By upholding an emergency moratorium on the foreclosure of homes and farms, the Supreme Court greatly limited the scope of the obligations-of-contracts clause.
During the Great Depression, many state legislatures enacted debtor-relief statutes to mitigate the wholesale foreclosure of homes and farms. The Minnesota Mortgage Moratorium Law of 1933 authorized state courts to grant two-year exemptions from scheduled mortgage payments as long as the debtor paid a reasonable rent. When John Blaisdell and his wife were granted a mortgage extension, their creditor asserted that the action violated the contract clause of the Constitution. Similar debtor-relief legislation had consistently been declared unconstitutional in the nineteenth century.
By a 5-4 vote, the Supreme Court surprised most observers when it upheld the Minnesota statute. Chief Justice Charles Evans Hughes
By enlarging the police power exception, the Blaisdell decision tended to eclipse the contract clause as a protector of property rights but did not entirely kill the clause. In Allied Structural Steel Co. v. Spannaus
Bronson v. Kinzie
Charles River Bridge v. Warren Bridge
Keystone Bituminous Coal Association v. DeBenedictis