In the court case Home Building & Loan Association v. Blaisdell, the court had to choose between two conflicting laws. The first was the Contract Clause of the Constitution and the second was a law passed by the State of Minnesota preventing lenders from foreclosing mortgages. The law was passed during the Great Depression and meant to slow down the effects of the depression while helping citizens get back on their feet. However, the law was in direct conflict with the Constitution.
The decision the courts ultimately made was to uphold the Minnesota law thereby protecting citizens from their own financial problems and ignoring the Contracts Clause of the Constitution. According to the book, it marked a turn away from the constitution and a turn toward the government protecting the common good. Here's a quote.
The Court was no longer concerned about keeping the markets open and free. It was no longer concerned with keeping the government small. It was no longer concerned with enforcing freely consented-to agreements. Its new priority was "the common good" and making sure the government would provide for it.
The court decided in favor of the Minnesota law, but I wanted to see how my kids would decide the case.
Hedgie wanted her money, but Vegie 3 couldn't pay. Therefore, Hedgie asked for the house. She brought her signed contract as evidence to present to the judges. Vegie 3 apologized for not paying, but said she couldn't and shouldn't have to because there was a law that said her house couldn't be taken away.
Obviously, this case was greatly simplified so that it could be understood by young children. Nonetheless, it presented an opportunity for discussion and consideration of significant issues.
The kids really had a difficult time deciding this case. They wanted to rule in favor of Hedgie, but provide a one year time period for Vegie 3 to find a new job. I instructed them that that was not an option. The case needed to be decided on the basis of which law took priority and was more important.
Their final verdict - Hedgie wins! Hedgie gets the house and will give Vegie 3 $10,000. The amount repaid on the loan. The reason - Vegie 3 did not pay. Hedgie loaned Vegie 3 money without interest, and the contract said she must pay the money back or she would loose the house. Hedgie is out a significant amount of money and needs her money back. Maybe Vegie 3 could find a job. She's smart. Unfortunately now she's jobless and houseless. Maybe she could find a rich husband, maybe she could sell her car to get some money, or maybe she could find a lower paying job like a food bagger at a grocery story. It's not really Hedgie's concern what Vegie 3 does. Hedgie feels bad, but doesn't deserve to loose the money she loaned.
I think in the end they decided the case on the basis of right and wrong. Regardless of whether a written law protects contracts or forbids the foreclosing of loans, they could see that the hedgehogs made a deal, one broke the deal, and the deal seemed reasonable.Therefore, it was fair that the remaining (yet undesirable) portion of the contract to be enacted.
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