CHICOT COUNTY DRAINAGE DISTRICT V. BAXTER STATE BANK
308 U.S. 371 (1940)
NATURE OF THE CASE: This was a dispute over a debt reorganization.
FACTS: Baxter (P) sued Chicot (D) to recover on fourteen bonds worth $1,000 each that
were issued in 1924. D had been in default since 1932. D pled a decree issued in the same
court under the Act of May 24, 1934 providing for Municipal Debt Readjustments. The decree
was essentially a debt restructuring in the same fashion that a bankruptcy court would
issue; old obligations were ordered to be presented within one year and that unless they
were presented those parties would be forever barred from participating in the planned
readjustment. D pled the decree as res judicata and P demurred to the answer. Evidence
showed that P had notice of the proceeding for debt readjustment. The District Court ruled
in favor of P as such because the decree was void as the statute that authorized it was
declared unconstitutional by the Supreme Court in a 1936 case. D appealed.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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