Old Court-New Court controversy

The Old Court – New Court controversy was a 19th-century political controversy in the U.S. state of Kentucky in which the Kentucky General Assembly abolished the Kentucky Court of Appeals and replaced it with a new court. The justices of the old court refused to recognize the action as valid, and for a time, two separate courts operated as the court of last resort for the state.

The controversy began when the financial Panic of 1819 left many Kentuckians in debt and unable to meet their financial obligations. A debt relief movement began in the state, and pro-relief candidates won majorities in the General Assembly in 1820. The Assembly passed a law of replevin that was extremely favorable to debtors. Disgruntled creditors challenged the constitutionality of the law, appealing their case to the Court of Appeals. The court opined in favor of the creditors. Attempts to remove the anti-relief justices failed. The pro-relief legislature passed a measure abolishing the Court of Appeals and replacing it with a new court, to which pro-relief governor Joseph Desha appointed pro-relief justices who upheld the replevin law.

As the economic situation in the state improved in the second half of the 1820s, the Old Court supporters regained control of both houses of the General Assembly. They abolished the New Court and restored the Old Court to power. In an 1829 case, the Court nullified decisions rendered by the New Court. In a 1935 case, the Court struck all the New Court cases from Kentucky common law.

A period of national prosperity followed the end of the War of 1812. In Kentucky, rapid population growth and strong demand for the state's goods led to land speculation becoming a popular enterprise. The charter of the Kentucky Insurance Company in 1802 and the Bank of Kentucky in 1806 made currency for loans plentiful. The establishment of branches of the Second Bank of the United States in Louisville and Lexington further augmented the availability of credit. In 1818, the General Assembly chartered 40 more state banks, and later added six more.

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