WEBVTT NOTE Constitutional Collapse Under the Weight of Economic Bailout 1 00:00:00.000 --> 00:00:30.000 I'm going to give a political historical perspective, and I think it goes without saying the collapse of the constitutional order didn't start with these recent bailouts, it began quite a while ago, but I'm going to look at a specific area of case law, you have to use your imagination a bit and it's going to be somewhat depressing to see where we were just back in the 1930s to where we are today, so try to 2 00:00:30.000 --> 00:00:36.960 think about what the system's supposed to look like and what it's devolving into. 3 00:00:36.960 --> 00:00:43.080 And I know we all know that there's a lot of talk about the end of capitalism. 4 00:00:43.080 --> 00:00:48.720 Boy, the Financial Times, I think every day they have an article in the editorial section 5 00:00:48.720 --> 00:00:55.000 about different models or alternatives to the capitalistic system. And we know what that is. 6 00:00:55.000 --> 00:01:00.900 is, when you talk about the end of capitalism, you're talking about the end of free markets 7 00:01:00.900 --> 00:01:08.060 and moving closer and closer to some type of socialism, fascism, I don't know what we 8 00:01:08.060 --> 00:01:13.680 call this new arrangement. But this is nothing new for the American political process. As 9 00:01:13.680 --> 00:01:21.880 a matter of fact, the various panics, recessions, depressions have quite a bit of precedent 10 00:01:21.880 --> 00:01:23.880 and American History. 11 00:01:23.880 --> 00:01:29.360 But the court, especially the Supreme Court, was always there to keep things in their proper 12 00:01:29.360 --> 00:01:31.160 place. 13 00:01:31.160 --> 00:01:36.560 And the due process clause of the Fifth Amendment, the Fourteenth Amendment are important, but 14 00:01:36.560 --> 00:01:42.920 I'm going to focus attention on the contract clause of Article I, Section 10. 15 00:01:42.920 --> 00:01:51.320 Now, it goes without saying, Article 1, Section 10 of the Constitution is also applicable, 16 00:01:51.320 --> 00:02:01.040 it was intended to be applicable to the national government, and that of course is the government, 17 00:02:01.040 --> 00:02:07.200 both national and state, are precluded from impairing the obligation of contracts. 18 00:02:07.200 --> 00:02:13.840 And I don't need to tell this audience how important contracts are to free markets and 19 00:02:13.840 --> 00:02:16.200 to the economy. 20 00:02:16.200 --> 00:02:24.040 There was a case, and there are so many of them, I'm just going to highlight the one 21 00:02:24.040 --> 00:02:29.240 in the 1934 case that was decided by the Supreme Court. 22 00:02:29.240 --> 00:02:32.480 We're going to focus in on a dissenting opinion by Justice Sutherland. 23 00:02:32.480 --> 00:02:37.160 And this is prior to the switching time that saved non, it's prior to the National Labor 24 00:02:37.160 --> 00:02:42.300 for Relations Board case, in which the Supreme Court more or less jettisoned property rights 25 00:02:42.300 --> 00:02:47.380 to the whims of the commerce powers of the United States Congress. 26 00:02:47.380 --> 00:02:52.500 So we have a system now that, going back to Rehnquist's opinion written in the U.S. v. 27 00:02:52.500 --> 00:02:58.140 Lopez case, that when we talk about congressional commerce powers, it covers just about everything 28 00:02:58.140 --> 00:03:00.580 imaginable under the sun. 29 00:03:00.580 --> 00:03:09.660 In that 1990s case on the Gun Free Zone Act, the court did give a little pushback to the 30 00:03:09.660 --> 00:03:14.860 Congressional Commerce powers, but not much, it was a 5-4 decision, it was split, if you 31 00:03:14.860 --> 00:03:19.540 read the dissenting opinions, they're really quite frightening that there are literally 32 00:03:19.540 --> 00:03:25.860 no limits to Congressional Commerce powers, including teacher certification, selecting 33 00:03:25.860 --> 00:03:32.880 in textbooks and schools, you name it, under commerce, the Congress can do just about anything. 34 00:03:32.880 --> 00:03:39.880 Rehnquist, who wrote the majority opinion in Lopez, summarized the status quo of commerce powers. 35 00:03:39.880 --> 00:03:49.880 And there are three broad categories that Congress can regulate insofar as its commerce powers are concerned. 36 00:03:49.880 --> 00:03:54.880 Those are essentially the channels of commerce, the instrumentalities of commerce, 37 00:03:54.880 --> 00:04:00.640 Commerce, such as persons and things, and those activities having a substantial relation 38 00:04:00.640 --> 00:04:03.080 to interstate commerce. 39 00:04:03.080 --> 00:04:06.920 And it's up to the political preferences of the court as to what falls under those three 40 00:04:06.920 --> 00:04:13.600 areas, those three categories, and like I said, when you consider the current administration 41 00:04:13.600 --> 00:04:18.960 and who's going to be on the court in the not too distant future, that'll be the main 42 00:04:18.960 --> 00:04:22.160 interpretation of the Supreme Court. 43 00:04:22.160 --> 00:04:30.840 So property rights under commerce and also under Article 1, Section 10, which also, the 44 00:04:30.840 --> 00:04:39.240 framers were very clear about this, also applies to the national government, more or less has 45 00:04:39.240 --> 00:04:51.560 carte blanche to impair the regulation of or impair the obligation of contracts. 46 00:04:51.560 --> 00:04:56.920 This is what some of the more important framers of the Constitution, for example Charles Pickney 47 00:04:56.920 --> 00:05:05.660 of South Carolina, discussing this in the South Carolina Ratification Convention, when 48 00:05:05.660 --> 00:05:12.240 it came to the contract clause of Article 1, Section 10, he stated that it's the soul 49 00:05:12.240 --> 00:05:15.720 of the Constitution. 50 00:05:15.720 --> 00:05:21.360 Its purpose is to cultivate those principles of public honor and private honesty, which 51 00:05:21.360 --> 00:05:34.360 which are due, which are the sure road to national character and happiness, honoring contracts, both private and public. 52 00:05:34.360 --> 00:05:45.360 James Madison, Federalist paper number 44, said it is necessary for the presence, for the perseverance of industry. 53 00:05:45.360 --> 00:05:51.680 In other words, there's something critical to Article 1, Section 10, and by implication, 54 00:05:51.680 --> 00:05:58.760 Section 9, about not impairing contracts, the obligation of contracts. 55 00:05:58.760 --> 00:06:07.240 Now, the recent signing statement by President Obama on the first bailout bill, he mentions, 56 00:06:07.240 --> 00:06:11.680 well, let me just read it very briefly. 57 00:06:11.680 --> 00:06:17.080 The Signing Statement states, Today I have signed into law House Resolution 1, the American 58 00:06:17.080 --> 00:06:20.460 Recovery and Reinvestment Act of 2009. 59 00:06:20.460 --> 00:06:25.760 The Act provides a direct fiscal boost to help lift our nation from the greatest economic 60 00:06:25.760 --> 00:06:33.000 crisis in our lifetimes and lay the foundation for further growth. 61 00:06:33.000 --> 00:06:38.240 The greatest economic crisis, wherever you see the word crisis, whether it's rhetorical, 62 00:06:38.240 --> 00:06:44.480 and Statements," or whatever. He's setting the stage. This isn't just plain old trying 63 00:06:44.480 --> 00:06:50.860 to get political support. This has a legal implication, because where there's a crisis, 64 00:06:50.860 --> 00:06:57.920 the Congress and the executive branch, based upon case law, have emergency powers. He also 65 00:06:57.920 --> 00:07:05.200 says in this signing statement, we have inherited an economic crisis as deep and as dire since 66 00:07:05.200 --> 00:07:15.200 And that links to the case law of the Great Depression, specifically the case that I'm going to look at. 67 00:07:15.200 --> 00:07:26.200 So crisis is important because it empowers the government with emergency powers. 68 00:07:26.200 --> 00:07:29.200 He also wrote in the Sonic Statement, 69 00:07:29.200 --> 00:07:38.200 No one policy or program will solve the challenge we face right now, nor will this crisis recede in a short period of time. 70 00:07:38.200 --> 00:07:56.200 So the emergency powers are for not just this maybe what might be a short-lived recession or even a depression, depending upon how you look at it, but it's to prevent a relapse into this economic cycle. 71 00:07:56.200 --> 00:08:06.200 Now, unfortunately, he's standing on pretty firm constitutional grounds based upon case law precedent. 72 00:08:06.200 --> 00:08:17.200 By characterizing this as a crisis, he confers upon his administration certain emergency powers that the framers would find to be abhorrent. 73 00:08:17.200 --> 00:08:26.960 I'm going to take a quick look at the Homebuilding and Loan Association vs. Blisdell, 1934. 74 00:08:26.960 --> 00:08:33.480 Now this has to deal with the state law, 1933 Minnesota enacted the Mortgage Moratorium Law 75 00:08:33.480 --> 00:08:38.240 in an effort to combat the economic emergency posed by the Great Depression. 76 00:08:38.240 --> 00:08:43.560 The law extended the time period in which borrowers could pay back their debts on property 77 00:08:43.560 --> 00:08:45.200 to lenders. 78 00:08:45.200 --> 00:08:50.000 The state argued that this was a legitimate use of its police powers since Minnesota faced 79 00:08:50.000 --> 00:08:52.640 massive economic difficulties. 80 00:08:52.640 --> 00:08:58.820 I also have some case law where I could make quite clear that the National Congress also 81 00:08:58.820 --> 00:09:00.520 has police powers. 82 00:09:00.520 --> 00:09:07.840 To go back to 1903, in the Champion v. Ames case, under commerce powers, had to do with 83 00:09:07.840 --> 00:09:13.440 lottery tickets, known as the lottery cases, the second-ring edition, to boost the morality 84 00:09:13.440 --> 00:09:22.040 of the Nation and the States by using commerce powers to make it a crime to transport lottery 85 00:09:22.040 --> 00:09:24.240 tickets across state lines. 86 00:09:24.240 --> 00:09:29.160 So this is also applicable to the national government. 87 00:09:29.160 --> 00:09:36.800 The legal question was, did Minnesota law violate both Article 1, Section 10 of the Constitution, 88 00:09:36.800 --> 00:09:40.720 obligation of contracts, which prevents a state from impairing the obligation of contracts 89 00:09:40.720 --> 00:09:45.280 and the Due Process Clause and the Equal Protection Clause of the 14th Amendment. 90 00:09:45.280 --> 00:09:50.000 And Justice Hughes says it did not. 91 00:09:50.000 --> 00:09:54.400 And it didn't because there was an emergency 92 00:09:54.400 --> 00:10:00.480 and because it didn't necessarily remove the obligation of contracts, it simply modified it. 93 00:10:00.480 --> 00:10:06.160 So the people who couldn't pay their mortgages were given an extended period of time to occupy the premises, 94 00:10:06.160 --> 00:10:08.480 but they would pay rent. 95 00:10:08.480 --> 00:10:14.640 and the rent was very much you know substantially less but it put the creditors in a quite a bind 96 00:10:15.760 --> 00:10:22.480 and the Supreme Court said that's constitutional because quote of the emergency that's 1934 97 00:10:24.320 --> 00:10:32.720 that's prior to like I mentioned the attempt by FDR to pack the court so the court already had 98 00:10:32.720 --> 00:10:40.320 had this inclination going back to other cases that during times of emergency, you have expanded 99 00:10:40.320 --> 00:10:47.480 powers of the government, the Constitution notwithstanding. And it's a very odd logic. 100 00:10:47.480 --> 00:10:53.520 Hopefully I could get to it very briefly. It's quite illogical, but it's only illogical 101 00:10:53.520 --> 00:10:59.080 if you look at it from a constitutional jurisprudential perspective. It's a political decision to 102 00:10:59.080 --> 00:11:06.720 to legitimize government action in a realm of public policy that the government's precluded from acting in. 103 00:11:06.720 --> 00:11:12.560 Justice Sutherland wrote the dissenting opinion, and it's really quite good. 104 00:11:12.560 --> 00:11:16.280 He wrote the opinion in a couple of other cases which were quite bad, 105 00:11:16.280 --> 00:11:23.040 but that was after the attempt to pack the courts, specifically the Curtis Wright case. 106 00:11:23.040 --> 00:11:29.340 He takes a very restricted view of governmental powers during times of emergency, domestically, 107 00:11:29.340 --> 00:11:35.040 but later on he expands presidential powers and foreign policy quite a bit. 108 00:11:35.040 --> 00:11:39.960 And his history is all wrong in that Curtis Wright case, just wondering what the guy was 109 00:11:39.960 --> 00:11:45.560 thinking when he was writing it, but he's pretty solid on this one. 110 00:11:45.560 --> 00:11:48.960 This is what he wrote in his dissenting opinion. 111 00:11:48.960 --> 00:11:55.080 Now, you'll never get anything like this again in a majority opinion, at least not in the 112 00:11:55.080 --> 00:11:57.080 short term. 113 00:11:57.080 --> 00:12:02.720 Sutherland wrote, few questions of greater moment than that just decided, Justice Hughes 114 00:12:02.720 --> 00:12:07.960 saying you can impair the obligation of contracts, have been submitted for judicial inquiry during 115 00:12:07.960 --> 00:12:10.800 this generation. 116 00:12:10.800 --> 00:12:15.920 He simply closes his eyes to the necessary implications of the decision, who fails to 117 00:12:15.920 --> 00:12:21.780 to see in it the potentiality of future gradual but ever-advancing encroachments upon the 118 00:12:21.780 --> 00:12:28.440 sanctity of private and public contracts. The effect of the Minnesota legislation, though 119 00:12:28.440 --> 00:12:35.920 serious enough in itself, is of trivial significance compared to the far more serious and dangerous 120 00:12:35.920 --> 00:12:43.540 inroads upon the limitations of the Constitution which are almost certain to ensue as a consequence 121 00:12:43.540 --> 00:12:48.540 naturally following any step beyond the boundaries fixed by that instrument. 122 00:12:48.540 --> 00:12:53.780 And those of us who are thus apprehensive of the effect of this decision would, in a 123 00:12:53.780 --> 00:12:58.020 matter so important, be neglectful of our duty, should we not fail to spread upon the 124 00:12:58.020 --> 00:13:05.980 permanent records of the Court the reasons which move us to the opposite view. 125 00:13:05.980 --> 00:13:13.480 And he proceeds after warning the readers, the American people, of the ever-encroaching 126 00:13:13.480 --> 00:13:21.260 encroachments, the ever-advancing encroachments upon the sanctity of private and public contracts. 127 00:13:21.260 --> 00:13:26.880 He talks about preventing legislation designed to relieve debtors, especially in times of 128 00:13:26.880 --> 00:13:29.460 financial distress. 129 00:13:29.460 --> 00:13:40.180 Now, his position is that the Constitution, when they included that provision, the framers 130 00:13:40.180 --> 00:13:48.820 when they included that provision in Article 10, were also confronting a very serious emergency, 131 00:13:48.820 --> 00:13:56.380 in many ways much worse than what they were confronting in 1934. 132 00:13:56.380 --> 00:14:02.460 And he talks and he cites the precedent from the constitutional debates that by stepping 133 00:14:02.460 --> 00:14:12.560 over this very important constitutional limitation is despotism. 134 00:14:12.560 --> 00:14:19.180 This is what he writes about the economic circumstances when that provision was drafted, 135 00:14:19.180 --> 00:14:22.020 debated, and included in the Constitution. 136 00:14:22.020 --> 00:14:26.340 Following the Revolution and prior to the adoption of the Constitution, the American 137 00:14:26.340 --> 00:14:30.380 people found themselves in a greatly impoverished condition. 138 00:14:30.380 --> 00:14:33.420 Their commerce had been well nigh annihilated. 139 00:14:33.420 --> 00:14:37.620 They were not only without luxuries, but in great degree were destitute of the ordinary 140 00:14:37.620 --> 00:14:40.820 comforts and necessities of life. 141 00:14:40.820 --> 00:14:45.360 In these circumstances, they incurred indebtedness in the purchase of imported goods and otherwise 142 00:14:45.360 --> 00:14:49.340 far beyond their capacity to pay. 143 00:14:49.340 --> 00:14:55.540 During this situation there arose a divided sentiment. On the one hand, an exact observance 144 00:14:55.540 --> 00:15:02.340 of public and private engagements was instantly urged. A violation of the faith of the nation 145 00:15:02.340 --> 00:15:07.860 or the pledges of the private individual, it was insisted, was equally forbidden by 146 00:15:07.860 --> 00:15:16.380 the principles of moral justice and sound policy. So it wasn't only unconstitutional, 147 00:15:16.380 --> 00:15:22.940 But it would be immoral and bad political economy, public policy. 148 00:15:22.940 --> 00:15:30.680 This is 1787. 149 00:15:30.680 --> 00:15:37.340 Individual distress, it was urged, should be alleviated only by industry and frugality, 150 00:15:37.340 --> 00:15:43.820 not by relaxation of law or by a sacrifice of the rights of others. 151 00:15:43.820 --> 00:15:58.820 was not to be relieved by legislation, but restrained by the conviction that a full compliance with contracts would be exacted. 152 00:15:58.820 --> 00:16:04.820 On the other hand, it was insisted that the case of the debtor should be viewed with tenderness, 153 00:16:04.820 --> 00:16:11.820 and efforts were constantly directed toward relieving him from an exact compliance with his contract. 154 00:16:11.820 --> 00:16:26.820 As a result of the latter view, state laws were passed suspending the collection of debts, remitting or suspending the collection of taxes, providing for the emission of paper money, delaying legal proceedings, etc. 155 00:16:26.820 --> 00:16:41.820 And remember, there's also, at this point in time, the constitution, fiat money was unconstitutional, and the court decided as much until around the 1880s, for the very similar reasons. 156 00:16:41.820 --> 00:16:54.820 There follow, as there must always follow from such a course, a long trail of ills, one of the direct consequences being a loss of confidence in the government and in the good faith of the people, 157 00:16:54.820 --> 00:17:07.820 Bonds of men whose ability to pay their debts was unquestionable, could not be negotiated except at a discount of seeking to meet their obligations by a discount of 30, 40 or 50 percent. 158 00:17:07.820 --> 00:17:23.820 So in other words, sort of the moral political hazard, people were negotiating a reduction of their contractual debts because they would say, I'll go to the legislature and just have the debt eliminated or reduced even further. 159 00:17:23.820 --> 00:17:27.820 Real property could be sold only at ruinous loss. 160 00:17:27.820 --> 00:17:33.820 Debtors, instead of seeking to meet their obligations by painful effort, by industry and economy, 161 00:17:33.820 --> 00:17:38.820 began to rest their hopes entirely upon legislative interference. 162 00:17:38.820 --> 00:17:46.820 So you see this, you know, there's this expectation, you could even see some of the externalities that would be created. 163 00:17:46.820 --> 00:17:52.820 You incur a debt with the expectation that the legislature will later relieve you of that debt, 164 00:17:52.820 --> 00:18:06.820 The impossibility of payment of public or private debts was widely asserted, and in some instances threats were made of suspending the administration of justice by violence. 165 00:18:06.820 --> 00:18:17.820 The circulation of depreciated currency became common. 2009, depreciated currency, because of the printing of this fiat paper money. 166 00:18:17.820 --> 00:18:35.820 The circulation of the depreciated currency became common, resentment against lawyers and courts was freely manifested, and in many instances the course of the law was arrested in judges restrained from proceeding and the execution of their duty by popular and tumultuous assemblages. 167 00:18:35.820 --> 00:18:46.820 Now, this is against the backdrop that Justice Hughes is saying the Constitution was made with this contingency in mind. 168 00:18:46.820 --> 00:18:53.140 If there's an emergency, the Constitution was designed to let certain constitutional rights, 169 00:18:53.140 --> 00:18:59.300 in this case the right of contract, to be set aside or at least modified to some extent. 170 00:18:59.300 --> 00:19:05.540 And Southerners say, no, this isn't the case. This state of things alarmed all thoughtful men 171 00:19:06.100 --> 00:19:12.980 and led them to seek some effective remedy. And that remedy, of course, was Article 1, Section 10. 172 00:19:12.980 --> 00:19:27.660 10. You cannot impair the obligation of contracts. Now, in his opinion, Hughes says, well, it's 173 00:19:27.660 --> 00:19:32.900 not in Article 1, Section 9, so they couldn't have been too committed to it, but there was 174 00:19:32.900 --> 00:19:37.300 no power under the Articles to impair the obligation of contracts. It was unnecessary 175 00:19:37.300 --> 00:19:50.140 In the midst of this confused, gloomy, and seriously 176 00:19:50.140 --> 00:19:58.460 exigent condition of affairs, the Constitutional Convention of 1787 met at Philadelphia. 177 00:19:58.460 --> 00:20:02.340 The defects of the Articles of Confederation were so great as to be beyond all hope of 178 00:20:02.340 --> 00:20:07.180 Amendment and the Convention acting in technical excess of its authority 179 00:20:07.180 --> 00:20:11.440 proceeded to frame for submission to the people of the several states and 180 00:20:11.440 --> 00:20:16.080 entirely new constitution. Shortly prior to the meeting of the convention, 181 00:20:16.380 --> 00:20:20.940 Madison had had settled a bill pending in the Virginia assembly proposing the 182 00:20:20.940 --> 00:20:25.340 payment of private debts and three annual installments on the ground that 183 00:20:25.340 --> 00:20:30.540 quote, no legislative principle could vindicate such an interposition of the 184 00:20:30.540 --> 00:20:38.480 Law and Private Contracts. The bill was lost by a single vote. Another delegate had likewise 185 00:20:38.480 --> 00:20:43.880 assailed similar laws as altering the value of contracts. William Patterson of New Jersey 186 00:20:43.880 --> 00:20:49.880 insisted that the legislature should leave the parties to the law under which they contracted. 187 00:20:49.880 --> 00:20:58.080 And he goes on and he points out to the Northwest Territory Ordinance, this is what it states. 188 00:20:58.080 --> 00:21:03.080 This became part of the political constitutional landscape. 189 00:21:03.080 --> 00:21:09.200 The contracts are sacrosanct, even though many in the states would like to have them 190 00:21:09.200 --> 00:21:15.720 less so because, of course, that's where the political support was in many state legislatures. 191 00:21:15.720 --> 00:21:23.040 The Northwest Territory Ordinance of 1787 states, in an adjust preservation of rights 192 00:21:23.040 --> 00:21:29.160 and Property. It is understood and declared that no law ever to be made or have force 193 00:21:29.160 --> 00:21:35.200 in the said territory that shall in any manner whatsoever interfere with or affect private 194 00:21:35.200 --> 00:21:43.000 contracts or engagements bona fide and without fraud previously formed. Now, it's not as 195 00:21:43.000 --> 00:21:55.200 Almost though the majority didn't have a sophisticated argument saying that the impairment of contracts 196 00:21:55.200 --> 00:22:04.920 is constitutional, but the logic for it just doesn't hold up to scrutiny within the original 197 00:22:04.920 --> 00:22:07.960 interpretation of the Constitution. 198 00:22:07.960 --> 00:22:17.800 They have, for example, under the Doctrine of Implied Conditions, you can impair contracts 199 00:22:17.800 --> 00:22:20.200 under that particular Doctrine of Implied Conditions. 200 00:22:20.200 --> 00:22:26.560 So for example, this is a far-fetched example, but let's just say for some reason that the 201 00:22:26.560 --> 00:22:34.120 Congress may pass the law on usury and therefore nullified any mortgages that were in excess 202 00:22:34.120 --> 00:22:41.120 In the case of what, six percent, and those mortgages, those contracts that are at seven, eight, nine, ten percent, 203 00:22:41.120 --> 00:22:45.120 whatever those balloon rates are currently, would be null and void. 204 00:22:45.120 --> 00:22:54.120 But under the doctorate of implied conditions, they could, under English common law and American common law tradition, 205 00:22:54.120 --> 00:23:03.120 impair that contract, but the impairment of the contract is an indirect result of exercising another constitutional power. 206 00:23:03.120 --> 00:23:14.120 So if a state had usury laws that outlawed certain interest rates and some contracts were already signed at those higher rates, that would impair those contracts. 207 00:23:14.120 --> 00:23:22.120 And we could think of all other sorts, you know, the liquor cases in the Supreme Court and such, but it can't be the direct purpose of the legislation. 208 00:23:22.120 --> 00:23:32.120 The direct purpose of the Minnesota law was to relieve the debtors from their obligations to the creditors. 209 00:23:32.120 --> 00:23:48.120 And so there's no real, under English and American common law tradition, especially under the reasonable interpretation of the Article 1, Section 10, this is, you know, not only facially, but substantially unconstitutional. 210 00:23:48.120 --> 00:23:56.120 Because it's a direct assault on the sanctity of contracts. 211 00:23:56.120 --> 00:24:11.120 And that's where the emergency powers come in, and the court says, well, that's true, but under implied conditions, if there's an emergency, you can't impair the obligation of contracts. 212 00:24:11.120 --> 00:24:23.120 So that would fall under the implied conditions, something has changed, but that's, you know, as I was mentioning, Sutherland tears that logic to shreds. 213 00:24:23.120 --> 00:24:33.120 And just to summarize, this is what, very briefly, the Sutherland writes. 214 00:24:33.120 --> 00:24:36.120 And I think this is very applicable to today. 215 00:24:36.120 --> 00:24:41.120 A statute which materially delays the enforcement of the mortgagee's contractual right of ownership 216 00:24:41.120 --> 00:24:47.120 and possession does not modify the remedy merely, it destroys, for the period of delay, 217 00:24:47.120 --> 00:24:52.120 all remedy so far as the enforcement of that right is concerned. 218 00:24:52.120 --> 00:25:09.720 The phrase, obligation of a contract, in the constitutional sense, imports a legal duty to perform the specified obligation of that contract, not to substitute and perform against the will of one of the parties a different, albeit equally valuable, obligation. 219 00:25:09.720 --> 00:25:19.720 An estate under the contract impairment clause has no more power to accomplish such a substitution than has one of the parties to the contract against the will of the other. 220 00:25:19.720 --> 00:25:30.220 It cannot do so either by acting directly upon the contract or by bringing about the result under the guise of a statute and form acting only upon the remedy. 221 00:25:30.220 --> 00:25:37.720 If it could, the efficacy of the constitutional restriction would, in large measure, be made to disappear. 222 00:25:37.720 --> 00:25:48.220 So what we're seeing with this flood of legislation under, quote, this crisis, this economic emergency, is, has precedent. 223 00:25:48.220 --> 00:25:55.820 And the precedent is, contractual rights, you'll probably see this soon enough when it comes to the credit card bailout, 224 00:25:55.820 --> 00:26:04.620 are no longer being held as constitutionally viable because of the emergency, quote, the economic situation. 225 00:26:04.620 --> 00:26:17.220 So it empowers both state legislatures and the national government to impair, to set aside a fundamental constitutional right, the right of contract. 226 00:26:17.220 --> 00:26:24.220 Thank you very much.