In 1934, Congress amended the National Bankruptcy Act so as to authorize any municipality or other political subdivision of any state to effect a readjustment of its debts by proceedings in courts of bankruptcy. A water district in Texas petitioned the United States District Court asking for a readjustment of its obligations. After the dismissal of the proceedings in the District Court, but before the reversal of the decision by the Court of Appeals, the state legislature of Texas passed an act empowering municipalities and other political subdivisions to proceed under the federal statute. Held, that the municipal debt readjustment act is unconstitutional, the fiscal affairs of a political subdivision of a state not being subject to control or interference by the Federal Government. Ashton v. Cameron County Water lmprovement District No. One, (U.S. 1936) 56 S. Ct. 892.
MUNICIPAL CORPORATIONS-POWER OF CONGRESS TO PASS ACT FOR READJUSTMENT OF MUNICIPAL DEBTS,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol34/iss8/27