A statute of Mississippi permitted the reopening of a closed bank, for the purpose of paying off creditors, upon terms proposed by three-fourths of the bank's creditors. The statute required that the proposition of the creditors be approved by the state superintendent of banks and confirmed by the court of chancery. Dissenting creditors opposed such a plan on the ground that the statute was unconstitutional because it impaired the obligation of contracts, and was contrary to the due process clause of the Federal Constitution. The court held that the statute was valid, that all it did was to change the method of liquidation. Property was not taken without due process since all creditors were in fact to be benefited by the plan. The fact that causes of action in favor of the dissenting creditors against the shareholders were extinguished in return for contributions of capital was not impairment of contract obligations since the causes of action were in the state superintendent of banks, who under the insolvency laws could have compromised the claims and released them with the approval of the court. Relinquishment of the claims under the statute amounted to the same thing since the plan of reorganization must be approved by the court of chancery. Doty v. Love, 295 U. S. 64, 55 S. Ct. 558 (1935).
BANKS AND BANKING-CONSTITUTIONAL VALIDITY OF STATUTES ALLOWING REORGANIZATION OF INSOLVENT BANK,
Mich. L. Rev.
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