Chicot County Drainage Dist v. Baxter State Bank, No. 122

CourtUnited States Supreme Court
Writing for the CourtHUGHES
Citation308 U.S. 371,60 S.Ct. 317,84 L.Ed. 329
Decision Date02 January 1940
Docket NumberNo. 122
PartiesCHICOT COUNTY DRAINAGE DIST. v. BAXTER STATE BANK et al

308 U.S. 371
60 S.Ct. 317
84 L.Ed. 329
CHICOT COUNTY DRAINAGE DIST.

v.

BAXTER STATE BANK et al.

No. 122.
Argued Dec. 7, 1939.
Decided Jan. 2, 1940.

Messrs. E. L. McHaney, Jr., S. Lasker Ehrman, and Grover T. Owens, all of Little Rock, Ark., for petitioner.

Page 372

Mr. G. W. Hendricks, of Little Rock, Ark., for respondents.

Mr. Chief Justice HUGHES delivered the opinion of the Court.

Respondents brought this suit in the United States District Court for the Western Division of the Eastern District of Arkansas to recover on fourteen bonds of $1,000 each, which had been issued in 1924 by the petitioner, Chicot County Drainage District, organized under statutes of Arkansas,1 and had been in default since 1932.

In its answer, petitioner pleaded a decree of the same District Court in a proceeding instituted by petitioner to effect a plan of readjustment of its indebtedness under the Act of May 24, 1934,2 providing for 'Municipal-Debt Readjustments'. The decree recited that a plan of readjustment had been accepted by the holders of more than two-thirds of the outstanding indebtedness

Page 373

and was fair and equitable; that to consummate the plan and with the approval of the court petitioner had issued and sold new serial bonds to the Reconstruction Finance Corporation in the amount of $193,500 and that these new bonds were valid obligations; that, also with the approval of the court, the Reconstruction Finance Corporation had purchased outstanding obligations of petitioner to the amount of $705,087.06 which had been delivered in exchange for new bonds and canceled; that certain proceeds had been turned over to the clerk of the court and that the disbursing agent had filed his report showing that the Reconstruction Finance Corporation had purchased all the old bonds of petitioner other than the amount of $57,449.30. The decree provided for the application of the amount paid into court to the remaining old obligations of petitioner, that such obligations might be presented within one year, and that unless so presented they should be forever barred from participating in the plan of readjustment or in the fund paid into court. Except for the provision for such presentation, the decree canceled the old bonds and the holders were enjoined from thereafter asserting any claim thereon.

Petitioner pleaded this decree, which was entered in March, 1936, as res judicata. Respondents demurred to the answer. Thereupon the parties stipulated for trial without a jury.

The evidence showed respondents' ownership of the bonds in suit and that respondents had notice of the proceeding for debt readjustment. The record of that proceeding, including the final decree, was introduced. The District Court ruled in favor of respondents and the Circuit Court of Appeals affirmed. 8 Cir., 103 F.2d 847. The decision was placed upon the ground that the decree was void because, subsequent to its entry, this Court in a

Page 374

proceeding relating to a municipal district in Texas had declared the statute under which the District Court had acted to be unconstitutional. Ashton v. Cameron County District, 298 U.S. 513, 56 S.Ct. 892, 80 L.Ed. 1309. In view of the importance of the question we granted certiorari. October 9, 1939. 308 U.S. 532, 60 S.Ct. 84, 84 L.Ed. —-.

The courts below have proceeded on the theory that the Act of Congress, having been found to be unconstitutional, was not a law; that it was inoperative, conferring no rights and imposing no duties, and hence affording no basis for the challenged decree. Norton v. Shelby County, 118 U.S. 425, 442, 6 S.Ct. 1121, 1125, 30 L.Ed. 178; Chicago, Indianapolis & Louisville Rwy. Co. v. Hackett, 228 U.S. 559, 566, 33 S.Ct. 581, 584, 57 L.Ed. 966. It is quite clear, however, that such broad statements as to the effect of a determination of unconstitutionality must be taken with qualifications. The actual existence of a statute, prior to such a determination, is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects, with respect to particular relations, individual and corporate, and particular conduct, private and official. Questions of rights claimed to have become vested, of status, of prior determinations deemed to have finality and acted upon accordingly, of public policy in the light of the nature both of the statute and of its previous application, demand examination. These questions are among the most difficult of those which have engaged the attention of courts, state and federal, and it is manifest from numerous decisions that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be justified.3 Without attempting

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to review the different classes of cases in which the consequences of a ruling against validity have been determined in relation to the particular circumstances of past transactions, we appropriately confine our...

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1029 practice notes
  • Juzwin v. Asbestos Corp., Ltd., No. 89-5420
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • May 9, 1990
    ...411 U.S. 192, 198, 93 S.Ct. 1463, 1468, 36 L.Ed.2d 151 (1973) (Lemon II ) (quoting Chicot County Drainage Dist. v. Baxter State Bank, 308 U.S. 371, 374, 60 S.Ct. 317, 318, 84 L.Ed. 329 (1940)). It is not surprising, then, that modern jurisprudence recognizes no set principle of retroactivit......
  • U.S. v. Duncan, No. 03-15315.
    • United States
    • U.S. Court of Appeals — Eleventh Circuit
    • February 24, 2005
    ...Petitioner's highly technical argument is at odds with [a statement from Page 1308 Chicot County Drainage District v. Baxter State Bank, 308 U.S. 371, 60 S.Ct. 317, 84 L.Ed. 329 (1940)]. Here the existence of the statute served as an "operative fact" to warn the petitioner of the penalty wh......
  • Northern Pipeline Construction Co v. Marathon Pipe Line Company United States v. Marathon Pipe Line Co, Nos. 81-150
    • United States
    • United States Supreme Court
    • June 28, 1982
    ...See also Buckley v. Valeo, 424 U.S., 1, 142, 96 S.Ct. 612, 692, 46 L.Ed.2d 659 (1976); Chicot County Drainage Dist. v. Baxter State Bank, 308 U.S. 371, 376-377, 60 S.Ct. 317, 319-320, 84 L.Ed. 329 (1940); Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702, n. ......
  • Meritcare Inc. v. St. Paul Mercury Ins. Co., No. 98-3032
    • United States
    • U.S. Court of Appeals — Third Circuit
    • January 25, 1999
    ...having become final and no longer appealable, may not be collaterally attacked. See Chicot County Drainage Dist. v. Baxter State Bank, 308 U.S. 371, 377, 60 S.Ct. 317, 84 L.Ed. 329 4 In Wright, Miller & Cooper, supra, § 3523.1, at 112 n. 73 (Supp.1998), it is asserted that the Federal Court......
  • Request a trial to view additional results
1029 cases
  • Juzwin v. Asbestos Corp., Ltd., No. 89-5420
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • May 9, 1990
    ...411 U.S. 192, 198, 93 S.Ct. 1463, 1468, 36 L.Ed.2d 151 (1973) (Lemon II ) (quoting Chicot County Drainage Dist. v. Baxter State Bank, 308 U.S. 371, 374, 60 S.Ct. 317, 318, 84 L.Ed. 329 (1940)). It is not surprising, then, that modern jurisprudence recognizes no set principle of retroactivit......
  • U.S. v. Duncan, No. 03-15315.
    • United States
    • U.S. Court of Appeals — Eleventh Circuit
    • February 24, 2005
    ...Petitioner's highly technical argument is at odds with [a statement from Page 1308 Chicot County Drainage District v. Baxter State Bank, 308 U.S. 371, 60 S.Ct. 317, 84 L.Ed. 329 (1940)]. Here the existence of the statute served as an "operative fact" to warn the petitioner of the penalty wh......
  • Northern Pipeline Construction Co v. Marathon Pipe Line Company United States v. Marathon Pipe Line Co, Nos. 81-150
    • United States
    • United States Supreme Court
    • June 28, 1982
    ...See also Buckley v. Valeo, 424 U.S., 1, 142, 96 S.Ct. 612, 692, 46 L.Ed.2d 659 (1976); Chicot County Drainage Dist. v. Baxter State Bank, 308 U.S. 371, 376-377, 60 S.Ct. 317, 319-320, 84 L.Ed. 329 (1940); Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702, n. ......
  • Meritcare Inc. v. St. Paul Mercury Ins. Co., No. 98-3032
    • United States
    • U.S. Court of Appeals — Third Circuit
    • January 25, 1999
    ...having become final and no longer appealable, may not be collaterally attacked. See Chicot County Drainage Dist. v. Baxter State Bank, 308 U.S. 371, 377, 60 S.Ct. 317, 84 L.Ed. 329 4 In Wright, Miller & Cooper, supra, § 3523.1, at 112 n. 73 (Supp.1998), it is asserted that the Federal Court......
  • Request a trial to view additional results

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