In the case of Chicot County v. Sherwood (1892), the U.S Supreme Court ruled in favor of Sherwood, upholding his right to redeem bonds that were issued by Chicot County. The county had previously defaulted on these bonds and attempted to argue that they should not be held liable for their repayment due to a state law which declared them void. However, the court found this argument invalid as it violated Article I, Section 10 of the Constitution which prohibits states from passing laws impairing contractual obligations. Therefore, despite any subsequent legislation declaring such bonds void or unenforceable, those who purchased these securities still retained their rights under federal law to seek redemption or enforcement against defaulters.

In the dissenting opinion for Chicot County v. Sherwood, Justice Brewer argued that the county should not be held liable for bonds issued by a previous administration which were later found to be unconstitutional. He contended that if an act is declared unconstitutional, it is as though it never existed and therefore any contracts or obligations arising from such an act are null and void. In his view, this principle applies regardless of whether parties involved acted in good faith or not at the time when they entered into those agreements. He further stated that allowing recovery on these bonds would essentially validate an unconstitutional law retroactively, something he believed was fundamentally wrong.