Flushing National Bank v. Municipal Assistance Corp.
New York Court of Appeals
40 N.Y.2d 731, 358 N.E.2d 848 (1976)
Facts
The city of New York (the city) (defendant) had amassed an enormous amount of debt by issuing municipal notes. The city was unable to pay the notes as they became due. Because of the city’s fiscal distress, the New York state legislature enacted the New York City Emergency Moratorium Act (the act). The act imposed a three-year moratorium on judicial actions to enforce the city’s outstanding notes. Hence, the act allowed the city to avoid paying notes as they became due. Flushing National Bank (the bank) (plaintiff) was a holder of the city’s notes. The bank brought suit, contending that the act was unconstitutional. The appellate division found that the act was constitutional. The bank appealed.
Rule of Law
Issue
Holding and Reasoning (Breitel, C.J.)
Dissent (Cooke, J.)
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