“ If obligations of states or their political subdivisions may be subjected to the interference here attempted, they are no longer free to manage their own affairs; the will of Congress prevails over them; although inhibited, the right to tax might be less sinister. And really the sovereignty of the state, so often declared necessary to the federal system, does not exist. ”

“ In Texas, at all events, it is clear to the point of demonstration that the filing of a voluntary petition by a political subdivision does not violate the local law or any local public policy. Petitioners are not the champions of any rights except their own. ”

“ To hold that this purpose must be thwarted by the courts because of a supposed affront to the dignity of a state, though the state disclaims the affront and is doing all it can to keep the law alive, is to make dignity a doubtful blessing. ”

“ The power 'to establish * * * uniform Laws on the subject of Bankruptcies' can have no higher rank or importance in our scheme of government than the power 'to lay and collect taxes.' Both are granted by the same section of the Constitution, and we find no reason for saying that one is impliedly limited by the necessity of preserving independence of the states while the other is not. Accordingly, as application of the statutory provisions now before us might materially restrict respondent's control over its fiscal affairs, the trial court rightly declared them invalid. ”

“ To read into the bankruptcy clause an exception or proviso to the effect that there shall be no disturbance of the federal framework by any bankruptcy proceeding is to do no more than has been done already with reference to the power of taxation by decisions known of all men. ”

“ Not by arguments so divorced from the realities of life has the bankruptcy power been brought to the present state of its development during the century and a half of our national existence.
The act does not authorize the states to impair through their own laws the obligation of existing contracts. Any interference by the states is remote and indirect. Cf. In re Imperial Irrigation District (D.C.) 10 F.Supp. 832, 841. At most what they do is to waive a personal privilege that they would be at liberty to claim. ”

“ If contracts are impaired, the tie is cut or loosened through the action of the court of bankruptcy approving a plan of composition under the authority of federal law. There, and not beyond in an ascending train of antecedents, is the cause of the impairment to which the law will have regard. ”

“ Impairment by the central go ernment through laws concerning bankruptcies is not forbidden by the Constitution. Impairment is not forbidden unless effected by the states themselves. No change in obligation results from the filing of a petition by one seeking a discharge, whether a public or a private corporation invokes the jurisdiction. The court, not the petitioner, is the efficient cause of the release.
The act is not lacking in uniformity because applicable only to such public corporations as have the requisite capacity under the law of the place of their creation. ”

“ What is true of Cameron county water improvement district No. 1 is true in essentials of thousands of other public corporations in widely scattered areas. The hearings by committees of the Congress before the passage of the statute exhibit in vivid fashion the breadth and depth of the mischief which the statute was designed to remedy. [1] In January, 1934, 2,019 municipalities, counties, and other governmental units were known to be in default. ”

“ The trial court dismissed the petition for lack of jurisdiction. It held:
The petitioner is a mere agency or instrumentality of the state, created for local exercise of her sovereign power reclamation of arid land through irrigation. It owns no private property and carries on public business only. The bonds are contracts of the state, executed through this agency, and secured by taxes levied upon local property. Congress lacks power to authorize a federal court to readjust obligations, as provided by the act. ”

“ It is one of its creatures, made for a specific purpose, to exercise within a limited sphere the powers of the State. The State may withdraw these local powers of government at pleasure, and may, through its legislature or other appointed channels, govern the local territory as it governs the State at large. ”

“ The district has made diligent effort to enforce collections, but without success. When it has attempted to foreclose its liens, it has been compelled for lack of bidders to buy the lands in and pay the court costs. After buying the lands in, it has been unable to get rid of them, for they have been subject to other tax liens prior to its own. The defaults are steadily mounting. For the year 1932, they were 63 per cent.; for the year 1933, 88.9 per cent. The average market value of lands in the district does not exceed $75 per acre ”

“ The Constitution prohibits the states from passing any law that will impair the obligation of existing contracts, and a state insolvency act is of no avail as to obligations of the debtor incurred before its passage. Sturges v. Crowninshield, 4 Wheat. 122, 4 L.Ed. 529. Relief must come from Congress if it is to come from any one. ”

“ Default has been suffered to the extent of $147,000, either for principal or for interest, upon its obligations now matured. But its own indebtedness is only a part of the financial burden that oppresses it. The bonded debt of other municipalities is a superior lien upon the property in the district for $10,386,000, and accumulated interest. The population is mainly agricultural. The farmers have been unable by reason of the great depression to make a living from their farms, and unable to pay their taxes in appreciable amounts. ”

“ Almost every change has been hotly denounced in its beginnings as a usurpation of power. Only time or judicial decision has had capacity to silence opposition. At the adoption of the Constitution, the English and Colonial bankruptcy laws were limited to traders and to involuntary proceedings. An act of Congress passed in 1800 (2 Stat. 19) added bankers, brokers, factors, and underwriters. ”

“ To overcome an act of Congress, invalidity must be proved beyond a reasonable doubt. Ogden v. Saunders, 12 Wheat. 213, 270, 6 L.Ed. 606; Sinking Fund Cases, 99 U.S. 700, 718, 25 L.Ed. 496. Sufficient reasons do n t appear for excluding political subdivisions from the bankruptcy jurisdiction if the jurisdiction is so exerted as to maintain the equilibrium between state and national power. Persuasive analogies tell us that consent will preserve a balance threatened with derangement. A state may not tax the instrumentalities of the central government. ”

“ One may resort to a court of bankruptcy though one has used up all one's property or though what is left is exempt. Vulcan Sheet Metal Co. v. North Platte Valley Irrigation Co. (C.C.A.) 220 F. 106, 108; In re Hirsch (D.C.) 97 F. 571, 573; In re J. M. Ceballos & Co. (D.C.) 161 F. 445, 450. It is enough that, in an omnibus proceeding between a nonpaying debtor on the one side and the creditors on the other, the debtor-creditor relation is to be readjusted or extinguished. Cf. Warren, op. cit. supra, at pages 8, 144.
Cameron water improvement district No. 1 has no assets to surrender. ”

“ Such a governmental unit may be brought into court against its will without violating the Eleventh Amendment. County of Lincoln v. Luning, 133 U.S. 529, 10 S.Ct. 363, 33 L.Ed. 766; Hopkins v. Clemson Agricultural College, 221 U.S. 636, 645, 31 S.Ct. ”