath of its vital existence. Without it, the contract, as such, in the view of the law, ceases to be, and falls into the class of those `imperfect obligations,' as they are termed, which depend for their fulfillment upon the will and conscience of those upon whom they rest. The ideas of right and remedy are inseparable. `Want of right and want of...