This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
A statute which authorizes the redemption of property, sold on execution or foreclosure in satisfaction of a former contract, where such right of redemption did not exist before,1 or which extends the time allowed for such redemption,2 impairs the obligation of the contract in satisfaction of which the foreclosure or execution is sought. The same objection applies to a statute increasing the time that must elapse between the rendition of a judgment and a sale of the land.3 While this rule is sanctioned by the Supreme Court of the United States whose views are conclusive on this question, it has not always been acquiesced in by the state courts.4 This question has caused some courts a great deal of trouble. In Kansas such statutes were first held unconstitutional,5 but, on rehearing, were held to be constitutional.0 The judgment last rendered was reversed by the Supreme Court of the United States, which held such statutes unconstitutional.7 So in Montana such statutes were at first held to be constitutional,8 but on rehearing this judgment was reversed.9 The same thing happened" in Oregon.10 If the statute does not increase the period between the time that the suit is begun or the decree is rendered, and the time that the right of redemption expires, a change in the apportionment of time does not impair the obligation of prior contracts. Thus a mortgage was given when the statute provided that property could not be sold on foreclosure until one year after the bill was filed. Before foreclosure the statute was modified so that sale might be had in six months after the bill was filed, and a redemption period of six months after the sale was given. As the total period was not lengthened it was held that the new statute did not impair the obligation of the prior contract, but applied to it and controlled it.11 A statute taking away a pre-existing right of redemption is invalid.12 A change in the terms of redemption, prejudicial to the creditor, impairs the obligation of his contract. Thus a debt was incurred at a time when a judgment debtor or mortgagor could not retain possession after execution sale without accounting for the rents and profits. Subsequently the statute was changed to allow the judgment debtor or mortgagor to keep possession of a homestead during the period of redemption. Such later statute was held unconstitutional as applied to a pre-existing mortgage.13 A similar statute has, however, been held to be valid as to a pre-existing debt not a lien on the realty which was subsequently put into judgment, the realty being sold after the statute was passed.14 This case was decided on the theory that since the property sold for more than the amount of the judgment debt, the rights of the original creditor were discharged, while the rights of the purchaser at the judicial sale did not originate until after the statute had been passed. This ignores the theory that the rights of the judgment creditor or mortgagee pass to the purchaser.15 On the other hand, a statute reducing the rate of interest to be paid on redemption is valid as to prior debts, bearing by agreement a rate of interest still lower than that fixed by statute.16 After sale on execution an additional contract right exists, namely, that of the purchase? at such sale. Subsequent statutes cannot change the period of redemption.17 This is true even if the sale was not based on contract rights, such as a tax sale.18 However, in analogy to the rule controlling statutes of limitations, a subsequent statute may require deeds for lands sold for taxes to be made within a specified time after the sale, and if a reasonable time is given for obtaining such deeds after the passage of the statute, it will be valid.19 A statute requiring a purchaser at a foreclosure sale to take a deed within five years of the end of the period of redemption and providing that if the deed is not taken within such time, the certificate of purchase shall be void does not impair the obligation of a trust deed executed before the statute was passed, though when the deed was executed there was no limit as to the period within which the deed must be obtained.20 So a statute subsequent to the tax-sale but before a deed issues may require notice to be given to the original owner as a condition precedent to taking possession of the property thus sold.21 The rate of interest to be paid on redemption cannot be changed to the prejudice of a purchaser at a prior judicial sale.22
14 Davies Henderson Lumber Co. v. Gottschalk, 81 Cal. 641; 22 Pac. 860; Leak v. Gay, 107 N. C. 468, 482; 12 S. E. 312, 315.
15 Davies Henderson Lumber Co. v. Gottschalk, 81 Cal. 641; 22 Pac. 860.
1 Curtis v. Whitney, 13 Wall. (U. S.) 68.
2 Coulter v. Stafford, 56 Fed. 564; 6 C. C. A. 18; Herrick v. Niesz, 16 Wash. 74; 47 Pac. 414.
3 Coulter v. Stafford, 56 Fed. 564; 8 C. C. A. 18.
4McKennon v. State, 42 Tex. Cr. Rep. 371; 96 Am. St. .Rep. 802; 60 S. W. 41.
1 Foreclosure. Barnitz v. Beverly, 163 U. S. 118.
2 Foreclosure. Barnitz v. Beverly, 163 U. S. 118; Allen v. Allen, 95 Cal. 184; 16 L. R. A. 646; 30 Pac. 213; Wilder v. Campbell, 4 Ida. 695; 43 Pac. 677; Ogden v. Walters, 12 Kan. 283; Bixby v. Bailey, 11 Kan. 359; Phinney v. Phinney, 81 Me. 450; 10 Am. St. Rep. 266; 4 L. R. A. 348; 17 Atl. 405; Hollis-ter v. Donahoe, 11 S. D. 407; 78 N. W. 959; Swinburne v. Mills, 17 Wash. 611; 61 Am. St. Rep. 932- 50 Pac. 489.
3 Swinburne v. Mills, 17 Wash. 611; 61 Am. St. Rep. 932; 50 Pac. 489.
4 Moore v. Martin, 38 Cal. 428. Foreclosure. Anderson v. Anderson, 129 Ind. 573; 28 Am. St. Rep. 211; 29 N. E. 35.
5 Watkins v. Glenn, 55 Kan. 417; 40 Pac. 316; Beverly v. Barnitz, 55 Kan. 451; 40 Pac. 325.
6 Beverly v. Barnitz, 55 Kan. 466; 49 Am. St. Rep. 257; 31 L. R. A. 74; 42 Pac. 725.
7 Barnitz v. Beverly, 163 U. S. 118.
8 State v. Gilliam. 18 Mont. 94;
31 L. R. A. 721; 44 Pac. 394; 45 Pac. 661; following Beverly v. Barnitz, 55 Kan. 466; 49 Am. St. Rep. 257; 31 L. R. A. 74; 42 Pac. 725.
9 State v. Gilliam, 18 Mont. 109; 33 L. R. A. 556; 45 Pac. 661; 44 Pac. 394; following Barnitz v. Beverly, 163 U. S. 118.
10 State v. Sears, 29 Or. 580; 43 Pac. 482, holding such statutes constitutional, was reversed on rehearing; State v. Sears. 29 Or. 580: 54 Am. St. Rep. 80S: 46 Par. 785; to follow Barnitz v. Beverly, I63 U. S. 118.
11 State Savings Bank v. Mathews, 123 Mich. 56; 81 N. W. 918.
12 Moore v. Irby. 69 Ark. 102; 61 S. W. 371. The court refused to decide the question whether a statute reducing the redemption period is valid, in Spokane County v. Ry., 5 Wash. 89; 31 Pac. 420.
13 Canadian, etc., Co. v. Blake, 24 Wash. 102; 85 Am. St. Rep. 946; 63 Pac. 1100.
14 Wilson v. Wold. 21 Wash. 398 r 75 Am. St. Rep. 846; 58 Pac. 223.
15 Hillebert v. Porter, 28 Minn. 496; 11 N. W. 84.
16 Robertson v. Van Cleave. 129 Ind. 217; 15 L. R. A. 68; 29 N. E. 781; 26 N. E. 899.
17 Thresher v. Atchison. 117 Cal. 73; 59 Am. St. Rep. 159; 48 Pac. 1020; Hull v. State, 29 Fla. 79; 30 Am. St. Rep. 95; 16 L. R. A. 308: 11 So. 97.
18 Hull v. State, 29 Fla. 79; 30 Am. St. .Rep. 95; 16 L. R. A. 308; 11 So. 97.
19 Turtle v. Block, 104 Cal. 443; 38 Pac. 109.
20 Bradley v. Lightcap, 201 111. 511; 66 N. E. 546. (Even though the payee of the note secured by the trust-deed was the purchaser.)
21 Oullahan v. Sweeney, 79 Cal. 537; 12 Am. St. Rep. 172; 21 Pae. 960; Gage v. Stewart, 127 111. 207; 11 Am. St. Rep. 116; 19 N. E. 702.
22 Bauer Grocer Co. v. Zelle, 172 111. 407; 50 N E 238.