Section 8 of the Minnesota Mortgage Moratorium Law (Act), 1933 Minn. Laws 339, provides that, during an emergency, relief may be had through authorized judicial proceedings with respect to foreclosures of mortgages, and execution sales of real estate; that sales may be postponed and periods of redemption may be extended. The Act does not apply to mortgages subsequently made nor to those made previously which shall be extended for a period ending more than a year after the passage of the Act. The Act is to remain in effect only during the continuance of the emergency and in no event beyond May 1, 1935. No extension of the period for redemption and no postponement of sale is to be allowed which would have the effect of extending the period of redemption beyond that date.
A loan association challenged the validity of the Minnesota Mortgage Moratorium Law (Act), 1933 Minn. Laws 339, as being repugnant to the Contract Clause of U.S. Const. art. I, § 10, and the Due Process and Equal Protection Clauses of U.S. Const. amend. XIV. The statute granted borrowers an extension for the period of redemption for a foreclosure sale. The Supreme Court of Minnesota found the Act to be constitutional. The case was appealed to the Supreme Court of the United States.
Is the Minnesota Mortgage Moratorium Law constitutional?
The U.S. Supreme Court affirmed, holding that the Act had been enacted pursuant to the state's police power with regard to an emergency economic crisis and that the legislation was addressed to a legitimate end. The conditions upon which the period of redemption was extended were not unreasonable, and the legislation was temporary in operation. Thus, the Act violated neither the Contracts Clause nor the provisions of U.S. Const. amend. XIV.