Court Opinion

ID: 7299577
Source: CourtListenerOpinion
Date Created: 2022-07-25 20:45:39.995604+00
Date Added: 2024-06-11T16:19:26.672632
License: Public Domain

Bodine, J.
An application was made under chapter 340 of the laws of 1931 (Pamph. L., p. 830), as amended and supplemented, to the end that the municipal finance commission function in the township of Lodi.
The applicant is a national banking association. It holds a large number of township notes and bonds on which the interest has been in default over sixty days. There is no dispute that the bank is the holder for value of the municipal obligation in question.
The contention is made that as to some of the obligations that the same were unconstitutionally issued and as to others that the Pierson act (Pamph. L. 1916, ch. 252, p. 525), was not complied with.
*115The laws of 1931, page 830, provide merely for a summary hearing as to the default. It is conceded that there was such default. To delay action merely because there may be some question as to the validity of issue of some of the municipal obligations would defeat the very purpose for which the act was intended. Municipal financing, past and present, must be placed on a sound basis.
In order for the court to safeguard the interest of the municipality and the bondholders, it is not necessary to determine more than the circumstance that obligations were issued for value, upon which interest was once paid, but which are now over sixty days in default.
The Pierson act (Pamph. L. 1916, p. 252, § 10), provides as follows: “Any bonds reciting that they are issued pur-
suant to this act, shall in any suit, action or proceeding involving their validity be conclusively deemed to be fully authorized by this act and to have been issued, sold, executed and delivered in conformity herewith and with all other provisions of statutes applicable thereto, and shall be incontestable anything herein or in other statutes to the contrary notwithstanding, unless such suit, action or proceeding is begun prior to the delivery of such bonds.”
At all events, some of petitioner’s obligations so recite. In this proceeding, the validity of these obligations, and other obligations issued for value, may not be questioned.
The rule will be made absolute.