finding- state repeal of covenant that assured bondholders that the revenues and reserves securing their bonds would not be used for purposes other than those specifically delineated in the covenant impaired the obligation of the state’s contract because it “totally eliminated an important security provision”
How later courts described this case
- finding- state repeal of covenant that assured bondholders that the revenues and reserves securing their bonds would not be used for purposes other than those specifically delineated in the covenant impaired the obligation of the state’s contract because it “totally eliminated an important security provision”
- holding that New York and New Jersey were bound by a statutory pledge regarding the Port Authority’s finances while its bonds were outstanding
- holding that the question of actual valuation of impairment need not be resolved where the statutory enactment eliminated an important security provision which clearly and undeniably affected the overall value and security of the bonds
- finding that New York and Néw Jersey’s intent to make a contract with bondholders is clear from the following statutory language: “The 2 States covenant and agree with each other and with the holders of any affected bonds ... ”
Written by the judges who cited it.
Distinguished
Distinguished by Cold Indian Springs Corp. v. Tp. of Ocean, 154 N.J. Super. 75 (1977)
U.S. Trust Co. v. State of New Jersey, supra, 431 U.S. 1, 97 S.Ct. 1505, is distinguishable.
The opinion
Mr. Chief Justice Burger,
concurring.
In my view, to repeal the 1962 covenant without running afoul of the constitutional prohibition against the impairment of contracts, the State must demonstrate that the impairment was essential to the achievement of an important state purpose. Furthermore, the State must show that it did not know and could not have known the impact of the contract on that state interest at the time that the contract was made. So reading the Court's opinion, I join it.
*33 For emphasis, I note that the Court pointedly does not hold that, on the facts of this case, any particular “less drastic modification” would pass constitutional muster, ante, at 30, and n. 28.