CONSTITUTIONAL LAW - IMPAIRING THE OBLIGATION OF CONTRACTS - REFUNDING BONDS

Authors

John F. Hall, University of Michigan Law School

Abstract

In 1938, Mississippi authorized the issuance of state highway bonds in the aggregate of $60,000,000. Interest was payable semiannually and the bonds were to mature serially semiannually, and to the extent necessary to make these payments the revenues from gasoline taxes were pledged. The act further provided that the state covenanted that so long as any of the bonds were outstanding and unpaid, it would not authorize "any other obligations or securities payable from gasoline tax revenues" unless such revenues should increase in such an amount that one-third of the proceeds would be sufficient to meet the principal and interest obligations on the bonds. In 1940, the act of 1938 was amended so as to allow the state bond commission to issue bonds for the sole purpose of refunding the bonds which matured in 1941. The refunding bonds were to have the same characteristics, be payable from the same revenues and secured by the same covenants as were the original bonds. Plaintiff, who was owner of a bond issued under the act of 1938 and maturing in 1949, filed a petition to enjoin the issuance of the refunding bonds, alleging that since one-third of the gasoline tax revenues would not be sufficient to meet principal and interest payments on the bonds, the obligation of the contract embodied in the act of 1938 will be impaired. Held, the amendatory act of 1940 providing for the issuance of refunding bonds is constitutional. Bank of Morton v. State Bond Commission, (Miss. 1941) 199 So. 507.

Recommended Citation

John F. Hall, CONSTITUTIONAL LAW - IMPAIRING THE OBLIGATION OF CONTRACTS - REFUNDING BONDS, 40 Mich. L. Rev. 293 (1941).
Available at: https://repository.law.umich.edu/mlr/vol40/iss2/11