Faitoute Iron & Steel Co. v. City of Asbury Park, 316 U.S. 502 (1942)

Please note: this case begins in mid-page. It therefore shares a citation with the last page of the previous case. If you are attempting to follow a link to the last page of 316 U.S. 491, click here.

Faitoute Iron & Steel Co. v. City of Asbury Park

No. 896

Argued April 28, 1942
Decided June 1, 1942
316 U.S. 502

APPEAL FROM THE COURT OF ERRORS

AND APPEALS OF NEW JERSEY

Syllabus

Under the New Jersey Municipal Finance Act, a plan for the adjustment or composition of the claims of creditors of an insolvent municipality may be made binding on all creditors, if approved by the municipality, by the Municipal Finance Commission, and by creditors representing 85 percent of the indebtedness affected, and, if adopted under prescribed conditions, by the State Supreme Court. As applied to holders of defaulted bonds and interest coupons of a municipality who, under an adjustment decreed by the state court, were obliged to convert their bonds into others bearing a lower rate of interest, held:

1. The Act is not inoperative as inconsistent with the bankruptcy power exercised by Congress. P. 507.

2. The Act does not effect an unconstitutional impairment of the obligation of contracts. P. 509.

3. The question of the validity of the Act, as applied to secured claims, is not involved, and not decided. P. 516.

127 N.J.L. 239, 21 A.2d 796, affirmed.

Appeal from a judgment affirming the dismissal, by the Supreme Court of New Jersey, 19 N.J. Misc. 322, 19 A.2d 445, of a suit to recover upon bonds and interest coupons issued by the municipality.