Jefferson Standard Life Ins. Co. v. Noble

• Decision Date: 17 April 1939
• Docket Number: 33587
• Citation: 188 So. 289,185 Miss. 360
• Court: Mississippi Supreme Court
• Parties: JEFFERSON STANDARD LIFE INS. CO. v. NOBLE et ux

188 So. 289

185 Miss. 360

JEFFERSON STANDARD LIFE INS. CO. v. NOBLE et ux

No. 33587

Supreme Court of Mississippi

April 17, 1939

APPEAL from the chancery court of Lincoln county HON. V. J STRICKER, Chancellor.

Petition by James F. Noble and wife against the Jefferson Standard Life Insurance Company to enjoin the defendant from proceeding with foreclosure sale, wherein defendant filed answer and cross-bill. From a decree for plaintiffs defendant appeals. Reversed and remanded.

Reversed and remanded.

Smith Wharton & Hudgins, of Greensboro, N. C., Brady, Brady, Phillips & Bass, of Brookhaven, and Watkins & Eager, of Jackson, for appellants.

That the moratorium statutes, authorizing postponement of mortgage foreclosure sales and granting extension of time for redemption from such sales, contrary to the terms of the mortgage contracts, impaired the obligations of contract cannot and will not be disputed. The Legislature recognized this fact and by its preamble sought to justify this impairment of obligations of contracts by the declaration of the existence of a public economic emergency. It was recognized that the constitutionality of such a statute would be questioned and that the apparent impairment of obligations of contract could be and would be justified, if at all, solely and only upon the ground of the police power of the state during an emergency period.

As has been anticipated by the Legislature, the constitutionality of the act was immediately questioned. However, Mississippi was not the first state during the economic emergency to enact such legislation. The State of Minnesota had passed a very similar act and its constitutionality had been passed upon by the Supreme Court of the United States, prior to the submission to the Supreme Court of the State of Mississippi of the question of the constitutionality of the Mississippi statute.

The Supreme Court of the United States, in the case of Home Building & Loan Assn. v. Blaisdell, 78 L.Ed. 413, 290 U.S. 398, had upheld the constitutionality of the Minnesota statute. The Minnesota statute was upheld by an almost equally divided court and the majority opinion specifically limited the constitutionality of the statute to the temporary period of economic emergency. The Supreme Court of the United States held that such legislation was necessarily temporal in character and had to expire with the emergency.

189 Minn. 437, 249 N.W. 340.

The Supreme Court of the United States justified the legislation by the existence of "a great public calamity, " and, also, by the fact that the relief was temporary even during such great public calamity.

The Supreme Court of the State of Mississippi had presented to it the same question when the Act of 1934 came under review in Wilson Banking v. Colvard, 152 Miss. 804, 161 So. 123. This court upheld the constitutionality of the statute upon exactly the same grounds as did the Supreme Court of the United States.

The Supreme Court of the State of Mississippi recognized that, even as early as the spring of 1935, the worst of the depression and the economic emergency was over; that the country was on the road to recovery. Yet under the conditions as they still existed in the spring of 1935, the court stated that it did not feel that it could hold that the Legislature had no basis for its conclusion that an economic emergency existed. Yet this court clearly indicated that should conditions continue to improve or even perhaps had the injunction there involved been issued at the time of the decision of the case, it would have held that no economic emergency then existed which would justify legislation admittedly impairing the obligations of mortgage contracts.

Jones v. Spearman, 174 Miss. 781, 165 So. 294; Federal Land Bank v. Lee, 154 Miss. 774, 165 So. 613; Atlantic Life Ins. Co. v. Klotz, 181 So. 519.

We respectfully submit that the general business condition of this state has returned to normal, if it has not passed what is normal for the State of Mississippi. The poor we will, of course, always have with us. Present indications are that the unemployed will always be with us. That we have not returned to the conditions existing in 1929 can be admitted. We cannot, however, look into the future and expect or hope for better general business conditions than exist today, at least, not for many years to come. An emergency is an extraordinary condition, not an ordinary condition. By its very nature, it is a temporary condition or else it ceases to become an emergency. There is no great public calamity today. We are no longer passing through a period of disaster. Since the moratorium legislation is only constitutional under such circumstance, there is therefore no constitutional warranty for the further continuance of the enforcement of our moratorium laws.

That this court will take judicial notice of the economic condition of the State of Mississippi and of general business conditions through the state was specifically held in Atlantic Life Ins. Co. v. Klotz, 181 So. 519.

Gully v. Casualty Co., 176 Miss. 388, 168 So. 609; Adams v. Standard Oil, 53 So. 692, 97 Miss. 879; Witherspoon v. State, 103 So. 134, 138 Miss. 310; Briscoe v. Buzbee, 143 So. 887, 163 Miss. 574.

We respectfully submit that the intent of the Legislature as reflected by these various statutes was to grant only temporary relief to a defaulting mortgagor; that it was not the intent of the Legislature to permit a mortgagor to sit back year after year and continue to take and demand the benefits of the act.

Jas. F. Noble, of Brookhaven, for appellees.

Let it be said while appellees owe considerable to appellant that during the ten years appellees have paid nearly the amount borrowed and of course appellant for several years has paid taxes and insurance, but let it be stressed that 7 per cent interest has certainly kept appellant from losing any advantage whatever.

Under the 1938 moratorium statute appellees were safe if they paid either taxes or interest and the context of the statute did not require payment of both in order to be protected by the said statute. Anyhow for the time in question they almost paid poth, perhaps lacked just a little. Of course there were certain monthly payments to be made under decree and there was just a little delinquency which the court under the law had a right to excuse for reasonable time.

These moratorium statutes for these few years are in a large sense rescripts of each other with certain changes intended for the best interests of both mortgagor and mortgagee and in the general interest of the state.

This great court should be, and I am sure will be, slow to destroy legislation enacted by a patriotic Legislature in the best interests of the mortgagor and mortgagee and the best interests of this great state. I believe this court will not destroy humane Legislature conceived in wisdom and brought forth in altruistic intention.

It cannot hurt Jefferson Standard Life Insurance Company to wait about one more year when the 1938 moratorium law will expire as it is abundantly protected under the law and the decrees of the chancery court of Lincoln County, Mississippi.

OPINION

McGowen, J.

On June 18, 1930, the appellees executed a deed of trust on their house and lot, their homestead in the City of Brookhaven, Mississippi, to secure a loan of $ 3600. The loan was to be repaid $ 180 semi-annually, with interest, and the deed of trust had a provision therein for a foreclosure in pais, with a trustee therein named, upon default of any semi-annual payment.

On December 15, 1934, Noble filed a petition, to which his wife afterwards became a party, under chapter 247 of the Laws of 1934, hereinafter designated as the Moratorium Law. The petition substantially complied with the requirements of said law relative thereto, and prayed for an injunction against the Jefferson Standard Life Insurance Company, appellant, restraining it and the trustee from proceeding with a sale of the property by foreclosure under its deed of trust. In that petition, he admitted that for two years he had not made the payments in accordance with the contract, and that he owed $ 3500 at that time. Promptly, on the fiat of the chancellor, the clerk of that court issued the injunction writ restraining the trustee from proceeding to foreclose in pais.

On April 15, 1935, the appellant filed its answer and cross-bill therewith, and the prayer of the cross-bill was that it be permitted to proceed with the foreclosure under the terms of the deed of trust, and for such relief in the alternative as was provided for its protection in the event of the postponement of the foreclosure as provided in the Act.

On April 25, 1935, the chancery court entered a decree providing for payment of reasonable rental on the property.

On October 28, 1938, the appellant filed its supplemental answer and set up that the two years' delay permitted by the Moratorium Act of 1934 had by its own terms ceased to operate on May 13, 1936. The supplemental answer further set up that there did not at that time exist in the State of Mississippi any economic or financial depression, or any state of emergency, and that should either the Moratorium Law of 1934, or chapter 287 of the Laws of 1936, or chapter 346 of the Laws of 1938, be enforced or construed so as to permit the keeping in force of the injunction and forbid the foreclosure of the deed of trust, that such laws would violate both the Constitution of the United States and the State of Mississippi; and that such Moratorium Law of 1938 was unconstitutional and no longer enforceable.

On November 19, 1938, the appellees filed their reply to the supplemental answer, the important feature of which was that they alleged that t...