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- Title
The Municipal Bond Cases Revisited.
- Authors
Buccola, Allison R.; Buccola, Vincent S. J.
- Abstract
Recent high-profile attempts to repudiate municipal bonds break from what had become a stable American norm of honoring public debt. In the nineteenth century, though, hundreds of cities, towns, and counties walked away from their bonds. The Supreme Court's handling of repudiation in the so-called municipal bond cases conjured intense animus. But time and the archaic prose and sheer volume of the opinions have obscured the cases' significance. This article reconstructs the bond cases with an eye to modern disputes. It reports the results of our reading all 203 cases, decided 1859-1899, in which the Justices opined on bond validity. At a high level, our findings correct a stock narrative in the literature. The standard account paints the Court as a reliable champion of northeastern capitalists in what resembled regional or class politics more than law. That story does not withstand scrutiny, however. We find, for example, that the Court ruled for the repudiating municipality about a third of the time. The decisions had a readily articulable logic at the heart of which lay the law/fact distinction. Estoppel barred issuers in most instances from denying factual predicates of bond validity, but it did not prevent scrutiny of legal predicates. Where law was at stabe, the Justices were willing to hold bonds void on even highly technical grounds. The framework developed by the Justices over this forty-year period, we argue, may be of use to courts facing these issues once again for the first time in a century.
- Subjects
MUNICIPAL bonds; BONDS (Finance); REPUDIATION (Public finance); ESTOPPEL; PUBLIC debts; UNITED States. Supreme Court
- Publication
American Bankruptcy Law Journal, 2020, Vol 94, Issue 4, p591
- ISSN
0027-9048
- Publication type
Article