Opinion
No. 8141.
October 19, 1936.
Appeal from the District Court of the United States for the Northern District of California, Northern Division; Harold Louderback, Judge.
Proceeding in the matter of the reorganization of the Waterford Irrigation District. From an order approving a plan of reorganization, George F. Covell and others, bondholders, appeal.
Reversed and remanded.
W. Coburn Cook, of Turlock, Cal., for appellants.
S.J. Hankins and Hankins Hankins, all of San Francisco, Cal., and A.L. Cowell, of Stockton, Cal., for appellee.
Before WILBUR, GARRECHT, and DENMAN, Circuit Judges.
This proceeding was inaugurated August 6, 1934, in the court below by the appellee, Waterford irrigation district, by filing a petition pursuant to act of Congress approved May 24, 1934, c. 345, §§ 78-80, 48 Stat. 798, extended to January 1, 1940, by act approved April 10, 1936 (11 U.S.C.A. §§ 301-303). This act of Congress was in effect approved by an act of the Legislature of the state of California, approved September 20, 1934 (St.Cal. 1935, p. 5). The matter proceeded in the lower court to the point where the court approved a reorganization plan from which the bondholders of the district take this appeal.
During the pendency of this appeal the Supreme Court has held that the provisions of the Bankruptcy Act relied upon are unconstitutional and that the lack of federal authority for such legislation cannot be acquired or validated by the consent of the state through its Legislature. Ashton et al. v. Cameron County Water Improvement Dist. No. One, 56 S.Ct. 892, 80 L. Ed. 1309, May 25, 1936.
For that reason the order of the lower court must be reversed, and the case remanded to the District Court for further action consistent with this opinion.