Onsrud v. Kenyon

• Decision Date: 07 October 1941
• Citation: 238 Wis. 496,300 N.W. 359
• Parties: ONSRUD v. KENYON.
• Court: Wisconsin Supreme Court

238 Wis. 496

300 N.W. 359

ONSRUD

v.KENYON.

Supreme Court of Wisconsin.

Oct. 7, 1941.

Appeal from a judgment of the Circuit Court for Dane County; Alvin C. Reis, Circuit Judge.

Affirmed.

Action brought by John A. Onsrud against S. V. Kenyon to recover the balance of $4,000 due as principal on a promissory note. Defendant moved to dismiss the complaint on the ground that the action was commenced in violation of sec. 281.22(4), Stats.1937. The court granted the motion, and judgment dismissing the complaint was entered. Plaintiff appealed therefrom.

FOWLER, J., dissenting.

Alvin M. Loverud, of Stoughton (Edward Mennes, of Stoughton, of counsel), for appellant.

Murphy & Morris, of Madison, for respondent.

FRITZ, Justice.

This appeal is in an action commenced on December 3, 1937, to recover from defendantthe balance of $4,000 owing as principal on a promissory note for $6,000. The note was secured by a mortgage on defendant's farm homestead, and on October 5, 1940, plaintiff commenced also an action of foreclosure based on the note and mortgage. Thereupon defendant, who had filed an answer and plea in abatement to the complaint in the action commenced on the note in December, 1937, moved for the dismissal of this action on the ground that it was commenced in violation of sec. 281.22 (4), Stats.1937, which prohibits the commencement of any action, excepting for the foreclosure of a mortgage, where the evidence of indebtedness is secured by a mortgage on real estate, until the mortgage is first foreclosed and the encumbered property sold on foreclosure and the sale confirmed. On the hearing of the motion the principal issue was the constitutionality of the statute, and upon the evidence produced by the parties, the court concluded that the statute was valid, and that under its provisions defendant was entitled to judgment dismissing the complaint.

On this appeal from the judgment plaintiff contends that sec. 281.22, Stats., and particularly subsec. (4) thereof, is unconstitutional on the grounds that it deprived a mortgage note holder of valuable rights for a long and indefinite time without any compensating relief; that such denial of constitutional rights is justified only by a great public disaster or calamity, and then only by a law necessary and appropriate to alleviate the disastrous conditions, which affords protection to all parties and is of temporary duration; and that when sec. 281.22(4), Stats., was enacted in 1937, no emergency amounting to a public disaster or calamity existed as a matter of fact, or if conditions of distress then existed they were not new conditions, but a continuation of conditions existing before 1931, and did not constitute an “emergency” condition; and that the provisions of sec. 281.22(4), Stats., were not necessary to alleviate any conditions existing in 1937, or appropriate to any such conditions and do not afford protection to all parties involved, and are not limited or temporary in scope or time.

[1] These contentions cannot be sustained. Plaintiff, as sole owner of the note and mortgage involved herein is not deprived, as he contends, of valuable rights for a long and indefinite time. As such sole owner, he could and, on October 5, 1940, did bring an action to recover on the note and mortgage by the foreclosure thereof; and if there is a deficiency judgment upon the confirmation of a foreclosure sale, he can proceed to enforce payment thereof by attachment, garnishment or execution as in the case of any judgment in an action based on solely the note. His contract is intact; he has not actually lost any contract right; and his property right survives. There is a change in but the order or method of procedure in that his remedy is in part postponed, but the limitation does not exceed the bounds of reason.

[2][3][4] As was stated in Conley v. Barton, 260 U.S. 677, 43 S.Ct. 238, 239, 67 L.Ed. 456: “It is recognized that the Legislature may modify or change existing remedies or prescribe new modes of procedure without impairing the obligation of contracts if a substantial or efficacious remedy remains or is given, by means of which a party can enforce his rights under the contract.”

See, also, Northwestern Mut. Life Ins. Co. v. Neeves, 46 Wis. 147, 49 N.W. 832;Hanauer v. Republic Building Co., 216 Wis. 49, 54, 255 N.W. 136, 256 N.W. 784. By express provision in subsec. (1) of sec. 281.22, Stats.1937, the effect of subsection (4) thereof (which was originally enacted in 1935) was limited to the duration of the emergency and in any event not later than April 1, 1939; and by an amendment in 1939, that date was extended to April 1, 1941. In subsec. (4) of sec. 281.22, Stats., there has been since its initial enactment the provision that “This is emergency legislation”, and in subsec. (1) thereof there has been the legislative declaration (without any change since 1937 excepting as to the extension of time) “that a public economic emergency does, and continues to, exist in the state of Wisconsin. A widespread drought within the state has aggravated and made more serious the conditions already existing. This economic emergency has deprived thousands of people in this state of employment, has necessitated the expenditure of many millions of public funds within this state to prevent starvation, has thrown the burden of support of thousands on the state and nation, has destroyed property values, and has caused many of the people of this state to lose their homes, their farms and their places of business by foreclosure of mortgages or execution upon judgments, and threatens the loss of homes, lands and businesswhich furnished those in possession the necessary shelter and means of subsistence and livelihood, and resulting in increased burdens on the state. In view of this emergency it is deemed necessary to adopt reasonable means to safeguard and preserve through this crisis the vital economic structure upon which the good of all depends. Such measures are designated ‘emergency legislation.’ All laws so designated shall expire when the emergency ceases, which shall be so proclaimed by the governor, and in any event, not later than April 1, 1939, unless another date is specifically provided.”

To such a legislative declaration and judgment there are applicable the rules stated by Mr. Justice Stone in South Carolina State Highway Department v. Barnwell Bros., Inc., 303 U.S. 177, 58 S.Ct. 510, 517, 82 L.Ed. 734, to-wit: “Being a legislative judgment it is presumed to be supported by facts known to the Legislature, unless facts judicially known or proved preclude that possibility. Hence, in reviewing the present determination, we examine the record, not to see whether the findings of the court below are supported by evidence but to ascertain upon the whole record whether it is possible to say that the legislative choice is without rational basis.”

Upon the hearing in the circuit court there was considerable proof in respect to farm land values, prices paid for agricultural products and farmers' purchasing power in the pre-war years of 1912 to 1914, and the years following until 1940, and although there were conflicts in the evidence, it reasonably admitted finding that in this state there was a gradual rise in such values and prices until about 1921, the year in which the note and mortgage involved herein were executed, when farm values were 168 per cent. of the pre-war level; and that there was then a decline until in 1933 and 1934 there was reached the low point in farm values and they were but 80 per cent. of pre-war values, and that although there were some fluctuations in March, 1940, they were still but 84 per cent. thereof, which was still but half of the values in 1921. In view of the proof establishing the existence of such facts and other distressing economic conditions, it cannot be said that there was no rational basis for the legislative declarations in enactments in 1935 to 1939 as to the continuing existence of the disastrous and distressing conditions and the consequent public economic emergency stated therein. Whether under the facts known to the legislature the existing conditions constituted such an emergency, the extent and effect and duration thereof, and what relief by legislation was necessary and appropriate to alleviate the disastrous consequences and afford due protection to all parties concerned, were matters to be determined by the legislature, and its judgment is presumed to be supported by facts within its knowledge, unless facts are proven that preclude that conclusion.

[5] It is not necessary, as appellant contends, that great and public disaster or calamity result in order to constitute such an emergency as to justify the enactment, in the exercise of the police power, of a temporary legislative limitation on the exercise of a contractual right. An emergency justifying such legislation may exist when there is a great and public need for such relief, although it does not constitute a great public disaster or calamity. As the court said in Home Bldg. & Loan Ass'n v. Blaisdell, 290 U.S. 398, 440, 54 S.Ct. 231, 240, 78 L.Ed. 413, 88 A.L.R. 1481:

“The reservation of state power appropriate to such extraordinary conditions may be deemed to be as much a part of all contracts as is the reservation of state power to protect the public interest in the other situations to which we have referred. And, if state power exists to give temporary relief from the enforcement of contracts in the presence of disasters due to physical causes such as fire, flood, or earthquake. That power cannot be said to be nonexistent when the urgent public need demanding such relief is produced by other and economic causes.” See, also, Hanauer v. Republic Building Co., supra, page 57 of 216 Wis., 255 N.W. 136, 256 N.W. 784.

[6] The mere fact that the distressing conditions which existed at the time of the re-enactment of sec. 281.22, Stats.1937 and 1939, are the continuation...