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Cornell University Library 
 HG 3766.J27 
 
 The Bankrupt law of the United States. 1 
 
The original of this book is in 
 the Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924013778265 
 
THE 
 
 BANKRUPT LAW of the UNITED STATES. 
 
 1867. 
 
 WITH NOTES, AND A COLLECTION OP AMERICAN AND ENGLISH 
 DECISIONS UPON 
 
 THE PRINCIPLES AND PRACTICE 
 
 OF THE 
 
 LAW OF BANKRUPTCY. 
 
 ADAPTED TO 
 
 THE USE OF THE LAWYER AND MERCHANT. 
 
 By EDWINJ JAMES, 
 
 OP THE NEW YORK BAB, AND ONE OP THE FRAMERS OF THE RECENT 
 V 
 
 ENGLISH BANKRUPTCY AMENDMENT ACT. 
 
 NEW YORK: 
 HARPER & BROTHERS, PUBLISHERS, 
 
 FRANKLIN SQUARE. 
 
 1867. 
 
■THE N V. YORK 
 f-U : l 'JBRARYl 
 
 ASTOB, LENOX AND 
 TIIDEN FOUNDATIONS. 
 
 1 899. 
 
 ■J 2 7 ' 
 
 Entered, according to Act of Congress, in the year one thousand eight hundred 
 
 and sixty-seven, by 
 
 HARPER & BROTHERS, 
 In the Clerk's Office of the District Court of the Southern. District of New York. 
 
INTRODUCTION 
 
 The Constitution of the United States delegates to Congress 
 " the power to establish uniform laws on the subject of bank- 
 ruptcies throughout the United States." - 
 
 Every commercial country has some system of bankruptcy. It 
 was introduced into the jurisprudence of the Eoman empire, and 
 made universal by succeeding Christian emperors. The French 
 and the Teutonic nations have adopted the system in their vari- 
 ous codes, and in England it has prevailed for more than two 
 centuries. 
 
 The power to establish a law of bankruptcy has been exercised 
 intermittently and at considerable intervals, to meet special emer- 
 gencies arising out of commercial difficulties, and the laws enact- 
 ed under it were repealed before they had formed even the basis 
 of a system of legislation. 
 
 The failure of the attempts at legislation upon this important 
 subject is historic. 
 
 The Bankrupt Act of 1800 was substantially for creditors only. 
 It was a carefully -prepared Digest of the English statutes as they 
 then existed, upon the subject of bankruptcy, without any proper 
 adaptation of the system to the peculiar interests of commerce in 
 this country. 
 
 The Bankrupt Act of 1841 was in fact for the benefit of debt- 
 ors only, and it was reported originally as a purely voluntary sys- 
 tem. In the course of the discussion in Congress on the bill, 
 amendments were ingrafted upon it which were intended to se- 
 cure and protect the interests of creditors, but were found by ex- 
 perience to be inefficient "and illusory. This objection to that 
 
IV INTRODUCTION. 
 
 law was one of the causes, if not the main cause, which allowed 
 it such a short-lived existence, and induced its sudden repeal. 
 
 Adopting the improved legislation of England upon the. law 
 of bankruptcy, tempering in many instances its harshness and se- 
 verity, but enacting stringent provisions to exact honesty from 
 the debtor, this act is intended to accomplish two objects : 
 
 1st. The discharge of the honest but unfortunate debtor upon 
 the complete surrender of his property to his creditors. 
 
 2d. The protection of the creditor against the fraudulent prac- 
 tices and dishonest conduct of his debtor. 
 
 It contains provisions both fori voluntary and compulsory 
 BANKRUPTCY, and for the first time in this country brings the 
 failing debtor and his creditors upon a ground of negotiation and 
 adjustment equally beneficial to both. 
 
 Avoiding the complications with which the system of bank- 
 ruptcy has been entangled in England by excessive legislation, it 
 adopts those provisions from the English statutes which the test 
 of experience has shown to be beneficial in their operation. 
 
 Some experience as a legislator upon this subject, and many 
 years practice in the English courts of bankruptcy, have, induced 
 the author to undertake this work. 
 
 His object has been to collate those authorities, American and 
 English, which explain and elucidate the principles which regu- 
 late and control the administration of the law of bankruptcy ; 
 and by notes to the sections of the act, written in as clear and 
 lucid style as he could command, to afford assistance to the legal 
 practitioner and general reader upon the questions, sometimes 
 complicated and difficult, which will arise in the application of 
 its various provisions. 
 
 To the ability and untiring energy of Mr. Thomas A. Jenckes, 
 member of Congress from Ehode Island, is mainly due the pas- 
 sage of an act which the author believes will do much to place 
 the commercial relations of this great country upon a sound and 
 healthy basis. 
 
 In the very first position among maritime and commercial na- 
 
xne aumor recoras nis acKnowieagmenx 01 tne services ren- 
 ered by his pupil, Mr. John H. Jackson; in the collection of 
 Linerican decisions, and his assistance in the compilation of this 
 r ork. 
 
 293 Broadway, New York, April, 1867. 
 
THE BANKRUPT LAW. 
 
 DISTRICT COURTS. 
 
 THEIR JURISDICTION AND POWERS. 
 
 Section 1. Be it enacted by the Senate and Home of 
 Representatives of the United States of America in Con- 
 gress assembled, That the several District Courts of the 
 United States be, and they hereby are, constituted Courts 
 of Bankruptcy, and they shall have original jurisdiction 
 in their respective districts in all matters and proceedings 
 in bankruptcy, and they are hereby authorized to hear 
 and adjudicate upon the same according to the provisions 
 of this act. The said courts shall be always open for the 
 transaction of business under this act, and the powers and 
 jurisdiction hereby granted and conferred shall be exer- 
 cised as well in vacation as in term time ; and a judge sit- 
 ting in chambers shall have the ,same powers and juris- 
 diction, including the power of keeping order and of pun- 
 ishing any contempt of his authority, as when sitting in 
 court. And the jurisdiction hereby conferred shall extend 
 to all cases and controversies arising between the bank- 
 rupt and any creditor or creditors who shall claim any 
 debt or demand under the bankruptcy ; to the collection 
 of all the assets of the bankrupt ; to the ascertainment 
 and liquidation of the liens and other specific claims 
 
8 THE BANKRUPT LAW. [§ 1. 
 
 thereon ; to the adjustment of the various priorities and 
 conflicting interests of all parties ; and to the marshaling 
 and disposition of the different funds and assets, so as to 
 secure the rights of all parties and due distribution of the 
 assets among all the creditors; and to all acts, matters, and 
 things to be done under and in virtue of the bankruptcy, 
 until the final distribution and settlement of the estate of 
 the bankrupt, and the close of the proceedings in bank- 
 ruptcy. The said courts shall have full authority to com- 
 pel obedience to all orders and decrees passed by them in 
 bankruptcy, by process of contempt and other remedial 
 process, to the same extent that the Circuit Courts now 
 have in any suit pending therein in equity. Said courts 
 may sit for the transaction of business in bankruptcy at 
 any place in the district, of which place, and the time of 
 holding court, they shall have given notice, as well as at 
 the places designated by law for holding such courts. 
 
 Constitutionality of a Bankrupt Law. — The Federal Constitution 
 declares that Congress shall have power to establish " uniform laws 
 on the 'subject of bankruptcies throughout the United States." — 
 Art. 1, Sec. 8. This power has lain dormant, except for a short time, 
 ever since the Constitution was adopted. It is evidently a system 
 which the country has long needed. Mr. Justice Story observed 
 several years ago " that one of the most pressing grievances bear- 
 ing upon commercial, manufacturing, and agricultural interests, is 
 the total want of a general system of bankruptcy." — Story on Con- 
 flict, § 541. "Although the above constitutional provision passed 
 the Convention with little opposition — Connecticut having voted 
 against it — wiseacre politicians have sought from time to time to 
 fetter the action of Congress by interpolating a rule of construction 
 equally repugnant to good se*nse and sound policy." Marshall, C. J., 
 in the case of Gibbon vs. Ogden, 9 Wheaton, 188, observed "that 
 he could not perceive the propriety of a strict construction, nor 
 adopt such as the rule by which the Constitution should be ex- 
 pounded." "The enlightened patriots," he remarks, " who framed 
 our Constitution, and the people who adopted it, must be under- 
 stood to have employed words in their natural sense, and to have 
 intended what they said." 
 
 Justice Catron, in Klein's case, 1 How. Rep., 211, sustained the 
 Bankrupt Law of 1841 as constitutional. " The power to establish 
 uniform laws of bankruptcy," says Mr. Madison in the Federalist, 
 XLLT., " is so intimately connected with the regulation of commerce, 
 
§ 1.] DISTEICT COURTS. 9 
 
 and will prevent so 'many frauds when the parties or their property 
 may lie or be removed into different States, that the expediency of 
 it seems not likely to he drawn into question." Laws made in pur- 
 suance of the Constitution constitute the supreme law of the land, 
 any -thing in the Constitution or laws of a State to the contrary not- 
 withstanding. 
 
 Before the adoption of our Federal Constitution, the States sever- 
 ally possessed the exclusive power, as belonging to general sover- 
 eignty, to pass such laws ; as prior to that time no such thing as a 
 Bankrupt Law, eo nomine, had ever been enacted in this country. 
 
 A defect seriously felt under the Confederation was the want of 
 a uniformity — as laws of "naturalization" and "bankruptcy 2 ' — a co- 
 ercive authority operating upon individuals as guarantee of internal 
 tranquillity. Charles Pinckiiey thus carefully prepared and submit- 
 ted the proposition which is embodied in our organic law. Mr. 
 Rawle observes in his work- on the Constitution, p. 101, that until 
 this right of Congress of passing a Bankrupt Law is exercised, States 
 are not prohibited from passing such laws, but such right is sus- 
 pended from that time. While the act of Congress is in force, the 
 power of a State continues over such cases as the law does not em- 
 brace ; but no State bankrupt or insolvent law can be permitted to 
 impair the " obligation of contracts," and no State law can act upon 
 the rights of citizens of other States. 
 
 Thus the Supreme Court determined years ago, by a series of de- 
 cisions,, 4 Wheaton's Rep., 122, 12 Id., 273, the following points: 
 1st. That State insolvent laws can not discharge the obligation of 
 antecedent contracts. 2d. That the power of Congress to pass 
 Bankrupt Laws is not an exclusive grant ; it may therefore be exer- 
 cised within constitutional limits by the States. 3d. That a State 
 may pass valid laws discharging the person of the debtor and his 
 after-acquired property from -debts contracted after the passing of 
 such law. 4th. That such a discharge is valid only between the 
 citizens of the State by which the law was passed. 5th. That the 
 insolvent law of one State does not discharge the debtor from debts 
 which he has contracted in another State. The doctrine seems to 
 obtain that Congress has exclusive power to pass Bankrupt Laws, 
 but that a State may exercise the right under restrictions. Mr. 
 Justice Washington, of the Supreme Court of the United States, 
 maintained that this power was " exclusively in Congress." One 
 other judge then on the bench is known to have held the same opin- 
 ion. Since the law of 1841 it has been held that a State insolvent 
 law may exist in full vigor, so far as it does not impede the opera- 
 tion of a Bankrupt Law of Congress. In the case of Kunzler vs. 
 Kohans, 5 Hill, 317, and also in Sackett vs. Andross, 5 Id., 327, where- 
 in the law of 1841 was elaborately discussed, it was held that vol- 
 untary as well as involuntary bankruptcy is constitutional, apply- - 
 ing to debts created before as well as after the passage of the law. 
 Bronson, J., and Wells, J., of the Supreme Court, held otherwise ; 
 but insolvency and bankruptcy being practically and theoretically 
 . the same — as a historical review of the colonial and State legisla- 
 
10 THE BANKRUPT LAW. [§ 1. 
 
 tion will abundantly show — there Seems to be no just and legal 
 ground for such opinion. After carefully reviewing the several works 
 on the Constitution, and the various cases arising under the Bank- 
 rupt Laws of 1800 and 1841, there appears no prudent or valid rea- 
 son for not acquiescing in the entire constitutionality of such a law. 
 
 The District Court of the United States in every district is con- 
 stituted a Court of Bankruptcy, and invested with original jurisdic- 
 tion in all matters and proceedings in bankruptcy.' Such courts are 
 to be always open for the transaction of bankruptcy business. A 
 judge of the Court of Bankruptcy has the same power when sitting 
 in chambers as when presiding in open court. 
 
 .The Jurisdiction extends to all cases and controversies between 
 the bankrupt and his creditors, to the .collection of the assets of the 
 bankrupt's estate, and generally for the efficient working of the 
 law of bankruptcy. 
 
 Orders and Decrees of the Court.— The same authority is given to 
 compel obedience to all orders and decrees of the court made and 
 pronounced in the administration of bankruptcy, as such courts now 
 have in any suit pending therein in equity. 
 
 Sittings of the Court.— The Courts of Bankruptcy may sit in any 
 place within their several districts, and hold their courts after pub- 
 lic notice. 
 
 Under the Bankruptcy Law of 1 841, a District Court of the United 
 States, sitting in bankruptcy, had jurisdiction in respect to mort- 
 gages and liens on the property of the bankrupt, to determine their 
 validity and extent. But such jurisdiction was not exclusive ; it 
 was to be exercised directly upon the parties themselves by injunc- 
 tion, or other appropriate proceeding in equity. The District Court 
 had no control over the State Courts themselves, and could not set 
 aside a foreclosure and sale of mortgaged property of a bankrupt 
 on ,a bill filed in a State Court to foreclose the mortgage, when no 
 objection was made to the validity of the mortgage itself, but only 
 to the jurisdiction of the court. — Norton vs. Boyd, 3 How., U.S., 426. 
 Vide also Mo parte Christy, 3 How.,U. S., 292. 
 
 The Bankrupt Act of 1841 gave to the District and Circuit Courts 
 complete jurisdiction, to accomplish all the purposes of the act, and 
 enabled each court to begin and end all such proceedings as might 
 be necessary for the settlement of the bankrupt's estate. — Mitchell 
 vs. The Great Works Milling and Manufacturing Co., 2 Story, 648. 
 The District Courts, by the Bankrupt Law of 1 841 , were possessed of 
 the Ml jurisdiction of courts of equity over all subject matters aris- 
 ing in bankruptcy.— Ex parte Poster, 2 Story, 131. The District 
 Court, when sitting in bankruptcy, had jurisdiction over liens and 
 mortgages existing upon the property of bankrupts so as to inquire 
 into their validity and extent, and grant the same relief which the 
 State Courts might or ought to grant.— Ex parte Christy, 3 How., 
 U. S., 292. The control of the District Court over proceedings in 
 the State Courts upon liens is exercised, not over the State Courts 
 themselves, but upon the parties through an injunction or other ap- 
 propriate proceeding in equity. Vide case last cited. In case of 
 
§ 2.] CIRCUIT COURTS. 11 
 
 a contested claim on the bankrupt's estate, the District Court has 
 jurisdiction of a formal bill in equity or other plenary proceeding, 
 or of a summary proceeding. — Mc parte Christy, 3 How., U. S., 292. 
 
 The District Court had jurisdiction in all matters and proceedings 
 arising under the Bankrupt Act of 1,841, and might entertain pro- 
 ceedings in equity, although an action at law could equally have 
 been maintained. — The Chemung Canal Bank vs. Judson, 4 Selden, 
 N. Y., 254. 
 
 The powers of the District Courts of the United States in regard 
 to the administration of the Bankrupt Law of 1841 were regarded 
 as special and summary ; so that in such cases the jurisdiction must ap- 
 pear, or be distinctly shown. — Morse vs. Presley, 5 Foster, N.H., 299. 
 
 The proceedings of the United States District Court, in cases of 
 bankruptcy, are in the nature of a proceeding in rem — like a pro- 
 ceeding in the English courts to obtain an outlawry. — Downer vs. 
 Rowell, 25 Vt., 2 Deane, 336. 
 
 In order to give the District Court jurisdiction of a petition for a 
 discharge in bankruptcy, the petitioner must be a resident of the 
 district where the petition is filed. That fact must, therefore, be 
 averred in the petition. — Johnson vs. Ball, 15 N". H., 40^. 
 
 Rights vested in creditors by a cessio bonorum, so far as they re- 
 late to the property ceded, are unaffected by subsequent proceed- 
 ings of the insolvent, in causing himself to be declared a bankrupt 
 under the act of Congress of August 19, 1841. Section 8, Art. 1, of 
 the United States Constitution provides that Congress shall have 
 the power to establish " uniform laws on the subject of bankruptcy 
 throughout the United States." This power was specially dele- 
 gated to Congress, and only reserved by the several States in so far 
 and so long as Congress did not see fit to exercise it. The moment 
 Congress exercised the power, the State laws on the subject became 
 inoperative and were suspended. — Beach vs. Miller, 15 La. An., 601. 
 
 CIRCUIT COURTS. 
 
 THEIR JURISDICTION AND POWERS. 
 
 Section 2. And be itfwiher enacted, That the several 
 Circuit Courts of the United States within and for the 
 districts where the proceedings in bankruptcy shall be 
 pending shall have a general superintendence and juris- 
 diction of all cases and questions arising under this act ; 
 and, except when special provision is otherwise made, 
 may, upon bill, petition, or other proper process of any 
 party aggrieved, hear and determine the case as a court 
 of equity. The powers and jurisdiction hereby granted 
 
12 THE BANKRUPT LAW. [§ 2. 
 
 may be exercised either by said court, or by any justice 
 thereof, in term time or vacation. Said Circuit Courts 
 shall also have concurrent jurisdiction with the District 
 Courts of the same district, of all suits at law or in equity, 
 which may or shall be brought by the assignee in bank- 
 ruptcy against any person claiming an adverse interest, or 
 by such person against such assignee, touching any prop- 
 erty or rights of property of said bankrupt transferable 
 to or vested in such assignee; but no suit at law or in 
 equity shall in any case be maintainable by or against 
 such assignee, or by or against any person claiming an ad- 
 verse interest, touching the property and rights of prop- 
 erty aforesaid, in any court whatsoever, unless the same 
 shall be brought within two years from the time the cause 
 of action accrued, for or against such assignee : provided, 
 that nothing herein contained shall revive a right of ac- 
 tion barred at the time such assignee is appointed. 
 
 Circuit Courts. — Within and for the district where proceedings in 
 bankruptcy are pending, the Circuit Courts have concurrent juris- 
 diction of all cases and questions in administration of bankruptcy 
 under the act as courts of equity, and have concurrent jurisdiction 
 in all suits at law and in equity to which the assignees, as plaintiffs 
 or defendants, are parties in all matters concerning the estate and 
 property of the bankrupt vested in or claimed by them. The Cir- 
 cuit Courts of the United States have jurisdiction under the Bank- 
 rupt Law to set aside the transfer of property by the bankrupt in 
 fraud of the law, and in the same proceeding direct that such prop- 
 erty be distributed according to their legal rights among creditors 
 having valid hens thereon. — M'Lean vs. Meline, 3 M'Lean, 199. 
 The Circuit Courts of the United States have jurisdiction in all 
 cases in which a suit is brought by or against the assignees of a 
 bankrupt, and the claimant can not be compelled to go into the 
 State- Courts to assert his rights as such. — M'Lean vs. Lafayette 
 Bank, 3 M'Lean, 185. The District Court of the United States, be- 
 fore which proceedings in bankruptcy were pending, had power to 
 enjoin the enforcement of any of the debts of the bankrupt in any 
 other tribunal, and a sale of the property of the debtor after notice 
 of injunction renders the officer liable. — Stinson vs. M'Murray, 6 
 Humph, 339. The District Courts have jurisdiction over liens and 
 encumbrances on the property of bankrupts, and the assignees of 
 bankrupts may in those courts compel a foreclosure of mortgages, 
 and the enforcement of liens generally, with a view to the ascertain- 
 
§2.] CIRCUIT COURTS. 13 
 
 ment and proper distribution of the assets of the bankrupt. — Russel 
 vs. Cheatam, 8 S. & M., 703. 
 
 The act, therefore, constitutes the District Court as the court in 
 which all the proceedings in bankruptcy are to originate ; the Cir- 
 cuit Courts having a general superintendence and jurisdiction of 
 all cases and questions arising under the act, so that some question 
 to be litigated must have arisen before the District Court to give 
 the Circuit Court jurisdiction. The Circuit Court is the Appellate 
 Court from the District Court, and writs of error are to be brought 
 from the District Court to the Circuit Court under the modifica- 
 tions prescribed by the act. Vide note, " Appeals." 
 
 State Courts— their Jurisdiction. — The State Courts have not ju- 
 risdiction to carry the Bankrupt Law into effect. Congress have 
 not power to give them such jurisdiction. — M'Lean vs. Lafayette 
 Bank, 3 M'Lean, 185. The State Courts must be governed by the 
 construction given to the Bankrupt Act* by the courts of the United 
 States. — Russel vs. Cheatam, 8 S. & M., 703. The State Courts 
 have jurisdiction to enforce liens on the property of a bankrupt 
 preserved under the Bankrupt Law, but this power does not draw 
 to their jurisdiction the administration of the Bankrupt Law. Vide 
 case last cited. 
 
 The Bankrupt Act of 1841, being within the powers of Congress, 
 is superior to State laws on the subject; and judgments confessed 
 in contravention of this law are void. — Atkinson vs. Purdy, Crabbe, 
 551. 
 
 The Bankrupt Act of 1841 was obligatory in all those States and 
 Territories to which the ordinance of 17137 extended, as well as to 
 the others. — Stow vs. Parks, 1 Chandler, Wis., 60. 
 
 The State Courts had jurisdiction in suits by the assignees of 
 bankrupts under the Bankrupt Law of the United States of 1841. 
 — Hastings vs. Fowler, 2 Carter, Ind., 216. 
 
 Where creditors are proceeding in a State Court to enforce liens 
 on the property of the bankrupt, the Circuit Court would take juris- 
 diction of a bill for injunction on them if fraud be alleged, but not 
 otherwise. — Clarke vs. Rist, 3 M'Lean, 494. The State Courts have 
 jurisdiction to entertain an inquiry into the validity of a discharge 
 of a bankrupt, which may be pleaded as an answer to any debt or 
 claim prosecuted in such courts. — Mabrey vs. Herndon, 8 Ala., 848. 
 In New York, when a bankrupt's discharge granted by a District 
 Court of the United States is offered in evidence, it will be pre- 
 sumed that the court granting the discharge had jurisdiction till 
 the contrary appears. — Morse vs. Cloyes, 11 Barb., Superior Ct., 100. 
 
 Effect of the Act upon State Insolvent Laws. — It was decided that 
 the Bankrupt Law of the United States, upon going into operation 
 in February, 1842, ipso facto suspended all action upon future cases 
 arising under State insolvent laws where the insolvent persons were 
 within the purview of the Bankrupt Law. — Me parte Eames, 2 Story, 
 322. Where the debtor took advantage of the Insolvent Law of 
 Massachusetts after the Bankrupt Law of the United States had 
 come into operation, and an assignee was duly appointed in pursu- 
 
14 THE BANKRUPT LAW. [§ 2. 
 
 ance of the law of Massachusetts, and the debtor subsequently; pe- 
 titioned to be declared a bankrupt under the law of the United 
 States, it was held that an injunction ought to issue against the as- 
 signee in the insolvency proceedings, to restrain him from intermed- 
 dling with the property of the debtor. — Ex parte Eames, 2 Story, 
 322. It was held that the late Bankrupt Law of the United States, 
 which was enacted August 19, 1841, and which expressly provided 
 that it should take effect only after February 1, 1842, did not sus- 
 pend the operation of the State insolvent laws until February 1, 
 1842.— Larrabee vs. Talbott, 5 Gill, 426. 
 
 When the jurisdiction of a Circuit Court once attached, it ex- 
 tended not only to the general merits of the bankrupt's case, but to 
 the regularity and sufficiency of all the interlocutory proceedings. 
 •So held under the Bankrupt Law of 1841. — Morrison vs. Woolson, 
 9 Foster, KH., 510. 
 
 In Iowa the Territorial District Courts had jurisdiction in bank- 
 ruptcy under the Bankrupt Law of 1841. — Wright vs. Watkins, 2 
 Greene, Iowa, 547. 
 
 It was decided that the State Courts of New Hampshire had no 
 jurisdiction of the crime of perjury committed in an examination 
 before a commissioner in bankruptcy appointed under the Bank- 
 rupt Law of 1841.— The State vs. Pike, 15 K H., 83. 
 
 Construction of the Act. — The former Bankrupt Acts of the United 
 States of 1800 and 1841 having consolidated the provisions of the 
 English statutes of bankruptcy, English decisions on the subject 
 are applicable to the construction of them. — Roosevelt vs. Mark, 6 
 Johns Chn., 266; Lummus vs. Fairfield, 5 Mass, 249 ; Livermore vs. 
 Bagley, 3 Mass., 511. And as this act embodies to a very large ex- 
 tent some of the most important provisions of the recent and im- 
 proved legislation upon the subject of bankruptcy in England, the 
 author has selected the most recent and leading decisions from the 
 English courts of law and equity, and annotated them under their 
 several titles. 
 
 Limitation of Actions by and against Assignees to Two Tears. — No 
 suit at law or in equity shall, in any case, be maintainable by or 
 against the assignee, or by or against any person claiming an ad- 
 verse interest touching the property, and rights of property, of the 
 bankrupt transferable to and vested in the assignee, in any court 
 whatsoever, unless the same shall be brought within two years from 
 the time the cause of action accrued for or against such assignee. 
 It is also provided by the section that nothing therein contained 
 shall revive a right of action barred at the time such assignee is ap- 
 pointed. The two years' limitation in the Bankrupt Law of 1841 
 was intended to prevent the adverse claims of third persons from 
 impeding the settlement of bankrupts' estates, and extends only to 
 cases where there is such adverse interest.— Union Canal Company 
 vs.Woodside, 11 Penn. State Rep., 1 Jones, 176. The limitation 
 of actions in the 8th Section of the United States Bankrupt Law 
 of 1841 did not operate to bar an action brought in the name of the 
 assignee of a bankrupt upon a note given to a bankrupt after peti- 
 
§3.] REGISTERS. 15 
 
 tion filed, but before the decree of bankruptcy. — Carr vs. Lord, 29 
 Maine, 16 Shep., 51. 
 
 The limitation of two years for the commencement of suits by an 
 assignee under the Bankrupt Law does not apply to applications to 
 the chancellor for orders or rules to refund moneypaid under a de- 
 cree which has been reversed. — Kane vs. Pilcher, 1 B. Mon., 651. An 
 assignee in bankruptcy can not sue in the State or Federal Courts 
 after the lapse of two years from the time of the declaration and 
 decree in bankruptcy, if the cause of action had then accrued, to re- 
 cover the property of the bankrupt. — Comegys vs. M'Call, 11 Ala., 
 932. An assignee can not sue after two years from the date of the 
 decree in bankruptcy, or from the time when the cause of action 
 accrued ; and if the defect in not bringing the action within that 
 time appeared on the face of the declaration or complaint, it may be 
 reached by demurrer. — Harris vs. Collins, 13 Ala., 388. It was held 
 that the limitation of the Bankrupt Law of 1841 applied to actions 
 in the name of the assignee, though brought wholly for the benefit 
 of a third party. — Pike vs. Lowell, 32 Maine, 2 Red., 245. 
 
 Jurisdiction in Bankruptcy in the District of Columbia, and in the 
 several Territories of the United States. — When the bankrupt resides 
 within the District of Columbia, or any of the Territories of the 
 United States, it is provided by Section 49 that all the jurisdiction, 
 power, and authority conferred upon and vested in the District 
 Court of the United States by this act in cases of bankruptcy, are 
 thereby conferred upon and vested in the Supreme Court of the 
 United States for the District of 'Columbia, and in and upon the 
 Supreme Courts of the several Territories of the United States. 
 
 Judicial Districts not within any organized Circuit of the United 
 States. — The last mentioned section also provides that, in those ju- 
 dicial districts which are not within any organized circuit of the 
 United States, the powers and jurisdiction in bankruptcy of a Cir- 
 cuit Court may be exercised by the district judge. 
 
 REGISTEKS. 
 
 THEIR DUTIES AND POWERS. 
 
 Section 3. And he it f wilier enacted, That it shall be 
 the duty of the judges of the District Courts of the United 
 States within and for the several districts to appoint in 
 each congressional district in said districts, upon the nom- 
 ination and recommendation of the Chief Justice of the 
 Supreme Court of the United States, one or more regis- 
 ters in bankruptcy, to assist the judge of the District 
 Court in the performance of his duties under this act. 
 
16 THE BANKRUPT LAW. [§ 4. 
 
 No person shall be eligible to such appointment unless 
 lie be ^ counselor of said court, or of some one of the 
 Courts of Record of the State in which he resides. Before 
 entering upon the duties of his office, every person so ap- 
 pointed a register in bankruptcy shall give a bond to the 
 United States, with condition that he will faithfully dis- 
 charge the duties of his office, in a sum not less than one 
 thousand dollars, to be fixed by said court, with sureties 
 satisfactory to said court, or to either of the said justices 
 thereof; and he shall, in open court, take and subscribe 
 the oath prescribed in the act entitled "An act to pre- 
 scribe an oath of office, and for other purposes," approved 
 July second, eighteen hundred and sixty-two, and also that 
 he will not, during his continuance in office, be, directly or 
 indirectly, interested in or benefited by the fees or emolu- 
 ments arising from any suit or matter pending in bank- 
 ruptcy in either the District or Circuit Court in his dis- 
 trict. 
 
 Section 4. And be it further enacted. That every regis- 
 ter in bankruptcy, so appointed and qualified, shall have 
 power, and it shall be his duty, to make adjudication of 
 bankruptcy, to receive the surrender of any bankrupt, to 
 administer oaths in all proceedings before him, to hold 
 and preside at meetings of creditors, to take proof of debts, 
 to make all computations of dividends, and all orders of 
 distribution, and to furnish the assignee with a certified 
 copy of such orders, and of the schedules of creditors and 
 assets filed in each case, to audit and pass accounts of as- 
 signees, to grant protection, to pass the last examination 
 of any bankrupt in cases whenever the assignee or a cred- 
 itor do not oppose, and to sit in chambers and dispatch 
 there such part of the administrative business of the court 
 and such uncontested matters as shall be defined in gen- , 
 eral rules and orders, or as the district judge shall in any 
 particular matter direct; and he shall also make short 
 
§ 4.] KEGISTERS. 17 
 
 memoranda of his proceedings in each case in which he 
 shall act, in a docket to be kept by him for that purpose, 
 and he shall forthwith, as the proceedings are taken, for- 
 ward to the 'clerk of the District Court a certified copy of 
 said memoranda, which shall be entered by said clerk in 
 the proper minute-book to be kept in his office, and any 
 register of the court may act for any other register there- 
 of : provided, 7iowever, that nothing in this section con- 
 tained shall empower a register to commit for contempt, 
 or to hear a disputed adjudication, or any question of the 
 allowance or suspension of an order of discharge ; but in 
 all matters where an issue of fact or of law is raised and 
 contested by any party to the proceedings before him, it 
 shall be his duty to cause the question or issue to-be 
 stated by the opposing parties in writing, and he shall 
 adjo.urn the same into court for decision by the judge. 
 No register shall be of counsel or attorney, either in or 
 out of court, in any suit or matter pending in bankruptcy, 
 in either the Circuit or District Court of his district, nor 
 in an appeal therefrom ; nor shall he be executor, admin 1 
 istrator, guardian, commissioner, appraiser, divider, or as- 
 signee of or upon any estate within the jurisdiction of 
 either of said Courts of Bankruptcy, nor be interested in 
 the fees or emoluments arising from either of said trusts. 
 The fees of said registers, as established by this act,, and 
 by the general rules and orders required to be framed 
 under it, shall be paid to them by the parties for whom 
 the services may be rendered in the course of proceedings 
 authorized by this act. 
 
 Office and Duty of Register. — The appointment of this officer, 
 npon whom will devolve important duties, and,, in disputed cases, 
 the chief portion of the practical and administrative business of bank- 
 ruptcy, has been adopted from the two last English Bankrupt Acts. 
 In both voluntary and compulsory bankruptcy, where the adjudica- 
 tion is not contested, the register is to make it ; he is to receive the 
 surrender of the bankrupt, to preside at meetings for the proof of 
 debts, to compute dividends under the estate, to audit and pass the 
 
 B 
 
18 THE BANKRUPT LAW. [§ 5. 
 
 accounts of the assignees, to grant protection to the bankrupt after 
 he has surrendered, and when the last examination of the bankrupt 
 is not opposed, he is to pass it. He is to sit in chambers in bank- 
 ruptcy, and conduct, in addition, such of the business as may be 
 specially directed by the judge, and as may be denned in the gen- 
 eral rules and orders. He is to keep a docket of all cases in which 
 he acts, and such docket is to form the minute-book of the proceed- 
 ings of the court. 
 
 The register has no power to commit for contempt, nor to hear 
 any question of adjudication of bankruptcy when disputed, nor any 
 application for the allowance or suspension of the bankrupt's dis- 
 charge. "Where issues of law or of fact are raised and contested 
 by parties before him, such questions are to be reduced to writing 
 by the parties, and then adjourned by him into court for the de- 
 cision of the judge. 
 
 The register is prohibited from acting as attorney or counsel in 
 any suit or matter pending in bankruptcy in either the Circuit or 
 District Court of his district, or in any appeal therefrom. 
 
 He can not be executor, administrator, guardian, commissioner, 
 appraiser, divider, or assignee of, or connected with any estate 
 within the jurisdiction of the Courts of Bankruptcy in which he 
 performs the duties of register, nor can he be interested in any fees 
 . or emoluments arising from either of the said officers or trusts. 
 The power of appointing these officers is vested in the judges of 
 the District Courts, upon the nomination and recommendation of 
 the Chief Justice of the Supreme Court of the United States. One 
 register may be appointed in each congressional district, who must 
 be a counselor of the District Court, or of some one of the Courts 
 of Record of the State in which he is resident. His remuneration 
 is from fees payable by the parties for whom his services are ren- 
 dered, such fees being regulated by the act, and the general rules 
 and orders. 
 
 Section 5. And be it further enacted, That the judge 
 of the District Court may direct a register to attend at 
 any place within the district, for the purpose of hearing 
 such voluntary applications under this act as may not be 
 opposed, of attending any meeting of creditors, or receiv- 
 ing any proof of debts, and, generally, for the prosecution 
 of any bankruptcy or other proceedings under this act ; 
 and the traveling and incidental expenses of such register, 
 and of any clerk or other officer attending him, incurred 
 in so acting, shall be settled by said court in accordance 
 with the rules prescribed under the 10th Section of this act, 
 and paid out of the assets of the estate in respect of which 
 
§ 5.] EEGISTEES. 19 
 
 such register has so acted ; or if there be no such assets, 
 or if the assets shall be insufficient, then such expenses 
 shall form a part of the costs in the case or cases in which 
 the register shall have acted in such journey, to be appor- 
 tioned by the judge ; and such register, so acting, shall 
 have and. exercise all powers, except the power of com- 
 mitment, vested in the District Court for the summoning 
 and examination of persons or witnesses, and for requir- 
 ing the production of books, papers, and documents : pro- 
 vided always, that all depositions of persons and witness- 
 es taken before said register, and all acts done by him, 
 shall be reduced to writing and be signed by him, and 
 shall be filed in the clerk's office as part of the proceed- 
 ings. Such register shall be subject to removal by the 
 judge of the District Court, and all vacancies occurring 
 by such removal, or by resignation, change of residence, 
 death, or disability, shall be promptly filled by other fit 
 persons, unless said court shall deem the continuance of 
 the particular office unnecessary. 
 
 For the purpose of convenience to the suitors, and expediting bus- 
 iness, the judge of the District Court may direct the register to at- 
 tend at any place within the district to hear voluntary applications 
 which are unopposed, to attend meetings of creditors, receive proofs 
 of debts, and generally for the prosecution of the proceedings in 
 bankruptcy. His expenses and those of any clerk attending him 
 are to be paid, according to the rules prescribed in the 10th Section, 
 out of the assets of the estate ; or, if there be no assets sufficient 
 to reimburse him, his expenses are to be apportioned by the judge, 
 and, when apportioned, to form a part of the costs of the proceed- 
 ings in which he has acted. The register has power to summon 
 and examine persons and witnesses, and to require the production 
 of books, papers, and documents ; he is vested with all the powers 
 of the District Court in the summoning and examination of wit- 
 nesses, and requiring the production of papers and documents, but 
 has no power to commit for contempt for disobedience of his orders. 
 In such event, under the provision of Section 7, he is to refer the 
 matter to the judge. Vide notes to Section 7. 
 
 Depositions taken before the register, and all acts done by him, 
 are to be reduced into writing, signed by him, and then filed in the 
 clerk's office. These will form the record of the proceedings in 
 bankruptcy. 
 
20 THK BANKRUPT LAW. [§ 6. 
 
 The judges have power to remove the register and appoint anoth- 
 er in his place. 
 
 Section 6. And he it further enacted, That any party 
 shall, during the proceedings before a register, be at lib- 
 erty to take the opinion of the district judge upon any 
 point or matter arising in the course of such proceedings, 
 or upon the result of such proceedings, which shall be 
 stated by the register in the shape of a short certificate 
 to the judge, who shall sign the same if he approve there- 
 of; and such certificate, so signed, shall be binding on all 
 the parties to the proceeding ; but every such certificate 
 maybe discharged or varied by the judge at chambers or 
 in open court. In any bankruptcy, or in any other pro- 
 ceedings within the jurisdiction of the court under this 
 act, the> parties concerned, on submitting to such jurisdic- 
 tion, may at any stage of the proceedings, by consent, 
 state any question or questions in a special case for the 
 opinion of the court; and the judgment of the court shall 
 be final, unless it be agreed and stated in such special 
 case that either party may appeal, if, in such case, an ap- 
 peal is allowed by this act. The parties may also, if they 
 think fit, agree that, upon the question or questions raised 
 by such special case being finally decided, a sum of mon- 
 ey, fixed by the parties, or to be ascertained by the court, 
 or in such manner as the court may direct, or any prop- 
 erty, or the amount of any disputed debt or claim, shall 
 be paid, delivered, or transferred by one of such parties 
 to the other of them, either with or without costs. 
 
 This section affords a simple mode of obtaining the opinion of the 
 judge on any question of law arising upon facts agreed upon be- 
 tween the parties. The register is to state the question in the shape 
 of a short certificate to the judge, who, upon approval, signs it, and, 
 when signed, it is to be binding upon the parties. The certificate 
 may, however, be varied, or discharged by the judge at chambers 
 or in open court. 
 
 A special case may at any time be stated by parties litigating 
 any question under the bankruptcy for the opinion of the court, and 
 
§ 7, 8.] APPEALS AND PEACTICE. 21 
 
 an amount may be agreed upon, or any property in dispute may be 
 transferred or delivered over, or be paid, when judgment on the 
 case has been pronounced. 
 
 Section 7. And be it further enacted, That parties and 
 witnesses summoned before a register shall be bound to 
 attend in pursuance of such, summons at the place and 
 time designated therein, and shall be entitled to protec- 
 tion, and be liable to process of contempt in like manner 
 as parties and witnesses are now liable thereto in case of 
 default in attendance under any writ of subpoena ; and 
 all persons willfully and corruptly swearing or affirming 
 falsely before a register shall be liable to all the penal- 
 ties, punishments, and consequences of perjury. If any 
 person examined before a register shall refuse or decline 
 to answer, or to swear to or sign his examination when 
 taken, the register shall refer the matter to the judge, 
 who shall have power to order the person so acting to 
 pay the costs thereby occasioned, if such person be com- 
 pellable by law to answer such question or to sign such 
 examination, and such person shall also be liable to be 
 punished for contempt. 
 
 Eegister to Summon Parties and Witnesses. — This section gives 
 power to the register to summon before him parties and witnesses, 
 and compels their attendance under the same penalty of contempt 
 as exists for disobedience to an ordinary subpoena of the District 
 Court. Any person examined before the register, and refusing or 
 declining to answer, is guilty of a contempt, but the register has no 
 power of his own authority to commit. It will be his duty to refer 
 the "matter to the judge of the District Court, who has power to 
 compel the signing of the examination, and to punish in his discre- 
 tion for contempt. Vide note, " Examination of Bankrupts and 
 other Parties." 
 
 APPEALS AND PEACTICE. 
 
 Section 8. And be it further enacted, That appeals may 
 be taken from the District to the Circuit Courts in all 
 cases in equity, and writs of error may be allowed to said 
 
22 THE BANKEUPT LAW. [§ 8. 
 
 Circuit Courts from said District Courts in cases at law 
 under the jurisdiction created by this act when the debt 
 or damages claimed amount to more than five hundred 
 dollars; and any supposed creditor whose claim is wholly 
 or in part rejected, or an assignee who is dissatisfied with 
 the allowance of a claim, may appeal from the decision of 
 the District Court to the Circuit Court for the same dis- 
 trict ; but no appeal shall be allowed in any case from 
 the District to the Circuit Court, unless it is claimed, and 
 notice given thereof to the clerk of the District Court, to 
 be entered with the record of the proceedings, and also 
 to the assignee or creditor, as the case may be, or to the 
 defeated party in equity, within ten days after the entry 
 of the decree or decision appealed from. The appeal shall 
 be entered at the term of the Circuit Court, which shall 
 be first held within and for the district next after the ex- 
 piration of ten days from the time of claiming the same. 
 But if the appellant in writing waives his appeal before 
 any decision thereon, proceedings may be had in the Dis- 
 trict Court as if no appeal had been taken, and no appeal 
 shall be allowed, unless the appellant at the time of claim- 
 ing the same shall give bond in manner now required by 
 law in cases of such appeals. No writ of error shall be 
 allowed, unless the party claiming it shall comply with 
 the statutes regulating the granting of such writs. 
 
 Appeals and Writs of Error. — Appeals may be taken from the 
 District to the Circuit Courts in all cases in equity, and -writs of 
 error maybe allowed from the District Courts to the Circuit Courts 
 in cases at law under the jurisdiction created by this act, when the 
 debt or damages claimed amount to more than five hundred dollars. 
 
 Time limited for Appeal.— No appeal shall be allowed in any case 
 from the District to the Circuit Court, unless it is claimed, and no- 
 tice given thereof to the clerk of the District Court, to be entered 
 with the record of the proceedings, and also to the assignee or cred- 
 itor, as the case may be, or to the defeated party in equity, within 
 ten days after the entry of the decree or decision appealed from. 
 The appeal is also to be entered at the term of the Circuit Court 
 which shall he first held within and for the district next after the 
 expiration of ten days from the time of claiming the same 
 
§9,10.] GENERAL ORDERS. 23 
 
 Waiver of Appeal. — If the appellant in writing waives his appeal 
 before any decision thereon, the proceedings may be continued in 
 the District Court as if no appeal had been taken. 
 
 Security on Appealing. — No appeal is to be allowed, unless the 
 appellant, at the time of claiming the same, shall give bond in the 
 manner now required by law in cases of such appeals. Vide Conk- 
 ling's Practice in the Courts of the United States, pp. 680, et seq. 
 
 Writs of Error. — No writ of error is to be allowed, unless the 
 party claiming it shall comply with the statutes regulating the 
 granting of such writs. Vide Conkling, ut supra, title " Writs of 
 Error." 
 
 Appeal by Creditor when Claim rejected. — The 24th Section pro- 
 vides specifically for the appeal in such cases. Vide Section 24, 
 and notes thereto. 
 
 Section 9. And be it further enacted, That in cases aris- 
 ing tinder this act, no appeal or writ of error shall be al- 
 lowed in any case from, the Circuit Courts to the Supreme 
 Court of the United States, unless the matter in dispute 
 in such case shall exceed two thousand dollars. 
 
 Appeal from the Circuit Courts to the Supreme Court of the United 
 States. — In cases arising under this act, no appeal or writ of error 
 shall be allowed in any case from the Circuit Courts to the Supreme 
 Court of the United States, unless the matter in dispute in such 
 case shall exceed the sum of two thousand dollars. Vide Conkling 
 Treatise, ut supra, pp. 38, 39. 
 
 GENEEAL OEDEES. 
 
 Section 10. And be it further enacted, That the justices 
 of the Supreme Court of the United States to the provi- 
 sions of this act shall frame general orders for the follow- 
 ing purposes : 
 
 For regulating the practice and procedure of the Dis- 
 trict Courts in bankruptcy, and the several forms of peti- 
 tions, orders, and other proceedings to be used in said 
 courts in all matters under this act ; 
 
 For regulating the duties of the various' officers of said 
 courts ; 
 
 For regulating the fees payable, and the charges and 
 costs to be allowed, except such as are established by this 
 
2i THE BANKRUPT LAW. [§ 11. 
 
 act or by law, with respect to all proceedings in bank- 
 ruptcy before said courts, not exceeding the rate of fees 
 now allowed by law for similar services in other proceed- 
 ings; 
 
 For regulating the practice and procedure upon ap- 
 peals ; 
 
 For regulating the filing, custody, and inspection of rec- 
 ords; 
 
 And generally for carrying the provisions of this act 
 into effect. 
 
 After such general orders shall have been so framed, 
 they, or any of them, may be rescinded or varied, and 
 other general orders may be framed in manner aforesaid, 
 and all such general orders so framed shall, from time to 
 time, by the justices of the Supreme Court, be reported to 
 Congress, with such suggestions as said justices may think 
 proper. 
 
 General orders are to be framed by the justices of the Supreme 
 Court of the United States, to come into operation contemporane- 
 ously with the act to regulate the procedure of the District Courts ; 
 to regulate the duties of the various officers of the courts, and upon 
 the several subjects specified in the section. 
 
 VOLUNTAKY BANKRUPTCY. 
 
 Section 11. And he it further enacted, That if any per- 
 son residing within the jurisdiction of the United States, 
 owing debts provable under this act exceeding the amount 
 of three hundred dollars, shall apply by petition, ad- 
 dressed to the judge of the judicial district in which such 
 debtor has resided or carried on business for the six 
 months next immediately preceding the time of filing such 
 petition, or for the longest period during such six months, 
 setting forth his place of residence, his inability to pay all 
 his debts in full, his willingness to surrender all his estate 
 and effects for the benefit of his creditors, and his desire 
 
§ 11. J VOLUNTARY BANKRUPTCY. 25 
 
 to obtain the benefit of this act, and shall annex to his 
 petition a schedule, verified. by oath before the court, or 
 before a register in bankruptcy, or before one of the com- 
 missioners of the Circuit Court of the United States, con- 
 taining a full and true statement of all his debts, and, as 
 far as possible, to whom due, with the place of residence 
 of each creditor, if known to the debtor, and, if not known, 
 the fact to be so stated, and the sum due to each creditor ; 
 also the nature of each debt or demand, whether founded 
 on written security, obligation, contract, or otherwise, 
 and also the true cause and consideration of such indebt- 
 edness in each case, and the place where such indebted- 
 ness accrued, and a statement of any existing mortgage, 
 pledge, lien, judgment, or collateral or other security given 
 for the payment of the same ; and shall also annex to his 
 petition an accurate inventory, verified in like manner, of 
 all his estate, both real and personal, assignable under 
 this act, describing the same, and stating where it is situ- 
 ated, and whether there are any, and, if so, what encum- 
 brances thereon, the filing of such petition shall be an act 
 of bankruptcy, and such petitioner shall be adjudged a 
 bankrupt ; provided, that all citizens of the United States 
 petitioning to be declared bankrupt shall, in filing such 
 petition, and before any proceedings thereon, take and 
 subscribe an oath of allegiance and fidelity to the United 
 States, which oath shall be filed and recorded with the 
 proceedings in bankruptcy. And the judge of the Dis- 
 trict Court, or, if there be no opposing party, any regis- 
 ter of said court, to be designated by the judge, shall 
 forthwith, if he be satisfied that the debts due from the 
 petitioner exceed three hundred dollars, issue a warrant, 
 to be signed by such judge or register, directed to the 
 marshal of said district, authorizing him forthwith, as 
 messenger, to publish notices in such newspapers as the 
 warrant specifies; to serve written or printed notice, by 
 
26 THE BANKEUPT LAW. [§ 11. 
 
 mail or personally, on all creditors upon the schedule 
 filed with the debtor's petition, or whose names may be 
 given to him in addition by the debtor, and to give such 
 personal or other notice to any persons concerned as the 
 warrant specifies, which notice shall state : 
 
 1st. That a warrant in bankruptcy has been issued 
 against the estate of the debtor. 
 
 2d. That the payment of any debts and the delivery 
 of any property belonging to such debtor to him or for 
 his use, and the transfer of any property by him, are for- 
 bidden by law. 
 
 3d. That a meeting of the creditors of the debtor, giv- 
 ing the names, residences, and amounts, so far as known, 
 to prove their debts and choose one or more assignees 
 of his estate, will be held at a Court of Bankruptcy, to be 
 holden at a time and place designated in the warrant, 
 not less than. ten nor more than ninety days after the is- 
 suing of the same* 
 
 Who may Petition.— "Any person" residing, within the jurisdic- 
 tion of the United States may petition. The English Bankrupt 
 Acts expressly enact that aliens trading to or from England should- 
 be subject to the Bankrupt Law, and entitled to its benefits. Aliens 
 who have resided here for the period required by the section may 
 petition under the act; and if an act of bankruptcy has been com- 
 mitted by them in any State, District, or Territory of the United 
 States, may be made bankrupts compulsorily. And this, whether 
 the debts have been contracted in this or any foreign country. 
 The English authorities upon this subject, although decisions upon 
 English statutes, tend to establish this .position. — Alexander vs. 
 Vaughan, Cowp., 398 ; Allen vs. Cannon, 4 Barn. & Aid., 418; In- 
 gliss vs. Grant, 5 Term. Rep., 530 ; ex parte Smith, Cowp., 402 ; Bird 
 vs. Sedgwick, 1 Salk, 110. Vide Taylor vs. Carpenter, 3 Story, 458, 
 as to the rights of aliens in the courts of this country. 
 
 Infants were held to be entitled to the benefits of the Bankrupt 
 Law of 1 842. — Me parte Book, 3 M'Lean, 317. 
 
 An adjudication in compulsory bankruptcy can not be sustained 
 against an infant upon debts incurred by him during his infancy. 
 And it is presumed, notwithstanding the decision above cited, that 
 he can not voluntarily petition under the act to be relieved from 
 debts incurred during his infancy, until after he has attained his 
 majority. The contracts of an infant being voidable only, he may, 
 after attaining his majority, ratify them; but until he has done so, 
 
§ 11.] VOLUNTARY BANKRUPTCY. 27 
 
 no debts incurred during his infancy are provable under his bank- 
 ruptcy. — Belton vs. Hodges, 2 M. & Scott, 496 ; ex parte Wat- 
 son, 16 Vesey, 265; ex parte Moule,14 Vesey, 603; ex parte Bar- 
 wise, 6 Vesey, 601 ; Rex vs. Cole, 1 Lord Raymond, 443. A peti- 
 tion by an infant under this act after attaining his majority might 
 be held to be a ratification of his debts set forth in his schedule ; 
 and those debts being thus ratified, would be provable under his 
 bankruptcy, and would be discharged therefrom; but the author 
 ventures to suggest that an infant during his infancy can not vol- 
 untarily petition under the provisions of this act, except in cases 
 where judgments have been obtained against him. In the case of 
 ex parte Watson, 16 Vesey, 265, Lord Eldon, upon an application by 
 a trader to annul an adjudication of bankruptcy, on the ground that 
 he was under the age of twenty-one years at the time it was is- 
 sued, refused to entertain it, on the ground that the petitioner had 
 held himself forth to the world as an adult and mi juris, and traded 
 in that character, and contracted debts to a considerable amount. 
 He left the bankrupt to his remedy by action at common law. 
 
 Married Women. — In all cases where the trade of a married wom- 
 an is not under the control of her husband, and he is not answera- 
 ble for the debts contracted by her, or, in other words, in all cases 
 where in actions against her upon her contracts a plea of coverture 
 will be no answer, she is subject to the Bankrupt Laws as fully as 
 a feme-sole. — Ex parte Preston, 1 Cooke, 40 ; ex parte Mear, 2 Bro., 
 266. Being subject to be made a bankrupt compulsorily, she has 
 the right to petition voluntarily ; but a married woman can not be 
 made bankrupt in respect of debts incurred by her in trade or oth- 
 erwise as & feme-sole before her marriage. 
 
 An Executor who in that character has carried on business and in- 
 curred debts in pursuance of the will of his testator, may be compul- 
 sorily made bankrupt, and, therefore, may voluntarily petition. — Me 
 parte Garland, 10 Vesey, 110 ; ex parte Richardson, 1 Madd, 138. 
 
 Undischarged Bankrupt can not voluntarily petition, nor can an 
 adjudication of a second bankruptcy be made against him; such 
 adjudication would be a nullity, because his property, as well after 
 acquired as otherwise, is already assigned and vested in assignees 
 under his first bankruptcy. — 3 Mont. & Ayrton, 294; V B. and 
 C.,684. 
 
 Indebtedness of the Petitioner. — To entitle any person to petition 
 under this act, the debts due by him, and provable under the act, 
 must exceed the amount of three hundred dollars, and the charac- 
 ter of the debts from which no discharge will be granted under 
 the act are fully stated and specified in the 33d Section. Vide 
 Section 33, and notes. 
 
 Form of the Petition. — The petition is to be addressed to the 
 judge of the judicial district, and the form of it will be prescribed 
 in the general orders and rules. 
 
 Where the Petition is to be presented. — The petition must be ad- 
 dressed to the judge of the judicial district in which the debtor has 
 resided or carried on business for the six months next immediately 
 
28 THE BANKRUPT LAW. [§ 11. 
 
 preceding the time of filing such petition, or for the longest period 
 during such six months. This provision as to the residence of the 
 debtor is taken from the English Bankrupt Act. The former Bank- 
 rupt Act of the United States of 1841 merely prescribed the resi- 
 dence " in any State, District, or Territory. It would seem, from the 
 provisions of this section, that a residence of the debtor for six 
 months immediately preceding the time of filing his petition within 
 one district, and having carried on business for the same period 
 within another, will give the petitioner the right to select either 
 district wherein to present his petition. The courts will, however, 
 be strict in entertaining the petition ; the residence must not be a 
 mere temporary one, but the usual residence of the debtor, and 
 where his debts have been contracted; and this latter element 
 should designate where the proceedings should be commenced. If 
 there be any thing like collusion, or a desire to avoid investigation 
 on the part of the creditors, or to put them to unnecessary incon- 
 venience or expense, the court would dismiss the petition, and di- 
 rect it to be presented in the district where the debts had been 
 contracted, and where a majority of the debtor's creditors may re- 
 side. 
 
 Schedule to be annexed to Petition. — The debtor must annex to 
 his petition a schedule, which he must verify by oath before the 
 court, or before a register in bankruptcy, or before one of the com- 
 missioners of the Circuit Court of the United States. Such sched- 
 ule must contain a full and true statement of all his debts, and, as 
 far as possible, to whom due, with the place of residence of each 
 creditor, if known to the debtor, and if not known, the fact to be 
 so stated. It must also set forth the sum due to each creditor, the 
 nature of each debt or demand, whether founded on written securi- 
 ty, obligation, contract, or otherwise; the true cause and consider- 
 ation of such indebtedness in each case, the place where such in- 
 debtedness accrued, and a statement of any existing mortgage, 
 pledge, lien, judgment, or collateral or other security given for the 
 payment of the same. 
 
 Inventory to be annexed to Petition. — The debtor must also an- 
 nex to his petition an inventory, to be verified in the same manner 
 as his schedule. Such inventory must accurately set forth all his 
 estate, both real and personal, assignable under the act ; the inven- 
 tory must describe the same, state where it is situated, and whether 
 there are any, and if so, what encumbrances thereon. 
 
 Oath of Allegiance. — Every petitioner who is a citizen of the 
 United States must, on filing his petition, take and subscribe the 
 oath of allegiance and fidelity to the United States ; such oath must 
 also be filed and recorded with the registeiywith the other proceed- 
 ings in the bankruptcy. The taking the oath is made a condition 
 precedent to taking any action on the petition. 
 
 Petition when filed to be an Act of Bankruptcy. — The petition thus 
 filed is to be an act of bankruptcy, and the petitioner thereupon is 
 adjudged a bankrupt, and the date of the filing of such petition is 
 to be deemed the commencement of the proceedings in bankruptcy. 
 
§ 12.] MEETINGS OF CEEDITOES. 29 
 
 Consequences of Adjudication. — In cases of voluntary bankruptcy, 
 if there be no opposition, the register, if he be satisfied of the truth 
 of the facts stated in the petition, and that the debts exceed the 
 sum of three hundred dollars, is to issue a warrant, signed by him, 
 directed to the marshal of the district, authorizing him to publish 
 notices in the newspapers to be specified in the warrant ; to serve 
 written or printed notices on all creditors whose names appear in 
 the petition as schedule, and to give such personal or other notices 
 as the warrant may specify. The form of the warrant will be found 
 in the general rules and orders. 
 
 Form of the Notice. — The section prescribes the form of the notice 
 to be given in the following terms : 
 
 1st. That a warrant in bankruptcy has been issued against the 
 estate of the debtor. 
 
 2d. That the payment of any debts, and the delivery of any prop- 
 erty belonging to such debtor to him, or for his use, and the trans- 
 fer of any property by him, are forbidden by law. 
 
 3d. That a meeting of the creditors of the debtor, to prove their 
 debts and choose one or more assignees of his estate, will be held 
 at a Court of Bankruptcy, to be holden at a time and place desig- 
 nated in the warrant, not less than ten, nor more than ninety days 
 after issuing the same. 
 
 In cases of voluntary bankruptcy the messenger is not to seize 
 nor take possession of the property of the bankrupt in the first in- 
 stance, as in cases of compulsory bankruptcy, vide Section 39, 
 and notes. The section provides that, in case of opposition to the 
 petition, the judge of the District Court is to issue the preliminary 
 warrant, and not the register ; but as the filing of the petition is 
 entirely an ex parte proceeding, taken without any notice to the 
 creditors, there can scarcely arise an opposition, and these duties 
 must in practice devolve upon the register. 
 
 MEETINGS OF CREDITOKS. 
 
 Section 12. And he it further enacted, That at the meet- 
 ing held in pursuance of the notice, one of the registers 
 of the court shall preside, and the messenger shall make 
 return of the warrant and of his doings thereon ; and if 
 it appears that the notice to the creditors has not been 
 given as required in the warrant, the meeting shall forth- 
 with be adjourned, and a new notice given as required. 
 If the debtor dies after the issuing of the warrant, the 
 proceedings may be continued and concluded in like man- 
 ner as if he had lived. 
 
30 THE BANKRUPT LAW. [§ 12. 
 
 First Meeting of the Creditors. — The register is to preside at the 
 first meeting, when the messenger is in the first instance to make a 
 return of what has been done under the warrant. In the event of 
 any defect in the notices to the creditors, the meeting is to be ad- 
 journed, and new notices given. 
 
 Death of the petitioning Debtor. — If the debtor should die after 
 the issuing of the warrant, the proceedings may be continued and 
 concluded in like manner as if he had lived. This provision is 
 adopted from the English Bankrupt Acts, and was not contained in 
 the. Bankrupt Law of the United States of 1841. In the absence 
 of such a provision, by the death of the bankrupt at any time dur- 
 ing the proceedings, they would have abated. The English stat- 
 utes enact, that " If any bankrupt shall die after adjudication, the 
 court may proceed in the bankruptcy as if such bankrupt were liv- 
 ing ;" and it was held that the death of the petitioning debtor be- 
 tween the petition and adjudication would abate the proceedings. — 
 Humfrey vs. Scroope, 13 Q. B., 509. This section provides, "That 
 if the debtor dies after the issuing of the warrant, the proceedings 
 may be continued ;" the death, therefore, of the petitioning debtor 
 at any time between the presentation of the petition and the issu- 
 ing of" the warrant would still abate the proceedings. Where one 
 of the bankrupts died before the adjudication under a joint fiat in 
 bankruptcy, it was ordered to be amended by omitting his name. 
 — Ex parte Hall, 1 De Gex, 332. 
 
 CHOICE OF ASSIGNEES. 
 
 Section 13. And be it further enacted, That the credit- 
 ors shall, at the first meeting held after due notice from 
 the messenger, m presence of a register designated by the 
 court, choose one or more assignees of the estate of the 
 debtor ; the choice to be made by the greater part in value 
 and in number of the creditors who have proved their 
 debts. If no choice is made by the creditors at said meet- 
 ing, the judge, or, if there be no opposing interest, the reg- 
 ister, shall appoint one or more assignees. Kan assignee, 
 so chosen or appointed, fails within five days to express 
 in writing his acceptance of the trust, the judge or regis- 
 ter may fill the vacancy. All elections or appointments 
 of assignees shall be subject to the approval of the judge; 
 and when in his judgment it is for any cause needful or 
 expedient, he may appoint additional assignees, or order 
 
§ 13.] CHOICE OP ASSIGNEES. 31 
 
 a new election. The judge at any time may, and, upon 
 the request in writing of any creditor who has proved his 
 claim, shall require the assignee to give good and suffi- 
 cient bond to the United States, with a condition for the 
 faithful performance and discharge of his duties ; the bond 
 shall be approved by the judge or register by his indorse- 
 ment thereon, shall be filed with the record of the case, 
 and inure to the benefit of all creditors proving their 
 claims, and may be prosecuted in the name and for the 
 benefit of any injured party. If the assignee fails to give 
 the bond within such time as the judge orders, not ex- 
 ceeding ten days after notice to him of such order, the 
 judge shall remove him and appoint another in his place. 
 
 Creditors who have proved their Debts to choose the Assignees.— 
 At the first meeting the creditors who have proved their debts are 
 to elect one or more assignees of the estate of the bankrupt. The 
 register is to preside at such meeting. The act provides that the 
 choice is to be made by the greater part, in value and in number, of 
 such creditors. The Bankrupt Act of the United States of 1841 
 conferred the power on the court to appoint the assignee; there 
 was no elective power by the creditors. The English Bankrupt 
 Acts, 23 and 24 Vic. C, 134, and 12 and 13 Vic. C., 106, provide 
 that the majority in value of the creditors who have proved their 
 debts are entitled to vote ; but this section, as will be observed, re- 
 quires a majority, both in value and in number, of the creditors to 
 render an election valid. If at the meeting the creditors decline, 
 or omit to make a choice, if there be any opposition, the judge has 
 the power to appoint the assignees, and if there be no opposition, 
 the same power is conferred on the register. All elections or ap- 
 pointments of assignees are subject to the approval of the judge, 
 and he has the power to appoint additional assignees, and for good 
 cause shown to cancel the election by the creditors, and order a new 
 election. The assignee elected by the creditors, or appointed by 
 the judge, should, within five days after his election or appointment, 
 signify in writing his acceptance of the trust, and in default of his 
 doing so, the judge or register may deem the office vacant and ap- 
 point another. The assignee may be required, either by the judge 
 or upon the request in writing of any creditor who has proved his 
 debt, to give bond to the United States for the due performance of 
 his duties. Should he fail to give the bond within the time order- 
 ed, not exceeding ten days after notice to him of such order, he is 
 liable to be removed. The choice of the assignees should in gen- 
 eral be proceeded with at the first meeting, however few creditors 
 may have proved their claims. — Ex parte Butterfill, 1 Rose, 196. 
 
32 THE BANKRUPT LAW. [§14. 
 
 The court will not in. general enlarge the time for the choice of as- 
 signees upon the ex parte application of a creditor. — Ex parte Law- 
 don, 1 Mont.,D. & D., 555. 
 
 A person appointed by the court to prove and receive dividends 
 can not vote in the choice of assignees. — Mc parte Shaw, 1 Glyn. 
 & J., 127. Creditors holding securities for their debts may have 
 such securities valued, and prove for -the difference before such se- 
 curities are sold, and vote in the choice of assignees. — Ms parte 
 Nunn, 1 Rose, 322. 
 
 Creditors ineligible to be Assignees. — No person who has received 
 any preference contrary to the provisions of this act shall vote for, 
 or be eligible as assignee. Vide Section 18. As the object of the 
 election is for the benefit of the general body of creditors, any per- 
 son whose interest is manifestly adverse to theirs will be rejected ; 
 the attorney acting under the bankruptcy, or his partner, ex parte 
 Badcock, 1 Mont. & Mac, 231, or a banker who is receiving the 
 money under the bankruptcy. — Me parte Lacey, 6 Vesey, 625. It is 
 not essential that the party to be elected assignee should be a cred- 
 itor. — 1 Atk., 90 ; 4 East., 330. The bankrupt will not be allowed 
 to be an assignee under his own estate, nor should he in any man- 
 ner interfere in the election. — Me parte Molineaux, 3 Mont. & Ayr., 
 703. Any fraud or collusion in conducting the choice of assignees 
 will vitiate it. — 1 Deac, 603. As a general rule, the parties elected 
 assignees should be present to accept the trust. — Me parte Heath, 
 4 Deac, 294. 
 
 As to Removal of Assignees after they have been Appointed or Elect- 
 ed by the Creditors. Vide Section 18, and notes thereto. — If .an 
 assignee elected by the creditors reside permanently out of the 
 State, District, or Territory in which the proceedings are being car- 
 ried on, it would be a ground for application for his removal. The 
 assignee, when elected and duly qualified, has the right to appoint 
 the attorney and counsel to conduct the subsequent proceedings in 
 the bankruptcy, and, subject to the lien of the former attorney, may 
 remove the papers and proceedings. This is the practice in the 
 English Courts of Bankruptcy, such right being given to the as- 
 signees by statute, and will probably be adopted by the courts in 
 the administration of this act. Before the statute this practice pre- 
 vailed, and it seems just and reasonable. 
 
 PROPERTY OF THE BANKRUPT VESTING LN 
 
 THE ASSIGNEES. 
 Section 14. And be it further enacted, That as soon as 
 said assignee is appointed and qualified, the judge, or, 
 where there is no opposing interest, the register, shall, by 
 an instrument under his hand, assign and convey to the 
 assignee all the estate, real and personal, of the bank- 
 
§ 14.] bankrupt's pkoperty vesting in the assignees. 33 
 
 rupt, Math all his deeds, hooks, and papers relating there- - 
 to ; and such < assignment shall relate back to the com- 
 mencement .of said proceedings in bankruptcy, and there- 
 upon, by operation of law, the title to all such property 
 and estate, both real and personal, shall vest in said as- 
 signee, although the same is then attached on mesne pro- 
 cess as the property of the debtor, and shall dissolve any 
 such attachment made within four months next preceding 
 the commencement of said proceedings: provided, hotv- 
 ever, that there shall be excepted from the operation of 
 the provisions of this section the necessary household and 
 kitchen furniture, and such other articles and necessaries 
 of such bankrupt as the said assignee shall designate and 
 set apart, having reference in the amount to the family, 
 condition, and circumstances of the bankrupt, but alto- 
 gether not to exceed in value, in any case, the sum of five 
 hundred dollars; and also the wearing apparel of such 
 bankrupt, and that of his wife and children, and the uni- 
 form, arms, and equipments of any person who is or has 
 been a soldier in the militia or in the service of the 
 United States, and such other property as now is, or 
 hereafter shall be, exempted from attachment, or seizure, 
 or levy on execution by the laws of the United States ; 
 and such other property not included in the foregoing ex- 
 ceptions as is exempted from levy and sale upon execu- 
 tion or other process, or order of any court, by the laws 
 of the State in which the bankrupt has his domicile at 
 the time of the commencement of the proceedings in 
 bankruptcy, to an amount not exceeding that allowed by 
 such State exemption laws in force in the year eighteen 
 hundred and sixty-four : provided, that the foregoing ex- 
 ception shall operate as a limitation upon the conveyance 
 of the property of the bankrupt to his assignees, and in 
 no case shall the property hereby excepted pass to the as- 
 signees, or the title of the bankrupt thereto be impaired 
 
 C 
 
34 THE BANKRUPT LAW. [§ 14. 
 
 or affected by any of the provisions of this act ; and the 
 determination of the assignee in the matter shall, on ex- 
 ception taken, be subject to the final decision of the said 
 court : and provided further, that no mortgage of any ves- 
 sel, or of any other goods or chattels, made as security for 
 any debt or debts, in good faith and for present consider- 
 ations," and otherwise valid, and duly recorded, pursuant 
 to any statute of the United States, or of any State, shall 
 be invalidated or affected hereby ; and all the property 
 conveyed by the bankrupt in fraud of his creditors.; all 
 rights in equity, choses in action, patents, ; and patent- 
 rights, and copy-rights ; all debts due him, or any person 
 for his use, and all liens and securities therefor ; and all 
 his rights of action for property or estate, real or person- 
 al, and for any cause of action -which the bankrupt had 
 against any person arising from contract, or from the un- 
 lawful taking or detention, or of injury to the property 
 of the bankrupt; and all his rights of redeeming such 
 property or estate, with the like right, title, power, and 
 authority to sell, manage, dispose of, sue for, and recover 
 or defend the same, as the bankrupt might or could have 
 had if no assignment had been made, shall, in virtue of 
 the adjudication of bankruptcy and the appointment of 
 his assignee, be at once vested in such assignee ; and he 
 may sue for and recover the said estate, debts, and effects, 
 and may prosecute and defend all suits at law or in equi- 
 ty, pending at the time of the adjudication of bankrupt- 
 cy, in which such bankrupt is a party in his own name, 
 in the same manner and with the like effect as they 
 might have been presented or defended by such bank- 
 rupt ; and a copy, duly certified by the clerk of the court 
 under the seal thereof, of the assignment made by the 
 judge or register, as the case may be, to him as assignee, 
 shall be conclusive evidence of his title as such assignee 
 to take, hold, sue for, and recover the property of the 
 
§ 14.] bankrupt's property vesting in the assignees. 35 
 
 bankrupt, as herein before mentioned; but no property, 
 held by the bankrupt in trust shall pass by such assign- 
 ment. No person shall be entitled to maintain an action 
 against an assignee in bankruptcy for any thing done by 
 him as such assignee, without previously giving him twen- 
 ty days' notice of such action, specifying the cause there- 
 of, to the end that such assignee may have an opportuni- 
 ty of tendering amends, should he see fit to do so. No 
 person shall be entitled, as against the assignee, to with- 
 hold from him possession of any books of account of the 
 bankrupt, or claim any lien thereon; and no suit in 
 which the assignee is a party shall be abated by his death 
 or removal from office, but the same may be prosecuted 
 and defended by his successors, or by the surviving or 
 remaining assignee, as the case may be. The assignee 
 shall have authority, under the order and direction of the 
 court, to redeem or discharge any mortgage or condition- 
 al contract, or pledge or deposit, or lien upon any proper- 
 ty, real or personal, whenever payable, and to tender due 
 performance of the condition thereof, or to sell the same 
 subject to such mortgage, lien, or other encumbrances. 
 The debtor shall also, at the request of the assignee, and 
 at the expense of the estate, make and execute any instru- 
 ments, deeds, and writings which may be proper, to ena- 
 ble the assignee to possess himself fully of all the assets 
 of the bankrupt. The assignee shall immediately give 
 notice of his appointment by publication, at least once a 
 week for three successive weeks, in such newspapers as 
 shall for that purpose be designated by the court, due re- 
 gard being had to their general circulation in the district, 
 or in that portion of the district in which the bankrupt 
 and his creditors shall reside, and shall, within six months, 
 cause the assignment to him to be recorded in every reg- 
 istry of deeds or other office within the United States 
 where a conveyance of any lands owned by the bank- 
 
36 THE BANKRUPT LAW. [§ 14. 
 
 rupt ought by law to be recorded; and the record of 
 such assignment, or a. duly certified copy thereof, shall be 
 evidence thereof in all courts. 
 
 Having treated of the duties and rights of assignees, it remains 
 to ascertain about what property those duties and rights are to be 
 exercised. It is proposed to consider what property of the bank- 
 rupt vests in his assignees, and the time from which their right to 
 it commences. 
 
 The mode in which property passes from the bankrupt to his as- 
 signees is provided by the section, which enacts that, so soon as the 
 assignee is appointed and qualified, the judge, or, where there is no 
 opposing interest, the register shall, by an instrument under his 
 hand, assign and convey to the assignee all the estate, real and per- 
 sonal, of the bankrupt, with all his deeds, books, and papers relating 
 thereto. This section also specifically vests in the assignees all 
 property conveyed by the bankrupt in fraud of his creditors ; all 
 rights in equity, choses in action, patents, patent-rights, and copy- 
 rights ; all. debts due him or any person for his use, and all liens 
 and securities therefor ; all the bankrupt's rights of action for prop- 
 erty or estate, real or personal ; any cause of action which the bank- 
 rupt had, arising from contract, or from the unlawful taking or de- 
 tention of the property of the bankrupt ; all his rights of redeeming 
 such property ; and all his right, title, power, and authority to sell, 
 manage, dispose of, sue for, recover, or defend the same, as the bank- 
 rupt could have had if no assignment had been made. 
 
 Property of the Bankrupt vesting in the Assignees. — It is proposed 
 in the notes upon this subject to give a short synthetical statement 
 of the property and interests of the bankrupt which pass, by virtue 
 of the assignment made, to the assignees. Assignees in bankruptcy 
 do not take the whole legal title in the bankrupt's property pre- 
 cisely in the same manner as do heirs or executors. Nothing vests 
 in them but such estate as the bankrupt has the beneficial, as well 
 as the legal interest in, and which is to be applied by them to the 
 payment of the debts. — Ontario Bank vs. Mumford, 2 Barb. Chan., 
 ~E. Y., 596. The assignees are subject to the same equities to 
 which the bankrupt himself was subject, so that their title does not 
 divest a legal or equitable lien, and they can take only such prop- 
 erty as the bankrupt is equitably as well as legally entitled to. — 
 Deacon's Bankruptcy, 3d edition, 429, 646. All the bankrupt's per- 
 sonal estate, and all property which may come to him before he has 
 obtained his discharge under the bankruptcy, become actually vest- 
 ed in the assignees for the benefit of the estate under the assignment. 
 ■ An assignee in bankruptcy succeeds to all the rights and inter- 
 ests of the bankrupt to precisely the same extent that the bank- 
 rupt himself had, subject to, and affected by all the equities, liens, 
 and encumbrances existing against them in the hands of the bank- 
 rupt ; and the same rule applies to the purchaser at an assignee's 
 sale of the bankrupt's effects. — Strong vs. Clawson, 5 Gilman, 346. 
 
§ 14.] bankrupt's property vesting in the assignees. 37 
 
 Though contracts made by a bankrupt generally passed as prop- 
 erty to his assignees under the Bankrupt Law of 1841, yet this was 
 not universally true. For instance, contracts continuing after the 
 bankruptcy, and depending on the future personal services of the 
 bankrupt, did not pass. Contracts which must be a charge upon, 
 instead of a benefit to the estate of the bankrupt, did not pass. 
 Contracts which can not be made available for the payment of the 
 debts did not pass. — Streter vs. Sumner, 11 Foster, N. H, 542. 
 
 All the rights and property of a bankrupt at the time of the fil- 
 ing pf his petition vest in his assignees by relation ; no lien in favor 
 of creditors, therefore, can afterward attach, either by any act of the 
 bankrupt or by judgment. — M'Lean vs. Rockey, 3 M'Lean, 235. 
 
 A son was' indebted to his father. The father bequeathed to 
 him a leasehold estate, and declared it to be " entirely free from any 
 claim, charge, demand, or lien of my son's creditors, or any or either 
 of them, or of any person claiming Under him (the son), either at 
 law or in equity." Soon after the father's death the son became 
 bankrupt. Held that the assignees were entitled to the estate. 
 — Harvey vs. Palmer, Eng. Law and Eq. Rep., 248. 
 
 The personal property of a bankrupt under the late Bankrupt 
 Law of 1841, whether inserted in a schedule of effects or not, vest- 
 ed in his assignee on his appointment ; and where such property 
 was sold by the assignee, pursuant to an order of sale by the court, 
 the property vested in the purchaser so as to enable him to main- 
 tain an action thereon in his own name. — Jewett vs. Preston, 2.7 
 Maine, 14 Shep., 400. 
 
 The property of a bankrupt is not divested until a decree of 
 bankruptcy ; and if before such decree he has applied partnership 
 assets to the payment of his private debts, a ratification by his sol- 
 vent partners will validate the transaction. — Anshutz vs. Fitzsim- 
 mons, 9 Barr, 1 80. 
 
 The rights of property of a bankrupt to which the assignee suc- 
 ceeds are those rights to which the bankrupt had either a legal or 
 equitable title, which could be enforced in a court of justice. No 
 right, therefore, to property of which the bankrupt had made a 
 fraudulent assignment passes to his assignee. — Reavis vs. Garnar, 
 12 Ala., 661. 
 
 The Bankrupt Act of 1841 included the franchise of a toll-bridge 
 as property within its contemplation, and it passed to the assignees 
 under the bankruptcy. — Stewart vs. Hargrove, 23 Ala., 429. 
 
 A decree in bankruptcy under the act of 1841 passed the debtor's 
 equities of redemption to the assignees, and a judgment creditor of 
 the bankrupt could not afterward redeem under the laws of Ten- 
 nessee. — Pillow vs. Langtree, 5 Humph., 389. 
 
 The assignees take the property and rights of property of the 
 bankrupt, subject to all such rights and equities of third persons as 
 are attached to it in the hands of the bankrupt. — Ex, parte, Newhall, 
 2 Story, 360. Assignees in bankruptcy, except in oases of fraud, 
 take only such rights and interests as the bankrupt himself had, and 
 could himself claim and assert at the time of the bankruptcy. — Mitch- 
 
38 THE BANKRUPT LAW. [§ 14. 
 
 ell vs. Winslow, 2 Story, 630. Where the bankrupt, after filing 
 his petition, and before a decree of bankruptcy, became entitled to 
 certain property as heir to his 'mother, to whom when alive he was 
 indebted, it was held that the assignee of the bankrupt was only 
 entitled to the bankrupt's distributive share after deducting there- 
 from his debt to the estate. — Ex, parte Newhall, 2 Story, 360. An 
 estate was devised tmconditionally to A and his sister. Subse- 
 quently to this, but before the will had been admitted to probate, 
 A filed his petition to be declared a bankrupt. Held that the 
 estate so devised became the property of the assignees under the 
 bankruptcy, and that they might sell and convey the same as part 
 of the estate of the bankrupt.— JSc^cwfe Fuller, 2 Story, 327. 
 
 Bills and Notes in the Possession of the Bankrupt. — Whether bills 
 of exchange and notes in the possession of a bankrupt not due at 
 the time of the bankruptcy pass to the assignees, or remain the 
 property of the parties who remitted such bills of exchange or notes 
 to him, depends upon the question of agency, and the trusts arising 
 out of that relation. For instance, a foreign mercantile house re- 
 mitted to their correspondents in London bills of exchange, some 
 of which were not due when the London house became bankrupts. 
 It was held, under the circumstances of the case, and from the usage 
 in that particular instance, that the London house acted as agents 
 to procure payment of the bills of exchange for the foreign house, 
 and, being fixed with the trust, that the property in the bills of ex- 
 change did not pass to the assignees under the bankruptcy. — Ms 
 parte Smith," 2 Rose, 457. 
 
 So bills of exchange, and notes deposited with a banker by his 
 customer for the purpose of obtaining payment, do not pass to the 
 assignees of the banker on his becoming bankrupt. — Ex, parte At- 
 kins, 2 Mont., D. & D., 103. The question in all these cases is, 
 whether the bills of exchange and notes thus deposited with a firm 
 retain their form as bills and notes for the purpose of being collect- 
 ed or otherwise applied, or whether they have assumed the form of 
 cash, and been considered, by the usage and dealing between the 
 parties, as cash. In the latter event, they would pass to the as- 
 signees. — Hornblower vs. Proud, 2 B. & Aid., 327. 
 
 Dower of the Wife. — On the bankruptcy of the husband owning 
 real estate, the wife can not be compelled to release her right to 
 dower ; the assignees, therefore, take all the interest of the bank- 
 rupt, subject to dower. — Ex parte Bell, 1 Glyn & J., 232. 
 
 Choses in Action, and Debts and Claims of the Bankrupt.— The as- 
 signees take all the bankrupt's debts by the express words of the 
 act. They have also, under the general words of the section, a 
 right to sue upon beneficial contracts made with the bankrupt, 
 where the pecuniary loss is the substantial and primary cause 
 of action; and for injuries affecting his property, so far as. they 
 do not involve a claim for personal damages, for which he would 
 be entitled to a remedy, whether his property were impaired or 
 not. — Spence vs. Rogers, 11 M. & W., 191 ; 13 M. & W., 571 ; 12 
 C. & P., 700. Vide Brewer vs. Deu, 11 M. & W., 625, where it 
 
. § 14.] bankrupt's property vesting in the assignees. 39 
 
 was held that the assigaees could sue for an asportavit of goods, 
 per. quod the plaintiff was prejudiced in his business and believed 
 insolvent, though not for mere personal wrongs, Wright vs. Fair- 
 field, 2 B. & Ad., 727 ; Hancock vs. Caffyn, 8 Bing., 358 ; Porter vs. 
 Vorley, 9 Bing., 93 ; Whitworth vs. Davis, 1 V. & B., 545 ; Sloper 
 vs. Fish, 2 V. & B., 145 ; Howard vs. Crowther, 8 M. & W., 601, 
 which was an action for seducing a servant ; or on breaches of 
 contracts having relation to the- bankrupt's person, and the breach 
 of which would affect him personally, and not by way of diminish- 
 ing his personal estate — such, for instance, as a contract to marry 
 him, or to cure him of a wound or disease. — Drake vs. Beckham, 1 1 
 M. & W., 315, overruling Beckham vs. Drake, 8 M. & W., 846. It 
 does not seem to be necessary that the entire benefit of the con- 
 tract should pass to the assignees. The question, as far as they 
 are concerned, is whether they have any beneficial interest in the 
 vested cause of action. It may be that there are various causes of 
 action for breaches of the same contract, of which some might, and 
 some might not, pass, Boddington vs. Castelli, 1 E. & B., 879 ; 
 Wetherel vs. Julius, 10 C. B., 267, or contracts from which his es- 
 tate can derive no possible advantage. — Trott vs. Smith, 12 M. & 
 W., 688. Thus, the assignees were held entitled to sue on the 
 breach of a contract to deliver a quantity of stone to the bankrupt 
 at a certain price before his bankruptcy.- — Wright vs. Fairfield, 2 
 B. & Ad., 727. And see Hill vs. Smith, 12 M. & W., 117. And a 
 right of action for a wrongful dismissal from the bankrupt's situa- 
 tion in a type-foundery was held by the Court of Exchequer Cham- 
 ber, reversing the judgment of the Court of Exchequer, to pass to 
 the assignees. — Beckham vs. Drake, 11 M. & W., 315 ; 8 M. & W., 
 846 ; Wetherell vs. Julius, 10 C. B., 267. This decision subsequent- 
 ly underwent discussion in the House of Lords, Beckham vs. Drake, 
 2 H. L. Ca., 579, where the decision of the Court of Error, after 
 consulting the judges (two of whom were of opinion that the right 
 of action did not pass), was upheld. This, however, was principal- 
 ly on the ground that the agreement contained a stipulation for 
 payment of five hundred pounds as a penalty for any breach, and 
 the declaration was founded upon and claimed it. Parke, B., ob- 
 serves, " The proper and reasonable construction appears to me to 
 be, that the statute transfers, not all rights of action which would 
 pass to executors (for rights incapable of being converted into 
 money pass to them), but all such as would be assets in their hands 
 for the payment of debts, and no others ; all which could be turned 
 to profit, for such rights of action are personal estate. Of such the 
 executor is assignee in law ; and the nature of the office and duty 
 of a bankrupt's assignee requires that he should have them also. 
 But rights of action for torts, which would die with the testator, 
 according to the rule ' actio personalis moritur cum persond^ and 
 all actions of contract affecting the person only, would not pass." 
 
 There are some cases in which the assignees may elect whether 
 they will affirm a contract made with the bankrupt, and sue on it, 
 or proceed in their own right in tort ; for instance, where the de- 
 
40 THE BANKRUPT LAW. [§ 14. 
 
 fendant sold the bankrupt's goods after an act of bankruptcy, and 
 with notice of it, the assignees were allowed to sue for the price 
 as money had and received to their use. — King vs. Smith, 2 T. R., 
 141 ; Clark vs. Gilbert, 2 Bing., N. C, 343. See Gye vs. Hitchcock, 
 4 Ad. & E, 84; Russell vs. Bell, 10 M. & W., 340, but could also 
 have sued in trover for the goods. It was supposed that, where 
 there is an express contract unperformed, they must make their 
 election, to take advantage of it within a reasonable time, otherwise 
 they might be treated as having abandoned it. — Lawrence vs. 
 Knowles, 5 Bing., N. C, 399. Sed vide Gibson vs. Carruthers, 8 
 M. & W-, 321. The effect of the assignees adopting the bankrupt's 
 contract, and proceeding upon it, is to give the defendant every ad- 
 vantage deducible from its validity. — Thorpe vs. Thorpe, 3 B. & 
 Ad., 580 ; Bradbury vs. Anderson, Tyrwh:, 152 ; and as to what 
 amounts to such an adoption, see Valpy vs. Sanders, 5 C. B., 886. 
 The assignees, however, can not affirm the bankrupt's act in pai-t, 
 and repudiate it as to ,the rest. — Brewer vs. Sparrow, JB.& C, 
 310 ; Wilson vs. Poulton, 2 Str., 859. 
 
 The defendant, a merchant at Hull, kept an account at the Hull 
 Bank, upon the terms that they should procure P. & Co., their Lon- 
 don agents, to accept on their credit bills drawn by the foreign cor- 
 respondents of the defendant against their consignments to him, and 
 of which P. & Co. were advised by the Hull Bank. The defend- 
 ant paid the Hull Bank a quarter per cent, on the amount of the ac- 
 ceptances, and they paid P. & Co. a fixed annual sum for transact- 
 ing their London business. When a bill was ac'cepted by P. & Co:, 
 the Hull Bank debited the defendant with the amount, and they 
 charged him interest, from the time the bill was due. The Hull 
 Bank became bankrupt, and P. & Co. paid all bills accepted by 
 them which were due after the bankruptcy. Held that the as- 
 signees of the Hull Bank, and not P. & Co., were entitled to recov- 
 er from the defendant the amount of such bills. — Barkworth vs. El- 
 lerman, 6 Hurl & Nor, 605. 
 
 Under the statute of Vermont, the right to recover back money 
 paid by the debtor upon a usurious contract was held to be a right 
 vested in property, which passed to and vested in the assignee un- 
 der the bankruptcy of the debtor. — Moore vs. Jones, 23 Vermont, 
 8 Washb., 739. The right of a bankrupt to sue for, and recover back 
 money paid by him as usury, is not such a right of property as 
 vests in the assignee in bankruptcy. Although the statute has 
 given a form of action in assumpsit, by which money so paid may 
 be recovered, yet this remedy in legal contemplation is no less a 
 mode of redressing an injury than if the action sounded wholly in 
 tort. — Nichols vs. Bellows, 22 Verm., 7 Washb., 581. The En- 
 glish authorities establish that the assignees of a bankrupt may 
 maintain an action to recover money lost by the bankrupt at gam- 
 ing, and the provisions of the statute upon which such an action is 
 founded are analogous to those of the Revised Statutes of the State 
 of New York upon the subject. -7- Vol. i., chap. 20, art. 3 ; Brandon 
 vs. Pate, 2 H. Black, 308. 
 
§ 14.] bankrupt's property vesting in the assignees. 41 
 
 Conditional E8tates. — Estates given by deed or will to the bank- 
 rupt, but of which he is to become possessed upon the happening 
 of a certain contingency, pass to the assignees ; and the same rule 
 applies to all estates created to commence upon the'performance of 
 a condition expressed. And where an estate has passed from the 
 bankrupt, defeasible upon the performance of a condition, such as 
 that created by a mortgage, or by his lands being extended under 
 an elegit, the assignees have what may be termed the equity of 
 redemption. 
 
 Leases. — The assignees are not bound to accept a term for years 
 belonging to 'the bankrupt, for it might be burdened with, rents 
 and covenants beyond its value, and thus prove a loss instead of a 
 benefit to the creditors. They may elect to take it ; but until they 
 have done some act to manifest their acceptance, the estate and in- 
 terest remain in the bankrupt, subject to the right of the assignees 
 to adopt it, Tuck vs. Fyson, 6 Bingh., 321, and he will remain lia- 
 ble to the rent, and chargeable on his express covenants. The lia- 
 bility of the bankrupt was provided against by the English Bank- 
 rupt Act, 12 & 13 Vict., cap. 106, § 145, which enabled the bank- 
 rupt, after the assignees had declined to accept any lease, or agree- 
 ment for a lease, to deliver it up to the lessor, and thus protect 
 himself from liability to the payment of the rent and the perform- 
 ance of the covenants subsequent to his bankruptcy; but there is 
 no such provision in this act, a defect which will probably be rem- 
 edied by future legislation. 
 
 Assignees may be compelled to Elect.— The lessor may call upon 
 the assignees to elect, although the lease has been deposited, by 
 way of equitable mortgage, with a third person. — Ex parte Vurdy, 
 3 Mont., D. & D., 340. Until election the term does not vest in 
 the assignees. — Copeland vs. Stephens, 1 B. & A., 593. The rem- 
 edy for the landlord is by petition or by motion, and the act ena- 
 bles the court to give him costs, see ex parte Hopton, 2 Mont.,D. 
 & D., 347 ; and ex parte Bright, 2 Glyn & J., 79 ; for it authorizes 
 the court " to award costs in all matters before it." The assignees 
 have a right to do reasonable acts for ascertaining the value of the 
 lease, for they are not bound to assume any interest of the bank- 
 rupt which is not beneficial. — Hope vs. Booth, 1 B. & Adol., 505. 
 As, for instance, merely advertising the lease without stating them- 
 selves to be the owners, and putthig the premises up to sale with- 
 out any bidding being offered, is not an election, Turner vs. Rich- 
 ardson, 7 East., 335 ; nor allowing the effects of the bankrupt to 
 remain on the premises for nearly a year after the bankruptcy, and 
 paying the rent due to prevent a distress, giving notice, at the 
 same time, to the landlord of their intention not to take the lease 
 unless it could be advantageously disposed of. — Wheeler vs. Bra- 
 mah, 4 Camp.,' 368. But a deliberate taking possession by the as- 
 signees will be an election to be tenants, although the bankrupt's 
 effects remain on the premises, and after they are sold the keys are 
 given up to the landlord. — Hanson vs. Stevenson, 1 B. & Adol., 303. 
 So where they assume the management of the farm, Thomas vs. 
 
42 THE BANKRUPT LAW. [§ 14. 
 
 Pemberton, 7 Taunt., 206, or enter the premises to complete con- 
 tracts entered into by the bankrupt. — Ansell vs. Robson, 2 C. & J., 
 610 ; Clarke vs. Hume, 1 R. & M., 20V. So where a bankrupt had 
 a lease of the premises and a reversionary interest, the sale of his 
 estate and reversionary interest by the assignees amounted to an 
 election. — Page vs. Godden, 2 Stark., 309. The bankrupt is dis- 
 charged from the covenants from the time of the assignees' election, 
 and not from the date of the adjudication ; and a surety for the 
 lessee is also liable up to that time for breaches of covenant com- 
 mitted by the bankrupt. — Tuck vs. Tyson, 6 Bing., 321. A condi- 
 tion giving a right of re-entry on assignment without consent does 
 not prevent the lessor from entering on the bankruptcy of the les- 
 see, Goring vs. Warner, 2 Eq. Cas., Abr., 100 ; nor does it bind the 
 assignees of the bankrupt, an assignment by whom is no forfeiture. 
 — Doe vs. Bevan, 3 M. & S., 353. It is clear that, unless there be 
 an express clause in the lease making an act of bankruptcy a de- 
 termination of the lease, the bankruptcy of the lessee, and the con- 
 sequent assignment under it, being proceedings in invitum, are not 
 within the proviso against the assignment without license. — Mc 
 parte Sherman, Buck, 462 ; Doe d. Mitchinson vs. Carter, 8 T. R., 57. 
 
 Parties may stipulate, by a special proviso, that the lease shall 
 determine upon the bankruptcy of the lessee, Roe d. Hunter vs. 
 Galliers, 2 Term Rep., 133; 15 Yes., 19 id., 92, or upon the lease 
 being taken in execution against the lessee. — Doe d. Mitchinson 
 vs. Carter, 8 T. R., 57. See Doe d. Floyd vs. Ingleby, 15 Mel. & 
 W., 465. 
 
 The assignees may assign the lease to any person, however irre- 
 sponsible, and even for the very purpose of getting rid of their 
 own liability, Onslow vs. Corrie, 2 Madd, 330; and if the bank- 
 rupt himself become their assignee, he will only be liable as such, 
 and not as the original lessee. — Doe d. Cheeres vs. Smith, S Taunt., 
 795. By their refusal to elect, the term may be determined, and 
 they will have the same rights as to the off-growing crop, etc., as 
 the lessee would have had under the conditions of the lease. — Me 
 parte, Maundrell, 2 Madd., 315. 
 
 It was held in Pennsylvania that where the bankrupt had enter- 
 ed into a covenant to pay ground rent, that his discharge under 
 his bankruptcy did not extinguish the claim for such rent falling 
 due after his discharge. — Bosler vs. Kuhn, 8 Watts & Serg., 183. 
 Vide " Bankrupt's Discharge," and notes. 
 
 A discharge under the Bankrupt Act of 1841 is not a bar to the 
 recovery of rent which accrued after presenting a petition in bank- 
 ruptcy upon a lease executed by the bankrupt as lessee for that 
 time. — Stimemet vs. Ainslie, 4 Denio, 573. 
 
 Foreign Property of the Bankrupt.— Personal property has no lo- 
 cality, but is controlled by the laws which govern the person of 
 the owner. It follows, therefore, that, unless there be a positive 
 law to prevent it, the personal property of the bankrupt in all for- 
 eign countries passes to the assignees. They can sue for and re- 
 cover debts in foreign courts, and their title duly and properly au- 
 thenticated there will be recognized. 
 
§ 14.] bankrupt's property vesting in the assignees. 43 
 
 Liens upon Property available against the Assignees. — The as- 
 signees take the property of the bankrupt, subject to the liens le- 
 gally and bond fide existing as against the bankrupt. Such liens 
 exist by operation of statute law, by usage, or at common law. 
 Under the former Bankrupt Act of 1841 many questions arose upon 
 the subject of liens created by the laws of the several States under 
 the process of attachment. That process had grown into a custom 
 in many of the commercial cities of the world, and has now obtain- 
 ed a place in the juridical system of the mercantile communities of 
 the United States. Recent statutory enactments of the several 
 States have given a very wide scope to attachments, and executions 
 upon judgments following attachments against the property of 
 the debtor. The sherifF is authorized to seize, not only tangible 
 property, but also money, choses in action, and evidences of debt. 
 By the service of the attachment the plaintiffs acquire ^provisional 
 lien upon the property and credits of the debtors in their posses- 
 sion, which lien is established and made absolute by the recovery 
 of the judgment. The judgment establishes the right of the plaint- 
 iffs to the satisfaction of their debt from the attached property of 
 the debtor. The execution is but a continuance of the attachment 
 lien, with authority to the sheriff to convert the assets levied upon 
 into money in the mode prescribed by law, and apply the same in 
 satisfaction of the final judgment. 
 
 Many questions arose upon the subject of the attachment of 
 goods of a bankrupt before the bankruptcy under the various pro- 
 cesses of attachment in the different States. It was held in Ver- 
 mont that an attachment of property upon mesne process, if per- 
 fected by judgment and levy, is a lien, which is protected by the 
 Bankrupt Act ; and it is immaterial whether the judgment is re- 
 covered before, pending, or after the proceedings in bankruptcy. — 
 In re Reed, 21 Vt., 6 Wash., 635. 
 
 Where property had been»attached upon mesne process, and after 
 judgment had been obtained, the right of the attaching creditor 
 attached absolutely to the property, and by the law of Massachu- 
 setts remained a fixed and permanent lien for thirty days after the 
 judgment, by means of which the creditor, at his election, might 
 obtain a preference of satisfaction out of the property attached over 
 all other creditors. And it was held under the former Bankrupt 
 ' Act that, under the decree of bankruptcy, all property and rights 
 of property of the bankrupt are divested from him, and vest in the 
 assignees as soon as they are appointed ; and such decree relates 
 back to the date of the petition ; consequently, pending the pro- 
 ceedings in bankruptcy, an attaching creditor was not permitted to 
 proceed in his suit against the bankrupt to trial and judgment, be- 
 cause there can be no party defendant properly before the court. — 
 Ex, parte Foster, 2 Story, 131. Vide also 2 Story, 376. And it 
 was by the same case decided that where a writ of attachment from 
 the State Courts had issued against the goods of a debtor, who im- 
 mediately afterward petitioned for the benefit of the Bankrupt Act, 
 and was declared bankrupt, the court, upon the petition of the debt- 
 
44 THE BANKRUPT LAW. [§ 14. 
 
 or, allowed the action to be continued, but would not allow the at- 
 taching creditor during the proceedings in bankruptcy to proceed 
 to trial and judgment in the suit. 
 
 An attachment by a creditor previous to the decree of bankrupt- 
 cy, but with notice of an act of bankruptcy having been committed 
 by the debtor, or of his intention to take the benefit of the Bank- 
 rupt Law, was a fraud upon the law, and would not create a lien 
 protected by it. The pendency of the petition in bankruptcy was 
 of itself notice, so as to avoid any attachment made after the filing 
 of the petition, and proof of actual notice avoided an attachment 
 made before. — Howes vs. Spaulding, Circuit Ct., 1844. Vide also 
 Downer vs. Brackett, 21 Vt., 6 Washb., 599. 
 
 Under the Bankrupt Law of 1841 all liens which were valid by 
 the laws of the States respectively were preserved, unless the per- 
 sons holding them came in and proved their claims, and asked pro 
 rata their share of the bankrupt's effects. — Wooten vs. Clark, 23 
 Miss., 1 Cush., 75. 
 
 The assignees of a bankrupt took his property, subject to all liens 
 to which it was subject in the hands of" the bankrupt, though they 
 had no notice of such liens. — Clason vs. Morris, 10 John. Rep., 524. 
 
 Attachments existing under State laws were discharged in cases 
 where the demand in suit could be proved under the bankruptcy. 
 — Payson vs. Payson, 1 Mass., 200 ; Flagg vs. Tyler, 6 Mass., 36 ; 
 Harrison vs. S terry, 5 Cranch, 301. 
 
 By the Bankrupt Law of 1841 the liens of judgments were con- 
 tinued in full operation, and the rights of the creditor protected, ac- 
 cording to the laws of the State, till the liens expired by limitation. 
 The estate then vested in the bankrupt's assignee. — Bruner vs. 
 Sherley, 27 Miss., 5 Cush., 407. 
 
 The lien of a creditor's bill was not dissolved by the subsequent 
 bankruptcy of the debtor, according to the provisions of the Bank- 
 rupt Law, and his assignee in bankrupt«y took his things in action, 
 subject to such lien. — Storm vs. Waddell, 2 Sanford, Chan. Rep., 494. 
 
 The assignees, having the right to discharge encumbrances on the 
 bankrupt's estate, may file a bill against all encumbrancers, to ascer- 
 tain the validity, priority, and amount of their several claims. — 
 M'Lean vs. Lafayette Bank, 3 M'Lean, 587. 
 
 Property of the Bankrupt attached on Mesne Process within four 
 Months next preceding the Bankruptcy. — In order to remedy the dif- 
 ficulties which had arisen upon this subject, and to prevent fraud 
 and collusion between the debtor and a favored creditor, this sec- 
 tion provides, That any attachment on mesne process which has 
 been issued against the property of the bankrupt within the time 
 above limited is to be dissolved, and the property which has been 
 so attached is to vest in the assignees as a portion of the bankrupt's 
 estate. The English Bankrupt Acts have analogous provisions. 
 The 12 and 13 Vic, chap. 106, § 133, makes valid all executions and 
 attachments against the goods and chattels of any bankrupt bond 
 fide executed and levied by seizure and sale before the date of the 
 bankruptcy or the filing of the petition, provided the person at 
 
§ 14.] bankrupt's property vesting in the assignees. 45 
 
 whose suit or on whose account such execution or attachment shall 
 have issued had not, at the time of executing or levying such exe- 
 cution or attachment, or at the time of making any sale thereunder. 
 
 Notice of any previous Act of Bankruptcy committed by the Bank- 
 rupt. — The effect of this section, therefore, is absolutely to defeat 
 all attachments issued against the property of the bankrupt within 
 four months before the bankruptcy where the plaintiffs have not 
 obtained judgment in such attachment suit. 
 
 A lien is construed to be a right to retain property until a debt 
 due to the person retaining has been satisfied. It is not incompat- 
 ible with a right on the part of the person claiming it to sue for the 
 same debt ; but he is allowed to do so, retaining his lien as collat- 
 eral security. There are two species of liens known to the law — 
 Particular and General. Particular Liens are when persons claim 
 to retain the goods in respect of which the debt arises, and these 
 are favored by the law. General Liens are claimed in respect of a 
 general balance of account, and these are to be taken strictly. 
 Where a lien exists, it is available, although the debt for which the 
 party retaining claims to hold the goods be of more than six years' 
 standing, and the remedy by action at law barred in consequence 
 by the Statute of Limitations. The goods, while they continue in 
 the possession of the person entitled to a lien, can not be seized in 
 execution for the real owner's debt. 
 
 The doctrine of lien originated in certain principles of the com- 
 mon law, by which a party who was compelled to receive the goods 
 of another was also entitled to retain them for his indemnity ; thus 
 carriers and innkeepers had by the common law a lien on the goods 
 intrusted to their charge. — Skinner vs. Upshan, Lord Raym., 752. 
 The rescuer of goods from perils of the sea has, on grounds of pub- 
 lic policy, a lien at common law for salvage ; and it is a principle 
 that, where an individual has bestowed labor and skill in the al- 
 teration and improvement; of the subject delivered to him, he has a 
 lien on it for his charge. Thus a miller and a shipwright, Ma 
 parte Ockenden, Atk., 235, have each a lien ; so has a trainer for the 
 expense of keeping and training a race-horse, Bevan vs. Waters, M. 
 & M., 236 ; for he has, by his instruction, wrought an essential im- 
 provement in the animal's character and capabilities, unless by 
 usage or contract the owner has a right inconsistent with it, as, for 
 instance, of sending the horse to run for any race, he pleases, and se- 
 lecting the jockey to ride him. — Forth vs. Simpson, 13 Q*. B., 680. 
 But here the rule appears to stop, and not to include cases wherein 
 expense has been bestowed upon the object claimed to be retained, 
 without producing any alteration in it. — Stone vs. Lingwood, 1 Str., 
 651. Thus it has been decided that a livery-stable keeper has no 
 lien for the keep of a horse, Wallace vs. Woodgate, R. & M., 193, 
 nor an agistor of a horse or cow, Jackson vs. Cummins, 5 M. & W., 
 342, for its agistment. Such is a description of a lien at common 
 law. Whenever one of any .other kind is sought to be established, 
 the claim to it is not deduced from principles of common law, but 
 founded upon the agreement of the parties, either expressed or to 
 
46 , THE BANKRUPT LAW. [§ 14 
 
 be inferred from usage, Naylor vs. Mangles, 1 Esp., 109, and will 
 fail if some such contract be not shown to have existed. — Pratt vs. 
 Vizard, 5 B. & Ad., 108. 
 
 By Special Agreement. — "With respect to liens by express agree- 
 ment little need be said ; the question whether one has or has not 
 been created, depends upon the special terms of each individual 
 contract. Where the intention of the parties to create one is plain, 
 there can be no doubt of their legal right to carry it into effect, 
 Small vs. Moates, 8 Bing., 574 ; and as they can deal as they please 
 with their own property, they may of course frame their contract 
 so as to exclude the right of lien, as well as to create or to extend 
 it ; and this may be done either by direct words, or the insertion 
 of some stipulation incompatible with the existence of a right of 
 lien, Owenson vs. Morse, 7 T. R., 64, or a similar usage of trade 
 consistent with, and incorporated by implication into the contract. 
 — Raitt vs. Mitchell, 4 Camp., 146. Indeed, it once was thought 
 that wherever there was an agreement for the payment of a fixed 
 sum, the right of lien must be taken to have been abandoned. — 
 Brennan vs. Currint, Say. R., 224. But this doctrine, which seems 
 unreasonable, has been overruled ; and the rule now is, that the 
 mere existence of a special agreement will not, of itself, exclude the 
 right of lien, but that, if any of its terms be inconsistent with such 
 right, it will do so. — Chase vs. Westinore, 5 M. & Sel., 180. 
 
 Lien by Usage. — As to liens resulting from usage, these depend 
 upon implied, as those last upon express contract. — Rushforth vs. 
 Hadfield, 6 East., 519. The usage whence such an agreement may 
 be implied is either the common usage of trades, or that of the par- 
 ties themselves, in their previous dealings with each other. — Hold- 
 erness vs. Collinson, 7 B. & C, 212. Of this description are most 
 general liens, none of which existed at common law, but all depend 
 upon the agreement of the parties themselves, either expressed, or 
 to be inferred from their previous dealings, or from the usage of 
 trade and the decisions of the courts of law thereon. — Leuckhart vs. 
 Cooper, 3 Bing., N". C, 99. It has been settled that an attorney has 
 a lien for his general balance on papers of his clients which come to 
 his hands in the course of his professional employment. — Stevenson 
 vs. Blakelock, 1 M. & Sel;, 535. So a banker who has advanced 
 money to a customer has a lien for his general balance, Davies vs. 
 Bowsher, 5 T. R., 488, upon securities belonging to such customer 
 which come into his hands, but not on muniments pledged for a 
 specific sum, Vanderzee vs. Willis, 3 Bro. C. C, 21, or left casually 
 at his bank after his own refusal to advance money on them, Lucas 
 vs. Dorrien, 7 Taunt., 278, or negotiable instruments belonging to 
 a third person, left in the banker's hands by his customer. — Bran- 
 das vs. Barnett, 1 M. & Gr., 908. So it has been determined that 
 calico-printers, Weldon vs. Gould, 3 Esp., 268, dyers, Savell vs. 
 Barchard, 4 Esp., 53, and wharfingers, Naylor vs. Mangles, 1 Esp., 
 109, have liens for their general balance. — Rose vs. Hart, 8 Taunt., 
 499, 2 B. Moore, 547. However, notwithstanding these decisions, it 
 does not appear certain that the right of lien may not, even with 
 
§ 14.J bankrupt's property vesting in the assignees. 47 
 
 respect to some of the above trades, be hereafter contested, for the 
 English courts have remarked with respect to wharfingers that 
 there may be a usage in one place varying from that which prevails 
 in another. — Holderness vs. Collinson, 7 B. & C, 212. The party, 
 therefore, claiming to retain goods for a general balance, should, in 
 almost every instance, be prepared with evidence of the usage ap- 
 plicable to his own case. It is, however, established too well for 
 dispute that a factor has a lien upon all goods in his hands as fac- 
 tor, Dixon vs. Stansfield, 10 C. B., 398, for the balance of his gen- 
 eral account, Houghton vs. Matthews, 3 B. & P., 485, and even on 
 the price of those with the possession of which he has parted. Thus 
 where A consigned goods to B, a factor, to whom he owed more 
 than their value, and B sold them to C, to whom he was himself in- 
 debted, the factor having become bankrupt, it was decided that he 
 had a lien on the whole price due from C, which must consequently 
 be placed to the credit of his assignees in winding up his account 
 with C, and that A was not entitled to any portion of it. — Hudson 
 vs. Granger, 5 B. & Aid., 27. But a factor has not a lien for debts 
 which accrued before his character as such commenced. — Houghton 
 vs. Matthews, 3 B. & P., 485. Policy brokers have also a general 
 lien, and may avail themselves of it to obtain payment of the bal- 
 ance due to them from their employer, though he be merely an 
 agent, if he did not disclose his principal, Mann vs. Forrester, 4 
 Camp., 60, but not if they knew, or there is enough to indicate to 
 them his representative character. — Maans vs. Henderson, 1 East., 
 335. Whether carriers have, by the usage of trade, a general lien, 
 is a matter which has been of late years a good deal disputed. — 
 Rushforth vs. Hadfield, 6 East., 519. The .prevailing opinion seems 
 to be that they have. But the master of a ship has no lien on the 
 vessel or her freight, either for his wages or disbursements on her 
 account. — Hussey vs. Christie, 9 East., 426. 
 
 As a lien is a right to retain possession, there can be no lien 
 where the possession of the goods has once been abandoned — the 
 lien is then .gone ; but when the master of a ship, in obedience to 
 revenue regulations, lands goods at a particular wharf or dock, he 
 does not thereby lose his lien on them for the freight. — Wilson vs. 
 Kymer, 1 M. & Sel., 157. And where they are not required to be 
 landed at any particular dock, the common practice is to land them 
 at a public wharf, and direct the wharfinger not to part with them 
 .till the charges upon them are paid. — Abbott on Shipping, 377, 8th 
 ed. In such case the wharfinger is the ship-master's agent, and the 
 goods remain in the constructive possession of the latter. But 
 otherwise, the rule concerning possession is so strict that, if a par- 
 ty, having a lien on goods, cause them to be taken in execution at 
 his own suit, and purchase them, he so alters the nature of the pos- 
 session that his lien is destroyed, though the goods may never 
 have left his premises. — Jacobs vs. Lawton, 5 Bing., 130. And if, 
 when the goods are demanded from him, he claims to retain them 
 on some different ground, and makes no mention of his lien, he will 
 be considered as having waived it, and the owner of the goods may 
 
48 THE BANKRUPT LAW. [§ 14. 
 
 sue him without tendering a satisfaction for the debt which created 
 his lien. Boardman vs. Sill, 3 Camp., 410, n. For it is to be re- 
 membered that, in all cases, the owner of the goods, on tendering 
 such satisfaction, has a right to his own property ; and if the cred- 
 itor refuse, after such tender, to restore it, he does so at his peril ; 
 for if the tender were sufficient in amount, he is a wrong-doer, and 
 answerable for his misconduct in an action. Nor, indeed, is an act- 
 ual tender, strictly so called, necessary, if the person in whose pos- 
 session the goods are have signified his refusal to accept the amount 
 really due. — Jones vs. Tarleton, 9 M. & W., 675. Moreover, the 
 possession must be lawful ; a creditor can not tortiously seize upon 
 his debtor's goods, and then claim to retain them by virtue of a 
 lien. — Taylor vs. Robinson, 2 Moore, 730. So if he abuses the goods, 
 as, for instance, by pledging them, his lien is forfeited. — Scott vs. 
 Newington, 1 M. & Rob., 252. 
 
 If a security is taken for the debt for which the party has a lien 
 upon the property of the debtor, such security being payable at a 
 distant day, the lien is gone. Cowper vs. Green, 7 M. & W., 633. 
 So, too, if the parties come to a new arrangement, and agree that 
 the debt shall be paid in a particular manner. But a mere right 
 of set-off to an amount equal to that for which the lien is claimed 
 does not alter it ; for in that case there are two parties having mu- 
 tual claims on one another, with this difference, that one has a se- 
 curity, and the other has not ; and, in the absence of special agree- 
 ment to that effect, it would be obviously unjust to deprive the for- 
 mer of his advantage. — Pinnock vs. Harrison, 3 M. & W., 532 ; 4 B. 
 & Ad., 408. . 
 
 Mortgages. — All the interest of the bankrupt as mortgagor or 
 mortgagee, either of real or personal property, passes to his as- 
 signees, and all his right of redeeming such property or estate 
 by the express provision of the section. The assignees have ex- 
 press power to redeem or discharge any mortgage upon any real 
 or personal property " whenever payable" and to tender due per- 
 formance of the conditions thereof, and to sell the same subject to 
 such mortgage. The assignees have a power under the act which 
 the bankrupt does not possess, as they may perform the contract 
 or stipulation, as to payment, by anticipation ; but it gives them no 
 other power than the bankrupt had of performing it after the day 
 of payment. — Dunn vs. Massey, 6 Ad. & K, 479. 
 
 Between a mortgage of land, and a mortgage or pledge of goods, 
 this distinction must be observed — that the mortgagor of lands 
 may retain possession of them without affecting the security ; but a 
 mortgage or pledge of goods may be deemed a nullity, as against 
 assignees, if there has been no bond fide change of possession. 
 However, there are many cases in which, although the mortgagor 
 of movable chattels does not remain in possession of them, it may 
 be impossible to give the actual manual occupation of them to the 
 mortgagee ; as, for instance, in the case of a ship at sea, which, 
 however, may be transferred in the manner pointed out in the stat- 
 utes on the subject. In the case of goods in transit on board of a 
 
§ 14.] bankrupt's peopeety vesting in the assignees. 49 
 
 ship at sea, in which case the transfer of the bill of lading will be 
 deemed a legal transfer of the goods, Meyer vs; Sharpe, 5 Taunt., 
 74 ; also of goods in bond, in which case a transfer of the usual 
 mercantile documents will be deemed ,a legal transfer of the 
 goods. This section will not enable the assignees to revest in 
 them the legal estate in mortgaged premises by payment, or tender 
 of what is due on the mortgage, after the estate of the mortgage „ 
 has become absolute by non-payment on the day limited by the 
 proviso of redemption, Dun vs. Massey, 1 Nev. & P., 578; 6 Ad. 
 & E., 479; and in the case of mortgages by a bankrupt, equity will 
 supply a defect in the conveyance, as against the assignees, in the 
 same manner as in other cases. — Russell vs. Russell, 1 Bro., 269. 
 
 But equity has refused to make good the mortgage of a ship, 
 which was defective, the regulations in the register acts not having 
 been complied with. — Me parte Bulteel, 2 Cox, 243. 
 
 A mortgage, or other conveyance of a conditional estate, to be 
 valid must have been executed so as to affect the estate before the 
 bankruptcy. — 1 P. W., 62 ; Meyer vs. Sharpe, 5 Taunt., 74. Where 
 the bankrupt has executed several distinct mortgages of different 
 estates to the same mortgagee, the assignee can not redeem one 
 mortgage without also redeeming the others. — 2 Vern., 286 ; 2 
 Mont., D. & D., 328. 
 
 Redeemable personal Property. — The assignees have power to re- 
 deem any property which has been deposited, hypothecated, or 
 pledged by the bankrupt before his bankruptcy ; and, as observed 
 in the note to " mortgages" they can exercise that power before the 
 day of payment stipulated in the contract, or by the terms of the 
 deposit or pledge, has arrived. 
 
 Property in Right of the Wife. — Whatever beneficial interest the 
 bankrupt has in the wife's property passes to the assignees. But a 
 Court of Equity, if its assistance is required to realiz^ such interest 
 for the benefit of the bankrupt's estate, will protect the interest of 
 the wife and children, and impose terms upon the assignees by stip- 
 ulating that a provision be made for her and her children out of the 
 fund. — In re Cutler's Trust, 20 L. J. Chancery, 504 ; Lloyd vs. Ma- 
 son, 5 Hare., 149. 
 
 The property of a bankrupt's wife, whether legal or equitable, 
 and whether coming to the husband upon or after marriage, passes 
 to his assignees. They take the rents' and profits of her real estate 
 during coverture, her personal chattels in possession absolutely, her 
 chattels real, and choses in action, mortgages, debts, and legacies, 
 so far as they vested in him or could be disposed of by him. Thus 
 a contingent remainder in personalty bequeathed to the wife pass- 
 es, although it be subject to a life interest which does not fall in 
 until after the bankrupt obtains his certificate. — Doe vs. Steward, 
 1 Ad. & E, 300 ; Ripley vs. Woods, 2 Sim., 165. If, however, the 
 property be settled, or a gift inures to the separate use of the wife, 
 then the assignees take nothing, because the bankrupt had no equi- 
 table interest therein. — Tullet vs. Armstrong, 4 Mylne & C, 377. 
 A Court of Equity will exercise the same jurisdiction to obtain a 
 
50 THE BANKRUPT LAW. [§ 14. 
 
 settlement for the wife and children against the assignees as 
 against the husband ; and there is no rule of law or practice to pre- 
 vent the whole residue of a wife's fortune being settled upon her 
 and her children, it being a matter purely in the discretion of the 
 court. — Dunkley vs. Dunkley, 16 Jurist, 76V. If, however, the as- 
 signees do not reduce' a chose in action belonging to the wife into 
 •possession during the husband's life, her right of survivorship is not 
 affected by the bankruptcy. — Hornsby vs. Lee, 2 Madd., 16 ; Ry- 
 land vs. Smith, 1 Mylne & C, 53. It was so held, although the 
 husband's death took place pending a suit by the assignees to re- 
 duce the chose in action into possession. — Pierce vs. Thornely, 2 
 Sim., 167. 
 
 A promissory note given to a married woman for a debt due 
 her before her marriage, although not reduced into possession by 
 her husband, passed, under the Bankrupt Act of 1841, to the as- 
 signees ; and a subsequent indorsement of the note by the husband 
 and wife will not enable the indorsee, who has notice of the cir- 
 cumstances, to maintain an action on the note, without the consent 
 of the assignee in bankruptcy. — Smith vs. Chandler, 3 Gray, Mass., 
 392. Where, however, by the laws of any State a married woman 
 may possess real estate and personal property, free from the con- 
 trol of her husband, such property would not pass, to the assignees 
 in the event of his bankruptcy. 
 
 Real Estate. — This includes not only estates in possession, but 
 also estates in remainder and reversion. Even a mere possibility 
 of right will pass to the assignees. — Hidden vs. Williamson, 3 P. 
 Williams., 132. But a possibility that lands will come to the bank- 
 rupt as heir at law by descent, if they do not actually descend to 
 him before he obtains his discharge under the bankruptcy, will not 
 pass to the assignees. — Carleton vs. Leighton, 3 Merivale, Appendix, 
 667. Estates given by deed or will to the bankrupt, but of which 
 he is to become possessed upon the happening of a certain contin- 
 gency, pass to the assignees ; and the same rule applies to all es- 
 tates created to commence upon the performance of a condition 
 expressed. 
 
 Property of Bankrupt Partner. — The general rule in cases of bank- 
 ruptcy is, that when one partner becomes bankrupt, his assignees 
 can take only that portion of the partnership assets which would 
 belong to the bankrupt after payment of all the partnership debts ; 
 and that the solvent partners have a lien upon all the assets of the 
 firm, for the debts of such firm, and for their own shares thereof, 
 before the separate creditors of the firm can come in and take any 
 thing. — Parker vs. Muggridge, 2 Story, 334. 
 
 For the purpose of ascertaining and settling the, partnership debts 
 and assets, it may be necessary that the District Court should take 
 into its own hands the exclusive management of all the partnership 
 assets, and prohibit the other partners from interfering therewith. 
 But a Court of Equity will be scrupulous not to displace any of the 
 solvent partner's rights or equities, but will maintain and protect 
 them. 
 
§ 14.] bankrupt's property vesting in the assignees. 51 
 
 The assignees of a bankrupt partner brought a suit in equity to 
 recover partnership property, to which the solvent partner, who 
 was made a party to the suit, demurred, on the ground that the 
 assignees of one partner were not entitled to recover joint property. 
 The demurrer was overruled, and an account was taken before the 
 master and finally settled. Held, that the solvent partner could 
 not, in a collateral suit, question the right of the assignees to the 
 property so recovered, though the decree, in the suit by the as- 
 signees, reserved to the solvent partner a right to question their 
 claim ; and a solvent partner could not call upon the assignees of 
 a bankrupt copartner, or the partnership debtors, who have bond 
 fide, settled with the assignees, to account for the partnership prop- 
 erty, in order to get possession of the property for the purpose of 
 distribution among the partnership creditors. The right of the as- 
 signees to distribute the fund is equal to his at law, and superior 
 to it in equity. — Murray vs. Murray, 5 John, C. R., 60. 
 
 Where all the partners of a firm have been adjudicated bank- 
 rupts, the whole of the joint property of such firm, and of the sep- 
 arate property of each of its members, is to be administered under 
 such bankruptcy, and passes to the assignees when appointed. But 
 where one partner of a firm is adjudicated bankrupt, the property 
 to be administered by his assignees consists of his separate estate 
 and interest in such firm, and his assignees are to administer such 
 part of the joint property as the bankrupt himself would have 
 been entitled to had he remained solvent. The bankruptcy oper- 
 ates as a dissolution of the partnership, and the assignees of the 
 bankrupt partner become tenants in common with the solvent part- 
 ner of the partnership effects, and hold the bankrupt's undivided 
 share thereof, subject to the state of the partnership accounts. — 
 Morgan vs. Marquis, 9 Exch. Rep., 145 ; Lewis vs. Edwards, 1 M. & 
 W., 300 ; Taylor vs. Field, 4 Ves., 396. 
 
 Hence it follows that, in case of the bankruptcy of one member 
 of an entire firm, it is necessary to take an account of the whole 
 state of the partnership affairs, in order to ascertain what property 
 and what interest of the bankrupt partner is to be administered by 
 the assignees under his bankruptcy ; and, in case of the bankruptcy 
 of an entire firm, it is also necessary to take such an account, in or- 
 der to ascertain how all the assets of such firm are to be adminis- 
 tered. — Dutton vs. Morrison, IV Ves., 209 ; Barker vs. Goodair, 11 
 Ves., 85 ; ex parte Farlon, 1 Rose, 421. Vide Section 36, " Bankrupt- 
 cy of Partnerships," and notes. 
 
 Property of the Bankrupt acquired after his Bankruptcy. — The as- 
 signees take not merely the bankrupt's present property, but also 
 that which may accrue to him at any time previously to obtaining 
 his discharge. — Ex parte Ansell, 19 Ves., 208; 1 Tenn. Rep., 296. 
 He has, however, an interest in such future property, subject to their 
 right, and is entitled to recover it from strangers if the assignees do 
 not interfere. — Tyson vs. Chambers, 9 M. & W., 460 ; Herbert vs. 
 Sayer, 5 Q. B., 965 ; Draytonvs.' Dale, 2 B. & C, 293. The assign- 
 ees have the right to interfere, even after the bankrupt has com- 
 
52 THE BANKRUPT LAW. [§ 14. 
 
 menced an action to recover such property. — Crofton vs. Poole, 1 
 B. & Ad., 568. They have no right to the labor or personal earn- 
 ings of the bankrupt, for that would deprive him of the means of 
 subsistence, and it has been decided that a bankrupt might recover 
 a compensation for such labor against his assignees, who had them- 
 selves employed him. — Williams vs. Chambers, 10 Q. B., 337. The 
 rule appears to be that the profits of the personal industry of the 
 bankrupt, between the bankruptcy and the discharge, do not pass 
 to the assignees ; but where the bankrupt, after his bankruptcy and 
 before his discharge, is substantially carrying on any business, either 
 with capital, or in any other manner not entirely depending upon 
 his personal exertions, the debts contracted with him in respect of 
 such business or trade are claimable by the assignees if they so 
 elect. It was held, under the United States Bankrupt Act of 1841, 
 that all the acquisitions of a bankrupt, made after the filing of his 
 petition in bankruptcy, are exempt from liability to pay debts pre- 
 viously contracted. — Bond vs. Baldwin, 9 Geo., 9. 
 
 Property conveyed by the Bankrupt in fraud of his Creditors. — The 
 section specifically vests in the assignees all property which has 
 been conveyed by the bankrupt in fraud of his creditors. The defi- 
 nition of a fraudulent conveyance will be found in express terms in 
 the 35th Section of this act. Vide notes to that section, and also 
 title " Fraudulent Preferences." But, in addition to such defini- 
 tion, any conveyance by a bankrupt which under the circumstances 
 would be deemed fraudulent, would be void as against the assignees, 
 and the property thus conveyed by the bankrupt would vest in 
 them. 
 
 Under the former Bankrupt Act of 1841 it was held that lands 
 conveyed to a third person by the bankrupt without any consider- 
 ation, upon a secret parol trust in his favor, for the purpose of de- 
 frauding creditors, passed to the assignees, although the convey- 
 ances were made before the passage of the act. — Carr vs. Hilton, 1 
 Curtis, Ct. Ct., 230. 
 
 Stocks and Shares in Public Companies. — All vest in the assignees, 
 whether standing in the name of the bankrupt, or in the name of 
 any third person in trust for him, and all title to the dividends and 
 interest thereof, and all his interest connected therewith. The last 
 English Bankrupt Act contains provisions applicable to the case of 
 a bankrupt entitled to the stock of any public company, and em- 
 powers the court to order all persons whose act or consent is nec- 
 essary thereto to transfer the interest of the bankrupt in such stock 
 into the names of the assignees, and to pay all the dividends upon 
 such stock, shares, etc., to them. — 12 & 13 Vic, chap. 166, § 128. 
 Without such a provision the same object will be accomplished by 
 this act. 
 
 Where the shares or stock are standing in the name of the bank- 
 rapt, he can be compelled by an order of the court to make all such 
 transfers as are necessary to vest them in his assignees ; and where 
 such stock or shares are standing in the name of a third person, the 
 court can, by injunction, prevent such person from receiving the 
 
§ 14.] bankrupt's property vesting in the assignees. 53 
 
 dividends and interest, if such shares or stocks properly belong to 
 the bankrupt. The assignees may elect whether they will take 
 such shares under the bankruptcy or not ; but, until acceptance by 
 the assignees, the bankrupt will remain liable for all future calls, 
 installments, or contributions. The case of the South Staffordshire 
 Railway Company vs. Burnside, 5 Exchq., 129 ; 20 L. J. Exchq., 120, 
 explains the English law upon this subject, and may be referred 
 to as laying down principles which may guide the decisions of the 
 American courts upon cognate questions. 
 
 As to the time from which the Bankrupt's Property vests in his As- 
 signees. — Subject to the qualifications and exceptions introduced by 
 the act, it is a fundamental rule and principle of the Bankrupt Law 
 that the title of the assignees has relation back to the act of bank- 
 ruptcy. To avoid the many difficulties which constantly arose un- 
 der the English Bankrupt Acts upon the question of when an act 
 of bankruptcy had been committed by the debtor, and at what date 
 therefore the. property of such bankrupt vested in his assignees, this 
 section declares that the assignment to be executed to the assignee 
 shall relate back to the commencement of the proceedings in bank- 
 ruptcy, and thereupon, by operation of law, the title of the assignees 
 to the bankrupt's property relates back to that period. In volun- 
 tary bankruptcy, the filing of the petition by the debtor is the com- 
 mencement of the proceedings ; in involuntary or compulsory banlc- 
 ruptcy, the filing of the petition for adjudication by the creditors is 
 the commencement of the proceedings. 
 
 The assignees have, it is true, no title until their appointment ; 
 but when appointed, their title is retroactive, and relates back, as 
 has been before observed, to the cqmmencement of the proceedings 
 in bankruptcy, 
 
 Property protected by the Act. — Mortgages of vessels, or of any 
 other goods or chattels, made as security for any debt or debts, in 
 good faith and for present considerations and otherwise valid, and 
 duly recorded in pursuance of any statute of the United States, or 
 of any State, are excepted by this section ; and if such securities 
 comply with the conditions of the section, they are not to be invali- 
 dated or affected by the bankruptcy. 
 
 Property not vesting in the Assignees— Trust Property. — The sec- 
 tion expressly declares that no property held by the bankrupt in 
 trust shall pass by such assignment. Independently, however, of 
 this enactment, property held by the bankrupt in trust for others 
 would not pass to his assignees, since it would be in no wise avail- 
 able for the purpose of the Bankrupt Laws. ' The English Bank- 
 rupt Act, 12 and 13 Vict., chap. 106, section 130, provides: "That 
 where a bankrupt is possessed, as trustee, of any real or personal 
 estate, or any interest secured upon or arising out of the same, or 
 shall have standing in his name as trustee, either alone or jointly, 
 any government stock, funds, or annuities, or any of the stock of 
 any public company, it shall be lawful for the lord chancellor, on 
 the petition of the person entitled in possession to the receipt of the 
 rents, dividends, interest, or produce thereof, to order the. assignees 
 
54 THE BANKRUPT LAW. [§ 14. 
 
 to convey, assign, or transfer the said estate, interest, and stock, etc., 
 to such person 'as the lord chancellor shall appoint, upon the same 
 trusts as the said estate, interest, stock, etc., were subject to before 
 the bankruptcy." This section, however, providing that no prop- 
 erty held in trust by the bankrupt passes to the assignees, will ren- 
 der any such proceedings unnecessary, and upon the bankruptcy of 
 a trustee, the assignees taking no interest in the trust property, a 
 Court of Equity would decree the appointment of another trustee. 
 — Ex, parte Smith, 4 Deac, 214. 
 
 Bankrupt Executor or Administrator. — Property in the possession 
 of the bankrupt as executor or administrator does not vest in his 
 assignees ; and money, if it can be specifically distinguished and as- 
 certained to belong to the testator or intestate, and not to the bank- 
 rupt, does not pass. — Ludlow vs. Browning, 11 Mod., 138. A Court 
 of Equity, upon application, will secure effects in the hands of a 
 bankrupt as executor or administrator, and if taken possession of 
 by the assignees, will appoint a receiver, to whom the assignees 
 must account. — Ex parte Tupper, 1 Rose, 179 ; ex parte Butler, 1 
 Atk., 213. 
 
 Property in the Possession of the Bankrn.pt as Factor, Broker, or 
 Agent. — Goods in the possession of the bankrupt at the time of the 
 bankruptcy, as factor or broker of another, will not pass to the as- 
 signees.— Whitfield vs. Brand, 16 M. & W., 282. If the bankrupt 
 has sold the property on account of the owner, the latter may sue 
 the vendee for the price, if he has not paid it to the bankrupt. If 
 the bankrupt has sold the goods and received the price in cash be- 
 fore his bankruptcy, the owner must come in with the other cred- 
 itor, and prove for the amount. — Scott vs. Surman, Willes, 400. 
 Or if the bankrupt has taken bills or notes for the amount of the 
 goods sold by him, the owner is entitled to them. — Same case suprd. 
 If the price received for goods sold by the bankrupt, as factor or 
 agent of another, has been specifically set apart by the bankrupt 
 bond fide before his bankruptcy, or securities received for the 
 amount from the vendee when they can be identified and distin- 
 guished from other property, such goods will be deemed the prop- 
 erty of such owner, and will not pass to the assignees. 
 
 Debts which have been Assigned. — All debts and other claims or 
 rights which have been bond fide assigned by the bankrupt before 
 his bankruptcy will not vest in the assignees.' 
 
 Property specifically Appropriated. — Property in the hands of 
 others, which the bankrupt has bond fide before his bankruptcy 
 specifically appropriated, will not pass to the assignees. When the 
 bankrupt before the bankruptcy gave one of his creditors an order 
 on the executor of his debtor to pay the debt to the creditor, and 
 the executor received the order, and detained it until he received 
 suflicient assets, the creditor was held entitled to recover the debt. 
 — Ex parte Smith, 3 Spons., 392 ; Bedford vs. Perkins, 3 Car. & P., 
 90. When a merchant had advanced money to a trader, upon an 
 agreement that the trader should consign a cargo to A B for sale, 
 and that A B should remit the proceeds through the medium of 
 
§ 14.] bankrupt's PROPERTY VESTING in the assignees. 55 
 
 the merchant, in order that he might secure himself for the advances 
 made, the cargo was consigned, but the trader afterward wrote A 
 B, informing him that the cargo was not responsible for the ad- 
 vances of the merchant. A B, however, remitted the proceeds to 
 the merchant.' The trader having become bankrupt, his assignees 
 brought an action against A B to recover the proceeds of the car- 
 go. It was held that they could not recover, because the trader 
 had specifically appropriated the proceeds of the cargo for the pay- 
 ment of the advances, and which appropriation he could not after- 
 ward rescind. — Fisher et al. vs. Miller, 1 Bing., 150. 
 
 Where a trader consigned goods to a merchant abroad, who was 
 to remit the proceeds to his agent in England for the trader, and 
 the trader drew bills upon the ag§nt to the value of the consign- 
 ment, who accepted them, under a promise by the trader to provide 
 for them if the proceeds should not be remitted to him in time. 
 After the bills were accepted, and before the remittance of any pro- 
 ceeds, the trader became bankrupt, after which the agent received 
 the proceeds and paid the bills. It was held that the assignees had 
 no right to recover the value of the proceeds, these proceeds hav- 
 ing been specifically appropriated to the payment of the bills by 
 the bankrupt before his bankruptcy. — Thomas vs. De Costa,- 2 
 Moore, 336. Vide also Waller et al. vs. Drakeford, 1 Stark, 481. 
 
 Where a trader, before his bankruptcy, being indebted to a cred- 
 itor, requested a third person, who was his debtor, to pay the 
 amount of his debt to such creditor, which the debtor engaged to 
 do as soon as the amount was ascertained ; but before the payment 
 of the amount the trader became bankrupt. It was held that these 
 circumstances amounted to an equitable assignment of the debt 
 and goods as against the assignees. — Cornfoot vs. Gurney, 9 Bing., 
 372. But a mere general agreement, or mere direction by a prin- 
 cipal to his agent to pay over moneys, will not, without further cir- 
 cumstances, amount to a specific appropriation, and divest the as- 
 signees of their right to recover. Where money has been placed 
 under the control of an arbitrator for a specific purpose to which it 
 has been applied, *uch money can not be recovered back from him 
 by the assignees, on account of a previous act of bankruptcy of 
 which the arbitrator had no notice. — Tope vs. Hockin, 1 B. & C, 
 101 ; Coles vs. Wright, 4 Taunt., 198. Where agents sold goods 
 of their principal to a trader who paid for them by a bill of ex- 
 change drawn by the trader upon a third person, and the goods so 
 purchased remained in the hands of the agent for sale on behalf 
 of the trader, - but before the bill became due the acceptor failed, 
 and the agent having applied to the trader for security, he gave a 
 written order to sell the goods and apply the proceeds to the pay- 
 ment of the bill, but before the sale was effected the trader became 
 bankrupt. It was held that the goods remained in the hands of the 
 agent, subject to the charge created by the bankrupt for the pay- 
 ment of the bill, and that the assignees could not recover the goods 
 or their value. — Bailey vs. Culverwell, 8 B. and C, 448. Where a 
 trader, having shipped goods for a foreign port, and, as collateral 
 
56 THE BANKRUPT LAW. [§ 14. 
 
 security for bills drawn upon and accepted by A B, lodged with 
 him the bills of lading, but without indorsing them ; the ship was 
 prevented going to the foreign port by an Order in Council ; in the 
 mean time the trader became bankrupt, and one of his creditors got 
 possession of the goods and sold them. It was held that A B was 
 entitled to the produce of the sale, the goods having been spe- 
 cifically appropriated to the payment of his acceptances by the 
 bankrupt before his bankruptcy. — Favence and others vs. Hullett 
 and others, 1 Camp., 554. And this rule applies in all cases where 
 property is clothed with a bond fide and specific trust, of the 
 exemplification of which rule the cases before cited afofd in- 
 stances. Wherever proceeds of a cargo or other property have 
 been charged by the bankrupt before his bankruptcy with a specific 
 trust, the conditions of which have been, performed, or the liability 
 for the performance of which has been incurred before the bank- 
 ruptcy, the assignees have no right to recover such property. 
 
 Property in the Possession of the Bankrupt for a particular Purpose. 
 — Property of another in the possession of a bankrupt at the time 
 of the bankruptcy for a particular purpose, for instance, in the hands 
 of a manufacturer for improvement or repair, or a ship in the hands 
 of a ship-builder in the course of construction, will not pass to the 
 assignees. — Clarke vs. Spence, 4 Ad. & E., 448. • 
 
 Property under Contract, but not accepted. — The assignees are not 
 entitled to goods delivered by the bankrupt before the bankruptcy, 
 although not in fact accepted until afterward, Bartram vs. Fair- 
 brother, 4 Bing, 579, nor to goods ordered or purchased by the 
 bankrupt, if he has not the right of possession as well as the prop- 
 erty. Thus a vendee requires a right of property by the contract 
 of sale, but no right of possession until he pays or tenders the price, 
 and, therefore, the assignees can not in such case maintain trover 
 for the goods, althought they might adopt the contract, which is 
 still in fieri, and sue for its non-performance, on the assignees them- 
 selves performing all that the bankrupt was bound to perform as 
 precedent or contemporaneous conditions. — Gibson vs. Carruthers, 
 8 Mees & W., 321 ; Bloxham vs. Sanders, 4 B. & C, 941. 
 
 Goods in Transitu. — The assignees have no right to goods stopped 
 in transitu, because the buyer has not the indefeasible right to the 
 possession, although he has the right of property, and his insolvency 
 without payment puts an end to his right of possession, or rather 
 clothes the vendor with the right of resuming the possession. — 
 Bloxham vs. Sanders, 4 B. & C, 949 ; Smith's Leading Cases,-432. 
 
 Interest of the Bankrupt's Wife not passing to the Assignees. — It 
 was held under the Bankrupt Act of 1841, that a legacy to a bank- 
 rupt's wife dependent on her surviving another person, being a 
 mere possibility, did not pass to the assignees of the husband. — 
 Krumbaar vs. Burt, 2 Wash., C. C, 406. 
 
 The general assignment in bankruptcy had not the effect of re- 
 ducing into possession a legacy of stock, in trust for the bankrupt's 
 wife, whose right by survivorship was established against the as- 
 signees. — Mitford vs. Mitford, 9 Ves., 87. 
 
§ 14.] bankrupt's property vesting in the assignees. 57 
 
 If the wife of a bankrupt has an interest in a legacy, and the as- 
 signees file a bill to compel payment, and the husband dies before 
 any decree is made, the widow, and not the assignees, is entitled to . 
 the legacy. — Pierce vs. Thornely, 2 Sim., 167 ; see Ryland vs. Smith, 
 1 Mylne & C, 53. 
 
 Claim by the Bankrupt upon a foreign Government. — It was held 
 under the Bankrupt Act of 1841, that a claim for spoliations by 
 Spain on the bankrupt's property was not assignable, and the as- 
 signees, having received the .amount of such claim awarded to them 
 by commissioners under the treaty between Spain and the United 
 States, were held liable to the bankrupt therefor in an action for 
 money had and received to his use. — Vasse vs. Comegys, 4 Wash., 
 C. G, 570. 
 
 Pensions or Salaries for Military, Naval, or Civil Services. — It is 
 presumed that no pensions for services, or compensation granted to 
 a public officer, would pass under the bankruptcy to the assignees. 
 The question has been much discussed in England. It was decided 
 that the half pay of a military or naval officer, either in the service 
 of the queen or in that of the East India Company, did not pass 
 " to the assignees in the event of the bankruptcy of such officer. — 
 Gibson vs. East India Company, 5 Bing., K. C. ? 262^ Morris vs. 
 Manisty, 7 Q. B., 674. It was also decided, that a compensation 
 granted to a public officer on the reduction of officers in his depart- 
 ment was not assignable by him, and, therefore, would not pass to 
 the assignees ; but it was laid down as a principle, that a pension 
 granted entirely as a compensation for past services is assignable ; 
 but if a continuing duty or service be part of the consideration, 
 then it is not.— Wells vs. Foster, 8 Mee. & W., 149. To remedy 
 the difficulties arising from many conflicting decisions, the last En- 
 glish Bankruptcy Act gives the court power to order a portion of 
 the pay, half pay, salary, emolument, or pension of any bankrupt to 
 be paid to the assignees, to be applied in payment of the debts of 
 such bankrupt ; and this provision of the English act confirms the 
 view of the author that, upon a proper construction of this act, such 
 pension, salary, or compensation would not pass under the assign- 
 ment to the assignee. 
 
 Property of«fche Bankrupt exempted from the Operations of the Act. 
 — The severe policy of the English Bankrupt Law exacts the trans- 
 fer of the whole of the property of the bankrupt. A more liberal 
 system is now established here. The Bankrupt Act of the United 
 States of 1841 excepted from its operation, in precisely the same 
 terms as the present act, the furniture of the bankrupt, and such 
 other articles and necessaries as the assignee should designate and 
 set apart, not to exceed in value in any case the sum of three hund- 
 red dollars. This section fixes the limit at Jive hundred dollars, as 
 the value of the furniture to be set apart for the bankrupt by the 
 assignee, his action being subject to the control of the court. 
 
 In addition to the above exception, the bankrupt will be entitled 
 to retain his wearing apparel, and that of his wife and children, 
 and his uniform, arms, and equipments, if he should be at the time 
 
58 THE BANKRUPT LAW. [§ 14. 
 
 of his bankruptcy, or if he has been a soldier in the militia or in the 
 service of the United States. 
 
 He will also be entitled to retain such other property as now is, 
 or hereafter shall be exempted from attachment or seizure, or levy 
 on execution, by the laws of the United States. 
 
 The section then exempts such other property not included in 
 the foregoing exceptions as is exempted from levy and sale upon 
 execution or other process or order of any court, by the laws of the 
 State in which the bankrupt has his domicile at the time of the com- 
 mencement of the proceedings in bankruptcy, to an amount not ex- 
 ceeding that allowed by such State exemption laws in force in the 
 year eighteen hundred and sixty-four; and such exception is to 
 operate upon the assignment or conveyance of the property of the 
 bankrupt to his assignees. In no case is the property excepted to 
 pass to the assignees, nor is the title of the bankrupt to the proper- 
 ty to be impaired or affected by any of the provisions of the act. 
 
 The following is an analysis of the various exemptions by all the 
 State laws of the United States, prepared with as much accuracy 
 as is attainable. , 
 
 Exemptions by State Laws.— It will be observed that the section 
 provides for exemptions under State laws, so far only as the latter 
 exempt property in excess of that exempted .by the apt. There is, 
 therefore, no use in giving the laws of States in which the aggre- 
 gate exemptions can not exceed five hundred dollars in value, ex- 
 clusive of arms and wearing apparel. This is the case in Dela- 
 ware, Florida, Georgia, Indiana, Kentucky, Louisiana, Maryland, 
 North Carolina, Pennsylvania, Rhode Island, South Carolina, and 
 Virginia. It should also be understood that no notice has been 
 taken of laws passed since 1864, nor of laws passed in the seceded 
 States since their secession. The homestead exemptions of the 
 Southern States are confined by the old statutes to white citizens, 
 and those of the Eastern and Middle States are limited by peculiar 
 conditions as to registration. 
 
 Alabama. — Wearing apparel ; a long list of furniture^H books 
 and portraits ; implements of trade ; three cows and calves ; one 
 horse or yoke of oxen ; twenty hogs ; twenty sheep ; five hundred 
 pounds of meat ; one hundred bushels corn ; all meal»on hand ; one 
 thousand pounds oats ; twenty-five bushels sweet potatoes ; thirty 
 pounds wool; one hundred pounds cotton; two plows and gear; 
 cloth on hand ; all poultry ; gun ; cart ; and homestead of forty 
 acres in the country worth five hundred dollars. — Code, 1852, 
 Amended Laws, 1854, ch. 13. 
 
 Arkansas. — Wearing apparel, except watches; and mechanic's 
 implements. 
 
 Also in favor of man with family : one horse or yoke of oxen ; 
 cow and calf; plow, axe, and hoe; plow gear; 'spinning-wheels, 
 loom, etc. ; spun yarn and cloth ; twenty-five pounds hemp, flax, 
 cotton, and wool ; two beds, etc. ; all furniture proved necessary ; 
 arms, etc. ; provisions ; doctor's books, medicines, and horse ; home- 
 stead of one hundred and sixty acres in country, or one town lot, 
 with all improvements. — Digest Stat., 503. 
 
§ 14.] bankrupt's peopeett vesting in the assignees. 59 
 
 Colorado. — Wearing apparel. Also in favor of head of a family : 
 family pictures and books ; beds, etc. ; stoves, etc. ; cooking uten- 
 sils; other furniture worth two hundred dollars; provisions and 
 fuel for six months ; implements or stock in trade worth two hund- 
 dred dollars ; library and implements of professional man worth 
 three hundred dollars; working animals worth two hundred dol- 
 lars ; cow and calf, ten sheep, and food therefor for six months ; 
 cart; plow; harrow; other farming implements worth fifty dol- 
 lars; pew and family burial-place. — Laws, 1861, p. 272. 
 
 Iowa. — Wearing apparel ; rifle ; tools of business ; library ; pic- 
 tures ; team used in business ; pew ; and one acre of burying-ground. 
 
 Also in favor of head of a family, additional : one cow and calf; 
 fifty sheep, and their wool ; five hogs, and all pigs under six months 
 old ; necessary food for these animals for sixty days ; all flax raised 
 by debtor, and manufactures therefrom ; one hundred yards home- 
 made cloth ; all spinning-wheels and looms, and other domestic in- 
 struments of labor ; one bed, etc., for every two in the family; nec- 
 essary provisions and fuel for six months ; earnings for ninety days 
 previous; and a homestead. — Rev. Stat., 1860, p. 605. 
 
 Kansas. — Wearing apparel ; all household furniture ; cattle, tools, 
 etc., worth three'hundred dollars ; Stock in trade worth four hund- 
 red dollars; professional library and instruments; pew and burial- 
 place ; also homestead of eighty acres, or one town lot worth one 
 thousand dollars. 
 
 Maine. — Wearing apparel ; bed, etc., for every two persons; fifty 
 dollars' worth of furniture ; tools of business ; Bibles and school- 
 books ; statutes of the State ; one hundred and fifty dollars' worth 
 of books ; all stoves in use ; cow ; heifer ; two swine ; ten sheep, 
 and their Wool ; three thousand pounds hay for cow, two thousand 
 pounds for sheep, and necessary amount for heifer ; thirty bushels 
 grain ; potatoes ; one barrel flour ; ten dollars' worth of wood ; 
 twelve cords fire-wood ; fishing-boat not over two tons ; fifty-six 
 dollars' worth farming implements ; one pair oxen ; or, instead, two 
 horses worth not over one hundred, dollars ; hay for same through 
 winter ; charcoal on hand ; five tons anthracite, and fifty bushels 
 bituminous coal. 
 
 Also one hundred and sixty acres wild land bought from the 
 State, worth not over one thousand dollars ; or homestead worth 
 not over five hundred dollars; and lot in burying-ground. — Rev. 
 Stat., 185V, p. 501. 
 
 Massachusetts. — Wearing apparel; bed, etc., for every two per- 
 sons ; one stove ; twenty dollars' worth of fuel ; one hundred dol- 
 lars' worth of other furniture ; fifty dollars' worth of books ; one 
 cow, six sheep, one hog ; two tons hay ; implements of business 
 worth one hundred dollars ; stock in trade worth one hundred dol- 
 lars ; family provisions worth fifty dollars ; hens ; fisherman's boat, 
 tackle, and nets worth one hundred dollars ; arms and equipments 
 of militiaman ; burying-ground. — ^Gen. Stat., 1860, p. 688. And 
 sewing-machine. — Laws, 1860, ch. 65. 
 
 Also homestead worth eight hundred dollars. — Gen. Stat., p. 524. 
 
60 THE BANKRUPT LAW. [§ 14. 
 
 Michigan. — Wearing apparel ; spinning-wheels, looms, etc. ; libra- 
 ry worth one hundred and fifty dollars ; stoves ; " things" to carry 
 on business worth two hundred and fifty dollars ; family pictures ; 
 arms, etc., required by law; pew; burial-place; and, in favor of 
 householders, provisions and fuel for family for six months ; ten 
 sheep, and their product ; two cows,; five swine ; food for such- an- 
 imals for six months ; and furniture worth two hundred and fifty 
 dollars. — 2 Compiled Laws, 1857, p. 1211. 
 
 Also a homestead of forty acres in the country, or of one lot in a 
 town. — Id., p. 1217. 
 
 Minnesota. — Wearing apparel, beds, etc., household stores, cook- 
 ing utensils, and other household furniture not exceeding five hund- 
 red dollars in value ; provisions and fuel for one year ; tools and 
 implements ; four hundred dollars' worth of stock in trade ; the li- 
 brary and implements of professional men ; three cows, ten swine, 
 one yoke of oxen, and one horse ; or, instead of one yoke of oxen 
 and a horse, a span of horses or mules ; twenty sheep, with their 
 wool, raw or manufactured ; necessary food for the stock ; one wag- 
 on, cart, or dray ; one sleigh, two plows, one dray, and other farm- 
 ing implements not exceeding three hundred dollars in value. 
 
 Also a homestead of eighty acres in the country, or one lot in a 
 town.— Pub. Stat., 1858, p. 569, 570. 
 
 Mississippi. — -Wearing apparel ; mechanic's tools ; farmer's imple- 
 ments for two laborers ; laborer's implements ; student's books for 
 education ; library of lawyer, doctor, or clergyman worth two hund- 
 red and fifty dollars ; instruments of surgeon or dentist worth two 
 hundred and fifty dollars ; globes, books, and maps used by teach- 
 ers; arms, etc., of militiaman; horse; four cows and calves; twen- 
 ty hogs ; one yoke oxen ; one cart ; one hundred and fifty bushels 
 corn ; twenty bushels wheat or rice ; eight hundred pounds pork or 
 bacon ; and furniture worth two hundred and fifty dollars. 
 
 Also homestead of one hundred and sixty acres worth not more 
 than fifteen hundred dollars. — Rev. Code, 1857, p. 529. 
 
 Missouri.— Wearing apparel ; instruments of trade belonging to 
 mechanic. 
 
 Also, when owned by the head of a family, ten hogs ; ten sheep, 
 and their product ; two cows and calves ; two plows ; one set plow 
 gear ; axe, hoe, and all farm implements for use of one man ; work- 
 ing-animals worth one hundred and fifty dollars ; or, in lieu of all 
 these things, other property worth three hundred dollars ; spinning- 
 wheel, loom, and cards ; spun-yam, cloth, etc., homemade; twenty- 
 five pounds each of hemp, flax, and wool ; four beds, etc. ; other 
 furniture worth one hundred dollars ; arms, etc., required by law ; 
 provisions worth one hundred dollars ; family library ; grave-stones ; 
 and pew. Lawyers, doctors, and ministers may select professional 
 books in place of other property, and doctorB may so select medi- 
 cines. — Gen. Stat., 1865, p. 641. 
 
 Also a homestead worth fifteen hundred dollars, and of one hund- 
 dred and sixty acres if in the country, or thirty square rods if in a 
 town or village, except in St. Louis, where it may be worth three 
 
§ 14.] bankrupt's property vesting in the assignees. 61 
 
 thousand dollars, but must not exceed eighteen square rods. — Gen. 
 Stat., 1865, p. 450. 
 
 Nebraska. — Same as in Iowa. — Laws, 1855, p. 101. 
 
 Nevada. — Same as in California, except that all sewing-machines 
 and all private libraries are exempt. — Laws, 1865, p. 224. 
 
 New Hampshire. — Wearing apparel'; beds, etc. ; Bibles and school- 
 books ; twenty dollars' worth of furniture ; stove, etc. ; twenty dol- 
 lars' worth of provisions and fuel ; one cow ; two pigs ; six sheep, 
 and their wool ; twenty dollars' worth of tools ; ton and a half of 
 hay; arms, etc., of militiaman; pew and burial-place; and home- 
 stead worth five hundred dollars. — Comp. Stat., 1853, p. 469, 474. 
 
 New Jersey. — Wearing apparel ; furniture and tools Worth two 
 hundred dollars; and homestead worth one thousand dollars. — 
 Laws, 1851, 278 ; Laws, 1857, 222. 
 
 New York. — Wearing apparel ; beds, etc. ; cooking utensils ; sun- 
 dry household articles ; family Bible, pictures, school-books, and 
 fifty dollars' worth of other books ; spinning-wheels, looms, and 
 stoves ; sewing-machine, arms, etc. ; twenty-five dollars' worth of ' 
 mechanic's tools, etc. ; ten sheep, and their product ; one cow ; two 
 swine ; provisions for family and cattle on hand ; fuel for sixty 
 days ; pew and burial-place ; two hundred and fifty dollars' worth 
 of other furniture, tools, or team, and ninety days' food for such 
 team. — 2 R. S., 367 ; Laws, 1859, ch. 134 ; Laws, 1847, ch. 85 ; Laws, 
 1860, ch. 152. Also a homestead worth one thousand dollars. — 
 Laws, 1850, ch. 260. 
 
 Ohio. — Only a debtor having a family has the benefit of these ex- 
 emptions, viz. : wearing apparel ; beds, etc. ; stove, etc. ; fuel for 
 sixty days ; food worth forty dollars ; one cow, two swine, and six 
 sheep, or furniture -worth thirty dollars in lieu thereof, and their 
 food for sixty days ; implements of trade ; horse or oxen worth fifty 
 dollars ; Bibles, hymn and school books ; family pictures ; furniture 
 worth thirty dollars ; articles of natural curiosity or science ; and 
 if a doctor, books or instruments worth fifty dollars, or if a dray- 
 man, one horse and cart, etc. — 2 Rev. Stat., 1860, p. 114. 
 
 Also a homestead worth five hundred dollars, or, if he has none, 
 three hundred dollars' worth of furniture in addition to the above. 
 —Id., p. 1145. 
 
 Also earnings for three months previous. — Id., p. 1090. 
 
 Oregon. — Wearing apparel ; furniture of householder worth three 
 hundred dollars ; family pictures, and one hundred and fifty dollars' 
 worth of books ; four hundred dollars' worth of any thing used in 
 business ; ten sheep, and their product ; two cows ; &ve swine ; pro- 
 visions and fuel for family for six months ; food for animals for three 
 months; and earnings for sixty days. — Stat., 1854, p. 103, 110. 
 
 Tennessee. — In favor of hea'd of a family : a long list of household 
 furniture ; school-books ; cow and calf; horse or mule, or yoke oxen ; 
 one ox-cart ; one wagon worth seventy-five dollars ; two saddles, 
 etc. ; twenty-five barrels corn ; ten bushels wheat ; five hundred 
 " bundles" oats ; five hundred bundles fodder ; hay worth twenty 
 dollars ; one thousand pounds pork, or six hundred pounds bacon ; 
 
62 TIJE BANKRUPT LAm [§ 14 
 
 poultry worth twenty-five dollars-;, six cords wood, or one hundred 
 bushels coal ; one gun ; mechanic's tools- worth one hundred dollars. 
 
 Also, in favor of a farmer, two plows and hoes, a set of common, 
 tools, five sheep, and ten hogs. Also a homestead worth five hund- 
 red dollars.— Code of 1858, p. 428, 430. 
 
 Texas. — Wearing apparel ; furniture worth two hundred dollars ; 
 implements of husbandry worth fifty dollars ; tools, apparatus and 
 books used in trade or profession ; five cows ; one horse or two oxen ; 
 twenty hogs ; one year's provisions ; ferryman's boat worth five 
 hundred dollars. Also homestead of fifty acres in the country, or 
 one town lot with improvements worth five hundred dollars. — Pas- 
 chal's Laws, 628. 
 
 Vermont. — Necessary apparel, bedding, tools, arms, and furniture ; 
 one sewing-machine ; one cow ; one hog, or its meat ; ten sheep, 
 and their wool of one year's growth ; forage therefor for one win- 
 ter ; ten cords wood ; twenty bushels potatoes ; ten bushels grain; 
 one barrel flour ; three hives of bees ; two hundred pounds segars ; 
 poultry worth ten dollars ; one yoke oxen ; family books ; profes- 
 sional books of clergyman or lawyer, or books and instruments of 
 doctor worth two hundred dollars ; pew, and grave-stones. — Gen. 
 Stat., 1863, p. 363. 
 
 Also a homestead worth five hundred dollars. — Gen. Stat., p. 456. 
 
 Wisconsin. — Wearing apparel ; family books ; beds, etc., stoves, 
 etc., cooking utensils, and two hundred dollars' worth of other fur- 
 niture ; two cows ; ten swine ; one horse ; another horse, or a yoke 
 of oxen ; ten sheep and wool ; one year's food for animals exempt ; 
 one wagon ; one sleigh ; one plow ; one drag ; fifty dollars' worth 
 of other farming utensils ; one year's provisions and fuel for family ; 
 two hundred dollars' worth of implements, stock, or books used in 
 business ; pew ; burial-place ; insurance on exempt property ; earn- 
 ings for sixty days ; and homestead of forty acres farming-land, or 
 quarter of an acre town-land. — Rev. Stat., 786, 799. 
 
 Notice of Appointment of Assignee. — The section provides that the 
 assignee is immediately to give notice of his appointment, by pub- 
 lication at least once a week for three successive weeks, in such 
 newspapers as shall for that purpose be designated by the court. 
 This subject will be provided for by the general rules and orders. 
 
 Assignment to he recorded.— The assignee is to cause the assign- 
 ment to him, within six months, to be recorded in every registry of 
 deeds or other office within the United States, where a conveyance 
 of any lands owned by the bankrupt ought by law to be recorded. 
 The record of such assignment, or a duly certified copy thereof, is 
 to be evidence of the fact of such assignment in all courts. 
 
 Evidence of Assignee's Title.— A copy, duly certified by the clerk 
 of the court under the seal thereof, of the assignment made by the 
 judge or register, as the case may be, to him as assignee, shall be 
 conclusive evidence of his title as assignee, to take, hold, sue for, 
 and recover any of the property of the bankrupt as provided by 
 the act. It would seem, therefore, that for the purpose of proving 
 the title of the assignee in any action or suit brought by him to 
 
§ 14.] bankrupt's property vesting in the assignees. 63 
 
 recover the property of the bankrupt, or in any proceeding in 
 which he claimed the right to take and hold the property of the 
 bankrupt, the production of a copy of the assignment duly certified 
 by the clerk of the court, under the seal of the court, will be suffi- 
 cient. 
 
 Actions against Assignees for Acts done in that Character— Notice 
 of Action. — The section enacts, that no person shall be entitled to 
 maintain an action against an assignee in bankruptcy for any thing 
 " done by him as such assignee" without previously giving him 
 twenty days' notice of such action, specifying the cause thereof, to 
 the end that such assignee may have the opportunity of tendering 
 amends should he see fit to do so. 
 
 Where a statute directs that notice of action should be given 
 where it is intended to proceed for any thing done by a party in a 
 particular , character, a thing is done in such character where the 
 person who does it is acting honestly and bond fide, either under 
 the powers which the act gives, or in discharge of the duties which 
 the act imposes, although he may erroneously exceed the powers 
 given by the act, or inadequately discharge the duties ; yet, if he 
 act bond fide, in order to execute such powers or to discharge such 
 duties, he is to be considered as acting in pursuance of the statute, 
 and is entitled to the protection conferred upon persons while so 
 acting. This is the principle deducible from the cases in the En- 
 glish courts, where statutable limitations and protections are very 
 usual. 
 
 After notice of action specifying the cause thereof, which must 
 of course be in writing, and before the action is commenced, the de- 
 fendant assignee should tender to the plaintiff, or his attorney, a 
 sum of money by way of amends ; and it is suggested that the de- 
 fendant assignee should plead such facts specially, by way of an- 
 swer to the action. If the jury at the trial should be of opinion 
 that the plaintiff is not entitled to recover more than the amount 
 tendered as amends, the plaintiff at the trial would be nonsuited. 
 This section, however, contains no provisions as to the course to be 
 pursued, if an action be brought without having given such notice, 
 or where the amends tendered are considered by the jury to have 
 been sufficient; but as the words of the section are, "no person shall 
 be entitled to maintain an action," it may be intended that the 
 plaintiff be nonsuited at the trial. The clause in the English 
 Bankrupt Act is much more specific, and provides, " That every 
 action brought against any person for any thing done in pursuance 
 of this act shall be commenced within three months next after the 
 fact committed ; and the defendant in any such action may plead 
 the general issue, and give this act and the special matter in evi- 
 dence at the trial, and that the same was done by authority of this 
 act ; and if it shall appear so to have been done, or that such action 
 was commenced after the time limited as aforesaid for bringing the 
 same, the jury shall find for the defendant ; and if there be a ver- 
 dict for the defendant, or if the plaintiff shall be nonsuited, or dis- 
 continue his action or suit after appearance thereto, or if, upon de- 
 
64 THE BANKRUPT LAW. [§ 14. 
 
 murrer, judgment shall be given against the plaintiff, the defendant 
 shall receive such full and reasonable indemnity as to all costs, 
 charges, and expenses incurred in and about any such action as 
 shall be taxed by the proper officer in that behalf." 
 
 The words of this section " for any thing done by him as such 
 assignee" differ from the words in the sections in the English 
 Bankrupt Acts, which are " for any thing done in pursuance of the 
 acts," which render many of the English authorities inapplicable. 
 The assignee, in the event of an action being brought against him, 
 and to entitle him to the protection of this act, must be prepared 
 to establish as a justification that he acted in the bond fide belief 
 that he had the right as such assignee to do the act complained of. 
 The absence of all reasonable ground for such a belief would, of 
 course, be an ingredient for the jury in determining that no such 
 bondfide belief existed. — Booth vs. Clive., 20 L. J. C. B., 150; Hall vs. 
 Thornberry, 3 Exchq. Rep., 846. In an action against the assignees 
 for improperly entering the premises of a third person to seize tire 
 bankrupt's goods, it is questionable whether the assignee would be 
 entitled to the protection afforded by this section, Edge vs. Parker, 
 8 B. & C, 697, or for seizing the goods of a third party upon the 
 premises of the bankrupt, Carruthers vs. Payne, 5 B. & C, 270 ; 
 and the question is often one of considerable difficulty, each case 
 depending upon its own particular circumstances. If the assignee 
 act upon his own authority, and not by virtue and in pursuance of 
 the statute, or under the direction of the court, he will be responsi- 
 ble as any other individual. To be protected for an " act done as 
 assignee," the act complained of must be consistent with his char- 
 acter as trustee, and which he can justify by virtue of his appoint- 
 ment. 
 
 No Lien on the Books of Account of the Bankrupt as against his 
 Assignees. — No person shall be entitled, as against the assignee, to 
 withhold from his possession any books of account of the bankrupt, 
 or claim any lien thereon. The mode of obtaining possession of 
 such books by the assignee will be by an application to the court 
 against the party withholding them, summoning him before the 
 court, and obtaining an order for their delivery. 
 
 The Bankrupt, to execute any Instrument, to vest in*the Assignee 
 the Assets of Bankruptcy. — The bankrupt is compellable, at the 
 request of the assignee, and at the expense of the estate, to make 
 and execute any instruments, deeds, and writings which may be 
 proper to enable the assignee to possess himself fully of all the 
 assets. Should the bankrupt refuse, after request by the assignee, 
 to execute such instruments, application should be made by the as- 
 signee to the court for an order requiring him to execute the nec- 
 essary documents when tendered to him for such purpose ; his dis- 
 obedience to such order will be a contempt, and punishable. The 
 order will be made, of course, unless the bankrupt dispute the va- 
 lidity of the adjudication. Vide 1 Mont., D. & D. ll S 667* 
 2 Deac, 479. ' ' 
 
§ 15.] THE DUTIES OF THE ASSIGNEES.. 65 
 
 THE DUTIES OF THE ASSIGNEES. 
 
 Section 15. And be it further enacted, That the as- 
 signee shall demand and receive from any and all persons 
 holding the same, all the estate assigned, or intended to 
 be assigned, under the provisions of this act ; . and he shall 
 sell all such unencumbered estate, real and personal, which 
 comes to his hands, on such terms as he thinks most for 
 the interest of the creditors; but upon petition of any 
 person interested, and for cause shown, the court may 
 make such order concerning the time, place, and manner 
 of sale, as will, in its opinion, prove to the interest of the 
 creditors ; and the assignee shall keep a regular account 
 of all money received by him as assignee, to which every 
 creditor shall, at reasonable times, have free resort. 
 
 Assignee to receive the Estate and Property of the Bankrupt. — It is 
 the duty of the assignee, immediately upon the assignment being 
 made, to demand and receive from the messenger, and all other per- 
 sons, the property and estate of the bankrupt. 
 
 Assignee to Sell. — The assignee is to sell all such unencumbered 
 estate, real and personal, which comes into his hands, on such terms 
 as he thinks most for the interest of the creditors. 
 
 . The Court may make Orders concerning the Time, Place, and Manner 
 of Sale. — Any person interested may petition the court upon this 
 subject, and the court will exercise strict control over this branch 
 of the assignee's duties. The usual mode of sale should be by pub- 
 lic auction, and for cash, unless under special circumstances the 
 court may otherwise direct. The general rules and orders will 
 probably prescribe what notice of sale is to be given. The assignee 
 being a trustee for the benefit of all the creditors, will not be per- 
 mitted, directly or indirectly, to purchase the bankrupt's property. 
 If he does, the sale may be set aside on the application of any cred- 
 itor. Under peculiar circumstances the court, with the sanction of 
 the creditors, will allow the assignee to bid at the sale and to pur- 
 chase ; but leave from the court must be obtained by him before 
 this can be legally done. — 8 Ves., 351, 1 Glyn & J., 112 ; Mcparte 
 Bage, 4 Madd., 459. On the application of the creditors the court 
 will enforce the immediate sale of the bankrupt's property, and if 
 the assignees have been guilty of any delay or willful default, they 
 can be ordered to pay all costs and expenses. — Me parte Montgom- 
 ery, Glyn & J., 338, 11 Ves., 514. 
 
 A purchaser at a sale made by an assignee of the bankrupt's ef- 
 
 E 
 
6Q THE BANKRUPT LAW. [§ 15. 
 
 fects, acquires only such title as the bankrupt had at the time of 
 his discharge ; where, therefore, a bankrupt, before the filing of his 
 petition, had assigned the claim due him which was then in the 
 hands of an attorney for collection, and the debtor was duly noti- 
 fied of the transfer, and the claim was, notwithstanding, included in 
 the bankrupt's schedule and sold by his assignee, and afterward 
 paid by the debtor to the purchaser at the assignee's sale, it was 
 held, that the payment by the debtor to such purchaser was no dis- 
 charge of the debt. — Anderson vs. Miller, 1 S. & M., 586. Where 
 debts belonging to the estate of a bankrupt were sold by the as- 
 signee, in an action by an assignee of the purchaser to recover the 
 debts, it was held to be sufficient evidence" of authority of the as- 
 signee in bankruptcy to sell, that he acted as such without record 
 evidence thereof, Arnold vs. Leonard, 12 S. & M., 258 ; and a bank- 
 rupt who has obtained his discharge under the bankruptcy may be- 
 come the purchaser of effects or debts belonging to his estate at 
 such sale, and may afterward maintain suits for the recovery of the 
 debts. 
 
 The assignees must give a marketable title to the purchaser of 
 the bankrupt's property sold by them, and not merely the title of 
 the bankrupt. Should any defect exist in such title, care should be 
 taken to point it out in the advertisement or conditions of sale, 
 otherwise the assignees may become personally responsible. 
 
 The purchaser of a bankrupt's land, at an authorized sale of it by 
 an assignee, takes the land freed from any encumbrance thereon 
 made by the bankrupt in fraud of creditors. — Dwinel vs. Perdey, 
 32 Maine, 1 5 1 , 2 Red. , 1 9 7. 
 
 A sale of the bankrupt's property by an assignee, made in con- 
 formity with the rule of court under the United States Bankrupt 
 Act of 1841, was held valid ; and if the deed contains the requisite 
 recitals, and there is a certified copy of a decree in bankruptcy reg- 
 ular on its face, the deed would be sustained.— Holbrook vs. Coney, 
 35 El, 543. 
 
 The assignees in bankruptcy have no power to sell or convey the 
 bankrupt's property without an order of the court ; and as to the 
 title necessary under the statutory proceedings of bankruptcy, vide 
 Cleveland vs. Boerum, 27 Barb., K Y., 252. 
 
 The deed of an assignee conveying the lands of the bankrupt 
 fnust recite the decree of bankruptcy and the order of appointing 
 the assignee. The right of the assignee to convey depended upon 
 the Act of Congress, and he must convey in the manner prescribed 
 by the act, or the conveyance wjll be void. — Gray vs. Heslep, 33 
 Mis., 2:38. So held under the act of 1841. 
 
 Assignees to keep Accounts. — The assignees are to keep regular 
 accounts of all moneys received by them in such character, and to 
 which accounts every creditor is to have access. A discretion will, 
 however, be exercised by the court hi granting the application to 
 inspect the accounts as to the reasonableness of the application. — 
 Ex parte Runel, re Brewer, 1 De Gex, M. & G, 491. 
 
§16.] THE EIGHTS OF THE ASSIGNEES. 67 
 
 THE RIGHTS OF THE ASSIGNEES. 
 
 Section 16. And be. it further enacted, That the as- 
 signee shall have the like remedy to recover all said estate, 
 debts, and effects in his own name, as the debtor might 
 have had if the decree in bankruptcy had not been ren- 
 dered and no assignment had been made. If, at the time 
 of the commencement of the proceedings in bankruptcy, 
 an action is pending in the name of the debtor for the re- 
 covery of a debt or other thing which might or ought to 
 pass to the assignee by the assignment, the assignee shall, 
 if he requires it, be admitted to prosecute the action in 
 his own name, in like manner and with like effect as if it 
 had been originally commenced by him. No suit pend- 
 ing in the name of the assignee shall be abated by his 
 death or removal; but upon the motion of the surviving, 
 or remaining, or new assignee, as the case may be, he shall 
 be admitted to prosecute the suit, in like manner and 
 with like effect as if it had been originally commenced 
 by him. In suits prosecuted by the assignee, a certified 
 copy of the assignment made to him by the judge or reg- 
 ister shall be conclusive evidence of his authority to sue. 
 
 Actions by the Assignees. — The assignees may sue for and recover 
 the estate of the bankrupt, all debts due to him and effects, and may 
 prosecute and defend all suits at law or in equity pending at the 
 time of the adjudication of bankruptcy, in which such bankrupt is 
 a party in his own name, in the same manner and with the like ef- 
 fect as they might have been prosecuted or defended by such bank- 
 rupt. The assignees may thus commence in their own names any 
 actions at law or suits in equity after the assignment, and may pros- 
 ecute and defend all actions at law and suits in equity which have 
 been commenced or defended by the bankrupt, and which are pend- 
 ing at the date of the adjudication. Where such actions or suits 
 are pending at the time of the adjudication, the assignees, when ap- 
 pointed, may elect to abandon such actions or suits, or proceed with 
 the prosecution or defense at their discretion ; if they elect to pro- 
 ceed or defend, they become liable as any other plaintiff or defend- 
 ant to the ,costs of such action or suit. An action can be maintain- 
 ed by the assignees against any person who has received money 
 
68 THE BANKKUPT LAW. [§ 16. 
 
 which ought to he paid to the assignees. For instance, where goods 
 of the bankrupt have been taken in execution subsequently to the 
 adjudication, and the creditor has received from the sheriff the pro- 
 ceeds of the sale of such goods, the assignees can recover the money 
 thus received ; or, if the sheriff has seized the goods subsequent to 
 the adjudication, and before sale, an action of trover, after demand 
 and refusal, can be maintained to recover their value against him. 
 — Hetchen vs. Campbell, 3 Wilson, 304, S. C, 2 Black Rep., 827. 
 So against a person who, after notice of adjudication of bankruptcy, 
 and during the time the bankrupt was imprisoned, sold the goods 
 of the bankrupt, and paid over the proceeds to him. — King vs. Leith, 
 2 Term Rep., 141. 
 
 A creditor in England who, knowing of the adjudication of bank- 
 ruptcy, attached property of the bankrupt in a foreign country, was 
 held liable to refund the proceeds, if received, or to pay the value 
 of the goods, if detained, in an action by the assignees, Phillips vs. 
 Hunter, 2 H. Black, 402, or, upon the same principle, if money of 
 tl.3 bankrupt be attached. — Still vs. "Warwick, 1 H. Black., 665. So 
 where a payment has been made by a bankrupt to a creditor, or 
 goods or property delivered in contemplation of bankruptcy, under 
 such circumstances as to amount to a fraudulent preference, the as- 
 signees can recover such money or the value of such goods. Or if 
 property has been conveyed by the bankrupt in fraud of his credit- 
 ors, the assignees can recover such property, or the value of it if it 
 has been converted. If bankers pay the draft of a trader keeping 
 cash with them, after notice of adjudication of bankruptcy, the as- 
 signees may recover the amount. — Vernon vs. Hankc y, 2 Term Rep., 
 113. Assignees, as such, may maintain an action for money lent by 
 the bankrupt before his bankruptcy.. — Richardson vs. Griffin, 5 M. & 
 S., 325. The assignees may sue for breach of covenants entered into 
 with the bankrupt, and are entitled to the benefit of the same estop- 
 pels as the bankrupt would have been. — Parker vs. Manning, 7 T. 
 Rep., 537. Assignees may support an action of trover against an 
 agent or servant of the bankrupt who, after the adjudication of 
 bankruptcy, receives goods on account of his principal and master, 
 although such agent or servant has accounted with his principal or 
 master for the proceeds. — Coles vs. Davies, 1 Lord Raymond, 724. 
 The assignees may in general elect to sue in assumpsit or in trover ; 
 hence they may either affirm or disaffirm the act of a party who, 
 after adjudication in bankruptcy, has converted the bankrupt's ef- 
 fects into money, either by bringing an action for money had and 
 received to their use, which affirms the contract, or by bringing 
 trover, which disaffirms it, King vs. Leith, 2 Term Rep., 141 ; but 
 they can not affirm the same transaction in part, and disaffirm it for 
 the remainder. — Wilson vs. Poulter, 2 Strange, 859. The assignees 
 may maintain an action to recover money lost by the bankrupt by 
 gaming, or recover from the stakeholder any money which shall 
 have been deposited by the bankrupt upon any wager, bet, or stake, 
 in pursuance of the provisions of the Revised Statutes, chap. 20, ar- 
 ticle 3, vol. i., page 614, Edmunds's edition. — Brandon vs. Pate, 2 H. 
 
§ 16.] THE EIGHTS OF THE ASSIGNEES. 69 
 
 Black, 308. The assignees may support an action of ejectment aft- 
 er the title is completely vested in them. — Doe vs. Mitchell, 2 M. & 
 S., 446. The dehtor to a bankrupt may plead the Statute of Limit- 
 ations in an action brought by the assignees, in the same manner as 
 he could to the claim of the bankrupt himself. — Grey vs. Bendez, 1 
 Strange, 556. 
 
 Assignees could not maintain an action on a demand arising from 
 a tort, such demand did not pcss by the assignment, as a demand 
 for deceiving the bankrupt in the sale of goods.' — Shoemaker vs. 
 Keely, 2 Dall., 213. The bankrupt's right of action against a sher- 
 iff for not collecting an execution passes to the assignees. — Sullivan 
 vs. Bridge, 1 Mass., 511. In an action by assignees for the bank- 
 rupt's services as supercargo of a ship, it was held, that the defend- 
 ant could not set off a demand against the bankrupt for not keep- 
 ing the ship fully insured. — Brown vs. Cuming, 2 .Cairns, 33. 
 
 The Bankrupt Act by the decree of bankruptcy divests the bank- 
 rupt of all property and rights of property, except as therein pro- 
 vided, and declares that all suits pending to which he is a party 
 shall be prosecuted or defended by the assignee to their final con- 
 clusion, in the same way, and with the same effect, as they might 
 have been by the bankrupt himself; consequently the assignee 
 must be made a party to the litigation which may be pending in 
 favor of or against the bankrupt, or it can not progress to a trial. 
 —Lacy vs. Rockett, 11 Ala., 1002. . 
 
 The assignee of a bankrupt copartner is a necessary party to a 
 suit in equity to recover a debt due to the firm at the time of the 
 bankruptcy, where the assignee has a beneficial interest in the part- 
 nership effects as trustee for the separate creditors of the bankrupt. 
 But where the bankrupt has obtained his discharge in bankruptcy, 
 and the copartnership is insolvent, so that the assignee in bank- 
 ruptcy has no interest in the effects 'of the firm, and where these 
 facts are distinctly stated in the bill, the assignee need not be made 
 a party. — Coe vs. Whitbeck, 11 Paige, 42. 
 
 . Compelling the Assignee to be a Party. — The assignee in bank- 
 ruptcy may be made a party by motion to a suit in which the bank- 
 rupt was a party when he was. declared such. Where the assignee 
 in a propei 1 case fails to come in as a plaintiff, the defendant may 
 suggest the plaintiff's bankruptcy, and upon the production of the 
 decree in bankruptcy the court may order the assignee to make 
 himself a party within a limited time, and in default thereof the 
 suit to abate for want of prosecution ; but, however this may be, 
 if the fact of the plaintiff's bankruptcy is not disputed, it is compe- 
 tent for the defendant to plead in bar to an action by the bankrupt 
 himself, the decree declaring the plaintiff to be a bankrupt. — Lacy 
 vs. Rockett, 11 Ala. ; 1002. 
 
 Where property is fraudulently conveyed by a bankrupt, his as- 
 signee can sue in trover or maintain an action for it, which the 
 bankrupt could not have maintained against a fraudulent grantee. 
 — Carr vs. Gale, 3 M. & W, 38. 
 
 Under the Bankrupt Act of 1841 a District Court had jurisdic- 
 
70 THE BANKRUPT LAW. [§ 16. 
 
 tion of an action by an assignee in bankruptcy to recover a balance 
 due from a principal to the bankrupt, as factor, at the time of the 
 presentation of his petition. Such a suit is essential to the -wind- 
 ing up of the proceedings in bankruptcy, and jurisdiction in it de- 
 pends upon the subject matter, and not upon the parties. — Kelly 
 vs. Smith, 1 Blatch, Ct. Ct., 290. 
 
 It was held under the Bankrupt Law of 1841 that an assignee 
 may maintain an action in his own name in a State court for the 
 breach of a contract made with the bankrupt. — Ward vs. Jenkins, 
 10 Met., 583. 
 
 Form and Nature of the Action. — In Pennsylvania, an involuntary 
 transfer of property by a proceeding in bankruptcy in a foreign 
 State will be regarded, except so far as it interferes with the claims 
 of American creditors, and foreign assignees may sue for debts in 
 the name of the bankrupt. — Merrick's estate, 5 Watts & Serg., 9. 
 In Virginia it has* been held, that the assignees of a bankrupt in En- 
 gland can not maintain an action at law in that State in their own 
 names, but must bring the action in the name of the bankrupt.— 
 Blane vs. Drummond, 1 Brock., 62. Vide also 2 Ashmead, 485. 
 
 The assignees, and not individual creditors, are the proper par- 
 ties to sue for property fraudulently conveyed by a bankrupt. — 
 Edwards vs. Coleman, 2 Bibb., 204. 
 
 Where a bond was given to partners, and one of them became a 
 bankrupt, it was held, that a suit upon the bond was properly 
 brought in the name of the solvent parties and the assignee of the 
 bankrupt. — Peel vs. Ringgold, 1 Eng. Eq., 546. 
 
 Where a declaration stated that " A, assignee of the estate and 
 effects of B, a bankrupt, complains, etc.," it was held that there was 
 no occasion for referring to the Bankrupt Act, as it was a public 
 law. — Hastings- vs. Fowler, 2 Carter, Ind., 216. 
 
 An assignee in bankruptcy may commence a suit against a citi- 
 zen of the same State in the courts of the United States, though 
 such citizen should not be a party to the proceedings in bankruptcy. 
 — Atkinson vs. Purdy, Crabbe, 551. 
 
 If the aid of a State court is sought by an assignee in bankruptcy 
 to recover property, he must submit to the terms prescribed by such 
 court. — Pindel vs. Vimont, 14 B. Mon., Ky, 400. Where the bankrupt 
 himself could have recovered, and the assignees derive their title 
 through him, it is suggested by the author that, by analogy to the 
 English law, the assignees in such action must declare as assignees of 
 the bankrupt ; but where the right of action accrues to the assignees 
 after the adjudication of bankruptcy, and where the bankrupt him- 
 self could "not have recovered, the assignees may bring the action 
 in their own names. When one of several partners becomes bank- 
 rupt, the action should be in the name of the solvent partner and 
 the assignees of the bankrupt. — Thomason vs. Freer, 10 East., 41 8. 
 For if it be brought in the name of all the partners, including the 
 bankrupt, the bankruptcy may be pleaded in bar. — Smith vs. Sloper, 
 1 East., 363 ; Teed vs. Elworthy, 14 East., 211. The usual form of 
 action brought by the assignees' in cases of an amotion of property 
 
§ 17.] THE RIGHTS OF THE ASSIGNEES. 71 
 
 belonging to the bankrupt is that of trover / but, in order to main- 
 tain such action, the bankrupt must have had. a right of possession 
 in the chattel at the time of the adjudication of bankruptcy. An 
 action of trespass can not be maintained at the suit of the assignees 
 for any injury or removal of property before they have obtained 
 actual possession of it ; and in the English courts it has been much 
 doubted whether the assignees of a bankrupt can sue in case for 
 a tort committed against the estate of the bankrupt. The safer 
 course is to adopt the form of trover or replevin, and, in all cases 
 where there has been no actual conversion of the goods, to make a 
 demand and receive a refusal before commencing the action. 
 
 Unless the delivery, or detention, or removal of goods or property 
 has occurred after the adjudication of bankruptcy, and if the trans- 
 action be one which the bankrupt himself, if solvent, could not have 
 impeached or invalidated, the assignees -can not recover the proper- 
 ty. The assignees must all join in an action on contract, and the 
 omission of one of them is ground of npnsuit. 
 
 Actions and Suits in which the Assignees are Parties, not to abate 
 by Death or Removal from Office. — This section enacts, that no suit in 
 which the assignee is a party, either as plaintiff or defendant, shall 
 be abated by his death or removal from office ; but the same may 
 be prosecuted and defended by his successor, or by the surviving or 
 remaining assignee, as the case may be. Upon motion of the surviv- 
 ing, or remaining, or new assignee, he is to be admitted to prosecute 
 the suit in like manner, and with like effect, as if it had been origin- 
 ally commenced by him. 
 
 Evidence of Assignee's Authority to sue. — In suits prosecuted by 
 the assignee, a certified copy of the assignment made to him by the 
 judge or register is made conclusive evidence of his authority to 
 sue. 
 
 Section 17. And be it further enacted, That the assignee 
 shall, as soon as may be after receiving any money belong- 
 ing to the estate, deposit the same in some bank in his 
 name as assignee, or otherwise keep it distinct and apart 
 from all other money in his possession ; and shall, as far 
 as practicable, keep all goods and effects belonging to the 
 estate separate and apart from all other goods in his pos- 
 session, or designated by appropriate marks, so that they 
 may be easily and clearly distinguished, and may not be 
 exposed or liable to be taken as his property or for the 
 payment of his debts. "When it appears that the distri- 
 bution of the estate may be delayed by litigation or other 
 cause, the court may direct the temporary investment of 
 
72 THE BANKRUPT LAW. [§ 18. 
 
 the money belonging to such estate in securities to be ap- 
 proved by the judge or a register of said court, or may 
 authorize the same to be deposited in any convenient 
 bank, upon such interest, not exceeding the legal rate, as 
 the bank may contract with the assignee to pay thereon. 
 He shall give written notice to all known creditors, by 
 mail or otherwise, of all dividends, and such notice of 
 meetings, after the first, as may be ordered by the court. 
 He shall be allowed, and may retain, out of money in his 
 hands, all the necessary disbursements made by him in 
 the discharge of his duty, and a reasonable compensation 
 for his services, in the discretion of the court. He may, 
 under the direction of the court, submit any controversy 
 arising in the settlement of demands against the estate, or 
 of debts due to it, to the determination of arbitrators, to 
 be chosen by him and the other party to the controversy, 
 and may, under such direction, compound and settle any 
 such controversy by agreement with the other party, as 
 he thinks proper and most for the interest of the creditors. 
 Section 18. And he it further enacted. That the court, 
 after due notice and hearing, may remove an assignee for 
 any cause which, in the judgment of the court, renders 
 such removal necessary or expedient. At a meeting call- 
 ed by order of the court in its discretion for the purpose, 
 or which shall be called upon the application of a major- 
 ity of the creditors in number and value, the creditors 
 may, with consent of the court, remove any assignee by 
 such a vote as is hereinbefore provided for the choice of 
 assignee. An assignee may, with the consent of the judge, 
 resign his trust and be discharged therefrom. Vacancies 
 caused by death or otherwise in the office of assignee may 
 be filled by appointment of the court, or, at its discretion, 
 by an election by the creditors, in the manner hereinbe- 
 fore provided, at a regular meeting, or at a meeting called 
 for the purpose, with such notice thereof in writing to all 
 
§18.] THE EIGHTS OF THE ASSIGNEES. 73 
 
 known creditors, and by such person as the court shall 
 direct. The resignation or removal of an assignee shall 
 in no way release him from performing all things requisite 
 on his part for the proper closing up of his trust and the 
 transmission thereof to his successors, nor shall it affect 
 the liability of the principal or surety on the bond given 
 by the assignee. When, by death or otherwise, the num- 
 ber of assignees is reduced, the estate of the debtor not 
 lawfully disposed of shall vest in the remaining assignee 
 or assignees, and the persons selected to fill vacancies, if 
 any, with the same powers and duties relative thereto as 
 if they were originally chosen. Any former assignee, his 
 executors or administrators, upon request, and at the ex- 
 pense of the estate, shall make and execute to the new as- 
 signee all deeds, conveyances, and assurances, and do all 
 other lawful acts requisite to enable him to recover and 
 receive all the estate. And the court may make all or- 
 ders which it may deem expedient to secure the proper 
 fulfillment of the duties of any former assignee, and the 
 rights and interests of all persons interested in the estate. 
 No person who has received any preference contrary to 
 the provisions of this act shall vote for or be. eligible as 
 assignee ; but no title to property, real or personal, sold, 
 transferred, or conveyed by an assignee, shall be affected 
 or impaired by reason of his ineligibility.' An assignee 
 refusing or unreasonably neglecting to execute an instru- 
 ment when lawfully required by the court, or disobeying 
 a lawful order or decree of the court in the premises, may 
 be punished as for a contempt of court. 
 
 The assignee after the receipt of any money belonging to the es- 
 tate is, as soon as may be, to deposit the same in some bank in his 
 name as assignee, and to keep it distinct and apart from all other 
 money in his possession. The goods and effects belonging to the 
 estate are also to be kept by him separate and apart from all other 
 goods in his possession. He is also to designate by appropriate 
 marks the property of the bankrupt, so that it may be easily and 
 
74 THE BANKRUPT LAW. [§18. 
 
 clearly distinguished from his own property, and may not he ex- 
 posed or liahle to he taken as his property, or for the payment of 
 his dehts. 
 
 The Court may direct the temporary Investment of Money. — If there 
 is a prohahility that the distrihution of the estate may he delayed 
 hy litigation or other causes, the court may direct the temporary 
 investment of the money belonging to such estate in securities to 
 be approved hy the judge or the register ; or it may authorize such 
 money to he deposited in any convenient hank, at a rate of interest 
 to be agreed upon between the assignee and such bank. The as- 
 signee will be entitled to retain, out of money in his hands, all the 
 necessary disbursements made by him in the discharge of his duty 
 as such assignee, and a reasonable compensation for his services. 
 The amount of compensation to be allowed him is in the discretion 
 of the court. 
 
 Assignee may submit Disputes to Arbitration. — Under the dif ection 
 of the court the assignee may submit any controversy arising in 
 the settlement of demands against the estate, or of debts due to it, 
 to the determination of arbitrators to be chosen by him and the 
 other party to the controversy. In submitting any questions to 
 arbitration, the assignees should he careful, in the agreement of ref- 
 erence, or by the terms of submission, expressly to protect them- 
 selves from any liability beyond the assets of the bankrupt's estate, 
 or they will be personally liable to the extent of the award. — 
 2 Rose, 50. The assignees are not hound hy the terms of submis- 
 sion to a reference by the bankrupt. — Marsh vs. "Ward, 9 B. & G, 
 659. If any reference be pending between the bankrupt and an- 
 other party at the time of their appointment as assignees, they 
 should be made parties to such reference. 
 
 Assignees may compound and settle Disputes. — By direction of the 
 court the assignee may compound and settle any controversy by 
 agreement with the other party in the manner which he thinks 
 proper, and most for the interest of the creditors. If the assignees 
 should adopt any of the courses allowed by this section without 
 having obtained the permission or direction of the court, they in- 
 cur the risk of not having their costs and expenses allowed out of 
 the estate.— 6 Bing.,N. G, 174; 8 Scott, 280. 
 
 Eemoval of Assignees by the Court. — The court, after due notice 
 and hearing, may remove an assignee for any cause which, in its 
 judgment, renders such removal necessary or expedient. 
 
 Objections by any creditors to the assignees chosen should he 
 made within a reasonable time ; and creditors authorizing the as- 
 signees to act, having knowledge of any objection to their fitness or 
 eligibility, will be estopped from making the objection afterward. 
 — Mc parte Nash, 1 Mont., 501. 
 
 Poverty alone of an assignee is no sufficient ground for removal ; 
 but subsequent insolvency or bankruptcy is. — Ex, parte Copeland, 
 1 Mont. & Ayr., 306 ; exparteBowsa,r,l Mont. D. & D.,194. Should 
 the assignee have received a fraudulent preference, he would be re- 
 moved. The bankrupt may petition on sufficient grounds for the re- 
 
§19.] PEOOF OF DEBTS AND CLAIMS. 75 
 
 moval of the assignee. — Eeparte Oakes, 2 Mont. D. & D., 60. Where 
 an assignee has accepted the office, he can only retire upon payment 
 of costs ; but where he is removed by the court for the benefit of the 
 estate without any fault or dereliction of his own, he is entitled to 
 his costs, and all the expenses he may necessarily have incurred. — 
 Ex parte Watts, 1 Deac. & Chit., 322; ex parte James, 1 Deac. & 
 Chitt., 212. It has been held, in the construction of the English 
 Bankrupt Act, that the removal of assignees is a matter within the 
 discretion of the judge in bankruptcy with which the Court of Ap- 
 peal will not interfere, unless' it is clearly established that such dis- 
 cretion has been wrongly exercised. — Ex parte Bates, 21 Law J. 
 Bank, 20 ; 16 Jurist, 459. 
 
 Creditors may remove Assignee. — At a meeting called by order of 
 the court in its discretion for the purpose, or which shall be called 
 upon the application of a majority of the creditors in number and 
 value, such creditors may, with consent of the court, remove any as- 
 signee by such a vote as is provided by Section 13 for the choice 
 of the assignees. 
 
 Assignee may resign his Trust. — The assignee may, with the con- 
 sent of the judge, resign- his trust, and be discharged therefrom. 
 Vacancies caused by death,, or otherwise, may be filled by appoint- 
 ment of the court, or by re-election by the creditors in manner here- 
 inbefore provided. 
 
 Assignees subject to the Order of the Court'. — The court may make 
 all orders to secure the proper fulfillment of the duties of the for- 
 mer, as well as the present assignees, and may compel the execu- 
 tion of any instrument, and punish any disobedience by an assignee 
 of any lawful order or decree of the court as for a contempt of 
 court. 
 
 Compensation to the Assignee. — The assignee, under the direction 
 of the court, may retain out of moneys in his hands all the expenses 
 he has necessarily incurred in the discharge of his duty, and a rea- 
 sonable compensation for his services. As there is no provision in 
 the act, as in the English Bankrupt Acts, for the employment of 
 counsel and attorneys to prosecute the proceedings in bankruptcy, 
 and no system provided for the taxation of their costs and profes- 
 sional charges, it is presumed that when employed by the assignees 
 in compulsory bankruptcy, or in cases of opposition, etc., in vol- 
 untary bankruptcy, the assignees will be justified in paying such 
 charges as necessary disbursements, subject to the approval of the 
 court. 
 
 PEOOF OF DEBTS AND CLAIMS. 
 
 Section 19. And be it further enacted, That all debts 
 due and payable from the bankrupt at the time of the ad- 
 judication of bankruptcy, and all debts then existing but 
 
76 THE BANKRUPT LAW. [§19. 
 
 not payable until a future day, a rebate of interest being 
 made when no interest is payable by the terms of con- 
 tract, may be proved against the estate of the bankrupt. 
 All demands against the bankrupt for or on account of 
 any goods or chattels wrongfully taken, converted, or 
 withheld by him, may be proved and allowed as debts 
 to the amount of the value of the property so taken or 
 withheld, with interest. If the bankrupt shall be bound 
 as drawer, indorser, surety, bail, or guarantor upon any 
 bill, bond, note, or any other specialty or contract, or for 
 any debt of another person, and his liability shall not 
 have become absolute until after the adjudication of 
 bankruptcy, the creditor may prove the same after Such 
 liability shall have become fixed, and before the final 
 dividend shall have been declared. In all cases of con- 
 tingent debts and contingent liabilities contracted by the 
 bankrupt, and not herein otherwise provided for, the 
 creditor may make claim therefor, and have his claim al- 
 lowed, with the right to share in the dividends, if the con- 
 tingency shall happen before the order for the final divi- 
 dend ; or he may at any time apply to the court to have 
 the present value of the debt or liability ascertained and 
 liquidated, which shall then be done in such manner as 
 the court shall order, and he shall be allowed to prove 
 for the amount so ascertained. Any person liable as bail, 
 surety, guarantor, or otherwise for the bankrupt, who 
 shall have paid the debt or any part thereof in discharge 
 of the whole, shall be entitled to prove such debt, or to 
 stand in the place of the creditor if he shall have proved 
 the same, although such payments shall have been made 
 after the proceedings in bankruptcy were commenced. 
 And any person so liable for the bankrupt, and who has 
 not paid the whole of said debt, but is still liable for the 
 same or any part thereof, may, if the creditor shall fail or 
 omit to prove such debt, prove the same, either in the 
 
§ 20.] PEOOF OF DEBTS AND CLAIMS. 77 
 
 name of the creditor or otherwise, as may be provided by 
 the rules, and subject to such regulations and limitations 
 as may be established by sueh rules.' Where the bank- 
 rupt is liable to pay rent, or other debt falling due at 
 fixed and stated periods, the creditor may prove for a 
 proportionate part thereof up to the time of the bank- 
 ruptcy, as if the same grew due from day to day, and 
 not at such fixed and stated periods. If any bankrupt 
 shall be liable for unliquidated damages arising out of 
 any contract or promise, or on account of any goods or 
 chattels wrongfully taken, converted or withheld, the 
 court may cause such damages to be assessed in such 
 mode as it may deem best, and the sum so assessed 
 may be proved against the estate. No debts other than 
 those above specified shall be proved or allowed against 
 the estate. 
 
 Section 20. And he it further enacted, That in all cases 
 of mutual debts or mutual credits between the parties, 
 , the account between them shall be stated, and one debt 
 set-off against the other, and the balance only shall be al- 
 lowed or paid, but no set-off shall be allowed of a claim 
 in its nature not provable against the estate : provided, 
 that no set-off shall be allowed in favor of any debtor to 
 the bankrupt of a claim purchased by or transferred to 
 him after the filing of the petition. "When a creditor has 
 a mortgage or pledge of real or personal property of the 
 bankrupt, or a lien thereon for securing the payment of 
 a debt owing to him from. the bankrupt, he shall be ad- 
 mitted as a creditor only for the balance of the debt aft- 
 er deducting the value of such property, to be ascertained 
 by agreement between- him and the assignee, or by a sale 
 thereof, to be made in such manner as the court shall di- 
 rect; or the creditor may release or convey his claim to 
 the assignee upon such property, and be admitted to 
 prove his whole debt. If the value of the property ex- 
 
78 THE BANKRUPT LAW. [§ 19, 20. 
 
 ceeds the sum for which it is so held as security, the as- 
 signee may release to the creditor the bankrupt's right 
 of redemption therein on receiving such excess, or he may 
 sell the property, subject to the claim of the creditor" 
 thereon ; and in either case the assignee and creditor, re- 
 spectively, shall execute all deeds and writings necessary 
 or proper to consummate-the transaction. If the proper- 
 ty is not so sold or released and delivered up, the cred- 
 itor shall not be allowed to prove any part of his debt. 
 
 In order that the main object of the Bankrupt Laws, viz., the 
 equal distribution of the debtor's property among his creditors may 
 be accomplished, it is obviously necessary that strict regulations 
 should be established, designating the manner in which creditors 
 may, by proving their debts, entitle themselves to share in such dis- 
 tribution, and designating also those claims which are to be con- 
 sidered debts, so as to entitle the persons proving them to share in 
 the division of the assets. It must be remembered that whether a 
 debt is provable under the bankruptcy; or is barred by the bank- 
 rupt's discharge, are convertible terms ; and while the attempt has 
 been made accurately to classify the debts which are provable in the 
 notes to this section, a reference to the notes under the title of the 
 " Bankrupt's Order of Discharge" will assist the reader in ascertain- 
 ing the nature and character of those debts which are provable un- 
 der the bankrupt's estate. 
 
 Provable and Non-provable Claims. — A Court of Bankruptcy be- 
 ing a Court of Equity, as well as of law, is not compelled to receive 
 all legal debts ; but has the right to inquire into the consideration 
 of every debt tendered for proof, even if it be a judgment. — Ex 
 parte Mudie, 3 Mont. D. &. D., 62. The principle is, that the debt 
 must have been contracted bond fide, and for good and valuable 
 consideration, and, if payable at the time, such as the creditor 
 might have had his remedy for against the bankrupt, either at law 
 or in equity. It must, in general, have been a debt either actually 
 ascertained, or capable of being ascertained without the interven- 
 tion of a jury, unless it be a contingent debt or contingent liabili- 
 ty, for which express provision is made hereafter. Vide those Ti- 
 tles. The debt must be due at the time of the adjudication, though 
 payable at a future day. Before enumerating generally those 
 debts which are provable, it must be observed that no debt is prov- 
 able if it arise out of an illegal contract, or is barred by any stat- 
 ute of limitations in force in the State or place where the debt was 
 contracted. — Ex -parte Dewdney, 15 Ves., 248; ex parte Hoffey, 2 
 Rose, 245. As to want of consideration, an exemption has been 
 made as to a voluntary bond given by the bankrupt, which, aft- 
 er a surplus, was admitted to proof — Gardner's assignees vs. 
 
§ 19, 20.) PKOOF OF DEBTS AND CLAIMS. 79 
 
 Skinner, 2 Sch. & Lef., 228 ; ex parte Hoskins, 2 De Gex & S., 549 ; 
 Meggison vs. Foster, 2 Yonge & C, 336. 
 
 Within the compass of these notes it is impossible to arrange al- 
 phabetically every provable claim. From those given it is hoped 
 that the principles upon which proofs of debts under bankruptcy 
 are admitted may be deduced. 
 
 Agents. — On the bankruptcy of an agent or broker who has been 
 intrusted by the owner of goods which he has pledged before the 
 adjudication of bankruptcy, the English Bankrupt Act gives the 
 owner the right to redeem and to prove under the bankruptcy for 
 the amount paid to redeem them, or for the value of the goods if 
 not redeemed. 
 
 If an agent, or any other person becoming bankrupt, is liable for 
 unliquidated damages arising out of any contract or promise, or on 
 account of any goods or chattels wrongfully taken, converted, or 
 withheld, the damages may be assessed by order of the court in 
 such manner as it may deem best, and the amount so assessed is to 
 be proved under the estate. This provision should be carefully 
 borne in mind. It embraces not only actions founded upon con- 
 tract, but those for torts, as trover, trespass for taking goods, re- 
 plevin, and detinue ; and as power is given to prove under the bank- 
 ruptcy in respect of such claims after the damages have been as- 
 sessed, the order of discharge, when obtained, will extinguish them. 
 
 Agreement—Breaches of, may be Proved. — If the damages are ascer- 
 tained or liquidated, or when not ascertained or liquidated, the court 
 may cause such damages to be assessed, and the sum so assessed is 
 provable. 
 
 Annuity. — The.English Bankrupt Acts contain express provisions 
 for proofs by creditors to whom the bankrupt may have granted 
 annuities, such annuities to be valued, and the amount so valued to 
 be proved. There is no provision of this nature in this act, and a 
 question may arise whether such a debt would be provable. Under 
 the provision that where the bankrupt is liable to pay rent, or other 
 debt falling due at stated periods, an annuity might be included, the 
 creditor might prove for a proportionate part up to the time of the 
 bankruptcy ; but the installments and arrears falling due subsequent 
 to the bankruptcy would not be provable. Vide the notes upon 
 this subject, title " Bankrupt's Order of Discharge." 
 
 Award. — An award made under an order of reference, gave a de- 
 cree for a sum to be paid by the defendant. After the date of the ' 
 award, and before judgment was signed, the defendant committed 
 an act of bankruptcy and gave notice thereof to the creditor, who 
 afterward entered up judgment, and the debtor was subsequently 
 adjudicated a bankrupt. Held, that the creditor was entitled to 
 prove for the debt awarded, interest and costs, as a liquidated sum, 
 until it could be shown that the award could be set aside at law. — 
 Ex parte Harding, 28 Eng. Law and Eq., 267. 
 
 Money due under an award may be proved. — Ex parte Lowndes, 
 1 Mont. Bank. L., 17. 
 
 Bail. — If the bankrupt be bail, and his liability shall not have 
 
80 THE BANKRUPT LAW. [§ 19, 20. 
 
 become absolute until after the adjudication, the creditor may prove 
 the same after such liability has become fixed, and before the final 
 dividend shall have been declared. Where a person has become 
 bail for the bankrupt, he may prove for the amount, or any part 
 thereof, which he has actually paid in discharge of his liability, al- 
 though such payments may have been made after the commence- 
 ment of the proceedings in bankruptcy. This provision is adopted 
 from the late English Bankruptcy Acts, where, as the law formerly 
 stood, the bail, who had paid the amount of the recognizance after 
 the bankruptcy of the principal, were not admitted to prove. If the 
 creditor has proved, the bail who has paid the debt is to stand in 
 the place of such creditor, and receive the dividend. The creditor 
 is his trustee to that extent. 
 
 Bills of Exchange and Promissory Notes. — Bills and notes, though 
 not due at the time of the adjudication of bankruptcy, are debts 
 provable. A bill drawn before the bankruptcy, though not protest- 
 ed until after the bankruptcy, is provable. — Macartney vs. Barrow, 
 7 East., 437 u. S. C, 2 Strange, 49. When two merchants exchange 
 acceptances, and afterward become bankrupts, each, or the assignees 
 of each, may prove the other's acceptances under the bankruptcy, 
 though the acceptances of neither were due at the time of the ad- 
 judication, Rolfe vs. Caslon, 2 H. Black, 570 ; especially where each 
 has engaged to pay his own acceptances. — Buckler vs. Bullevant, 3 
 East., 72. 
 
 Where an indorser was compelled to pay money for a bankrupt, 
 after the bankruptcy, upon an indorsement prior to the bankruptcy, 
 he was allowed to prove his debt. — Tunno vs. Betheune, 2 Dessau, 
 285. The holder of more than one bill or note of the bankrupt, if 
 such bills or notes represent distinct and separate debts, is not com- 
 pelled to prove under the bankruptcy upon all ; he may prove upon 
 one, and proceed at law upon the others. — Ex parte Newton, 2 Mont. 
 D. & D., 51. The proof in bankruptcy is made in respect of the 
 consideration for the bill or note, and the latter are treated as secu- 
 rities only. 
 
 Whatever would be a defense at law or in equity to a bill or note, 
 such as usury, want of consideration, or illegal consideration, in the 
 hands of the party attempting to prove, is available as an answer to 
 such proof.— -Long vs. Bland, Bunbury, 1 70. 
 
 If the bill or note has not been indorsed by the bankrupt, the hold- 
 er can not prove it under the bankruptcy, ex parte Husler, 3 Madd., 
 117 ; but if given for a debt, then the original consideration is prov- 
 able. — Buck's Bank. Cases, 113. Where the holder of a bill or note 
 by any act or omission has released the bankrupt — as where due no- 
 tice of dishonor has not been given, or where time has been given 
 to the principal maker of a note or acceptor of a bill of exchange 
 without the consent of the bankrupt, if the drawer or indorser (and 
 not being a mere accommodation transaction as between the bank* 
 rupt and the person to whom time was given) — proof can not be 
 made. — Stevens vs. Lynch, 12 East., 38 ; ex parte Holden, Cook, 189 ; 
 Tindall vs. Brown, 2 Term Rep., 186. So if barred by the Statute 
 
§ 19, 20.] PROOF OF DEBTS AND CLAIMS. 81 
 
 of Limitations. If the bill of exchange is bond fide in the hands of 
 the holder at the time of the adjudication, whether he has actually 
 paid the amount to take it up before adjudication, is immaterial, 
 he may prove when he has done so. The holder of a bill of ex- 
 change or promissory note may prove under the estate of as many 
 drawers, acceptors, or indorsers as are bankrupts, and may bring ac- 
 tions against other parties on the 'security, and may receive a divi- 
 dend upon his whole debt from each of the estates under which he 
 has proved, ex parte Dyer, 6 Vesey, 9 ; ex parte Adam, 2 Rose, 36 ; 
 ex parte Bank of Scotland, 2 Rose, 197 ; ex parte Wildman, 1 Atk, 
 109 ; but he can not receive more than the amount of such bill or 
 note. A creditor has the right to avail himself of all collateral se- 
 curities to the extent of his just demand. This principle does not 
 apply to partners who are bankrupts. A creditor holding the joint 
 bi.ll or note of a firm must elect whether he will prove under the 
 joint or separate estate, ex parte Bonbonus, 8 Vesey, 542 ; 2 Vesey 
 
 6 Beanies, 254 ; and so, although he holds distinct securities of each 
 partner unless there be a surplus. — 1 Rose, 21. Where a bill has been 
 given in lieu of a former bill unpaid, the latter may be treated as 
 a nullity, and proof made upon the former bill. — Ex parte Barclay, 
 
 7 Vesey, 507. Where the holder has been paid a portion of a bill 
 by the person who indorsed it to him, he may prove for the whole 
 amount under the estate of a bankrupt acceptor or drawer, and be- 
 comes a trustee for such indorser. — Mc parte DeTastet, 1 Rose, 10 ; 
 ex parte Turner, 3 Vesey, 243.* Where a bill or note is transferred 
 by way of sale, and is not indorsed by the bankrupt transferrer, it 
 is not provable, ex parte Smith, Cook, 120, 1 Montagu, 142 ; but if 
 such bill unindorsed be deposited for a debt due, such debt is prov- 
 able. — Ma parte Cook, 120. Where the holder of a bill has proved 
 the amount under the bankruptcy, and is afterward paid such 
 amount by another party to the bill, an application should be made 
 to expunge sftch proof, and disallow a dividend, or, if any dividend 
 has been received, the court will order it to be refunded. ' The ac- 
 ceptor of a bill, or the maker of a promissory note, contracts a debt 
 by the accepting or making the instrument, and an indorser who 
 has been compelled to take it up after the bankruptcy, may prove 
 for the amount. — Cowley vs. Dunlop, 7 Term Rep., 565 ; Joseph vs. 
 Orme, 2 New Rep., 180. 
 
 The holder of a note made before, but transferred after the bank- 
 ruptcy of the maker, may prove it, and receive the dividend. — 
 Humphries vs. Blight, 4 Dall., 370. But the holder must have al- 
 lowed, all offsets which could have been made against the assignor, 
 though the note was made payable "without defalcation." — 1 
 Wash., C. C, 44. The indorser of a bill of exchange protested be- 
 fore the drawer's bankruptcy, and paid afterward, may set it off 
 against a demand of the assignee, though he could not prove it un- 
 der the bankruptcy. But he must show that the debt was due to 
 him alone when the assignee's action was brought. — Marks vs. 
 Barker, 1 Wash., C. C, 178. 
 
 The holder of a bill of exchange is entitled to prove his debi in 
 
 F 
 
82 THE BANKRUPT LAW. [§ 19, 20. 
 
 bankruptcy against the drawer, the acceptor, and the payee, and to 
 receive a dividend from all their estates until his full debt is paid. 
 And if one only be bankrupt, he may prove his debt against such 
 bankrupt, and also proceed against the others at law. — In re Bab- 
 cock, 3 Story, 393. 
 
 Bills or Notes on which the Bankrupt is Surety only. — Where the 
 liability of the bankrupt has not become absolute until after the 
 adjudication of bankruptcy, proof may be made after such liabil- 
 ity has become fixed, and before the final dividend shall be declared. 
 This provision remedies the state of the English law under which 
 a surety or accommodation acceptor, drawer, or indorser could not 
 have proved when he had paid the liability after the adjudication. 
 — Smith vs. Gale, 7 Term. Rep., 364. A debt due by a surety, but 
 payable after the date of the adjudication, is provable. — Brooks vSi 
 Lloyd, 1 Term. Rep., 17. The proof in these cases must be made 
 before the final dividend is declared. In all those cases in which 
 the liability of the bankrupt as surety is well defined, and it ap- 
 pears probable that it must result in a debt from the default of the 
 principal debtor, the court will allow the creditor, upon establish- 
 ing the facts before payment, to enter a claim upon the proceed- 
 ings. It would have an equitable jurisdiction to allow such claim, 
 as well as by this act. — Ex parte Beaumont, 1 Fonb., B. C, 268. 
 A debt of this character being provable, the bankrupt's discharge 
 will be a bar to any action, and every facility for the creditor re- 
 ceiving his proportion of the assets of the estate should be afforded. 
 
 Bonds. — Voluntary bonds are provable, on condition that they 
 are not paid until all the other debts due by the bankrupt are sat- 
 isfied. — Garland vs. Skinner, 2 S. & L., 228. The consideration of a 
 bond under seal can be investigated upon proof offered, and if ille- 
 gal, is not provable. — Simpson vs. Bloss, 2 Marsh, 542 ; Jones vs. 
 Randall, Cowp., 39. A bond of indemnity is provable under the 
 section after liability fixed. The court will rectify a palpable mis- 
 take in the condition of a bond, to enable the proof to be made. — 
 12 Mont. & Ayrton, 5411 Where there are several obligors, the obli- 
 gee may prove the whole amount due to him under the estate of 
 each of the bankrupts, until he receives the full amount of his debt. 
 — 1 Atk., 109. The interest provable, when secured by the bond, 
 must not, when added to the principal sum, exceed the penalty. — 
 Cook, B. L., 207. Where the liability of the bankrupt obligee has 
 not become fixed until after the bankrupt's discharge, as on a bond 
 for the performance of covenants in a lease or otherwise, his dis- 
 charge is no bar to an action on such bond. It was decided under 
 the Bankrupt Act of the United States of 1841, that a. bond taken 
 as absolute security for actual advances and responsibilities, was a 
 legal debt provable under the bankruptcy, and the bankrupt may 
 therefore set up his discharge in bar to any demand which such 
 security was intended to cover. So a judgment given by a debtor 
 in trust for a creditor as security for existing advances. But where 
 a bond or judgment is given merely for indemnity, or where a par- 
 ty is bail or surety, no debt is provable till the bail or surety is 
 actually damnified by payment. 
 
§ 19, 20.] PROOF OF DEBTS AND CLAIMS. 83 
 
 A jail bond for the limits given upon the commitment of a debt- 
 or to jail upon execution, is not provable under the bankruptcy of 
 a debtor before there has been a breach. The discharge of the 
 bankrupt obtained" after commitment, is therefore no bar to an ac- 
 tion upon the bond for a breach committed after the decree of 
 bankruptcy. — Dyer vs. Cleaveland, 18 Vt., 3 Washb., 241. But if 
 the bond were provable in such case, the discharge of the bankrupt 
 would not release the sureties. Vide case last cited. 
 
 Bonds to secure annuities given by the bankrupt to trustees as a 
 provision for the wife, or to replace stock at a certain time, are 
 provable under the bankruptcy. — Roosevelt vs. Mark, 6 Johnson 
 Chan., 266. Claims resulting from the breach of an official bond, 
 subsequently to the debtor's petition in bankruptcy, were held to 
 be provable under the Bankrupt Act of 1841. — Fowler vs. Kendall, 
 44 Maine, 448. 
 
 Costs. — Costs at law after Judgment hear relation to the debt; 
 therefore, if the debt may be proved, so may the costs, Scott vs. 
 Ambrose, 3 M. & S., 326; whether of action of tort or contract. — 
 Longford vs. Ellis, 1 H. Black, 29 N. S. C. ; 14 East., 202, n. ; S. P. 
 Beeston vs. White, 1 Price, 209. Hence, if a party become bank- 
 rupt after final judgment, the costs are in all cases provable. — Gul- 
 liver vs. Drinkwater, 2 T. Rep., 261. So if, between the period of a 
 nonsuit at nisi prius and a judgment on the same in banco, plaintiff' 
 become bankrupt, the costs of the nonsuit are provable under the 
 commission, Watts vs. Hart, 1 B. & P., 134; Contra, Walker vs. 
 Barnes, 1 Marsh, 346, S. C. ; 5 Taunt., 118, though the plaintiff be- 
 come bankrupt before the taxation. — Hunt vs. Meade, 5 T. R., 365 ; 
 Phillips vs. Brown, 6 T. R., 282. , 
 
 So where a bankrupt sued commissioners for false imprisonment, 
 and they obtained judgment for costs, and that bankruptcy was 
 superseded, and another issued on the same act of bankruptcy un- 
 der which he obtained his certificate, such costs were holden a debt 
 provable under the latter commission. — Holding vs. Impey, 1 Bing., 
 189, S. C. ; 1 Moore, 614. And the same rule applies to the costs 
 of a writ of error. — Graham vs. Benton, 2 Stra., 1196; S. P. Phillips 
 vs. Brown, 6 T. R., 282. And formerly, even where the verdict was 
 obtained after the bankruptcy, the costs were considered provable, 
 Lewis vs. Piercy, 1 H. Black, 29 ; but where a verdict was found 
 for defendant, and the plaintiff afterward became bankrupt, but be- 
 fore judgment, the costs were holden not provable. — Walker vs. 
 Barnes, 1 Marsh, 346 ; 5 Taunt., 118. And the court were of the 
 same opinion where an action was brought against a bankrupt as 
 executor after the bankruptcy, and he incurred costs by a false plea. 
 — Howard"vs. Jemmett, 3 Burr., 1368 ; S. C, 1 Black, 400. 
 
 Covenants. — A covenant to pay money at a fixed time after the 
 bankruptcy is provable. — Charlton vs. King, 4 Term. Rep., 156. As 
 to proofs upon covenants to indemnify, to build houses, covenants 
 against encumbrances, etc., where the liability has arisen, the dam- 
 ages may be assessed, and the claims are then admissible as proofs. 
 As to liabilities in futuro upon covenants, vide " Contingent Debts 
 and Contingent Liabilities." 
 
84 THE BANKRUPT LAW. [§ 19, 20. 
 
 Where a composition deed contained a clause, that, in the event 
 of the bankruptcy of the debtor, the covenants of the creditors 
 should be void, and the first installment of the composition had been 
 paid, the creditors were allowed to retain the amount, and prove 
 for the whole of the residue. — Ex, parte, Vere, 1 Rose, 281 ; ex parte 
 Peele ; id., 435. Where, under a composition deed, no funds were 
 appropriated for the dividends or installments, it was held that a 
 creditor, not having received them, could not claim them out of the 
 bankrupt's estate, but must come in pari passu with the other cred- 
 itors. — Ex parte D'Oliveira, 8 Ves., 84. But where an assignment 
 was made of certain book debts to those creditors who should exe- 
 cute the deed, with a covenant that, if they were not paid in full 
 within two years by the proceeds of those debts, he, the debtor, 
 would pay the deficiency within one month after the expiration of 
 the two years, and he became bankrupt before the two years elapsed, 
 it was heM that the creditors who executed the deed were entitled 
 to the produce of that fund, and might also prove for the deficiency 
 under the estate of the debtor. — Ex parte Richardson, 14 Ves., 114. 
 Any fraud practiced by a- creditor in procuring the composition 
 deed will vitiate his proof if creditors have been deceived by it. — 
 Ex parte Oakley, 1 Rose, 198. 
 
 The covenants in a mortgage deed were held, under the Bank- 
 rupt Law of 1841, not to be such debts as could be proved or dis- 
 charged in bankruptcy. — Bush vs. Cooper, 26 Miss., 599. The au- 
 thor ventures to suggest that this decision is erroneous. Wherever 
 an action of debt may be maintained against a bankrupt upon a 
 mortgage deed for a sum payable at any time before the bank- 
 ruptcy, or at the time of the bankruptcy, or wherever a breach of 
 any covenant in a mortgage deed has been committed by the bank- 
 rupt before his bankruptcy, the mortgagee must prove, and the or- 
 der of discharge extinguishes such debt or damages on the breach 
 of covenant. , 
 
 Common Carrier. — Under the Bankrupt Act of 1841, a claim 
 against a cpmmon carrier, arising from contract, though for un- 
 liquidated damages, was provable, and was discharged by the cer- 
 tificate in bankruptcy. — Campbell vs. Perkins, 4 Selden, N". Y., 
 430. 
 
 Contingent Debts and Contingent Liabilities. — The question of 
 what constitutes a contingent debt or contingent liability is one of 
 much importance to the bankrupt, because the provability of such 
 claims, and his discharge from liability in respect of them, are, as 
 before observed, convertible terms. 
 
 In all cases where contracted by the bankrupt, and not otherwise 
 provided for by the act, the creditor may make claim therefor, and 
 have his claim allowed, with the right to share in the dividends if 
 the contingency shall happen before the order for the final dividend. 
 He may at any time apply to the court to have the present value 
 of the debt or liability ascertained and liquidated, and be allowed 
 to prove for the amount so ascertained. This provision allowing 
 the proof of contingent liabilities is of very wide effect. There is a 
 
§ 19, 20.] PROOF OF DEBTS AND CLAIMS. 85 
 
 distinction between a contingent liability, which may never in fact 
 become a debt, and a debt payable upon a contingency. 
 
 Where a contingent debt exists, and the event making the debt 
 payable happens before the final dividend, no difficulty can arise, 
 Proof can easily be made ; but the creditor, it is presumed, is not 
 to disturb former dividends which may have already been paid to 
 the creditors. There is an express provision in the English Bank- 
 rupt Act to this effect, which is absent from this act. The creditor 
 should, therefore, apply immediately to have such contingent debt 
 ascertained by the court, and to prove for that amount, which will 
 entitle him to all the dividends if the contingency happen before 
 the order for the final dividend. The section makes no distinction 
 between contingent debts and contingent liabilities, and, although 
 obscurely drawn, must mean that the proof is not to be allowed un- 
 less the contingency has happened, or the contingent liability has 
 arisen. There is ho provision as to how long such a claim is to re- 
 main upon the proceedings. There should be some limitation. The 
 English statute allows six -months for converting the proof into a 
 claim; and, unless done, within that time, such claim is to be ex- 
 punged, wholly or 1 in part, from the proceedings on the application 
 of the assignees. The question is, What are contingent debts and 
 contingent liabilities, within the meaning of this section which are 
 capable of proof, and from which the discharge of the bankrupt re- 
 leases him? The debt must be payable upon some contingency, 
 and the liability must arise upon some contingency. A covenant 
 in a marriage settlement to pay a sum certain to trustees within a 
 certain time after the death of the settlor is a debt payable upon a 
 contingency. — Ex parte Tindal, 8 Bing., 402. A debt on a guaran- 
 tee which did not become absolute before the bankruptcy, is prov- 
 able as a contingent debt. — Ex. parte Simpson, 3 Deac. & Chitty, 
 792 ; ex parte Myers, 2 Deac. & Chitty, 251. By a deed of separa- 
 tion between husband and wife, the former covenanted that he 
 would every year, during the joint lives of himself and wife, pay a 
 certain annuity by equal quarterly installments ;. but that if they 
 should at any time thereafter cohabit as man and wife, that the an 1 
 nuity should cease. While they continued to live separate the hus- 
 band became bankrupt. It was held, that such claim was hot prov- 
 able — that it was not an annuity, nor a debt payable upon a contin- 
 gency, nor a liability to pay money upon a contingency — and, con- 
 sequently, that the discharge under the bankruptcy was no bar to 
 an action for the recovery of a quarterly payment which became 
 due after the bankruptcy. — Parker vs. Ince, 4 H. & N., 53 ; 28 Law 
 J. Exchq., 189. And this was confirmed on appeal in the Excheq- 
 uer Chamber, the Court of Errors from the English Court of Ex- 
 chequer. 
 
 Where a defendant executed a bond whereby he became liable 
 as a surety to pay such costs as the plaintiff should in due course 
 of law be liable to pay in an action then pending, the action was 
 tried, and a verdict passed whereby the liability of the defendant 
 accrued. The defendant became bankrupt in the November fol- 
 
86 THE BANKRUPT LAW. [§ 19, 20. 
 
 lowing, and subsequently obtained his certificate before the costs 
 were taxed, and before final judgment was signed against the plaint- 
 iff in the action. It was held, that the plaintiiFs claim was not barred 
 fey the defendant's certificate," the debt not being a contingent debt 
 within the meaning of the English Bankrupt Acts, but only a contin- 
 gent liability. — Hankin vs. Bennett, 14 Eng. Law and Eq. Rep., 403. 
 
 The uncertain and contingent demands which might be proved 
 under the United States Bankrupt Act of 1841 did not include de- 
 mands whose existence depended on a contingency, but existing de- 
 mands, the cause of action upon which depended on a contingency. 
 — French vs. Morse, 2 Gray, Mass., 111. 
 
 Under the Bankrupt Act of 1841, contingent demands which arose 
 out of indorsements, bail, and other uncertain undertakings, might 
 be proved under the bankruptcy ; and where the claims became ab- 
 solute, they were allowed to participate in the effects of the bank- 
 rupt.— M'Neil vs. Knott, 11 Geo., 142. 
 
 A joint debtor with a bankrupt has a contingent claim on the 
 latter, which is provable under the bankruptcy ; and the bankrupt's 
 certificate will bar a suit against him for contribution. — 7 Blatch., 
 317. 
 
 Where it appears on the face of the bond to secure an annuity, 
 that one of the obligators is surety only for the other, he is to be 
 looked upon as a surety only, and not as a principal under the Bank- 
 rupt Law, and consequently his discharge under his bankruptcy 
 will not release him from liability to pay the arrears of the annuity 
 accruing after the bankruptcy, and unpaid by the principals. — White 
 vs. Corbett, 28 Law Journ., Q. B., 228. Yide also Thompson vs. 
 Thompson, 2 Bingh., K C, 168; Bennett vs. Barton, 12 Ad. & E., 
 657. 
 
 The obligation to pay calls on shares does not create a debt pay- 
 able on a contingency, but is a contingent liability. — South Staf- 
 fordshire Railway Co. vs. Burnside, 5 Excheq., 129. Proofs upon 
 contracts to replace stock upon a given day have been admitted. — 
 Ex parte Day, 7 Ves., 301. Proof has been admitted, under the bank- 
 rupt's covenant, with trustees to assign stock in the funds to them 
 for the benefit of the wife upon request. — 16 Ves., 244. 
 
 A debtor assigned to his creditor a claim on a third person, and 
 guaranteed that if such claim could not be recovered from the per- 
 son indebted he would pay the amount, with the charges thereon. 
 Held, that this claim of the creditor on the contract of guarantee 
 was provable against the debtor's estate, and that his discharge 
 under his bankruptcy would bar the same. — Stone vs. Miller, 16 
 Penn. State Rep., 4 Harris, 450. 
 
 Children's Earnings. — When a child has earned money by its 
 labor, and deposited the money with the father, who has become 
 bankrupt, it will be allowed to prove for such amount, ex parte, 
 Kronklin, 6 Vesey, 675 ; but there must be very cogent evidence to 
 avoid fraud. — 1 V es. & Beames, 48. 
 
 Composition Deed. — When a creditor had agreed with his debtor 
 to take a composition, to be paid by installments, and after payment 
 
§ 19, 20.] PKOOF OF DEBTS AND CLAIMS. 87 
 
 of the first installment the debtor became bankrupt, Lord Hard- 
 wicke, then chancellor, thought that the creditor should be admit- 
 ted to prove the whole of the original debt, and not the amount of 
 the composition only, Eq. Cases Abr., 28 ; Sewell vs. Musson, 1 Ver- 
 non, 240; Heathcote vs. Crookshanks, 2 Term Rep., 24; and this is 
 no^ the rule in the English courts* 
 
 Damages. — Where the damages have been ascertained by verdict 
 and judgment, they are provable ; when not ascertained, and un- 
 liquidated, where the damages arise out of any contract or promise, 
 "or on account of any goods or chattels wrongfully taken, converted, 
 or withheld by the bankrupt, the court, as before observed, may 
 cause, the damages to be assessed in such mode as it may deem best, 
 and the sum so assessed may be proved. The court would prob- 
 ably in some cases order the assessment by a jury. The bankrupt's 
 discharge would be a bar to an action for breach of promise of mar- 
 riage made before his bankruptcy. The words of the section are 
 large, any " contract or promise" and there is no exception or limita- 
 tion in the act. 
 
 Equitable xlebts may be proved. — 3 Ves., L. B., 40 ; 2 Rose, 196. 
 
 Husband and Wife. — If a woman be indebted, and she marries, and 
 her husband becomes bankrupt, her debts are provable under his 
 estate. — Miles vs. Williams, 10 Mod., 243. 
 
 Executor, Proof by. — An executor may prove a debt due to the 
 testator, and also an administrator, who must produce the letters 
 of administration. 
 
 Executor when Bankrupt. — A vested legacy may be proved by 
 the legatee against an executor bankrupt who has received or ad- 
 mitted assets. — 1 Cooke, Bank. L., 483. If an executor misapply 
 the assets of the testator, the amount of the devastavit may be 
 proved. — S. C. Proof against the estate of a husband of an execu- 
 trix, where, in a joint bill filed against them, they had admitted as- 
 sets, was allowed. — 1 Sch. & L., 173. 
 
 Although the fact of bankruptcy would not bar the recovery of 
 specific property held by the bankrupt in his character of executor, 
 yet it would bar the recovery by the distributees of money received 
 by him, and for which he was liable as executor before his bank- 
 ruptcy. — Waller vs. Edwards, 6 Litt., 348. 
 
 Marriage Settlements. — Marriage being in law and equity a valu- 
 able consideration, contracts made upon marriage, or after marriage, 
 if contracted for before, to pay money to trustees, create debts prov- 
 able under the bankruptcy of the husband. A bond or covenant 
 by the husband to pay or vest in trustees during his lifetime 3, sum 
 of money for the benefit of his wife and children, is provable, ex 
 parte Campbell, 16 Ves., 234 ; ex parte Gardner, 11 Ves., 40 ; Shaw 
 vs. Sakeman, 4 East., 201 ; or a covenant to pay or invest it upon 
 the death of himself or his wife, whichever should first happen, 
 Brandon vs. Brandon, 2 Wils., C. C, 14 ; or upon the death of the 
 husband, with interest in the mean time ; and if default be made in 
 payment of the interest before his bankruptcy, such debt is prov- 
 able. — Ex parte Elder, 2 Madd., 282. 
 
88 THE BANKRUPT LAW. [§ 19, 20. 
 
 A trader about to be married, and being, in fact, insolvent, of 
 which insolvency the intended wife was ignorant, entered into a 
 covenant with trustees to pay them a sum of money, the interest 
 of such sum to be paid to the wife's appointment. Some property 
 of the wife was also agreed to be settled upon the same ■ trusts. 
 The husband became bankrupt, and the trustees applied to prove 
 under the bankruptcy for the amount, which, in fact, had never 
 been paid by the bankrupt under his covenant. The commissioner 
 rejected the proof. Held, on appeal, that the settlement was good 
 as against the assignees, and that the trustees were entitled to 
 prove under his bankruptcy. — In re M'Birnie, 13 Eng. Law and Eq. 
 Rep., 479. 
 
 Judgments., — A judgment in an action of tort recovered against one 
 who afterward becomes bankrupt is provable, and is barred by the 
 defendant's final discharge. — Comstock vs. Grout, IV Vermont, 512. 
 
 Mutual Debts and Mutual Credits. — In all cases of mutual debts 
 or mutual credits between the parties, the account between them 
 shall be stated, and one debt set off against the other, and the bal- 
 ance only shall be allowed or paid, but no set-off shall be allowed 
 of a claim in its nature not provable against the estate. This pro- 
 vision is the same as in the English Bankrupt Acts. The object 
 of the enactment is, that where two persons have dealt with each 
 other on mutual credit, and one of them becomes bankrupt, the ac- 
 count is to be settled between them, and the balance only be pay- 
 able on either side. Such account is to be stated and settled as 
 between merchant and merchant, and upon that principle only. 
 See the judgment of Tindal, C. J., Gibson vs. Bell, 1 Bing.,N. C, 
 768. There must be a mutual credit existing at the time of the 
 bankruptcy. 
 
 It will be perceived that the right of set-off is not confined to 
 mutual debts, but extends to cases of mutual credits ; i. e., cases 
 where that which will terminate in a debt exists on both sides. — 
 Groom vs. West, 8 Ad. & E., 758. An accommodation indors'er who 
 has paid the amount for the bankrupt since the bankruptcy may 
 set it off, Hulme vs. Mugglestone, 3 Mees & W., as also an accom- 
 modation acceptor. — Russell vs. Bell, 8 Mees & W., 277. If the 
 credit given by the bankrupt existed before the bankruptcy, or 
 before notice of an act of bankruptcy, it is sufficient, although the 
 debt due to the bankrupt's estate arising from such credit may not 
 have accrued till afterward. — Bittlestone vs. Temmis, 1 C. B., 389. 
 But where a bill is deposited, not in order to create a debt, but 
 for some specific purpose, this is not a credit, and can not be set 
 off. — Alsager vs. Currie, 12 Mees & W., 758. A guarantee, being 
 merely a contract to indemnify against contingent damages, will 
 not form the subject of a mutual credit. — Rose vs. Sims, 1 B. & Ad., 
 521. There is a distinction between the right of set-off in bank- 
 ruptcy and the ordinary right of set-off at law. Under the former, 
 the object is that substantial equitable justice shall be done, and 
 under the latter, the object is to prevent cross actions between the 
 parties. In bankruptcy the right depends, not merely on the legal, 
 
§ 19, 20.] PROOF OF DEBTS AND CLAIMS. 89 
 
 but on the beneficial interest. Debits to be set off, must be due in 
 the same right ; therefore a debt due to an executor can not be set 
 off against a debt due from him in his own right. — 10 Bing., 310 ; 
 Bishop vs. Church, 3 Atk, 601. In actions for unliquidated dam- 
 ages there can be no plea of set-off or mutual credit. — Bell vs. 
 Carey, 8 C. B., 887. Vide Alsager vs. Currie, 11 Mees & W, 14, 
 where the law upon this point is elaborately stated. The claim to 
 be set off must be one of a nature provable under the bankrupt's 
 estate. A party can not avail himself of his own wrongful act to 
 establish a mutual credit within the meaning of this section, as 
 when an attorney, with whom bills of exchange have been deposit- 
 ed for a specific purpose, detains them against good faith. — Bu- 
 chanan vs. Findlay, 9 B. & C, 738. There is no provision in this 
 section, as in the English acts, that the person claiming the benefit 
 of such set-off had not, when such credit was given, notice of any 
 act of bankruptcy committed by the bankrupt ; and the question 
 may arise whether, in the absence of such a statutory restriction, 
 notice of an act of bankruptcy will invalidate the claim. If the 
 claim must be of a nature provable, it can not be provable if the 
 party claiming had notice at the time it arose that an act of bank- 
 ruptcy had been committed. The well-known policy of the Bank- 
 rupt Law would invalidate it. 
 
 An accommodation acceptance is a credit given by the acceptor 
 to the party accommodated ; and an accommodation indorser, who 
 pays the amount after the bankruptcy, may set it off. — Hulme vs. 
 Muggelstone, 3 Mees & W., 30. An agreement to pay the bank- 
 rupt for goods sold, prompt payment in two months, or by accept- 
 ance, is a claim against which a debt due from the bankrupt may 
 be set off.— Groom vs. West, 8 Ad. & E, 758. 
 
 Mutual credits are credits which must either terminate in debts, 
 or have a natural tendency to terminate in debts, not claims differ- 
 ing in nature from a debt. — Rose vs. Hart, 8 Taunt., 499 ; 2 Smith's 
 Leading Cases, 179. If the credit be given before notice of any act 
 of bankruptcy, or before the filing of the petition, the accrual of the 
 debt afterward will be immateriaL Where a debtor to the estate 
 of a bankrupt has a fair subject of set-off against the assignees, he 
 is not to be deprived of it. Where the bankrupt agreed to set off 
 a debt owing to him against a debt he owed to the debtor's broth- 
 er, and had actually set off such debt in his books, it was held to bar 
 the claim of the assignees to the debt. — Cuxun vs. Chadley, 1 C. & 
 P., 174 ; 10 Bing., 310. A landlord may set off rent due from the 
 bankrupt against a claim by the assignees for improvements and 
 machinery put up by the bankrupt on the demised premises. — Ms 
 parte Hanson, 3 De Gex & J., 92. Vide also 27 L. J. Bank., 40. 
 Where there are mutual dealings between A and B, and A having 
 the property of B in his hands, B becomes bankrupt, A is entitled to 
 set off his debts or demands against the funds in his hands, and can 
 be compelled to account to the assignees of the bankrupt for the 
 balance only ; even though the subject of the set-off would not be 
 admissible at law. — Murray vs. Riggs, 15 Johns., 571. A joint debt 
 
90 THE BANKRUPT LAW. [§ 19, 20. 
 
 might be set off against the separate claim of the assignee of one of 
 the parties, but such set-off could not have been made at law inde- 
 pendently of the statute. — Tuckers vs. Oxley, 5 Cranch, 34. 
 
 The set-off allowed under the Bankrupt Law of 1841, in case of 
 bankruptcy, is not confined to pecuniary demands, but extends to 
 all cases where the creditor has goods of the debtor in his hands, 
 which can be reached only by a suit at law or in equity. — Murray 
 vs. Riggs, 15 Johns. Rep., 571. 
 
 For a luminous history of this part of the Bankrupt Law and the 
 principles which should govern decisions upon the subject, the 
 reader is referred to the judgment of the Chief Justice of the Court 
 of Queen's Bench in the case of Groom vs. West, 8 Ad. & E., 758, and 
 also to the case of Gibson vs. Bell, 1 Bing., N". C, 743. The distinc- 
 tions are sometimes very nice, for mere liabilities which may of may 
 not become debts are not within the section. — Abbott vs. Hicks, 5 
 Bing., N". C, 578. 
 
 No Set-off to be allowed in Favor of any Debtor to the Bankrupt of a 
 Claim purchased by or transferred to him after the Piling of the Peti- 
 tion. — This provision is stringent in its terms, and even without no- 
 tice to the transferee of the filing of the petition, N which in its incep- 
 tion is entirely an ex parte proceeding, the right of set-off is extin- 
 guished. 
 
 Joint and Separate Claims—Partnership Debts. — There are some 
 peculiar considerations applicable to the proof of debts where a firm 
 has wholly, or in part, become involved in bankruptcy. 
 
 The question — sometimes one of great nicety — frequently arises, 
 whether the proof is to be made under the joint or the separate 
 estate of two or more bankrupt partners. The joint estate.is some- 
 times hopelessly insolvent, when the separate estate of a partner 
 will realize a large dividend, and the converse. The joint estate is 
 that in which the partners are jointly interested for the purposes of 
 partnership at the time of the bankruptcy. The separate estate is 
 that in which the partners are each separately interested at the 
 time of the bankruptcy. It is not unusual to confine the term " sep- 
 arate estate" to that part of the bankrupt partner's property which 
 is distinct from, and unconnected with the partnership. But it may 
 be applied to property used for the purpose of the partnership, if it 
 belongs to one or more partners to the exclusion of the others. Sep- 
 arate debts are those for which the creditor has a remedy at law 
 against such partner only as contracted them. Joint debts, and 
 which must be proved under the joint estate only, are those for 
 which the creditor in any action at law must have made all the 
 partners defendants. 
 
 The general rule as to the application of the joint and separate 
 property to the payment of the creditors is, that the joint estate 
 shall be applied to the joint debts, the separate to the separate 
 debts, and the surplus of each estate reciprocally to the creditors 
 remaining on the other — this rule being subject to the exceptions 
 which have been before noticed. 
 
 A joint debt might be proved under a separate estate, and a full 
 
§ 19, 20.] PROOF OF DEBTS AND CLAIMS. 91 
 
 dividend received under the Bankrupt Law of 1841. Equity alone 
 can restrain the joint creditor from receiving his full dividend until 
 the joint effects are exhausted. — Tucker vs. Oxley, 5 Cranch., 34. 
 And under the same law a joint debt might be set off against the 
 separate claim of the assignee of one of the partners, but such set- 
 off could not have been made at law independent of the Bankrupt 
 Law. It was decided by Chancellor Kent, that a joint bankruptcy 
 against partners can not be maintained after a separate commission 
 against one partner, nor a separate commission after a joint com- 
 mission. And it would seem that the assignees under a separate 
 commission were entitled to a distribution of the joint as well as 
 the separate estate. — Murray vs. Murray, 5 Johns. Chan. Rep., 60. 
 
 Bills and Notes of Bankrupt Partners. — A note was issued by a 
 bank in this form : " I promise to pay the bearer on demand fifty 
 pounds for A, B, C, and D" (the partners). Signed A (one of the 
 partners). The question arose whether proof upon this note should 
 be made under the joint estate of all the partners, or under the sep- 
 arate estate of the partner signing. It was held, that the holder 
 of the note had no separate right of action against A, and that his 
 proof should be made under the joint estate. — 14 Mees & W., 469 ; 
 15 Law J. Bank. C, 3. Two of six partners who had given a con- 
 fidential clerk a general authority in writing to sign bills and notes 
 on behalf of the firm, directed the clerk to sign four promissory notes 
 in the name of the firm, payable respectively to one or the other of 
 the two partners who cltiimed to be creditors of the aggregate firm, 
 in respect of an excess of capital advanced by them for the purposes 
 of the partnership. The two partners afterward indorsed the notes 
 to a separate creditor for a private debt of one of the two. Held, 
 that although, as between these two partners and the other mem- 
 bers of the firm, the notes were unjustifiably created and possessed 
 by the two, yet, in the absence of all fraud or connivance in the 
 transaction by the party to whom the notes were indorsed, the 
 firm of the six were liable for the amount ; and that on the bank- 
 ruptcy of the firm, the holder of the notes had a right to prove the 
 amount of them against the joint estate. — Ex, parte Bushel!, 3 Mont., 
 D. & D., 615 ; 8 Jurist, 937. 
 
 Election to prove under joint or separate Estate. — The English de- 
 cisions have established a principle which has, however, frequently 
 been questioned, that where a creditor holds both joint and sepa- 
 rate security of bankrupt partners, he must elect against which es- 
 tate he will prove. See the cases collected, Eden on Bankruptcy, 
 181; ex parte Husband, 2 Glyn & J., 4; ex parte Law, 3 Deac, 
 541. Joint creditors may prove against the separate estates, where 
 there is no joint estate, and no solvent partner ; but these conditions 
 must be very strictly observed; for if there be a joint estate how- 
 ever small, or any fund applicable to the payment of the joint debts, 
 the creditors of the joint estate can not compete with those of the 
 separate estate. — Ma parte Kennedy, 2 Mont., D. & D., 228 ; 2 Rose, 
 54; ex parte Banerman, 3 Deac, 476. And this rule applies to the 
 case of co-contractors as well as partners. — 2 Mont., D. & D., 283. 
 
92 THE BANKKUFT LAW. [§ 19, 20. 
 
 Joint creditors may also prove under the separate estate, where 
 there are no separate debts, and, which is the same thing, where the 
 joint creditors undertake to pay them. — Ex parte Hubbard, 13 
 Ves., 434. 
 
 Partners— Proof by 'Partners on the Estate of each other. — It some- 
 times happens that a partner is indebted to the firm, or the firm to 
 one of the partners ; in such case the rule is, that an individual part- 
 ner can not prove against the joint estate in competition with the 
 joint creditors; for as they are his own creditors also, he has no 
 right to withhold any part of the funds available for the payment 
 of their debts ; nor can those partners of a firm who remain sol- 
 vent prove against the separate estate of a member of the same 
 firm in competition with his separate' creditors, unless the joint 
 creditors are first paid in full, and with interest ; for they might, by 
 doing so, prevent a surplus of the separate estate from accruing, 
 which would be available toward the payment of the joint credit- 
 ors. — Ex parte Reeve, 9 Ves., 558 ; ex parte Broome, 1 Rose, 69. 
 If the solvent partner pay all the joint debts, he may then prove 
 against the separate estate in competition with the separate cred- 
 itors of his bankrupt copartner. In such a case, he would come 
 under the definition of a person liable for the debt of-the bankrupt. 
 But there must be an actual satisfaction of the joint debts by pay- 
 ing the whole, or part, in discharge of the whole. Nothing less 
 will be sufficient. — Ex parte Moore, 2 Glyn & J., 166 ; ex parte Car- 
 ter, 3 Glyn & J., 233 ; ex parte Ellis, 2 Glyn & J., 312. Where a 
 solvent partner pays all the joint debts, and proves against the sep- 
 arate estates of his copartners (more than one having become bank- 
 rupt) for the respective sums each is bound to contribute, it is a 
 question whether, if the estate of one is insufficient to pay his share 
 of the debts, the solvent partner can have recourse to the other 
 bankrupt's estate for his proportion of the deficiency. Lord El- 
 don, then lord chancellor, thought he might. The master of the 
 rolls dissented. Proof is only equivalent to payment when it pro- 
 duces payment. 
 
 Proofs between Estates. — In bankruptcy the estate of one partner, 
 by the assignees, frequently have to prove upon the estate of the 
 other, the joint upon the separate, and the converse. The rules as 
 to proofs by partners above noted are applicable. An example is, 
 where one partner has fraudulently drawn from the account at the 
 bank money deposited by the firm, the sum so drawn out may be 
 considered as money stolen from the joint estate, and would be 
 provable by the joint estate against his separate estate. — Ex parte 
 Graham, 2 Mont.,D. & D., 781 ; ex parte Smith, 1 Glyn & J., 74 ; ex 
 parte t Watkins, 1 Mont. & Mac, 157. This right depends upon the 
 ground of fraud in violation of the contract of partnership, and such 
 case must depend upon its own peculiar circumstances. Contribu- 
 tion between the estates of bankrupt partners is allowed where one 
 has been subject to an undue proportion of a charge which ought to 
 have fallen equally upon both or all. — Ex parte Willcock, 2 Rose, 
 392 ; Rogers vs. Mackenzie, 4 Ves., 752. 
 
§ 19, 20.] PROOF OF DEBTS AND CLAIMS. 93 
 
 Rent. — Where the bankrupt is liable to pay rent, or other debt 
 falling due at fixed and stated periods, the section provides that 
 the creditor may prove for a proportionate part thereof up to the 
 time of the bankruptcy, as if the same grew from day to day, and 
 not at such fixed and stated periods. The landlord may therefore 
 prove for the amount of rent due at the time of the bankruptcy, 
 without reference to the period at which, by- the lease or contract 
 of tenancy, it would fall due. In those States where the right to 
 distrain for rent in arrear exists, the English decisions upon this 
 subject will be applicable. As long as the goods remain on the de- 
 mised premises, the landlord will have the right to distrain, notwith- 
 standing the bankruptcy of his lessee or tenant, and may realize all 
 the arrears due under such distress. — Ex, parte Burly, 22 L. J. Bank, 
 26. If, however, the landlord neglect to use his right of distress, he 
 can only come in and prove under the estate with the other cred- 
 itors. If a landlord distrains after the bankruptcy upon the ten- 
 ant's goods, he can not prove under the estate also ; he must elect 
 to distrain or to prove ; but if he has distrained before the bank- 
 ruptcy, and such distress does not realize the arrears of rent due, he 
 may then come in and prove for the deficiency. 
 
 Where a tenant, after an act of bankruptcy, under threat of dis- 
 tress by his landlord, paid the rent due, such payment was protect- 
 ed, and the assignees were held not to be entitled to recover it back 
 from the landlord. — Stephenson vs. Wood, 5 Esp., 200. If, however, 
 the landlord neglect to use his right of distress, and the assignees 
 remove the 1 goods of the bankrupt tenant, he can then only come in 
 with the other creditors and prove under the estate. — Ex parte De- 
 visne, Cook's Bank. Law, 190. After a petition has been presented 
 for the benefit of the Bankrupt Law, and before the applicant has 
 been declared a bankrupt, his goods found upon demised premises 
 may be distrained, and sold by his landlord for the payment of his 
 rent. — Butler vs. Morgan, 8 Watts & Serg., 53. 
 
 Proofs by Creditors nolding Security. — A creditor holding a mort- 
 gage, or pledge of real or personal property of the bankrupt, or who 
 has a lien thereon for securing the payment of a debt owing from 
 the bankrupt, is admitted as a creditor only for the balance of the 
 debt after deducting the value of the property, such value to be as- 
 certained by agreement between him and the assignee, or by a sale 
 as the court may direct. 
 
 The creditor has the option of releasing his claim upon the prop- 
 erty and proving the whole debt. If the value of the property held 
 by the creditor as security exceeds the debt, the assignee may re- 
 lease the bankrupt's right to redeem the property on receiving the 
 excess. He may sell the property subject to the creditor's claim ; 
 all necessary deeds are to be executed; but the creditor holding 
 such security exceeding the amount of the debt is not allowed to 
 prove any part of his debt until such property is released or deliv- 
 ered up. A creditor holding security must be careful not to prove 
 for the whole of his debt, but follow the course prescribed by the 
 section. A creditor proving for the whole debt without regard to 
 
94 THE BANKRUPT LAW. [§ 19, 20. 
 
 his security, whether it be a mortgage or a lien, has been held to 
 have abandoned his security by electing to prove, and permission 
 to withdraw such proof and assert his right to the security has been 
 refused. — Ex, parte, Spottiswoode, 1 Fonb., 20; ex parte Solomon, 1 
 Glyn & J., 25. The security must be realized or given up, before 
 proof to receive a dividend will be allowed ; but it may be valued, 
 in order to allow proof for the surplus for the choice of assignees. — 
 Ex parte 'Nunn, 1 Rose, 322. The provisions of the section only 
 apply to securities on the estate of the bankrupt. The creditor may 
 retain the security given by a third person for the bankrupt's debt, 
 or a joint security by the bankrupt and a third person, ex parte Ben- 
 nett, 2 Atk., 528, and even the security of the wife of the bankrupt, 
 ea;£>arteHeddersley, 2 Mont.,D. &D.,487; and in this case the cred- 
 itor, holding the estate of the wife as security for the bankrupt hus- 
 band's debt, was allowed to prove for the whole debt ; and it was 
 held that it was incumbent on him to prove on the bankrupt's estate 
 for the whole debt before resorting to the wife's property. 
 
 Mortgages and Pledges. — A legal mortgage gives the mortgagee 
 a right to retain the property mortgaged until his debt is satisfied, 
 and the assignee can not redeem without paying all arrears of in- 
 terest up to the time of redemption. — Ex parte Barnes, 3 Deac, 223. 
 An equitable mortgage, which is created by the deposit of deeds 
 without the execution of any deed, is also upheld in Courts of Bank- 
 ruptcy ; and Where an equitable mortgagee has received the rents 
 and profits of the bankrupt's estate, he can not be forced to refund 
 to the assignees of thebankrupt mortgagor. — Garry vs. Sharratt, 10 
 B. & C, 716. A pledge of personal property is in the nature of a 
 mortgage, and subject to the same rules. 
 
 Liens. — Whatever liens exist against the bankrupt, legally and 
 equitably, are available against his assignees ; such as the vendor's 
 legal lien on a thing sold, but not paid for, or the right of a vendor 
 of real estate to a lien for the unpaid purchase-money. But a con- 
 tract made by a bankrupt that in case of his bankruptcy certain 
 goods should become the- property of other persons if they should 
 so choose, is not binding on the assignees, because a bankrupt can 
 not make a contract which would have the effect of vesting in oth- 
 ers after his bankruptcy the property which, on his bankruptcy, be- 
 came by statute vested in his assignees. — Tripp vs. Armitage, 4 M. 
 &W., 699; Hawthorne vs. Newcastle Railway, 3 Q. B., 734. To 
 render the security valid, the creditor must have acquired it bond 
 fide, and without notice of any act of bankruptcy. In the adminis- 
 tration under bankruptcy, the joint and, separate estates are consid- 
 ered as distinct estates. A joint creditor having a security upon 
 the separate estate of one of the partners, is entitled to prove under 
 the joint estate without giving up his security, on the ground that 
 it is a different estate. — Ex parte Peacock, 2 Glyn & J., 27 ; ex parte 
 Bowden, 1 Deac. & C, 135, and the converse. A creditor whose 
 debt was secured by the joint and several covenants of two part- 
 ners in trade, and also by a mortgage on part of the joint property, 
 was admitted to prove his debt against the separate estate of each, 
 
§ 19, 20.] PROOF OF DEBTS AND CLAIMS. 95 
 
 without surrendering or realizing his mortgage security. — Ex, parte 
 Plummer, 2 Mont., D. & D., 204. Where a partner who has given 
 a separate security for a joint debt becomes bankrupt, the creditor 
 may realize by sale under the order of the court, but can only have 
 the right to prove for the deficiency. In this case the other part- 
 ners remained solvent. — Mc parte Leicester Banking Company, 1 
 De Gex, 292. A creditor holding security is entitled to apply it in 
 discharge of whatever liability of the bankrupt he may elect, unless 
 a contract, or a course of dealing between the parties, regulate the 
 application of the proceeds in a particular manner, and thus satisfy 
 a particular debt. — Ms parte Johnson, 3 De Gex ; Mac. & G. , 2 1 8 ; 6 
 Ves., 94. 
 
 Sureties. — Any person liable as bail, surety, guarantor, or other- 
 wise for the bankrupt, who shall have paid the debt, or any part 
 thereof, in discharge of the whole, is entitled to prove such debt, or 
 after payment to stand in the place of the creditor if he shall have 
 proved the same, although such payment shall have been made 
 after the commencement of the proceedings in bankruptcy. The 
 liability of a surety, as between himself and the bankrupt, arises 
 from a contract to pay a debt or damages for the bankrupt which 
 is the debt of the latter, and which, by express or implied contract, 
 the bankrupt ought to pay ; as, for instance, the acceptor of a bill 
 of exchange for the accommodation of the bankrupt drawer. — 
 Stedman vs. Martine, 13 East., 427. But where a party is surety 
 with the "(bankrupt for the debt of another person, he can not 
 prove until he has paid the debt, because he could not sue his co- 
 surety for contribution until he has done so. — Clements vs. Lang- 
 ley, 5 B. & Adol., 372 ; Wallis vs. Swinburne, 1 Exchq., 203. The 
 word " liability" is larger than the word " surety," and in the En- 
 glish courts has been the subject of much discussion. The juris- 
 diction in bankruptcy being in its character both legal and equita- 
 ble, a party who is in equity surety for another is within the sec- 
 tion, though at law he and that other may be both principals. For 
 instance, a solvent partner who has paid the partnership debts is 
 " liable" for his bankrupt copartner, and may prove, though he 
 could not have maintained an action at law. — Aflalo vs. Fourdri- 
 nier, 6 Bing., 306. The suretiship must have commenced before 
 notice of the bankruptcy, but a renewal of a suretiship, as by ac- 
 cepting a new bill after the bankruptcy in renewal of that which 
 constituted the original liability, will suffice. In consequence of 
 this section, the bankrupt's discharge will release him not only from 
 the principal debt, for which the surety is liable and has paid, but 
 from all special damage sustained in consequence of the surety's 
 liability. — Vansandau vs. Corsbie, 8 Taunt., 550; 3 B. & Aid., 13. 
 
 Sureties are generally entitled, upon payment of the debt by the 
 principal, to the securities held by the creditor ; but in bankruptcy, 
 if the creditor hold a security upon the bankrupt's own property, 
 he can not prove his debt without surrendering the security, or 
 having it valued, and proving for the balance as before men- 
 tioned. If the creditor hold the security of a third person, he may 
 
96 THE BANKRUPT LAW. [§ 21. 
 
 prove his debt without surrendering it, and may enforce such se- 
 curity against such third person, provided he does not thereby re- 
 ceive more than his claim. — In re JJabcock, 3 Story, 393. 
 
 A surety in a custom-house bond who paid the debt before the 
 principal became bankrupt is merely entitled to preference' out of 
 the estate, and can not maintain an action against the principal aft- 
 er he has obtained his certificate. — Reed vs. Emory, 1 S. & R., 339. 
 
 A surety of a bankrupt, if he had no cross security, or had not 
 paid the debt before the bankruptcy of the principal, could not 
 prove under the bankrupt's estate. — Selfridge vs. Gill, 4 Mass., 96 ; 
 Barclay vs. Carson, 2 Hayward, 244. Vide 2 Dallas, 36. 
 
 Stock Exchange Transactions. — Transactions on the Stock Ex- 
 change, where they are mere contracts for time, or otherwise gam- 
 bling transactions, are not provable upon the ground of public pol- 
 icy— JSb parte Phillips, 2 L. J., N". S., 637 ; 3 L. J., 516 ; 6 Jur., 1ST. 
 S.,1273. 
 
 Trustee. — Where a bankrupt, who is executor or trustee, has ap- 
 plied the trust property to his own use, he ought not to be permit- 
 ted to prove the amount against his own estate ; but a legatee may 
 prove on behalf of himself and the other legatees, with a direction 
 that any dividends received be paid to the proper account. — 3 Mont., 
 D. & D., 361 ; 1 id., 497 ; 2 Rose, 413. 
 
 Wages. — The reader is referred to the notes to Sections 27 and 
 28. Any operative, clerk, or house-servant is entitled to be paid 
 his wages in full, not exceeding fifty dollars, for labor^erformed 
 within six months next preceding the first publication of the no- 
 tice of proceedings in bankruptcy. This payment in full is not to 
 be made out of the first moneys got in, but as soon as there is a 
 sufiicient fund for the purpose, after providing for all the expenses 
 necessary for working the bankruptcy. — Ma parte Hampson, 2 
 Mont., D. & D., 462 ; 6 Jur., 376. 
 
 EFFECT OF PROOF. 
 
 Section 21. And he it further enacted, That no cred- 
 itor proving his debt or claim shall be allowed to main- 
 tain any suit at law or in equity therefor against the 
 bankrupt, but shall be deemed to have waived all right 
 of action and suit against the bankrupt, and all proceed- 
 ings already commenced, or unsatisfied judgments already 
 obtained thereon, shall be deemed to be discharged and 
 surrendered thereby ; and no creditor whose debt is prov- 
 able under this act shall be allowed to prosecute to final 
 judgment any suit at law or in equity therefor against the 
 
§21;] EFFECT OF PEOOF. 97 
 
 bankrupt, until the question of the debtor's discharge 
 shall have been determined; and any such suit or pro- 
 ceedings shall, upon the application of the bankrupt, be 
 stayed to await the determination of the court in bank- 
 ruptcy on the question of the discharge, provided there 
 be no unreasonable delay on the part of the bankrupt in 
 endeavoring to obtain his discharge ; and provided, also 
 that if the amount due the creditor is in dispute, the suit. 
 by leave of the court in bankruptcy, may proceed to judg 
 ment for the purpose of ascertaining the amount due 
 which amount may be proved in bankruptcy, but execu 
 tion shall be stayed as aforesaid. If any bankrupt shall 
 at the time of adjudication, be liable upon any bill of 
 exchange, promissory note, or other obligation in respect 
 of distinct contracts as a member of two or more firms 
 carrying on separate and distinct trades, and having dis- 
 tinct estates to be wound up in bankruptcy, or as a sole 
 trader, and also as a member of a firm, the circumstance 
 that such firms are in whole or in part composed of the 
 same individuals, or that the sole contractor is also one 
 of the joint contractors, shall not prevent proof and re- 
 ceipt of dividend in respect of such distinct contracts 
 against the estates respectively liable upon such con- 
 tracts. 
 
 Proof of a debt is considered an election not to proceed against 
 a bankrupt by action. Such proof operates as a statutable discon- 
 tinuance of all actions and suits in respect of the same claim and 
 demand, and is a waiver of all other legal and equitable remedies 
 in respect of the debt proved. In the English courts ah applica- 
 tion may be made for an injunction to restrain the action by the 
 creditor who has proved, or to expunge the proof. — Ex parte Diack, 
 2 Mont. & Ayr., 675 ; ex parte Bernasconi, 2 Glyn & J., 381. And 
 this section provides, that all proceedings which may have been 
 commenced by the creditor, who afterward proves his debt or claim, 
 and all unsatisfied judgments obtained in any suits, are deemed to 
 be discharged and surrendered by the fact of proof. 
 
 Under the United States Bankrupt Law of 1841 it was held, that 
 the District Court, upon the application of the bankrupt or his as- 
 signees before the discharge is granted, may issue an injunction to 
 
 G 
 
98 THE BANKRUPT LAW. [§21. 
 
 the creditor staying the proceedings until the further order of the 
 court ; and if the creditor, his agents or attorneys, proceed in the 
 suit notwithstanding the injunction, they are liable to be committed 
 for contempt. If the bankrupt does not obtain his discharge, the 
 creditor may petition for a dissolution of the injunction, and, if it is 
 granted, he may then, proceed in his suit to judgment and execu- 
 tion. If the bankrupt obtains his discharge, and pleads it in bar to 
 the further maintenance of the act, and the creditor intends to con- 
 test its validity on the trial in the State Court, he should apply to 
 the District Court for leave to do so. If the validity of the dis- 
 charge as such is not contested, and the State Court on demurrer 
 should hold the discharge invalid as to the property attached, and 
 the creditor proceeds to judgment and execution, the District 
 Court would enjoin the sheriff from levying on the property, and 
 order him to deliver the same to the assignee, or, if it has been sold, 
 to bring the proceeds into court. — In re Bellows & Peck, 3 Story, 
 428. 
 
 The Bankrupt Law of the United States of 1841 contemplated 
 that a creditor might maintain a suit in a State Court upon a de- 
 mand provable in bankruptcy, although the debtor might have 
 filed his petition to be declared a bankrupt. — Hobart vs. Haskell, 14 
 KH.,127. 
 
 A judgment creditor could not pursue a bankrupt by bill after he 
 had proved his debt in bankruptcy, nor could he allege that he 
 proved the debt for the purpose of defeating the discharge, and not 
 for receiving a dividend. By proving the debt, the creditor elects 
 to become a party to the proceedings in bankruptcy, surrenders his 
 judgment, and can receive but a dividend. — Hoxtun vs. Corse, 4 
 Ed. Ch., 585. 
 
 Where a creditor levied an execution upon property acquired by 
 a debtor after he had been decreed a bankrupt, and before it had 
 been decided whether his certificate of discharge should be granted, 
 a Court of Equity interfered by injunction to protect his rights, 
 and restrained proceedings under the "execution until the question 
 of his discharge was decided. — Mosby vs. Steele, 7 Ala., 299. And 
 in the same case it was held, that the State, and not the Federal 
 Court, is the proper tribunal to afford relief in such a case. 
 
 A creditor who took a dividend under the estate of a bankrupt 
 surrendered to the assignee under a petition filed by him in bank- 
 ruptcy, was not thereby estopped from collecting the remainder of 
 his debt, if the. debtor failed to get his certificate of discharge under 
 his bankruptcy. — Hamlin vs. Hamlin, 3 Jones Eq. Rep.,N. C, 191. 
 
 No Action for Debt provable to be prosecuted to final Judgment. 
 — The section provides, that no creditor whose debt is provable un- 
 der the act is to be allowed to prosecute to final judgment any suit 
 at law or in equity therefor against the bankrupt, until the ques- 
 tion of his discharge under the bankruptcy shall have been determ- 
 ined. The bankrupt may apply to the District Court for an order 
 in the form of an injunction upon the creditor to restrain the pros- 
 ecution of such action or suit, until the question of his right to his 
 
§ 22.] EFFECT OF PJJOOF. 99 
 
 discharge under the bankruptcy has been determined by the court. 
 There must be no unreasonable delay on the part of the bankrupt 
 in his endeavor to obtain his discharge. ' If there should be, the 
 creditor should apply to the court to dissolve the injunction stay- 
 ing the proceedings in his action. By leave of the court, if the 
 amount due to the creditor is disputed, he may proceed to judg- 
 ment in his suit for the purpose of ascertaining the amount due ; 
 and when that amount is ascertained by the judgment, he may 
 prove such judgment under the estate, but execution upon the 
 judgment will be stayed. If the bankrupt obtains his order of 
 discharge, he can plead it in answer to the action in the manner 
 pointed out in the notes, title " Bankrupt's Order of Discharge." 
 If the bankrupt does not obtain his order of discharge under the 
 bankruptcy, the creditor will have the right to have the injunction 
 dissolved, and to continue his action, and have his remedy under 
 the execution in the court in which the suit is pending. 
 
 If the bankrupt is in custody at the suit of the creditor who had 
 proved his debt, the court, upon petition, will order him to be dis- 
 charged, and make the creditor pay the costs. A creditor who has 
 the bankrupt in execution at the time of the adjudication, has his 
 election either to continue to hold the bankrupt in execution, or to 
 come in under the bankruptcy ; but, in the latter case, he must dis- 
 charge the bankrupt. If the creditor take the bankrupt in execu- 
 tion after the adjudication, it is an election ; and although the bank- 
 rupt is discharged from custody, the debt is satisfied, and the cred- 
 itor will not be admitted to prove. — Ex parte Hicklin, 1 Cook, 156 ; 
 ex parte Bisson, id. t 157 ; 13 Ves., 183. 
 
 It will not fail to be observed that the debt or claim in respect 
 of which the creditor is not allowed to prosecute a suit to final ad- 
 judication must be of a nature provable under the bankruptcy. Ac- 
 tions of tort, such as for assault, libel, slander, malicious prosecution, 
 negligence as the cause of accident, et ejusdem generis, not being 
 provable before judgment has been obtained, may proceed, notwith- 
 standing an adjudication in bankruptcy. 
 
 Proof where Bankrupt liable on distinct Contracts. — If any bank- 
 rupt, at the time of his adjudication, is liable upon any bill of ex- 
 change, promissory note, or other obligation in respect of distinct 
 contracts, as a member of two or more firms carrying on separate 
 and distinct trades, and having "distinct estates to be wound up in 
 bankruptcy, or as a sole trader, and also as a member of a firm, the 
 creditor may prove in respect of each distinct contract against the 
 estate respectively liable upon such contract, and may receive the 
 dividends under each respective estate. 
 
100 THE BANKRUPT LAW. [§22. 
 
 Section 22. And be it further enacted, That all proofs 
 of debts against the estate of the bankrupt, by or in be- 
 half of creditors residing within the judicial district where 
 the proceedings in bankruptcy are pending, shall be made 
 before one of the registers of the court in said district, and 
 by or in behalf of non-resident debtors before any register 
 in bankruptcy in the judicial districts where such cred- 
 itors, or either of them, reside, or before any commissioner 
 of the Circuit Court authorized to administer oaths in 
 any district. To entitle a claimant against the estate of 
 a bankrupt to have his demand allowed, it must be veri- 
 fied by a deposition in writing on oath, or solemn affirma- 
 tion, before the proper register or commissioner, setting 
 forth the demand, the consideration thereof, whether any 
 and what securities are held therefor, and whether any 
 and what payments have been made thereon ; that the 
 sum claimed is justly due from the bankrupt to the claim- 
 ant ; that the claimant has not, nor has any other person 
 for his use, received any security or satisfaction whatever 
 other than that by him set forth ; that the claim was not 
 procured for the purpose of influencing the proceedings 
 under this act, and that no bargain or agreement, express 
 or implied, has been made or entered into, by or on be- 
 half of such creditor, to sell, transfer, or dispose of the 
 said claim, or any part thereof, against such bankrupt, or 
 take or receive, directly or indirectly, any money, prop' 
 erty, or consideration whatever, whereby the vote of such 
 creditor or assignee, or any action on the part of such 
 creditor or any other person in. the proceedings under 
 this act, is or shall be in any way affected, influenced, or 
 controlled, and no claim shall be allowed unless all the 
 statements set forth in such deposition shall appear to be 
 true. Such oath, or solemn affirmation, shall be made by 
 
§ 21.] EFFECT OF PKOOF. ' 101 
 
 the claimant testifying of his own knowledge, unless he 
 is absent from the United States, or prevented by some 
 other good cause from testifying, in which cases the de- 
 mand may be verified in like manner by the attorney or 
 authorized agent of the claimant testifying to the best of 
 his knowledge, information, and belief, and setting forth 
 his means of knowledge, or, if in a foreign country, the 
 oath of the creditor may be taken before any minister, 
 consul, or vice-consul of the United States ; and the court 
 may, if it shall see fit, require or receive further pertinent 
 evidence either for or against the admission of the claim. 
 Corporations may verify their claims by the oath or sol- 
 . emn aflirmation of their president, cashier, or treasurer. , If 
 the proof is satisfactory to the register or commissioner, it 
 shall be signed by the deponent, and delivered or sent by 
 mail to the assignee, who shall examine the same and 
 compare it with the books and accounts of the bankrupt, 
 and shall register, in a. book to be kept by him for that 
 purpose, the names of creditors who have proved their 
 claims, in the order in which such proof is received, stat- 
 ing the time of receipt of such proof, and the amount and 
 nature of the debts, which books shall be open to the in- 
 spection of all the creditors. The court may, on the ap- 
 plication of the assignee, or of the bankrupt, or without 
 any application, examine uppn oath the bankrupt, or any 
 person tendering or who has made proof of claims, and 
 may summon any person capable of giving evidence con- 
 cerning such proof, or concerning the debt sought to be 
 proved, and shall reject all claims not duly proved, or 
 where the proof shows the claim to be founded in fraud, 
 illegality, or mistake. 
 
 How Proofs are to be Made. — Where creditors seeking to make 
 proofs of debts against the estate of the bankrupt reside within the 
 judicial district where the proceedings in bankruptcy are pending, 
 the proof is to be made by deposition in writing on oath, or solemn 
 affirmation, before one of the registers of the court in such district; 
 
102 THE BANKRUPT LAW. [§23. 
 
 and in practice should be made before the register who is acting 
 in the bankruptcy proceedings. 
 
 Proofs by non-resident Creditors may be made before any register 
 in bankruptcy in the judicial district where such creditors, or either 
 of them, reside, or before any commissioner of the Circuit Court au- 
 thorized to administer oaths in any district. The form of the proof, 
 and the statements required in it, are specifically set forth in the 
 section, and will be embodied in the general rules and orders. 
 
 Proof by Absent Creditor. — If the creditor be absent from the 
 United States, or be prevented by some other good cause from tes- 
 tifying when necessary to make such proof, the proof may be veri- 
 fied by the attorney or authorized agent of the claimant testifying 
 to the best of his knowledge, information, and belief, and setting 
 forth his means of knowledge. ' 
 
 Proof by Creditor in a Foreign Country.— A creditor abroad in a 
 foreign country may make his deposition on oath before any minis- 
 ter, consul, or vice-consul of the United States. 
 
 Proof by Corporations. — Corporations may prove their claims by 
 the oath or solemn affirmation of -their president, cashier, or treas- 
 urer. 
 
 Evidence in support of Proof. — The court may, if it shall see fit, re- 
 quire further pertinent evidence either for or against the admission 
 of the claim ; and on the application of the assignee, or of any cred- 
 itor, or of the bankrupt, or without any application, examine upon 
 oath the bankrupt, or any person tendering or who has made proof 
 of claims; and may summon any person capable of giving evidence 
 concerning such proof, or concerning the debt sough#to be proved, 
 and shall reject all claims not duly proved, or where the proof 
 shows the claim to be founded in fraud, illegality, or mistake. 
 
 Proofs by Creditors holding Securities. — This subject has been fully 
 treated of. Vide Section 20, and notes. 
 
 Delivery of Proofs to the Assignees. — Where the proof is satisfac- 
 tory to the register it is to be signed by the deponent, and to be 
 delivered or sent by mail to the assignee, who is to examine the 
 same, and compare it with the books and accounts of the bankrupt. 
 A book is to be kept by the assignee, in which are to be registered 
 by him the names of creditors who have proved their claims ; the 
 order in which such proofs have been received ; the times of the 
 receipt of such proof; and the amount and nature of the debts 
 proved ; and such book is to be open to the inspection of all the 
 creditors. 
 
 Section 23. And be it further enacted, That when a 
 claim is presented for proof before the election of the as- 
 signee, and the judge entertains doubts of its validity, or 
 of the right of the creditor to prove it, and is of opinion 
 that such validity or right ought to be investigated by 
 
§ 24.] EFFECT OF PKOOF. 103 
 
 the assignee, he may postpone the proof of the claim un- 
 til the assignee is chosen. Any person who, after the ap- 
 proval of this act, shall have accepted any preference, 
 having reasonable cause to believe that the same was 
 made or given by the debtor contrary to any provision 
 of this act, shall not prove the debt or claim on account 
 of which the preference was made or given, nor shall he 
 receive any dividend therefrom until he shall first have 
 surrendered to the assignee all property, money, benefit, 
 or advantage received by him under such preference. The 
 court shall allow all debts duly proved, and shall cause a 
 list thereof to be made and certified by one of the regis- 
 ters; and any creditor may act at all meetings by his 
 duly constituted attorney the same as though personally 
 present. 
 
 Proof of a Claim may be postponed. — Before an assignee has been 
 elected under the bankruptcy, and if the judge entertains doubts of 
 the validity of a claim presented for proof, .or of the right of a cred- 
 itor to prove it, and is of opinion that such validity or right ought 
 to be investigated by the assignee, such proof may be postponed 
 until the assignee is chosen. 
 
 Creditor who has accepted a Preference not to be admitted to Prove. 
 — Any person who, after the approval of this act, shall have accept- 
 ed any preference, having reasonable cause to believe that the same 
 was made or given by the debtor contrary to any provision of this 
 act, shall not prove the debt or claim on account of which the pref- 
 erence was made or given, nor shall he receive any dividend there- 
 from. As to what constitutes fraudulent preferences in violation of 
 the Bankrupt Law, vide notes, title " Fraudulent Preference." 
 
 . List of Debts to be made. — A list of all debts' duly proved is to be 
 made and certified by one of the registers. 
 
 Creditor may act at Meetings by Attorney. — Any creditor may act 
 at all meetings by his duly constituted attorney the same as though 
 he were personally present. 
 
 Section 24. And he it further enacted, That a sup- 
 posed creditor who takes an appeal to the Circuit Court 
 from the decision of the District Court, rejecting his claim 
 in whole or in part, shall, upon entering his appeal in the 
 Circuit Court, file in the clerk's oflice thereof a statement 
 in writing of his claim, setting forth the same substantial- 
 
104 THE BANKRUPT LAW. [§ 24. 
 
 ly, as in a declaration for the same cause of action at law, 
 and the assignee shall plead or answer thereto in like 
 manner, and like proceedings shall thereupon be had in 
 the pleadings, trial, and determination of the cause as in 
 an action at law, commenced and prosecuted in the usual 
 manner in the courts of the United States, except that no 
 execution shall be awarded against the assignee for the 
 amount of a debt found due to the creditor. The final 
 judgment of the court shall be conclusive, and the list 
 of debts shall, if necessary, be altered to conform thereto. 
 The party prevailing in the suit shall be entitled to costs 
 against the adverse party, to be taxed and recovered as 
 in suits at law; if recovered against the assignee, they 
 shall be allowed out of the estate. A bill of exchange, 
 promissory note, or other instrument, used in evidence 
 upon the proof of a claim, and left in court, or deposited 
 in the clerk's office, may be delivered, by the register or 
 clerk having the custody thereof, to the person who used 
 it, upon his filing a copy thereof, attested by the clerk 
 of the court, who shall indorse upon it the name of the 
 party against whose estate it has been proved, and the 
 date and amount of any dividend declared thereon. 
 
 Mode of Appeal by Creditor where Claim rejected. — A creditor 
 whose claim to prove under the estate has been rejected, in whole 
 or in part, by any decision of the District Court, may appeal to the 
 Circuit Court from such decision. A statement in writing of his 
 claim, setting forth the same substantially, as in a declaration for 
 the same cause of action at law, is to be filed in the office of the 
 clerk of the District Court at the time that he enters his appeal. 
 The section does not provide for any notice to be given to the as- 
 signee of this proceeding, but it is presumed that it will be required 
 by some general order. The assignee is then to plead or answer 
 in like manner, that is, to state in writing, and file in the clerk's 
 office, substantially as in a plea to an action at law, the grounds upon 
 which he relies for the rejection of the claim, so that some distinct 
 issue can be raised from these mutual statements for the determina- 
 tion of the court. The final judgment of the court is to be con- 
 clusive, and the list of debts proved under the estate is, if necessary, 
 to be altered to conform thereto. 
 
 Costs of the Appeal. — The party prevailing in the suit is entitled 
 
§25.] PROPERTY PERISHABLE AND IN DISPUTE. 105 
 
 to costs against the adverse party, to be taxed and recovered as in 
 suits at law ; and the costs, if recovered against the assignee, are to 
 be allowed out of the bankrupt's estate. No execution can be had 
 against the assignee. 
 
 Documents used in Evidence upon Proof of Debts may he returned 
 to Creditors. — Any bill of exchange, promissory note, or other in- 
 strument which has been used as evidence in support of a proof or 
 claim under a bankrupt's estate, and which may have been left in 
 court or deposited in the clerk's office, may be delivered, by the' 
 register or clerk having the custody thereof, to the person who used 
 it in evidence, upon his filing a copy thereof, attested- by the clerk 
 of the court, and leaving such copy with him. The clerk is to in- 
 dorse upon the document the name of the bankrupt's estate against 
 which the debt has been proved, and the date and amount of any 
 dividend declared thereon. 
 
 PROPERTY PERISHABLE AND IN DISPUTE. 
 
 Section 25. And he it further enacted, That when it 
 appears to the satisfaction of the court that the estate of 
 the debtor, or any part thereof, is of a perishable nature, 
 or liable to deteriorate in value, the court may order the 
 same to be sold in such manner as may be deemed most 
 expedient, under the discretion of the messenger or as- 
 signee, as the case may be, who shall hold the funds re- 
 ceived in place of the estate disposed of; and whenever 
 it appears to the satisfaction of the court that the title to 
 any portion of an estate, real or personal, which has come 
 into possession of the assignee, or which is claimed by 
 him, is in dispute, the court may, upon the petition of the 
 assignee, and after such notice to the claimant, his agent 
 or attorney, as the court shall deem reasonable, order it 
 to be sold, under the direction of the assignee, who shall 
 hold the funds received in place of the estate disposed 
 of; and the proceeds of the sale shall be considered the 
 measure of the value of the property in any suit or con- 
 troversy between the parties in any courts. But this 
 provision shall not prevent the recovery of the property 
 from the possession of the assignee by any proper action 
 commenced at any time before the court orders the sale. 
 
106 THE BANKRUPT LAW. [§ 26. 
 
 This section gives the court authority, when any goods or proper- 
 ty of the debtor which have been taken possession of by the mes- 
 senger, or which are in the hands of the assignee, and is of a perish- 
 able nature or liable to deteriorate in value, to order the same to 
 be sold, under the direction of the messenger or assignee, and the 
 proceeds of such sale are to be treated and considered as a part of 
 the bankrupt's estate to be administered under the bankruptcy. 
 
 Disputed Title to Property. — Where the title to any portion of the 
 estate of a bankrupt, real or personal, which has come into the pos- 
 session of the assignee, or which is claimed by him to belong to the 
 estate, is in dispute, the court has power, on petition of the assignee, 
 to order the sale of such property under his direction, and the pro- 
 ceeds of such sale are to be considered the measure o'f the value of 
 such property in any suit or controversy between the parties in any 
 courts. The requisite notice to be given to the claimant before 
 proceeding to sale will probably be prescribed by the general rules 
 and orders. If the claimant has commenced his action against the 
 assignee for the recovery of the value of such property before the 
 sale has been ordered by the court, the last provision of the section 
 will not apply. If, however, such action be commenced after the 
 court has ordered the sale, it would be stayed by an injunction. 
 
 EXAMINATION OF THE BANKRUPT AND 
 OTHER PERSONS. 
 
 Section 26. And be tt further enacted, That the court 
 may, on the application of the assignee in bankruptcy, or 
 of any creditor, or without any application; at all times 
 require the bankrupt, upon reasonable notice, to attend 
 and submit to an examination on oath, upon all matters 
 relating to the disposal or condition of his property, to 
 his trade and dealings with others, and his accounts con- 
 cerning the same, to all debts due to or claimed from him, 
 and to all other matters concerning his property and es- 
 tate, and the due settlement thereof according to law, 
 which examination shall be in writing, and shall be 
 signed by the bankrupt, and be filed with the other 
 proceedings ; and the court may, in like manner, require 
 the attendance of any other person as a witness, and if 
 such person shall fail to attend, on being summoned 
 thereto, the court may compel his attendance by warrant 
 
§ 26.] EXAMINATION OF THE BANKRUPT AND OTHERS. 107 
 
 directed to the marshal, commanding him to arrest such 
 person and bring him forthwith before the court, or be- 
 fore a register in bankruptcy, for examination as such wit- 
 ness. If the bankrupt is imprisoned, absent, or disabled 
 from attendance, the court may order him to be produced 
 by the jailor, or any officer in. whose custody he may be, 
 or may direct the examination to be had, taken, and cer- 
 tified at such time and place and in such manner as the 
 court may deem proper, and with like effect as if such 
 examination had been in court. The bankrupt shall at 
 all times, until his discharge, be subject to the order of 
 the court, and shall, at the expense of the estate, execute - 
 all proper writings and instruments, and do and perform 
 all acts required by the court touching the assigned prop- 
 erty or estate, and to enable the assignee to demand, re- 
 cover, and receive all the property and estate assigned, 
 wherever situated; and for neglect or refusal to obey 
 any order of the court, such bankrupt may be committed 
 and punished as for a contempt of court. If the bank- 
 rupt is without the district, and unable* to return and 
 personally attend at any of the times or do any of the 
 acts which may be specified or required pursuant to this 
 section, and if it appears that such absence was not caused 
 by willful default, and if, as soon as may be after the re- 
 moval of such impediment, he offers to attend and sub- 
 mit to the order of the court in all respects, he shall be 
 permitted to do so, with like effect as if he had not" been 
 in default. He shall also be at liberty, from time to time, 
 upon oath to amend and correct his schedule of creditors 
 and property, so that the same shall conform to the facts. 
 For good cause shown, the wife of any bankrupt may be 
 required to attend before the court, to the end that she 
 may be examined as a witness ; and if such wife do not • 
 attend at the time and place specified in the order, the 
 bankrupt shall not be entitled to a discharge unless he 
 
108 THE BANKRUPT LAW. [§ 26. 
 
 shall prove to the satisfaction of the court that he was 
 unable to procure the attendance of his wife. No bank- 
 rupt shall be liable to arrest during the pendency of the 
 proceedings in bankruptcy in any civil action, unless the 
 same is founded on some debt or claim from which his 
 "discharge or bankruptcy would not release him. 
 
 The power given to the court to examine the bankrupt at all 
 times upon reasonable notice, is an important element in the ad- 
 ministration of the Bankrupt Law, and without such power proceed- 
 ings in bankruptcy in many cases would be ineffectual. The bank- 
 rupt is to be examined upon oath upon all matters relating to the 
 disposal or condition of his property ; upon all matters relating to 
 his trade and dealings with others, and his accounts concerning the 
 same ; upon all matters relating to debts due or claimed from him ; 
 and to all other matters concerning his. property and estate, and 
 the due settlement thereof according to law. The words of this 
 section are very comprehensive, and embody the former provisions 
 upon this subject of the Bankrupt Act of 1841, and those also of 
 the 12 & 13 Vict., chap. 106, § 117. Upon the examination of a 
 bankrupt questions of difficulty frequently occur. The bankrupt, 
 in the course of an examination as to the disposition of his prop- 
 erty and the disclosure of his estate, may frequently render him- 
 self liable to penalties for fraudulent concealment, or that he has 
 obtained property illegally acquired ; and the English authorities 
 cited in this note will perhaps afford some principle for the guid- 
 ance of the court as to the questions which the bankrupt is com- 
 pelled under his examination to answer. It would seem that a 
 bankrupt is not bound to disclose the commission of any distinct 
 criminal act, and he has been protected from answering such ques- 
 tions. — Me parte Cossens, Buck, 531 ; ex parte Kirby, 1 Mont. & 
 Mac, 212 ; in re Smith, 2 Deac. & Chit, 239 ; ex parte Hawley, 20 
 L. J., 258; 1 Deac. & Chit., 415; 2 id, 465. But the bankrupt 
 can not refuse to discover all his estate and effects, and the full 
 particulars relating to them, though by giving such information his 
 answers may tend to show that he has been guilty of fraudulent 
 concealment, or that he owns property which he has obtained ille- 
 gally, or the possession of which will render him liable to penalties. 
 — Me parte Cossens, Buck, 531 ; ex parte Caldecott, Mont., 55 ; ex 
 parte Stone, 1 Glyn & J., 1. 
 
 The general rule of law, that no person can be compelled "to 
 criminate himself, has been said to be qualified with respect to the 
 jurisdiction in bankruptcy, because a bankrupt can not refuse to 
 discover his estate and effects, and the particulars relating to them, 
 though, in the course of giving information as to what his property 
 consists of, such information may tend to show that he has obtain- 
 ed property in violation of the law, as in the case of illegal trading. 
 — Me parte Cossens, Buck, 540. A bankrupt has been held bound 
 
§ 26.] EXAMINATION OF THE BANKRUPT AND OTHERS. 109 
 
 to answer a question relating to particular property, although an 
 indictment was pending against him for the concealment of such 
 property, ex parte Heath, 2 Deac. & Chit., 214 ; and in another case 
 ne was compelled to answer touching his estate and effects, al- 
 though such answer might tend to convict him of perjury commit- 
 ted by him on a former occasion, and also be evidence against him 
 that he had incurred penalties by concealing his effects. — In re 
 Smith, 2 Deac. & Chit, 230 ; in re Feat, id., 226. 
 
 The bankrupt can not object to answer questions tending to es- 
 tablish an act of bankruptcy committed by him. 
 
 The' answer on which the bankrupt was committed being "•that 
 he could not recollect how he came to draw a certain check in a 
 certain name," and the court, from the whole examination as set 
 out in the warrant, perceiving that the substance of the inquiry 
 was how he had disposed of the money, and that the name inserted 
 in the" check, and the object of inserting it, were material on that 
 point, it was held that the committal was valid. — In re Bradbury, 
 25 Eng. Law and Eq. Rep., 252. 
 
 On the examination of a bankrupt, he is bound to answer as to 
 matters necessarily within his knowledge, and which must, more or 
 less, be in his recollection ; as, for instance, the disposal of his money, 
 and the drawing of bills, notes, or checks ; and it is not sufficient for 
 him to answer, as to such matters, that he does not recollect, if he 
 gives no reason for his want of recollection, nor any information by 
 which the court can pursue the investigation ; and this applies as 
 to questions upon minute points, or even to matters of intention or 
 motive, if they are necessary to the investigation; and an answer 
 may be direct and full which is not satisfactory, because not reason- 
 able. 
 
 On an application by a bankrupt to be released who has been 
 committed for not answering fully, the court will look to the whole 
 of the examination set out in the warrant ; and the proper course 
 is, therefore, to set out therein as much as is necessary to show the 
 relevancy and materiality of the questions for not answering which 
 he is committed, especially if they are such &s,per se, might appear 
 unimportant. And if, on looking to the whole of what is set out, 
 the court see that the question was material, and the answer was a 
 mere denial of all recollection, without any reason or explanation, it 
 will not be deemed full and satisfactory, and the committal is justi- 
 fiable. 
 
 In order to justify the commitment- of a bankrupt under this sec- 
 tion for not fully answering questions to the satisfaction of the 
 court, the examination should be full, fair, and searching, and not 
 rambling or irrelevant. — Ex parte Legge, 17 Jur., 415 ; 22 L. J., Q. 
 B., 345. Where a bankrupt on a second or subsequent examination 
 states that he wishes to explain some of his former statements, but 
 that he does not sufficiently recollect them, his memory should be 
 refreshed by their being repeated to him. A bankrupt, on his ex- 
 amination before a commissioner, in answer to the question, " Not 
 having kept any books, does your memory serve you as to how a 
 
110 THE BANKRUPT LAW. [§ 26. 
 
 sum of money (the proceeds of a check drawn by the bankrupt pay- 
 able to the Rev. W. B.) was appropriated ?" the bankrupt gave 
 what amounted to no answer — that he could not tell what had be- 
 come of the proceeds, and saying'" he did not remember," without 
 giving any reason for not remembering, the court held that the 
 commissioner was justified in committing the bankrupt to prison 
 for not fully answering to his satisfaction. — Ex parte Bradbury, 18 
 Jur., 189. 
 
 Confidential Communications to Counsel or Attorney. — The question 
 how far matters communicated by a bankrupt to his counsel or at- 
 torney are exempted from disclosure, may frequently arise ' under 
 this section. The general principles on this subject apply just as 
 much after the client's bankruptcy as before, and the assignees have 
 no right to compel a counsel or attorney to disclose matters which 
 are privileged communications, nor can he properly disclose them 
 without the bankrupt's consent. — Bowman vs. Norton, 5 C. & P., 
 Ill ; in re Phillips, 20 L. J., 16. It has been decided, where the 
 question was whether the bankrupt had committed an act of bank- 
 ruptcy by having made a fraudulent conveyance, that the attorney 
 of the bankrupt, though, as attesting witness to the deed, he was 
 bound to disclose what took place at the time of its execution, was 
 privileged from stating what occurred during its concoction and 
 preparation, and could not be asked whether it had not been subse- 
 quently destroyed,' if the only knowledge he had as to these mat- 
 ters was acquired from his confidential character as an attorney. — 
 Russell vs, Jackson, 21 L. J., Chan., 146. A commissioner in bank- 
 ruptcy refused to compel the clerk of an attorney (who is within 
 the rule as much as the attorney himself) who had been employed 
 by the bankrupt in the preparation of a deed which was alleged to 
 be a fraudulent preference, to give evidence as to the circumstances 
 under which it was made, in support of an opposition to the bank- 
 rupt obtaining his certificate ; and this decision of the commission- 
 er was supported by the Appellate Court. — In re Phillips, 20 L. J., 
 15 ; Turquand vs. Knight, 2 Mees & W., 98 ; exparte Lord, Buck, 110. 
 But the legal adviser must disclose all questions put to him by his 
 client, with the client's answers thereto, provided such questions 
 were asked in order to gain information respecting matters of fact, 
 as distinguished from those put with a view of obtaining advice. — 
 Bramwell vs. Lucas, 2 B. & C, 743. 
 
 Examination of the Bankrupt to be in Writing, and to be signed by 
 him. — The section prescribes, that the examination shall be in writ- 
 ing, and be signed by the bankrupt, and filed with the other pro- 
 ceedings. In the event of a bankrupt refusing to sign his examin- 
 ation, or refusing to answer questions legally and properly put to 
 him, he is liable to be committed by the court for contempt ; and 
 many questions have arisen in England where the bankrupt has 
 been committed to custody by a warrant from the judge in bank- 
 ruptcy for refusing to answer, and has been brought before the Ap- 
 pellate Courts upon a writ of habeas corpus, upon the sufficiency and 
 propriety of ihe answers given by him, and the questions put to 
 
§ 26.] .EXAMINATION OF THE BANKRUPT AND OTHERS. Ill 
 
 him upon his examination. Where the bankrupt has been commit- 
 ted upon a warrant for refusing to answer questions put under his 
 examination, it has been held in the English courts, that the ques- 
 tions refused to be answered must be specified in the warrant of 
 commitment. Vide Me parte Bull, 15 L. J., Q. B., 235 ; Me parte 
 Dauncey, 4 Q. B., 668 ; 3 Per. & D., 640 ; 12 L. J., Q. B., 239 ; 12 
 Mees & W., 271 ; Ex parte Bull, 1 B. C. R, 132. 
 
 The bankrupt may be committed by the court for answers upon 
 his examination which, on the whole, are unsatisfactory, and which 
 do not really and truly disclpse the disposition of his estate and 
 effects, as where they were so clearly of an improbable character 
 that they could not be believed. — In re Martin, 11 Jurist, 461 ; ex 
 parte Lord, 11 Jurist, 186 ; 10 Mees & W., 462 ; 16 L. J., Exc, 118. 
 
 The courts before whom a bankrupt, who has been committed for 
 refusing to answer, is brought upon a writ of habeas, in point of 
 fact review the decisions of the judge in bankruptcy, and the whole 
 examination of the bankrupt, and the particular questions put to 
 him are brought up. 
 
 Where the Bankrupt is in Prison, Absent, or unable to Attend. — If 
 the bankrupt is in prison, absent, or disabled from attendance, the 
 court may order him to be produced by the jailor, or any officer in 
 whose custody he may be, or may direct the examination to be had, 
 taken, and certified at such time and place, and in such manner as 
 the court may deem proper, and with like effect, as if such examin- 
 ation had been had in court. As the power to commit a bankrupt 
 is only vested in the court, in the event of the bankrupt refusing 
 to answer questions properly put to him upon his examination, the 
 register or other officer taking the examination must certify such 
 facts to the court, and bring the bankrupt before the court in order 
 to enforce such answers, or have him committed for contempt. 
 
 Examination of other Persons under the Bankruptcy. — The section 
 provides that the court may, in like manner, require the attendance 
 of any other person as a witness ; and if such person shall fail to at- 
 tend, on being summoned thereto, the court may compel his attend- 
 ance by warrant directed to the marshal, commanding him to ar- 
 rest such person, and bring him forthwith before the court, or be- 
 fore a register in bankruptcy, for examination as such witness. 
 This section does not provide in terms for the examination of wit- 
 nesses under the bankruptcy who are capable of giving informa- 
 tion concerning the person, trade, dealings, or estate of the bank- 
 rupt, or concerning any act of bankruptcy committed by him, or 
 any information material to the full disclosure of his dealings, as 
 the English Bankrupt Acts provide ; but it is presumed, from the 
 words of the section in like manner, that the intention of the act 
 is to enable the court to examine witnesses upon all matters relat- 
 ing to the disposal or condition of the bankrupt's property, and to 
 his trade and dealings, and to all matters concerning his estate, and 
 the due settlement thereof, as fully and effectually as the bankrupt 
 himself can be examined. 
 
 The party summoned as a witness can be compelled to answer 
 
112 THE BANKRUPT LAW. "[§ 26. 
 
 such questions only as relate to the subjects specified in the sec- 
 tion ; and it has been held, under the same power in the English 
 Bankrupt Acts, that a question to ascertain the truth of a plea to 
 an action which has been commenced by the assignees against the 
 witness, is not authorized. — Mb parte Solarte, Re Absedo, 1 Mont., 
 495. And the penalty for refusing to be sworn, or sign the exam- 
 ination, or not answering satisfactorily, must be limited to the pow- 
 ers given by the words in the early part of the section. No ex- 
 press power is given by the section to require the witness sum- 
 moned to produce books, papers, deeds, writings, or other docu- 
 ments which may appear to the court necessary to the full dis- 
 closure of any of the matters which the court is authorized to in- 
 quire into, as the English Bankrupt Acts specially provide ; but it 
 is presumed that the court would have the inherent power to re- 
 quire their production, and, in the event of their non-production, 
 to issue a warrant against the witness. It has been held, that a 
 refusal on the part of a witness to read an entry in an account-book 
 put into his hands by the examiner, was not such a refusal to an- 
 swer a question within the meaning of the section of the English 
 Bankrupt Acts before mentioned. — Isaac vs. Impey, 10 B. & C, 442. 
 
 Bankrupt's Wife may be Examined. — The section provides that, 
 for good cause shown, the wife of any bankrupt may be required 
 to attend before the court, to the end that she may be examined as 
 a witness ; but it would seem, in the event of her neglect or refusal 
 to attend, no power is conferred to compel her attendance by war- 
 rant, as in the case of other witnesses. The penalty of her non-at- 
 tendance appears to be entirely thrown upon the bankrupt. The 
 section providing that if the wife so required to attend does not 
 attend at the time and place specified in the order, the bankrupt is 
 not to be entitled to his discharge, unless he shall prove to the sat- 
 isfaction of the court that he was unable to procure her attendance. 
 
 It is difficult to treat of this peculiar provision. It may subject 
 the bankrupt to injustice and hardship on the one hand, and afford 
 the opportunity for fraud and collusion on the. other ; and the ques- 
 tion of what would constitute an inability on the part of a bank- 
 rupt to procure the attendance of his wife will be very difficult to 
 decide. 
 
 " If she will, she will/you may depend on't ; 
 Aad if she won't, she won't, and there's an end on't," 
 
 is an old aphorism not wholly inapplicable in the present day to 
 the gentler sex. The English Bankrupt Acts contain provisions 
 giving the courts the power to summon the wife of the bankrupt, 
 and to examine her compulsorily as the bankrupt and other wit- 
 nesses can be examined. Should the wife attend, her examination 
 must be strictly confined to the objects specified in the earlier part 
 of the section, and it has been held, that it is a statutory power to be 
 strictly limited, and that she can not be examined as to any act of 
 bankruptcy committed by her husband. — Mb parte James, 1 P. 
 Wms., 611. 
 Obtaining the Order for Examination. — Where the assignees or 
 
§ 26.] EXAMINATION OF THE BANKRUPT AND OTHERS. 113 
 
 creditors desire to have the bankrupt, or any other witness, person- 
 ally examined for any of the objects specified in the section, an affi- 
 davit should be prepared, setting forth concisely the reason or ne- 
 cessity therefor, and presented to the court ; and if the court is sat- 
 isfied that a case is made out requiring such examination, an order 
 will be entered, directing the time and place thereof. The same 
 course will be pursued for an order from the court requiring the 
 wife to attend, or perhaps in practice the bankrupt to produce her. 
 
 The Bankrupt, until his Discharge, at all Times subject to the Or- 
 der of the Court. — This section provides that the bankrupt shall, 
 at all times until his discharge, be subject to the order of the 
 court ; and shall, at the expense of the estate, execute all proper 
 writings and instruments, and do and perform all acts required by 
 the court touching the assigned property or estate ; and to enable 
 the assignee to demand, recover, and receive all the property and 
 ..estate assigned, wherever situated; and for neglect or refusal to 
 obey any order of the court, such bankrupt may be committed and 
 punished as for contempt of court. These orders will be made of 
 course by the court, unless the bankrupt disputes the validity of 
 the adjudication. — 1 Mont., D. & D., 118 ; id., 667 ; 2 Deac.,'479. 
 
 The Bankrupt may Attend and Clear himself from Default, if not 
 Willful. — If the bankrupt is without the district, and unable to re- 
 ctum and personally attend at any of the times, or do any of the 
 acts which may be specified or required pursuant to this section, 
 and if it appears that such absence was not caused by willful de- 
 fault, and if, as soon as may be after the removal of such impedi- 
 ment, he offers to attend and submit to the order of the court in all 
 respects, he shall be permitted to do so with like effect, as if he had 
 not been in default. 
 
 The Bankrupt may Amend or Correct his Schedule. — The bankrupt 
 shall be at liberty from time to time, upon oath, to amend and cor- 
 rect his schedule of creditors and property, so that the same shall 
 conform to the facts. This provision should be carefully attended 
 to by every bankrupt, because his discharge under the bankruptcy 
 is invalidated by the Act if he has willfully sworn falsely in his affi- 
 davit annexed to his petition, schedule, or inventory ; and the op- 
 portunity being afforded him of amending and correcting his sched- 
 ule, should be taken advantage of before his application for his dis- 
 charge. The application to amend should be made immediately, or 
 within a reasonable time after the facts rendering such an amend- 
 ment necessary have come to his knowledge. ■ Any willful delay or 
 neglect would deprive him of the right. 
 
 Bankrupt protected from Arrest in certain Civil Actions. — No bank- 
 rupt shall be liable to arrest during the pendency of proceedings in 
 bankruptcy in any civil action, unless the same is founded on some 
 debt or claim from which his discharge under the bankruptcy would 
 not release him. For every debt provable under the bankruptcy, 
 and from which his discharge will release him, the bankrupt is pro- 
 tected from arrest during the pendency of the proceedings. He 
 will remain liable to arrest according to the laws of each State for 
 
 H 
 
114 THE BANKRUPT LAW. [§ 26. 
 
 any debt created by fraud or embezzlement, or by bis defalcation as 
 a public officer, executor, administrator, guardian, trustee, assignee, 
 or factor, or while acting in any other fiduciary character ; he will 
 also remain liable to arrest according to the laws of each State for 
 personal wrongs — as for false imprisonment, seduction, criminal con- 
 versation, injuries to character, for fraudulently contracting debts, 
 or for removing and disposing of his property with intention to de- 
 fraud his creditors. 
 
 A bankrupt was protected from arrest from the time of filing his 
 application to be declared a bankrupt. — State vs. Rollins, 13 Mis., 
 179. 
 
 The protection will extend to arrests under attachment for the 
 non-payment of money, ex parte Jeyes, 3 Deac. & Chit., 764 ; 3 
 Mont., D & D., 309 ; and it has been held in England, to protect the 
 bankrupt from arrest under an attachment in the Insolvent Debt- 
 ors' Court for the non-payment of a balance due from the bankrupt 
 as assignee under that act. — Ex parte Barry, 7 Jur., 406. But it 
 does not extend to the taking of the principal by his bail, for the 
 bail are not creditors ; and besides, in contemplation of law, he was 
 in their custody the moment they became bail. — Ex parte Leigh, 1 
 Glyn & J., 264. A bankrupt at large on bail is not in custody. 
 "Where a bankrupt is entitled to his discharge upon an arrest under 
 the provisions of this section, he will be discharged also from all de- 
 tainers lodged against him after such arrest took place ; but if in 
 custody at the time of the commencement of the proceedings,-it is 
 otherwise. — Ex parte Goldie, 2 Rose, 343 ; ex parte Hawkins, 4 Ves., 
 691 ; ex parte Ross, 1 Rose, 260. The discharge of the bankrupt 
 must be unconditional ; the court will not impose terms that the 
 bankrupt shall not bring an action, nor will the court order the 
 costs for an application for the discharge to be paid out of the 
 estate. — Ex parte Helsby, Mont. & Bligh, 79. The sheriff may re- 
 take a bankrupt upon an escape, and he would not be discharged 
 under the provisions of this section. — Anderson vs. Hampton, 1 B. 
 & A., 308. Where the court orders the discharge of a bankrupt, 
 the jailor or sheriff will be bound to release him, and no action will 
 lie against him for an escape, as it would be an order made within 
 the general jurisdiction of the court, and by its judicial authority. 
 —Thomas vs. Hudson, 13 Mees & W., 353, 816, 884; Norton vs. 
 Walker, 3 Excheq., 480. 
 
 The words of this section apply to arrests during the pendency of 
 proceedings in bankruptcy ; but where the bankrupt at the time of 
 his adjudication has been arrested, and is in custody for a debt 
 provable under the bankruptcy, it is presumed that the court would 
 have authority to order his discharge. 
 
§27.] DISTRIBUTION OF THE BANKRUPT'S ESTATE. 115 
 
 DISTRIBUTION OF THE BANKRUPT'S ESTATE. 
 
 Section 27. And be it further enacted, That all credit- 
 ors whose debts are duly proved and allowed shall be 
 entitled to share in the bankrupt's property and estate 
 pro rata, without any priority or preference whatever, ex- 
 cept that wages due from him to any operative, or clerk, 
 or house-servant, to an amount not exceeding fifty dol- 
 lars, for labor performed within six months next preced- 
 ing the adjudication of bankruptcy, shall be entitled to 
 priority, and shall be first paid in full : provided, that any 
 debt proved by any person liable as bail, surety, guaran- 
 tor, or otherwise, for the bankrupt, shall not be paid to 
 the person so proving the same until satisfactory evidence 
 shall be produced of the payment of such debt by such 
 person so liable, and the share to which such debt would 
 be entitled may be paid into court, or otherwise held for 
 the benefit of the party entitled thereto, as the court may 
 direct. At the expiration of three months from the date 
 of the adjudication of bankruptcy in any case, or as much 
 earlier as the court may direct, the court, upon the re- 
 quest of the assignee, shall call a general meeting of the 
 creditors, of which due notice shall be given, and the as- 
 signee shall then report, and exhibit to the court and to 
 the creditors just and true accounts of all his receipts and 
 payment*, verified by his oath, and he shall produce and 
 file vouchers for all payments for which vouchers shall 
 be required by any rule, of the court ; he shall also sub- 
 mit the schedule of the bankrupt's creditors and property 
 as amended, duly verified by the bankrupt, and a state- 
 ment of the whole estate of the bankrupt as then ascer- 
 tained, of the property recovered and of the property out- 
 standing, specifying the cause of its being outstanding ; 
 also what debts or claims are yet undetermined, and stat- 
 
116 THE BANKRUPT LAW. [§28. 
 
 ing what sum remains in his hands. At such meeting 
 the majority in value of the creditors present shall de- 
 termine whether any and what part of the. net proceeds 
 of the estate, after deducting and retaining a sum suffi- 
 cient to provide for all undetermined claims which by 
 reason of the distant residence of the creditor, or for oth- 
 er sufficient reason^ have not been proved, and for other 
 expenses and contingencies, shall be divided among the 
 creditors ; but unless at least one half in value of the 
 creditors shall attend such meeting either in person or 
 by attorney, it shall be the duty of the assignee so to de- 
 termine. In case a dividend is ordered, the register shall, 
 within ten days after such meeting, prepare a list of cred- 
 itors entitled to dividend, and shall calculate and set op- 
 posite to the name of each creditor who has proved his 
 claim the dividend to which he is entitled out of the net 
 proceeds of the estate set apart for dividend, and shall 
 forward by mail to every creditor a statement of the divi- 
 dend to which he is entitled, and such creditor shall be 
 paid by the assignee in such manner as the court may di- 
 rect. 
 
 Section 28. And be it further enacted, That the like 
 proceedings shall be had at the expiration of the next 
 three months, or earlier, if practicable, and a third meet- 
 ing of creditors shall then be called by the court, and a 
 final dividend then declared, unless any action at law or 
 suit in equity be pending, or unless some other estate or 
 effects of the debtor afterward come to the hands of the 
 assignee, in which case the assignee shall, as soon as may 
 be, convert such estate or effects into money; and within 
 two months after the same shall be so converted, the 
 same shall be divided in manner aforesaid. Further divi- 
 dends shall be made in like manner as often as occasion 
 requires;' and after the third meeting of creditors, no 
 further meeting shall be called, unless ordered by the 
 
§28.] DISTRIBUTION" OF THE BANKRUPT'S ESTATE. 117 
 
 court. If at any time there shall be in the hands of the 
 assignee any outstanding debts or other property, due or 
 belonging to the estate, which can not be collected and 
 received by the assignee without unreasonable or incon- 
 venient delay or expense, the assignee may, under the di : 
 rection of the court, sell and assign such debts or other 
 property in such manner as the court shall order. No 
 dividend already declared shall be disturbed by reason 
 of debts being subsequently proved ; but the creditors 
 proving such debts shall be entitled to a dividend equal 
 to those already received by the other creditors before 
 any further payment is made to the latter. Preparatory 
 to the final dividend, the assignee shall submit his account 
 to the court and file the same, and give notice to the cred- 
 itors of such filing, and shall also give notice that he will 
 apply for a settlement Of his account, and for a discharge 
 from all liability as assignee, at a time to be specified in 
 such notice, and at such time the court shall audit and 
 pass the accounts of the assignee, and such assignee shall, 
 if required by the court, be examined as to the truth of 
 such account, and if found correct, he shall thereby be 
 discharged from all liability as assignee to any creditor 
 of the bankrupt. The court shall thereupon order a divi- 
 dend of the estate and effects, or of such part thereof as 
 it sees fit, among such of the creditors as have proved 
 their claims, in proportion to the respective amount of 
 their said debts. In addition to all expenses necessarily 
 incurred by him in the execution of his trust, in any case, 
 the assignee shall be entitled to an allowance for his serv- 
 ices in such case, on all moneys received and paid out by 
 him therein, for any sum not exceeding one thousand dol- 
 lars, five per centum thereon ; for any larger sum not ex- 
 ceeding five thousand dollars, two and a half per centum 
 on the excess over one thousand dollars; and for any 
 larger sum, one per centum on the excess over five thou- 
 
118 THE BANKRUPT LAW. [§ 28. 
 
 sand dollars ; and if, at any time, there snail not be in his 
 hands a sufficient amount of money to defray the neces- 
 sary expenses required for the further execution of his 
 trust, he shall not be obliged to proceed therein until the 
 necessary funds are advanced or satisfactorily secured to. 
 him. If by accident, mistake, or other cause, without 
 fault of the assignee, either or both of the said second 
 and third meetings should not be held within the' times 
 limited, the court may, upon motion of an interested par- 
 ty, order such meetings, with like effect as to the validity 
 of the proceedings as if the meeting had been duly held. 
 In the order for a dividend under this section, the follow- 
 ing claims shall be entitled to priority or preference, and 
 to be first paid in full in the following order : 
 
 1st. The fees, costs, and expenses of suits, and the sev- 
 eral proceedings in bankruptcy under this act, and for the 
 custody of property, as herein provided. 
 
 2d. All debts due to the United States, and all taxes 
 and assessments under the laws thereof. 
 
 3d. All debts due to the State in which the proceed- 
 ings in bankruptcy are pending, and all taxes and assess- 
 ments made under the laws of such State. 
 
 4th. "Wages due to any operative, clerk, or house-serv- 
 ant to an amount not exceeding fifty dollars, for labor 
 performed within six months next preceding the first 
 publication of the notice of proceedings in bankruptcy. 
 
 5th. All debts due to any persons who, by the laws of 
 the United States, are or may be entitled to a priority or 
 preference, in like manner as if this act had not been 
 passed : ahoays provided, that' nothing contained in this 
 act shall interfere with the assessment and collection of 
 taxes by the authority of the United States or any State. 
 
 The Duties of the Assignee as to making, declaring, and paying the 
 Dividend. — These sections provide for the manner in which the div- 
 idends under the estate of the bankrupt are to be made, notified, 
 
§ 28.] DISTRIBUTION OF THE BANKRUPT'S ESTATE. 119 
 
 and paid by the assignees. In the order for a dividend the follow- 
 ing claims are entitled to priority or preference, and are to be first 
 paid hi full in the following order: 
 
 1st. The fees,, costs, and expenses of suits, and for the custody of 
 property, as herein provided ; 
 
 2d. All debts due to the United States, and all taxes and assess- 
 ments under the laws thereof; 
 
 3d. All debts due to the State in which the proceedings in bank- 
 ruptcy are pending, and all taxes and assessments made under the 
 laws of such State ; 
 
 4th. Wages due to any operative, clerk, or house-servant to an 
 amount not exceeding fifty dollars, for labor performed within six 
 months next preceding the first publication of the notice of proceed- 
 ings in bankruptcy ; 
 
 5th. All debts du6 to any persons who, by the laws of the United 
 States, are or may be entitled to a priority or preference, in like 
 manner as if this act had not been passed ; always provided, that 
 nothing contained in this act shall interfere with the assessment and 
 collection of taxes by the United States or any State. 
 
 Wages to Operatives, Clerks, or House-servants. — To entitle an op- 
 erative, clerk, or house-servant to be paid in full, not exceeding fifty 
 dollars, the labor in respect of which the wages or salary are claimed 
 must have been performed within six months next preceding the first 
 publication of the notice of proceedings in bankruptcy. In the con- 
 struction of the same clause under the English Bankrupt Acts, it has 
 been held, that a servant hired for a year, at a certain sum payable 
 weekly, is within the provision of the section. — Ex, parte Collier, 4 
 Deac. & Chit., 520; ex parte Humphreys, 3 Deac. & Chit., 114. 
 Also that a person engaged as a traveler by the bankrupt, at an an- 
 nual salary, comes within the clause. — Ex parte Neal, Mont. & Mac, 
 194. So also the mate of a vessel at certain wages, hired by the 
 master, who was also one of the owners. — Ex parte Homberg, 2 
 Mont., D. & D., 642 ; 17 Jurist, 198. 
 
 Debts due to Persons who, by the Laws of the United States, are en- 
 titled to Priority or Preference. — Under this category are included 
 creditors who have paid money, as sureties of the bankrupt, to the 
 government of the United States in consequence of his defalcation 
 or default. 
 
 Assignee to exhibit his Accounts. — At the expiration of three months 
 from the date of the adjudication of bankruptcy in any case, or ear- 
 lier, if directed by the court, a general meeting of the creditors is to 
 be called, at which the assignee is to attend, and report and exhibit 
 to the court and the creditors accounts of all his receipts and pay- 
 ments, verified by his oath, and produce and file his vouchers for 
 such payments ; he is also then to submit the schedule of the bank- 
 rupt's creditors and property as amended, duly verified by the bank- 
 rupt, and a statement of the whole estate of the bankrupt as then 
 ascertained of all the property which has been recovered, and of the 
 property outstanding; also what debts or claims are then unde- 
 termined, and a statement of what money remains in his hands. 
 
120 THE BANKRUPT LAW. [§28. 
 
 Creditors at such Meeting to determine the Amount of Dividends. — 
 If one third in value 1 of the creditors (which must mean the credit- 
 ors who have proved their debts under the estate) be present at 
 such meeting, they are to determine whether any, and what part, 
 of the net proceeds of the estate shall be divided among the credit- 
 ors ; if one third in value of the creditors do not attend such meet- 
 ing, it is the duty of the assignee so to determine. Before determ- 
 ining what dividend is to be made, a sufficient sum is to be retained 
 to provide for all undetermined claims which, by reason of the dis- 
 tant residence of the creditor, or for other sufficient reason, have 
 not been proved, and for other expenses and contingencies. 
 
 Duty of the Register when a Dividend is ordered. — When a divi- 
 dend is ordered, the register, within ten days after such meeting, is 
 to prepare a list of creditors entitled to dividend, and is to calculate 
 and set opposite to the name of each creditor who has proved his 
 claim the dividend to which he is entitled. ' A statement of such 
 dividend is to be forwarded by the register by mail to every cred- 
 itor. 
 
 Payment of the Dividend to the Creditor. — The creditor entitled to 
 the dividend is to be paid such dividend by the assignee in such 
 manner as the court may direct. The general rules and orders will 
 prescribe the time and manner of paying dividends by assignees. 
 The English Bankrupt Acts provide, that no action for any divi- 
 dend shall be brought against any assignee by any creditor who 
 shall have proved under the bankruptcy ; but if the assignees re- 
 fuse to pay any dividend, the Courts of Bankruptcy, upon petition 
 by the creditor, may order such payment, with interest for the time 
 that it shall have been withheld, and the costs of the application. 
 If the assignee, after demand by the creditor, refuses or neglects to 
 pay the dividend to which he is entitled, the proper course will be 
 to petition the court, who will order the assignee to pay it, and 
 make him personally liable to pay all the costs of such application. 
 After a dividend had been declared, the creditor entitled to it re- 
 quested the assignees by letter to send him the amount of his div- 
 idend in a post-office order, promising to send a receipt by return 
 of post. The assignees sent no answer. It was held, that this was 
 such a refusal to pay the dividend as entitled the creditor to an or- 
 der upon petition, at the cost of the assignees personally. — Ex parte 
 Jackson, 3 Mont., D. & D., 1. 
 
 Second and final Dividends. — The section provides for the conver- 
 sion, by the assignee, of the estate and effects of the bankrupt into 
 money, and for the making of the second and final dividends under 
 the estate. 
 
 Further Dividends. — The assignees are to make further dividends 
 in like manner as often as occasion may require ; but after the third 
 meeting of creditors called for the purpose of making the dividends, 
 no further meeting is to be called, unless ordered by the court. 
 
 Effect of Subsequent Proofs upon Dividend. — No dividend already 
 declared is to be disturbed by reason of debts being subsequently 
 proved, but the creditors proving such debts are entitled to a divi- 
 
§29.] THE bankrupt's discharge. 121 
 
 dend equal to those already received by the other creditors before 
 any further payment is made to the latter. 
 
 Discharge of Assignee. — Preparatory to the final dividend, the 
 assignee is to submit his accounts to the court, and file them, and 
 give notice to the creditors of such filing, and also give them notice 
 that he will apply for the settlement of his accounts, and for a dis- 
 charge from all liability as an assignee. The court, at the time 
 specified in the notice, is to audit and pass the accounts of the as- 
 signee, who, if required by the court, is to be examined as to the 
 truth of such accounts, and if they be found correct, the assignee 
 will be discharged by the court from all liability as assignee. 
 
 Allowance to the Assignee. — In addition to the expenses neces- 
 sarily, incurred by the assignee in the execution of his trust, the as- 
 signee is to be entitled for his services on all moneys received and 
 paid out by him to the following allowance : 
 
 For any sum not exceeding one thousand dollars, five per centum 
 thereon ; 
 
 For any larger sum not exceeding five thousand dollars, two and 
 a half per centum on the excess over one thousand dollars ; 
 
 And for every larger sum, one per centum on the excess over five 
 thousand. 
 
 Assignee entitled to necessary Funds or Security. — If, at any time, 
 the assignee has not in his hands a sufficient amount of money to 
 defray the necessary expenses required for the further execution of 
 his trust, he may refuse to proceed therein until the necessary funds 
 are advanced, or satisfactorily secured to him. 
 
 Assignee may sell Debts or other Property under Order of the Court. 
 — If, at any time, outstanding debts or other property due, or be- 
 longing to the estate of the bankrupt, can not be collected and re- 
 ceived by the assignee without unreasonable or inconvenient delay 
 and expense, the court, upon the application of the assignee, may 
 direct a sale and assignment of such debts or property in such man- 
 ner as may be most expedient. Vide former notes, title " Sale by 
 the Assignees." 
 
 Omission to hold Meetings for Dividend. — If, by accident, mistake, 
 or other cause, without fault of the assignee, the second and third 
 meetings for making the dividends should not be held within the 
 times limited by the section, the court may, upon motion of an in- 
 terested party, order such meetings to be subsequently held, and 
 these are to be as valid as if they had been held in strict compliance 
 with the provisions of the section. 
 
 THE BANKRUPT'S' DISCHARGE. 
 
 Section 29. And be it further enacted, That at any- 
 time after the expiration of six months from the adjudi- 
 cation of bankruptcy, or if no debts have been proved 
 against the bankrupt, or if no assets have come to the 
 
122 THE BANKRUPT LAW. [§29.- 
 
 hands of the assignee, at any time after the expiration of 
 sixty days, and within one year from the adjudication of 
 bankruptcy, the bankrupt may apply to the court for a 
 discharge from his debts, and the court shall thereupon 
 order notice to be given by mail to all the creditors who 
 have proved their debts, and by publication at least once 
 a week in such newspapers as the court shall designate, 
 due regard being had to the general circulation of the 
 same in the district, or in that portion of the district in 
 which the bankrupt and his creditors shall reside, to ap- 
 pear on a day appointed for that purpose, and show 
 cause why a discharge should not be granted to the 
 bankrupt. No discharge shall be granted, or, if granted, 
 be valid, if the bankrupt has willfully sworn falsely in 
 his affidavit annexed to his petition, schedule, or inven- 
 tory, or upon any examination in the course of the pro- 
 ceedings in bankruptcy in relation to any material fact 
 concerning his estate or his debts, or to any other mate- 
 rial fact; or if he has concealed any part of his estate or 
 effects, or any books or writings relating thereto, or if he 
 has been guilty of any fraud or negligence in the care, 
 custody, or delivery to the assignee of the property be- 
 longing to him at the time of the presentation of his pe- 
 tition and inventory, excepting such property as he is 
 permitted to retain under the provisions of this act, or if 
 he has caused, permitted, or suffered any loss, waste, or 
 destruction thereof; or if, within four months before the 
 commencement of such proceedings, he has procured his 
 lands, goods, money, or chattels to be attached, sequester- 
 ed, or seized on execution ; or if, since the passage of this 
 act, he has destroyed, mutilated, altered, or falsified any 
 of his books, documents, papers, writings, or securities, or 
 has made or been privy to the making of any false or 
 fraudulent entry in any book of account or other docu- 
 ment, with intent to defraud his creditors ; or has re- 
 
§ 30.] THE BANKRUPT'S DISCHARGE. 123 
 
 moved or caused, to be removed any part of Ms property 
 from the district, with intent to defraud his creditors ; or 
 if he has given any fraudulent preference contrary to the 
 provisions of this act, or made any fraudulent payment, 
 gift, transfer, conveyance, or assignment of any part of his 
 property, or has lost any part thereof in gaming, or has 
 admitted a false or fictitious debt against his estate ; or 
 if, having knowledge that any person has proved such 
 false or fictitious debt, he has not disclosed the same to 
 his assignee within one month after such knowledge ; or 
 if, being a merchant or tradesman, he has not, subsequent- 
 ly to the passage of this act, kept proper books of ac- 
 count ; or if he, or any person in his behalf, has procured 
 the assent of any creditor to the discharge, or influenced 
 the action of any creditor at any stage of the proceedings, 
 by any pecuniary consideration or obligation ; or if he 
 has, in contemplation of becoming bankrupt, made any 
 pledge, payment, transfer, assignment, or conveyance of 
 any part of his property, directly or indirectly, absolutely 
 or conditionally, for the purpose of preferring any cred- 
 itor or person having a claim against him, or who is or 
 may be under liability for him, or for the purpose of pre- 
 venting the property from coming into the hands of the 
 assignee, or of being distributed under this act in satis- 
 faction of his debts ; or if he has been convicted of any 
 misdemeanor under this act, or has been guilty of any 
 fraud whatever contrary to the true intent of this act ; 
 and before any discharge is granted, the bankrupt shall 
 take and subscribe an oath to the effect that he has not 
 done, suffered, or been privy to any act, matter, or thing 
 specified in this act as a ground for withholding such 
 discharge, or as invalidating such discharge if granted. 
 
 Section 30. And be it further enacted, That no person 
 who shall have been discharged under this act, and shall 
 afterward become bankrupt, on his own application shall 
 
124 THE BANKRUPT LAW. [§31,32. 
 
 be again entitled to a discharge whose estate is insuf- 
 ficient to pay seventy per centum of the debts proved 
 against it, unless the assent in writing of three fourths 
 in value of his creditors who have proved their claims is 
 filed at or before the time of application for discharge ; 
 but a bankrupt who shall prove to the satisfaction of 
 the court that he has paid all the debts owing by him at 
 the time of any previous bankruptcy, or who has been 
 voluntarily released therefrom by his creditors, shall be 
 entitled to a discharge in the same manner and with the 
 same effect as if he had not previously been bankrupt. 
 
 Section 31. And be it further enacted. That any cred- 
 itor opposing the discharge of any bankrupt may file a 
 specification in writing of the grounds of his opposition, 
 and the court may, in its discretion, order any question 
 of fact so presented to be tried at a stated session of the 
 District Court. 
 
 Section 32. And be it further enacted, That if it shall 
 appear to the court that the bankrupt has in all things 
 conformed to his duty under this act, and that he is en- 
 titled, under the provisions thereof, to receive a discharge, 
 the court shall grant him a discharge from all his debts 
 except as hereinafter provided, and shall give him a cer- 
 tificate thereof under the seal of the court, in substance 
 as follows : 
 
 District Court of the United States. District of 
 . "Whereas has been duly adjudged 
 
 a bankrupt under the act of Congress establishing a uni- 
 form system of bankruptcy throughout the United States, 
 and appears to have conformed to all the requirements 
 of law in that behalf, it is therefore ordered by the court 
 that said be forever discharged from all debts 
 
 and claims which by said act are made provable against 
 his estate, and which existed on the day of 
 
 , on which day the petition for adjudication 
 
§33,34.] the bankrupt's discharge. 125 
 
 was filed by (or against) him ; excepting such debts, if 
 any, as are by said act excepted from the operation of a 
 discharge in bankruptcy. Given under my hand, and 
 the seal of the Court, at , in the said district, 
 
 this day of ,A.D. 
 
 (Seal.) , Judge. 
 
 Section 33. And be it further enacted, That no debt 
 created by the fraud or embezzlement of the bankrupt, 
 or by his defalcation as a public officer, or while acting 
 in any fiduciary character, shall be discharged under this 
 act ; but the debt may be proved, and the dividend there- 
 on shall be a payment on account of said debt ; and no 
 discharge granted under this act shall release, discharge, 
 or affect any person liable for the same debt for or with 
 the bankrupt, either as partner, joint contractor, indorser, 
 surety, or otherwise. And in all proceedings in bank- 
 ruptcy commenced after one year from the time this act 
 shall go into operation, no discharge shall be granted to 
 a debtor whose assets do not pay fifty per centum of the 
 claims against his estate, unless the assent in writing of a 
 majority in number and value of his creditors who have 
 proved their claims is filed in the case at or before the 
 time of application for discharge. 
 
 Section 34. And be it further enacted, That a dis- 
 charge duly granted under this act shall, with the excep- 
 tions aforesaid, release the bankrupt from all debts, 
 claims, liabilities, and demands which were or might 
 have been proved against his estate in bankruptcy, and 
 may be pleaded, by a simple averment that on the day 
 of its date such discharge was granted to him, setting 
 the same forth in hcec verba, as a full and complete bar 
 to all suits brought on any such debts, claims, liabilities, 
 or demands, and the certificate shall be conclusive evi- 
 dence in favor of such bankrupt of the fact and the reg- 
 ularity of such discharge : always provided, that any 
 
1:26 THE BANKRUPT LAW. [§ 29-34. 
 
 creditor or creditors of said bankrupt, whose debt was 
 proved or provable against the estate in bankruptcy, 
 who shall see fit to contest the validity of said discharge 
 on the ground that it was fraudulently obtained, may, at 
 any time within two years after the date thereof, ap- 
 ply to the court which granted it to set aside and annul 
 the same. Said application shall be in writing, shall 
 specify which, in particular, of the several acts mentioned 
 in section twenty-nine it is intended to give evidence of 
 against the bankrupt, setting forth the grounds of avoid- 
 ance, and no evidence shall be admitted as to. any other 
 of the said acts ; but said application shall be subject to 
 amendment at the discretion of the court. The court 
 shall cause reasonable notice of said application to be 
 given to said bankrupt, and order him to appear and 
 answer the same, within such time as to the court shall 
 seem fit and proper. If, upon the hearing of said parties, 
 the court shall find that the fraudulent acts, or any of 
 them, set forth as aforesaid by said creditor or creditors 
 against the bankrupt, are proved, and that said creditor 
 or creditors had no knowledge of the same until after 
 the granting of said discharge, judgment shall be given 
 in favor of said creditor or creditors, and the discharge 
 of said bankrupt shall be set aside and annulled. But 
 if said court shall find that said fraudulent acts, and all 
 of them, set forth as aforesaid, are not proved, or that 
 they were known to said creditor or creditors before the 
 granting of said discharge, then judgment shall be ren- 
 dered in favor of the bankrupt, and the i validity of his 
 discharge shall not be affected by said proceedings. 
 
 The policy of the Bankrupt Law comprehends two great objects: 
 the distribution of the debtor's effects in the most expeditious, equal, 
 and economical mode, and the liberation of his person from the de- 
 mands of his creditors after he has made a full surrender of his prop- 
 erty. The effect of the order of Discharge is to exempt the bank- 
 rupt from the payment of all debts which might have been proved 
 
§29-34.] the bankrupt's discharge. 127 
 
 under his bankruptcy, and, as it has been before observed, whether 
 the bankrupt be released from a debt, and whether it be provable 
 under his bankruptcy, are strictly convertible terms. 
 
 The section enacts certain penalties against bankrupts by inval- 
 idating the Discharge ; if the bankrupt has been guilty of the follow- 
 ing misconduct, no Discharge shall be granted, and if granted, be 
 valid : 
 
 If the bankrupt has willfully sworn falsely in his affidavit annex- 
 ed to his petition, schedule, or inventory, or upon any examination 
 in the course of the proceedings in bankruptcy in relation to any 
 material fact concerning his estate, or his debts, or to any other ma- 
 terial fact. 
 
 This provision may be found in the Insolvent Acts of some of the. 
 States ; it did not exist in the United States Bankrupt Act of 1841, 
 nor is it in any of the various English Bankrupt Acts. The author 
 can not find that it has received any judicial construction. 
 
 The falsehood must be willful, and committed in relation to some 
 material fact with reference to the bankrupt's, estate, or his debts, 
 or any other material fact to which he has deposed on oath during 
 the proceedings in the bankruptcy. The question in fact involves 
 a trial by the court of a charge of perjury ; and the consequences 
 to the bankrupt being highly penal, the principles which regulate 
 the evidence upon an indictment for perjury will probably be ad- 
 hered to. 
 
 To substantiate the offense, it must be proved that the false oath 
 was willfully taken. If taken from inadvertence or mistake, it will 
 not amount to voluntary and corrupt perjury. An oath is held to 
 be willful when taken with deliberation, and not through surprise 
 or inadvertency, or a mistake of the true state of the question. — 
 Com. vs. Cornish, 6 Binney, 349. Vide also Steiman vs. M'Williams, 
 6Barr., 178. 
 
 A bankrupt who submits the facts in regard to his property fair- 
 ly to the advice of his counsel, and, acting under the advice thus 
 given, withholds certain items from his schedule, is not guilty of 
 perjury, the fraudulent intent being wanting. — U. S. vs. Conner, 3 
 M'Lean, 573. But if he makes false statements in regard to it, in 
 answer to interrogatories proposed to him in his examination, it is 
 perjury. — U. S. vs. Dickey, 1 Morris, 412. 
 
 False swearing to a fact, to the best of the opinion of tke witness, 
 which the witness, though without any reasonable caus,e, believes 
 to be true, is not perjury. — Com. vs. Brady, 5 Gray, Mass., 78. 
 
 It must also be proved, to have been committed in a matter ma- 
 terial to some of the proceedings. It may be committed in swear- 
 ing falsely to a collateral matter with intent to prop the testimony 
 on some other point, but such collateral matter must be material 
 to the question in dispute ; if it be a point the existence or non-ex- 
 istence of which can not affect the question in dispute, it does not 
 tend to prevent the due administration of justice, and, therefore, is 
 not perjury. — Studdard vs. Linville, 3 Hawks, 474. 
 
 An intentional omission by one applying for the benefit of the 
 
128 • THE BANKRUPT LAW. [§ 29-34. 
 
 Bankrupt Law, to place any portion of his property upon a sched- 
 ule sworn to by him as containing a true account of all his effects, 
 was held to be perjury. — IT. S, vs. Nichols, 4 M'Lean, 23. 
 
 Upon an indictment against the defendant for a misdemeanor in 
 falsely swearing that he bond fide had such an estate in law or equi- 
 ty of the annual value of £300 as qualified him to be a member of 
 Parliament for a borough, a surveyor stated that the fair annual 
 value of the property was about £200 a year; but another witness 
 stated that it was badly let, and believed that it was worth more 
 than £300 a year, and that he told the defendant so, and that he 
 did not think that the defendant had any reason to believe that the 
 qualification in point of value was not sufficient. It was held, that 
 the jury must be satisfied beyond all doubt that the property was 
 not of the value of £300 a year, and that at the time the defendant 
 made the statement, he knew that it was not of that value. — R. vs. 
 DeBeauvoir, 7 C. &P.,17. 
 
 Superfluous and immaterial matter stated in a deposition or ex- 
 amination, and by analogy, in a bankrupt's petition or schedule, al- 
 though false, would not amount to perjury. — White vs. State, 1 
 Sm. & Marsh, 149. 
 
 If he has concealed any part of his estate, or his effects, or any 
 books or writings relating thereto. 
 
 The fraud or concealment of property by the bankrupt must be 
 deliberate and intentional to affect him. The removal of property 
 from the bankrupt's house or place of business, and delivery to some 
 person or persons in trust for him, and omitting the same from his 
 petition, or schedule, of property, and not accounting for the same 
 to the assignee, would be cogent evidence of an intention to conceal 
 his estate and effects. The same also with respect to his books. 
 
 If he has been guilty of any fraud or negligence in the care, cus- 
 tody, or delivery to the assignee of the property belonging to him at 
 the time of the presentation of his petition and inventory, excepting 
 such property as he is permitted to retain under the provisions of 
 this act. 
 
 This provision was not in the United States Bankrupt Act of 
 1841, nor is there any such in the English Bankrupt Acts. Any 
 fraud in the delivery by the bankrupt of his property to the as- 
 signee is analogous to concealment of property, which has been al- 
 luded to in the preceding note. The question of what will amount 
 to negligence on the part of the bankrupt in the care and custody 
 of his property at the time he presents his petition, and until he 
 delivers it to the assignee, is of wider import. 
 
 From the moment of filing his petition the bankrupt will be con- 
 sidered as a trustee for the assignee and the creditors of such 
 property as may be in his possession or control, and the strictest 
 diligence in the care of such property will very properly be exact- 
 ed of him. In the case of an ordinary bailee, diligence in the cus- 
 tody of the article deposited with him is required by the principles 
 of the common law. Gross negligence in the care of property, it 
 has often been said, is equivalent to fraud, and is evidence of fraud. 
 
§ 29-34] the bankrupt's discharge. 129 
 
 It may in certain cases afford a presumption of fraud, and in very- 
 gross cases approach so near as to be almost undistinguishable 
 from it, especially when the facts seem hardly consistent with any 
 honest intention. Magna negligentia culpa est, was a principle of 
 the civil law. If the bankrupt should neglect the custody of his 
 property, or should expose it to unnecessary jeopardy, and it should 
 be injured or lost through such negligence, he would clearly be 
 liable to have his certificate opposed, or, if obtained, invalidated; 
 but all such questions will be decided by their own special circum- 
 stances. In every case he will be required to take such reasonable 
 care of the property as he would of his own; and what amounts to 
 such reasonable care must depend upon the nature, value, and qual- 
 ity of the property, and the circumstances under which such prop- 
 erty may be placed. 
 
 If he has caused, permitted, or suffered any loss, waste, or destruc- 
 tion thereof. 
 
 If within four months before the commencement of such proceed- 
 ings he has procured his lands, goods, money, or chattels to be at- 
 tached, sequestered, or seized on execution. 
 
 This is also made an act of bankruptcy upon which the debtor 
 can be compulsorily made bankrupt, and is treated of in the notes 
 to Section 40. 
 
 Next follow a series of misconduct or offenses which, to affect the 
 bankrupt's order of Discharge, must have been committed by him 
 since the passage of the act. The acl; is to commence and take ef- 
 fect, as to the appointment of the officers created thereby, and 
 the promulgation of rules and general orders, from and after the 
 date of its approval, which approval was given by the President 
 on March 2, 1867. But no petition or other proceeding under 
 the act is to be filed, received, or commenced before the 1st day of 
 June, 1867. It may therefore be considered that the act, though 
 passed on the 2d of March, 1867, is limited in its operation to the 
 appointment of the officers, and the promulgation of rules and gen- 
 eral orders, and that its passage, with reference to the commence- 
 ment of proceedings in bankruptcy, will date from the 1st of June, 
 1867. Some doubt, however, may be raised upon this point, one 
 of much importance with reference to the penal consequences at- 
 taching to the conduct of debtors, who may themselves petition or 
 be compulsorily made bankrupt. Vide Section 50. 
 
 If since the passage of the act he has destroyed, mutilated, altered, 
 or falsified any of his books, documents, papers, writings, or securi- 
 ties, or has made or been privy to the making of any false or fraud- 
 ulent entry in any booh of account, or other document, with intent to 
 defraud his creditors. 
 
 An analogous provision exists in the English Bankrupt Act, 24 
 & 25 Vict., chap. 134, § 221, except that the offense must have been 
 committed by the bankrupt within three months next before the 
 adjudication in bankruptcy. 
 
 There is no limit in the section of that nature as to the time with- 
 in which, previous to the commencement of the proceedings in 
 
130 THE BANKRUPT LAW. [§ 29-34. 
 
 bankruptcy, the falsification of the hooks and the fraudulent entries 
 must have taken place. The gist of the offense in this and like 
 cases, depends upon the intention "with which it has been commit- 
 ted ; and if that be made apparent, and the court be satisfied that 
 such intention was to defraud the creditors, the order of Discharge 
 will be disallowed. 
 
 If he has removed or caused to be removed any part of his prop- 
 erty from the district with intent to defraud his creditors. 
 
 This substantially is made an act of bankruptcy. Vide notes to 
 Section 39, "Acts of Bankruptcy." 
 
 If he has given any fraudulent preference contrary to the provi- 
 sions of this act, or made any fraudulent payment, gift, transfer, 
 conveyance, or assignment of any part of his property. 
 
 As to what amount to "fraudulent preferences;" and "fraudu- 
 lent payments, gifts, transfers, and assignments," vide notes to Sec- 
 tion 35. 
 
 If he has lost any part of his property in gaming. 
 
 This provision has probably been adopted from the earlier En- 
 glish Bankrupt Laws, by which the certificate of the bankrupt, which 
 was analogous to the order of Discharge, was rendered invalid if {he 
 bankrupt at any time before his bankruptcy had lost the sum of 
 ten pounds sterling by gaming or wager. In practice it operated 
 very harshly ; in many instances a bankrupt had given up the whole 
 of his property to his creditors, and had acted honestly in every 
 respect, when some person came forward and impeached his certifi- 
 cate upon the ground that he had lost a wager or bet to the amount 
 which the statutes prohibited. There is no such provision in the 
 recent English act consolidating the law of bankruptcy, nor was 
 there any such in the United States Bankrupt Act of 1841. 
 
 The word gaming has a large signification: it includes wagers, 
 bets, or stakes made to depend upon any chance, casualty, or un- 
 known or contingent event whatever, and is strictly prohibited by 
 the statutes of the various States. 
 
 Gaming, therefore, is not confined to playing at a common gam- 
 bling-house, but includes betting and wagering. 
 
 For the penalties against gaming, betting, and wagering in the 
 different States, and the construction of the laws of each State upon 
 this subject, vide United States Digest, title Gaming. 
 
 The provision itself is somewhat loosely drawn. Is the loss of 
 any part of the bankrupt's property to mean the same thing as the 
 loss of money ? Upon reference to the various statutes in each State 
 prohibiting gaming and wagering, and enacting penalties, it will be 
 found that they almost invariably specify the word money as well 
 as property ; for instance, the Revised Statutes of the State of New 
 York, Art. 3, Sec. 9, enact, That any person who shall pay, deliver, 
 or deposit any money, property, or thing in action, upon the event 
 of any wager or bet therein prohibited, may recover the same of the 
 winner or depositary. 
 
 If he has admitted a false or fictitious debt against his estate, or 
 if, having knowledge that any person has proved a false or fictitious 
 
§ 29-34.] THE bankrupt's discharge. 131 
 
 debt, he has not disclosed the same to his assignee within one month 
 after such hnowledge. 
 
 The former Bankrupt Act of 1841 contains substantially the same 
 provision. 
 
 In order to impeach the order of Discharge, it would be incumbent 
 upon the opposing party to' establish that in fact no debt, nor sem- 
 blance of a debt, existed, and that the proof is a fraud in its legal 
 acceptation, and was made by the fictitious creditor in concert with 
 the bankrupt for the purpose of defrauding the creditors. 
 
 The experience of the bankruptcy system in England proves the 
 expedience and necessity of such a provision. It has frequently 
 occurred that a bankrupt has given promissory notes and bills of 
 exchange, and concocted fictitious invoices, for the purpose of accu- 
 mulating proofs upon his estate, in some instances to add to the 
 number and value of his creditors, to secure the choice of friendly 
 assignees, or in order that the fictitious creditor, after proof of his 
 debt, should receive a share of the dividend ; and many prosecutions 
 have been instituted for conspiracy to accomplish these objects, and 
 the bankrupt and the parties concerned with him have been con- 
 victed. 
 
 In this, as in similar cases, the court will look at the intention of 
 the party proving ; a claim, for instance, may be admitted to proof 
 where in fact no legal debt actually exists at the time, as in the 
 case of a party who is surety for the bankrupt for a debt which he 
 has not paid, and in respect of which an application may be made 
 to expunge it from the proceedings, or to restrain the receipt of any 
 dividend ; or a debt may be expunged, not being supported by good 
 and valuable consideration ; but in all such instances, as has been 
 before observed, the intent of the bankrupt to defraud the estate, by 
 remaining passive with a knowledge of the transaction, constitutes 
 the offense. 
 
 If, being a merchant or tradesman, he has not, subsequently to the 
 passage of this act, kept proper books of account. 
 
 The Bankrupt Act of the United States of 1841 contains substan- 
 tially the same provision. Until recently there was no obligation 
 imposed by any Bankrupt Law in England upon a trader to keep 
 proper books of account ; but where he had omitted to do so, his 
 examination under the bankruptcy was invariably opposed ; and in- 
 asmuch as no bankrupt can there obtain his order of Discharge until 
 he has passed what is termed his last examination, he became thus 
 practically liable for the omission to keep proper books of account. 
 The recent English statute consolidating the law of bankruptcy en- 
 acts, that if any bankrupt trader, with intent to- conceal the true 
 state of his affairs, has willfully omitted to keep proper books of ac- 
 count, the order of Discharge may be refused by the court, or it may 
 be suspended, or the bankrupt may be sentenced to be imprisoned 
 for any period of time not exceeding one year. The books of a 
 bankrupt or insolvent trader in all commercial countries are always 
 considered of great importance. The French Code, and the author 
 believes the Prussian and Italian Codes, inflict severe penalties in 
 respect of the omission. 
 
132 THE BANKRUPT LAW. [§29-34. 
 
 One of the English Insolvent Acts now in force subjects the in- 
 solvent to imprisonment for a term not exceeding three years. 
 
 To justify the court in refusing or invalidating the bankrupt's 
 order of Discharge, it should appear that the bankrupt's intention 
 was manifestly to deceive and defraud his creditors. The definition 
 of the offense in the English statute before alluded to, viz., the in- 
 tent to conceal the true state of his affairs, might, perhaps, be one of 
 the rules by which the court, in judging of the circumstances, would 
 be guided. The section uses the words proper books of account, 
 which probably will be construed as meaning the usual and ordi- 
 nary books with respect to the particular trade and business of the 
 bankrupt trader. Books carelessly or unskillfully kept, or entries 
 inaccurately made, would scarcely justify the refusal or annulling 
 of the order of Discharge. It will be observed that this provision 
 applies only, by the terms used in the section, to a merchant or 
 tradesman, the latter word being somewhat inaccurately used in- 
 stead of the word trader. Vide Section 39 ; and as to what consti- 
 tutes a " trader," vide notes, title "Acts of Bankruptcy." 
 
 If he, or any person on his behalf, has procured the assent of any 
 creditor to his Discharge, or influenced the action of any creditor at 
 any stage of the proceedings by any pecuniary consideration or obli- 
 gation. 
 
 Any corrupt dealing on the part of the bankrupt with any cred- 
 itor, in order to induce him to vote in the choice of assignees ; to re- 
 frain from opposing his Discharge ; or, having entered an opposi- 
 tion, to forbear from proceeding with it, violates the policy of the 
 Bankrupt Law, and by this provision renders the bankrupt liable to 
 have his order of Discharge refused or annulled; and every contract 
 made by the bankrupt with a creditor for such an object is made 
 void by the act. Vide Section 35 and notes. 
 
 If he has, in contemplation of becoming bankrupt, made any 
 pledge, payment, transfer, assignment, or conveyance of any part of 
 his property, directly or indirectly, absolutely or conditionally, for 
 the purpose of preferring any creditor or person having a claim 
 against him, or toho is, or may be, under liability for him, or for the 
 purpose of preventing the property coming into the hands of the as- 
 signee, or of being distributed under this act in satisfaction of Ms 
 debts. 
 
 For explanation of this provision, vide notes, title " Fraudulent 
 Preferences;" Section 35 and notes, title "Acts of Bankruptcy;" 
 Section 39. 
 
 If he has been convicted of any misdemeanor under this act, or 
 has been guilty of any fraud whatever contrary to the true intent of 
 this act. 
 
 Such are the grounds which will justify the court in refusing a 
 bankrupt his order of Discharge, and, upon proof of any of which, 
 the Discharge of any bankrupt, after it has been granted by the 
 court, can be invalidated. 
 
 Application by the, Bankrupt for his Discharge. — If no debts have 
 been proved under the estate, or if no assets have come to the hands 
 
§29-34.] the bankrupt's discharge. 133 
 
 of the assignee after the expiration of sixty days from the adjudi- 
 cation of hankruptcy, and within one year from such adjudication, 
 the hankrupt may apply to the court for a Discharge from his debts. 
 If debts have been proved against the bankrupt, or if assets have 
 come to the hands of the assignee, the bankrupt can not apply for 
 his Discharge until after the expiration of six months from the ad- 
 judication of bankruptcy. The section gives the right to the bank- 
 rupt to make the application in the one case after the expiration of 
 sixty days, and in the other after the expiration of six months from 
 the adjudication ; but in either case the application should be made 
 within one year. Should the bankrupt be unable, from circumstan- 
 ces, to make his application within the year, he should apply for 
 leave to extend the period for hearing his application. In the En- 
 glish bankruptcy courts, the application is made in the form of a 
 short petition, and regulated by the general rules and orders. 
 
 Notice of the Application. — Upon the application of the bankrupt 
 for his Discharge, the court will order notice to be given by mail 
 to all creditors who have proved their debts, and by publication in 
 certain newspapers, to be designated by the court, to appear on the 
 day appointed for that purpose, and show cause why the Discharge 
 should not be granted to the bankrupt. The form of the notice, 
 etc., will be prescribed by the general rules and orders. 
 
 Oath to be taken by the Bankrupt. — The precise time for taking 
 the oath is not prescribed by the section ; but at some time before 
 the Discharge is granted, the bankrupt is to take and subscribe an 
 oath to the effect that he has not done, suffered, or been privy to 
 /any act, matter, or thing specified in the act as a ground for with- 
 holding such Discharge, or as invalidating such Discharge if granted. 
 
 Opposing the Order of Discharge. — The bankrupt having applied to 
 the court for his order of Discharge, the creditor having notice, may 
 appear on the day appointed for the purpose and show cause why 
 it should not be granted. The grounds upon which such opposi- 
 tion may be based are treated of in the earlier portion of the notes. 
 Section 31 provides that the opposing creditor may file a specifica- 
 tion in writing of the grounds of his opposition. Although the 
 word " may" is used in the section, the court, in justice to the bank- 
 rupt, would require a succinct and precise statement of the grounds 
 upon which the creditor impeaches the conduct of the bankrupt. 
 
 "Where a creditor, under the provision of Section 34, contests the 
 validity of the order of Discharge within two years after its date, 
 on the ground that it was fraudulently granted, he must, in that 
 case, specify in writing which in particular of the several acts men- 
 tioned in Section 29 he intends to give evidence of against the bank- 
 rupt, and must set forth the grounds of such avoidance as to any 
 other of the said acts, subject, however, to amendment at the dis- 
 cretion of the court. In the case of opposition by a creditor to the 
 granting of a bankrupt's Discharge in the first instance, the terms 
 of the section upon this point are not thus imperative. The former 
 Bankrupt Act of 1841 gave the right to the bankrupt, in the event 
 of opposition to his certificate and refusal of his Discharge by the 
 
134 THE BANKRUPT LAW. [§ 29-34. 
 
 court, to demand a trial by jury upon proper issues directed by the 
 court; and he also had the alternative of appealing from the decision 
 of the court to the Circuit Court, which appeal might be heard and 
 determined by the court summarily, or by a jury, at the option of 
 the bankrupt. 
 
 The recent English act consolidating the law of bankruptcy, gives 
 the right to a bankrupt to require a jury to be summoned to try 
 the charges preferred by the opposing creditor against him, and also 
 gives a right of appeal to the bankrupt, against the decision refus- 
 ing his order of Discharge, to the lord chancellor. 
 
 This act gives no right of appeal to the bankrupt upon the refu- 
 sal of his Discharge, nor to any creditor opposing it, if granted; nor 
 is there any peremptory right, either to the bankrupt or to the oppos- 
 ing creditor, to demand a trial by jury. The section provides, that 
 the court may, in its discretion, order any question of fact so pre- 
 sented to be tried at a stated session of the District Court. The 
 author suggests that a question may arise upon the construction 
 of these words, whether the question of fact is to be tried by a jury 
 at a stated session of the court, or by the court itself? The bill 
 as passed, in the first instance, by the House of Representatives, 
 gave the opposing creditor the right to demand a trial by a jury 
 of the question of the bankrupt's right to a Discharge, and that such 
 trial should take place at a stated session of the District Court. 
 
 The provision now in the act was an amendment inserted by the 
 Judiciary Committee of the Senate ; and it appears to the author 
 probable that the words by a jury have been unintentionally omit- 
 ted. It will be observed that the question of fact is that which is 
 to be tried, and it seems anomalous that the court, instead of try- 
 ing such question at the time it is presented, should direct it to be 
 tried before the same tribunal. A question of fact, as is well known 
 in practice, is essentially one for a jury, and invariably directed by 
 the court to be tried by that tribunal. The point, however, will 
 probably arise very early in the operation of the act, and the sug- 
 gestions of the author are made with a view to its consideration. 
 
 Assuming the proper construction of the terms used in the sec- 
 tion to be, that Congress intended a trial by a jury of a question 
 of fact, are the parties to be entitled to a second trial upon the or- 
 dinary grounds upon which new trials are granted ? The bill as it 
 passed the House of Representatives provided, that one trial only 
 should be had, and that the verdict of the jury should be final so 
 for as the proceedings in bankruptcy were concerned. 
 
 It is to be observed that notice of the bankrupt's application for 
 his order of Discharge is to be given in the manner prescribed by 
 the section only to all creditors who have proved their debts, while 
 the 31st Section provides in substance that any creditor may file a 
 specification, and oppose the bankrupt's order of Discharge. Upon 
 this a question may arise, whether a creditor who has not proved 
 his debt under the bankruptcy has a locus standi in court to be 
 heard in opposition. In the English Courts of Bankruptcy the 
 question has been frequently raised; and the practice prevails of 
 
§ 29-34.] the bankrupt's discharge. 135 
 
 not allowing a creditor who, having had the opportunity of doing 
 so, has not proved his debt, to be heard. The question, however, 
 has been held to be one entirely of discretion on the part of the 
 court, and no appeal is allowed in England against the exercise of 
 such discretion. It is also to be observed in this connection, that 
 under the provisions of Section 34, the creditors who may contest the 
 validity of" the order of Discharge after it has been granted, upon 
 the grounds there set forth, must be creditors in respect of debts 
 which have been proved or are provable under the estate of the 
 bankrupt; and the United States Bankrupt Act of 1841 enacted 
 that, in any case of bankruptcy, the majority in number and value 
 of the creditors who should have proved their debts at the time of 
 the hearing of the petition of the bankrupt for his Discharge, might 
 file their written dissent to the allowance of the bankrupt's Dis- 
 charge. 
 
 The District Court of the United States for the Southern District 
 of New York decided, that creditors who had not come in and 
 proved their debts under the bankruptcy, could not file objections, 
 and contest the right of the bankrupt to his Discharge. — In the 
 matter of King, 5 Law Reports, 320. 
 
 Contesting the Validity of the Discharge when granted. — At any 
 time within two years after the date of the order of Discharge, any 
 creditor whose debt has been proved under the bankrupt's estate, 
 or is provable, may contest the validity of such Discharge on the 
 ground that it was fraudulently obtained, and apply to the court 
 which granted it to set aside and annul it. The application must 
 be made by the creditor in writing, and must specify which in par- 
 ticular of the several acts mentioned in Section 29 it is intended 
 to give evidence of against the bankrupt, setting forth the grounds 
 of avoidance. No evidence is to be admitted as to any other of 
 the said acts, but the said application is to be subject to amend- 
 ment at the discretion of the court. Vide the various acts enumer- 
 ated in the previous notes, title " Order of Discharge." 
 
 The court is to direct that such notice of the creditor's applica- 
 tion as it may deem reasonable be given to the bankrupt, and or- 
 der him to appear and answer the same within such time as to the 
 court shall seem fit and proper. The accusation and charges against 
 the bankrupt of the fraudulent acts, in respect of which the creditor 
 seeks to invalidate the Discharge, should be prepared with great 
 care and accuracy. They assume the form of an indictment against 
 him, many of them being constituted misdemeanors under the penal 
 provisions of the act. Vide Section 44. 
 
 In order to invalidate the Discharge, the court must be satisfied 
 by evidence, 
 
 1. That the fraudulent acts, or any of them, alleged against the 
 bankrupt by the creditor are true, and, 
 
 2. That the creditor contesting the validity of the Discharge 
 had no knowledge of such fraudulent acts committed by the bank- 
 rupt until after the Discharge was granted. 
 
 These elements having been proved to the satisfaction of the 
 
136 THE BANKRUPT LAW. [§29-34. 
 
 court, the bankrupt's order of Discharge is to be set aside and an- 
 nulled. If the fraudulent acts alleged are either not proved by 
 the creditor upon the hearing, or if the court find that they were 
 known to the creditor before the, granting of the Discharge, judg- 
 ment is to be rendered in favor of the bankrupt, and the validity 
 of the Discharge is not to be affected by the proceedings. This 
 provision is adopted from the recent English act consolidating the 
 law of bankruptcy, which enacts that the bankrupt's order of Dis- 
 charge shall not be reviewed by the court, unless the court see 
 that the Discharge was obtained upon false evidence, or by reason 
 of the suppression of evidence. And it may be observed that the 
 bankrupt is afforded the same right to apply for a rehearing, where 
 his order of Discharge has been suspended or refused upon the 
 ground that false evidence has been adduced against him, a right 
 which is not afforded by this act. 
 
 There was no such provision in the United States Bankrupt Act 
 of 1841. 
 
 Impeaching the Order of Discharge by Replication when it is plead- 
 ed. — The bankrupt has still another ordeal to pass through. If 
 sued by a creditor for a debt due before the adjudication of bank- 
 ruptcy, such creditor proceeds with his action, and does not prove 
 under the bankrupt's estate, and the bankrupt having obtained his 
 order of Discharge, pleads it in bar to such action, the creditor may, 
 by way of replication to such plea, impeach such Discharge upon 
 all or any of the grounds in respect of which this act invalidates it ; 
 and the question thus raised upon the pleadings is that which is 
 to be tried by the jury. 
 
 The decisions under the Bankrupt Act of 1841 almost unani- 
 mously establish, that where a creditor or other person seeks to 
 avoid the order of Discharge obtained by a bankrupt under his 
 bankruptcy, distinct and specific allegations must be made of the 
 particular misconduct of the bankrupt with reference to the Bank- 
 rupt Law, by which the order of Discharge is invalidated, and that 
 such allegations should appear on the record by way of replication 
 to the plea of Discharge. — Flournoy vs. Newton, 8 Geo., 306 ; 
 Tomkins vs. Bennett, 3 Texas, 36 ; Swan vs. Littlefield, 4 Cush., 
 474. 
 
 Certain creditors of a bankrupt, who had proved their claims 
 against him, opposed his Discharge, and an issue was framed and 
 tried in the District Court of the United States, involving the ques- 
 tion, whether the bankrupt had been guilty of any fraud or willful 
 concealment of his property, or had preferred any of his creditors 
 contrary to the provisions of the Bankrupt Act. The jury returned 
 a verdict in the bankrupt's favor, and the court granted a Discharge 
 and certificate. Afterward a creditor, who had not proved his 
 debt under the bankruptcy, nor had appeared before the court to 
 oppose the bankrupt's Discharge, brought an action against him, 
 and he pleaded his Discharge in bar. Held, that the verdict was 
 not conclusive against the plaintiff, and that he might impeach and 
 avoid such Discharge, by evidence that the bankrupt had preferred 
 
§ 29-34.] the bankrupt's discharge. 137 
 
 one creditor to another contrary to the provisions of the act. — 
 Beekman vs. Wilson, 9 Met., 434. 
 
 Where the precise question of fraud, upon which the creditor 
 sought to impeach the bankrupt's Discharge, had been passed upon 
 by the District Court, the adjudication upon that question had the 
 operation of an estoppel ; but where the attempt was to impeach 
 the certificate for further and other instances of fraud, beyond what 
 were passed upon by the District Court, the adjudication did not 
 conclude the creditor, for the estoppel must be confined to such as 
 the case shows were passed upon by the District Court. — Downer 
 vs. Rowell, 25 Ver., 2 Deane, 336. It was held that a bankrupt's 
 certificate of Discharge was not avoided by his having given money 
 or property to a creditor, who had filed objections to his Discharge 
 for cause assigned, in order to induce such creditor to withdraw his 
 opposition. — Chamberlin vs. Griggs, 3 Denio, 9. Where a bankrupt 
 has made conveyances to prefer creditors in contemplation of bank- 
 ruptcy, in replying such matter to avoid the certificate of Dis- 
 charge, it was held not to be necessary to set out the property con- 
 veyed, nor the names of the nominal parties to the conveyance ; it 
 is sufficient to state the names of those beneficially interested. — 
 Shelton vs. Pease, 10 Mis., 473. 
 
 Where a plaintiff sought to invalidate a bankrupt's Discharge 
 under the Bankrupt Law of 1841, upon the ground that the defend- 
 ant in his petition in bankruptcy had omitted to insert his name, 
 whereby he had no notice of such bankruptcy, and could neither 
 prove his claim under the estate nor oppose the granting of the 
 bankrupt's Discharge, it was held, that in order to avoid such Dis- 
 charge by reason of such omission, it was incumbent on the plaint- 
 iff to show that the omission was willful and fraudulent. — Burn- 
 side vs. Brigham, 8 Met., 75. Where a defendant relied on a Dis- 
 charge under the Bankrupt Act of 1841, and the plaintiff attempted 
 to avoid such Discharge by showing that the bankrupt had con- 
 cealed a portion of his property, the latter was allowed to give in 
 evidence the statements made by him to his counsel, who assisted 
 him in making an inventory of his property, respecting the property 
 alleged to have been concealed, and the advice given by his counsel 
 that such property ought not to be inserted in such inventory. — 
 Robinson vs. Wadsworth, 8 Met., 67. Any one interested in the 
 administration of the effects of the bankrupt may object to the Dis- 
 charge, though not technically a creditor. — In the matter of Book, 
 3 M'Lean, 317. 
 
 In order to enable a plaintiff to impeach a Discharge in bank- 
 ruptcy, pleaded on the ground of some fraud, or willful concealment 
 by him of his property, the reasonable notice specifying in writing 
 such fraud or concealment required by the Bankrupt Act should be, 
 either by replication to the defendant's plea seasonably filed, or 
 by written notice seasonably given, setting forth in ekch case the 
 fraud and concealment, and wherein it consisted, as specifically as 
 if it were a special declaration in an action on the case. — Chad wick 
 vs. Starrett, 27 Maine, 14 Shep., 138. 
 
138 THE BANKRUPT LAW. [§ 29-34. 
 
 The certificate, i. e., the Discharge of a bankrupt, who had con- 
 cealed part of his property with intent to defraud his creditors, was 
 held void under the 38th Section of the English Bankrupt Act, al- 
 though he voluntarily gave it up before the granting of the certifi- 
 cate. — Courtivron v. Meunier, 2 Eng. Law and Eq. Kep., 393. 
 
 A Discharge under the late Bankrupt Act of the United States, 
 when pleaded in bar to an action for prior indebtedness, may be im- 
 peached and avoided on account of preferences given to creditors, 
 and of payments and transfers of property in contemplation of 
 bankruptcy, forbidden by the 2d Section of the act. — Brereton vs. 
 Hull, 1 Denio, 75. For a replication to a plea of Discharge and 
 evidence in support of such replication, vide cases, Richards vs. 
 Nixon, 20 Penn., 8 Harris, 19 ; Chambers vs. Neal, 3 B. Mon., 25. 
 
 The bankrupt is entitled to notice of the intention of the creditor 
 to impeach the validity of his Discharge for fraud, and to have the 
 specific fraud which the creditor relies upon distinctly stated. — 
 Hubbell vs. Cramp, 11 Paige, 310. 
 
 The omission by a petitioner under the act to give notice to a 
 creditor is not of itself, without proof that the omission was fraud- 
 ulent or intentional, sufficient to invalidate the petitioner's Dis- 
 charge under the bankruptcy as against such creditor. — Brown vs. 
 Rebb, 1 Richardson, 174. 
 
 A replication to a plea of Discharge under the Bankrupt Act 
 must state what particular act of fraud the bankrupt defendant has 
 committed ; a mere general averment that he had made payments 
 or transfers of property to creditors, in violation of the provisions of 
 the Bankrupt Law, would seem to be insufficient ; and for what such 
 a replication should specifically allege, and its form, vide Brereton 
 vs. Hull, 1 Denio, 75. 
 
 Pleading the Discharge. — In order to avoid the many conflicting 
 decisions of the American courts upon the construction of the Bank- 
 rupt Act of 1841 with respect to the averments necessary to sup- 
 port the plea of the bankrupt's order of Discharge, and to be alleged 
 in such plea, the 34th Section of this act adopts the form of plea 
 prescribed by the English act consolidating the Bankruptcy Law, 
 and provides that the Discharge may be pleaded by a simple aver- 
 ment that on the day of its date such Discharge was granted to 
 him, setting the same forth in hcec verba. 
 
 The Discharge may be pleaded since the last continuance in bar 
 of the suit, and in such plea it is not necessary to state when the 
 plea is filed. The time of filing appears sufficiently from the filing, 
 and the leave of the court to file it. — Keene vs. Mould, 16 Ohio, 12. 
 
 A plea of certificate of Discharge need not set forth the facts nec- 
 essary to give jurisdiction to the court granting it, and all matters 
 in avoidance of the certificate of Discharge must be specially replied. 
 — Rowan vs. Holcomb, 16 Ohio, 463 ; Suydam vs. Walker, 16 Ohio, 
 122. The order of Discharge, after other pleas have been entered, 
 should be pleaded as a plea since the last continuance. — Corpening 
 vs. Grmnell, 10 Iredell, 15. 
 
 Where the defendant obtains his Discharge in bankruptcy after 
 
§29-34.] the bankrupt's discharge. 139 
 
 an action has been brought, the plaintiff will be allowed to discon- 
 tinue without costs, but not so if the Discharge has been obtained 
 before action brought. — Camp vs. Gilford, 7 Hill, 169. 
 
 A plea of bankruptcy stating that, after the making of the prom- 
 ise sued on, the defendant became a bankrupt within the meaning 
 of the statute of bankruptcy, but which sets out no Discharge under 
 the law, is bad. — Atkinson vs. Fortinberry, 7 S. & M., 302 ; Ingass 
 vs. Savage, 4 Barr, 224. • ' 
 
 Where a defendant, after the commencement of an action against 
 him, jointly, with others, obtains his Discharge in bankruptcy, but 
 neglects to obtain leave to plead it, and suffers judgment to be en- 
 tered against him, it seems that he can not set up his Discharge 
 afterward in opposition to the appointment of a receiver in a cred- 
 itor's suit founded on such judgment. — Steward vs. Green, 11 Paige, 
 535. As to the effect of the certificate of Discharge in answer to a 
 creditor's bill, and the averments necessary in pleading such Dis- 
 charge in a State Court, wdfeHubbell vs. Cramp, 11 Paige, 310. 
 
 Where a decree is made by the Court of Chancery before the Dis- 
 charge of the defendant in bankruptcy for the payment of a debt 
 contracted before the bankruptcy, the Discharge is a bar to any suit 
 or other proceeding upon the decree to charge the defendant per- 
 sonally with the debt. — Johnson vs. Fitzhugh, 3 Barb. Chan. Rep., 
 360. 
 
 A certificate of Discharge granted in the District Court of the 
 United States in one State is not evidence in another, without the 
 authentication of the certificate of the clerk by the judge. — Dorsey 
 vs. Maury, 10 S. & M., 298. 
 
 Where a creditor's bill is filed before a decree of bankruptcy 
 against the defendant, so as to obtain a lien upon his property, and 
 the defendant subsequently obtains a Discharge in bankruptcy, he 
 can not plead it generally in answer to such bill, it being only a 
 personal Discharge, and not affecting the lien of the bill upon his 
 estate. — Lowry vs. Morrison, 11 Paige, 327. 
 
 A Discharge in bankruptcy granted by a District Court of the 
 United States under the Bankrupt Law of 1841, was a good defense 
 to an action of covenant upon a warranty in a State Court, which 
 was not broken until after a certificate of Discharge was granted. 
 —Bates vs. West, 19 111., 134. 
 
 The Supreme Court will on motion, in their discretion, reverse a 
 judgment of the County Court in order that the defendant may 
 plead in bar his Discharge under the bankruptcy, such Discharge 
 having been obtained subsequently to the final trial in the County 
 Court, on payment by the defendant of costs in the Supreme Court. 
 —Bank of Bellows' Falls vs. Onion, 16 Verm., 470. 
 
 Omission to plead Discharge. — Where a suit is pending against a 
 bankrupt at the time he obtains his Discharge upon a debt provable 
 in bankruptcy, and he does not plead his Discharge in bar as he 
 might do, a Court of Equity will not annul the judgment rendered 
 against him in order to give effect to his Discharge. — Bellamy vs. 
 Woodson, 4 Geo., 175. 
 
140 THE BANKRUPT LAW. [§ 29-34. 
 
 Where a defendant has neglected to plead his Discharge as a 
 bankrupt, obtained after suit was commenced, and judgment has 
 been given against him by default, he may be let in to plead on pay- 
 ment of costs. — Lee vs. Philips, 6 Hill, 246 ; Sanford vs. Sinclair, 6 
 Hill,248. > 
 
 Amending Plea. — Where there was a defective plea of a bank- 
 rupt's Discharge, the case being in the last resort, the defendant 
 had leave to amend. — M'Niel vs. Knott, 11 Geo., IS 2. 
 
 Effect of the Discharge upon foreign Debts. — A Discharge under 
 the Bankrupt Act of the United States does not Discharge a debtor 
 from debts contracted, and made payable in, a foreign country, un- 
 less by express terms of the statute itself, or unless the foreign cred- 
 itors should come in and prove their debts under the bankruptcy. — 
 Murray vs. De Rottenham, 6 Johns. Ch., 52. 
 
 Where the acceptor of a bill at the time it was drawn and accept- 
 ed, although a citizen of the United States, resided in England, and 
 continued to reside there until after its maturity, and became bank- 
 rupt in England after the maturity of such bill, and obtained his 
 Discharge under the Bankrupt Laws of that country, it was held, 
 that his liability as such acceptor was thereby discharged, notwith- 
 standing such bill, when it was accepted, was owned by a citizen 
 and resident of the United States, and thence continued to be so 
 owned until after such Discharge was obtained. — Olyphant vs. At- 
 wood, 4 Bosw., 2ST. Y., 459. 
 
 A Discharge under the English Bankrupt Law of a merchant re- 
 siding in England, from a debt due to a citizen of Massachusetts, 
 contracted and payable in England, is a bar to a subsequent action 
 on the debt in that State, whether the debtor proved his debt under 
 the English Bankrupt Law or not. — May vs. Breed, 2 Cush., 15. 
 
 The Discharge in bankruptcy did not Discharge the bankrupt 
 from debts contracted and made payable in a foreign country, un- 
 less the foreign creditors come in and prove their debts under such 
 bankruptcy. — M'Menomy vs. Murray, 3 John. R., 435. 
 
 A and B, copartners, conveyed lands to C in trust for security 
 of certain of their European creditors until they should be paid or 
 B should be exonerated, and after the said debt should be satisfied, 
 or B so exonerated, then in trust for A. A and B were afterward 
 discharged from their debts under the Bankrupt Act of the United 
 States ; held, that the deed of trust was valid, and that B's Dis- 
 charge from the partnership debts was not a fulfillment of the con- 
 dition on\which the trust for the foreign creditors was created. — 
 M'Menomy vs. Murray, 3 Johns. Ch., 435. 
 
 A certificate of Discharge under the Bankrupt Law of the United 
 States of 1841 was held to Discharge the bankrupt from all suits 
 brought here for debts, domestic or foreign, which were or might 
 have been proved under the bankruptcy. — Murray vs. De Rotten- 
 ham, 6 Johns. C. R, 52. The general rule is, that a Discharge from 
 a contract according to the laws of the place where it is made, or 
 where it is to be performed, is good every where, and extinguishes 
 the contract. — Very vs. M'Henry, 29 Maine, 16 Shep., 206. 'And 
 
§ 29-34.] the bankrupt's discharge. 141 
 
 upon the other hand, the Discharge of a contract by the law of the 
 place where the contract was not made, or to be performed, will 
 not be a Discharge. A debt created in London, England, and due 
 to a London- creditor, is not extinguished by a Discharge of the 
 debtor under the Bankrupt Act of the United States. — Lizardi vs. 
 Cohen, 3 Gill, 430. 
 
 Upon Debts and Liabilities in General. — The validity of a decree 
 by the United States Court giving a Discharge in bankruptcy to a 
 debtor under the act of 1841, can not be questioned if the certifi- 
 cate has not been impeached for fraud, and the debt in question is 
 not of that fiduciary class which is saved from the operation of the 
 act. — Beach vs. Miller, 15 La. An., 601. 
 
 A decree showing an absolute Discharge in bankruptcy, and that 
 the bankrupt was authorized to receive a certificate, is conclusive 
 as a plea in bar without the certificate itself. — Viele vs. Blanchard, 
 4 Greene, Iowa, 299. 
 
 Debts not Barred or Extinguished by the Bankrupt's Discharge., 
 — In order to ascertain which debts are extinguished by the bank- 
 rupt's Discharge, the real test is what debts are provable under the 
 bankruptcy. The following cases decide what character of liabil- 
 ities are not extinguished by the Discharge. 
 
 Covenant of the Bankrupt to pay Annuity. — By a deed of separa- 
 tion between the defendant and his wife, the defendant covenanted 
 with the plaintiff, as trustee for the wife, to pay him, for her sepa- 
 rate use, an annuity, to commence from the 11th of January, 1854. 
 On the 29th of September, 1854, and while the defendant and his 
 wife were living separate, the defendant became bankrupt. Held, 
 that the annual sum so covenanted to be paid was not a debt pay- 
 able on a contingency, nor a liability to pay money on a contin- 
 gency, and, consequently, that the bankrupt's certificate was no bar 
 to an action for the recovery of a quarterly payment which became 
 due after the bankruptcy. — Parker vs. Lice, 4 Hurl. & Nor., 53. 
 
 A demand arising upon an undertaking which creates a liability 
 to pay money at several different periods, if several contingencies 
 shall happen at those several periods, is not a demand provable un- 
 der the bankruptcy, and is therefore not barred by the certificate. — 
 Warburg vs. Tucker, 32 Eng. Law and Eq., 189; 4 Jurist, N. S., 
 1142. In this case, which was considered in England a leading case 
 upon the subject, the defendant, being indebted to the plaintiff, had 
 assigned to him by way of security a policy of insurance upon his 
 life, and had covenanted to pay all future premiums ; and secondly, 
 that, if he did not pay them, it should be lawful for the plaintiff to 
 pay the premiums, and that he (the defendant) would repay him. 
 The plaintiff sued the defendant upon this covenant, assigning as 
 breaches, first, that the defendant had not paid the premiums ; and, 
 secondly, that he had not repaid to the plaintiff the premiums which 
 had been paid by him on the defendant's default. The defendant 
 pleaded his certificate under the bankruptcy in bar of the action ; 
 and it was held by the judges (in error), affirming the decision of 
 the Court of Queen's Bench, that such certificate was no bar to an 
 
142 THE BANKRUPT LAW. [§ 29-34. 
 
 action to recover the premiums which accrued due, and were so 
 paid by the plaintiff after the bankruptcy. The effect of this deci- 
 sion was to render the bankrupt liable for all future premiums upon 
 policies of insurance which before his bankruptcy he may have 
 covenanted to pay ; and that being the state of the law in England 
 as the result of the decision in the case cited, and to remedy the 
 hardship and injustice upon a bankrupt, the author inserted in the 
 last English Bankrupt Act a clause to remedy that injustice. Vide 
 24 & 25 Vict., chap. 134, § 154. The same clause was suggested to 
 the, promoters of this bill, but has not been adopted ; and the deci- 
 sion, therefore, will be applicable to the bankrupt's liability upon- 
 such covenants, notwithstanding his Discharge. See also the case 
 of Young vs. Winter, 32 Eng. Law and Eq. Rep., 437. 
 
 Contingent Debt. — Bankruptcy during the currency of the quar- 
 ter, and a subsequent certificate of the bankrupt, is no bar to an ac- 
 tion by a schoolmaster for board and tuition of a bankrupt's son 
 under a quarterly contract, the demand not being a debt " not pay- 
 able, at the time of the bankruptcy" within the meaning of the- En- 
 glish Bankrupt Act, nor " a liability to pay money on a contingen- 
 cy."— Hopkins v. Thomas, 7 C. B., N. S., 711. 
 
 Where it appears on the face of a bond to secure an annuity, that 
 one of the joint and several obligors is, in fact, a surety only for the 
 other, he is to be looked upon as a surety, and not as a principal, in 
 all questions under the Bankrupt Laws ; consequently, his bank- 
 ruptcy and certificate will not discharge him from liability to pay 
 arrears of an annuity accruing due since his bankruptcy, and unpaid 
 by the principal.— White vs. Corbett, 11 Ellis, B. & E, 1103. 
 
 Contracts to pay Accruing Taxes. — A debtor conveyed his proper- 
 ty in trust for his creditors, and covenanted to pay the taxes on the 
 property ; it was held that a discharge under the Bankrupt Law of 
 1800 did not discharge this collateral covenant as to taxes .accruing 
 subsequently to the Discharge. — Murray vs. De Rottenham, 66 John. 
 Chan. Rep. 52. 
 
 Where a bankrupt had covenanted to pay all taxes, etc., that 
 should be assessed on land which he had conveyed in trust, and to 
 discharge certain specified encumbrances existing thereon, it was 
 held,' that he was liable after his Discharge on the covenant to pay 
 the taxes laid from time to time upon the land whioh had been paid 
 by the party to whom he had conveyed the land, they not being 
 provable under the bankruptcy ; but as to the encumbrances exist- 
 ing at the time of the bankruptcy, and which had been paid off by 
 the same party, it was held that he was discharged. — 6 Johns. 
 Chan., 45. 
 
 Liability on Guarantee. — The bankrupt had given a continuing 
 guarantee for goods to be supplied to B, with a stipulation that the 
 security should subsist until notice in writing to the contrary. 
 Goods were supplied on the faith of the guarantee, and a debt in- 
 curred. No notice had been given to determine the guarantee, and 
 it was held, that the bankrupt's liability thereon was a contingent 
 liability within the meaning of the English Bankrupt Act, and con- 
 
§29-34.] the bankrupt's discharge. 143 
 
 sequently that the debt was provable, and that the certificate was a 
 bar in respect to all goods supplied to B after the bankruptcy. — 
 Boyd vs. Robins, 4 C. B, N". S., 749. This decision was afterward 
 reversed in the Exchequer Chamber. Vide S. C, 577. 
 
 Rent. — If a house be taken for a year before adjudication of bank- 
 ruptcy, and the bankrupt continue in possession afterward, he is not 
 discharged from the subsequent rent by the Discharge under his 
 bankruptcy. — Hendricks vs. Judah, 2 Caines, 25. 
 
 A Discharge in bankruptcy taking effect on the 28th of June, 
 1842, is not a bar to the recovery of a quarter's rent falling due on 
 the 9th of July following, the bankrupt having occupied the prem- 
 ises until the end of the quarter. — Savory vs. Stocking, 4 Cush., 607. 
 
 A ground-rent in Pennsylvania coming due after the discharge 
 of the debtor as a bankrupt, is not extinguished by his certificate. 
 — Bosler vs. Kuhm, 8 Watts & Serg., 1 83. 
 
 A debtor was arrested on mesne process, and gave a bond in com- 
 mon form to procure his release from arrest. The surety in the 
 bond then filed his petition, and was decreed to be a bankrupt un- 
 der the late Bankrupt Act of the United States. Judgment having 
 been obtained in the action, the bond became forfeited by the neg- 
 glect of the principal to perform the condition thereof The bank- 
 rupt afterward received his certificate of Discharge, and it was held 
 that such certificate was no defense to a suit upon the bond. — 
 Woodward vs. Herbert, 11 Shep., 358. 
 
 Breach of Warranty. — Where the breach of a warranty made prior 
 to the bankruptcy is subsequent to the Discharge under the bank- 
 ruptcy, such Discharge is no bar. — Bush vs. Cooper's administrator, 
 18How.,U.S.,82. 
 
 Bankrupt's Liability for. Calls or Shares. — The defendant, being a 
 holder of shares in a railway company, became bankrupt, and was 
 sued for calls made in respect of such shares after his bankruptcy. 
 It was held, that this debt was not barred by his certificate, as it 
 was not provable under his bankruptcy as a debt due in futv.ro, nor 
 as a debt due on a contingency within the meaning of the English 
 Bankrupt Acts. — South Staffordshire Railway Company vs. Burn- 
 side, 2 Eng. Law and Eq. Rep., 418. 
 
 Property held by the Bankrupt as Executor. — The Discharge is no 
 bar to the recovery of specific property held by the bankrupt as 
 executor ; but where he has received money which he ought to have 
 distributed before his bankruptcy, and the distributees seek to re- 
 cover it, it has been held that his Discharge is a bar. — Waller vs. 
 Edwards, 6 Litt., 348. 
 
 An action on the case for deceit is not barred by a certificate of 
 Discharge as a bankrupt, though the measure of damages be ascer- 
 tainable by reference to a contract. 
 
 Upon Judgments recovered after Adjudication. — A certificate of 
 Discharge under the act is a bar to an action upon a judgment re- 
 covered pending the proceedings in bankruptcy and before the 
 granting of the certificate upon a debt due at the time of the de- 
 cree in bankruptcy ; and the costs accruing upon the debt after the 
 
144 THE BANKRUPT LAW. [§ 29-34. 
 
 decree and before the granting of the certificate follow the debt in 
 this respect. — Harrington vs. M'Naughton, 20 Vt, 5 Washb., 293. 
 The question in all these cases is, whether the debt against the 
 ^bankrupt actually existed at the time of the adjudication of bank- 
 ruptcy ; if it did it is provable under the bankruptcy of the debtor, 
 and, if provable, the discharge under the bankruptcy releases the 
 debtor from it. Vide the cases Boyd vs. Vanderkemp, 1 Barb., 
 Chan. Rep., 273, 347. If a creditor to whom a debt is due at the 
 time of the adjudication of bankruptcy has commenced an action 
 against such debtor, and, instead of electing to prove his debt un- 
 der the bankruptcy, continues such action to final judgment, the 
 Discharge operates as a release ; the enforcement of the debt by 
 final process makes no difference. 
 
 Under the Bankrupt Law of 1841 the certificate of Discharge 
 applied to debts owing before, though judgments be obtained on 
 them after the bankrupt filed his petition. The judgment is hot a 
 new debt, but a new security, given by the act of the law for the 
 same debt. — Dick vs. Powell, 2 Swan, Tenn., 632. 
 
 A judgment rendered after the defendant has presented his peti- 
 tion to be declared a bankrupt is not affected by his Discharge sub- 
 sequently obtained under the bankruptcy. — Kellogg vs. Schyler, 2 
 Denio, 73. 
 
 A Discharge in bankruptcy, valid as regards the debt on which 
 a judgment is founded, is operative against the judgment. — M'Don- 
 al vs. Ligraham, 3 Miss., 1 George, 389: 
 
 A judgment recovered after a party applied to be declared bank- 
 rupt was not barred by a decree of bankruptcy. — Uran vs. Pond- 
 lette, 36 Maine, 1 Heath, 15. 
 
 • It was afterward settled in Vermont that the certificate of a 
 bankrupt under the law of 1841 was a bar to an action upon a 
 judgment recovered pending the proceedings in bankruptcy, and 
 before the granting of the certificate, upon a debt due at the time 
 of the decree in bankruptcy. — Downer vs. Rowell, 26 Vt., 3 Deane, 
 397. 
 
 Non-payment by the Bankrupt of a Fine. — A fine imposed upon a 
 party by the Court of Chancery for the willful violation of an in- 
 junction order is not affected by his discharge under the Bankrupt 
 Law. — Spaulding vs. The People, 7 Hill, 301. And it is presumed 
 that the same rule would apply to any fine or pecuniary imposition 
 by a State Court for contempt or violation of any of its orders. 
 
 Where a party has been committed for non-payment of a fine im- 
 posed as a punishment for a willful contempt, as for violating an 
 injunction, or other criminal act of a like nature, he could not be 
 discharged under the act. But an ordinary precept issued from 
 the Court of Chancery committing a party for non-payment of a 
 sum of money found due from him is a mere debt, and the debtor 
 might set up his Discharge under the bankruptcy. — People vs. 
 Spalding, 10 Paige, C. R, 284. 
 
 Liability to Sureties who have paid for the Bankrupt Principal. — 
 A Discharge under the Bankrupt Law of 1841 released the bank- 
 
§ 29-34.] the bankrupt's discharge. 145 
 
 rupt from all future liabilities to his sureties for debts paid by 
 them, not payable until after the Discharge took place. And he is 
 released from liability to guarantors also under similar circum- 
 stances.— Fullwood vs. Bushfield, 14 Penn. State Rep., 2 Harris, 90. 
 
 Where the surety' upon a note pays the same after the maker's 
 Discharge in bankruptcy, although the note became due before 
 such Discharge, he is not entitled to recover the amount from the 
 bankrupt. — Mace vs. Wells, 1 How., U. S., 272. 
 
 The sureties of a defalcating public officer were not excluded 
 from the benefit of the United States Bankrupt Act of 1841 ; but 
 the Discharge of a bankrupt under such act does riot affect his lia- 
 bilities to such sureties. — Saunders vs. Commonwealth, 10 Gratt., 
 Va., 494. 
 
 A man committed to prison on mesne process, where he remains 
 sixty days, was in the mean time fixed as bail ; after the sixty days 
 had expired he was adjudicated bankrupt. Held, that the demand 
 on his recognizance of bail was provable under the bankruptcy, and 
 therefore that his certificate discharged him from liability on that 
 recognizance. — Rathbone vs. Blackford, 1 Caines, 588. See Payson 
 vs. Payson, 1 Mass., 283. 
 
 One of two joint debtors who assumes the whole debt and in- 
 demnifies the other becomes thereby a surety, Sandf. Ch., 210; 10 
 Paige, 595 ; and being surety, and, as such, liable to pay the debt, he 
 may come in and prove the claim under the act. The fact that the 
 debt was not due at the time of the proceedings does not prevent 
 this. The surety's claim, therefore, for payments made after the : 
 Discharge, is barred by the Discharge. — Ct. of Appeals, 1851, Crafts 
 vs. Mott, 4 N. Y. ; 4 Comst., 604 ; affirming S. C. 5 Barb., 305 ; S. P. 
 Chancery, 1846, Morse vs.Hovey,l Barb. Oh., 404; affirming S. C. 1 
 Sandf. Ch., 188. 
 
 A decree for damages which are unliquidated, containing a pro- 
 vision for their liquidation by reference to a master, is a present 
 debt, payable when the amount is ascertained by the master, and is 
 therefore provable under the act of 1841. — Chancery, 1846, Boyd 
 vs. Vanderkemp, 1 Barb. Ch., 273. 
 
 It was held under the Bankrupt Act of 1841, tha,t where the 
 plaintiffs had proved their debt under the bankruptcy, although 
 they afterward defeated the application of the bankrupt for his Dis- 
 charge, they were nevertheless precluded from maintaining any suit 
 for their debt, and that they were not at liberty to prove their debt 
 conditionally. The chancellor upon appeal decided that the intent 
 ' of the statute was not that the proving of debts by the creditors 
 should be an absolute abandonment of all claim against future 
 acquisitions in case the Discharge should be refused, or if it should 
 be void, but only that the proof of debts should be a waiver of any 
 suits or proceedings inconsistent with the election to obtain satis- 
 faction under the decree, and a consent to be bound by the Dis- 
 charge, if the bankrupt should obtain one, which was not impeach- 
 able ; and it was further decided in the same case that all proceed- 
 ings theretofore commenced by the creditor are absolutely relin- 
 
146 THE BANKRUPT LAW. [§ 29-34. 
 
 quished by the act of proving, and not merely suspended. — Haxtun 
 vs. Corse, 2 Barb. Chan., 506. 
 
 A payment by a debtor, when it consists of an appropriation of a 
 part only of his property, must, in order to bar his Discharge as a 
 bankrupt, be made in contemplation of bankruptcy, and be volun- 
 tary. To show the payment to be in contemplation of bankruptcy, 
 something more must appear than mere insolvency; and to be 
 voluntary, the payment must originate with the debtor, the first 
 step being taken by him, and not by the creditor. — In re Rowell, 
 21 Vt, 6 Washb.,B20. 
 
 New Promise by the Bankrupt to pay Debts extinguished by his 
 Discharge. — In order to make the Discharge of a bankrupt under his 
 bankruptcy complete, and to secure to him the benefit of his exemp- 
 tion from all previous debts, the English Bankrupt Act prevents 
 any creditor enforcing any contract, promise, or agreement made 
 by the bankrupt after the commencement of the bankruptcy to 
 pay any debt, claim, or demand, or any part of such debt, claim, or 
 demand, from which he shall have been discharged by his certifi- 
 cate. This provision does not render the contract illegal, but the 
 bankrupt may plead The statutory defense. In the American courts 
 a new promise by the .bankrupt to pay a debt, barred by his Dis- 
 charge under the bankruptcy, is legal, and may be enforced ; and 
 some of the leading decisions upon this subject with reference to 
 the act of 1841 are collected. It will be observed, that there is 
 much conflict of authority as to the evidence sufficient to establish 
 the fact of a new promise, and the facts upon which an action to en- 
 force such promise is maintainable. 
 
 Although such decisions are in conflict as to the facts from which 
 a new promise is to be inferred, and the evidence necessary to es- 
 tablish such promise, they appear to agree upon this point, namely, 
 that such promise must have been made by the bankrupt at some 
 period before he has obtained his Discharge under his bankruptcy, 
 and that a promise made after such Discharge can not be support- 
 ed in law — the Discharge being deemed to be a total extinguish- 
 ment of the debt. Vide Otis vs. Gazlim, 31 Maine, 1 Red., 56V ; 
 vide also Petten vs. Ellingwdod, 32 Maine, 2 Red., 163. 
 
 Nothing less than an express promise to pay a debt discharged 
 under the bankruptcy will revive the liability to pay it. Partial 
 payments are not a new promise, nor the equivalent to a new prom- 
 ise. — Stark vs. Stinson, 3 Foster, N. H., 259. 
 
 Where a bankrupt, after the adjudication of bankruptcy, makes 
 a new promise to pay in consideration of an agreement by the par- 
 ticular creditor not to prove under the bankruptcy, such promise 
 is binding if there be no collusion prejudicial to other creditors. 
 Vide case last cited. An express promise by a bankrupt after his 
 Discharge to pay a prior debt, is a waiver of the Discharge, and, as 
 the debt is sufficient consideration for such promise, he is bound by 
 it. But if a condition be annexed to the promise, such condition 
 must be complied with or fulfilled before the promise can be en- 
 forced. — Yate vs. Hollins worth, 5 Har. & J., 216 ; Maxim vs. Morse ; 
 
§ 29-34.] the bankrupt's discharge. 147 
 
 8 Mass., 127. But a promise to pay a specialty debt, which has been 
 discharged by a certificate of bankruptcy, does not revive the orig- 
 inal debt, as a debt by specialty. The original debt is merely a 
 consideration that gives validity to the new promise. — Field's Case, 
 2 Rawle, 351. 
 
 Where a new promise is made by a bankrupt to pay a debt con- 
 tracted previous to his bankruptcy, such promise is valid, but does 
 not revive his liability upon the note evidencing the debt, but ren- 
 ders him liable only on the new promise. — Carson vs. Osborn, 10 
 B. Mon., 155. 
 
 A new promise to pay a debt which otherwise would have been 
 discharged by proceedings in bankruptcy made after the decree of 
 bankruptcy and before the certificate of Discharge, is binding upon 
 the party making it. — Corliss vs. Shepherd, 28 Maine, 15 Shep., 550. 
 
 A declaration of a discharged bankrupt that he was going to 
 pay the particular debt as soon as he was able, and that he was 
 going to pay all his honest debts except some in the city, though 
 expressive of an intention, does not constitute an engagement to 
 pay sufficient to avoid the legal effect of his Discharge. — Yoxthei- 
 mer vs. Keyser, 11 Penn. State Rep., 1 Jones, 364. 
 
 But a promise made by a bankrupt after he has obtained his 
 Discharge does not revive the debt, for the Discharge in bankrupt- 
 cy annihilates all previous debts of the bankrupt. 
 
 If a debtor previous to his bankruptcy promise a particular 
 creditor to pay the debt when he shall be able, his Discharge is no 
 bar to an action on the new promise, although the original debt 
 might have been proved under the bankruptcy. — Kingston vs. 
 Whorton, 2 S. & R, 208. 
 
 A creditor of a bankrupt, who has been discharged under his 
 bankruptcy, can not maintain an action on a subsequent promise 
 of the bankrupt " to pay when he is able" until all the assets of the 
 bankrupt have been distributed. — Mason vs. Hughart, 9 B. Mon., 
 480. A new promise to overcome the effect of a bankrupt's Dis- 
 charge must appear to have been made after the debtor was de- 
 creed to be a bankrupt ; and a replication to a plea of a Discharge 
 in bankruptcy, setting forth a promise made after the presentation 
 of the petition, and before the commencement of the action, is bad. 
 — Sebens vs. Sherman, Sandf. Sup. Ct. Rep., 510. 
 
 Great strictness was required, in order to create liability by a 
 new promise made to pay a debt discharged under the bankruptcy, 
 as much so as is necessary in the case of a new promise made to 
 pay a debt barred by the Statute of Limitations. Vide Badger vs. 
 Gilmore, 33 N. H., 361 ; La Tourette vs. Price, 28 Miss., 6 Cush., 702. 
 
 Where a creditor relies upon a new promise by the bankrupt to 
 pay a debt discharged by his bankruptcy, the promise to pay such 
 debt must be absolute and unconditional. — Brown vs. Collier, 8 
 Humph., 510. 
 
 As to what is sufficient evidence of a new promise, vide the 
 cases, Spaulding v. Vincent, 24 Vt., 1 Deane, 501 ; Way vs. Sperry, 
 2 Cush., 238 ; Pratt vs. Russell, 1 Cush., 462 ; Herndon v. Givens, 
 
148 THE BANKRUPT LAW. [§ 29-34. 
 
 16 Ala., 261. As to what evidence is necessary to bind the bank- 
 rupt by a new promise, vide also Prewett vs. Carruthers, 12 S. & M, 
 491 ; Spooner vs. Russell, 30 Maine, IT Shep., 454 ; Haines vs. Stan- 
 fer, 13 Penn. State Rep., 1 Har., 541 ; Evans vs. Carey, 29 Ala., 99 ; 
 Taylor vs. Nixon, 4 Sneed, Tenn., 352. 
 
 Debts and Claims not Discharged. — No debt created by the fraud 
 or embezzlement of the bankrupt, or by his defalcation as a public 
 officer, or while acting in any fiduciary character, shall be discharged 
 under the act. 
 
 The rules upon the subject as to what will constitute fraud in 
 the contraction of a debt depends so much upon the peculiar circum- 
 stances of each case, and are frequently so complicated, that within 
 the compass of this treatise it is impossible to do more than allude 
 to some of the principles deducible from reported decisions. 
 
 It has been held, for instance, in the State of New York, that 
 mere insolvency at the time known to and believed in by the party 
 to the contract is not sufficient, nor mere concealment of the fact 
 from the vendor. The proposition that a purchaser upon credit 
 stands in a confidential relation to his creditor, so as to bind him 
 to disclose his situation without any inquiry by the seller, is not 
 sustained by sufficient authority. The test inquiry in such cases is, 
 Did the party purchase the goods in question with the intention 
 not to pay for them ? — Hall vs. Naylor, 6 Duer, Rep., 71. 
 
 The rule thus laid down was substantially affirmed in the same 
 case by tjie Court of Appeals. Judge Comstock says, " It does not 
 appear that Kerr & Co., in purchasing the goods in question, made 
 any representation of their ability to pay for them. If, however, 
 they concealed the fact of their insolvency with a design of pro- 
 curing the goods without paying for them, it was a fraud which 
 rendered the sale void. On the trial of such an issue, the quo ani- 
 mo of the transaction, is the fact to 'be arrived at. If, however, the 
 purchaser, at the time of a new purchase, is not only insolvent, and 
 knows himself to be so, but has performed an open and notorious 
 act of insolvency by breaking up his business and assigning his 
 property, it is his duty to communicate that fact, and the violation 
 of that duty is a fraud." — Mitchell vs. "Warden, 20 Barbour, 253. 
 
 But express representations of ability to pay, made at the time, 
 and sufficient to induce, and which did induce the credit, will be evi- 
 dence o? an intended fraud. The representations must be false, and 
 must be known to the party making them to be so. — Freeman vs. 
 Leland, 2 Abbott, Rep., 479; Wenzer vs. De Baum, 1 E. D. Smith, 
 261 ; Gaflhey vs. Burton, 12 Howard, Pr. Rep., 516. 
 
 It is competent to show that the party accused was engaged in 
 other similar frauds at or about the same time. The transactions 
 must be so connected in point of time, and so similar in their other 
 relations, that the same motive may reasonably be imputed to them 
 • all. — Opinion of the Court of Appeals in Hall vs. Naylor; Cary vs. 
 Hotailing, 1 Hill, 311, and cases. 
 
 Where the question is, whether goods have been procured by a 
 fraudulent suppression of facts material to credit given, it will be 
 
§ 29-34.] the bankrupt's discharge. 149 
 
 competent to prove that in other instances they have been obtain- 
 ed by actual misrepresentations concerning the same facts. The 
 concealment in one case, and the false representations in the other, 
 are evidence of a fraudulent design, common to both transactions, 
 of procuring goods without the ability or intention to pay for 
 them. 
 
 In the case of Crandall vs. Bryan, 5 Abbott, 162, some points of 
 importance were determined ; and although the case was before a 
 single judge only, it seems that the propositions are either clearly 
 law, or extremely well supported. 
 
 Fraudulent representations and deceit, accompanied by damage, 
 constitute a good cause of action in respect to a sale of lands as 
 much as in respect to personal property. They did so before the 
 Code. — 1 Comstock, 308. 
 
 As to what constitutes a debt contracted by the breach of a fidu- 
 ciary relation, the most ordinary instances are those in which the 
 bankrupt has been intrusted by his principal with goods or money 
 in the capacity of agent, factor, broker, banker, attorney, or trustee. 
 And the criterion in every such case is, whether the specific moneys 
 received ought in good faith to have been paid over to the princi- 
 pal, or whether the bankrupt upon receiving such moneys had the 
 right to use them as his own, holding himself accountable for the 
 debt thus created. It must be clearly established that there was 
 a special trust and confidence reposed in him. If the relation be- 
 tween the parties was merely that of creditor and debtor, it is not 
 sufficient ; the relation must be that of trustee and cestui que trust. 
 
 The words of this section are more comprehensive than those of 
 the former Bankrupt Act of the United States of 1841, as to invali- 
 dating the order of Discharge ; and for the purpose of applying 
 the decisions under that act to a proper construction of the present 
 act, it has been considered advisable to state them. The Bankrupt 
 Law of 1841 excludes from its benefits "all persons owing debts 
 created in consequence of a defalcation as a public officer, or as ex- 
 ecutor, administrator, guardian, or trustee, or while acting in any 
 other fiduciary capacity." And it followed from such provisions 
 that the certificate of Discharge granted under that act did not re- 
 lease the bankrupt from any debts which came within that cate- 
 gory. 
 
 It was decided by the former Bankrupt Act of 1841 that a factor 
 who had sold the goods of his principal and received the money 
 therefor, did not owe him a debt created while acting in a fiduciary 
 capacity within the meaning of that act. — Hayman vs. Pond, 7 Met., 
 328 ; Anstill vs. Crawford, 1 Ala., 335 ; Chapman vs. Forsyth, 2 How., 
 U. S., 202. Vide also Williamson vs. Dickens, 5 Iredell, 259. 
 
 The Circuit Court of the United States soon after decided that 
 the existence of fiduciary debts would not prevent the bankrupt's 
 Discharge from other debts ; and that fiduciary debts, if proved, 
 would be discharged. The creditor thereupon petitioned the Dis- 
 trict Court, before which he had proved his debt, to withdraw such 
 proof. The court granted such petition, and thereupon gave the 
 
150 THE BANKRUPT LAW. [§ 29-34. 
 
 bankrupt his certificate of Discharge, and it was held, that such 
 fiduciary debt was not barred by the bankrupt's discharge. — Morse 
 vs. City of Lowell, 1 Met., 152. 
 
 The principle upon which the above decisions proceed is, that if 
 the creditor to whom a fiduciary debt is 1 due from the bankrupt, 
 elect to prove such debt, and receive a dividend under the estate, 
 he is estopped from saying afterward that his debt is not within 
 the law. If, however, he does not prove such debt, he may recover 
 it from the bankrupt, notwithstanding the bankrupt's Discharge, by 
 showing that it was a debt contracted by the breach of a fiduciary 
 relation existing between the creditor and the bankrupt. 
 
 Where a person receives money or property belonging to another, 
 as agent or bailee, to be paid over or delivered to the principal, or 
 used in a particular way, or for specific purposes for his use, such 
 property or money is held or received in a fiduciary capacity, the 
 liability for which is not affected by the Discharge in bankruptcy 
 of the agent or bailee. — Matteson vs. Kellogg, 15 111., 547. 
 
 A banker who had pledged a short bill of a customer was ex- 
 cluded from his certificate. — Ex parte Strutt, 17 Eng, Law & Eq. 
 Rep., 515. 
 
 Where the usual course of dealing carried on by the bankrupt, 
 who had traded without capital, had been to purchase goods, and 
 immediately afterward to raise money by pledging them, and it ap- 
 peared that this was done, not for a purpose merely dishonest, but 
 in accordance with the custom in his trade, and with the bond fide 
 expectation of being ablo afterward, on a rise in the market price 
 of the goods, to redeem tha goods and sell them at a profit, it was 
 held, that this was not equivalent to the ofiense of contracting debts 
 " by any manner of fraud, or by means of false pretenses," within the 
 meaning of the 256th Section of the Bankrupt Law Consolidation 
 Act of 1849. — Ex parte Manico, 1 7 Eng. Law & Eq., 594. 
 
 A private person who received a note or other security for col- 
 lection was held, under the Bankrupt Act of 1841, to have received 
 it in a fiduciary capacity, and that it was a case of special trust. — 
 White vs. Piatt, 5 Den., 269. 
 
 No debt created by the defalcation of the bankrupt as a publio 
 officer is to be discharged under the act, and it is assumed that such 
 debt must have been created by the embezzlement or misapplication 
 of moneys received by him in the course of his employment as such 
 public officer. Vide Peele vs. Elliott, 16 How, Pr. R., 480, 481 ; The 
 Republic of Mexico vs. Arrangoiz, 5 Duer, 604. 
 
 Under the Bankrupt Act of 1841, in some cases of this nature, the 
 question arose as to the effect of a creditor whose debt had been 
 created by the breach of a fiduciary relation between himself and 
 the bankrupt, proving his debt under the bankrupt's estate, and it 
 was decided, that where the creditor had elected to prove for such 
 debt and take a dividend under the estate, he was barred like other 
 creditors by the bankrupt's Discharge. — Fisher vs. Currier, 7 Met., 
 424. 
 
 Section 33, however, of this act provides in express terms that 
 
§29-34.] THE bankrupt's discharge. 151 
 
 such creditors may prove under the estate, and receive a dividend 
 in payment of their debt ; it is therefore presumed that the proof 
 under the estate, and the receipt of a dividend, would not preclude 
 or estop them from opposing or invalidating the bankrupt's Dis- 
 charge. 
 
 Discharge under a Second Bankruptcy.— The act provides that no 
 person who shall have been discharged under this act, and shall aft- 
 erward become bankrupt on his own application, shall be again en- 
 titled to a Discharge whose estate is insufficient to pay seventy per 
 centum of the debts proved against it, unless the assent in writing 
 of three fourths of his creditors who have proved their claims is 
 filed at or before the time of such application for his Discharge. 
 
 If a bankrupt, therefore, upon a second bankruptcy occurring vol- - 
 untarily and upon his own application, is unable to pay the required 
 dividend under such bankruptcy, and is unable to obtain the requi- 
 site assent of his creditors, his order of Discharge under his second 
 bankruptcy will be a nullity. 
 
 It is to be observed that the restriction applies as to the payment 
 of the dividend to the debts proved under the estate, and not to those 
 for which he may be liable, if not proved. The onus lies upon the 
 bankrupt to establish that his former estate has paid seventy-five 
 per centum, or can pay that amount to his creditors ; it will not be 
 sufficient to prove that his estate is likely to produce that amount. 
 —Till vs. Wilson, Man. & Ry, 580 ; Edmondson vs. Parker, 3 B. 
 & P., 185 ; Coverley vs. Morley, 16 East., 225 ; Jeffs vs. Ballard, 
 1 B. & P., 467. It will not fail to be remarked that this provi- 
 sion applies only to cases where the adjudication of the first bank- 
 ruptcy has taken place under the voluntary clause of the act upon 
 the bankrupt's own application, and in practice this may be defeated 
 by the bankrupt procuring the adjudication in the second bank- 
 ruptcy by a friendly creditor under the compulsory clause of the 
 act. 
 
 In the event of a second bankruptcy, the order of Discharge under 
 such bankruptcy will be valid upon the bankrupt proving to the 
 satisfaction of the court that he has paid all the debts owing by him 
 at the time of such previous bankruptcy, or that he has been volun- 
 tarily released by his creditors from such debts. 
 
 Bankruptcy after one Year from the Date of this Act. — It is express- 
 ly enacted in Section 33, that in all proceedings in bankruptcy com- 
 menced after one year from the time this act shall go in operation, 
 no Discharge shall be granted to a debtor whose assets do not pay 
 fifty per centum of the claims against his estate, unless the assent 
 in writing of a majority in number and value of his creditors who 
 have proved their claims is filed in the case at or before the time 
 of the application for the Discharge. 
 
 This provision is not limited to cases of voluntary bankruptcy, 
 but is equally applicable to the bankruptcy of a debtor compulso- 
 rily made bankrupt. 
 
152 THE BANKRUPT LAW. [§ 35. 
 
 FRAUDULENT PREFERENCES AND CON- 
 VEYANCES. 
 
 Section 35. And be it fwiher mooted, That if any per- 
 son, being insolvent, or in contemplation ' of insolvency, 
 within four months before the filing of the petition by or 
 against him, with a view to give a preference to any cred- 
 itor or person having a claim against him, or who is un- 
 der any liability for him, procures any part of his prop- 
 erty to be attached, sequestered, or seized on execution, 
 or makes any payment, pledge, assignment, transfer, or 
 conveyance of any part of his property, either directly or 
 indirectly, absolutely or conditionally, the person receiv- 
 ing such payment, pledge, assignment, transfer, or con- 
 veyance, or to be benefited thereby, or by such attach- 
 ment, having reasonable cause to believe such person is 
 insolvent, and that such attachment, payment, pledge, as- 
 signment, or conveyance, is made in fraud of the provi- 
 sions of this act, the same shall be void, and the assignee 
 may recover the property, or the value of it, from the 
 person so receiving it, or so to be benefited ; and if any 
 person being insolvent, or in contemplation of insolvency 
 or bankruptcy, within six months before the filing of the 
 petition by or against him, makes any payment, sale, as- 
 signment, transfer, conveyance, or other disposition of 
 any part of his property to any person who then has rea- 
 sonable cause to believe him to be insolvent, or to be act- 
 ing in contemplation of insolvency, and that such pay- 
 ment, sale, assignment, transfer, or other conveyance, is 
 made with a view to prevent his property from coming 
 to his assignee in bankruptcy, or to prevent the same 
 from being distributed under this act, or to defeat the 
 object of, or in any way impair, hinder, impede, or delay 
 the operation and effect of, or to evade any of the provi- 
 
§ 35.] FRAUDULENT PREFERENCES AND CONVEYANCES. 153 
 
 sions of this act, the sale, assignment, transfer, or convey- 
 ance shall be void, and the assignee may recover the 
 property, or the value thereof, as assets of the bankrupt. 
 And if such sale, assignment, transfer, or conveyance is 
 not made in the usual and ordinary course of business 
 of the debtor, the fact shall be prima facie evidence of 
 fraud. Any contract, covenant, or security made or given 
 by a bankrupt or other person with, or in trust for, any 
 creditor, for securing the payment of any money as a con- 
 sideration for or with intent to induce the creditor to for- 
 bear opposing the application for discharge of the bank- 
 rupt, shall be void ; and if any creditor shall obtain any 
 1 sum of money or other goods, chattels, or security from 
 any person as an inducement for forbearing to oppose, or 
 consenting to such application for discharge, every cred- 
 itor so offending shall forfeit all right to any share or 
 dividend in the estate of the bankrupt, and shall also 
 forfeit double the value or amount of such money, goods, 
 chattels, or security so obtained, to be recovered by the 
 assignee for the benefit of the estate. 
 
 The provisions of this section, one of the most important in the 
 whole act, makes void certain transactions of the bankrupt, and 
 certain assignments, transfers, conveyances, payments, and pledges, 
 within four months and six months respectively before the filing of 
 the petition for an adjudication in . bankruptcy, either by himself 
 or by a creditor against him ; and it gives the assignees the right 
 to recover the property, or the value, from the person who has ob- 
 tained its possession, in order that such property, or its value, may 
 be distributed generally among the creditors of the bankrupt's 
 estate. 
 
 From the earliest existence of a Bankrupt Law the same provi- 
 sions are found. In the first Bankrupt Act which was passed in 
 the reign of James I., the bankrupt was prohibited from making, or 
 causing to be made, any fraudulent conveyance of his lands, tene- 
 ments, goods, or chattels ; . and under that head were classed all the 
 cases of fraudulent conveyances— that is to say, voluntary convey- 
 ances without a valuable consideration — which were rendered void 
 without the intervention of bankruptcy, as against creditors, by the 
 well-known statutes passed in the previous reign, 13 Eliz., chap. 5, 
 and 21 Eliz., chap. 4, the provisions of which are so well known to 
 
154 THE BANKRUPT LAW. [§ 35. 
 
 every American jurist, and are incorporated in the Insolvent Acts 
 of the various States of the Union. 
 
 Under these earlier statutes the English courts decided, that un- ' 
 der the original Bankrupt Act of James I., all grants and. convey- 
 ances were void as against the creditors of a bankrupt, which a 
 Court of Equity would declare fraudulent, as well as all cases which 
 either appear from the facts themselves to be, or from conclusion 
 of law arising from these facts would be deemed to be, fraudulent 
 as against third parties, however fair and binding they might be as 
 between the parties themselves. 
 
 The first enactment of the section is : 
 
 That if any person being insolvent, or in contemplation of insolv- 
 ency, within four months before the filing of the petition by or against 
 him, with a view to give a preference to any creditor pr person hav- 
 ing a claim against him, procures any part of his property to be at- 
 tached, sequestered, or seized in execution ' ; secondly, or makes any 
 payment, pledge, assignment, transfer, or conveyance of any part of 
 his property, either directly or indirectly, absolutely or conditionally, 
 the person receiving such payment, pledge, assignment, transfer, or 
 conveyance, or to be benefited thereby, or by such attachment, having 
 reasonable cause to believe such person is insolvent, and that such 
 attachment, payment, pledge, assignment, or conveyance is made in 
 fraud of the provisions of this act, the same shall be void, and the 
 assignee may recover the property, or the value ofit,from the person 
 so receiving it, or so to be benefited/ 
 
 If any person being insolvent, or in contemplation of insolvency 
 or bankruptcy, within six months before the filing of the petition by 
 or against him, makes any payment, sale, assignment, transfer, con- 
 ' veyance, or other disposition of any part of his property, to any per- 
 son who then has reasonable cause to believe him- to be insolvent, or 
 to be acting in contemplation of insolvency, and that such payment, 
 sale, assignment, transfer, or other conveyance, is made with a view 
 to prevent his property from coming to his assignee in bankruptcy, 
 or to prevent the same from being distributed under this act, or to 
 defeat the object of, or in any way impair, hinder, impede, or delay 
 the operation and effect of, or to evade any of the provisions of this 
 act, the sale, assignment, transfer, or conveyance shall be void, and 
 the assignee may recover the property, or the value thereof, as the 
 assets of the bankrupt. 
 
 The first two subdivisions of the section are intended to apply 
 to, and to defeat and invalidate what are deemed to be fraudulent 
 preferences to creditors. 
 
 The third subdivision of the section is intended to invalidate 
 transactions calculated to defeat the policy of the Bankrupt Law, 
 which contemplates the distribution of the bankrupt's estate equal- 
 ly among his creditors ; and the distinction must be remembered, 
 that the actual fact of insolvency, or the act being done in contem- 
 plation of insolvency, and reasonable cause existing on the part of 
 the creditor to believe that the bankrupt is at the time insolvent, 
 are the requirements necessary to defeat any fraudulent preference. 
 
§ 35.] FRAUDULENT PREFERENCES AND CONVEYANCES. 155 
 
 It is not necessary that bankruptcy should have been contemplated, 
 and this obvious distinction will be borne in mind in applying the 
 principles of the legal decisions upon this branch of the Bankrupt 
 Law. It may be laid down as a general principle that, in order to 
 make a transaction void as a fraudulent preference under the act, it 
 must not only be made at a time when the debtor was either in- 
 solvent, or contemplated insolvency, but it must also have been 
 voluntary. If there be any threat or pressure on the part of the 
 creditor, it will not be voluntary. The transaction must originate 
 with the debtor, and be his own voluntary act. 
 
 Many of the American decisions under the Bankrupt Law of 
 1841, and the English decisions on the meaning of the words con- 
 templation of bankruptcy, are very conflicting, and difficult to recon- 
 cile. 
 
 In referring to the authorities, American and English, those have 
 been selected from which the principles which regulate these trans- 
 actions will the most easily be deduced. Each case depends so 
 much upon its own intrinsic facts that it is impossible to analyze 
 them. Many conveyances and assignments which would be valid 
 under many of the State laws are rendered void by the section, as 
 calculated and intended to defeat the distribution of the debtor's 
 estate under the Bankrupt Law. The transfer by a debtor of part 
 of his property to a creditor in consideration of a pre-existing debt 
 would be a valid assignment under the laws of many States ; but if 
 made voluntarily, and in contemplation of bankruptcy, it is defeated 
 by the act, as being against the policy of the Bankrupt Law. Gen- 
 erally speaking, a debtor has a right to prefer one creditor to an- 
 other ; he may assign all, or a portion of his property, to such cred- 
 itor, but if he does it voluntarily, and in contemplation of bankrupt- 
 cy, he contravenes the policy of the Bankrupt Law. 
 
 It may be laid down as a general principle, that where any as- 
 signment or conveyance is fraudulent, as being in contravention of 
 the policy of the Insolvent Laws of the various States, it is a fortiori 
 void, as against the policy of the Bankrupt Law. 
 
 For instance, the Revised Statutes of the State of New York en- 
 act, that " Every conveyance or assignment, in writing or otherwise, 
 of any estate, or interest in lands or in goods, or things in action, or 
 of any rents or profits issuing therefrom, and every charge upon 
 lands, goods, or things in action, or upon the rents or profits there- 
 of, made with the intent to hinder, delay, or defraud creditors or 
 other persons of their lawful suits, damages, forfeitures, debts, or 
 demands, and every bond or other evidence of debt given, suit com- 
 menced, decree or judgment suffered, with the like intent, as against 
 the persons so hindered, delayed, or defrauded, shall be void." And 
 the decisions upon the above and similar enactments will afford a 
 guide for the construction of the provisions of this act upon the 
 subject of fraudulent preferences and conveyances. 
 
 A merchant being insolvent, sold his whole stock of goods to an 
 infant, who was his clerk and brother-in-law, took his notes for the 
 price, and ran away. Held, that the assignment was a fraud upon 
 
156. THE BANKRUPT LAW. [§35. 
 
 creditors, and a verdict to the contrary should be set aside. — Su- 
 preme Ct., 1844, Vance vs. Phillips, 6 Hill, 433, 
 
 An insolvent, against whom suits were pending, conveyed land to 
 his brother for an inadequate price, which did not clearly appear to 
 have been paid, and the conveyance was for some time kept secret, 
 and there was no proof that it was executed when it bore date, and 
 the grantor still continued in possession, erecting buildings, and re- 
 ceiving rents and profits. Held, that the deed was fraudulent and 
 void, as against a subsequent purchaser of the land, at a sale under 
 an execution against the grantor. — Court of Errors, 1817, Sands vs. 
 Hildreth, 14 Johns., 493 ; affirming S. C, 2 Johns. Ch., 35. 
 
 A transfer by one insolvent partner, made after a dissolution of 
 the firm and in fraud of the creditors and solvent partner, to one 
 having notice, is void. — Supreme Ct., Sp. T., 1847; Geortner vs. 
 Trustees of Canajoharie, 2 Barb., 625. 
 
 A father, to defraud his creditors, bought land before the Revised 
 Statutes, and took a deed in his son's name. Held, that no trust 
 resulted to the father, for the conveyance was fraudulent. — Supreme 
 Ct, 1849, Proseus vs. M'Intyre, 5 Barber, 424. 
 
 The prohibition of 1 Revised Stat., 603, § 4, that no incorpora- 
 ted company shall make an assignment in contemplation of insolv- 
 ency, applies to associations organized under the General Banking 
 Law; — Ct. of Appeals, 1860, Robinson vs. Bank of Attica, 21 1ST. Y. 
 406. 
 
 A debtor's conveyance of all his property, without consideration, 
 and with intent to defeat debts which exceed the value of the prop- 
 erty, is void as against existing creditors. — 2 Rent. Com., 440 ; N. 
 T. Superior Ct. 1859, N. Y. and Harlem R. R. Co. vs. Kyle ; 5 Bos., 
 587. 
 
 It was held that a deed not fraudulent at first, may become so 
 by being concealed, or not pursued, by which means creditors are 
 drawn in to lend their money. — 2 Vera, 261 ; Chancery, 1816, Hil- 
 dreth vs. Sands, 2 Johns. Ch., 35. 
 
 Assignments giving preferences have never been favored by the 
 courts, and will only be upheld when they fulfill the conditions 
 which the law finds it necessary to prescribe to prevent fraud 
 Among these are, that the debtor shall devote all his property to 
 the satisfaction of his debts, without condition or qualification, and 
 that he shall reserve nothing from the assigned property to himself 
 until all his creditors are paid. He may prescribe the order in 
 which payments shall be made, giving preferences to favored cred- 
 itors ; but if he reserves any part of the estate to his own use, or 
 for the benefit of himself in any way, until the debts of all his cred- 
 itors are satisfied, the assignment will be adjudged fraudulent and 
 void— Supreme Ct., 1862, M'Clelland vs. Remsen, 26 Barb., 622 : S. 
 C.,How. Pr., 175. ' ' 
 
 A conveyance executed after insolvency, and after legal proceed- 
 ings had commenced, was upheld against the creditors on the ground 
 that it was only fulfilling a parol partition which had been made in 
 good faith many years before, and under which possession had been 
 meanwhile assumed. — Bilsborou vs. Titus, 15 How. Pr., 95. 
 
§ 35.] • FRAUDULENT PREFERENCES AND CONVEYANCES. 157 
 
 The bankrupt, before committing any act of bankruptcy, assigned 
 to an agent a bill of lading and invoice to secure particular credit- 
 ors, saying, in a letter of instruction to their agent, " This is intend- 
 ed to secure them, let our business take what turn it may, unless 
 they sue, and then you can pay the whole to C," another creditor. 
 Held, a voluntary preference on the eve of bankruptcy, and in con- 
 templation of it, and therefore void. — Supreme Ct., 1806, Ogden vs. 
 Jackson, 1 Johns., 370. 
 
 It was held under the Bankrupt Law of 1841 that a debtor on 
 the eve of bankruptcy could not transfer goods to a favored credit- 
 or in payment of his claim, so as to vest in the creditor any title as 
 against assignees afterward appointed. — 3 Wils., 27, Mayor's Ct., 
 1802 ; Waddington vs. Morris, Liv. Jud. Op., 52. 
 
 Even if an act of bankruptcy be contemplated by the debtor, yet 
 if, at the instance and on the application of the creditor, he makes 
 payment or assigns property to him, such payment or assignment is 
 valid as against the assignees of the bankrupt. — Court of Errors, 
 1809, Phoenix vs. Dey, 5 Johns., 412. 
 
 Of the degree of pressure or urgency of solicitation on the part 
 of the creditor necessary to bring the case within this rule, vide 
 Ogden vs. Jackson, 1 Johns., 3V0 ; Phoenix vs. Dey, 5 id., 412. 
 
 Under the United States Bankrupt Act of 1800 it was held that a 
 payment of a particular creditor, made after June 1, 1800, but in the 
 hope of being ultimately able to pay all debts, under peculiar cir- 
 cumstances, was not fraudulent, as made in contemplation of bank- 
 ruptcy. — M'Menomy vs. Ferrers, 3 Johns., 71. 
 
 It was decided under the Bankrupt Act of 1841, which declares 
 all payments, assignments, etc., in contemplation of bankruptcy, for 
 the purpose of giving preferences, void, means in contemplation of 
 a state of bankruptcy, or rather of actually stopping business be- 
 cause of insolvency. — 5 Law R., 2 ; Story's R., 349 ; 2 N". Y. Leg. 
 Obs., 131 ; Av. Chan. Ct., 1846, Freeman vs. Deming, 3 Sandf. CL, 
 327. 
 
 Such payments and assignments are void only in reference to pro- 
 ceedings under the Bankrupt Law. — Chancery, 1848, Seaman vs. 
 Stoughton, 3 Barb. Ch., 344. To the same effect, 1843, Dodge vs. 
 Sheldon, 6 Hill, 9. 
 
 The confession of judgment by a debtor in contemplation of bank- 
 ruptcy, in order to prefer one creditor to the general creditors, is a 
 fraudulent preference within the act, and the judgment entered on 
 such confession is void, and of course no lien attaches under it. — 
 M'Lean vs. Lafayette Bank, 3 M'Lean, 185. A judgment confessed 
 by a bankrupt within two months before the filing of his petition, 
 where the bankrupt had broken up his business, was held fraudu- 
 lent, and also all the proceedings under it. — M'Lean vs. Lafayette 
 Bank, 3 M'Lean, 587. A confession of judgment at the instance of 
 the plaintiff to secure him from liabilities contracted for the defend- 
 ant, all of which became due four months before the defendant filed 
 his petition in bankruptcy, was valid under the Bankrupt Law as 
 against subsequent judgment creditors. — Wilkinson's Appeal, 4 
 Barr., 284 
 
158 THE BANKRUPT' LAW. [§ 35. 
 
 The words "in contemplation of bankruptcy," as used in the 
 Bankrupt Law, mean a contemplation of a state of bankruptcy 
 merely, and not an intention to take the benefit of the Bankrupt 
 Law. And this means more than an inability to pay debts prompt- 
 ly. It contemplates a thorough breaking up of business. — Everett 
 vs. Stone, 3 Story, 446 ; Winsor vs. Kendall, 3 Story, 507. 
 
 A and B, partners, made certain conveyances of the bulk of their 
 property to a certain creditor to the amount of $36,000, being at the 
 same time indebted to an equal amount, and subsequently became 
 bankrupts. Held, that such a conveyance was in contemplation of 
 bankruptcy, and in fraudulent preference of creditors. — Peckham vs. 
 Burrows, 3 Story, 544. The same case also decided, that to consti- 
 tute a conveyance in contemplation of bankruptcy, it is not neces- 
 sary that the preferred creditor should know of the debtor's insolv- 
 ency, or should co-operate with him to obtain a priority of payment. 
 A mortgaged to B the whole of his stock in trade, and nearly all 
 of his real estate, to secure a debt due from him to B, and on the 
 same day presented his petition for adjudication of bankruptcy. 
 Subsequently B assigned to the Cohasset Bank and others all his 
 right, title, and interest in the said stock and real estate. Held, 
 that the mortgages were in contemplation of bankruptcy within 
 the meaning of the Bankrupt Act of 1841, and were therefore void, 
 and that it was immaterial whether the mortgagee did or did not 
 know that a fraudulent preference was intended in his favor, if it 
 were actually given.-— Morse vs. Godfrey, 3 Story, 364. 
 
 The pendency of proceedings in bankruptcy is sufficient construct- 
 ive notice to all grantees or assignees of property proceeding from 
 the bankrupt ; and in the case last cited a definition of a bond fide 
 purchaser is given in the following terms : To constitute a bond fide 
 purchaser for a valuable consideration, the sale must be for a new 
 consideration; and the transfer of property merely as a new secu- 
 rity for old debts and liabilities, without extinguishment or surren- 
 der of such debts, or of the old securities therefor, is not sufficient. 
 Where two partners in trade, apprehending embarrassment in their 
 business, conveyed all of their stock and real estate and promissory 
 notes to secure them against certain debts and liabilities which they 
 had incurred as sureties for the two partners, actions were after- 
 ward commenced on certain of the debts so secured, upon which 
 judgment was obtained, and execution was levied ; but before the 
 judgment was obtained, the two partners became bankrupts under 
 the Bankrupt Law of 1841. The personal chattels so assigned were 
 sold previous to the bankruptcy, and the proceeds were applied to 
 the payment of the said debts. Held, that the assignment was art 
 act in contemplation of bankruptcy, and in preference of certain 
 creditors, and was therefore void ; that the judgments were not 
 valid liens within the saving of the last proviso of the act ; that the 
 proceeds of the personal chattels sold and applied to the payment 
 of the debt could be followed by the assignee, and made assets in 
 bankruptcy ; and that the said fraudulent conveyance was a bar to 
 the bankrupt's Discharge. — Everett vs. Stone, 3 Story, 446. 
 
§ 35.] FRAUDULENT PREFERENCES AND CONVEYANCES. 159 
 
 Where, however, the preference has been given by a bankrupt, 
 induced by an agreement between the parties for the creditor's se- 
 curity, and which the creditor called upon the bankrupt, in compli- 
 ance with his agreement, to execute ; it was held, that the payment 
 or assignment of assets by a debtor, under such circumstances, is 
 not voluntary, and not void as a fraudulent preference under the 
 Bankrupt Law. — Smoot vs. Morehouse, 8 Ala., 370. 
 
 Under the Bankrupt Law, any act done in contemplation of bank- 
 ruptcy, or when in a state of insolvency, whereby preference is 
 given to particular creditors, is void. — Collins vs. Hood, 4 M'Lean, 
 186. 
 
 Where a debtor, in contemplation of taking the benefit of the 
 Bankrupt Act of 1841, confessed judgment to his creditor to give 
 him a preference over other creditors, the creditor being in no way 
 a party to the fraudulent transaction, such judgment was not suf- 
 ficient to avoid the title of the creditor to the real estate of the 
 debtor purchased at a sale under execution on such judgment. — 
 Fenelon vs. Lonergan, 29 Penn. State Rep., 471. 
 
 A debtor was declared a bankrupt on a petition filed against 
 him by his creditors September 21, 1842. It appeared that, Au- 
 gust 5, 1842, the bankrupt had made a mortgage of land to secure 
 a note due of one of his creditors. The security was given at the 
 urgent request of the creditor, and the bankrupt testified that, 
 though he was in fact at the time deeply insolvent, he supposed 
 he could go on and pay his debts, and that he did not at *he time 
 intend to petition, nor expect to be proceeded against in bankrupt- 
 cy. Held, that the mortgage was valid, and not within the con- 
 demnation of the provisions of the second section of the Bank- 
 rupt Act. — Dow vs. Sargent, 15 IN". H., 115. 
 
 Whether the payment to a creditor is to be deemed a fraudulent 
 preference or not, must depend upon the circumstances of each par- 
 ticular case. When the payment is not made in the ordinary 
 course of business, or under threats or suits, but a creditor who is 
 a relation or a friend is selected, and payment is made to him, either 
 before the debt is due, or after the debt is due, upon the eve of 
 bankruptcy, without any pressure on the part of such creditor, all 
 the authorities, both American and English, establish that such facts 
 afford an almost irresistible conclusion, that the payment is prefer- 
 ential, and a fraud upon the Bankrupt Law. 
 
 A voluntary payment or transfer by an insolvent debtor, who is 
 going on with his business with a bond fide intention and expecta- 
 tion of saving himself from failing, and of paying his debts, is not 
 an unlawful preference within the meaning of the Bankrupt Law ; 
 and, in order to substantiate that the transfer was made in con- 
 templation of bankruptcy, it should appear that the debtor acted 
 in the anticipation of failing in his business — of committing an act 
 of bankruptcy, or of being declared bankrupt at his own instance, 
 on the ground of inability to pay bis debts, and intending to defeat 
 the general distribution of effects which takes place under a pro- 
 ceeding in bankruptcy. — In re Pearce, 21 Vermont, 6 Washb., 611. 
 
160 THE BANKRUPT LAW. [§ 35. 
 
 It was held under the Bankrupt Law of 1841, that a voluntary 
 assignment for the benefit of creditors made after the passage of 
 that law, and before it went into operation, and preferring some 
 creditors to others, was a fraud upon the law, and the assignee ap- 
 pointed under it was entitled to recover the property assigned. — 
 Cornwell's Appeal, 7 Watts. & Serg., 305. 
 
 An assignment for the benefit of creditors making' preferences, 
 made after the passage of the Bankrupt Law of 1841, by one hope- 
 lessly insolvent, and within five months previous to his application 
 for the benefit of the act, was held to be void, as being in contem- 
 plation of bankruptcy. — Freeman vs. Denning, 3 Sanford, Chan. 
 Rep., 327. 
 
 The fact that a debtor knows himself to be insolvent at the time 
 of giving a preference, is no ground for impeaching the transaction, 
 unless the debtor contemplated bankruptcy at the time. — Phoenix 
 vs. Ingraham, 5 John. Rep., 412. 
 
 A transfer by an insolvent person of all his property to a cred- 
 itor ten days before applying for the benefit of the Bankrupt Law, 
 is void under that law, although at the time of making the trans- 
 fer the debtor did not intend to take the benefit of the law. — M'Al- 
 lister vs. Richards, 6 Barr., 133. 
 
 An assignment made by a debtor of his property in contempla- 
 tion of bankruptcy, and for the purpose of giving preferences, is not 
 absolutely void«for all purposes ; it is only void as against an as- 
 signee pjoperly appointed under the Bankrupt Act. — Seaman vs. 
 Stoughton, 3 Barb., Chan. Rep., 344. 
 
 An assignment by a debtor in contemplation of bankruptcy of 
 all his effects, for the benefit of his creditors, to one who is not a 
 bond fide creditor or purchaser without notice, was held to be void 
 under the Bankrupt Law of 1841. — M'Lean vs. Meline, 3 M'Lean, 
 199; M'Lean vs. Johnson, 3 M'Lean, 202. Such assignment, though 
 valid under the law of the State, being void under the Bankrupt 
 Law, the property may be seized on execution upon judgments 
 regularly obtained without fraud before the filing of the petition 
 in bankruptcy. 
 
 Where a trader gives a mortgage to one of his creditors, in con- 
 templation of bankruptcy, and for the purpose of giving such cred- 
 itor a preference over the others, it is an act of bankruptcy within 
 the meaning of the statute of the United States of 1841. — Arnold 
 vs. Maynard, 2 Story, 349. 
 
 A conveyance or transfer by a debtor, in contemplation of bank- 
 ruptcy, does not necessarily mean in contemplation of his being de- 
 clared a bankrupt under this statute, but in contemplation of his 
 actually stopping his business, because of his insolvency, and inca- 
 pacity to carry it on. Vide case last cited. The confession of a 
 judgment to a creditor, with a view to prefer him, is not invalid un- 
 der the Bankrupt Law of 1841, if it be not voluntary, but the effect 
 of measures taken by the creditor, or in his power to take ; and the 
 burden is upon the party seeking to avoid the transaction to show 
 
§ 35.] FRAUDULENT PREFERENCES AND CONVEYANCES. 161 
 
 that it was voluntary. — Haldeman vs. Michael, 6 Watts & Serg., 
 128. 
 
 A judgment by confession is not void, because confessed only 
 ten days before the filing a petition by the debtor to be declared a 
 bankrupt. It must have been confessed in contemplation of bank- 
 ruptcy, voluntarily, and with a view of giving a particular creditor 
 a preference over the general creditors. — Taylor vs. Whitthorn, 5 
 Humph., 340. 
 
 Where a husband conveyed by way of release to his wife, for her 
 sole use and benefit, all the right, title, and interest he had acquired 
 by virtue of their marriage, to certain stock in an incorporated com- 
 pany, as also the right to sue the company for permitting the unlawful 
 transfer thereof, such a conveyance will be inoperative at law ; and 
 the rights of the husband attempted to be released will, upon his 
 being declared a bankrupt, vest in the assignees under his bankrupt- 
 cy. — Butler vs. Merchants' Insurance Company, 8 Ala., 146. 
 
 Where the grantor of a deed made to defraud creditors after- 
 ward became bankrupt, and such deed having been declared fraud- 
 ulent and void, the, grantee was held accountable for the rents and 
 profits s'ubsequent to the acts of bankruptcy, or from the time when 
 the right of the creditors to call him to an account accrued. — Sands 
 vs. Codwise, 4 Johns., 536. 
 
 Giving a voluntary preference to one creditor was held not to be 
 an act of bankruptcy, though if given on the eve of bankruptcy, and 
 in contemplation thereof, it was void. — Harrison vs. Sterry, 5 
 Cranch, 301 ; Locke vs. Winning, 3 Mass., 325 ; Ogden vs. Jackson, 
 1 Johns., 370. 
 
 Paying money or giving security to a creditor, in contemplation 
 of bankruptcy, and with a view to prefer him, was held to be a val- 
 id transaction, if it was not voluntary, but the result of measures 
 taken by the creditor. — 1 Johns., 370 ; Phoenix vs. Dey, 5 Johns., 
 412 ; M'Mechen vs. Grunvy, 3 Har. & J., 185. 
 
 A debtor had engaged, to transfer bank stock to B to secure him 
 from loss by indorsing the debtor's notes. Not having the stock 
 when applied to for the transfer, the debtor, at B's instance, convey- 
 ed land to C, who took up the notes. Held, that though the debtor 
 had committed an act in bankruptcy before he conveyed the land, 
 yet the conveyance was valid, and that B's preference thus obtain- 
 ed was only a substantial fulfillment of the debtor's original en- 
 gagement when B indorsed the notes. — 3 Har. & J., 185. 
 
 The policy of the Bankrupt Law of 1841 was to secure equality 
 among the creditors, and to prevent the debtor giving all his prop- 
 erty to some, to the exclusion of others. — Ex parte Breneman, 
 Crabbe, 456. 
 
 An assignment of all a man's property, made for the benefit of 
 certain creditors, is an act of bankruptcy, though made without 
 moral fraud; and assignments with preferences have been held 
 valid only on the ground that there was no Bankrupt Law in ex- 
 istence at the time. 
 
 L 
 
162 THE BANKRUPT LAW. [§35. 
 
 Two years before the passage of the Bankrupt Act of 1841, prop- 
 erty was conveyed by a debtor to prevent an attachment thereof 
 on a debt due at the time of the conveyance. Held, that it could 
 not be regarded as made in contemplation of bankruptcy, and could 
 not invalidate the bankrupt's Discharge. — Gove vs. Lawrence, 6 
 Foster, K H., 484. 
 
 A conveyance or assignment which is fraudulent at common law 
 is an act of bankruptcy, and so is every conveyance or assignment 
 which contravenes the provisions and objects of the Bankrupt Law, 
 though good at common law. — Gassett vs. Morse, 21 Vermont, 6 
 "Washb., 627. Vide also Bell vs. Leggett, 2 Sandford, Sup. Ct. Rep., 
 450, in which a very able judgment was pronounced, conflicting, to 
 some extent, with other American decisions on this question, and 
 deciding that a conveyance or assignment by a trader in embar- 
 rassed circumstances of all his effects to a particular creditor, wheth- 
 er voluntary or under pressure of legal process, or with intention 
 to take the benefit of the Bankrupt Act or not, was an act of bank- 
 ruptcy within the meaning of the Bankrupt Law of 1841 ; and it 
 will be found that most of the English cases support the view, that 
 if a debtor in insolvent circumstances transfers all his property in 
 trade, and all his effects, to one particular creditor, it virtually de- 
 feats the object and intention of the Bankrupt Law, which is based 
 upon a general distribution of the assets of the insolvent debtor 
 among his creditors. The fact of such a transfer incapacitates the 
 debtor from carrying on his trade, and the act of such transfer it- 
 self is pregnant with notice to the transferee of the object of the 
 debtor in making it. 
 
 A creditor could not, by commencing proceedings in a State 
 Court, after the commission of an act of bankruptcy by his debtor, 
 obtain a valid lien upon the property conveyed by a fraudulent 
 deed, the execution of which constituted the act of bankruptcy, if 
 such creditor had notice thereof; and such property passes to the 
 assignee in bankruptcy. — Shawhan vs. Wherroot, 7 How., U. S., 627. 
 ■ In order to make a security void, as given " in contemplation of 
 bankruptcy," within the meaning of the United States Bankrupt 
 Act of 1841, the debtor must at the time have contemplated an act 
 of bankruptcy, or a decree adjudging him a bankrupt on his own 
 petition. — Buckingham vs. M'Lean, 13 How.,U. S., 151. 
 
 Under the Bankrupt Law a sale of property to a creditor more 
 than thirteen months before the debtor applied for the benefit of 
 the law, and without knowing that the debtor contemplated going 
 into bankruptcy, and made by the vendee bond fide, is valid. — Ash- 
 by vs. Steere, 2 W. & M., 347. Such a sale, if done as a preference 
 of one creditor over another, where the debtor contemplated going 
 into bankruptcy, might prevent him from getting his Discharge, 
 and might be in him an act of bankruptcy, but still be valid in re- 
 gard to the creditor ; and the same case decides, that while in En- 
 gland the contemplation of bankruptcy means the benefit of the 
 Bankrupt Act, in this country it has been construed to mean in- 
 
§ 35.] FKAUDULENT PBEFERENCES AND CONVEYANCES. 163 
 
 solvency. Btlt, with all respect to this decision, it is suggested 
 that, if the preference to the creditor might he in the dehtor an act 
 of bankruptcy, it could not he valid in favor of the creditor. 
 
 To make a judgment void under the provisions of the Bankrupt 
 Law of 1841, it must have been given, not only to effect a prefer- 
 ence, but in contemplation of bankruptcy. — Atkinson vs. The Farm- 
 er's Bank, Crabbe, 529. 
 
 A judgment or preference in fraud of the act can be set aside 
 only in the court where the bankrupt's proceedings are had. Vide 
 case last cited. 
 
 Where a defendant confessed judgment after suit commenced, 
 and stipulated for delay, the confession under such circumstances 
 repels the conclusion that it was voluntary, and made with a view 
 to prefer such creditor. — Taylor vs. W. Witthorn, 5 Humph, 340. 
 
 An assignment of part of a debtor's effects when he is a trader, 
 even on account of a by-gone and pre-existing debt, does not, like 
 an assignment of the whole, carry with it intrinsic evidence of fraud, 
 since every trader must in the course of his business have power to 
 make over some portions of his property to creditors. The onus of 
 proving that it is the whole of the trader's property is upon the 
 assignees. — Chase vs. Goble, 2 Mann. & G., 930. 
 
 Whether such an act be a fraudulent preference, must be ascer- 
 tained by putting it to the jury to say whether the transaction 
 took place in contemplation of bankruptcy, and voluntarily, or under 
 fear and compulsion. It is not necessary that, to render a prefer- 
 ence on the eve of bankruptcy valid, there should be a threat or 
 pressure with an immediate power of rendering it available by tak- 
 ing legal steps. To defeat a payment or transfer made to a creditor, 
 the assignees must show it to be fraudulent, as against the body of 
 creditors, by proving it to be voluntary on the part of the bankrupt, 
 and in contemplation of his bankruptcy ; and if made in consequence 
 of the act of the creditor, it is not voluntary. — Casteel vs. Booker, 2 
 Exchq., 691. Mr. Baron Parke, in the case of Mogg vs. Baker, 4 Mees 
 & W., 348, thus states the law : " It is not necessary that the cred- 
 itor in the first instance is to show 'pressure,' the assignees must 
 show that the conveyance or transfer originated in the voluntary 
 act of the insolvent ; whereas here it is made in consequence of the 
 creditor asking it." It will be observed that all the cases, without 
 a single exception, where the assignment of property by a trader 
 has been deemed fraudulent, and an act of bankruptcy, are cases 
 where the assignment was made, either without consideration, or 
 for a before-contracted debt. A trader may sell the whole or any 
 part of his stock in trade to a fair and bond fide purchaser, without 
 thereby committing an act of bankruptcy. An assignment made 
 to secure advances by a person lending bond fide, will be supported 
 on the same grounds, unless after notice of the bankruptcy. — Green 
 vs. White, 3 Bing., KC.,59; Baxter vs. Pritchard, 1 Ad. & E, 456, 
 and cases there cited; ~!j|oung vs. Waud, 8 Exchq., 221. 
 
 A sale, being expressly named, in the third subdivision of the sec- 
 
164 THE BAKKRUPT LAW. ['§ 35. 
 
 tion, comes within its provisions, But it is not in its nature exposed 
 to tne same suspicion as most other transactions 1 ; a sale can not in 
 reason, be held to be a fraudulent transfer, and void, unless it takes 
 place under such circumstances that the purchaser, as a man of 
 business and understanding, ought to suspect and believe that the 
 seller means to get money by it for himself in fraud of his creditors, 
 and that the sale is made for such purpose ; as, for instance, where 
 the buyer, as a man of business, must know that he is purchasing 
 the property much below its real value. — Deyas vs. Venables, 3 Bing. , 
 N. C., 400 ; Hill vs. Furnell, 9 B. & C, 45 ; Bishop vs. Crawshay, 3 B. 
 & C, 415. The doctrine with regard to a sale has been carried still' 
 further in many English authorities, which seem to have decided, that 
 if a bond fide agreement be entered into by which a trader contracts, 
 for good consideration, to transfer to another person, even by way of 
 security, property, or a chose in action, or a fund, which the trader, 
 though he has it not in his present possession, will be entitled to 
 receive at some future period, such agreement will operate as an 
 equitable assignment of that property or fund, and will entitle the 
 transferee to receive it, whatever may be the state of the trader's 
 affairs between the time of the agreement and of the transferee's 
 claim of possession. — Dangerfield vs. Thomas, 9 Ad. & E., 292 ; 
 Walker vs. Rostron, 9 Mees & W., 411; Douglass vs. Russell, 4 
 Simon, 524; Hunt vs. Mortimer, 10 B. & C, 44; Hutchinson vs. 
 Heyworth, 9 Ad. & E., 375 ; Belcher vs. Oldfield, 6 Bing., 1ST. C, 102. 
 
 A transfer is fraudulent if it contravenes the policy of the Bank- 
 rupt Law, whioh is an equal distribution of the bankrupt's assets, 
 and so defeats or delays his creditors ; therefore an assignment of 
 his whole property, or of the whole with an exception merely nom- 
 inal, in consideration of a by-gone and pre-existing debt, thought 
 not fraudulent by a non-trader, is fraudulent under the English 
 Bankrupt Act. — Worsley vs. Demattos, 1 Burr, 467 ; Porter vs. 
 Walker, 1 Mann. & G, 686 ; London vs. Sharpe, 6 id., 895. If it be 
 an assignment of a specified portion, it must be proved to be such 
 as would cause insolvency; and if of all property at a specified 
 place, that it is substantially the whole of the trader's property. — 
 Chase vs. Goble, 2 Mann. & G., 930 ; Carr vs. Burdiss, 1 C, M. & R., 
 447. 
 
 It would not be correct to leave it as a question to the jury 
 whether the deed being acted upon, would prevent the trader car- 
 rying on the particular business in which he is engaged, but it must 
 be a transfer of so much of his property as would prevent him car- 
 rying on business by reason of his thereby becoming insolvent. — 
 Wedge vs. Newlyn, 4 B. & Adol., 831 ; Wood vs. Waud, 22 L. J. Ex. ; 
 Harris vs. Rickett, 4 H. & N., 28 ; 28 L. J. Ex., 4*7. 
 
 But though not fraudulent or void per se, yet if made in contem- 
 plation of bankruptcy, and with an intent to give the transferee an 
 undue advantage over other creditors, it is fraudulent and void. 
 And that, although it took place more thfljp two months before the 
 filing of the petition, Be van vs. Nunn, 9 Bing., 107, and though 
 
§ 35.] FRAUDULENT PREFERENCES AND CONVEYANCES. 165 
 
 not formerly so, it is now, by the section we are considering, an act 
 of bankruptcy. Whether an act be or not of tbis description, in 
 other words, whether it be or not a fraudulent preference, must be 
 ' ascertained by putting it to a jury to say whether the transfer, de- 
 livery, etc., were made in contemplation of bankruptcy and volun- 
 tary, or under fear or compulsion. — Belcher vs. Prittie, 10 Bing., 
 408; Cook vs. Rogers, 7 id., 438; Fidgeon vs. Sharp, 5 Taunt., 539; 
 Cook vs. Pritchard, 3 Mann. & G., 329 ; Morgan vs. Brundet, 2 Nev. 
 & M., 280 ; 5 B. & Adol., 297 ; Bevan vs. Nunn, 9 Bing., 107 ; Harts- 
 horne. vs. Hodden, 2 B. & P., 582; Gibbon vs. Phillips, 7 B. & 
 C, 529 ; Poland vs. Glyn, 4 Bing., 22, n. ; Hook vs. Jones, id., 20 ; 
 Wheelwright vs. Jackson, 5 Taunt., 109 ; Moore vs. Barthrop, 1 B. 
 & G, 5 ; Crosby vs. Crouch, 11 East., 256 ; Thompson vs. Freeman, 
 1 T. R, 155; Smith vs. Payne, 6 id., 152; Bayley vs. Ballard, 1 
 Camp., 416; Singleton vs. Butler, 2 B. & P., 283; Churchill vs. 
 Crease, 5 Bing., 177 ; De Tastet vs. Carroll, 1 Stark., 88 ; Morgan vs. 
 Horseman, 3 Taunt., 41 ; Abbott vs. Pomfret, 1 Bing., N. C, 462 ; 
 Morgan vs. Brundrett, 5 B. & Adol., 289. In order to make the de- 
 livery fraudulent, it must not only have been made at a time when 
 the trader contemplated the event of his own bankruptcy, but it 
 must also have been voluntary ; and therefore' a delivery under the 
 threat or apprehension of criminal or civil process is valid. This 
 distinction, viz., between a voluntary transfer in contemplation of 
 bankruptcy, and a transfer either voluntary but not in the contem- 
 plation of bankruptcy, but involuntary and under the pressure of 
 threat or compulsion, is the distinction upon which all modern cases 
 turn. Several of these cases are referred, to above, but the depend- 
 ence of each upon its own peculiar circumstance renders it impossi- 
 ble to give a full account of them. 
 
 The declaration of the debtors at the time of the transfer, or con- 
 nected with it, are admissible in evidence to show the intention with 
 which it was made. — Ridley vs. Gyde, 9 Bing., 349 ; Rouch vs. G. 
 W. Railway, 1 Q. B., 51 .; Phillips vs. Earner, 1 Esp, 355. In Ridley 
 vs. Gyde, the declarations were made a month after the disputed 
 act. But see Lees vs. Marton, 1 M. & Rob., 210; see also Smith 
 vs. Cramer, 1 Bing., N. C, 585. 
 
 A, a soap and alkali manufacturer, being indebted to a banking 
 company, assigned to them, to secure future advances, his leasehold 
 property, with all his stock in trade, utensils, and effects therein, 
 and also a policy of insurance, as a security for moneys advanced or 
 to be advanced. The deed contained a power, of sale, and a proviso, 
 that the trader should remain in possession until default. The as- 
 signment did not include another part of A's property equal in 
 amount to the debt covered by the security. In an action by A's 
 assignees to recover part of the property assigned, the jury found 
 that the deed was not executed in contemplation of bankruptcy. 
 It was held, that it was a valid deed, and did not amount to an act 
 of bankruptcy. — Carr vs. Burdiss, 1 G, M. & R, 433, 722 ; Johnson 
 vs. Fesemeyer, 3 De Gex & S., 13. 
 
 A sale of all his property by a debtor, although he intends to run 
 
166 THE BANKRUPT LA"W. [§ 35. 
 
 away with the money, has been held not within this section, Bax- 
 ter vs. Pritchard, 1 Ad. & E, 456, recognized in Lindon vs. Sharpe, 
 6 Mann. & G., 906, because the trader gets a present equivalent for 
 his goods, and the sale is in the course of his business. — Graham vs. 
 Chapman, 21 L. J., G. P., 173. And the sale of part of a trader's 
 stock for the fair price of that part is of course unobjectionable. 
 But the Court of Common Pleas in England, after commenting 
 Upon Siebert vs. Spqoner, 1 Mees & W., 714; Lindon vs. Sharpe ? 
 and Whitwell vs. Thompson, 1 Esp., 68, recently intimated their 
 opinion, that an assignment, though made bond fide, of the whole 
 of a trader's stock for the price of a part, not because the trader is 
 obliged under pressure to sell his stock for less than its value, but 
 because an old debt is taken as part of the price, though the mov- 
 ing cause of the transfer may be a new advance, is a fraudulent 
 transfer, and an act of bankruptcy. And at all events it is so, even 
 without fraud in fact, if it conveys all the trader's property, includ- 
 ing the sum advanced, and professes to give the assignee a right to 
 take the trader's future acquired property upon non-payment of 
 his debt within a certain time. — Graham vs. Chapman, 21 L. J., C. 
 P., 173. 
 
 The conveyance must have been completely executed so as to 
 divest the trader of the property, and the delivery of such a deed 
 as an escrow would not be an act of bankruptcy. — Bowker vs. Bur- 
 dekin, 11 Mees & W., 146 ; Reynolds vs. Hall, 4 H. & N., 519 ; 28 
 L. J., Ex., 257. 
 
 It is apprehended that the transfer of choses in action, whether 
 seizable in execution or not under this section, would be void as 
 against assignees. — Norcutt vs. Dodd, Craig & Phil., 160 ; 1 Smith's 
 Leading Cases, 13 d. ; Grahain vs. Purber, 23 L. J., C. P., 5. 
 
 In extension of the strict words of the Bankrupt Acts, the courts 
 in England have further held, that a transfer by a trader of part of 
 his property to a creditor in consideration of a by-gone and pre-ex- 
 isting debt, thought not fraudulent within the Statute of Elizabeth, 
 is fraudulent as an act of bankruptcy under the Bankruptcy Act, 
 if made voluntarily and in contemplation of bankruptcy. 
 
 A multiplicity of cases have occurred upon the meaning of the 
 word " voluntary," and in contemplation of bankruptcy ; for both 
 circumstances must occur, Gibbon vs. Phillips, 7 B. & C, 529; 
 Brown vs. Kempton, 19 L. J., C. P., 169 ; if, in consequence of the 
 act of the creditor, it is not voluntary, although the creditor may 
 not have power to obtain immediate benefit to himself by taking 
 legal steps, e.g., a, surety, or one to whom the debt is due, but not 
 payable. — Van Casteel vs. Booker, 2 Ex., 691 ; Mogg vs. Baker, 4 
 Mees & W., 348. The fact of pressure is not sufficient, if the jury 
 believe that it did not cause the transfer, nor, on the other hand, 
 does it follow as a matter of law, though it is a strong presumption 
 of fact, that because the first step in the transaction resulting in the 
 preference was taken by the bankrupt, that it was therefore volun- 
 tary. — Cook vs. Pritchard, 5 Mann. & G., 329 ; Edwards vs. Glyn, 5 
 Jur., N". S., 1397. This definition of "voluntary" will render all 
 
§ 35.] FRAUDULENT PREFERENCES AND CONVEYANCES. 167 
 
 the cases under the Insolvent Acts (which almost invariably use 
 the term "voluntary") applicable. — Doe vs. Gillett, 2 C.,M. & R., 
 581 ; Arnell vs. Beau, 8 Bing., 87, 91. The definition given in that 
 case is a conveyance or gift, made without such valuable consider- 
 ation as is sufficient to induce a party acting really and bond fide 
 under the influence of such consideration, or made in favor of a par- 
 ticular creditor spontaneously, and without any pressure on his 
 part to obtain it. In Mogg vs. Baker (4 Mees & W., 348), it was 
 held, that a conveyance, in pursuance of a bond fide demand, was 
 good ; for that pressure, or an apprehension that, by not making the 
 payment, he, the insolvent, would be in a worse condition, was un- 
 necessary ; and if there be pressure, it is immaterial that the trader 
 also desires to give a preference to the creditor in the event of 
 bankruptcy. — Brown vs. Kempton, 19 L. J., C. P., 169. 
 
 Many of the decisions as to the meaning of contemplation of 
 bankruptcy can not be reconciled. In some, contemplation of actual 
 bankruptcy has been held essential, and contemplation of mere in- 
 solvency insufficient. In other cases, the contemplation of bank- 
 ruptcy has been inferred from that of insolvency, because men's acts 
 must be construed as done with the intention of producing their 
 natural consequences. More recently it has been laid down that it 
 is a question for the jury in each case, and that contemplation of 
 bankruptcy need not be negatived, because there was contemplation 
 of insolvency ; but that if, at the time of the transfer, etc., the debtor 
 considered that he was* likely, from the condition in which he stood, 
 to become a bankrupt, and he knew that his assets were inadequate 
 to the payment of all his creditors, the fraudulent preference would 
 be established. — Morgan vs. Brandrett, 5 B & Adol., 289 ; Aldred 
 vs. Constable, 4 Q. B., 684; Gibson vs. Muskett, 3 Mann. & G., 158; 
 4 id., 160, 171 ; Brown vs. Kempton, 19 L. J., C. P., 169. 
 
 Lord Justice Knight Bruce decided, that hopeless insolvency, so 
 that there is not a reasonable expectation of avoiding bankruptcy, 
 was suflicient to constitute contemplation of bankruptcy. — Ms parte 
 Simpson, 1 De Gex, 9. The intent to benefit the creditor has been 
 held essential, Belcher vs. Jones, 2 Mees & W., 258 ; but in Marshall 
 vs. Lamb, 5 Q. B., 11 5, it was held, that a payment may be void as a 
 fraudulent preference, if by it the equal distribution of the estate 
 be, defeated, although the bankrupt did not intend to benefit, nor 
 did in fact benefit, the creditor. 
 
 It is held, on the subject of fraudulent preference, that if a banker 
 intending to prefer A, give notice to him of the state of his circum- 
 stances, in order that he may draw out his private balance, which 
 A not only does, but also draws out that of a company of which he 
 was a director, that is not a fraudulent preference of the company, 
 for a preference must be intentional, and here there was no intention 
 to prefer them. — Belcher vs. Jones, 2 Mees & W., 258. 
 
 It has been said by Lord Mansfield, that " the principles of com- 
 mon law, as now universally known and understood, are so strong 
 against fraud in every shape, that the common law would have at- 
 tained every end proposed by Stat. 13 Eliz., c. 5." The question, 
 
168 THE BANKRUPT LAW. [§ 35. 
 
 whether a gift he fraudulent in the meaning of this Statute, is very 
 different indeed from the question, whether, if made by a trader, it 
 would be fraudulent, and an act of bankruptcy within the meaning 
 of the Bankrupt Act. The latter question may be answered in each 
 case by reference to one of the three following rules : 
 
 1. Any .transfer which is fraudulent within the meaning of the 
 Statute of Elizabeth, is also fraudulent, and an act of bankruptcy 
 under the Bankrupt Act, and void as against the assignees. — Doe 
 d. Gumsby vs. Ball, 11 M. & W. 531, and judgment of Lord Wens- 
 leydale in Billiter vs. Young, 6 E. & B., 1 7. 
 
 2. Any conveyance to a creditor by a trader of his whole property, 
 or of the whole with an exception merely nominal, in consideration 
 of a by-gone and pre-existing debt, though not fraudulent within 
 the Statute of Elizabeth, is fraudulent under the Bankrupt Act, and 
 an act of bankruptcy. — Lindon vs. Sharp, 7 Scott, N. R., 730 ; Gra- 
 ham vs. Chapman, 12 C. B., 85 ; Hutton vs. Cruttwell, 1 E. & B., 15 ; 
 Smith vs. Cannan, 2 E. & B., 35 ; Bittlestone vs. Cooke, 6 E. & B., 
 296 ; Bell vs. Simpson, 2 H. & N., 410 ; Harris vs. Rickett, 4 H. & 
 N\, 1. The note to Graham vs. Chapman, 12 C. & B., 94, a, as to 
 the date of the introduction of this rule into the Bankrupt Law, is 
 erroneous, Law vs., Skinner, 2 W. BL, 996, having been decided in 15 
 Geo. III., not Geo. II., as there incorrectly stated upon the authority 
 of Worsley vs. De Mattos, 1 Burr., 467, decided in 31 Geo. II. 
 
 3. A transfer of a trader of part of his property to a creditor in 
 consideration of a by-gone and pre-existing debt, though not fraud- 
 ulent within the Statute of Elizabeth, is fraudulent, and an act of 
 bankruptcy under the Bankrupt Act, if made voluntarily and in 
 contemplation of bankruptcy, or if it otherwise have the effect of 
 defeating or delaying creditors. — Smith vs. Cannan, 2 E. & B., 35. 
 
 L, a member of the Stock Exchange, had entered into contracts 
 with other members of the Stock Exchange for the sale and purchase 
 of stocks. These contracts purported to be for the delivery of 
 stock to the buyer, but, in fact, the seller had not the stock to de- 
 liver, nor any intention of procuring it ; and the contracts were 
 really to be carried out by payment or receipt of differences, as 
 stocks might rise or fall. Upon the balance of these transactions 
 L would have to pay a large sum on the account-day. Previous 
 to the account-day L became a defaulter. According to the rules 
 of the Stock Exchange, which are binding upon all its members, the 
 moneys due to a defaulter from other members of the Stock Ex- 
 change upon dealings there are got in by the official assignees of 
 the exchange and divided ratably among his creditors on the ex- 
 change. The defendant, who was one of the official assignees, ac- 
 cordingly collected the money due to L from the other members 
 of the exchange upon the before-mentioned contracts, and on the 
 8th of December, 1853, bond fide distributed ratably among L's 
 exchange creditors the whole of such money except a sum of £138, 
 which remained in his hands at the time when L was adjudged 
 bankrupt. 
 
§ 35.] FRAUDULENT PREFERENCES AND CONVEYANCES. 169 
 
 On the 23d of November, 1853, L, who had various creditors off 
 the exchange, petitioned the Court of Bankruptcy for a private ar- 
 rangement with his creditors, under the 211th Section of the Bank- 
 rupt Act, 1849 ; but the necessary proportion of creditors not assent- 
 ing to the proposals made, the petition was adjourned into court, 
 and L was adjudged bankrupt on the 31st of December, and the 
 plaintiffs were appointed his assignees. The defendant had no no- 
 tice of any act of bankruptcy committed by L until after he was 
 adjudged bankrupt. In an action by the plaintiffs against the de- 
 fendant for money had and received, it was ,held, that as to the 
 money distributed by the defendant before L was adjudged bank- 
 rupt, the defendant was not liable, as the plaintiffs' title as assignees 
 could not in such a case relate back to any prior act of bankruptcy ; 
 and even if the payments of the money were, as between the bank- 
 rupt and the Stock Exchange creditors, a fraudulent preference, 
 which the plaintiffs might disaffirm, they had not done so until it 
 had been paid over by the defendant, and therefore that it never 
 ,became in his hands money received to their use as assignees. — 
 Nicholson vs. Gooch, 34 Eng. Law and Eq, 163. 
 
 In England the contemplation of bankruptcy means the benefit 
 of the Bankrupt Act, but in this country it has been construed to 
 mean insolvency. 
 
 The preference of a creditor is not the payment of one in the or- 
 dinary course of business, or under threats or suits, but selecting 
 one, as a relation or friend, or settling with him before due, or on 
 the eve of bankruptcy, when not pushed by him. — Ashby vs. Steere, 
 2 W. & M„ 347. 
 
 A made a voluntary assignment of all-his estate to the defendant 
 for the benefit of certain creditors. Afterward he applied for the 
 benefit of the Insolvent Laws of Pennsylvania, was discharged, and 
 the defendant appointed his assignee. Under these assignments 
 the defendant obtained possession of and sold the property of A. 
 The latter petitioned for the benefit of the Bankrupt Law, and was 
 decreed a bankrupt. The plaintiff was appointed his assignee, and 
 brought an action of trover to recover the value of the property re- 
 ceived under the voluntary assignment. Held, that the plaintiff 
 could not recover. — Sullivan vs. Hieskill, Crabbe, 525. 
 
 A composition deed made in alleged pursuance of Section 224 of 
 the Bankrupt Law Consolidation Act, 1849, contained a clause 
 which was to operate to defeat any action brought by a creditor, 
 whether one who had executed the deed or not, by making the 
 bringing of such action ipsofcCcto a release of the debt ; and also a 
 clause enabling any creditor, by leave of the inspectors, notwith- 
 standing the former provision, to bring an action, and, in case of 
 success, to receive dividends upon the amount recovered. Held, 
 that the operation of these clauses was to establish a double in- 
 equality; first, in respect of the power of the inspectors to allow an 
 action or not, at their discretion ; secondly, in respect of the possi- 
 ble misapplication of the assets in payment of the costs of such 
 
170 THE BANKRUPT LAW. [§ 35. 
 
 creditors as might by leave of the inspectors bring actions and re- 
 cover judgment ; and, consequently, that the deed was not valid. — 
 Gardner vs. Chapman, 8 C. B., N. S., 317. 
 
 A trader being indebted to various persons, procured from A an 
 advance of £200, for which he verbally agreed to give a bill of sale 
 of all his property, if called upon to do so. On receiving the money 
 he gave to A a promissory note for £200, a memorandum of agree- 
 ment to assign some property expectant on the death of his wife's 
 father, together with a policy of insurance, and also another memo- 
 randum of agreement to pay £10 yearly as bonus. At a later pe- 
 riod, on being requested, he executed a bill of sale of all his prop- 
 erty to A Held, 1st, that such bill of sale, having been executed 
 in pursuance of the original agreement, was not an act of bank- 
 ruptcy; 2d, that evidence of the original verbal agreement was ad- 
 missible, inasmuch as the subsequent written agreement did not 
 contain, and was not intended to contain, the whole agreement be- 
 tween the parties. — Harris vs. Rickett, 4 Hurl. & Nor., 1. 
 
 M and S being in embarrassed circumstances, on the 15th of April, 
 1800, executed a conveyance of certain lands, which, by a declara- 
 tion in writing executed by them on the 3 1 st of May, 1800, they de- 
 clared to be in trust to pay particular creditors in preference. On 
 the 13th June, 1800, they drew an order on one F, their agent, di- 
 recting him to pay to R such moneys of theirs as should come to 
 his hands from certain persons, which order was accepted by F on 
 the same day. On the 1 1th of July, 1 800, M andS committed an act 
 of bankruptcy, and on the 18th of July, 1800, were duly declared 
 bankrupts. In an action brought by the assignees of M and S 
 against F, it was held that the order and acceptance amounted to 
 an assignment, and fixed the fund irrevocably, and that the order 
 was not given in contemplation of bankruptcy, so as to make it 
 fraudulent under the Bankrupt Law. — M'Menomy vs. Ferrers, 3 
 Johns., 71. 
 
 This decision was under the United States Bankrupt Act of 1800, 
 which contained the same provisions as this act upon this subject. 
 
 Where it appeared that a bankrupt was insolvent on the first 
 day of February, 1842, the day the United States Bankrupt Law 
 went into operation, and that he made a voluntary confession of 
 judgment on that day in favor of one of his creditors for a sum in 
 damages exceeding the value of all his attachable property, and 
 that all his property was taken the same evening, by virtue of an 
 execution upon such judgment, and afterward was sold thereon, 
 and that this was done by the bankrupt for the mere purpose of 
 compelling another of his creditors to make a deduction in the rent 
 of a certain farm, which the bankrupt then occupied as his tenant, 
 and which rent was to become due March 1, 1842 ; and if that could 
 not be effected, then to defeat the debt of that creditor, the debtor 
 contemplating bankruptcy as the ultimate resort, and the petition 
 in bankruptcy was filed March 30, 1842; the District Court re- 
 fused to grant to the bankrupt his Discharge, notwithstanding the 
 
§ 35.] FRAUDULENT PREFERENCES AND CONVEYANCES. 171 
 
 debt, upon which the judgment was confessed, was actually due at 
 that time to the creditor in whose favor the confession was made. 
 — In re Chase, 22 Vt. ; 1 Washb., 649. 
 
 L being in embarrassed circumstances, it was agreed, at a meet- 
 ing of his creditors, to accept a composition of 12s. in the pound, 
 10s. to be secured by bills of exchange accepted by B, and the re- 
 maining 2s. to be secured by L's promissory note. L agreed to 
 give B a counter-security by assignment of his property and effects. 
 On the 10th October, 1854, a composition deed accordingly was 
 made between L of the first part, B of the second part, and the 
 creditors of L, who should sign within a certain time, of the third 
 part; subject to a condition for rendering it void, unless it should 
 be executed by six sevenths of the creditors, with a covenant not to 
 sue L until default should have been made in payment of the bills of 
 exchange and promissory notes, or any of them. The bill for pay- 
 ment of the first installment having been dishonored, W, one of the 
 creditors, sued L on the original debt, and B on the dishonored bill. 
 L withdrew his pleas, and let W have judgment for the amount of 
 his claim, less the installment, which B paid. By the deed of the 
 3d of March, 1855, L assigned the whole of his stock and property 
 to B as security for the sums which he had paid, or might pay to 
 the creditors of L in respect of the composition bills; in trover by 
 L against his assignees, held, that there was a good petitioning 
 creditor's debt: for, 1st, though the composition deed was not 
 void by reason of any concealment from the creditors of the fact 
 that the whole of L's property was to be assigned to B, and there- 
 fore the debt was suspended, it remained, and upon default in pay- 
 ment of the installment the right of suing for it revived ; and 2d, 
 the judgment obtained by W was conclusive, and was an acknowl- 
 edgment by L that he still owed the debt : also, that the assign- 
 ment to W was an act of bankruptcy ; for a transaction whereby 
 the property of a trader is conveyed to secure a surety to a compo- 
 sition deed against liabilities which he has incurred to the particu- 
 lar creditors who may come in, and which surety can stop the trade 
 at any moment, is not a case where the 'trader receives an equiva- 
 lent. — Leake vs. Young, 36 Eng. Law and Eq., 188. 
 
 There is nothing illegal or contrary to the policy of the Bankrupt ' 
 Laws in a stipulation by the assignor on an assignment of goods, un- 
 der .which they are to remain in his possession, not to do any act by 
 means of which the goods assigned might become charged or alien- 
 ated, or whereby the assignment might become ineffective, or the ■ 
 assignor might be deprived of them. And it is a breach of such 
 stipulation for the assignor, while the goods are in his possession, to 
 file a declaration of insolvency, upon which a fiat in bankruptcy is- 
 sues, under which the goods are seized by the assignees in bankrupt- 
 cy, as being in the possession and order of the bankrupt as reputed 
 owner, by the consent of the true owner. For there would be noth- 
 ing illegal or contrary to the policy of the Bankrupt Laws in an ex- 
 press stipulation by the assignor not to file such a declaration, so 
 
172 THE BANKRUPT LAW. [§ 35. 
 
 that the goods assigned might be liable to be seized in bankruptcy, 
 or while the goods remained in his possession;, and his duty would 
 be to give notice to the assignee of his insolvency, that the latter 
 might remove them, and thus they might no longer remain in the 
 possession and order of the assignor as the owner by consent of the 
 true owner. And as the effect of the act of bankruptcy, while the 
 goods so remained in his order or possession, was to vest them in 
 the. assignees in bankruptcy, the act of filing the declaration was an 
 " act by means whereof" the assignee was deprived of the goods. — 
 Hill vs. Cowdery, 37 Eng. Law & Eq., 553. 
 
 It was held under the United States Bankrupt Law of 1841, that 
 a decree by which a man is declared a bankrupt divests him of all 
 his property and vests it in his assignee, who is empowered to sell, 
 sue for, and defend the same in all cases, subject to the orders and 
 directions of the court " as fully, to all intents and purposes, as if 
 the same were vested in or might be exercised by such bankrupt 
 before or at the time of his bankruptcy, except in the cases specified 
 in the 2d Section of the statute, though such conveyance may have 
 been fraudulent and void as to creditors." The 2d Section makes void 
 "all sales and conveyances made in contemplation of bankruptcy." 
 Therefore, where the conveyance of property was not made in con- 
 templation of bankruptcy, the vendor was completely divested of all 
 title to the property, and could not, neither could his assignee, re- 
 cover it back. — Porter vs. Douglass, 27 Miss., 5 Cush., 379. 
 1 A conveyed to his father, apparently for a valuable consideration, 
 certain real and personal property, but retained possession of it hi 
 1838. In 1840 the real property was sold by execution against it, 
 but no deed was given to the purchaser. In 1842 A was discharged 
 under the United States Bankrupt Ac ( t of 1841. He pleaded his 
 Discharge to a writ of scire facias to revive a judgment obtained 
 in 1838 ; and it was held, that while his Discharge could be plead- 
 ed in all courts, it could be impeached for fraud or willful conceah 
 ment in obtaining it ; and his retaining possession of the proper- 
 ty which he pretended to have sold his father, and did not include 
 in his inventory, raised a presumption of fraud, on which a verdict 
 of the jury, that it was a fraud, was sustained. — The State vs. Be- 
 thune, 8 Ired.,139. 
 
 _ A and B entered into partnership in 1841. A, before his mar- 
 riage, had joined his wife in an ante-nuptial settlement of her prop- 
 erty by means of a bond and mortgage of certain property. A part 
 of her property, which the trustee for her had loaned to A, he put 
 into the firm. _ B was appointed trustee under the settlement, and 
 A secured to him a certain other property belonging to the firm, to 
 secure the loan from his wife's estate. This was done just before 
 the failure. Held, on a bill by B to enforce this security for the 
 trust estate, that this attempt to secure the payment of a debt of 
 one of the firm, by pledging partnership property, was void under 
 the United States Bankrupt Law of 1841. — Auckar vs. Lew 3 
 Strobh.Eq.,197. 
 
§ 35.] FBAUDULENT PEEFEEENCES AND CONVEYANCES. 173 
 
 A deed of transfer, although it may be an act of bankruptcy, is 
 not void as against future creditors. — Oswald vs. Thompson, 2 Ex. 
 Rep., 215; 17 L. J. Ex., 234. And where a party assigned his prop- 
 erty for their benefit, at a time when there was no creditor of suffi- 
 cient amount to obtain an adjudication, and the trader was adjudi- 
 cated bankrupt upon his own petition, the assignment was held to 
 be valid against the assignees under his bankruptcy. — Me parte 
 Philpott, 10 Jurist, 111; 1 De Gex, 344. 
 
 If an attaching creditor, knowing that proceedings in bankruptcy 
 have been instituted, should nevertheless proceed in his suit to get 
 a judgment against the bankrupt before an assignee was appointed, 
 it would be a fraud on the law ; and if such creditor should obtain 
 satisfaction of his judgment, it seems he would not be allowed to 
 retain the money. — Me, parte, Foster, 2 Story, 131. 
 
 An assignment of property which is declared by the 2d Section 
 of the Bankrupt Law of the United States of 1841 to be void, and a 
 fraud upon the act, is void as against those persons only who claim 
 by virtue of the proceedings under that act.— Atkins vs. Spear, 8 
 Met., 400. 
 
 It would seem that an assignment, though made bond fide, of the 
 whole of a trader's stock for the price of a part, not because a trad- 
 er is obliged under pressure to sell his stock for less than its value, 
 but because an old debt is taken as part of the price, though the 
 moving cause of the transfer may be a new advance, is a fraudulent 
 transfer, constituting an act of bankruptcy within the 12 & 13 Vict., 
 chap. 106, § 67; at all events, such assignment was held to be an 
 act of bankruptcy, even without fraud in fact, if it conveyed all the 
 trader's property, including the sum advanced, and professed to give 
 the assignee a right to take the trader's future acquired property 
 upon non-payment of his debt within a certain time. — Graham vs. 
 Chapman, 11 Eng. Law & Eq. Rep., 498. 
 
 Where, on the eve of the bankruptcy, the bankrupt, on being 
 pressed for payment by a creditor, executed to him an assignment 
 of so much of his estate and effects as to render it impossible for 
 him to continue carrying on his trade, this was held to constitute 
 an act of bankruptcy, and to be void as against the general body 
 of the creditors of the bankrupt. — Me parte Bailey, 19 Eng. Law & 
 Eq. Rep., 51. 
 
 Payment by a trader, who contemplates bankruptcy, of a debt 
 not then due upon a bond fide request of the creditor, is not in law 
 a voluntary payment ; the fact of the debt not being due is merely 
 a circumstance for the jury in considering the question of fraudu- 
 lent preferences. — Strachan vs. Barton, 34 Eng. Law & Eq., 492. 
 So where an assignment of all a bankrupt's property required for 
 his trade, as a security for an antecedent debt, had taken place 
 more than twelve months before the petition for adjudication, the 
 assignees, in order to avoid the deed, must show that there 'still 
 exists a debt which existed at the time of the execution of the as- 
 signment. — Me parte Taylor, 35 Eng. Law & Eq., 166. 
 
174 THE BANKRUPT LAW. [§ 35. 
 
 In August, 1853, and for some months following, a retail draper, 
 who afterward became bankrupt, bought large quantities of goods 
 on credit, and in November, and for some months subseiquently, 
 sold them from time to time to the defendant, who was a job deal- 
 er, at prices considerably below their real value. Held, that in the 
 absence of proof of the defendant's intention to decamp with the 
 money, or otherwise defraud his creditors, and of the buyer's knowl- 
 edge of such intention, such sales were not of themselves acts of 
 bankruptcy as amounting to a "fraudulent transfer" within the 
 Bankrupt Act. — Lee vs. Hart, 28 Eng. Law & Eq., 531. 
 
 The creditors of a bankrupt having assented to a composition of 
 3s. 6d. in the pound, to which the plaintiff, who was a creditor, was 
 not a party, the same creditors afterward signed a petition for an- 
 nulling the adjudication of bankruptcy, which the plaintiff refused 
 to sign unless the defendant would give him his guarantee for 
 £167 in part payment of his debt. The defendant accordingly, 
 without the knowledge of the other creditors, gave the plaintiff the 
 guarantee, whereupon the latter signed the petition. Held, in an 
 action on the guarantee, that the same was not in contravention of 
 the Bankrupt Law Amendment' Act, 12 & 13 Vict., ch. 106, § 268, 
 and was not fraudulent. — Smith vs. Saltzman, 25 Eng. Law & Eq., 
 476. That statute contains provisions analogous, to those in this 
 section. 
 
 G, a farmer, who became liable to the Bankrupt Laws as a trad- 
 er, by possessing two shares in a joint stock bank worth less than 
 £20 each, conveyed all his other property, worth about £3000, to 
 a creditor to secure his debt of £900. Held, that the conveyance 
 might be an act of bankruptcy, as a fraudulent grant with intent 
 to defeat or delay creditors, although the two shares, which were 
 G's only trading property, were not conveyed, and although the 
 conveyance did not stop G's trade as a trader. — Smith vs. Cannan, 
 1 8 Eng. Law & Eq., 390. Held, further, that the conveyance being 
 of property worth three times the amount of the debt which it was 
 given to secure, did not prevent the deed being an act of bankrupt- 
 cy ; for though the grantee would be a trustee for G as to the 
 amount beyond his own debt, the property could not be taken in 
 execution ; and as the common law remedies of the other creditors 
 against their debtor's property would thus be barred, they might 
 consequently be defeated or delayed. — Id. 
 
 A colorable exception in a grant or conveyance of an inconsider- 
 able part of a trader's property will not prevent the same being 
 considered as an act of bankruptcy ; as where a trader made an as- 
 signment of the bulk of his property, except his household goods 
 and some other articles, to trustees in trust for the benefit of them- 
 selves and the creditors mentioned in a schedule, and in which 
 schedule one creditor was purposely omitted, it was considered an 
 actf of bankruptcy, ex parte Poord, 1 Burr., 477 ; and vide Ber- 
 ney vs. Davison, 1 B. & B., 408; Compton vs. Bedford, B. & B., 
 362 ; and so where a trader mortgaged all his stock in trade, ex- 
 
§ 35.] FRAUDULENT PREFERENCES AND CONVEYANCES. 175 
 
 cepting household goods and debts, which were very inconsidera- 
 ble. — Law vs. Skinner, 2 Bl. R., 996. There is a distinction be- 
 tween an assignment by a trader of all his effects for the benefit 
 of his creditors, or to secure a pre-existing debt, and an assignment 
 of all his property for a valuable consideration. — Whitall vs. Thomp- 
 son, 1 Esp., 72 ; see Manton vs. Moore, 7 T. R., 67 ; Hunt vs. Morti- 
 mer, 10 B. & C, 44. So 'a sale to a bond fide purchaser of the whole 
 of a trader's stock in trade, he intending to abscond with the mon- 
 ey and defraud his creditors, is not an act of bankruptcy. — Baxter 
 vs. Pritchard, 1 Ad. & E, 456 ; Harwood vs. Bartlett, 6 N. & C, 61. 
 But an assignment by a trader to a creditor of all his effects and 
 stock in trade is of itself an act of bankruptcy, and the question of 
 fraud should not be left to the jury. — Siebert vs. Spooner, 1 M. & 
 W., 714. A sale at a price under circumstances to raise a suspicion 
 in the mind of the buyer as to the intention of the seller to defraud 
 his creditors, is an act of bankruptcy, and the assignees may main- 
 tain an action of trover for the goods. — Cook vs. Caldecott, M. & 
 M., 522. 
 
 A very important question will arise under this section as to the 
 validity of assignments made by debtors, when insolvent, to trust- 
 ees for the benefit of all their creditors, even when made optima fide. 
 If executed when they are insolvent, which may be predicated at 
 the time of executing such a deed, and voluntarily, and with a view, 
 to prevent their property from coming to their assignees in bank- 
 ruptcy, or to prevent the same from being distributed under the 
 act, such an assignment would be an act of bankruptcy, and is made 
 void by the provisions of the" section. The very object of such a 
 deed is to administer the estate of the assignor among themselves, 
 and to obviate any proceedings under a bankruptcy. This propo- 
 sition is clearly established by the English authorities, and to avoid 
 the consequences of such a result, such an assignment is made valid 
 upon certain conditions and qualifications. There are no provisions 
 in this section of a similar character ; and as the question must come 
 up very early in the administration of the law of bankruptcy under 
 this act, it is desirable to ascertain the state of the English Bank- 
 rupt Law upon the subject. 
 
 An assignment of all a trader's effects may be an act of bank- 
 ruptcy, whether it be upon trust for the benefit of one creditor, 
 Wilson vs. Day, 2 Burr., 877; Siebert vs. Spooner, 1 M. & W., 714; 
 or of several, Compton vs. Bedford, 1 W. Bl., 362 ; or of all, to the 
 exclusion of one, ex parte Foord, cited 1 Burr., 477 ; or even of all, 
 without exception, ex parte Bourne, 16 Ves. Jun., 149; ex parte 
 Smith, 1 Ves. & B., 518 ; Eckhardt vs. Wilson, 8 T. R, 140 ; Kettle 
 vs. Hammond, 1 Cooke, B. L., 39 ; or of all who should execute, or 
 who should assent to the arrangement, ex parte Zurlchenbart, 8 
 Jur., 1801; 13 Law J., N". S., 19;- and though he did not there- 
 by intend to defeat, defraud, or delay his creditors, as that being 
 the necessary consequence of the assignment, he must in law be 
 taken to have intended it, Siebert vs. Spooner, 1 M. & W., 714 ; 
 Stewart vs. Moody, 1 C, M & R, 777 ; 5 Tyru., 493 ; or though it 
 
176 THE BANKRUPT LAW. [§ 35. 
 
 is not signed by the trustee or any creditor, and is not further act- 
 ed on, and has not been out of the trader's possession, Botcherby 
 vs. Lancaster, 3 Nev. & M., 383 ; 1 Ad. & E., 77 ; or though it does 
 not purport to convey all his effects, and may have been executed 
 in the hope of obtaining further advances from the creditor, and 
 with the intention of conveying it, and though the advances are ac- 
 cordingly obtained, and the trade carried on for several weeks, and 
 no possession taken in the mean time under the instrument, which 
 was a bill of sale. — 13 Law J., N". S., 67. And as it is the execu- 
 tion of the deed that creates the act of bankruptcy, the conveyance 
 produces that effect, although there be a proviso that it shall be 
 void if the trustees think fit, or if any of the creditors refuse his ac- 
 quiescence, Kettle vs. Hammond, 1 Cooke, B. L., 106 ; Eckhardt vs. 
 Wilspn, 8 T. R., 140 ; or if all the creditors do not sign, or if a com- 
 mission of bankruptcy be taken out within a given period, Dutton 
 vs. Morrison, 17 Ves., 199 ; 1 Rose, 213. It is immaterial whether 
 the assignment is made to secure a present debt, or to indemnify a 
 surety who is only likely to become a creditor. — Hassell vs. Timp- 
 son, Doug., 89. 
 
 An assignment, however, of all the trader's property to trustees 
 for the benefit of all creditors, does not constitute an act of bank- 
 ruptcy unless a petition of adjudication be filed within three months 
 from the execution thereof ; provided the deed is executed by every 
 trustee within fifteen days after the execution of it by the trader, 
 and by every trustee, and be attested by an attorney or solicitor, 
 and notice be given within one month after the execution by the 
 trader, if he reside in London or within forty miles thereof, in 
 the London Gazette and in two London daily papers ; and if he re- 
 side beyond that distance, then in the London Gazette and one 
 London daily paper, and one provincial newspaper published near 
 to the trader's residence ; which notice must contain the date and 
 execution of the deed, and the name and place of abode respective- 
 ly of every such trustee, and of such attorney or solicitor. Vide 
 the English Bankrupt Act, 12 & 13 Vict., cap., 106. And such an 
 assignment will only constitute an act of bankruptcy when the 
 creditors do not all assent to the deed ; as no creditor who is either 
 a party or privy to the assignment, or has even acted under it, can 
 afterward set it up as an act of bankruptcy. — Bamford vs. Barron, 
 2 T. R, 594, n. ; Marshall vs. Barkworth, 1 Nev. & M., 279 ; ex parte 
 Cawkwell, 1 Rose, 313. This, however, only estops such a creditor as 
 petitioning creditor, and the assignees under a fiat sued out by him, 
 Tope vs. Hockin, 9 D. & R, 881 ; 7 B. & G, 101 ; and they can not 
 rely on any other act of bankruptcy on which he could not, and not 
 a person who may happen to be elected an assignee under the com- 
 mission, Tappenden vs. Burgess, 4 East., 230 ; nor is a party estop- 
 ped from suing out a commission upon a different act of bankrupt- 
 cy committed by the trader previously to and independent of the 
 deed. — Doe vs. Anderson, 1 Stark., 262. 
 
 An assignment for the benefit of all creditors would, but for this 
 section of the English act just referred to, be in every case an act 
 
§ 35.] FRAUDULENT PREFERENCES AND CONVEYANCES. 177 
 
 of bankruptcy, although not available by any creditor party to, 
 privy, or acting under such deed, on the ground that it is defeating 
 the creditors of their rights under the statutes of bankruptcy to an 
 administration according to such statutes, and necessarily prevent- 
 ing the trader from carrying on his trade. — Jackson vs. Thompson, 
 2 Q. B., 88V ; Siebert vs. Spooner, 1 Mees & W., 714; exparte Alsop, 
 6 Jur., N". S., 282 ; 30 L. J. Bank., 6. 
 
 The bankrupt, before committing any act of bankruptcy, assigned 
 to an agent a bill of lading and invoice, to secure particular credit- 
 ors, saying, in a letter of instructions to their agent, " This is in- 
 tended to secure them, let our business take what turn it may, un- 
 less they sue, and then you can pay the whole to C," another cred- 
 itor. Held, a voluntary preference on the eve of bankruptcy, and 
 in contemplation of it, and therefore void. — Supreme Ct., 1806, Og- 
 den vs. Jackson, 1 Johns., 370. 
 
 Under the Bankrupt Law, a debtor on the eve of bankruptcy 
 could not transfer goods to a favored creditor in payment of" his 
 claim, so as to vest in the creditor any title as against assignees 
 afterward appointed. — 3 Wils., 47 ; Mayor's Ct., 1802, Waddington 
 vs. Morris, Liv. Jud. Op., 52. 
 
 Even if an act of bankruptcy be contemplated by the debtor, 
 yet if, at the instance and on the application of the creditor, he 
 makes payment or assigns property to him, such payment or assign- 
 ment is valid as against the assignees of the bankrupt. — Ct. of Er- 
 rors, 1809, Phoenix vs. Dey, 5 Johns., 412. 
 
 Of the degree of pressure or urgency of solicitation on the part 
 of the creditor necessary to bring the case within this rule, v ide 
 Ogden vs. Jackson, 1 Johns., ( 370 ; Phoenix vs. Dey, 5 id., 412. 
 
 A payment of a particular creditor, made after June 1, 1800, but 
 in the hope of being ultimately able to pay all debts. Held, under 
 peculiar circumstances, not fraudulent, as made in contemplation of 
 bankruptcy. — M'Menomy vs. Ferrers, 3 Johns., 71. This decision 
 was under the first United States Bankrupt Law of 1800. 
 
 An Assignment in bankruptcy under a foreign law passes the 
 personal property within this State of such foreign bankrupt, in- 
 cluding debts due him, so that a compulsory payment under such 
 proceedings, by the agent of his debtor, is a defense to the debtor 
 in proceedings here by attaching creditors of the bankrupt. The 
 act of assigning under a Bankrupt Law may be deemed voluntary, 
 within the principle that a voluntary assignment made bond fide, 
 by a debtor for the payment of his debts is valid, and founded on 
 a valuable consideration, and will operate on his foreign debts, and 
 preclude a subsequent attachment of them. — Chancery, 1820, Holmes 
 vs. Remsen, 4 Johns., Ch., 460, 485. But see Holmes vs. Remseh, 20 
 Johns.,- 229 ; and compare, to the contrary, Hoyt vs. Thompson, 5 
 N. Y., 1 Seld., 320; Willetts vs. Waite, 13 How.,Pr., 34; Bird vs. 
 Pierpoint, 1 Johns., 118. 
 
 A trader, whose goods had been seized under an execution, exe- 
 cuted a bill of sale of them to the defendant, who paid out the 
 sheriff; the jury found that the object of the transaction was, not 
 
 M 
 
178 THE BANKRUPT LAW. [§ 35. 
 
 merely to relieve the trader from a forced sale, but to _ protect the 
 goods from other creditors. Held, that the sale was void under the 
 Statute of 13 Eliz.,c. 5, and act of bankruptcy, Semble; that it was 
 also void as to persons who became creditors subsequently to the 
 transaction if they were thereby delayed or defrauded. — Graham 
 vs. Furber, 25 Eng. Law and Eq., 273. 
 
 Property which has been attached, sequestered, or seized on exe- 
 cution by the procurement of the bankrupt within four months be- 
 fore the filing of his petition for adjudication in bankruptcy, or by 
 a creditor against him, may be recovered by the assignees from the 
 creditor in whose favor such attachment or execution has been pro- 
 cured. An execution obtained at the suggestion of the bankrupt, 
 and by an act prompted by his own volition, is fraudulent as against 
 his creditors ; it uses and abuseg the process of the law to give an 
 undue preference to a creditor. It is immaterial whether the debt, 
 in respect of which the attachment or execution procured by the 
 debtor, is for a real or a fictitious debt, 7 Viner's Abridgment, 61, and 
 it will be equally an act of bankruptcy whether the debt be a just 
 debt or not. An attachment out of any court for the mere default 
 of the debtor would not be an attachment within the meaning of 
 the act, for such an attachment would not be considered as executed 
 by the debtor's own procurement. — Deac, Bank, 63. Where a 
 trader, hearing that a writ- of ft. fa. was issued against him, clan- 
 destinely conveyed his goods out of his house and concealed them 
 privately, in order to prevent them being seized in execution by a 
 bond fide creditor of the debtor, this, it was held, though a palpable 
 fraud, was not an act of bankruptcy. — Cole vs. Davies, 1 Lord Ray- 
 mond, 724. 
 
 So where, in May, 1842, a tenant in arrear for rent gave, upon the 
 pressing solicitation of the landlord, a warrant of attorney for the 
 arrear and the current year's rent, upon the understanding that 
 judgment was to be entered. up thereon, and a ft. fa. delivered to 
 the sheriff, but not to be executed till other writs against the tenant 
 should come into the sheriff's hands ; and upon such writs coming 
 into his hands in November it was executed. It was held, that the 
 giving of the warrant of attorney was not an act of bankruptcy un- 
 der this head.— Gore vs. Lloyd, 12 M. & W., 463 ; 13 Law J., K S., 
 Ex., 366. The arrest, attachment, sequestration, or execution must 
 be proved to have been procured by the bankrupt with intent to 
 defeat or delay his creditors. 
 
 The Bankrupt Act of the United States of 1841 contained the 
 same provision as to the procuring by a bankrupt of his goods and 
 chattels to be taken in execution, but the author can find no re- 
 ported decision in the American courts upon this question. The 
 English authorities are therefore referred to as affording some 
 guide to the proper construction of this provision. In order to es- 
 tablish the fact whether the bankrupt, in order to favor a creditor, 
 has procured his goods to be attached or taken in execution, all 
 the circumstances of the case must be carefully looked to, and any 
 concert or dealing between the bankrupt and the creditor out of 
 
§ 35.] FRAUDULENT PREFERENCES AND CONVEYANCES. 179 
 
 the usual course pursued in cases of hostile execution, should be 
 presented in trying this question. 
 
 Executions concerted between the debtor and the creditor to 
 hinder and delay creditors are included in the statute, 13 Eliz., cap. 
 5, and are held to be void. And where it is found that the cred- 
 itor has, with the knowledge or at the suggestion of the debtor, 
 hindered or delayed the execution in fraud of the rest of the cred- 
 itors of the debtor, such acts will afford cogent evidence of the ex- 
 ecution having been procured by the debtor in order to confer an 
 undue preference upon the execution creditor. 
 
 The author is indebted to the learned and elaborate notes of 
 Messrs. Hare and Wallace, in their edition of Smith's Leading Cases, 
 for the following remarks upon this subject. 
 
 In the Circuit Court of the Third Circuit, the distinction is estab- 
 lished between a delay by the officer, and a delay by the order or 
 advice of the plaintiff in the execution. The officer, after a levy, 
 need not remove the property nor sell immediately, if the sale be 
 within a reasonable time ; but the only legal purpose of an execu- 
 tion is to obtain satisfaction of the debt, and, therefore, if the plaint- 
 iff directs the sheriff not to execute it till a certain time, or till fur- 
 ther orders, or directs him to levy, and leave the property with the 
 debtor until otherwise directed,' this at once renders the execution 
 fraudulent and void against later executions levied before the or- 
 der not to proceed is countermanded ; and the goods remaining in 
 the debtors hands an unreasonable length of time, with the knowl- 
 edge and assent of the plaintiff in the execution, is legal evidence 
 of the delay being his act. — U. S. vs. Conyngham et a£, Wallace's 
 C. C. R., 178, brief note of S. C, without arguments or opinions, 
 in 4 Dallas, 358; Barnes et al vs. Billington et al, 1 Washing- 
 ton, C. C. R., 29, 37 ; Berry vs. Smith, 3 id., 60. The establishment 
 of this clear and satisfactory principle, which has been adopted in 
 New York and Pennsylvania, and other States, is due to Judge 
 Griffith, of New Jersey, whose opinion in the case of U. S. vs. Co- 
 nyngham et al., is a fine specimen of the powers of that able law- 
 yer, and highly-accomplished scholar. 
 
 In New York the same distinction is established in Rew vs. Bar- 
 ber, 3 Cowen, 272, and Russell vs. Gibbs, 5 id., 390 ; Ball vs. Shell, 
 21 Wendell, 222 ; Knower vs. Barnard, 5 Hill, 877 ; the Herkimer 
 County Bank vs. Brown, 6 id., 232 ; and the older cases accord 
 with this distinction, though not expressed to be grounded upon 
 it ; the executions being held fraudulent, where the possession or 
 use was left a long time with the debtor by direction of the plaint- 
 iff, in Storm & Beekman vs. Woods, 1 1 Johnson, 110; Farrington & 
 Smith vs. Sinclair, 15 id., 428; andi Kellogg vs. Griffin, 17 id., 274; 
 and it being held in Whipple vs. Foot, 2 id., 418, and Doty vs. Tur- 
 ner, 8 id., 20, that mere delay does not avoid the levy, though great 
 delay might authorize the jury to infer the consent and direction 
 of the plaintiff. 
 
 In Pennsylvania the law now appears to be precisely the same, 
 though formerly different, or, rather, unsettled. It is evident, in- 
 
180 THE BANKRUPT LAW. [§ 35. 
 
 deed, from Levy vs. Wallis, and Chancellor vs. Phillips, 4 Dallas, 
 167, 213, and other cases referred to. in TJ. S. vs. Conyngham et al, 
 Wallace, C. C. R., 178, that the early decisions in Pennsylvania had 
 fluctuated, because the true principle was not discovered ; but upon 
 that principle being stated by Judge Griffith, and more clearly ex- 
 plained by Judge Washington, the decisions in Pennsylvania have 
 ever since been in accordance with it. Merely leaving the prop- 
 erty in possession of the debtor is not fraudulent; but an order 
 by the plaintiff in execution to the sheriff to delay proceedings, ren- 
 ders the execution fraudulent against later executions levied during 
 the stay, or against subsequent purchasers, whether the levy be re- 
 turned or not, and whether or not the later claimant had notice. — 
 Eberle vs. Mayer, 1 Rawle, 366 ; Commonwealth vs. Stremback and 
 others, 3 id., 341 ; M'Clure vs. Ege, 7 Watts, 74 ; Metz and another 
 vs. Haiiman, 5 Wharton, 150. The test is, " the presence or the ab- 
 sence of a direction to stay proceedings on the levy. The princi- 
 ple of this test is, that to levy with directions to proceed no farther, 
 can be referred to no object but the creation of a lien, which the 
 law does not tolerate." — Per Gibson, C. J, in Hickman vs. Cald- 
 well, 4 Rawle, 376. And that an order to stay proceedings in case 
 of household furniture will have the same fraudulent effect, is the 
 point decided in Commonwealth vs. Stremback and others. An or- 
 der will have this effect, though there be no. fraudulent intent ; and 
 of course taking out execution with intent not to have it executed 
 bond fide, and it be not so executed, though there be no order to 
 proceed, will postpone the execution. — Weir vs. Hale, 3 Watts & 
 Sergeant, 285. A postponement of the sale to any time within the re- 
 turn-day is a mere adjournment, and not fraudulent ; but an adjourn- 
 ment to a time beyond the return-day would be equivalent to an in- 
 definite postponement, and a badge of fraud, because no sale could 
 then be made on the writ. — Sautz vs. Worthington, 4 Ban-., 153, 1-55. 
 But a delay proceeding from the officer, though by sufferance of 
 the plaintiff, without fraud on his part, will not postpone the plaint- 
 iff's execution. — Howell vs. Atkyn, 3 Rawle, 282, explained in Hick- 
 man vs. Caldwell ; M'Coy vs. Reed, 5 Watts, 300. But though the 
 rule in Pennsylvania is, that the officer need not " remove the prop- 
 erty, nor put a person in charge, nor sell immediately," Common- 
 wealth vs. Stremback and others, yet it is required that he should do 
 it in a reasonable time, Wood vs. Vanarsdale, 4 Rawle, 401 ; for if the 
 property be left unreasonably long, the delay will afford evidence of 
 the plaintiff's being the fraudulent cause of it, and will, therefore, vi- 
 tiate the execution, Corlies & Co. vs. Stanbridge, 5 Rawle, 286, 290, 
 especially if the levy is not returned. — Lewis vs. Smith, 2 Sergeant 
 & Rawle, 142. Household goods can not be left more than a rea- 
 sonable time, Cowden vs. Brady and others, 8 id, 505, 510; as to 
 the reasonable length of time in such cases, see Commonwealth vs. 
 Stremback and others, and Dean and others vs. Patton, 13 Sergeant 
 & Rawle, 341, 345 ; and as to what is a reasonable time in general 
 cases, vide Judge Griffith's opinion in U. S. vs. Convngham et al, 
 Wallace, C. C. R., 29, 37. ' ° 
 
§ 35.] FEATJDULENT PEEFEEENCES AND CONVEYANCES. 181 
 
 In Alabama, also, it is settled that if an execution issued is stay- 
 ed or held up by direction of the plaintiff, the proceeding is fraud- 
 ulent in law", and the execution constitutes no lien, as against junior 
 ones regularly levied and enforced. — Wood vs. Gary et al., 4 Ala., 
 43 ; Patton vs. Hay ter,- Johnson, and Co., 15 id., 18, 21. 
 
 In Kentucky a similar principle has been adopted : the officer is 
 not obliged to take exclusive possession under a levy on chattels, 
 and therefore the simple retention of the property by the debtor, if 
 it be not continued longfer than a vigilant officer may conveniently 
 require to sell the property, is not alone even prima facie proof of 
 a fraudulent intent, though it might be some slight evidence of col- 
 lusion ; but a retention of possession, with a right in the debtor to 
 consume or sell the property, or any indefinite holding by the debt- 
 or, without any effort by the creditor to sell the property within an 
 ordinary or usual time, is prima facie evidence of fraud; and there- 
 fore, if there be a continued possession by the debtor for months 
 after the levy, and there be no evidence to rebut the presumption 
 of fraud, the jury will be directed to find that the levy is void 
 against a subsequent execution creditor. — Swigert, etc., vs. Thomas, 
 7 Dana, 220, 222 ; vide also Bourne vs. Hocker, 11 B. Monroe, 25.' 
 
 In "New Jersey the rule in Berry vs. Smith is not strictly adopted ; 
 mere delay, or an order from the plaintiff not to proceed, will not 
 postpone an execution to a subsequent one.— Casher vs. Peterson, 1 
 Southard, 317; Williamson vs. Johnson, 7 Halsted, 86; Sterling 
 vs. Van Cleve, id., 285 ; James vs. Burnett, Spencer, 636, 641. To 
 have that effect, the conduct of the prior execution creditor must 
 be fraudulent ; but it is not necessary to prove actual fraud in the 
 concoction of the judgment, or an actual design to defeat or delay 
 other creditors ; it is enough if the proceedings of the prior execu- 
 tion creditor are an abuse of the process of the law. Accordingly, 
 it has been determined, that although the creditor when he delivers 
 his execution, or at any time afterward, may direct the sheriff not 
 to proceed to a sale without further orders from him, or unless urged 
 on by other executions, and will not thereby lose his priority if he 
 act in good faith ; yet that if the debtor is permitted, with the 
 knowledge and consent of the execution creditor, express or im- 
 plied, not only to retain the possession of the property, and to use 
 and enjoy it for ordinary and appropriate purposes as in the case 
 of household goods, but to exercise an unlimited control over all 
 the property levied on, whatever may be its nature, and to use, sell, 
 exchange, or consume it, as the rightful and absolute owner, it is 
 such evidence of a fraudulent and colorable use of the process of 
 the court, whether the debt be a real and just one or not, as to post- 
 pone the execution to younger ones sued out and prosecuted in 
 good faith. — Cumberland Bank vs.* Hann, 4 .Harrison, 167, 169 ; 
 Cook vs. Wood, 1 id., 254. In Delaware, also, a mere order to the 
 sheriff to hold the execution in his hands, and not proceed unless in- 
 structed to do so, or compelled by other judgment creditors, does 
 not postpone an execution. — Houston vs. Sutton, 3 Hamington, 37. 
 The practice of allowing executions to be used for the purposes of 
 
182 THE BANKRUPT LAW. , [§ 35. 
 
 a lien is also avowedly established in South Carolina, and dormant 
 executions are never postponed but for actual fraud, Snipes vs. the 
 Sheriff of Charleston District, 1 Bay, 295 ; Brown vs. Gilliland, 3 
 Desaussure, 539 ; Greenwood et al. vs. Naylor,- 1 M'Cord, 414 ; 
 where it is decided that indorsing on a,fi.fa. "lodged to bind," 
 which was regarded as a stay, did not prevent the execution taking 
 the money made on a younger writ. — Adair vs. M'Daniel & Corn- 
 well, 1 Bailey, 158. 
 
 In the Eastern States, where an attachment is a usual mesne pro- 
 cess, it is generally held that possession must be taken and kept, or 
 the property is liable to future attachments. — See Bagley vs. White, 
 4 Pickering, 395, and cases cited ; Taintor vs. Williams, 7 Connecti- 
 cut, 2 VI ; Mills vs. Camp, 14 id., 219 ; Harding vs. Janes, 4 Ver- 
 mont, 462, 465. 
 
 Procuring promissory notes or bills of exchange, to be taken in 
 execution with intent to defeat and delay creditors, is an act of 
 bankruptcy, and the assignees may recover them or their value from 
 the creditor who has thus obtained possession of them. — Edwards 
 vs. Cooper, 10 Law J. Q. B., 100. 
 
 Where a debtor, in concert with his creditor, has procured his 
 
 . goods to be taken in execution, the fraudulent preference in favor 
 
 of the creditor is not complete until the goods have been actually 
 
 seized or levied upon by the sheriff. — Belcher vs. Gummow, 9 Q. B., 
 
 873. 
 
 A fraudulent pledge or transfer of any part of the property of the 
 bankrupt to a creditor who has reasonable cause to believe that his 
 debtor is insolvent, is void, and the assignee may recover the prop- 
 erty, or the value of it, from the person so receiving it, or so to be 
 benefited. This provision, which existed in the former United States 
 Bankrupt Act of 1841, and was adopted from the earlier English 
 Bankrupt Acts, removed a great inconsistency that formerly pre- 
 vailed in the Bankrupt Law ; for though a fraudulent gift or trans- 
 fer by deed was held an act of bankruptcy, it had been decided that 
 a sale, or any transfer of goods not by deed, however fraudulent the 
 scheme might be as giving a preference of one creditor to another, 
 and as such void, was nevertheless not an act of bankruptcy. 
 
 A fraudulent delivery of goods will not be an act of bankruptcy 
 unless it be in the nature of a gift or transfer ; so that where goods 
 are removed with intent to delay a creditor, but the party in whose 
 custody they are placed has no claim given him over them, this is 
 not an act of bankruptcy. — Cotton vs. James, Moo. & M., 273. 
 
 A fraudulent delivery of goods by a debtor to one to whom no 
 debt was due, is clearly an act of bankruptcy, and the value of the 
 goods can be recovered by the assignees. So also the fraudulent 
 transfer or delivery of a bill of exchange or promissory note by a 
 trader to a creditor is void, as against the assignees, although the 
 only evidence of the delivery was that it was inclosed in a letter to 
 the creditor, supported by evidence that the creditor would have 
 accepted it. — Gumming vs. Bailey, 4 M. & P., 36 ; 6 Bing., 363. 
 
§ 35.] FRAUDULENT PREFERENCES AND CONVEYANCES. 183 
 
 But where a debtor secretly carried his goods out of his house, 
 and did not place them in the control or custody of any person, this 
 was held not to be a fraudulent transfer of such goods. To render 
 such a transaction void, the parties should stand in the relation of 
 debtor and creditor. 
 
 Evidence of Fraud. — The section provides that the fact of any 
 sale, assignment, transfer, or conveyance within the third subdivi- 
 sion not being made in the usual and ordinary business of the 
 debtor, is to be deemed prima facie evidence of fraud. 
 
 Contracts and Securities made void. — Any contract, covenant, or 
 security made or given by a bankrupt or other person with, or in 
 trust for, any creditor for securing the payment of any money as a 
 consideration for or with intent to induce the creditor to forbear 
 opposing the application for the order of Discharge of a bankrupt, 
 is made absolutely void by this section. 
 
 This provision is adopted from the recent English act consolida- 
 ting the law of bankruptcy, but this section does not contain the 
 proviso which is found in. the English act, viz., that no such securi- 
 ty, if a negotiable security, shall be void as against a bond fide hold- 
 er thereof for value, without notice of the consideration for which 
 it was given. 
 
 The Bankrupt Act of the United States of 1841 invalidated any 
 security for money given to a creditor in consideration of his with- 
 drawing his dissent, or agreeing not to enter such dissent to the 
 bankrupt's obtaining his certificate. It has been held, that where 
 a security has been given by a third party without the knowledge 
 or privity of the bankrupt to a creditor to induce him to sign the 
 bankrupt's certificate, which at that time was given to a majority 
 in value of the creditors, such a contract was void at common law. 
 — Ex, parte Butt., 10 Ves., 359; ex parte Hall, 17 Ves., 62. 
 
 The contrary, however, has been held in this country : where a 
 friend of a bankrupt, under the act of 1841, without the knowledge 
 or connivance of the bankrupt, arranged with some of the creditors 
 of the bankrupt who opposed his Discharge to give his own notes 
 for their debts as soon as the bankrupt received his Discharge, and 
 take an assignment of their judgments against him, and such cred- 
 itors thereupon withdrew their opposition, it was held, that notes 
 given in pursuance of that arrangement were valid, and upon a suf- 
 ' ficient consideration. — Bell vs. Leggett, 2 Sandf., Sup. Ct., 450. 
 
 Penalty upon the Creditor accepting such Security from the Bank- 
 rupt. — Every creditor obtaining any sum of money or security for 
 the purposes before mentioned, either as an inducement to forbear 
 opposition or to consent to the bankrupt's Discharge, shall forfeit 
 all right to any share or dividend in the estate of the bankrupt, and 
 shall also forfeit double the value or amount of such money, goods, 
 chattels, or security so obtained to be recovered by the assignee for 
 the benefit of the estate. 
 
184 THE BANKRUPT LAW. [§ 36. 
 
 BANKRUPT PARTNERS AND CORPORATIONS. 
 
 Section S6. And be itfwriher enacted, That- where two 
 or more persons who are partners in trade shall be ad- 
 judged bankrupt, either on the petition of such partner, 
 or any one of them, or on the petition of any creditor of 
 the partners, a warrant shall issue in the manner pro- 
 vided by this act, upon which all the joint stock and 
 property of the copartnership, and also all the separate 
 estate of each of the partners, shall be taken, excepting 
 such parts thereof as are hereinbefore excepted ; and all 
 the creditors of the company, and the separate creditors 
 of each partner, shall be allowed to prove their respective 
 debts ; and the assignee shall be chosen by the creditors 
 of the company, and shall also keep separate accounts of 
 the joint stock and property of the copartnership, and 
 of the separate estate of each member thereof; and after 
 deducting out of the whole amount received by such 
 assignee the whole' of the expenses and disbursements, 
 the net proceeds of the joint stock shall be appropriated 
 to pay the creditors of the copartnership, and the net 
 proceeds of the separate estate of each partner shall be 
 appropriated to pay his separate creditors ; and if there 
 shall be any balance of the separate estate of any part- 
 ner, after the payment of his separate debts, such balance 
 shall be added to the joint stock for the payment of the 
 joint creditors ; and if there shall be any balance of the ' 
 joint stock after payment of the joint debts, such balance 
 shall be divided and appropriated to and among the sep- 
 arate estates of the several partners according to their 
 respective right and interest therein, and as it would have 
 been if the partnership had been dissolved without any 
 bankruptcy ; and the sum so appropriated to the separate 
 estate of each partner shall be applied to the payment of 
 
§ 37.] BANKRUPT PARTNERS AND CORPORATIONS. 185 
 
 his separate debts ; and the certificate of discharge shall 
 be 'granted or refused to each partner as the same would 
 or ought to be if the proceedings had been against him 
 alone under this act ; and in all other respects the pro- 
 ceedings against partners shall be conducted in the like 
 manner as if they had been commenced and prosecuted 
 against one person alone. If such copartners reside in 
 different districts, that court in which the petition is first 
 filed shall retain exclusive jurisdiction over the case. 
 
 Section 37. And be it further enacted, That the provi- 
 sions of this act shall apply to all moneyed, business, or 
 commercial corporations and joint-stock companies, and 
 that upon the petition of any officer of any such corpora- 
 tion or company duly authorized by a vote of a majority 
 of the corporators present at any legal meeting called for 
 the purpose, or upon the petition of any creditor or cred- 
 itors of such corporation or company, made and presented 
 in the manner hereinafter provided in respect to debtors, 
 the like proceedings shall be had and taken as are here- 
 inafter provided in the case of debtors ; and all the pro- 
 visions of this act which apply to the debtor, or set forth 
 his duties in regard to furnishing schedules and invento- 
 ries, executing papers, submitting to examinations, dis- 
 closing, making over, secreting, concealing, conveying, as- 
 signing, or paying away his money or property, shall in 
 like manner, and with like force, effect, and penalties, 
 apply to each and every officer of such corporation or 
 company in relation to the same matters concerning the 
 corporation or company, and the money and property 
 thereof.. All payments, conveyances, and assignments 
 declared fraudulent and void by this act when made by 
 a debtor, shall in like manner, and to the like extent, and 
 with like remedies, be fraudulent and void when made 
 by a corporation or company. No allowance or discharge 
 shall be granted to any corporation or joint-stock com- 
 
186 THE BANKRUPT LAW. [§ 36, 37. 
 
 pany, or to any person, or officer, or member thereof: 
 provided, that whenever any* corporation by proceedings 
 under this act shall be declared bankrupt, all its property 
 and assets shall be distributed to the creditors of such 
 corporation, in the manner provided in this act in respect 
 to natural persons. 
 
 This section, adopting the usual equitable principles which reg- 
 ulated the administration in bankruptcy of partnership property, 
 and prescribed the rights of the joint and separate creditors upon 
 partnership estates in very concise and intelligible terms, lays down 
 the rules upon which, in the event of the bankruptcy of one or more 
 partners, the estate is to be distributed. One member of a partner- 
 ship firm may become bankrupt upon his own application, or, if he 
 has committed an act of bankruptcy, may be adjudicated a bank- 
 rupt compulsorily. The effect of such bankruptcy upon the part- 
 nership estate, and the rights of his partner or partners who remain 
 solvent, is clearly prescribed and set forth in the section. In the 
 event of the bankruptcy of all the members in the firm, either upon 
 their own petition or upon a hostile adjudication of bankruptcy by 
 a creditor of the firm, all the joint stock or property of the firm, 
 and also all the separate estate of each partner, is to be taken pos- 
 session of for the purpose of distributing the assets, subject to the 
 exemptions to which each partner is entitled under Section 14 of 
 this act. Vide notes to that section. 
 
 The creditors of the partnership, and the separate creditors of 
 each partner, are then to come in and prove their debts under the 
 estate ; the joint creditors upon the joint estate, and the separate 
 creditors of each partner upon the separate estate of such partner. 
 Upon this subject, vide notes to Section 19, title " Partners — Proof 
 of Debts." The creditors of the partnership are to choose the as- 
 signees; and this elective right being given to them by the sec- 
 tion, a creditor of the separate estate of one of the' partners will 
 not have the right. to vote in such choice. The. assignee is to keep 
 distinct accounts of the joint property of the firm and the separate 
 estate of each partner. The joint estate and property is to bear 
 the whole of the expenses and disbursements of all the proceedings 
 in bankruptcy incurred in the distribution of the estate, and the 
 net proceeds of the partnership property are to be appropriated to 
 pay the creditors of the copartnership, and the net proceeds of the 
 separate estate of each partner are to be appropriated to pay his 
 separate creditors. It frequently happens that the separate estate 
 of one partner of a firm may be more solvent than that of the co- 
 partnership, in which event the section provides, that after the pay- 
 ment in full of the_ separate debts of the partner, any surplus or 
 balance remaining in the hands of the assignee is to be added to 
 the fund for the payment of the joint creditors. 
 
 It may happen, on the other hand, that upon the bankruptcy of 
 
§ 36, 37.] BANKRUPT PARTNERS AND CORPORATIONS. 187 
 
 a copartnership, that such copartnership is solvent, but that individ- 
 ual members of such partnership may be insolvent with respect to 
 their individual debts and liabilities ;- and in such an.event the section 
 provides that after the payment of the joint creditors of the firm in 
 full, any balance or surplus which may remain in the hands of the as- 
 signees shall be divided and appropriated to and among the separate 
 estates of the separate partners according to their respective rights 
 and interests therein, and as it would have been administered if there 
 had been an ordinary dissolution of the partnership, and no bank- 
 ruptcy had occurred. The sum thus appropriated to the separate 
 estate of each partner is to form the fund out of which his individ- 
 ual creditors are to receive the payment of their dividends. 
 
 Joint estate is that in which the partners are jointly interested 
 for the purposes; of the partnership at the time of the bankruptcy. 
 
 Separate estate is that in which the partners are each separately 
 interested at the time of the bankruptcy. It is not unusual to con- 
 fine the term " separate estate" to that part of the partner's prop- 
 erty which is unconnected with the partnership. But it may be 
 applied to property used for the purposes of a partnership, if be- 
 longing to one or more partners to the exclusion of the rest. — Ma 
 parte Hamper, 17 Ves., 404 ; Coll. on Part., 595, 596,,2d ed. 
 
 Separate debts are those for which the creditor has a remedy, at 
 law against such partner only of the firm as contracted them. 
 Joint debts are those which can be recovered by action, in which 
 all the partners constituting the firm must be defendants. 
 
 A B, in consideration of one per cent., guaranteed to C D and 
 Sons the payment of one half of the price of certain bales of wool 
 purchased by W and E, who had given their acceptance at eight 
 months for the full amount to C D and Sons. W and E and A B 
 severally became bankrupt. A B had not obtained his certificate, 
 and no dividend had been declared when the bill was dishonored. 
 A proof by C D against the estate of A B for the amount guaran- 
 teed was tendered before the commissioner and refused, but on ap- 
 peal was allowed. — Me parte Brook, 12 Jur., 411 ; 17 L. J. Bank., 8. 
 
 A and B were partners. B, to obtain capital for the business, 
 borrowed money, and for security entered into a bond, in which C 
 and D became his securities for the repayment of the money and 
 interest, and also effected and deposited with the lenders a policy 
 of insurance on his life. One of the conditions of the bond was, 
 that the money should be repayable on either B, C, or D becoming 
 bankrupt. The two partners entered into a deed of covenant to 
 indemnify C and D, the sureties, from all loss by reason of their 
 entering into the bond. A and B became bankrupt, and C and D 
 were called on for payment of the whole money, which C paid, to- 
 gether with interest and expenses. Held, that C was not entitled 
 to prove for the money as a creditor on the joint estate. — Mc parte 
 Meyer, 12 Jur., 447. 
 
 A, B, and C, who were in partnership, were joint owners of a 
 ship with D, the managing owner, who contracted a debt with the 
 petitioners for goods supplied for the use of the ship. A, B, and C 
 
188 THE BANKRUPT LAW. [§ 36, 37'. 
 
 became bankrupt. Held, that the petitioners could not prove 
 against their joint estate, but only against the separate estate of 
 each of the bankrupts. — Mc parte Benson, 2 Mont., D. & D., 750. 
 
 A and B dissolved their partnership, when B assigned all the 
 joint property to A, among which were debts due to the firm to 
 the amount of £60, but no notice of assignment was given to the 
 debtors. A and B severally became bankrupt. Held, that a joint 
 creditor, who had proved under the separate estate against A, was 
 entitled to receive dividends on his proof. — Ms parte Taylor, 2 
 Mont, D. &D, 753. 
 
 A trader made a promissory note as a surety for a debt due to 
 one of the creditors of a. firm. " The firm and the trader became 
 bankrupt, and the creditor proved against the estate of the trader 
 on the note, and against the separate estate of a partner in the 
 firm on the debt. A dividend was declared and paid on the for- 
 mer proof, but not on the latter. Held, that the assignees of the 
 trader were not entitled to arf order to prove against the joint es- 
 tate of the firm for the amount of the dividend which they had 
 paid on the promissory note. — Mc parte Brown, 2 Mont., D. & D., 
 718; 6 Jur., 1021. 
 
 Where, upon the dissolution of partnership, the debt of the retir- 
 ing partner was ascertained upon the supposition that all the joint 
 debts were paid, and the retiring partner assigned his share of the 
 partnership assets, upon an agreement that he should pay the con- 
 tinuing partners his balance, and that the continuing partners 
 should pay the outstanding debts of the firm, and afterward the 
 continuing partners became bankrupt ; the liability of the retiring 
 partner to pay an outstanding debt of the original partnership was 
 held not to be a debt of mutual credit, so as to enable him to set it 
 off against the claim of the assignees for his ascertained balance 
 under the agreement. — Abbott vs. Hicks, 5 Bing., N. G, 579. 
 
 The defendant was sued on a debt due from him as a surviving 
 partner, and one due from him in his private capacity. He plead- 
 ed that he, residing in New Hampshire, applied to the District 
 Court there for the benefit of the Bankrupt Act in his private right 
 and gapacity as a partner. And he also, in another plea to the 
 court on the private debt, pleaded that he applied for the benefit 
 of the Bankrupt Act and was discharged, nothing of the partner- 
 ship being said. On demurrer to the rejoinder it was held, that 
 the plea was good, though it did not state that the defendant was 
 decreed a bankrupt as partner, or that his partner was also decreed * 
 a bankrupt ; that as the court was shown to have had jurisdiction, 
 and to have decreed his Discharge, it would be presumed that all 
 the intermediate steps were regularly taken; that to state the le- 
 gal effects of the decree pleaded was sufficient ; and that the repli' 
 cation, which stated, that before the defendant made his applica- 
 tion, his partner, residing in another district, applied there for the 
 benefit of the Bankrupt Act as a partner, and thereupon the court 
 declared him a bankrupt, and appointed an assignee, did not avoid 
 the plea. — Morrison vs. Woolson, 3 Foster, N. H., 11. 
 
§ 36, 37.] BANKRUPT PARTNERS AND CORPORATIONS. 189 
 
 D and Y carried on business in Liverpool in partnership as D, Y, 
 and Co. D, Y, and Y also carried on business in Pernambuco in part- 
 nership as D, Y, and Co. The two firms were separate and distinct, 
 and the third partner in the Pernambuco trade had not any inter- 
 est in the Liverpool business. The Pefnambuco house drew bills 
 upon, and they were accepted by the Liverpool house bond fide and 
 in the ordinary course of business, and two of such bills came into 
 the hands of G and K honestly, in the due course of trade. The 
 English firm became bankrupts, and afterward the Pernambuco 
 firm entered into a eoncordata with their creditors, under, which 
 they vested property in trustees for the benefit of their creditors. 
 G and K received a dividend under the eoncordata out of the as- 
 sets vested in the trustees of the Pernambuco firm as drawers of 
 the bill. They subsequently attempted to prove against the Liv- 
 erpool firm as acceptors of the bills, but one of the commissioners 
 decided, that, there was no right to double proof, and upon appeal 
 the same was affirmed, Lord Justice Turner agreeing with the com- 
 missioner, Lord Justice Knight dissenting. — Mc parte Goldsmid, 39 
 Eng. Law and Eq., 106. 
 
 The members of a partnership became in 1847 unable to meet 
 their engagements ; a deed of arrangement was drawn up between 
 themselves and most of their creditors, to which deed the plaintiffs 
 were not parties, nor was it executed by them, by which provisions 
 were made for paying the debts of the partnership, and they were 
 in virtue thereof released from further liability. Held, that this 
 deed, having been completely executed before the passing of the 
 12 & 13 Vict., ch. 106, the Bankrupt Law Consolidation Act, did 
 not fall within the provisions of the 224th Section of that statute, 
 and, consequently, could not bind strangers to it, and, therefore, 
 could not be pleaded in bar to an action brought against the part- 
 ners by the plaintiffs, who were creditors at the time of the execu- 
 tion of the deed, but had never executed it. — Larpent vs. Bibby, 
 34 Eng. Law and Eq., 7. 
 
 Where there was joint estate to the amount of £13, it was held, 
 that the joint creditors could not receive dividends from the sep- 
 arate estate until all the separate creditors could be paid in full, 
 although it did- not appear that after costs any amount of the £13 
 would remain for distribution. — Ex, parte Kennedy, 19 Eng. Law 
 and Eq., 150. 
 
 Where one or more of several partners have been declared bank- 
 rupts and discharged under the act, a suit can not be maintained 
 in the name of the several partners on a note owned by the firm 
 before such bankruptcy. — Tims vs. Ross, 81 S. & M., 557. Decided 
 under the United States Bankrupt Act of 1841. 
 
 Where three firms, having each a distinct name, keeping separate 
 books and doing a separate business, consist of the same persons, 
 and upon the bankruptcy of one firm its claim against one of the 
 others, also bankrupt, is sold by the assignee, and by the purchaser 
 proved against the debtor firm, he can not afterward proceed by 
 suit for the debt against either of the partners ; for, although the 
 
190 THE BANKRUPT LAW. [§ 36, 37. 
 
 three firms may be regarded as distinct so. far as to settle the 
 claims of the creditors of each, and to render a debt due from one 
 firm to another assets for the creditors of the latter, yet there could, 
 in fact, be no debt that could pass to a purchaser to make him a 
 creditor of the debtor firm 1 , since all were bankrupt.— Buckner vs, 
 Calcote, 28 Miss., 2 Cush., 432. 
 
 The assignees of one partner, under a separate commission, are 
 tenants in common with the solvent partner, and one can not call 
 the joint property out of the other's hands. — Murray vs. Murray, 5 
 Johns., Ch., 60. 
 
 A decree of the United States District Court, admitting the proof 
 of the debt in such a case, is conclusive as to the matter before it, 
 but does not settle the question as to the rights of parties acquired 
 under that decree that are drawn in question here. — Buckner vs. 
 Calcote, 28 Miss., 2 Cush,. 432. 
 
 The assignee of one partner who is bankrupt must join with the 
 solvent partner in a suit at law. — Murray vs. Murray, 5 Johns., 
 Ch., 60. 
 
 The assignees of a bankrupt partner brought a suit in equity to 
 recover partnership property, to which the solvent partner, who 
 was made party to the suit, demurred, on the ground that the as- 
 signees of one partner were not entitled to recover joint property. 
 The demurrer was overruled, and an account was, with consent of 
 parties, taken before the master, and finally settled. Held, that the- 
 solvent partner could not, in a collateral suit, question the right of 
 the assignees to the property so recovered, though the decree, in 
 the suit by the assignees, reserved to the solvent partner a right to 
 question their claim. — Murray vs. Murray, 5 Johns,, C. R, 60. 
 
 A solvent partner can not call upon the assignees of a bankrupt 
 copartner, or partnership debtors who have bond fide settled with 
 the assignees, to account for the partnership property, in order to 
 get possession of the property for the purpose of distribution among 
 the partnership creditors. The right of the assignees to distribute 
 the fund is equal to his at law, and superior to it in equity. Vide 
 case last cited. 
 
 Where a joint fiat issued against A and B, who were partners, 
 and the debt was separate, it was held void, and the subsequent 
 superseding it as to A qould not make it good as a separate fiat as 
 to B. — Ex. parte Clarke, 1 Deac. & Chit., 544. 
 
 Four partners were adjudicated bankrupts, two of whom resided 
 abroad. The adjudication was made on the 8th of November. On 
 the 13th notice was given of an application, on behalf of the part- 
 ners abroad, to suspend the advertisement. On the lVth the meet- 
 ing was held_ to show cause against the issue of the advertisement, 
 and the application was then made. The commissioner refused to 
 suspend the issue of the advertisement on the ground that, as the 
 application was not made within seven days from the adjudication, 
 he had no authority, under the 104th Section of the 12 & 13 Vict., 
 c. 106, to do so. Held, upon appeal, that "such extended time" 
 mentioned in the section meant " further or longer time" not ex- 
 
§ 36, 37.] BANKRUPT PARTNERS AND CORPORATIONS. 191 
 
 ceeding fourteen days; and that the notice having been given 
 within the seven days, every thing was in fieri, and the commis- 
 sioner had authority to grant the application. The matter was 
 therefore sent back to the commissioner. — In re Castelli, 8 Eng. 
 Law and Eq. Rep., 280. 
 
 Where one of several partners becomes a bankrupt, the action 
 must be brought in the name of the solvent partner and the as- 
 signees of the bankrupt. — Thompson vs. Frere, 10 East, 418; rec- 
 ognized by Baily,B., in Burt. vs. Mould, 3 Tyrw., 569. 
 
 If one partner becomes a bankrupt, his assignee can not obtain 
 any share of the partnership effects until they satisfy all that is due 
 from him to the partnership. — Holderness vs. Shakels, 8 B. & C, 
 618; per Tenterden, C. J. A solvent partner may sue out a writ 
 in the name of his partner or of his assignees, if he be bankrupt, as 
 well as his own, in order to recover a debt due to the partnership ; 
 but the partner who objects has a right to be indemnified against 
 the costs. — Whitehead vs. Hughes, 2 Cr. & M., 318. 
 
 Although each partner may bind the others by dealing with 
 strangers in the name of the firm, yet he can not do so on his own 
 individual account to a larger extent than his interest. Thus, 
 though the goods may be taken, and his share therein sold for his 
 own private debt, yet the purchaser, from the sheriff buys only that 
 to which the defendant is justly entitled, as between himself and 
 his companions. — Heyden vs. Heyden, 3 Salk., 392; Chapman vs. 
 Koops, 3 B. & P., 289 ; Johnson vs. Evans, 1 Mann. & Q., 240. So 
 if he became individually a bankrupt. — Holderness vs. Shakels, 8 
 B. C, 612 ; West vs. Skip, 1 Ves., 242. 
 
 In the case of voluntary bankruptcy upon the application of an 
 individual partner, or the copartnership upon their own petition, no 
 difficulty can of course arise ; but where a creditor attempts to 
 make a partnership firm bankrupts, and files a petition for adjudi- 
 cation in bankruptcy against them jointly, he must establish a joint 
 debt due from the copartnership to him, in its nature provable un- 
 der this act, to an amount of at least two hundred and fifty dollars ; 
 he must also establish that the copartnership has committed one of 
 the acts of bankruptcy specified in Section 39. Such an act of 
 bankruptcy may have been, committed by the partnership jointly, 
 by executing a deed or making an assignment, or making a trans- 
 fer, pledge, payment, or delivery of goods which may amount to a 
 fraudulent preference, or in fact that the copartnership have jointly 
 been concerned or participated in the commission of some act which 
 is constituted by the section above alluded to an act of bankruptcy. 
 
 If there be no evidence of such joint act of bankruptcy commit- 
 ted by the firm, the creditor may prove an individual act of bank- 
 ruptcy committed by each member of the firm ; and in the event of 
 his being unable to establish either of these two propositions, he 
 can only make such member of a copartnership bankrupt who may 
 have committed some act of bankruptcy. 
 
 One member of a copartnership is not liable to be made a bank- 
 rupt in respect of an act of bankruptcy committed by another mem- 
 
192 THE BANKRUPT LAW. [§ 36, 37. 
 
 ber of a copartnership unknown to him, and without his sanction, 
 direction, authority,, or ratification. 
 
 In some cases where there are partners, it has been held that the 
 act of one partner with respect to the commission of an act of bank- 
 ruptcy, is binding upon all the others ; but these decisions have pro- 
 ceeded on the principle that the party committed the act of bank- 
 ruptcy under such circumstances, and in such connection with the 
 usual trade and dealings of the firm, that it must be presumed he 
 had authority to bind the firm by his acts. An assignment by a 
 partner conveying any portion of the partnership property in fraud, 
 and without the knowledge of his copartner, if it amounted to an 
 act of bankruptcy, would clearly not bind the innocent partners. 
 
 Where one of three partners carrying on a bank in England, and 
 who had the sole management of the business, his copartners resid- 
 ing at a distance, absented himself from the banking-house, shut it 
 up, and stopped payment, which acts constituted an act of bank- 
 ruptcy by the English Bankrupt Law, it was held, that this was no 
 evidence to support a joint adjudication in bankruptcy against the 
 firm. 
 
 These cases must depend very much upon their own peculiar cir- 
 cumstances. A partner can not stand by and, with a knowledge 
 that his copartner is dealing with the partnership property by giv- 
 ing preferences and engaging in transactions which render such 
 partner amenable to the Bankrupt Law, escape the consequences 
 of his copartner's acts ; while, on the other hand, it would be man- 
 ifestly unjust to subject a partner to the consequences of bankrupt- 
 cy for an act done by his copartner of which he had no knowl- 
 edge, and to which he neither directly nor indirectly consented. If 
 the firm were known to be in insolvent circumstances, and were 
 dealing with their property in a manner out of the usual and ordi- 
 nary course of business, such facts would afford cogent proof to 
 bind all the partners for the acts of the individual partner who com- 
 mitted an act of bankruptcy. 
 
 Upon the question of a compulsory adjudication of bankruptcy 
 against a firm these facts are minutely examined, and the court is 
 to be satisfied that the partners concurred with, or were cognizant 
 without objection, of the act of bankruptcy imputed to the individ- 
 ual partner. 
 
 The question of the liability of one partner to, be made a bank- 
 rupt by the act of another is one of paramount importance in every 
 commercial community. After an accurate search, no reported de- 
 cision can be found upon this question in the American courts in 
 the construction of either of the former United States Bankrupt 
 Acts, and it is questionable whether the point has ever arisen, or 
 has ever received any judicial determination in this country. The 
 only analogy which can be found must be drawn from cases upon 
 the authority of one partner to bind his copartner by the execution 
 of deeds of assignment of partnership property in trust for cred- 
 itors; and although there exists some conflict in the decisions of the 
 various cases, the result clearly appears to be that one partner can 
 
§ 36, 37.] BANKRUPT PARTNERS AND CORPORATIONS. 193 
 
 not bind his copartner by the execution of a fraudulent deed, or the 
 making of a fraudulent preference by assignment' or conveyance. 
 
 One partner can not make an assignment of the partnership prop- 
 erty for the benefit of the firm's creditors without the consent of 
 the other partners, where they are present, and actually engaged in 
 the business of the partnership — Deming vs. Colt, 3 Sandf., Sup. 
 Ct., 284. 
 
 Where one partner, in the absence of his copartner, executed a 
 bill of sale, under seal, of all the partnership effects, the sale being 
 bond fide and for the full value of the property, and made to pay a 
 pressing debt of the absent partner, it was held, that the sale was 
 binding upon the absent partner, and passed, the whole title of the 
 firm to the property. — Forkner vs. Stuart, 6 Gratt., 197. 
 
 Where one partner agreed with a private creditor, that if he 
 would trade with the firm, his account should go in payment of his 
 private debt, and it did not appear that the other party approved 
 of the same, it was held, that such agreement could not be sustain- 
 ed so as to diminish the partnership assets. — Ramey vs. M'Bride, 4 
 Strobh.,12. 
 
 One partner can not, without the consent of the other, appropri- 
 ate the partnership property to his individual purposes. — Bourne 
 vs. Wooldridge, 10 B. Mon., 492. 
 
 One of a firm of warehousemen falsely represented to a person 
 who advanced money on the faith of such representation, that the 
 one to whom the money was advanced, and to whom he had given 
 receipts in the firm name, had on storage with the firm a certain 
 quantity of grain. The innocent partners were held bound by the 
 representation, and responsible for the money advanced. — Griswold 
 vs. Haven, 25 N. Y., 1 1 Smith, .595. 
 
 In the absence of fraud, one member of a firm may, notwithstand- 
 ing the protest of his partner, transfer all the property of the part- 
 nership, in. consideration of the promise of the purchaser to pay its 
 debts, though not yet due. — Graser vs. Stellwagen, 25 N. Y., 11 
 Smith, 315. (Sutherland, Allen, and Smith, J. J., dissenting.) 
 
 Each partner has full power to sell, pledge, or otherwise dispose 
 of the entirety of any particular effects belonging to the partner- 
 ship, and not merely of his own share thereof, for any purpose with- 
 in the scope of the firm secured by any joint contract, but he can 
 not affect the rights of his copartner in any several contract. — 
 , Clark vs. Rives, 33 Miss., 579. 
 
 Each partner possesses an equal and general power in behalf of 
 the firm to pledge, exchange, or otherwise dispose of the partnership 
 effects for any and all purposes within the scope of the partner- 
 ship. One partner may assign property for the benefit of one of 
 several, or of" all joint creditors. Whether one partner can make a 
 general assignment of all the partnership effects, quaere Cullum vs. 
 Bloodgood, 15 Ala., 34. 
 
 One partner can not, without the consent of his copartner, ap- 
 propriate the assets of the firm to the payment of his individual 
 debts ; and such appropriation, if made with a knowledge on the 
 
 N 
 
194 THE BANKRUPT LAW. [§ 36, 37. 
 
 part of the person receiving them that they are the joint property 
 of the firm, is no bar to an action instituted against him by the 
 partnership. — Burwell vs. Springfield, 15 Ala., 273. 
 
 One partner can not bind the firm by deed without special author- 
 ity ; and if he executes a single bill under seal in the name of the 
 firm without such authority, it binds himself alone. — Morris vs. 
 Jones, 4 Haring, 428. 
 
 Whether one partner can, during the existence of the partner- 
 ship, assign the partnership effects in the name of the firm for the 
 payment of the partnership debts, giving some a preference over 
 others, quaere Walworth, Ch., Egberts vs. Wood, 3 Paige, C. R., 517. 
 
 Although one partner, on the eve of insolvency, or after it exists, 
 may pay a debt of the firm in money or property, and although one 
 partner may assign to a trustee for the equal benefit of all the 
 creditors, yet he can not make an assignment which shall prefer 
 any of the creditors. — Hitchcock vs. St. John, 1 Hoff, C. R., 511. 
 
 Where an assignment by such acting partner purported to be an 
 assignment of his individual property for the benefit of his individ- 
 ual creditors, in classes specified, and the property conveyed in- 
 cluded both individual and partnership property, and the creditors 
 to be paid included both individual and copartnership creditors, it 
 was held, that though no distinction was made in the deed between 
 his joint and separate property, yet the deed was not fraudulent in 
 fact or law, the debts provided for being just, and that equity would 
 reform the deed, so that the joint property should be applied to the 
 payment of the partnership debts, and the separate property to that 
 of the assignor's separate debts, and according to the order of 
 preference established in the assignment.— M'Cullough vs. Som- 
 merville, 8 Leigh, 415. 
 
 Instruments under seal executed by one partner in the absence 
 of the other partners, in those cases where binding on a firm, are 
 binding in transactions only that transfer an interest. — M'Donald 
 vs. Eggleston, 26 Vt., 8 Deane, 154. 
 
 A, one of a firm consisting of A, B, and C, sold out his interest in 
 the firm to D. Afterward B and C assigned to the defendants all 
 their rights and interest " as members of the firm," in all effects of the 
 firm, in trust for creditors, providing that the partnership property 
 should be applied to the payment of partnership debts. Held, that 
 this was an assignment by two partners of all the partnership effects 
 for the benefit of creditors, and that the whole title of those effects 
 passed by such assignment. — Clark vs. Wilson, 19 Penn., 7 Harris, 
 414. 
 
 One partner can not by his individual act bind the firm as the 
 guarantor of the debt of another, or as a party to a note or bill 
 made for the accommodation or as the surety of another, without 
 authority specially given him for the purpose, or implied from the 
 common course of business of the firm, or from the previous course 
 of dealings between the parties, unless the act of such partner be 
 afterward ratified by the others. — Sweetser vs. French, 2 Cush., 
 309. 
 
§ 36, 37.] BANKRUPT PARTNERS AND CORPORATIONS. 195 
 
 An assignment made by one partner against the known wishes 
 of Ms copartner, conveying the partnership effects to a trustee for 
 the benefit of creditors, and giving preferences, is invalid. The 
 principle on which an assignment by one partner in payment of a 
 partnership debt is sustained, is that there is an implied authority 
 for that purpose, the payment of firm debts being a part of the nee- 
 essary business of the firm. But it is no part of the ordinary busi- 
 ness of a copartnership to appoint a trustee of all the effects for the 
 purpose of distributing them among creditors. — Chancery, 1834, 
 Havens vs. Hussey, 5 Paige, 30. Vide also Mills vs. Argall, 6 id., 
 511. 
 
 The reason why a general assignment of the firm effects made by 
 one partner only is held invalid, is not that it operates as a fraud 
 on the other partner, but because the relation of partner does not 
 confer power upon any one partner to make it. Where the assign- 
 ment is made after insolvency, and divides the funds equally among 
 creditors, it will be supported ; for the partner making it might, by 
 filing a bill, insure an equal distribution, and, in the absence of any 
 dissent by the copartner, his assent to such distribution may be 
 presumed. But an assignment by one partner giving preferences, 
 will be deemed invalid. — A.V. Chancery Ct., 1840, Hitchcock vs. 
 St. John, Hoffman, 511. 
 
 The relation subsisting between partners is of the most intimate 
 and confidential nature. They are joint tenants of the stock and 
 effects of the company, their interests are joint and mutual, and 
 each is seized per my etper tout; each has entire possession, as well 
 of every part as of the whole, and not the undivided whole as a 
 moiety. A partnership is a voluntary association, by which, in all 
 the affairs connected with the business, an authority is impliedly 
 given to every member to dispose of the partnership property as if 
 it were his own personal effects. Such is the indivisible nature of 
 their interest and the capacity of every member to act as the author- 
 ized agent of all, that whatever one does in the course of the part- 
 nership business, has the same efficacy as if all had severally and 
 directly joined in the act. — Ct. of Appeals, 1855, Mabbett vs. White, 
 12 N. Y.,2 Kern., 442. 
 
 A partner has not power, as such, to assign the assets of the firm 
 to a trustee for the benefit of creditors. To support such an assign- 
 ment by one partner, or any number short of the whole, it must be 
 shown that it was made under circumstances that rendered it im- 
 possible to consult the other partners, or from their acts or declara- 
 tions, either before or subsequent thereto, that it was executed by 
 their assent or by their authority. — N". Y. Common Pleas, 1852, 
 Fisher vs. Murray, 1E.D., Smith, 341. 
 
 By the law, a merchant, although the effects of a copartnership, 
 upon the insolvency of the firm, were in equity considered a trust 
 fund for the payment of the partnership debts, and any of the part- 
 ners might apply to have them appropriated ratably among all the 
 creditors, yet either of the partners before a dissolution, or all of 
 them afterward, might appropriate them to the payment of one cred- 
 
196 THE BANKRUPT LAW. [§ 36, 37. 
 
 itor in preference to another. The Revised Statutes have imposed ' 
 a partial restriction on this right by depriving an insolvent debtor 
 wno attempts to exercise it of the benefit of the insolvent laws. 
 But if he is willing to subject himself to this disability, the pay- 
 ment of one creditor, to the exclusion of others, is valid as against 
 the others. And the surviving partners, upon a dissolution of the 
 firm by death, may give a similar preference, with the consent of 
 the personal representative of the decedent. — Chancery, 1832, Eg- 
 berts vs. Wood, 3 Paige, 517. 
 
 One partner has authority, in the absence of fraud, to sell and 
 transfer all the copartnership effects directly to a creditor of the 
 firm, in payment of a debt, without the knowledge or consent of his 
 copartner, although the latter is at the place of business of the firm 
 and might be consulted. Nor is such transfer invalid although the 
 firm is insolvent, and thereby the one creditor gains a preference 
 over the other creditors of the firm. — Ct. of Appeals, 1855,Mabbett 
 vs. White, 12 N Y, 2 Kern., 242. 
 
 When a partnership formed, not for the purpose of buying and 
 selling, but for a business in which the continued ownership of the 
 partnership property is indispensable, has closed, or is about closing, 
 neither of the partners can make an assignment or sale of the joint 
 property, even for the payment of creditors, when the other is pres- 
 ent and capable of acting in the matter, without his consent ; and, 
 in such a case, mere knowledge of the intended sale will not be 
 sufficient evidence of assent. — Sloan vs. Moore, 3*7 Penn. State R., 
 217. 
 
 - An assignment by one copartner of the whole copartnership prop- 
 erty to a trustee for the benefit of the creditors of the firm, with 
 preferences, without the knowledge and assent of the other copart- 
 ner, who is present and capable of attending to the common busi- 
 ness, is void, as beyond the power of one member only of a copart- 
 nership. A subsequent bill of sale of a, portion of the firm property 
 to the assignee, who was a creditor of the firm, in payment of, or as 
 security for his debt, was held good, although executed by one of 
 the copartners without the knowledge or assent of the other, as 
 within the competence of one member only of the firm. — Ormsbee 
 vs. Davis, 5 R. T., 442. 
 
 An assignment in trust of partnership property by one partner 
 in the absence of his copartner is not void per se, but only voidable 
 by such copartner. — Sheldon vs. Smith, 28 Barb., N". Y., 593. A 
 ratification by the copartner on his return makes such assignment 
 valid from its execution. An assignment so ratified becomes abso- 
 lute as against the partner first making it, and he can not alter its 
 terms, nor make a note to the creditor, dating it prior to the assign- 
 ment. 
 
 It is not competent for one member of a partnership, without the 
 assent or concurrence of his copartner, being present or capable of 
 acting, to make a general assignment of the property and effects of 
 the firm to a trustee for the payment of the partnership debts, even 
 though no preferences are directed. The power to make such a 
 
§ 36, 37.] BANKRUPT PARTNERS' AND CORPORATIONS. 197 
 
 disposal of the effects is not implied in the partnership relation. — 
 N". Y. Superior Ct., 1849, Deming vs. Colt, 3 Sandf. , 284, S. P. ; Su- 
 preme Ct., Sp. T., 1857, Haggerty vs. Granger, 15 How.,Pr., 243 ; 
 N. Y. Com. PI., 1858, Wetter vs. Schlieper, 6 Abbott's Pi\, 123. 
 
 If upon his return the absent partner affirms and ratifies an as- 
 signment executed during his absence by his partner in his name 
 and as his attorney, such ratification will relate back to the time of 
 the original execution of the instrument, and render the assignment 
 valid and operative from that time. — 5 Hill, 107 ; Story on Ag., § 
 239,244. 
 
 One partner has no authority to make an assignment of the part- 
 nership assets to a trustee for the benefit of the creditors, though 
 without giving any preferences, except with the assent or concur- 
 rence of the other partners. — Wetter vs. Schlieper, 4 E. D., Smith, 
 N.Y.,707. 
 
 One partner has authority to make an assignment under seal of 
 all his goods, notes, and accounts of the firm to a trustee for the 
 benefit of creditors. The assignment is not void because the debts 
 of the individual partner were included therein, but only the part- 
 ner's surplus, after satisfying the partnership debts, could be ap- 
 plied to the payment of his debts. — Lasell vs. Tucker, 5 Sneed, 
 Term., 33.. 
 
 Two out of four persons in partnership, the other two being at 
 the time out of the State, have no authority, without the assent of 
 such partners to make an assignment of the firm property for the 
 benefit of creditors, giving a preference to some over others, and the 
 insolvency of the firm will not give them any such authority. — Pet- 
 tee vs. Orser, 6 Bosw., 1ST. Y., 123. Such an assignment will be void 
 as, against creditors and the sheriff levying in their behalf. 
 
 The assignee in such case being one of the preferred creditors, 
 can not retain any advantage in the assigned property over the 
 other creditors, on the ground that as to him there is a partipular 
 application of his share of the funds to the payment of his debt. 
 Vide same case. 
 
 One partner sold his interest in the firm to his two copartners, 
 and left them in possession of the property. Held, that they had a 
 right to pass the whole title by assigning the same for the purpose 
 of paying the partnership debts. — Clark vs. M'Clelland, 2 Grant's 
 Cases, Penn., 31. 
 
 It was doubted whether one partner has the right to assign co- 
 partnership effects to a trustee for the payment of debts, giving 
 preferences, without the assent of the other partner. — M'Clelland 
 vs. Remsen, 36 Barb., K Y, 622. 
 
 One partner has power to sell the copartnership effects to a, par- 
 ticular creditor for payment of his debt ; also, to dispose of the 
 property of the firm by assignments as security for antecedent debts, 
 as well as for debts to be thereafter contracted on account of the 
 firm. Vide case last cited. 
 
 A sale by a partner to secure antecedent debts to a firm creditor 
 is not invalidated by the fact that the other partner, though pres- 
 
198 THE BANKRUPT LAW. [§ 36, 37. 
 
 ent, was not consulted ; neither by the insolvency of the firm at the 
 time, and the preference which the purchasing creditor obtains over 
 others. Vide same case. 
 
 A partner mortgaged his private property for a firm debt, and on 
 that mortgage the property was sold and debt satisfied, after the 
 firm assets had gone into the hands of an assignee for creditors. 
 Held, that the separate estate of the partner stood on the same foot- 
 ing as other general creditors of the firm. — Kendall vs. Rider, 35 
 Barb., N". Y., 100. 
 
 A partner may commit an act of bankruptcy by making a fraud- 
 ulent assignment or fraudulent conveyance to his copartner ; but 
 that will not amount to an act of bankruptcy by the partner who 
 receives such fraudulent assignment.— Whitwell vs. Thompson, 1 
 Esp., 68: 
 
 No adverse adjudication of bankruptcy can issue against the 
 members of a copartnership jointly, unless the creditor petitioning 
 for such adjudication prove the joint indebtedness of the firm to the 
 amount required by the act. And the debt must be such a one as, 
 if payable, an action at law could be maintained against all the 
 members of the firm. 
 
 In the course of the proceedings to obtain adjudication of bank- 
 ruptcy against all the members of the firm, it frequently occurs that 
 the creditor looks to the liability of one of the members of the firm, 
 who is sometimes known to be solvent, for the payment of his debt, 
 and, before he can obtain adjudication against the desired partner, 
 he must, as before observed, establish a joint liability. 
 
 Partnership is either actual or nominal. Actual partnership takes 
 place when two or more persons agree to combine property, or la- 
 bor, or both, in a common undertaking, sharing profit and loss. "I 
 have always," says Tindal, C. J., in Green vs. Beesley, 2 Bing.,N. 
 C, 112, "understood the definition of partnership to be mutual par- 
 ticipation in profit and loss." But with respect to third persons, 
 an actual partnership may subsist where there is a participation in 
 the profits, even though the participant may have most expressly 
 stipulated against the usual incidents to that relation. — Bromley vs. 
 Elliott, 38 New Hampshire, 287, 302 ; Sheridan vs. Medara, 2 Stock- 
 ton, 469 ; Wood vs. Valette, 7 Ohio, 1ST. S., 172 ; Smith vs. Hallester, 
 32 Vermont, 695, 704 ; Hazzard vs. Hazzard, 1 Story, 371, 374 ; see 
 Bond vs. Pittard, 3 M. & W., 357. Such stipulation will indeed 
 hold good between himself and his companions, but will in nowise 
 diminish his liability to third persons, and this is founded on a princi- 
 ple of justice to the community ; for, to use the language of the chief 
 justice in the principal case, by taking part of the profits he takes 
 from the creditors a part of that fund which is the proper security 
 to them for the payment of their debts. — See Cheap vs. CramondJ 4 
 B. & Ad., 663 ; ex parte Wheeler, Buck, 48 ; Hoare vs. Dawes, Doug- 
 lass, 371. Nor does it signify whether he receive them for -his 
 own benefit or as trustee for others, since the mischief to the cred- 
 itors would be the same if he were to be exempt from liability in ei- 
 ther case. — Wightman vs. Townore, 1 M. & S., 412 ; Wheatcroft vs. 
 
§ 36, -37.] BANKRUPT PARTNERS AND CORPORATIONS. 199 
 
 Hickman, 9 C. B., N. S., 100. Equally indifferent is it whether his 
 share be large or small. — Rex vs. Dodd, 9 East., 527. In holding 
 one who has placed money in the firm and is to receive part of the 
 profits, liable, viz., that he would otherwise receive usurious inter- 
 est without risk, this reason, at no time a very satisfactory one, nor 
 at all necessary to sustain the proposition for which it was adduced, 
 is now taken away in the majority of cases by the operation of the 
 act for the abolition of the usury laws. — 17 & 18 Vict., c. 90. 
 
 There may be a participation in profits, yet no partnership, even 
 quoad third persons. The real test of the liability of a person to 
 third parties as a partner is, whether or not the other person or 
 persons conducting the business were his agents to carry it on. 
 This appears to be decided by the unanimous judgment of the 
 House of Lords in Wheatcroft vs. Hickman, and another, 9 C. B., N". 
 S., 47, 8 H. of Lords, cases, 268 ; 30 L. J. C. P., 125, S. C, overruling 
 the previous dicta to the contrary, and reversing the decision on 
 the same case of the Common Pleas and of the Exchequer Cham- 
 ber, in which latter court, however, the judges were divided in 
 opinion, as also were the judges who delivered their opinions in the 
 House of Lords. The facts of the case were these : Messrs. Smith, 
 who were partners, as iron merchants, at the Stanton Iron Works, 
 became insolvent, and a deed of arrangement was executed between 
 them and their creditors. By this deed Messrs. Smith convey- 
 ed all their property to five trustees upon trust, to continue and 
 carry on, under the name and style of the Stanton L-on Company, 
 the business theretofore carried on by the Messrs. Smith in copart- 
 nership. The deed then conferred upon the trustees powers to 
 manage the works as they thought fit, and to renew leases, insure, 
 erect buildings and machinery, appoint managers and agents, enter 
 into and execute all contracts and instruments in carrying on the 
 business (a provision clearly authorizing the trustees to make or 
 accept bills of exchange), and to divide the net income of the busi- 
 ness remaining, after the above purposes had been answered, among 
 the creditors of Messrs. Smith, in ratable proportions, provided that, 
 in distributing such income, it should be deemed the property of 
 Messrs. Smith, with power for the majority in value of the joint 
 creditors, at a meeting, to alter the trusts, and make rules as to the 
 discontinuance of the business and the management of it, and ulti- 
 mately, after paying the debts incurred in the business so carried 
 on, to divide the residue of the moneys ratably among the cred- 
 itors, with the same provision that the moneys were to be consid- 
 ered the property of Messrs. Smith. The-creditors were to receive 
 the provisions of the deed in full discharge of their debts, and they 
 covenanted not to sue. The defendants were creditors of Messrs. 
 Smith, and they subscribed and executed this deed. The trustees 
 carried- on the business in pursuance of the deed, under the name 
 of the Stanton Iron Company, and the plaintiff having supplied 
 the company with iron ore, one of the trustees accepted bills of 
 exchange in the name of the company for the price of it. The 
 bills not having been paid at maturity, the plaintiffs sued the de- 
 
200 THE BANKRUPT LAW. [§ 36, 37. 
 
 fendants as acceptors. The real question was, whether the deed 
 made the defendants partners with the trustees, or what is the 
 same thing, agents to bind by their acceptances on account of the 
 business, and the lords present (Lords Campbell, C, Brougham, 
 Cranworth, Wensleydale, and Chelmsford) unanimously held that 
 such agency was not established by the deed, and that the defend- 
 ants were not liable. " It is often," observed Lord Cranworth, 
 " said, that the tests, or one of the tests, whether a person not os- 
 tensibly a partner is nevertheless, in contemplation of law, a partner, 
 is, whether he is entitled to participate in the profits. This, no 
 doubt, is in general a sufficiently accurate test ; for a right to par- 
 ticipate in profits affords cogent, often conclusive evidence that the 
 trade in ■frhich the profits have been 1 made was carried on in part 
 for or on behalf of the person setting up such a claim. But the 
 real ground of the liability is, that the trade has been carried on by 
 persons acting on his behalf. When that is the case, he is liable to 
 the trade obligations, and entitled to the profits, or to a share of 
 them. It is not strictly correct to say that his right to share in 
 the profits makes him liable to the debts of the trade. The correct 
 mode of stating the proposition is to say, that the same thing that 
 entitles him to the one makes him liable to the other, namely, the 
 fact that the trade has been carried on in his behalf, i. e., that he 
 stood in the relation of principal toward the person acting ostensi- 
 bly as the traders, by whom the liabilities have been incurred, and 
 under whose management the profits have been made. Taking 
 this to be the ground of liability as a partner, it seems to me to fol- 
 low, that the mere concurrence of creditors in an arrangement un- 
 der which they permit their debtor, or trustees for their debtor, to 
 continue his trade, applying the profits in discharge of their de- 
 mands, does not make them partners with their debtor or trust- 
 ees." His lordship then proceeded to show that Waugh vs. Carver, 
 Bond vs. Pittard, and Barry vs. Nesham, applying to them the test 
 enunciated by him, were correctly decided. " The law," said Lord 
 Wensleydale, " as to partnership, is undoubtedly a branch of the 
 law of principal and agent; and it would tend to simplify and 
 make more easy of solution the questions which arise on this sub- 
 ject, if this true principle were more constantly kept in view. A 
 man who orders another to carry on trade, whether in his own 
 name or not, to buy and sell, and to pay over all the profits to him, 
 is undoubtedly the principal, and the person so employed is the 
 agent ; and the principal is liable for the agent's contracts in the 
 course of his employment." 
 
 So, if two or more agree that they should carry on a trade and 
 share the profits, each is a principal, and each is an agent for the 
 other ; and each is bound by the other's contracts in carrying on 
 the trade as much as a single principal would be by the aet of an 
 agent who was to give the whole of the profits to his employer. 
 Hence it becomes a test of the liability of one for the contract of 
 another, that he is to receive the whole or a part of the profits aris- 
 ing from that contract, by virtue of the agreement made at the 
 
§ 36, 37.] BANKRUPT PARTNERS AND CORPORATIONS. 201 
 
 time of the employment. I believe this is the true principle of 
 partnership liability. Perhaps the maxim that he who takes the 
 profits ought to bear the loss, often stated in the earlier cases on 
 this subject, is only the consequence, and not the cause, why a man 
 is made liable as a partner. Can we collect from the trust deed 
 that each of the subscribing creditors is a partner with the trustees, 
 and by the mere signature of the deed constitutes them his agent 
 for carrying on the business for his account and the rest of the 
 creditors ? I think not. It is true that, by this deed, the creditors 
 will gain an advantage by the trustees carrying on the trade, for 
 if it is profitable they will get their debts paid ; but this is not that 
 sharing of profits which constitutes the relation of principal, agent, 
 and partner." 
 
 On the above principles it is, that a dormant partner, i. e., a part- 
 ner whose name does not appear to the world as part of the firm, is 
 held responsible for its engagement, even to those who, when they 
 contracted with the firm, were ignorant of his existence. — Mc parte 
 Gellar, Rose, 297 ; Wintle vs. Crowther, 1 C. & P., 316; 1 Tyrw., 
 210 ; Robinson vs. Wilkinson 3 Price, 538 ; Bottomley vs. ISTut- 
 tall, 5 C. B., ~N. S., 122; Bromley vs. Elliott, 38 N. H., 287, 302; 
 Pierson vs. Steinmeyer, 4 Richardson, 309. In one respect, how- 
 ever, there exists very considerable difference between the liabili- 
 ties of an ostensible partner and those of a dormant one ; for the 
 liability of a partner who has appeared in the firm, in respect of the 
 acts and contracts of his copartners, continues even after the disso- 
 lution of the partnership, and the removal of his name therefrom, 
 until due notice has been given of such dissolution. — Martin vs. 
 Searles, 28 Conn., 43 ; The City Bank vs. M'Chesney, 20 N". Y., 240. 
 See Parkin vs. Carruthers, 3 Esp., 248 ; Graham vs. Hope, Peak., 
 154. And though, as far as the public at large are concerned, no- 
 tice in the Gazette is held sufficient for this purpose, Godfrey vs. 
 Turnbull, 1 Esp., 371 ; Wrightson vs. Pullan, 1 Stark., 375 ; Brodie 
 vs. Howard, 17 C. B., 123, per Willes, J. ; Martin vs. Searles ; or 
 any publication of the fact which will render it generally notorious, 
 to persons who have dealt with the firm more specific information., 
 must be given.— Kirwan vs. Kirwan, 4 Tyrw., 491 ; Page vs. Brant, 
 18 Illinois, 37 ; Clapp vs. Rogers, 1 E. D., Smith ; Lyon vs. Johnson, 
 28 Conn., 149 ; The Mechanics' Bank vs. Livingston, 33 Barb., 458 ; 
 Little vs. Clark, 12 Casey, 314 ; "Williamson vs. Fox, 2 Wright, 214 ; 
 Grady vs. Robinson, 28 Alabama, 289 ; Skannell vs. Taylor, 12 Lou- 
 isiana, Ann., 773 ; see The Bank vs. M'Chesney. And this is gen- 
 erally effected by circulars; see Neusome vs. Coles, 2 Camp., 617 ; 
 Jenkins vs. Blizard, 1 Stark., 418. But if a fair presumption of act- 
 ual notice can be raised from other circumstances, that will- be suf- 
 ficient. — MTver vs. Humble, 16 East, 169 ; Lyon vs. Johnson, Little 
 vs. Clark, Dedford vs. Reynolds, 12 Casey, 325; Park vs. Wooten, 
 35 Alabama, 242. Thus a change in the wording of checks has 
 been held notice to a party using them, Barfoot vs. Goodall, 3 
 Camp., 147 ; see Green vs. The Merchants' Ins. Co., 10 Pick., 402 ; 
 Boyd vs. M'Cann, 10 Maryland, 118 ; Page vs. Brant, 18 Illinois, 37; 
 
202 THE BANKRUPT LAW. [§ 36, 37. 
 
 Treadwell vs. Wels, 4 California, 260, which tend to sustain, and 
 Beltzhoover vs. Blackstock, 3 Watts, 20, which negatives the idea 
 that notice may be shown by proof that the plaintiff took or read 
 a newspaper in. which it was published ; without proof that the 
 newspaper was taken by the plaintiff, such evidence is inadmis- 
 sible. 
 
 But it is not to be taken as a legal incident of the position of a 
 dormant partner, but rather as a probability arising from the great- 
 er likelihood of his share in the firm being unknown to those who 
 deal in it, that his liability ceases upon the actual dissolution of the 
 partnership, while that of an ostensible partner continues toward 
 . persons who have no notice of the dissolution ; for although, gener- 
 ally speaking, a dormant partner may retire without giving notice 
 to the world, Heath vs. Sansom, 4 B. & Ad., 172 ; Deford vs. Rey- 
 nolds, 12 Casey, 325, 332 ; Gregler vs. Durham, 9 Indiana, 175, yet 
 even such a partner remains liable to persons who became aware 
 of his partnership while it lasted, and continued their dealings with 
 the firm under the belief that he still remained a member of it. If 
 such persons were not made aware of the dissolution, it might be 
 inferred that they dealt in the faith of the partnership ; and so, to 
 them, unless the circumstances of the case rebutted such an infer- 
 ence, even a dormant partner would still be liable. — Evans vs. 
 Drummond,'4 Esp., 89; Carter vs.Whalley, 1 B. & Ad., 13; Farrar 
 vs. Deflinne, 1 Car. & K, 580, Cresswell, J. ; Park vs. Wooten, 35 
 Alabama, 242; see Pratt vs. Page, 32 Vermont, 13. Whether a 
 creditor who is in the habit of dealing with the firm is entitled to 
 notice of the withdrawal of a dormant partner, depends in general 
 on whether the participation of the latter in the firm was known to 
 the creditor. — Gregler vs. Durham, 9 Indiana, 175. 
 
 It has been said that a participation in the profits indicates a 
 partnership. But the participation must be that of a person hav- 
 ing a right to the share of the profits, and to an account in order 
 to ascertain his share, not that of a mere servant or agent receiv- 
 ing, in respect of his wages, a sum proportioned to a share of the 
 profits, or which may be partly furnished out of the profits. The 
 distinction on this subject has run so fine, that it will not be unin- 
 teresting briefly to review the principal cases, and endeavor to ex- 
 tract from them some rules for ascertaining when a particular con- 
 tract falls under the head of partnership, and when under that of 
 ordinary agency or service. In Dixon vs. Cooper, 3 Wils., 40, in 
 an action for goods sold and delivered, the plaintiff, in order to 
 prove his delivery, called his factor, who was to receive a shilling 
 in the pound upon the price. It should be observed on this case, 
 that though the factor would have incidentally come in for a share 
 of the profits arising from the sale, yet he did not, like a. partner, 
 depend for his remuneration upon the contingency of profits accru- 
 ing, since, as his commission was calculated upon the price, he 
 would have been entitled to it even had no profits been obtained ; 
 and this very distinction has been acted on in Dry vs. Boswell, 1 
 Camp., 329, where it was held that an agreement that A should 
 
§ 36, 37.] BANKRUPT PARTNERS AND CORPORATIONS. 203 
 
 work B's lighter, and that they should share the profits, constitu- 
 ted a partnership ; but an agreement that A should receive half her 
 gross earnings only rendered him B's agent for the purpose of 
 working her. The case of Benjamin vs. Porteus, 2 H. Bl., 590, went 
 somewhat further. There, in an action for the price of indigo, sold 
 at three shillings per pound, the broker, being called to prove the 
 contract, stated on the voir dire that he was to have all that he 
 could for the indigo above half a crown per pound, instead of the 
 usual commission on the price ; Eyre, C. J., rejected him as incom- 
 petent, and directed a nonsuit, which was, however, set aside by 
 the Court of Common Pleas, Eyre, C. J., dissentiete. 
 
 In Wilkinson vs. Frazer, 4 Esp., 182, it was held, that an agree- 
 ment to divide the produce of a whaling-voyage between the cap- 
 tain, seamen, and owners did not constitute them partners, so as to 
 prevent the seamen from recovering their share in an action. This 
 case goes no further than Dixon vs. Cooper, since the seamen would 
 have been entitled, though the owners might have gained no profit 
 by the voyage. Vide The Riby Grove, 2 Rob<f 52. In Mair vs. 
 Glennie, 4 M. & S., 240, Lord Ellenborough expressed an opinion 
 that an agreement to remunerate a captain with one fifth of the 
 profit on the intended voyage on ship and cargo, so as to prevent 
 a transferree from obtaining such possession of it as would prevent 
 it from remaining in the order and disposition of the transferror, 
 who afterward became bankrupt. In Harrington vs. Churchward, 
 29 L. J., Chan., 521, the plaintiff was employed at a certain salary, 
 and, in addition thereto, was to have a sum equivalent to ten per 
 cent, on the profits, and he was held not to be a partner in the un- 
 dertaking. Vide also French vs. Styring, 2 C. B., 1ST. S., in which the 
 question was raised, whether owners in common of a race-horse, 
 though not partners in the horse, were not partners for the purpose 
 of its management. The action was by one owner against the 
 other for half of the keep and expenses of the horse ; and the agree- 
 ment appearing to be that the plaintiff was to keep, etc., the horse, 
 and the defendant to pay him half the keep, etc., and that the win- 
 nings of the horse should be equally divided between them, it 
 was held, that even supposing a partnership to exist, the plaintiff 
 was entitled to recover, since his demand would, on that supposi- 
 tion, be for advances of capital to his copartner. Part owners of 
 ships are not necessarily partners. — Helme vs. Smith, V Bing., 709 ; 
 Brodie vs. Howard, 17 C. B., 109; Mitcheson vs. Oliver, 5 E. & B., 
 419. 
 
 It must be remarked, that in Wilkinson vs. Frazer the question 
 was between the seamen and the captain, not between the seamen 
 and third parties ; and that neither in Benjamin vs. Porteus, Dixon 
 vs. Cooper, Mair vs. Glennie, or Harrington vs. Churchward, was 
 the liability of an agent, receiving part of the profits as his remu- 
 neration, to third parties at all in question. In the two former cases 
 he was equally interested in the result of the cause, whether he 
 were a factor or a partner, and, if considered a factor, would be 
 rendered competent only by an exception in the law of evidence, 
 
204 THE BANKRUPT LAW. [§ 36, 37. 
 
 introduced for general convenience, not on account of the difference 
 between the liabilities of a factor and those of a principal. 
 
 Now it seems very reasonable to allow persons sharing in the 
 profits of an adventure carried on by them jointly, to exclude, by 
 express agreement, the relation of partnership from arising as be- 
 tween themselves, and at the same time prohibit them from so ex- 
 cluding it to third persons dealing with them, for the rights and 
 liabilities of partners inter se have been created by the law for 
 their own convenience. But to allow a person on whose account 
 the adventure is really prosecuted, and who receives part of the 
 profits, to shield himself from the creditors of the firm, under the 
 plea that he receives them as an agent, would militate agahlst the 
 reason given by Eyre, C. J., in the principal case, who places the lia- 
 bility of a participant on the ground that, by taking part of the 
 profits, he takes from the creditors part of their security, and against 
 the better reason given in Wheatcroft vs. Hickman, supra. 
 
 Thus, as we have already seen, persons who participate, even as 
 principals, in the profits of an adventure prosecuted on their be- 
 half, may, by express stipulation, prevent the ordinary incidents of 
 partnership from arising as between themselves, but can not except 
 themselves from any of the usual responsibility of members of a 
 firm to strangers. 
 
 Upon the whole, the cases justify the conclusion, that whenever 
 it appears that the agreement was intended by the parties them- 
 selves as one of agency or service, but the agent or servant is to be 
 remunerated by a portion of the profits, then the contract would 
 be considered as between themselves . one of ordinary agency, 
 Geddes vs. "Wallace, 2 Bligh, 270 ; R. vs. Hartley, Russ. & R, 139 ; 
 but as between them and third persons, one of partnership, pro- 
 vided the adventure was really carried on by them on their joint 
 account. If, however, the agent or servant is to be remunerated, 
 not by a portion of the profits, but, as in Drey vs. Boswell, Dixon 
 vs. Coopei-, and Wilkinson vs. Frazier, by part of a gross fund or 
 stock which is not altogether composed of the profits, the con- 
 tract, even as against third persons, will be one of ordinary agency, 
 although that fund or stock may include the profits, so that its 
 value, and the quantum of the agent's reward, will necessarily fluc- 
 tuate with their fluctuation. 
 
 There is a third case, that, viz., in which the agent or servant is 
 not to receive a part of the profits in specie, but a sum of money 
 calculated in proportion to a given quantum of the profits. In 
 such case Lord Eldon has expressed his opinion, that the agent so 
 remunerated would not be a partner, even as to third persons. " It 
 is clearly settled," said his lordship, in ex parte Hamper, 1 7 Ves., 
 112, " though I regret it, that if a man stipulates that he shall have 
 as the reward of his labor, not a specific interest in the business, but 
 a given sum of money, even in proportion to a given quantum of 
 the profits, that will not make him a partner; but if he agrees- for 
 a part of the profits as such, giving him a right to an account, though 
 having no property in the capital, he is as to third persons a part- 
 
§ 36, 37.] BANKRUPT PARTNERS AND CORPORATIONS. 205 
 
 ner." In another part of the same case he says : " The cases have 
 gone to this nicety, upon a distinction so thin, that I can not state 
 it as established upon due consideration, that if a trader agree to 
 pay another person for his labor in the concern a sum of money, 
 even in proportion to the profits, equal to a certain share, that will 
 not make him a partner; but if he has a specific interest in the 
 profits themselves, he is a- partner." — 17 Ves.,404; vide ex parte 
 Watson, 19 Ves., 461; Harrington vs. Churchward, 29 L. J., Cha., 
 521. The criterion proposed by De Grey, C. J., in Grace vs. Smith, 
 2 W. Bl., 998, " to inquire whether Smith agreed to share the profits 
 of the trade with Robinson, or whether he only relied on those prof- 
 its as a fund of payment, a distinction not more nice than usually 
 occurs in questions of trade and usury," was cited as correct by 
 Tindal, C. J., in delivering the judgment of the court in Pott /vs. 
 Eyton, 3 C. B, 32. In Pott vs. Eyton, A, a part owner of a mine, 
 set up a tally-shop for the supply of articles to the miners, his own 
 name being over the door and in the excise licenses ; and he ar- 
 ranged with B to supply the goods and conduct the business, on 
 the terms that B should allow A five per cent, on the amount of 
 -sales to the miners, and retain the rest for himself. That was found 
 by the jury, and afterward held by the Court of Common Pleas, not 
 to constitute an actual partnership ; and Tindal, C. J., in delivering 
 judgment, referred to the cases already mentioned, and, after citing 
 the dictum of Lord Eldon, in ex parte Watson, that " one who re- 
 ceives a salary not charged upon profits, according to a known 
 though nice distinction, is not by that a partner," proceeded to say 
 that it makes no difference " whether the money is received by way 
 of interest, or money lent, or wages, or salary as agent," or com- 
 mission on sales ; and that the payment of the five per cent, to A 
 was " in the nature of commission on certain sales supposed to be ■ 
 effected through his influence over his workmen, and was not suffi- 
 cient to render him, as a matter of legal inference, liable as a part- 
 ner; and, in so far as it was a question of fact, it was disposed of by 
 the jury." Vide Barry vs. Nesham, 3 C. B., 641, for a case where 
 a share of the profits was stipulated for. 
 
 It may still be useful to keep in mind the above distinctions, al- 
 though the broad test of partnership propounded in Wheatcroft vs. 
 Hickman may be sufficient to solve the question of liability as part- 
 ner in the generality of cases. 
 
 In Withington vs. Herring, 3 M. & P., 30, some of the judges of 
 the Common Pleas seem to have thought that a bill drawn on H 
 and Co. by a person who acted as their agent abroad, in a concern 
 in which he was to receive £1000 per annum salary and one fifth 
 share of the profits, could not be considered as a bill drawn by a 
 partner. The point, however, was not decided, as it appeared clear 
 that he had authority to draw the bill, even assuming him to be 
 but an agent. It may be added, that the mere circumstance that 
 a man-has an option to become a partner and to receive a share of 
 the profits, even from a past time, has been holden insufficient to 
 constitute him a partner before he has exercised that option, and 
 
206 THE BANKRUPT LAW. [§ 36, 37. 
 
 thereby become entitled to an account of the profits. 1 — Gabriel vs. 
 Evill, 9 M. & W.,297, at K P., Car. & M., 358; see ex parte Tur- 
 quand, 2 M., D. & D., 340 ; Wilson vs. Whithead, 10 M. & W., 303 ; 
 see Hubbel vs. "Wolf, 15, Indiana, 204 ; Williams vs. Souter, 1 Clark, 
 435. 
 
 With respect to nominal partnership, that takes place where a 
 person, having no real interest in the concern, allows his name to 
 be held out to the world as that of a partner, in which case the law 
 imposes on him the responsibility of one to persons who have had 
 dealings with the firm of which he has held himself out as a mem- 
 ber. 
 
 It has, as we have seen, been laid down in Young vs. Axtell, that 
 it makes no difference in such a person's liability that the party 
 seeking to charge him did not know at the time when he gave 
 credit to the firm that he had so held himself out. But this posi- 
 tion appears very questionable; for the rule which imposes on a, 
 nominal partner the responsibilities of a real one, is framed in order 
 to prevent those persons from being defrauded or deceived who may 
 deal with the firm of which he holds himself out as a member on 
 the faith of his apparent responsibility. But where the person deal- 
 ing with the firm has never heard of him as a component part of it, 
 that reason no longer applies, and there is not wanting authority 
 opposed to such an extension of the rule respecting a nominal part- 
 ner's liability. — Bowie vs. Maddox, 29 Georgia, 285. "If it could 
 be proved," says Parke, J., "that the defendant held himself out, not 
 to the world, for that is a loose expression, but to the plaintiff him- 
 self, or under such circumstances of publicity as to satisfy a jury 
 that the plaintiff knew of it, and believed him to be a partner, he 
 would be liable." — Dickinson vs. Valvy, 10 B. & C, 140. Vide 
 Teller vs. Patten, 20 Howard, 125. So also in Shott vs. Streatfield 
 and another, 1 M. & Rob., 9, where the question was, whether Green 
 was liable jointly with Streatfield, a witness proved that he had 
 been told in Green's presence that Green had become a partner; 
 he was then asked " whether he had repeated the information ?" 
 on which it was objected that this was not evidence unless it were 
 shown that the defendants, or one of them, were present when it 
 was repeated; sed per Lord Tenterden, C. J., "I think it is; be- 
 cause otherwise it will be said presently that what was said was 
 confined to the witness, and that the plaintiff could not have acted 
 on it." In Alderson vs. Ropes, 1 Camp., 404, n., it was held, that a 
 man could not be charged as a partner by one who, when he con- 
 tracted, had notice that he was but nominally so. The reason of 
 this must have been because he could not have been deceived, or 
 induced to deal with the firm by any reliance on the nominal part- 
 ner's apparent responsibility ; and the same reason precisely applies 1 , 
 whether the false impression in the customer's mind has been put 
 an end to by a notice, or whether, in consequence of his ignorance 
 that the nominal partner's name has been used, no false impression 
 ever existed on his mind at all. See Carter vs. Whalley, 1 B. & 
 Ad., 11 ; Pott vs. Eyton, C. B., 32. 
 
§ 36, 37.] BANKRUPT PARTNERS AND CORPORATIONS. 207 
 
 However, in order to fix a person with this description of liability, 
 no particular mode of holding himself out is requisite. If he do 
 acts, no matter of what kind, sufficient to induce others to believe 
 him a partner, he will be liable as such. Vide Spencer vs. Billing, 
 3 Camp., 310 ; Parker vs. Barker, 1 B. & B., 9 ; 3 Moore, 226 ; Gur- 
 ney vs. Evans, 3 H. & N., 122. _ 
 
 But a man who describes himself as a partner with another in 
 one particular business does not thereby hold himself >out as such 
 in any other business which that other may happen to profess. — 
 De Berkom vs. Smith, 1 Esp., 29 ; RidgWay vs. Phillips, 5 Tyrw., 131. 
 Nor is a person liable as a nominal partner because others, without 
 his consent, use his name as that of a member of their firm, even 
 although he may have previously belonged to it, provided he have 
 taken the proper steps to notify his retirement. — Newsom vs. Coles, 
 2 Camp., 6 17. Nor, as has beeri already stated, can a man be 
 charged as a member of a firm by one who had express or implied 
 notice, Bromley vs. Elliott, 58 New Hampshire, 287, 302 ; Living- 
 ston vs. Roosvelt, 4 Johnson, 251, that he was but nominally so. — 
 Alderson vs. Ropes, 1 Camp., 404, in notis. 
 
 The reader is referred to the authorities collected in Smith's Lead- 
 ing Cases, sixth American edition, with notes by Messrs. Hare and 
 Wallace, to which the author is indebted for the American decis- 
 ions collated upon the subject of partnership. 
 
 Order of Discharge to Partners. — The section provides, that the or- 
 der of Discharge shall be granted or refused to each partner as the 
 same would or ought to be if the proceedings had been against him 
 alone under this act; and in all other respects the proceedings 
 against partners shall be conducted in the like manner as if they 
 had been commenced and prosecuted against one partner alone. 
 Each partner should apply for his order of Discharge, at least such 
 is the practice in the English courts, upon his own separate peti- 
 tion, and such application will be judged of by the merits or de- 
 merits of the individual partner's conduct. 
 
 The order of Discharge, when granted to a partner under a sep- 
 arate adjudication of bankruptcy against him, will operate to release 
 him from both joint and separate debts, and when granted under a 
 joint adjudication against him with other members of the firm, will 
 release him from both separate and joint debts. — Ex parte Yale, 3 
 P. Wms., 24, n. ; 1 Sel., N. P., 232. 
 
 Kesidence of Partners in different Districts.— When copartners re- 
 side in different districts, that court in which the petition is first 
 filed is to retain exclusive jurisdiction over the case. The object 
 of this provision, adopted from the recent English acts, is to avoid 
 the conflict which frequently arose as to the place in which, in the 
 event of the non-residence of partners within the jurisdiction where 
 the proceedings were originally commenced, should be carried on. 
 ' Corporations and Joint-stock Companies liable to the Bankrupt Law. 
 • — For the first time in this country corporations which partake of 
 the character of moneyed, business, or commercial corporations and 
 joint-stock companies, are made liable to the law of bankruptcy. 
 
208 • THE BANKRUPT LAW. [§ 36, 37. 
 
 Until a very recent period, corporations and joint-stock companies 
 were exempt from the operation of the Bankrupt Law in England. 
 The experiment, however, was made, of including them within its 
 provisions by the Statute of 24 and 25 Vict., c. 134, and has operated 
 with great success. It effected great changes in the commercial 
 relations between these trading corporations and companies and 
 their creditors, by subjecting the directors, managers, and other of- 
 ficers to the stringent provisions of the Bankrupt Law, defeating 
 all fraudulent conveyances and assignments, and exacting a strict 
 account of all their dealings and transactions by compelling a sub- 
 mission to examination and searching investigation through the 
 machinery of the Bankrupt Laws. The author is indebted to the 
 able and learned treatise upon the Law of Private Corporations Ag- 
 gregate, by Mr. Lathrop, of the Boston bar, for the following sum- 
 mary of the constitution, powers, and liabilities of trading corpora- 
 tions and-joint-stock companies in the'United States : 
 
 We have in this country an almost infinite number of corporations 
 aggregate, which have no concern whatever (other than as arti- 
 ficial inhabitants) with affairs of a municipal nature. These as- 
 sociations are not only scattered throughout every cultivated part 
 of the United States, but so engaged are they in all the varieties 
 of useful pursuit, that we see them directing the concentration of 
 mind and capital to the advancement of religion and morals ; to the 
 diffusion of literature, science, and the arts ; to the prosecution of 
 plans of internal communication and improvement ; and to the en- 
 couragement and extension of the great interests of commerce, agri- 
 culture, and manufactures. There is a great difference, in this re- 
 spect, between our own country and the country from which we 
 have derived a great portion of our laws. What is done in En- 
 gland by combination, unless it be the management of municipal 
 concerns, is most generally done by a combination of individuals, 
 established by mere articles of agreement. On the other hand, 
 what is done here by the co-operation of several persons, and by 
 the combination of their capital, industry, and skill, is, in the greater 
 number of instances, the result of a consolidation effected by an ■ 
 express act or charter of incorporation. 
 
 Private corporations are indisputably the creatures of public 
 policy, and, in the popular meaning of the term, may be called pub- 
 lic ; but yet, if the whole interest does not belong to the govern- 
 ment, as if the corporation is created for the administration of civil 
 or municipal power, the corporation is private. A bank, for instance, 
 may be created by the government for its own uses ; but if the stock 
 is owned by private persons, it is a private corporation, although it 
 is erected by the sanction of public authority, and its objects and 
 operations partake of a public nature. Railroads are private corpo- 
 rations, and, " generally speaking," says the court in the case of 
 Bonaparte vs. Camden Railroad Company, " public corporations 
 are towns, cities, counties, parishes, existing for public purposes ; 
 private corporations are for banks, insurance, roads, canals, bridges, 
 etc., where the stock is owned by individuals, but their use may be 
 
§ 36, 37.] BANKRUPT PARTNERS AND CORPORATIONS. 209 
 
 public." In all the last-named and other like corporations, the acts 
 done by them are done with a view to their own interest ; and if 
 thereby they incidentally promote that of the public, it can not 
 reasonably, be supposed they do it from any spirit of liberality they 
 have beyond that of their fellow-citizens. Both the property and 
 the sole object of every such corporation are essentially private, and 
 from them the individuals composing the company corporate are to 
 derive profit. 
 
 By a statute of New York of 1811, manufacturing corporations 
 may be created by the mere association of five or more persons 
 filing a certificate designating their names, object, and location. 
 The numerous decisions which have been made in New York 
 in reference to banking institutions, have established beyond a 
 doubt that the companies formed under the act of 1838 are corpo- 
 rations. When the question was fcefore the Court of Errors, there 
 was no doubt as to the extent of the powers possessed by banking 
 associations. The only question was as to which class of legal ex- 
 istences bodies corporate with such powers properly belonged. 
 The court decided they were corporations ; that is, that which the 
 Legislature intended to create, and did create, was, according to 
 the correct legal construction, a corporation. Persons intending 
 to institute an association under this law, authorizing the business 
 of banking, after subscribing articles of association, proceeded to 
 elect a president and directors. The directors signed and recorded 
 a certificate of its organization, made in the form prescribed, and 
 proceeded to transact business. This certificate not being signed 
 by the stockholders, was not in compliance with the law, and, con- 
 sequently, they had no corporate capacity. 
 
 The State of New York, in 1849, effected two important assimi- 
 lations of natural persons to corporations. It enabled every vol- 
 untary joint-stock company, when composed of seven or more per- 
 sons, to sue and be sued, in the name of its president or treasurer, 
 and guarded against the abatement of the suit by removal from of- 
 fice, or the death of the officers or any of the associates. 
 
 The General Banking Law, and the general laws for the forma- 
 tion of manufacturing establishments, insurance companies, plank, 
 turnpike, and railroads, go far also to enable any natural person to 
 transact business for himself under a corporate organization. 
 
 In Michigan, by an " act to organize and regulate banking asso- 
 ciations," it is provided, that application is to be made in writing 
 to the treasurer and clerk of the county where the business is to be 
 carried on, stating the amount of capital proposed. Of this appli- 
 cation public notice is required to be given. The capital stock is 
 limited, and the subscriptions are to be received and apportioned, 
 etc. Ten per cent, on the shares subscribed is required to be paid. • 
 Then, on notice being given to the stockholders, they are authorized 
 to meet and elect nine directors, a majority of whom are authorized 
 to manage the affairs of the association. They are 'required to elect 
 one of their number president ; and it is provided, that " all such 
 persons as shall become stockholders in any such association, shall, 
 
 O 
 
210 THE BANKRUPT LAW. [§ 36, 37. 
 
 on compliance with the provisions of this act, constitute a body cor- 
 porate and politic, in fact, in name, and by such name as they shall 
 designate and assume to themselves ; and by such name, they and 
 -their successors shall and may have continued succession, and shall, 
 in their corporate capacity, be capable of suing and being sued." 
 The act not only gives in terms all the requisites to form a corpo- 
 ration, but the body, when formed, is technically designated by it 
 as such. - 
 
 " Could the Legislature," says Mr. J. M'Lean, " in language more 
 clear and forcible, have created corporations ? Not a quasi corpo- 
 ration, not a joint-stock company or a limited partnership, but, sub- 
 stantially and technically, a corporation." 
 
 The laws of Massachusetts have given as great facility to the in- 
 stitution of corporations. When any lands, wharves, or other real 
 estate are held in common by five or more proprietors, they may 
 form themselves into a corporation. By subsequent statutes, three 
 or more persons, who shall have associated themselves by articles 
 of agreement in writing for the purpose of cutting, storing, or sell- 
 ing, or of carrying on any mechanical, mining, quarrying, or manu- 
 facturing business, except that of distilling or manufacturing liq- 
 uors, are constituted a corporation. Ten or more may organize as 
 a corporation for the purpose of making and selling gas as a light 
 in a city or town, or for the business of banking; and seven or more 
 proprietors of a library may form themselves into a corporation. 
 
 Where several individuals signed articles of association for such 
 purposes as were contemplated by the statutes of the State of Ver- 
 mont of 1797 and 1814, and the form- adopted was substantially in 
 conformity to the one prescribed and provided for the election of 
 the trustees, etc., and no words were used indicating an intention 
 not to form themselves into a body corporate, it was held, that 
 they became a corporation under those statutes, notwithstanding 
 they did not describe themselves as inhabitants of any town, and 
 made no reference in their articles of association to the first section 
 of the Statute of 1797. 
 
 In private corporations aggregate, for the sake of convenience, the 
 whole management of their affairs is usually vested by charter in 
 certain officers and boards, the body of the members having no 
 voice except in their election. When this is the case, the power 
 of making deeds, like every other power, rests with them; and the 
 courts will not interfere upon a petition, even of a majority of the 
 members, to compel that body, contrary to their own judgment, to 
 affix the common seal to any instrument, and still less can the 
 stockholders, by their vote, authorize the making of a deed, as a 
 lease of the corporate property. Sometimes the charter or act of 
 incorporation requires a certain number of a special body or board 
 existing within the corporation to be present at the doing of any 
 corporate act, or at the making of particular species of contracts, as 
 deeds ; and in such a case, the number must be present at the mak- 
 ing of the deed, in order to its validity as a corporate act. But 
 though by charter a certain number of a board are required to con- 
 
§ 36, 37.] BANKRUPT PARTNERS AND CORPORATIONS. 211 
 
 cur in entering, into a special contract, or making a deed, it does 
 not follow that the affixing of the seal, which is merely a ministe- 
 rial act, may not be done by a less number than were at first com- 
 petent to enter into the contract, provided it were done by the 
 direction of a legal quorum. 
 
 The power to appoint officers and agents rests, of course, like 
 every other power, in the body of the corporators, unless some par- 
 ticular board or body created or existing within the corporation is 
 legally vested with it ; and courts can not judicially notice that a 
 particular board or body of the corporation is authorized by the 
 charter and by-laws to appoint agents, where the evidence of the 
 charter and by-laws is not introduced. Where the charter or act 
 of incorporation speaks upon this subject, it must be strictly pur- 
 sued, or the appointment may be avoided. The directors of a cor- 
 poration, specially empowered by the charter to contract on its be- 
 half, have no power to appoint sub-agents to contract for the corpo- 
 ration unless such power is expressly given them, and, accordingly, 
 contracts made by such sub-agents will not be binding on the cor- 
 poration. Canal commissioners can not delegate the authority Vest- 
 ed in them to enter upon and take possession of lands for canal pur- 
 poses ; but this must be done by themselves, or under their express 
 •directions, as in other cases of personal confidence and trust where 
 judgment and discretion are required or relied on. And where, by 
 a bank charter, the power of discounting notes and bills was vested. 
 in the board of directors, it was held in Louisiana that they could 
 not delegate this trust to an agent or agents of the board. In such 
 case, indeed, it would be a violation of the charter, for which the 
 corporation would be held responsible, for the board of directors to 
 authorize their president, or cashier, or any other officer of the bank 
 to make loans and discounts without having the same formally 
 passed upon by the board. Neither can an agent, appointed by the 
 corporation, and authorized to make a particular contract or to do 
 a certain piece of business, delegate his trust, unless specially em- 
 powered so to do ; the personal confidence of the principal in the 
 agent being the supposed motive of the selection and appointment 
 of the latter. Accordingly, where the directors of a turnpike cor- 
 poration were empowered by the corporation to contract for the 
 making of the turnpike road, and they, without authority so to do, 
 appointed sub-agents, who covenanted on behalf of the directors to 
 pay certain sums for the making of the road, it was decided by the 
 Supreme Court of Massachusetts that the corporation was not bound 
 by the contract, since it had given its directors, its immediate agents, 
 no power to substitute agents under them. And if three persons 
 are'appointed by a corporation for a particular purpose, all must acj, 
 and no contract- can be made by two of the three which will be 
 binding upon the corporation. It was accordingly held, that not 
 only might the directors of a bank mortgage its real estate to se- 
 cure a debt due from the bank, but might delegate such an author- 
 ity to a committee of their own number. 
 
 Generally speaking, any persons may, by due appointment, be 
 
212 THE BANKRUPT LAW. [§ 36, 37. 
 
 agents of corporations as well as of natural persons ; and it is a 
 well-established principle, that they even who are disqualified to act 
 for themselves, as infants and feme coverts, may yet act as the agents 
 of others. A corporation may employ one of its own members as 
 agent to act as auctioneer at the sale of its pews, who may make 
 the memorandum of sale required under the Statute of Frauds to 
 bind the purchaser. 
 
 It is not unusual, however, for the charters of banking, insurance, 
 and turnpike companies to prescribe who, and who alone, shall be 
 the agents of the company for particular purposes ; and in such cases 
 the boards or persons specified, and they alone, for those purposes, 
 are or can be the agents of the corporation. Such being created 
 agents by the charter or act of incorporation, the power of appoint- 
 ing others in their stead, by the very nature of its law, never ex- 
 isted in the corporation. These boards, it is true, are elected by the 
 stockholder", but are constituted agents of the corporation, and de- 
 rive all their authority from the charter. Accordingly, whei^e the 
 member of a turnpike company agreed to pay the installments on 
 his stock in such manner and proportion as the president, directors, 
 and company of the corporation should direct, it was decided that 
 he bound himself to pay according to the order of the president and 
 directors, since they were the representatives of the corporation, and 
 were by the charter alone authorized to manage its concerns. A 
 Statute incorporating an insurance company enacted, that no losses 
 should be paid without the approbation of at least four of the direct- 
 ors, with. the president and his assistants. An attempt was made 
 to charge the company with a total loss, upon a verbal agreement 
 to accept an abandonment and pay a total loss, made by the presi- 
 dent and assistants merely, at a meeting, when it did not appear that 
 a single director was present. The Supreme Court of the State of 
 New York decided, that the acceptance, not having been made by 
 the agents constituted by the act of incorporation, was not binding 
 on the company. If the charter has invested a particular board, or 
 select body, with the power to manage the concerns of the corpo- 
 ration, the body at large have no right to interfere with the doings 
 of these, their charter agents, and courts will not, even upon a pe- 
 tition of a majority of the members, compel the board to do any act 
 contrary to their own judgment. The directors of a bank are the 
 sole judges of what portion of the profits of the bank they ought 
 from time to time to divide ; and their judgment in such matters 
 will not be controlled by the courts, even though they may deem it 
 honestly erroneous. 
 
 Boards of directors, managers, etc., are agents of the corporation 
 only so far as authorized to be directly or impliedly by the charter ; 
 and the general authority given by the act of incorporating a man- 
 ufacturing corporation to the directors, to manage the stock, prop- 
 erty, and affairs of the corporation, does not enable them to apply 
 to the Legislature for an enlargement of the corporate powers ; and 
 a legislative resolve passed upon such an application without au- 
 thority from the company is void. Neither has a board of bank 
 
§ 36, 37.] BANKRUPT PARTNERS AND CORPORATIONS. 213 
 
 directors any right to pass a resolution excluding one of its number 
 from an inspection of the bank books, upon the ground that he was 
 hostile to the interests of the bank ; and a mandamus will lie, di- 
 rected to the cashier, commanding that the books be submitted to 
 the inspection of a director thus excluded. The directors have, in 
 general, power to control all the property of the bank, and may 
 authorize one of their number to assign any securities belonging to 
 it ; whether they hava, in general, power to assign all the estate, 
 real and personal, of the corporation to a trustee, for the purpose 
 of winding up and closing its concerns, without the assent of the 
 stockholders, may be doubted. The Supreme Court of Pennsyl- 
 vania have, however, held, that such a power was vested in the di- 
 rectors of the Bank of the United States. The directors of a bank 
 may authorize the president and cashier to borrow money or ob- 
 tain discounts for the use of the bank ; ar(d the power of making 
 discounts, and of« fixing the conditions of them, is in general solely 
 with them. The board of directors of a banking corporation having 
 passed a resolution authorizing the stockholders to transfer their 
 stock to the bank in payment of their debts to it, several of the 
 stockholders availed themselves of the authority of the resolution, 
 and discharged their debts to the bank in this way. It was de- 
 cided that the directors had power to pass the resolution, and that 
 the stockholders were legally authorized by it thus to pay their 
 debts to the bank, and that, notwithstanding that the bank had 
 since stopped payment, equity would not compel a resumption of 
 the stock by the stockholders, or compel them to pay their debts 
 with other means. Where the trustees of a religious corporation 
 purchased lands with the corporate funds, and took the deeds in 
 their individual names, it was considered that they held the lands 
 as trustees for the corporation, and that, jf they subsequently sold 
 the lands, the proceeds belonged to the corporation, and were to be 
 held for its use. 
 
 In treating of the nature and meaning of civil corporations es- 
 tablished for the purposes of trade and commercial adventure, it is 
 to be observed that they are distinguishable from the common as- 
 sociation of partnership, in respect, to the personal liability of the 
 members for the company's debts. No such personal liability at- 
 taches to the individuals united under the sanction of the govern- 
 ment and invested by charter, or other act of legislation, with the 
 full powers and immunities of a corporate body; while, on the 
 other hand, each and every individual of a common partnership as- 
 sociation is personally responsible for every debt of the firm. There 
 is the same distinction between incorporated and unincorporated 
 joint-stock companies — the latter, in fact, being but partnerships, 
 though established on a large scale, and consisting of an indefinite, 
 or of a very large number of joint undertakers. Whatever name 
 they may assume and use, in the transaction of their business, it is 
 but a partnership, and not a corporate designation ; and every suit 
 upon a contract with* the company must be brought in the names 
 of the several persons composing the firm. Still, the object of their 
 
214 THE BANKRUPT LAW. [§ 36, 37. 
 
 institution is to prosecute some important undertaking, for which 
 the capital and exertions of a few individuals would be inadequate, 
 like most of the English Fire and Life Insurance Companies, which 
 have no charter, or any corporate functions or immunities conferred 
 upon them by the government. They differ, it is true, from ordi- 
 nary partnerships in their formation, and a variety of acts are to be 
 done before the partnership is actually commenced, which is either 
 under what is called Xl a deed of settlement," or under what is call- 
 ed a provisional agreement. The first is a covenant between a 
 few of the shareholders chosen as trustees for the purpose, and the 
 other, by which each of the latter covenants with the rest of the 
 shareholders for the due performance of a series of articles which 
 are set forth ; and this deed is the only instrument of regulation, 
 and, as between the shareholders themselves, contains the law af- 
 fecting them. Upon points, however, which are not comprehended 
 in the deed, the general law of partnership prevails; and even as to 
 the provisions of the deed itself, effect would be given to, or taken 
 away from it, by the courts of law and equity. But, as to the 
 transactions between the company and the world, the deed of reg- 
 ulation is wholly inoperative, and the shareholders stand upon the 
 same footing as ordinary partners in respect to the rights and rem- 
 edies of the persons with whom they deal. " It is well known," 
 says' Chancellor Walworth, " that there are and have been many 
 joint-stock, and even banking companies, which are mere partner- 
 ships, as to every person except their own stockholders, they never 
 having been legally incorporated." A provisional agreement may 
 be defined as containing the heads of certain stipulations which it 
 is intended should thereafter be comprised within a deed of settle- 
 ment, where such an instrument is in the contemplation of the par- 
 ties. It is sometimes nothing more than a prospectus, and fre- 
 quently so publicly advertised. In like manrier as a deed of settle- 
 ment, it contains the conditions which regulate the proceedings of 
 the shareholders inter seipsos. 
 
 If there is nothing in the constitution of a joint-stock company 
 which regulates the remedies of the shareholders among themselves, 
 the general law of partnership governs. — Bullard vs. Kinney, 10 
 Calif., 60. 
 
 Civil corporations include not only those which are public, as cities 
 and towns, but private corporations created for an infinite variety 
 of temporal purposes. But the most numerous, and, in a secular 
 and commercial point of view, the most important class of private 
 civil corporations, and which are very often called " companies," 
 consists at the present day of banking, insurance, manufacturing, 
 and extensive trading corporations; and likewise of turnpike, 
 bridge, canal, and railroad corporations. The latter kind have a 
 concern with some of the expensive duties of the State, the trouble 
 and charge of which are undertaken and defrayed by them in con- 
 sideration of a certain emolument allowed to their members ; and 
 in cases of this sort there are the most unquestionable features of 
 a contract, and manifestly a quid pro quo. 
 
§ 36, 37.] BANKRUPT PARTNERS AND CORPORATIONS. 215 
 
 These joint-stock corporations, by a combination of capital and 
 skillfully-directed labor, have wonderfully contributed to . the com- 
 mercial prosperity of our country, and at no former period were 
 they ever more rapidly increasing numerically than at the present. 
 They are distinguishable from common partnership associations 
 and simple joint-stock companies, and in connection with the re- 
 stricted and limited powers with which they are often created, and 
 by which they are to be governed. A trading association may be 
 but a mere partnership, or it may have corporate powers to a small 
 extent, and sub rnodo ; or it may be, invested with corporate func- 
 tions to a considerable, and yet limited extent, or it may exist with 
 all the incidental functions and peculiar privileges which a grant 
 of unconditional corporate power confers. 
 
 The difference between a company established for private haz- 
 ard and profit by an act or charter of incorporation and an ordinary 
 copartnership is obvious and striking. The latter is simply a vol- 
 untary contract, or the result of such contract, whereby two or 
 more persons agree to combine their property or labor, or both, for 
 the purpose of a common undertaking and the acquisition of a com- 
 mon profit, and the gain or loss is to be proportionately shared be- 
 tween them. But this definition greatly falls short of a company 
 established as a body corporate, which, though originating in a vol- 
 untary contract, is the result not only of that, but of its confirma- 
 tion by special legislative authority. This conformation is indis- 
 pensable to enable the parties to the contract to sue and be sued as 
 a company by a general name, to act by a common seal, and to 
 transmit their property in succession. One, if not the principal and 
 main inducement, in procuring an act of incorporation, is to limit 
 the risk of the partners, and to render definite the extent of their 
 hazard ; for it is a perfectly well settled rule of law, that each mem- 
 ber of a common partnership, whether active, nominal, or dormant, is 
 the accredited agent of the others, and as such has authority to bind 
 them to the extent of their private property by any simple con- 
 tract he may make, either respecting the goods or business of the 
 concern, or by negotiable instruments in its behalf, to any person 
 dealing bond fide. 
 
 With the view of encouraging persons to an active and useful em- 
 ployment of their capital, a species of partnership has been intro- 
 duced in different parts of the world, with a restricted personal re- 
 sponsibility, and it, on that account, may be called a quasi corpora- 
 tion, and therefore is entitled to attention in treating of private, 
 civil, and commercial corporations. Though the English law does 
 not admit of partnership with restricted responsibility, they have 
 been established in different parts of the Continent and in this coun- 
 try. In France, by the celebrated ordinance of 1673, la Societe en 
 Commandite, or a, limited partnership, was introduced for promot- 
 ing the interests of the mercantile community and the benefit of 
 the public, by which one or more persons were associated with one 
 or more sleeping partners, who furnished a certain proportion of 
 capital, and were liable only to the extent of. the funds furnished. 
 
216 THE BANKRUPT LAW. [§36,37. 
 
 This peculiar kind of partnership has Tbeen continued by the new 
 commercial code of France. It has been introduced into the civil 
 code of Louisiana, under the title of partnership in commendam. 
 On account of , its tendency to invite dormant capital into active 
 and useful employment, it has obtained a very considerable extent 
 of favor throughout the United States, and accordingly it has been 
 authorized by a legislative enactment in the States of New York, 
 Massachusetts, Rhode Island, Connecticut, Vermont, New Jersey, 
 Pennsylvania, Maryland, South Carolina, Georgia, Alabama, Florida, 
 Mississippi, Indiana, and Michigan. The provisions of the New 
 York act having been taken, in most of the essential points, from 
 the French ordinance and code above named, and the provision for 
 limited partnership in the other States, and which were subsequent 
 in point of time to that of New York, is essentially the same. It 
 is the first instance, says Kent, in the history of the legislation of 
 New York, that the statute law of any other country than Great 
 Britian has been closely imitated and adopted. 
 
 Where an association which has existed as a mere copartnership 
 becomes incorporated, and the corporation then accepts an 
 ment of all the property of such association for the purpose of < 
 rying out their objects, they are primarily, and jointly, and se 
 ly liable for all the debts incurred before the act of incorporation. 
 The incorporation of a joint-stock company in Pennsylvania, which 
 had united under articles, one of which provided for anApplication 
 to the Legislature for a charter, does not substitute the responsibil- 
 ity of the corporation for contracts previously made with the asso- 
 ciates and exempt the members from . liability beyond the joint 
 funds. And the action of the Legislature declaring the corporation 
 solely responsible on such contracts, without the assent of all the 
 parties, is in directcqntravention of the provision of the Federal Con- 
 stitution which interdicts the impairing of the obligation of contracts. 
 
 Whatever may be the stipulations voluntarily entered into be- 
 tween the parties to a copartnership, they can not arrange to them- 
 selves the functions of a corporation ; and without an express sanc- 
 tion of the Legislature, amounting at least to the creation of a quasi 
 body corporate, they can not form an association capable of acting 
 independently of 'the rules and principles which govern a single co- 
 partnership. "Stipulations," says Lord Brougham, "for the pur- 
 pose of restricting the liabilities of partners, would plainly be of no 
 avail ; and whoever," he adds, " becomes a subscriber upon the faith 
 of the restricting clause, or of the limited responsibility which that 
 holds out, would have himself to blame, and be the victim of his 
 ignorance of the known law of the land." A very serious, practical 
 result of the inflexibility of the rule of the personal liability of the 
 members of a commercial firm, according to Bell, the author of the 
 Commentaries on the Law of Scotland, occurred in that country in 
 the case of the Douglas Bank. " That bank," says he, " was formed 
 for the generous but short-sighted purpose of relieving the distresses 
 of the country, occasioned by the excessive use of bills of .exchange 
 and the stop in the usual discounts to which the regular banks were 
 
§ 36, 37.] BANKRUPT PARTNERS AND CORPORATIONS. 217 
 
 forced to have recourse. After the bank had been established a 
 little more than two years it failed, with a loss of £430,000. Many 
 of the stockholders were eminent lawyers, and they raised every 
 possible point in order to shield themselves and their families from 
 the personal responsibility of the members of a company so circum- 
 stanced ; but it was never for a moment imagined that the part- 
 ners were not responsible for the last fraction of the debts." But 
 an eminent jurist has suggested that it may well deserve inquiry 
 how far stipulations in articles of copartnership, which limit the re- 
 sponsibility of the members to the mere joint funds, or to a quali- 
 fied extent, will be binding upon their creditors, who have due no- 
 tice of such a stipulation. 
 
 This personal liability of the members of unincorporated joint- 
 stock companies is inconsistent with one fully endowed with a cor- 
 porate character, as, in the case of the latter, the law recognizes 
 only the creature of the charter, and knows not the individuals. 
 Thus it is that the proceedings of a vestry of a church, pledging its 
 corporate funds to persons who might perform work or furnish ma- 
 terials for it, can impose no personal liability upon the members of 
 the vestry ; and *an impression, moreover, subsequently manifested 
 by them, that they had assumed a personal responsibility, can not 
 vary the legal interpretation of the act upon which the question of 
 responsibility depends. The provision of the section will only ap- 
 ply to moneyed, business, or commercial corporations and joint- 
 stock companies, and obviously excludes private corporations and 
 joint-stock companies incorporated by charter or voluntary associa- 
 tion, where the objects of such corporation and joint-stock company 
 apply to promote scientific and literary objects or agricultural pur- 
 suits. They must, in fact, to be subject to the law of bankruptcy, 
 carry on some business, trade, or manufacture for the purpose of 
 profit. 
 
 Any corporation or joint-stock company owing debts to the 
 amount of three hundred dollars may petition in like manner as any 
 other debtor for adjudication in bankruptcy. Such petition must 
 be presented and signed by some authorized officer of such corpo- 
 ration or joint-stock company, and that officer must have been duly 
 authorized by a vote of a majority of the corporators present at a 
 legal meeting called for that purpose. 
 
 This will, of course, be regulated by the rules and by-laws of 
 each individual corporation or joint-stock company. 
 
 In the case of proceedings to obtain an adjudication in compulso- 
 ry bankruptcy, the proceedings will be the same as in the case of 
 an ordinary debtor ; and the reader is referred to the notes to Sec- 
 tions 11 and 39. 
 
 All assignments, conveyances, and payments, declared fraudulent 
 and void by this act, when made by any debtor, are in like man- 
 ner, and to a like extent, declared by the section to be fraudu- 
 lent and void when made by any corporation or joint-stock com- 
 pany, and the assignees of such corporation or joint-stock company 
 have the same rights and remedies under the bankruptcy as in 
 
218 THE BANKRUPT LAW. [§ 36, 37. 
 
 the case of any other debtor adjudicated bankrupt. All the estate 
 and property of such corporation or joint-stock company is to be 
 dealt with under the bankruptcy precisely in the same manner as 
 that of other debtors ; proofs of debts to be made by the creditors, 
 and dividends >to be distributed as in other cases. 
 
 Misconduct by the authorized officers of the company is liable to 
 be punished in the same manner as that of other debtors ; and al- 
 though no order of Discharge under the act is to be granted to any 
 corporation or joint-stock company under the bankruptcy, the offi- 
 cers of such corporations and joint-stock companies are amenable to 
 the penalties imposed by Section 44. 
 
 It is presumed that the bankruptcy of a corporation -would 
 amount to the forfeiture of the charter of such corporation by anal- 
 ogy to those cases in which the courts have declared such charters 
 forfeited. 
 
 The insolvency of a bank, and an assignment by it of so much of 
 its property to trustees for the payment of its debts as to prevent 
 it from resuming banking business, the purpose, for which the bank 
 was instituted being thus defeated, though not per se a dissolution, 
 is good cause of forfeiture on quo warranto. — People vs. Hudson 
 Bank, 6 Cowen, 217 ; People vs. Niagara Bank, id., 196. Vide also 
 Bank Commissioners vs. Bank of Brest, Harrington, Ch. Mich., 106, 
 111, 112 ; State vs. Commercial Bank, 13 Smedes & M, 569 ; Carey 
 vs. Greene, 7 Ga., 79. 
 
 Li general, to work a forfeiture there must be something wrong 
 arising from willful abuse or improper neglect, something more than 
 accidental negligence, excess of power, or mistake in the mode of ex- 
 ercising an acknowledged power. 
 
 The withdrawing of stock under the form of loans on private se- 
 curity by a bank, with intent to reduce the effective capital of the 
 institution below the amount required by the charter, may be good 
 cause of forfeiture, although it is discretionary with the court, on 
 proceedings to procure a forfeiture of the charter for such cause, 
 whether it will declare the charter forfeited ; and it will not do so 
 if no existing danger to the community require it. The contracting 
 of debts, or issuing of bills to a larger amount than the charter al- 
 lows, or issuing with a fraudulent intention more paper than the 
 bank can redeem, or embezzling large sums deposited for safe keep- 
 ing, or making large dividends of profits, while it refuses to pay 
 specie for its bills, all subject a bank to the forfeiture of its charter. 
 The establishment by a bank located by its charter in one county 
 of an agency in another county, where it receives deposits and buys 
 and sells exchange, is a violation of its charter, and was held in 
 Michigan a good cause of forfeiture, although only punished with 
 fine and costs, under the discretion vested in the court in such cases. 
 
 As to what acts of bankruptcy, when committed by a corpora- 
 tion or joint -stock company, will render them liable to be made 
 bankrupt compulsorily, vide Section 39 and notes. As yet, there 
 has been no reported decision in the English courts upon this ques- 
 tion, but it is presumed that they would be bound by the acts of 
 
§■36, 37.] BANKRUPT PARTNERS AND CORPORATIONS. 219 
 
 their authorized officers. For instance, it has been decided that 
 the loaning by a bank to its directors, or any of them, or upon paper 
 upon which they are responsible, to an amount exceeding in the 
 aggregate one third of the capital of the bank, contrary to a statute 
 of New York, was held by the chancellor of that State sufficient to 
 authorize him, at the instance of the bank commissioners, to grant 
 an injunction against the bank, to appoint a receiver to wind up its 
 affairs, and to decree its dissolution. For this purpose the acts of 
 the officers were considered the acts of the bank, and their igno- 
 rance or neglect form no excuse for a violation of law. At the 
 same time it was observed, that the mere act of the cashier of a 
 bank, contrary to the express directions of the directors, and with- 
 out their knowledge and acquiescence, in receiving payment for 
 stock other than gold and silver and the notes of specie-paying 
 banks, and thereby violating a law of the State, will not work a 
 forfeiture of the charter. — Bank Commissioners vs. Banks of Buffalo, 
 6 Paige, 497 ; and see Bank Commissioners vs. Rhode Island Central 
 Bank, R. I., 12. 
 
 This doctrine has been maintained and applied by the courts of 
 New York in the construction of a statute of that State concern- 
 ing manufacturing corporations, which provides that for all debts 
 due and owing by the company at the time of its dissolution, the 
 persons then composing such company shall be individually re- 
 sponsible to the extent of their respective shares or stock, and no 
 further.— R. L. N. Y., 247. 
 
 Under this statute, if a corporation, being indebted, suffer all its 
 property to be sacrificed, and the trustees actually relinquish then- 
 trust, and omit the annual election, and do no one act manifesting 
 an intention to resume their corporate functions, the courts may, 
 for the sake of the remedy against the individual members and in 
 favor of creditors, presume a virtual surrender of the corporate 
 rights and a dissolution of the corporation. — Slee vs. Bloom, 19 
 Johns., 456, commented on in 2 Kent, Com., 311, 312 ; Penniman vs. 
 Briggs, 1 Hopkins, 300, 8 Cowen, 387. And an election of trustees 
 made after the insolvency of the company, for the mere purpose of 
 keeping it in existence, will not prevent such dissolution. — Penni- 
 man vs. Briggs, 1 Hopkins, 300, 8 Cowen, 387 ; Matter of Niagara 
 Ins. Co., 1 Paige, 258. In these cases the courts of New York did 
 not decide that the companies had lost all their rights, but that, 
 even if they had a right to reorganize themselves, the case had hap- 
 pened in which, with regard to their creditors, they were dissolved. 
 — Slee vs. Bloom, 19 Johns., 475, 476, per Spencer, J. ; Penniman vs. 
 Briggs, 1 Hopkins, 305, per Sandford, Ch, 2 Kent, Com., 311, 312. 
 Vide also Mickles vs. Rochester City Bank, 11 Paige, 118 ; Jackson 
 Marine Ins. Co., 4 Sandf., Ch., 559. 
 
 A joint-stock company, completely registered, became bankrupt. 
 One of the members of the company had previously been declared 
 bankrupt, and had obtained his certificate. The master placed the 
 bankrupt's name on the list of contributories, and calls were made 
 by the master on him for contributions to discharge the liabilities 
 
220 THE BANKRUPT LAW. [§ 38. 
 
 of the company incurred before his bankruptcy. Held, on his ap- 
 peal, that his certificate was a bar to the liabilities to satisfy which 
 the calls were made, and that the bankrupt's name ought to be re- 
 moved from the list of contributories. — Chappie's Case, 17 Eng. Law 
 and Eq., 516. 
 
 DATES AND DEPOSITIONS. 
 
 Section 38. And he it further enacted, That the filing 
 of a petition for adjudication in bankruptcy, either by a 
 debtor in his own behalf, or by any creditor against a 
 debtor, upon which an order may be issued by the court, 
 or by a register in the manner provided in Section 4, 
 shall be deemed and taken to be the commencement of 
 proceedings in bankruptcy under this act; the proceed- 
 ings in all cases in bankruptcy shall be deemed matters 
 of record, but the same shall not be required to be re- 
 corded at- la'rge, but shall be carefully filed, kept, and 
 numbered in the office of the clerk of the court, and a 
 docket only, or short memorandum thereof, kept in books 
 to be provided for that purpose, which shall be open to 
 public inspection. Copies of such records, duly certified 
 under the seal of the court, shall in all cases be prima 
 facie evidence of the facts therein stated. Evidence or 
 examinations in any of the proceedings under this act 
 may be taken before the court, or a register in bank- 
 ruptcy, viva voce, or in writing, before a commissioner of 
 the Circuit Court, or by affidavit, or on commission, and 
 the court may direct a reference to a register in bank- 
 ruptcy, or other suitable person, to take and certify such 
 examination, and may compel the attendance of witnesses, 
 the production of books and papers, and the giving of 
 testimony in the same manner as in suits in equity in' the 
 Circuit Court. 
 
 Commencement of the Proceedings in Bankruptcy. — The filing of 
 the petition for adjudication in bankruptcy, either by a debtor on 
 his own behalf, or by any creditor against a debtor, upon which an 
 
§ 39.] INVOLUNTARY BANKRUPTCY. 221 
 
 order has been issued by the court, or by a register in the manner 
 provided by the 4th Section, shall be deemed and taken to be the 
 commencement of the proceedings in bankruptcy under this act. 
 
 This provision must be constantly borne in mind, because it has 
 an important bearing in the administration of bankruptcy The 
 fraudulent preferences and conveyances, transfers, payments, and 
 pledges, it will be remembered, are invalidated when made respect- 
 ively within four months and six months before the filing of the 
 petition by or against a debtor. It is, in fact, the landmark, in 
 many instances, which must be ever kept in view. 
 
 The section then declar.es that the proceedings in all cases of 
 bankruptcy are to be deemed matters of record, and prescribes the 
 form in which they are to be recorded, kept, and numbered in the 
 office of the clerk of the court, and the books which are to be kept 
 open for public inspection. 
 
 Copies of such records, duly certified under the seal of the court, 
 are in all cases to be admitted as prima facie proof of the facts 
 therein stated. 
 
 Evidence and examinations, either of the bankrupt or other per- 
 sons summoned in the course of the proceedings under the act, may 
 be taken before the court or a register. in bankruptcy, viva voce or 
 in writing. 
 
 Such evidence or examinations may also be taken before a com- 
 missioner of the Circuit Court, or evidence may be taken by affi- 
 davit, or, when necessary, on commission. 
 
 The court has power to direct a reference to a register in bank- 
 ruptcy, or other suitable person, to take and certify such examina- 
 tion; and the court has power to compel the attendance of witness- 
 es, and the production of" books and papers, and the giving of testi- 
 mony in the same manner as in suits in equity in the Circuit Court. 
 
 INVOLUNTARY BANKRUPTCY. 
 
 Section 39. And he it further enacted, That any per- 
 son residing and owing debts as aforesaid, who, after the 
 passage of this act, shall depart from the State, district, or 
 Territory, of which he is an inhabitant, with intent to de- 
 fraud his creditors, or, being absent, shall, with such in- 
 tent, remain absent ; or shall conceal himself to avoid the 
 service of legal process in any action for the recovery of 
 a debt or demand provable under this act ; or shall con- 
 ceal and remove any of his property to avoid its being 
 attached, taken, or sequestered on legal process ; or shall 
 make any assignment, gift, sale, conveyance, or transfer 
 
222 THE BANKRUPT LAW. [§ 39. 
 
 of his estate, property, rights, or credits, either within the 
 United States or elsewhere, with intent to delay, defraud, 
 or hinder his creditors; or who has been arrested and 
 held in custody under or by virtue of mesne process or 
 execution, issued out of any court of any State, district, 
 or Territory, within which such debtor resides or has 
 property, founded upon a demand in its nature provable 
 against a bankrupt's estate under this act, and for a sum 
 exceeding one hundred dollars, and such process is re- 
 maining in force, and not discharged by payment, or in 
 any other manner provided by the law of such State, 
 district, or Territory applicable thereto, for a period of 
 seven days ; or has been actually imprisoned for more 
 than seven days in a civil action, founded on contract, for 1 
 the sum of one hundred dollars or upward ; or who, be- 
 ing bankrupt or insolvent, or in contemplation of bank- 
 ruptcy or insolvency, shall make any payment, gift, grant, 
 sale, conveyance, or transfer of money, or other property, 
 estate, rights, or credits, or give any warrant to confess 
 judgment, or procure or suffer his property to be taken 
 on legal process, with intent to give a v preference to one 
 or more of his creditors, or to any person or persons who 
 are or may be liable for him as indorsers, bail, sureties, or 
 otherwise, or with the intent, by such disposition of his 
 property, to defeat or delay the operation of this act ; or 
 who, being a banker, merchant, or trader, has fraudulent- 
 ly stopped or suspended, and not resumed payment of his 
 commercial paper, within a period of fourteen days, shall 
 be deemed to have committed an act of bankruptcy, and, 
 subject to the conditions hereinafter prescribed, shall be 
 adjudged a bankrupt, on the petition of one or more of 
 his creditors, the aggregate of whose debts provable un- 
 der this act amount to at least two hundred and fifty 
 dollars, provided such petition is brought within six 
 months after the act of bankruptcy shall have been com- 
 
§40.] INVOLUNTARY BANKRUPTCY. 223 
 
 mitted. And if such person shall be adjudged a bank- 
 rupt, the assignee, may recover back the money or other 
 property so paid, conveyed, sold, assigned, or transferred 
 contrary to this act, provided the person receiving such 
 payment or conveyance had reasonable cause to believe 
 that a fraud on this act was intended, or that the debtor 
 was insolvent, and such creditor shall not be allowed to 
 prove his debt in bankruptcy. 
 
 Section 40. And be it further enacted, That upon the 
 filing of the petition authorized by the next preceding 
 section, if it shall appear that sufficient grounds exist 
 therefor, the court shall direct the entry of an order re- 
 quiring the debtor to appear and show cause, at a court 
 of bankruptcy to be holden at a time to be specified in 
 the order, not less than five days from the service thereof, 
 why the prayer of the petition should not be granted ; 
 and may also, by its injunction, restrain the debtor, and 
 any other person, in the mean time, from making any trans- 
 fer or disposition of any of the debtors property not ex- 
 cepted by this act from the operation thereof and from 
 any interference therewith ; and if it shall appear that 
 there is probable cause for believing that the debtor is 
 about to leave the district, or to remove or conceal his 
 goods and chattels or his evidence of property, or make 
 any fraudulent conveyance or disposition thereof, the 
 court may issue a warrant to the marshal of the district, 
 commanding him to arrest the alleged bankrupt and him 
 safely keep, unless he shall give bail to the satisfaction 
 of the court for his appearance from time to time, as re- 
 quired by the court, until the decision of the court upon 
 the petition or the further order of the court, and forth- 
 with to take possession provisionally of. all the property 
 and effects of the debtor, and safely keep the same until 
 the further order of the court. A copy of the petition 
 and of such order to show cause shall be served on such 
 
224 THE BANKRUPT LAW. [§ 41, 42. 
 
 debtor by delivering the same to him personally, or leav- 
 ing the same at his last or usual place of abode ; or if 
 such debtor can not be found, or his place of residence as- 
 certained, service shall be made by publication, in such 
 manner as the judge may direct. No further proceed- 
 ings, unless the debtor appear and consent thereto, shall 
 be had until proof shall have been given, to the satisfac- 
 tion of the court, of such service or publication ; and if 
 such proof be not given on the return-day of such order, 
 the proceedings shall be adjourned, and an order made 
 that the notice be forthwith so served or published. 
 
 Section 41. And be it further enacted,That on such re- 
 turn-day, or adjourned day, if the notice has been duly 
 served or published, or shall be waived by the appear- 
 ance and consent of the debtor, the court shall proceed 
 summarily to hear the allegations of the petitioner and 
 debtor, and may adjourn the proceedings from time to 
 time oh good cause shown, and shall, if the debtor on the 
 same day so demand in writing, order a trial by jury at 
 the first term of the court at which a jury shall be in at- 
 tendance, to ascertain the facts of such alleged bankrupt- 
 cy ; and if, upon such hearing or trial, the debtor proves 
 to the satisfaction of the court or the jury, as the case 
 may be, that the facts set forth in the petition are not 
 true, or that the debtor has paid and satisfied all liens 
 upon his property in case the existence of such liens were 
 the sole ground of the proceeding, the proceedings shall 
 be dismissed, and the respondent shall recover his costs. 
 
 Section 42. And be it further enocted,That if the facts 
 set forth in the petition are found to be true, or if default 
 be made by the debtor to appear pursuant ip the order, 
 upon due proof of service thereof being made, the court 
 shall adjudge the debtor to be a bankrupt, and, as such, 
 subject to the provisions of this act, and shall forthwith 
 issue a warrant to take possession of the estate of the 
 
§ 39-42.] INVOLUNTARY BANKRUPTCY. 225 
 
 debtor. The warrant shall be directed, and the property 
 of the debtor shall be taken thereon, and shall be as- 
 signed and distributed in the same manner and with sim- 
 ilar proceedings to those hereinbefore provided for the 
 taking possession, assignment, and distribution of the 
 property of the debtor upon his own petition. The or- 
 der of adjudication of bankruptcy shall require the bank- 
 rupt forthwith, or within such number of days, not ex- 
 ceeding five after the date of the order, or notice thereof, 
 as shall by the order be prescribed, to make and deliver, 
 or transmit by mail, post-paid, to the messenger, a sched- 
 ule of the creditors and an inventory of his estate in the 
 form and verified in the manner required of a petitioning 
 debtor by Section 13. If the debtor has failed to appear 
 in person or by attorney, a certified copy of the adjudica- 
 tion shall be forthwith served on him by delivery or 
 publication in the manner hereinbefore provided for the 
 service of the order to show cause ; and if the bankrupt 
 is absent or can not be found, such schedule and inven- 
 tory shall be prepared by the messenger and the assignee 
 from the best information they can obtain. If the peti- 
 tioning creditor shall not appear and proceed on the re- 
 turn-day, or adjourned day, the court may, upon the peti- 
 tion of any other creditor to the required amount, pro- 
 ceed to adjudicate on such petition, without requiring a 
 new service or publication of notice to the debtor. 
 
 We now approach the consideration of the question, how a debt- 
 or may be compulsorily made a bankrupt. The answer to which 
 is, by the commission of any one of those acts which this section 
 denominates Acts of Bankruptcy. These acts we will now enu- 
 merate, dividing them into two classes : 
 
 1st. Those acts which are only acts of bankruptcy if done by 
 the debtor with intent to defeat or delay creditors in the recovery 
 of their debts, or with a view to prevent his property from coming 
 to his assignee in bankruptcy, or to prevent the same from being 
 distributed under the provisions of this act, or to defeat the object 
 of, or in any way impair, hinder, impede, or delay the operation and 
 effect of the act, or to evade any of the provisions thereof. 
 
 P 
 
226 THE BANKRUPT LAW. [§ 39-i2 
 
 2d. Those acts denominated acts of bankruptcy, the intent in 
 the commission of which is immaterial. 
 
 Intent can be evidenced only by the debtor's acts or admissions. 
 If a man admit that he committed the act with the intent of defeat- 
 ing or delaying his creditors in the recovery of their debts, it is al- 
 most conclusive evidence of it, and can scarcely be explained away. 
 Any thing written or said by the debtor before his bankruptcy tend- 
 ing to show the tendency of an act equivocal in itself is admissible. 
 So, if the act be accompanied by circumstances from which the in- 
 tent may fairly be presumed, it will be sufficient. If the necessary 
 consequence of the conduct of the debtor is that his creditors must 
 be defeated and delayed, then his intent to do so may be fairly pre- 
 sumed. The various acts of bankruptcy being expressly defined 
 by the act, and being in many instances penal in their operation, 
 are not to be extended or enlarged by construction or implication. 
 Where a presumption is raised by circumstances attending the act, 
 it may always be rebutted by evidence showing that the debtor 
 did not at the time entertain the intention imputed to him ; some 
 such instances will be found in the notes to this section. 
 
 The intention may be either inferred from the act itself, as a nec- 
 essary consequence of it, or shown by other circumstances accom- 
 panying the act, or proved by the admissions of the bankrupt ; and 
 declarations made by the bankrupt may be given in evidence 
 against him to prove such intention, though not contemporaneous 
 with the commission of the act, if they are so connected with it as 
 to form part of the res gestae,. — Rouch vs. Great Western Railway 
 Company, 1 Q. B., 57. 
 
 It must be remembered,, that in order to establish a compulsory 
 adjudication in bankruptcy, the act or acts of bankruptcy relied on 
 must have been committed by the debtor within six months before 
 the creditor applies by petition for the adjudication, or, to adopt 
 the very words of the section, the petition must be brought within 
 six months after the act of bankruptcy shall have been committed 
 by the debtor. 
 
 It should be premised that there are very few decisions in the 
 American courts upon the question of what amounts to an act of 
 bankruptcy, and with the exception of the cases applying to fraudu- 
 lent preferences, assignments and conveyances, which have been be- 
 fore noted by the author, he is unable, upon inquiry, to find any de- 
 cision of the Federal or State Courts upon any of the other acts of 
 bankruptcy which were enumerated in that act. 
 
 That act was in operation for so short a period that comparative- 
 ly very few cases of compulsory bankruptcy came before the courts. 
 
 That able judge and eminent jurist, Mr. Justice Betts, Judge of 
 the United States Court for the Southern District of New York, in- 
 formed the author that, in the administration of the Bankrupt Law 
 of 1841, over which he presided, very few cases of disputed adjudi- 
 cation occurred in his district. English decisions, therefore, upon 
 the cognate questions arising upon the construction of this act, will 
 be admitted as authorities. And the decisions under the act of 1 841 
 
§ 89-42.] INVOLUNTARY BANKRUPTCY. 227 
 
 which are reported upon the question of fraudulent preferences 
 and conveyances arose where the order of Discharge was opposed, 
 or where the assignees brought actions to recover back property so 
 fraudulently assigned and conveyed under voluntary bankruptcy. 
 
 In this connection it may be well to state what were constituted 
 acts of bankruptcy by the United States Bankrupt Act of 1841. 
 They were all adopted from the English Bankrupt Act, 6th Geo. 4, 
 c. 16, which act repealed all the previous English Bankrupt Acts, 
 and were as follows : 
 
 1st. Departure from the State, District, or Territory of which the 
 trader is an inhabitant, with intent to defraud creditors. 
 
 2d. Concealment to avoid being arrested. 
 
 3d. Willfully pr fraudulently procuring himself to be arrested, 
 or his goods and chattels, lands or tenements to be attached, dis- 
 trained, sequestered, or taken in execution. 
 
 4th. Removal or concealment of goods, chattels, and effects to 
 prevent their being levied upon or taken in execution, or by other 
 process. 
 
 5th. Making a fraudulent conveyance, assignment, sale, gift, or 
 other transfer of his lands, tenements, goods, chattels, credits, or ev- 
 idence of debt. 
 
 We now consider in detail, and in the order of the enactments in 
 the section, the various acts which will constitute 
 
 ACTS OF BANKRUPTCY. 
 
 First. — Departing from the State, District, or Territory of which 
 he is an inhabitant, with intent to defraud his creditors. 
 
 The departure must be with intent to defraiid*his creditors. The 
 words used in the latest English Bankrupt Act are, " If any trader 
 liable to become bankrupt shall depart the realm with intent to de- 
 feat- or delay his creditors ;" and in the case of a person not a trad- 
 er, the words used are, " If any person not being a trader shall, with 
 intent to delay his creditors, depart the realm." The words de- 
 fraud his creditors have never been adopted in any of the English 
 bankrupt statutes. The departure from the State, district, or Ter- 
 ritory with intent to defeat or delay creditors, would be cogent 
 primd facie evidence of anintent to defraud creditors. An adju- 
 dication of bankruptcy can not be sustained where the departure 
 was for a fair and proper purpose, and not with a view of defraud- 
 ing and delaying creditors. Every man has the right to go abroad 
 to look after his affairs, though his creditors may be thereby delay- 
 ed. — Ex parte Mutrie, 5 Ves., 574; Warner vs. Baker, Holt, 175. 
 The departure, with a consequential delay of creditors, is not an act 
 of bankruptcy without proof, or necessary inference of an intention 
 to delay creditors at the instant of departure. — Ex parte Osborne, 
 1 Rose, 387 ; 2 V. & B., 177. 
 
 It is now settled by the English decisions, that a departure of a ' 
 debtor with an intent to delay his creditors is an act of bankruptcy, 
 though no creditor be in fact delayed, Robertson vs. Liddell, 9 East., 
 487 ; Aldridge vs. Ireland, cited 7 Term. Rep., 512 ; Hawkins vs. 
 
228 THE BANKRUPT LAW. [§ 39-42. 
 
 Lukin, cited in the last case ; Cooke's Bank. Law, 4th edition, 74 ; and 
 on the other hand, where the delay of creditors is the necessary con- 
 sequence of the debtor's absenting himself, the departure then con- 
 stitutes an act of bankruptcy. Vide 10 East., 418 ; Ramsbottom vs. 
 Lewis, 1 Camp., 279. The intention may also be inferred from 
 length of absence. — 5 Jurists, 580. The departure of a debtor 
 proved to be in embarrassed circumstances, though strong evidence 
 of an intention to defeat and delay his creditors, is not always con- 
 clusive evidence of such intention. In some cases where the debtor 
 had gone abroad under circumstances which rendered it highly im- 
 probable that he would return, as where he had committed a crime, 
 it will be inferred that he must have intended to delay his credit- 
 ors, such being the necessary consequence of his behavior. — Fowler 
 vs. Padgett, 7 Term Rep., 509, where these cases are explained and 
 the principle elaborately laid down. 
 
 A trader' resident abroad, having come to England for a tempo- 
 rary purpose, commits an act of bankruptcy by leaving it to avoid 
 a creditor. — Williams vs. Nunn, 1 Taunt., 270 ; S. C, 1 Camp., 152 ; 
 Holroyd vs. Gwynne, 2 Taunt., 126. But if a trader depart'with an 
 honest intention compatible with business, he does not thereby com- 
 mit an act of bankruptcy, unless the fear of arrest concur with the 
 other motive to induce -him to depart. — Warner vs. Barber, Holt, 
 175; Windham vs. Paterson, 4 Camp., 286. Where a trader ap- 
 pointed to meet A respecting some accounts in which B was inter- 
 ested, and failed to do so, but left this country for France, leaving 
 a letter for B, in which he stated he should be back in ten days, 
 and in the mean time would make proposals to his creditors ; and 
 on the following day he wrote another letter to B from Calais 
 stating that the account current between them might be speedily 
 settled ; and a month afterward he wrote another letter from Paris 
 stating that he was under the necessity of remaining in France, it 
 was held, that the departing the realm and absence abroad being a 
 continuous act, these letters were admissible in evidence, and suffi- 
 cient to establish an act of bankruptcy, by showing the intent with 
 which such trader departed. — Rawson vs. Haigh., 9 Moore, 217 ; 2 
 Bing., 99 ; 1 C. & P., 77 ; and see Bateman vs. Bailey, 5 T. R, 512. 
 
 Pressure of debts, though strong, is not conclusive evidence of an 
 intention to delay creditors. If a trader go abroad, leaving a gen- 
 eral power of attorney with his clerk to transact all his business for 
 him, but provides no means of paying bills of exchange which fall 
 due in his absence, he commits an act of bankruptcy. — Mc parte Hil- 
 ner, 3 Mont. & Ayr., 722 ; 2 Deac, 324. If a trader, whose house 
 of trade is in Ireland, comes to England on business, and again quits 
 the country to avoid an arrest, it is a departing the realm with in- 
 tent to delay his creditors sufficient to constitute an act of bank- 
 ruptcy.— Williams vs. Nunn, 1 Taunt., 270 ; 1 Camp., 152. A trader 
 who leaves England and proceeds to Ireland, where he carries on 
 trade with an honest intention compatible with trade, does not 
 thereby commit an act of bankruptcy. — Windham vs. Paterson, 2 
 Rose, 466; 1 Stark, 144. A voluntary departure for the shortest 
 
§ 89^:2.] INVOLUNTARY BANKRUPTCY. 229 
 
 time is sufficient, if done clearly with an intention to defraud cred- 
 itors. — Maylin vs. Eylve, 2 Strange, 809. Compulsory absence, as 
 where the debtor has been arrested, will not constitute an act of 
 bankruptcy. — Phillips vs. The Sheriff of Essex, Green, 53. If a 
 debtor leave his house on account of domestic dissensions, but gives 
 no directions for carrying on his business, or makes no arrangements 
 for meeting pressing liabilities which he must have known would 
 accrue in his absence, and gives no explanation of such absence, this 
 was held sufficient evidence of an act of bankruptcy. — Holroyd vs. 
 Whitehead, 3 Camp., 530 ; 1 Marsh, 128. If a trader leave his 
 house, and assigns as a reason for his departure to his clerk that he 
 does so to avoid any altercation as to the state of his affairs, this 
 has been held to be no act of bankruptcy. — Ex parte Prater, 4 Taun- 
 ton, 603. 
 
 A debtor who had ordered large quantities of goods from several 
 tradesmen without the means of payment, and after they were de- 
 livered secretly . left her house in London without leaving word 
 where she was to be foundj and took lodgings in a remote country 
 village, and remained there for some time, it was held, that this was 
 a departure with intent to delay creditors, and an act of bankruptcy. 
 — Ex parte Birch, 1 Mont., D. & D., 659. The intent to defraud 
 creditors must be proved ; but where the result of the absence is 
 that creditors are in fact delayed, the burden of proof that such 
 was not his intention is then upon the debtor. — Ex parte Beer, 1 
 Mont.,D. & D., 390. Explanatory circumstances for the depart- 
 ure, the fact that the debtor intended to return, the object of his 
 leaving, the fact that he made provision for liabilities maturing in 
 his absence, and any other facts negativing his intent to defraud 
 his creditors, may be adduced by the debtor in rebuttal of the pre- 
 sumption that he committed an act of bankruptcy. The section 
 requires a departure from the State, District, or Territory of which 
 the debtor is an inhabitant, to make such departure an act of bank- 
 ruptcy, and this must be strictly proved. 
 
 A departure from the debtor's residence or place of business in 
 one city of a State to another, would not, it is presumed, within the 
 words of the section, constitute an act of bankruptcy, unless he did 
 so to conceal himself to avoid the service of legal process in an ac- 
 tion for the recovery of a debt. Vide the third Act of Bankruptcy 
 and notes. 
 
 A debtor being in embarrassed circumstances in England, left 
 that country in June, 1831, for America, with some intention of re- 
 turning, but did not return, and made no provision for the payment 
 of all his debts, and in September, 1833, one of the creditors, whose 
 debt was left unprovided for, issued a fiat in bankruptcy ; on appli- 
 cation to supersede without the bankrupt appearing to such fiat, it 
 was held, that the continued absence of the bankrupt, under the cir- 
 cumstances, amounted to an act of bankruptcy. — Me parteHirkmim, 
 3 Dea. & Chit., 451. 
 
 Some analogy may be found from the cases in which the Amend- 
 ed Code of Procedure of the State of New York authorizes war- 
 rants in cases of attachment to be issued. 
 
230 THE BANKRUPT LAW. [§ 39^12. 
 
 The warrant may be issued whenever it shall appear by affidavit 
 that a cause of action exists against such defendant, specifying the 
 amount of the claim and the grounds thereof, and that the defend- 
 ant is either a foreign corporation; or not a resident of this State, 
 or has departed therefrom with intent to defraud his creditors, or 
 to avoid the service of a summons, or keep himself concealed there- 
 in with the like intent, or that such corporation or person has re- 
 moved or is about to remove any of his or its property from the 
 State with intent to defraud his or its creditors, or has assigned, 
 disposed of, or secreted, or is about to assign, dispose of, or secrete, 
 any of his or its property with the like intent, whether such defend- 
 ant be a resident of this State or not. 
 
 There was a similar provision in the Revised Statutes. The real 
 and personal property of a debtor may be attached for the payment 
 of his debts whenever such debtor, being an inhabitant of this State, 
 shall secretly depart therefrom with intent to defraud his creditors, 
 or to avoid the service of civil process, or shall keep himself con- 
 cealed therein with the like intent. — 2 R. S., p. 3, § 1. 
 
 The affidavit is to show that the defendant has departed from 
 the State with intent to defraud his creditors, or to avoid service 
 of a summons, or keeps himself concealed therein with a like intent. 
 The clause appears to imply residence or inhabitancy within the 
 State, and then the code scarcely differs from the statute, except as 
 to the secrecy of departure. 
 
 In Castellanos vs. Jones, 1 Selden, 164, the affidavit of the appli- 
 cant stated that the said Rodriqnes was an inhabitant of this State, 
 but that since the 14th of January inst. he has absconded or con- 
 cealed himself to avoid service of civil process ; that said Rodriques 
 can not be found, and is not at his usual place of business ; that de- 
 ponent has tried to serve civil process upon him, but that he can 
 not be found ; that his sign has been removed from his store within 
 the last two days, and that the person in charge refused to give any 
 information as to where he was concealed or gone to. 
 
 The affidavits of two persons were annexed. The application 
 was held defective on different grounds, and the affidavit verifying 
 it and above set forth, was declared to fall short of stating the facts 
 authorizing an attachment. Although it was stated that Rodriques 
 was an inhabitant of the State, it did not affirm he had departed 
 therefrom with intent to defraud his creditors, secretly or other- 
 wise, or that he had departed therefrom to avoid the service of civil 
 process, or that he kept himself concealed within the State with the 
 like intent. 
 
 In Vanalstyne vs. Erwine, 1 Kernan, 331, under the Revised Stat- 
 utes, the affidavit was in the disjunctive — that the debtor had de- 
 parted from the State or was concealed within it, with an intent to 
 defraud his creditors, the facts stated in the affidavits would sustain 
 either aspect of the case. The case of The People vs. The Recorder 
 of Albany ,6 Hill, 429, was cited to the point, that where the circum- 
 stances are such that it is doubtful in what particular the defend- 
 ant's conduct has brought him within a statute, the creditor has 
 
§ 39-42.] INVOLUNTARY BANKRUPTCY. 231 
 
 only to state all the facts, without electing which aspect he will 
 adopt. The affidavit was held sufficient. 
 
 It has been held that, in order to obtain the warrant upon an at- 
 tachment under the Code of Procedure in the State of New York, 
 it is sufficient for the plaintiff to show that the defendant secretly- 
 departed the State. If he has departed with the intent specified, it 
 is enough, though he went openly. — Supreme Ct., 1850, Morgan vs. 
 Avery, 7 Barb., 656. 
 
 Departing from the party's counting-house or place of business, 
 although he have a place of business elsewhere, is an act of bank- 
 • ruptcy. — Judine vs. Da Cossen, 1 N. R, 234. 
 
 The departure must be voluntary, and not compulsory ; for where 
 a man is arrested, and thereby obliged to leave' his house, such a de- 
 parture is not an act of bankruptcy.^ — Phillips vs. Essex, Sheriff, 1 
 Cole,B. L.,85. 
 
 The distance that a person departs to after leaving his dwelling- 
 house, or the length of time that he is absent from it, are perfectly 
 immaterial, if the object be to delay his creditors. Where a trader 
 went to a neighbor's house, and told him he expected every moment 
 to be arrested, upon which he concealed himself, and desired his 
 neighbors to watch, but returned home immediately the officer was 
 gone, such temporary absence was held to be an act of bankruptcy. 
 — Chenoweth vs. Haley, 1 M. & S., 676 ; Bayly vs. Schofield, id., 338. 
 
 And if the party go to a distant place among strangers, it may 
 be an act of bankruptcy, though he is visible there ; and going only 
 to the next house may also be the same, if he is not visible. Per 
 Buller, J., cited Aldridge vs. Ireland, cited 1 Taunt., 273. 
 
 Where a man rode out of town in order to avoid being arrested, 
 and returned in the evening, and the next morning sent for the 
 bailiff, and told him he went out in order to get the terms of the 
 plaintiff, this was held to be such a departing from the dwelling- 
 house as was sufficient to constitute an act of bankruptcy. — Maylin 
 vs. Eylve, 2 Stra., 809. 
 
 And if a trader, on being applied to for payment by a creditor, 
 leave his house under the pretense of getting money, but goes to a 
 billiard-table, and remains there the whole evening, this has also 
 been held an act of bankruptcy. — Bigg vs. Schooner, 651. 
 
 The departure must be with the intention to delay his creditors, 
 and semble to delay them absolutely, and not merely in case a par- 
 ticular event should occur. — Fisher vs. Boucher, 10 B. & C, 705. 
 
 The intention may, as in other cases, be presumed as a necessary 
 consequence of the party's act. When the departure is evidently 
 for a laudable purpose, although creditors be delayed, it is not an 
 act of bankruptcy, as leaving home to recover a debt, Fowler vs. 
 Padgett, 7 T. R, 509 ; or to arrange with a creditor leaving word 
 where he is gone, vide Defile vs. Desanges, 8 Taunt., 671 ; 3 Moo., 
 7; or for any other lawful purpose, Robertson vs. Liddell, 9 East., 
 492 ; 4 Taunt., 603 ; or for avoiding altercation. 
 
 His declaration before leaving home has been admitted, Smith 
 vs. Cramer, 1 N. C, 585, sOj after his return home, assigning a rea- 
 
232 THE BANKRUPT LAW. [§ 39-42. 
 
 son for his absence, Bateman vs. Bailey, 5 T. R., 512; Ridley vs.' 
 Gyde, 9 Bing., 349 ; and where it is proved that he said that he de- 
 parted to avoid arrest, no proof of the writ, debt, or even of cred- 
 itors, was required. — Newman vs. Stretch, Moo. & M., 838. 
 
 Second. — Or being absent from the State, District, or Territory of 
 which he is an inhabitant, remaining absent with intent to defraud 
 his creditors. 
 
 If a debtor depart from the State, District, or Territory, from a 
 proper motive, but upon discovering an embarrassed state of his 
 affairs he remains absent with intent to defraud his creditors, or to 
 conceal himself from them, he commits thereby an act of bankrupt- 
 cy ; the length of absence is immaterial, the act is complete the 
 moment the debtor leaves the State, District, or Territory, if the in- 
 tention be apparent. — Holroyd vs. Gwynne, 2 Taunt., 176 ; 1 Rose, 
 113. Thus, although departing for legitimate and urgent reasons, 
 if a debtor protracts his residence abroad for an unreasonable length 
 of time, assigning no cause for his absence, leaving no funds, nor 
 making any arrangements in the country he has left for the pay- 
 ment of his debts, it will be inferred that he remains absent with 
 intent to delay his creditors.^JSe parte Kilner, 2 Deac, 326 ; ex 
 parte Rhodes, 5 Jurist, 580 ; ex parte Cohn, 2 L. J., N". S., 90 ; 26 L. 
 J. Bank, 83 ; 3 Jurist, 1141. 
 
 This provision, as will have been observed, was not contained in 
 the former United States Bankrupt Act of 1841, nor was it in the 
 earlier English Bankrupt Acts ; it has been adopted from the re- 
 cent English act consolidating the Bankrupt Law. 
 
 The intention of the party in delaying his creditors must be 
 proved in the same manner as already noticed. A trader protract- 
 ing his residence abroad for an unreasonable length of time, with- 
 out assigning a sufficient cause for his absence, or leaving funds, or 
 making other arrangements here for the payment of his debts, is 
 prima facie sufficient evidence of intention, Deac, 47, though he 
 may have been pursuing his regular course of business, and remain- 
 ed away only three years. — Ex parte Rhodes, 5 Jur., 580, Ch. 
 
 Third. — Concealing himself to avoid the service of legal process in 
 any action for the recovery of a debt or demand provable under 
 this act. 
 
 A debtor concealing himself, if he did not thereby prevent the 
 service of process, would seem not to have been a complete act of 
 bankruptcy upon the construction of the former Bankrupt Act of 
 the United States of 1841. — Barnes vs. Billington,! Wash., C. 0., 
 29; 4 Day, 81, note. But the author ventures to suggest a doubt 
 upon the correctness of this decision. If it were proved that the 
 sheriff or other officer really had the necessary legal process to serve 
 upon the debtor, and the debtor, with the intent of avoiding such 
 service, concealed himself, the act of bankruptcy would be complete, 
 although the fact of such concealment was not the proximate cause 
 of the non-service of such process. The intent of the debtor is the 
 question in cases of the commission of acts of bankruptcy of this 
 character. The act of concealment must be to avoid the service 
 
§ 39-42.] INVOLUNTARY BANKRUPTCY. 233 
 
 of legal process for the recovery of a debt or demand provable un- 
 der the act. 
 
 Where a debtor conceals himself, either in his own house or else- 
 where, or departs from his house under the apprehension that he 
 may be arrested, he thereby commits an act of bankruptcy ; and it 
 would seem that he does so, even though such apprehension should 
 be groundless, ex parte Bamford, 45 Ves. Jr., 447 ; Newman vs. 
 Stretch, M. & M., 330, and no one called during his absence, Ham- 
 mond vs. Hicks, 5*Esp., 139 ; Wydown's Case, 14 Ves., 86. 
 
 The intention in all these cases must govern the act ; thus where 
 a trader went to his neighbor and told him he expected to be ar- 
 rested, and while he remained there was informed that a sheriff's 
 officer was going toward his house, upon which he concealed him- 
 self in the back room, and desired the neighbor to watch, and when 
 told the officer had gone past his house and had left the street, im- 
 mediately returned home, it was held, that this was an act of bank- 
 ruptcy, as an absenting himself to delay creditors, Chenoweth vs. 
 Hay, 1 M <fc S., 676 ; 2 Rose, 137 ; 6 Taunt, 540 ; and would clear- 
 ly be within the operation of this act. Again, where there were 
 two partners, one of whom resided at Manchester and the other in 
 London, and the London partner having left his own house without 
 intent to delay his creditors, and having been a few days on a visit 
 to Manchester, both of- them left the house of business there to 
 avoid an arrest, at the same time carrying their books of account 
 with them, it was held, that they both thereby committed an act 
 of bankruptcy. — Spencer vs. Billing, 3 Camp., 314; 1-Rose, 362. 
 So a debtor, being arrested, escapes from the officer into a neighbor's 
 house, and when the officer inquired for him there he was denied, 
 and the door fastened against him ; and while there the trader de- 
 clared that he remained there, not so much on account of the offi- 
 cer, for that debt was really paid, but for fear of other creditors, 
 and when it became dark he went home ; this was held to be an 
 absenting or concealing himself, and an act of bankruptcy. — Bayly 
 vs. Schofield, 1 M. & S., 338. 
 
 And where a trader who has no settled house, but takes up a 
 temporary abode at an inn or public-house, by departing therefrom 
 to avoid being arrested, he thereby commits an act of bankruptcy. 
 — Holroyd vs. Gwynne, 9 Taunt., 176 ; 1 Rose, 113. Where credit- 
 ors called upon a trader, and he admitted and spoke to them, and 
 pretending to go out for money to pay them, left his house and did 
 not return until he knew they were gone, it was held, that he 
 thereby committed an act of bankruptcy. — Bigg vs. Spooner, 2 Esp., 
 651. And declarations by a bankrupt of his motives for concealing 
 himself made at the time, is evidence against him to prove the act 
 of bankruptcy. — Bateman vs. Bailey, 5 T. R, 512. 
 
 But the declarations of a debtor made shortly after an absence, 
 are not admissible to prove such absence an act of bankruptcy. — 
 Lees vs. Marton, 1 M. & Rob., 210. 
 
 So also where a debtor had been absent, and on his return made 
 a declaration that he had concealed himself to avoid a writ against 
 
234 THE BANKRUPT LAW. [§ 39-42. 
 
 him, this is sufficient evidence of an act of bankruptcy without any- 
 other proof of the existence of the writ, or of the debt on which it 
 was founded. — Newman vs. Stretch', M. & M., 338. And it would 
 not be necessary to show that a writ had been actually sued out 
 against a debtor who concealed himself to avoid an arrest, the a<?t 
 of concealing with such intention would be sufficient. — Wilson vs. 
 Norman, 1 Esp., 334. Whether the concealment took place with 
 the inten,t necessary to constitute it an act of bankruptcy must, in 
 such cases, be determined by the circumstances under which it 
 took place, which is a question of fact for a jury to decide upon. — 
 Aldridge vs. Ireland, 1 Taunt., 273, n. ; 3 Doug., 397. 
 
 Thus where a debtor, in embarrassed circumstances, absented 
 himself from his house from the 16th of February till tbe 9th of 
 March, upon an issue whether he had .committed an act of bank- 
 ruptcy on or before the 5th of March, two letters written by him 
 on the 16th of January preceding, asking for extension on two bills 
 of exchange payable by him, were admitted in evidence to show 
 the motive of his absence. — Smith vs. Cramer, 1 Scott, 541 ; 1 
 Hodges, 124. 
 
 So also where a debtor, in embarrassed circumstances, sent a let- 
 ter from his country house to his son, who resided at his place of 
 business in town, stating that he was unable to meet his engage- 
 ments, and desiring that he might be denied to any creditor that 
 might call, and thereupon left his home, and did not return during 
 the whole of that and the following day ; upon an issue directed to 
 try whether an act of bankruptcy had been committed, a witness 
 proved that the trader called at her brother's house in London on 
 the day in question, and expressed an apprehension of being sent 
 to prison ; that he was in no hurry to get home, as he was fearful 
 his creditors would lay hold of him, and he did not leave till dark ; 
 it was held, that this was concealing himself, and was an act of 
 bankruptcy. — Johnson vs. Woolf, 2 Scott, 372. The debtor must 
 conceal himself to avoid the service of legal process, not merely to 
 avoid the meeting a creditor. The decisions above cited were, 
 some of them, upon the words of the English Bankrupt Act, " other- 
 wise absent himself," which are not in this act, but they will afford 
 some rule of construction, and are in many respects in pari mate- 
 rid. For instance, upon an application for an attachment under the 
 Code of Procedure in the State of New York, where a defendant, 
 becoming aware that he must fail, during business hours withdrew 
 from his place of business to a tavern in another part of the city, 
 and remained there till midnight, meanwhile occupied in preparing 
 payments for preferred creditors, and in making a general assign- 
 ment. He communicated his place of resort only to his counsel 
 and a friend, and the friend on meeting an officer denied that he 
 knew where he was. It was held, that these facts were sufficient 
 evidence of a concealment with intent to avoid service of summons. 
 — Supreme Ct., 1851 ; Genin vs. Tompkins, 12 Barb., 265. 
 
 It was also in the same case held, that where the attachment was 
 sought on the ground of an intention on the part of the debtor to 
 
§39-i2.] INVOLUNTARY BANKRUPTCY. 235 
 
 avoid the service of process, that it was not necessary to show that 
 a summons had heen actually issued, and an attempt to serve it 
 made. 
 
 The act of bankruptcy now treated of, it will be observed, is not 
 founded upon an alleged departure of the debtor from the State, 
 District, or Territory in which he resides, with an intent to delay or 
 defraud creditors, but upon a concealment within the State, or in 
 any place where legal process can be lawfully served upon him, and 
 the intent is to avoid the service of such legal process. 
 
 It will probably be sufficient to prove that the debtor who in- 
 tentionally so disposes of himself with a view to avoid such service, 
 and has an actual intention at the time to do so ; for it is laid down 
 in all the decisions upon this question of intent, that men are sup- 
 posed to intend what must be the natural and necessary conse- 
 quences of their acts. It is a concealment to avoid service of the 
 summons, no matter for what length of time ; no matter if with 
 a view to make a disposition, even lawful, of his property ; the 
 placing himself designedly so that his creditors can not reach, him 
 with process, which is the concealment contemplated in the act. 
 The question seems to be, Did the defendant conceal himself, even 
 temporarily, with the purpose of avoiding service of the summons ? 
 
 Fourth. — Concealing or removing any of his property to avoid its 
 being attached, taken, or sequestered, on legal process. 
 
 The concealment of goods, distinct from a fraudulent conveyance 
 of them, must be actual, not constructive, and by the bankrupt him- 
 self, or by his procurement, while they continued to be in his inten- 
 tion his own goods, in order to constitute an act of bankruptcy. — 
 Livermoor vs. Bagley, 3 Mass., 487. 
 
 This act also depends upon the intent with which it is done. The 
 concealment must be with the intent to prevent the property being 
 attached, taken, or sequestered on legal process. As in the other 
 acts of bankruptcy declared by the section depending upon intent, 
 the debtor may rebut any evidence raised by evidence explanatory 
 of his conduct in the transaction. 
 
 To establish this act of bankruptcy, it should be proved that there 
 is legal process existing and in force by which the debtor's goods 
 could have been attached, taken, or sequestered. 
 
 The concealment or removal of property must be construed to 
 mean any property in the debtor's possession and to which he claimed 
 title, even if his title should be imperfect or clearly bad. If the 
 debtor has removed or concealed any part of his property to avoid 
 its being seized under legal process, it will constitute under this 
 section an act of bankruptcy. From a removal of any part or por- 
 tion of his property with such an intent, it may reasonably be in- 
 ferred that he intended to extend the offense as far as might be 
 necessary to promote his fraudulent designs. 
 
 As to what amounts to a concealment by a debtor, or a removal 
 of his property, the decisions in the State Courts under provisions 
 of a similar character to those of this act will present analogies. 
 The mere naked fact of a removal of property from its place of 
 
236 THE BANKRUPT LAW. • [§ 39-42. 
 
 location, or from the business premises of the debtor, will not be 
 sufficient to constitute an act of bankruptcy. The intention to de- 
 fraud the creditor by withdrawing the property beyond the reach 
 of the attachment or execution must be clearly established. 
 
 Fifth. — Making any assignment, gift, sale, conveyance, or trans- 
 fer of his estate, property, rights, or credits, either within the United 
 States or elsewhere, with intent to delay, defraud, or hinder his cred- 
 itors. 
 
 The effect of this enactment is to make all assignments, gifts, 
 sales, conveyances, or transfers of the debtor's estate, rights, or cred- 
 its made by the debtor with intent to delay, defraud, or hinder his 
 creditors, an act of bankruptcy. 
 
 "We have treated of fraudulent preferences and conveyances 
 made by the bankrupt in contemplation of bankruptcy fully in the 
 notes to Section 35, and to some extent in those notes upon the 
 question as to what assignments and conveyances by the debtor, 
 void under the Statutes of Elizabeth and at common law, may 
 amount also to fraudulent preferences and conveyances in contem- 
 plation of bankruptcy. 
 
 This section, however, by enacting that any assignment, etc., 
 made with intent to delay, defraud, or hinder creditors, is to consti- 
 tute an act of bankruptcy, opens out a very wide question, as it in- 
 cludes all conveyances and assignments void under the Statutes of 
 Elizabeth which have been adopted in the various States of the 
 Union as part of their common law, and also the statutes of the va- 
 rious States made against fraudulent assignments. 
 
 Any assignment, gift, conveyance, sale, or transfer of the debtor's 
 property, void either at common law or by the law of the State in 
 which it may be made, when so made with intent to delay, defraud, 
 or hinder his creditors, is by this act constituted an act of bank- 
 ruptcy. 
 
 The words of the Statutes of Elizabeth are embodied in the en- 
 actment, which must thus receive the same construction as the 
 Statutes of Elizabeth themselves, and the State laws in which their 
 provisions are embodied, have received from the courts. 
 
 Within the compass of this treatise it will not be expected that 
 any more than the leading authorities on this question should be 
 cited. It will be sufficient to state that any assignment, convey- 
 ance, or transfer, which is void by those statutes where they form 
 part of the common law of the State, or void by the statutes of any 
 State against fraudulent assignments in force at the time, will, when 
 made by a debtor, amount to an act of bankruptcy. 
 
 It will be necessary, therefore, to review, as briefly as is consist- 
 ent with clearness, the legal principles which regulate and control 
 these transactions, and to refer to some of the decisions upon the 
 question of fraudulent assignments and conveyances. 
 
 WTiere it is attempted to invalidate a transfer of goods by show- 
 ing it to fall within the provisions of 13 Eliz., c. 5, a question arises 
 proper for the consideration of a jury, who are to say whether the 
 transaction was bond fide, or a contrivance to defraud creditors. 
 
§ 39-42.] INVOLUNTARY BANKRUPTCY. 237 
 
 Where a bill of sale of chattel property is executed by a debtor to 
 bis creditor, purporting to convey the property to the vendee im- 
 mediately, yet the vendor is after its execution suffered to remain 
 in possession, a very strong presumption of fraud arises ; for, as Lord 
 Coke remarks in Twyne's case, continuance in possession by the do- 
 nor is a sign of trust for his benefit^and therefore, in Edwards vs. 
 Harben, 2 Term, 587, where a creditor took an absolute bill of sale 
 of the goods of his debtor, but agreed to leave them in bis posses- 
 sion for a limited time, and in the mean time the debtor died, where- 
 upon the creditor took and sold the goods, he was held'liable to be 
 sued as executor de son tort for the debts of the deceased. Vide 
 Shears vs. Rogers, 3 Barnwell & Adolphus, 363. Indeed, in Ed- 
 wards vs. Harben, the court went so far as to say, " This has been 
 argued as a case in which the want of possession is only evidence of 
 fraud, and that it was not such a circumstance, per se, as to make the 
 transaction fraudulent in point of law. That is the point we have 
 considered, and we are all of opinion, that if there be nothing but 
 the absolute conveyance icithout the possession, that in point of law 
 is fraudulent." Lord Ellenborough thought " that if the vendor re- 
 mained in possession of the goods after the sale thereof, the case 
 was not bettered by the vendee's remaining in possession along 
 with him; 1 ' and therefore, in Wardell vs. Smith, 1 Campbell, 333, 
 where the action was brought against the Sheriff of Middlesex for 
 a false return to a writ of fieri facias sued out by the plaintiff 
 against John Mason, and returned by the sheriff nulla bona, and 
 upon the trial it appeared that Mason had, before the issuing of the 
 fieri facias, assigned aljhis effects to a creditor, whose servant was 
 immediately put into the house, and remained conjointly with Ma- 
 son, Lord Ellenborough directed a verdict for the plaintiff, saying, 
 " To defeat the execution there must have been a bond fide substan- 
 tial change of possession. It is a mere mockery to put another 
 person in to take possession jointly with the former owner of the 
 goods." 
 
 However, though in Edwards vs. Harben it was laid down, in 
 the express terms above stated, that an absolute sale without de- 
 livery of possession was in point of law fraudulent, the tendency of 
 the courts has lately been to qualify that doctrine, and leave the 
 whole circumstances of each case to a jury, bidding them decide 
 whether the presumption of fraud deducible from the absence of a 
 transmutation of possession shall prevail. And, indeed, it ought to 
 be remarked that, even in Edwards vs. Harben, the words of Buller, 
 J., were, "If there be nothing but an absolute conveyance without 
 the possession, that -in point of law is fraudulent ;" by which his 
 lordship may have intended, that where there was nothing, i e., no 
 facts whatever appearing in the case except the absolute convey- 
 ance and the non-delivery, that then the inference of fraud would 
 be so strong that a jury ought not to resist it. But it is very dif- 
 ferent in cases where, although the conveyance is absolute, and the 
 possession has not passed, still there are surrounding circumstances 
 which show that a fraud may not have been intended; in such 
 
238 THE BANKRUPT LAW. [§ 39-42. 
 
 cases it can not properly be said that there is " nothing but an ab- 
 solute conveyance without the possession." Therefore, in Latimer vs. 
 Batson, 4 Barnwell & Cresswell, 652, where the sheriff seized the 
 goods of the Duke of Marlborough, and sold them to the judgment 
 creditor, who sold them to the plaintiff, who put a man in posses- 
 sion, but allowed them to remim in the duke's mansion and be used 
 by him as before, it was held, that it was properly left to the jury 
 to say whether the sale was a bond fide sale for money paid by the 
 plaintiff; and that if so, they should find a verdict for him. 
 
 Here the' goods had been seized by the sheriff, who is a public 
 officer, and his seizure a public act, so that the transaction was ac- 
 companied with some notoriety ; and as the secrecy of the transfer 
 is a badge of fraud, so is the notoriety of the transfer always a 
 strong circumstance to rebut the'presumption thereof. Vide Lati- 
 mer vs. Batson; Leonard vs. Baker, 1 M. & S., 251 ; Watkins vs. 
 Birch, 4 Taunt.,- 823 ; Jezeph vs. Ingram, 8 Taunt., 838 ; Kidd vs. 
 Rawlinson, 2 B. & P., 59; Cole vs. Davies, 1 Lord Raym., 724; 
 Macdona vs. Swiney, 8 Irish C. L. Rep., 73. 
 
 It may, therefore, be safely laid down that, under almost any 
 circumstances, the question,/ra«d orno fraud, is one of the consid- 
 erations for the jury. Vide the judgments in Martindale vs. Booth, 
 3 B. & Ad., 498, where several cases establishing this point are 
 cited; and see in Carr vs. Burdiss, 5 Tyrwh., 316, the expressions 
 of Park, B. ; Dewey vs. Bayntun, 6 East., 257; Reed vs. Blades, 5 
 Taunt., 212, and per Tindal, C. J., Lindon vs. Sharp, 6 Mann. & G., 
 898 ; 7 Scott, N. R., 730, S. C. ; Pennell vs. Dawson, 18 C. B., 355. 
 So in Chancery there are no rules establishing particular circum- 
 stances to be indelible badges of fraud ; but the question of bond 
 fides is there also one of fact. — Hale vs. The-Metropolitan Omnibus 
 Co., 28 L. J., 777. 
 
 The above observations apply to cases where the consequence 
 is absolute, and there is no transmutation of possession ; but where 
 the conveyance is not absolute to take effect immediately, as, for in- 
 stance, where it is by way of mortgage, and the mortgagee* is not 
 to take possession till a default in payment of the mortgage money, 
 there, as the nature of the transaction does not call for any trans- 
 mutation of possession, the absence of such transmutation seems to 
 be no evidence of fraud. 
 
 " "We consulted," says Buller, J. , in Edwards vs. Harben, " with all 
 the judges, who are unanimously of opinion, that unless possession 
 accompanies and. follows the deed, it is fraudulent and void. I lay 
 stress on the words accompanies and follows, because I shall men- 
 tion some cases where, though possession was not delivered at the 
 time, the conveyance was held not to be fraudulent." And then 
 his lordship proceeds to point out the distinction between " deeds 
 or bills of Sale which are to take place immediately, and those 
 which are to take place at some future time; for, in the latter case, 
 the possession continuing in the vendor till that future time, or till 
 that condition is performed, is consistent with the deed, and such 
 possession comes within the rule as accompanying and following 
 
§ 39^2.] INVOLUNTARY BANKRUPTCY. 239 
 
 the deed." Vide B. N". P., 258, and Cadogan vs. Kennett, Cowp., 
 436 ; Munshull vs. Lloyd, 2 M. & W., 450. This doctrine was af- 
 firmed and acted upon in the late case of Martindale vs. Booth, 3 B. 
 & Ad., 505 ; and in Reed vs^ Wilmot, 7 Bing., 577 ; also per Tindal, 
 C. J., Reeves vs. Capper, 5 Bing., N. C, 140. 
 
 Cases may, and probably will arise, in which it may be attempt- 
 ed to take advantage of this doctrine for the purposes of fraud, by 
 introducing terms consistent with the continuing possession of the 
 vendor into deeds really intended not to operate as a bond fide 
 transfer of property, but to inure for the vendee's protection. 
 
 Li such a case, however, the collusion, as soon as discovered, 
 would be held to invalidate the deed as much as if the conveyance 
 purported upon the face of it to be absolute ; for the presence or 
 absence of fraud depends on the motives of the party making the 
 conveyance. — Nunn vs. Wilson, 8 T. R., 521 ; Riches vs. Evans, 9 
 C. & P., 640. 
 
 Thus in cases of secret transfer not impeachable on the ground 
 of fraud or want of consideration, the 13 Eliz., c. 5, left the creditor 
 liable to incur a loss by trusting to the false appearance of owner- 
 ship which the debtor's continuance in possession presented. 
 
 In the event of bankruptcy and insolvency, this defect in the law 
 has been remedied by later English statutes, which vest in the as- 
 signees, upon order of the court, all goods which, by consent and 
 permission of the true owner, are in the debtor's possession, order, 
 or disposition at the time of his bankruptcy or arrest, and of which 
 he was then the reputed owner. — 12 & 13 Vict., c. 106, § J25 ; 1 & 
 2 Vict., c. 110, § 57. See Heslop vs. Baker, 8 Ex., 411 ; Quartermaine 
 vs. Bittleston, 13 C. B., 153 ; Hamilton vs. Bell, 10 Exch., 545 ; and 
 Reynolds vs. Hall, 4 H. & ST., 519. But in general the secrecy of 
 the transfer was not absolutely fatal to its validity until the 1 7 & 
 18 Vict., c. 36, "An act for preventing frauds upon creditors by se- 
 cret bills of sale of personal chattels." The provisipns of this im- 
 portant enactment extended to all bills of sale made after passing 
 of the act, that is to say, after the 10th of July, 1854, whether they 
 be absolute or conditional, or subject or not subject to any trusts, 
 and which empower the grantee to seize or take possession, either 
 with or without notice, immediately or at a future time, of any 
 property or effects comprised in the act. Under the term "bill of 
 sale," this act includes assignments, transfers, declarations of trust 
 without transfer, »and other assurances of personal chattels ; and 
 also powers of attorney, authorities, or licenses to take possession 
 of personal chattels as security for any debt." But it does not ex- 
 tend to assignments for the benefit of creditors, marriage settle- 
 ments, see Poster vs. Fowler, 29 Law J., Q. B., 210; transfers of 
 ships, transfers of goods in the ordinary course of business of any 
 trade or calling, or bills of sale of goods in foreign parts or at sea ; 
 bills of lading, delivery orders, or any other documents used in the 
 ordinary course of business, as proof of the possession or control of 
 goods. Under the term " personal 1 chattels," the statute compre- 
 hends goods, furniture, fixtures, see Waterfall vs. Penistone, 6 E. 
 
240 THE BANKRUPT LAW. [§ 39-42. 
 
 & B., 876, and other articles capable of complete transfer by deliv- 
 ery ; but not chattel interests in real estate or shares in govern- 
 ment securities, or in incorporated or joint-stock companies, chosen 
 in action, or stock and produce not removable from any farm or 
 lands either by reason of a contract or a custom. 
 
 There are some cases — that, for instance, of the sale of a ship at 
 sea — in which an actual delivery being impossible, no presumption 
 of fraud can possibly arise from the substitution of one merely sym- 
 bolical. — Atkinson vs. Maling, 2 T. R., 472. In the case of British 
 ships, notoriety of transfer is to a certain extent secured by the 
 Merchant Shipping Act, 1854, the 17 & 18 Vic, c, 104, which re- 
 quires that when any registered ship, or any share in her, is dis- 
 posed of to persons qualified to be the owners of British ships, the 
 transfer must be made by bill of sale, which must contain a descrip- 
 tion of the ship, and must be registered according to the provisions 
 of that act.— See §§ 55 & 57, and the 18 & 19 Vic, c 91, § 11. 
 
 It will be observed that the Statute of Elizabeth only declares 
 the fraudulent conveyance to be void, " as against that person, his 
 heirs, and successors, executors, etc., who are or might be in any 
 wise disturbed, hindered, delayed, or defrauded." Such a convey- 
 ance is good as against the party executing it, Robinson vs. M'Don- 
 nel, 2 B. & A., 134, and also as against any other person privy and 
 consenting to it, Steel vs. Brown, 1 Taunt., 381 ; Alliver vs. King, 25 
 Law J., Cha., 427, and as against strangers other than creditors or 
 bond fide purchasers for valuable consideration. — Bessey vs. Wind- 
 ham, 6 Q. B., 166 ; see, as to question of evidence raised, the latter 
 case ; White vs. Morris, 11 C. B., 1015. If, before the conveyance 
 is avoided, the transferree assigns the goods, with the assent of the 
 original owner, to a bond fide purchaser for value, the transfer is 
 •valid against creditors. — Morewood vs. The South Yorkshire Rail- 
 way Company, 3 H. & N"., 798. A sham transfer, for the purpose 
 of defrauding creditors, has been held not to pass the property in 
 the goods even as between the debtor and his confederate. — Bowes 
 vs. Foster, 2 H. & 1ST., 779. 
 
 Where a portion of the property of a debtor was under attach- 
 ment at the suit of a creditor, and another creditor executed to the 
 attaching creditor his bond conditioned for the payment of the debt, 
 and thereupon the attachment was released, and then the debtor 
 executed to the second creditor, a general assignment of all his 
 property to secure a debt due to him, and also to* secure him for so 
 giving his bond to the attaching creditor, and for the benefit of his 
 other creditors generally, but creating preferences in favor of some 
 of them, it was held that this was both an act of bankruptcy within 
 the meaning of the Bankrupt Act and a giving an unlawful prefer- 
 ence. — Gassett vs. Morse, 21 Ver., 6 Washb., 627. 
 
 A manufacturer assigned all his machinery, by way of mortgage, 
 to secure the amount of certain bills drawn by him and accepted 
 by the consignees of his goods, which had been discounted by the 
 mortgagee, and also of such other bills as should from time to time 
 be discounted in like manner. The mortgagee was empowered, 
 
§39-42.} INVOLUNTARY BANKRUPTCY. 241 
 
 after three days' notice, to enter and take possession of all the ma- 
 chinery, and after a sale of the same, to pay the amount of the ex- 
 penses and the bills then due or running, and to pay the surplus to 
 the mortgagor. At the time of the execution of this deed the ma- 
 chinery was worth £1500, and the mortgagor's property consisted 
 of goods £1100, and good debts £900, while his whole liabilities 
 were £2900. Held, that this deed was no evidence of an act of 
 bankruptcy ; although, had it been acted upon, the mortgagor could 
 not have carried on- the particular business in which he was en- 
 gaged. — Young vs. Ward, 14 Eng. Law & Eq, 403. 
 
 The dissolution of copartnership, and assignment by one partner 
 to the other of all the property of the former in the firm, is not of 
 itself an act of bankruptcy, but it would be if made as a mere cover 
 to conceal actual or legal fraud, or with intent to give an advantage 
 to any one. — Ex, parte Shouse, Crabbe, 482. 
 
 A and B, partners, made a voluntary assignment of all their prop- 
 erty for the benefit of their creditors without preference ; and a few 
 days after each presented a petition for the benefit of the Bankrupt 
 Law. Six months before, one of them, in the name of the firm, 
 wrote to their consignee in Rio, " The object of this letter is to re- 
 quest you to ship $10,000 under cover to EDG, as he is our in- 
 dorser, and under the Bankrupt Law this is the only way we can 
 secure him." The request was not complied with. The court held 
 that this " transfer" was made in contemplation of bankruptcy, and 
 for the purpose of giving a preference to an indorser over other cred- 
 itors, and refused to grant a Discharge. The petitioners demanded 
 a jury, and they, by their verdicts, found the bankrupts were enti- 
 tled to the.ir discharges. — Ex parte Garwood ; ex parte Potts ; 
 Crabbe, 496. 
 
 If a trader raises money by selling his goods at an under value 
 (in contemplation of stopping payment and for the purpose of cheat- 
 ing his creditors) to one who has notice, either by express informa- 
 tion or from the nature of the transaction, that he is selling his 
 goods with a fraudulent intention, the sale is an act of bankruptcy 
 and void, and the assignees may recover the goods from the pur- 
 chaser. — Fraser vs. Levy, 6 Hurl. & Nor., 16. 
 
 A bill of sale made by a trader to secure future advances only, 
 and executed bondfide^ is not, in point of law, an act of bankruptcy, 
 although it transfers all the stock in trade ; and no intention to de- 
 feat or delay creditors can be inferred from it, although it operated 
 by way of mortgage, and the property assigned was disproportion^ 
 in value to the amount advanced. — Bittleston vs. Cooke, 36 Eng. 
 Law & Eq., 97. 
 
 A trader, indebted to several creditors in a sum sufficient to form 
 a petitioning creditor's debt, caused his goods to be taken in execu- 
 tion by the plaintiff, another creditor, with intent to defeat or delay 
 his creditors, and by way of fraudulent preference, after which the 
 defendants distrained them for rent while on the trader's premises. 
 The trader subsequently filed a declaration of insolvency, and on 
 this fiat was awarded before the Bankrupt Law Consolidation Act 
 
 Q 
 
242 THE BANKRUPT LAW. [§ 39-42. 
 
 of 1849 came into operation, and he was adjudged bankrupt on his 
 own petition, under the 7 & 8 Vic, c. 96, § 41. The plaintiff then 
 sued the defendants for maliciously distraining for more rent than 
 was due, and for taking an excessive distress, etc. After the com- 
 mencement of the action, the assignees gave notice to the plaintiff 
 that they elected to treat the execution as void ; and they also gave 
 notice to the defendants, claiming the goods taken under the dis- 
 tress. Held, that as the fiat and adjudication proceeded on the 
 bankrupt's own petition, the title of the assignees could not relate 
 further back than to the act of bankruptcy on which the fiat pro- 
 ceeded, namely, the declaration of insolvency, and, therefore, that it 
 did not relate back to the fraudulent execution ; but that the case 
 would have been otherwise had the fiat been obtained on the peti- 
 tion of the creditors, and possibly so if the adjudication had pro- 
 ceeded on their petition, though the fiat had issued on the petition 
 of the trader. — Stevenson vs. Sewenham, 16 Eng. Law & Eq., 258. 
 
 The importance of the question the author is now annotating in 
 the administration of this act in the various States, where assign- 
 ments of this character prevail to a great extent, has induced him 
 to present a summary of the decisions in each State upon the sub- 
 ject, and it is hoped that the labor will be repaid by the conven- 
 ience of reference which is thus afforded to the practitioner. 
 
 In Alabama it has been held, that the 2d Section of the Alabama 
 Statute of Frauds, in declaring that every gift, etc., of lands, etc., had 
 or made, etc., " to the intent or purpose to delay, hinder, or defraud 
 creditors, shall be utterly void," etc., is declaratory of the common 
 law, and does not derive additional potency from the insertion of 
 the word "purpose;" that word might be omitted, and still the 
 same meaning would be accorded to the act. — Anderson vs. Hooks, 
 9 Ala., 704. 
 
 In Alabama a conveyance colorable and fraudulent as to part is 
 void as to the whole of the property conveyed by it so far as cred- 
 itors are concerned. When part of the consideration of such a con- 
 veyance is the payment of prior encumbrances upon a part of the 
 property conveyed, the mortgagee is not entitled to be reimbursed 
 for these, as the fraud vitiates the whole consideration. — Tickner 
 vs. Wiswall, 9 Ala., 305. 
 
 An insolvent debtor is not allowed to appropriate the proceeds 
 of his labor to investments in real estate for the advancement or in 
 the name of his children ; and if he procures a conveyance to be 
 made to a child under such circumstances, the estate may be reach- 
 ed by an execution creditor. — Patterson vs. Campbell, 9 Ala., 933. 
 
 A being largely indebted, and having taken judgments that had 
 been rendered against him to the Supreme Court for delay merely, 
 executed to B a deed of trust to secure the payment of a debt of 
 one hundred and fifty dollars due by him to C, and to indemnify C 
 and another as his sureties on certain debts, some of which were 
 due, and others running to maturity. The property conveyed was" 
 of much greater value than the aggregate of the debts intended to 
 be secured, and consisted of land, slaves, horses, cattle, cotton, lum- 
 
§ 39-42.] INVOLUNTARY" BANKRUPTCY. 243 
 
 ber, household and kitchen furniture, and a stock of goods, togeth- 
 er with all the debts due the grantor by note or account, and 
 amounting to more than seven thousand dollars. The deed pro- 
 vided that A should remain in possession of all the property both 
 real and personal, including the debts, and take the profits thereof 
 to his own use, until default should be made in the payment of the 
 debt due to C, or until C and his co-surety should be compelled 
 by law to pay any of the debts for which they were bound ; upon 
 the happening of either of which contingencies B was authorized to 
 sell for cash all or as much of the property as might be sufficient, 
 first giving twelve months' notice of such sale, and from the pro- 
 ceeds to pay the debt due to C, or such part thereof as remained 
 unpaid, and also such sums as C and his co-surety, or either of them, 
 had been compelled to pay, and the surplus, if any, after defraying 
 the expenses incurred in the execution of the trust, was to be paid 
 over to A, the grantor. Held, that the deed, as against the cred- 
 itors of A, was fraudulent and void on its face. — Johnson vs. 
 Thweatt,18 Ala., 741. 
 
 A voluntary conveyance, as against existing creditors, is abso- 
 lutely void; but to avoid it, as against subsequent creditors, it 
 must be shown to have been made withga fraudulent intent. — Stiles 
 vs. Lightfoot, 26 Ala., 443. 
 
 In Arkansas it has been decided that a voluntary conveyance 
 made in fraud of the rights of creditors is valid between the par- 
 ties ; and, therefore, he who accepts of a conveyance of a slave to 
 him by deed, as trustee of another, can not set up a claim to it as 
 his own. — Anderson vs. Dunn, 19 Ark., 450. 
 
 Where an absolute conveyance by a debtor who is insolvent, and 
 who has been frequently sued, of all his real and personal property 
 to his son, who was a young man without means or property, and 
 at the time a member of his family, no consideration being paid at 
 the time nor secured, and the grantor remaining in possession, is a 
 conveyance having attached to it unmistakable badges of fraud, 
 such as in the Court of Chancery would be conclusive evidence of 
 a fraudulent intent to hinder and delay creditors. — Ringold vs. 
 Waggoner, 14 Ark., 69. 
 
 In California it has been held, that a voluntary conveyance, as 
 from a father to an infant son, though alleged to be in consideration 
 of services rendered, is fraudulent in favor of creditors if the donor, 
 as a reasonable man, ought not to have made the gift, and in fact is 
 insolvent if the conveyance be sustained — Swartz vs. Hazlett, 8 
 Cal., 118. 
 
 A confession of judgment to a bond fide creditor made without 
 his knowledge, and the issuing of an execution and making levy 
 under it by the judgment debtor, done with the knowledge that 
 another creditor is about to attach, and for the purpose of defeat- 
 ing his attachment, are void as to him. — Ryan vs. Daly, 2 Cal., 238. 
 
 In Connecticut it was held, that a voluntary conveyance, to defeat 
 a claim of a third person to damages for tort, is void at common 
 law as against such third person. — Fox vs. Hills, 1 Conn., 295. 
 
244 THE BANKRUPT' LAW. [§ 39-42. 
 
 In Florida the Statute of 13 Elizabeth, protecting creditors and 
 others from fraudulent conveyances, is to be construed literally in 
 favor of the class of persons designed to be protected from the 
 fraud. A surety is a creditor of the co-obligor, and, as such, is en- 
 titled to the protection of the statute. — Gibson vs. Love, 4 Florida, 
 217. 
 
 The Statute of 27 Elizabeth, though in its terms it applies only to 
 land, yet, being declaratory of the common law, may be interpreted 
 as defining the nature and effect of fraudulent conveyances gener- 
 ally. ' 
 
 What is termed fraud in law is distinct from fraud in fact, and ii 
 is the duty of a judge to instruct the jury that their conclusions 
 from facts must be regulated by the character and import given to 
 these facts by necessary legal implication. Where the legal effect 
 of a conveyance is to hinder, delay, and defraud creditors, no mat- 
 ter what the actual intention may have been, it is a fraud in law, 
 and the courts are bound so to declare it. Vide case last cited. 
 
 A creditor must establish his debt by judgment before he can 
 raise the question of the validity of a conveyance made by his debt- 
 or. — Carter vs. Bennett, 4 Florida, 283. • 
 
 In Georgia it has been hfjd, that where B executed a deed of as- 
 signment of his property to A for the benefit of certain creditors, 
 which was void by the act of 1818, and subsequently executed a 
 mortgage of the same property to secure the payment of a bond fide 
 debt, the mortgagees, as creditors, might avo'id the first conveyance, 
 and have the proceeds of the property mortgaged applied to the 
 payment of their niortgage debt ; and that, as against them, the 
 first conveyance was in law a nullity. — Lee vs. Brown, 7 Geo., 275. 
 
 An assignment of the assets of a bank, insolvent at the time, and 
 about making a general assignment, and against which proceedings 
 are pending to revoke its charter, made to a creditor cognizant of 
 these facts, and by collusion with him to defraud the other credit- 
 ors, is void, and the assets so assigned to him are a trust fund to be 
 applied to the payment of the debts of the corporation. — Hightow- 
 er vs. Mustian, 8 Geo., 506. 
 
 To make a voluntary settlement void under the Statute . of 27 
 Elizabeth, c. 4, it must be ■ covinous and fraudulent, and not volun- 
 tary only. — Clayton vs. Brown, 17 Geo., 217. 
 
 As to retaining possession in Georgia, vide Howland vs. Dews, 
 Charlt.,386 ; Foster vs. Wallace, 2 id, 231. 
 
 In Illinois, where debtors who are insolvent, and pressed for pay- 
 ment, convey all their real and personal estate to a brother of one 
 of them (after having recently before secured certain creditors by 
 mortgage) in consideration of five several promissory notes, paya- 
 ble in two, three, four, five, and six years from date, the considera- 
 tion in the deed for the real estate being only one dollar, with an 
 understanding that the assignee, at his discretion, shall apply the 
 proceeds of the whole estate toward liquidating the demands 
 against the assignors, such a transaction will be condemned as a 
 legal fraud. — Nesbitt vs.Digby, 13 111., 387. 
 
§ 39-42.] INVOLUNTARY BANKRUPTCY. 245 
 
 J conveyed lands to B to defraud creditors, which B for the same 
 ohject conveyed to W, taking from him a written agreement to re- 
 convey them to J. While in B's possession they were levied upon 
 hy N, a creditor of J. J executed a release to W; who reconveyed 
 to B without consideration, and B, subsequent to N's levy, convey- 
 ed a portion to S. Held, that B's title was not strengthened by the 
 conveyance from W, because the conveyance from J to B was com- 
 plete as to J, but void as to his creditors, and N, whether his debt 
 occurred prior or subsequent, is entitled to have the fraudulent con- 
 veyances set aside ; and that S, having purchased after the filing of 
 the certificate of levy by N, had notice of N's rights, and can not be 
 protected. — Brown vs. Niles, 16 111., 385. As to retaining posses- 
 sion in Illinois, see Thornton vs. Davenport, 1 Scam., 296. 
 
 As to retaining possession in Indiana, see Watson vs. Williams, 4 
 Blackf , 26 ; Case vs. Winshop, id., 4?5. 
 
 In Kentucky, if a man makes a bill of sale of slaves which is 
 fraudulent and void as to creditors, and afterward goes to another 
 State and dies domiciled there, and the vendor asserts no claim to 
 the slaves, they will be assets in the hands of an administrator in 
 Kentucky, if any, and, if there is no administrator, they will pass 
 like lands to an heir or devisee. But if a purchaser claims the 
 slaves, though his bill of sale may be fraudulent as to creditors, the 
 law of the foreign domicile will not apply ; and neither a foreign 
 executor or an administrator can claim them ; for the bill of sale 
 good against the vendor will be equally conclusive against his rep- 
 resentatives. — Warren vs. Hall, 6 Dana, 450. Two slaves were 
 sold under execution upon credit, and purchased upon a bond fide 
 judgment creditor of the same debtor, not plaintiff in either execu- 
 tion, who, in pursuance of a previous agreement between him and 
 debtor, who was entirely insolvent, conveyed them to him in trust 
 for his children. The debtor, in pursuance of the said agreement, 
 furnished the sale money before it was due, but as payment, upon 
 the purchaser's judgment against him. Held, that these circum- 
 stances were sufficient to justify a finding that the conveyances 
 were fraudulent, and that the slaves were subject to executions 
 against the debtor upon judgments recovered before these occur- 
 rences. — Clarkson vs. White, 81 Dana, 11. 
 
 In Louisiana a conveyance Df record is valid by the laws of 
 Louisiana, unless its invalidity is judicially declared in the direct 
 revocative action given, by their code, to the creditor against the 
 vendee. It can not be attached collaterally, as, under the Statutes 
 of Elizabeth, or under the Tennessee act of 1801, a common law 
 conveyance may be attached. — Cage vs. Wells, 7 Humph., 585. 
 
 In Maine, where the attendant circumstances clearly show the 
 intention of both the mortgagor and the mortgagee to have been to 
 place the mortgaged property beyond the reach of legal process, and 
 thereby delay if not defeat creditors, this constitutes a legal fraud, 
 though both parties intended to act for the benefit of all the cred- 
 itors. — Wheelden vs. Wilson, 44 lyjaine, 1. 
 
 In Massachusetts, at common law, a debtor may prefer any one 
 
246 THE BANKKUPT LAW. [§ 39-42. 
 
 qf his creditors by payment of his debt, or by conveying in trust 
 so much of his property as will be adequate for such payment. — 
 Widgery vs. Haskell, 5 Mass., 144; Hatch vs. Smith, 5 Mass., 42; 
 Stevens vs. Bell, 6 Mass., 339 ; Thomas vs. Goodwin, 12 Mass., 140 ; 
 New England Ins. Co. vs. Chandler, 16 Mass., 275; Nostrand vs. 
 Atwood, 19 Pick., 281. And property may be so conveyed to in- 
 demnify a surety. — Stevens vs. Bell, 6 Mass., 339. But such pay- 
 ment or conveyance will be void as against other creditors, unless 
 assented to and accepted by the creditor preferred. — Widgery vs. 
 Haskell, 5 Mass., 144 ; Ingram vs. Geyer, 13 Mass., 146 ; Quincy vs. 
 Hall, 1 Pick., 357 ; Marston vs. Coburn, 17 Mass., 454, 457 ; Russell 
 vs. Woodward, 10 Pick., 408. 
 
 In Maryland, prior to the act of 1835, c. 380, the general rule was, 
 that a creditor before he could in equity pursue property fraudu- 
 lently conveyed, must have first obtained a judgment with respect 
 to realty, and a judgment an 1 fieri facias where personal property 
 was to be reached. Yet there are some exceptions to the rule. 
 The case of a guardian suing in behalf of his wards, who is the sure- 
 ty on the bond given by the former guardian, and therefore can not 
 maintain an action at law on the bond, might possibly be so re- 
 garded. — Swan vs. Dent, 2 Md., Ch. Decis., 111. 
 
 But the act of 1835, c. 380, § 2, expressly exempts creditors from 
 the obligations to obtain judgments before they can proceed in 
 equity to vacate fraudulent conveyances. 
 
 The conveyances in this case were vacated upon proof that they 
 embraced all the grantor's property real and personal ; that they 
 were made to his daughter, who never did and never could have 
 paid the consideration expressed in them ; that at the time of exe- 
 cuting them he was greatly in debt, and shortly afterward applied 
 for the benefit of the insolvent laws, returning no property in his 
 schedule ; and that the whole transaction was a scheme to defraud 
 his creditors. Vide case last cited. 
 
 Upon a bill filed by an administrator to set aside a conveyance 
 as fraudulent against the creditors of his intestate, charging that 
 said conveyance was made at the request and by the order of the 
 intestate, for the use and benefit of his wife and children, it was 
 held, that whatever may be the character of the conveyance, so far 
 as the rights of the creditors are concerned, it was certainly good 
 against the party who caused it to be made and his representa- 
 tives.— Kinnemon vs. Miller, 2 Md., Ch. Decis., 407. 
 
 The construction of the Statute of 27 Eliz. was not settled in 
 England until after the year 1776; hence it does not prevail in 
 Maryland, under the provision in the Constitution of that State rel- 
 ative to the adoption of the common law. — Mayor of Baltimore vs. 
 Williams, 6 Md., 235. 
 
 In the Statute of 13 Eliz.,c. 5, vacating fraudulent conveyances, 
 the words " creditors and others" will be held to include a wife 
 made the victim of her husband's fraud. — Feiglev vs. Feiglev, 1 
 Mi, 687. 
 
 A executed a bill of slaves to B, to secure the payment of a bond 
 
§ 39-42.] INVOLUNTARY BANKRUPTCY. 247 
 
 fide debt — A and B being both at that time residents of W. Coun- 
 ty, in the District of Columbia. The bill of sale was duly executed, 
 etc., agreeably to the laws of the District. A afterward removed 
 into Maryland, bringing with him the slaves, which had remained 
 in his possession, and over which he had exercised acts of owner- 
 ship, paying the court assessment thereon, and selling some of them. 
 A, both before and after his bill of sale to B, was indebted to C, of 
 the said county and district, who recovered judgment against A in 
 A. County, in Maryland, to which A had removed with said slaves. 
 Kfi.fa. issued upon this judgment, and the said slaves were taken 
 and sold by the sheriff, against whom B brought trespass. Held, 
 that B recover, there being no proof to impeach the validity of 
 the bill of sale or contaminate the transaction with fraud, nor that 
 the property transferred was more than sufficient to pay the debt 
 secured. — Bruce vs. Smith, 3 Har., 499. The retaining possession 
 by the grantor of the property included in a bill of sale duly exe- 
 cuted, acknowledged, and recorded, is sanctioned by the Maryland 
 act of 1729, c. 8. — Id. 
 
 Where a deed, purporting to be made on a moneyed considera- 
 tion, is attacked as being fraudulent as against the creditors of the 
 grantor, it can not be propped up by proof of an indebtedness to 
 the grantee for services as a clerk, such consideration being in- 
 consistent with that on the face of the deed. — Glenn vs. M'Neal, 3 
 Md., Chan. Decis., 349. 
 
 Where a deed is void as to creditors, the law as to them treats 
 the property as if no such deed had been made, and hence the pur- 
 chaser, under a judgment in favor of a creditor, takes all that the 
 grantor owned in the property at the date of the deed. Vide case 
 last cited. 
 
 The acknowledgment and recording of a bill of sale, according 
 to the Maryland act of Assembly, where the vendor remains in 
 possession, is not conclusive to show absence of fraud, and fraud 
 may be inferred from other circumstances than the vendor's con- 
 tinuing in possession. — Garrett vs. Hughlett, 1 H. & J., 3. 
 
 In Michigan, where a deed of real estate was made to the wife 
 by her husband, he being much in debt, and after such deed he 
 contracted further liabilities, holding himself out as still owner of 
 such estate, and then failed, making an assignment, and showing as- 
 sets less than half enough to pay his debts, it was held, that the 
 deed to the wife was fraudulent and void as to subsequent creditors. 
 
 Where the circumstances are such that the deed from husband 
 to wife, if voluntary, would be void as fraudulent against creditors, 
 and the wife pays a consideration therefor wholly inadequate, 
 equity will sustain such settlement only so far as to insure the re- 
 payment of the money to her. 
 
 A deed fraudulent as to existing creditors is, as a general rule, 
 fraudulent as to subsequent creditors. — Hershfeldt vs. George, 6 
 Mich., 456. 
 
 A conveyed to B certain premises to enable B to purchase goods 
 for the joint benefit of both, .and, if B succeeded in the purchase, 
 
248 THE BANKRUPT LAW. [§ 39-42. 
 
 they were to become partners. B failed to purchase the goods, 
 and a judgment creditor of A, who had sued his claim before A 
 conveyed, levied upon the premises. Held, that the conveyance 
 was fraudulent and void as against the judgment creditor. — Wis- 
 ner vs. Farnham, 2 Mich., Gibbs, 472. 
 
 In Mississippi it has 'been held, that an absolute conveyance of 
 property by a person at the time of such conveyance largely in- 
 debted, especially where such indebtedness is about to ripen into 
 judgments, and his subsequent possession and continued enjoyment 
 of the property create such a presumption of fraud as to require 
 clear and satisfactory proof of the fairness and bona fides of the 
 transaction, that a full price has been agreed to be paid for it, is 
 not alone sufficient. —Johnston vs. Dick, 27 Miss., 5 Cush., 277. 
 
 A deed conveying property to secure an existing debt, on which 
 more time is given than is usually necessary to collect it by due 
 course of law, is a fraud on the existing creditors of the grantor 
 and a breach of the Statute of Frauds. — Henderson vs. Downing, 
 24 Miss., 106. 
 
 In Missouri, under the 2d Section of the act concerning fraudu- 
 lent conveyances, indebtedness, at the time of a voluntary convey- 
 ance, is evidence of fraud, although there is some diversity of opin- 
 ion as to the extent of indebtedness necessary to constitute the con- 
 veyance fraudulent. — Woodson vs. Pool, 19 Miss., 4 Bennett, 340. 
 
 Where a father bought property with his own money, and pro- 
 cured it to be conveyed to his minor children, and afterward sold 
 the same for a valuable consideration, it was held, in an action at 
 trover by the minors to recover the value of the property, that the 
 conveyance to the minors was void as tp the subsequent purchaser 
 from him, and that a bond fide purchaser for a valuable considera- 
 tion is protected under Statutes of 13 and 27 Elizabeth, whether he 
 purchase from a fraudulent grantor or grantee. — Howe vs. Ways- 
 man, 12 Miss., 169. 
 
 In New Hampshire, in an indictment on the statute for falsely 
 and fraudulently mortgaging personal property, to prevent it from 
 being taken on legal process for the mortgagor's debts, if the debt 
 or obligation intended to be secured is falsely described in the con- 
 dition of the mortgage, and the mortgage is made in whole or in 
 part for the purpose of preventing the property mortgaged from 
 being seized on legal process, this is in law a fraud on the creditors 
 of the mortgagor, and the making of the mortgage is a violation of 
 the statute. — State vs. Marsh, 36 N. H., 196. 
 
 A conveyance of real estate, absolute in its terms, but made for 
 the purpose of securing a debt, with an agreement or understand- 
 ing between the parties that the land is to be reconveyed upon pay- 
 ment of the debt and interest, is fraudulent and voidable, not only 
 against existing -creditors of the grantor, but against those who may 
 have become such after its execution. — Ladd vs. Wiggin, 35 N. H., 
 421. 
 
 In New Jersey, under the Statute relative to confession of judg- 
 ments, it is held, that no judgment can be entered by confession, 
 
§ 39-42.] INVOLUNTARY BANKRUPTCY. 249 
 
 except for a demand founded on a legal consideration, and for a 
 debt justly and honestly due and owing at the time of the entry of 
 the judgment. — Clapp vs. Ely, 3 Dutch., N. J., 555. 
 
 A purchaser taking a conveyance of a debtor's property, knowing 
 that the debtor is about to abscond, and with a view of aiding him 
 to raise funds for that" purpose, participates in the proposed fraud, 
 and the conveyance is void as against creditors. — Garr. vs. Hill, 1 
 Stockt., N. J., 210. 
 
 A conveyance of chattels, unaccompanied by possession, is void 
 in New Jersey. — Chumar vs. Wood, 1 Halst., 155. 
 
 In New York, an assignment for the benefit of creditors which 
 substantially reserves to the assignors the right to give future pref- 
 erences, is fraudulent and void > as against the creditors of the as- 
 signors who have not assented thereto. — Averill vs. Loucks, 6 Barb., 
 Sup. Ct.,470. 
 
 An assignment directed the assignees to pay the debts specified 
 in the schedules annexed thereto, according to the priority of the 
 several schedules, and provided that such schedules should be made 
 within sixty 'days, and be annexed to and form part of the assign- 
 ment, but did not prescribe what debts shpuld be inserted in the 
 respective schedules, or in what order they should be arranged 
 therein, the preparation of such schedules being left entirely to the 
 discretion of the assignors, and it appeared that such schedules had 
 not been made out and annexed to the assignment previous to its 
 execution, but that they were prepared and annexed at some sub- 
 sequent time. Held, that the assignment was fraudulent and void, 
 and that, even if the schedules were prepared and annexed within 
 the sixty days, this would not render the assignment valid from the 
 time the schedules were annexed. — Averill vs. Loucks, 6 Barb., Sup. 
 Ct., 4T0. 
 
 An assignment by an insolvent debtor of all his property, con- 
 sisting in this case of a large real estate, in trust to pay certain 
 specified creditors, and then, without making provision for other 
 creditors, in trust to +econvey the residue to the debtor, is, as to 
 creditors not provided for in the deed, fraudulent and void upon its 
 face, and can not be made good by showing ;there will be no surplus 
 after paying the creditors provided for. — Barney vs. Griffin, 2 
 Comst., 365. 
 
 An assignment by an insolvent debtor of his estate for the benefit 
 of certain creditors is fraudulent and void in New York, where, by 
 the terms of the deed, the trustees are authorized to sell the prop- 
 erty on credit. — Barney vs. Griffin, 2 Comst., 363. , 
 
 A conveyed personal property to trustees for the benefit of his 
 wife, with authority to them ,to loan its value to A, taking his note. 
 The property continued in the possession of A, who gave his note 
 for the value to the trustees. A afterward assigned the property 
 for the benefit of creditors, making the note to the trustee a pre- 
 ferred debt. Held, that the assignment was fraudulent as against 
 creditors of A, who became such after the note of the trustees was 
 given. — Fielder vs. Day, 2 Sandf., Sup. Ct., 594. 
 
250 THE BANKKUPT LAW. [§ 39-42. 
 
 An assignment of property in trust for the payment of the as- 
 signor's debts authorized the assignees to take possession of the 
 premises forthwith, and within such convenient time as to them 
 should seem meet, by public or private sale, for the best price that 
 could be procured, to convert the property into money ; and by an- 
 other clause authorized the assignees to ask, demand, sue for, and 
 compound and agree for all or any part of the debts due and owing 
 to the assignor as the assignees should deem meet. Held, that the 
 assignment was fraudulent in law and in fact, and therefore void as 
 against creditors. — Woodburn vs. Mosher, 9 Barb., Sup. Ct., 255. 
 
 As to the effect of a voluntary sale of chattels, with an agreement 
 contained in the deed, or out of it, that the vendor may keep pos- 
 session, and how far such a sale will be 4 eeme< i fraudulent and 
 void as delaying and hindering creditors, and the special reasons 
 and circumstances under which such deeds will be upheld, vide 
 Sturtevant vs. Bullard, 9 Johns., 337 ; Ludlow vs. Heard, 19 m£,*221 ; 
 Bisyell vs. Hopkins, 3 Cow., 166 ; Doane vs. Eddy, 16 Wend., 523 ; 
 Butler vs. Van Wyck, 1 Hill, 438. 
 
 An assignment of the property of the assignor in trust for the 
 benefit of creditors, which contains a provision authorizing the as- 
 signee in his discretion to change the order of the preferences given 
 therein to the preferred creditors, is fraudulent and void on its face. 
 — Strong vs. Skinner, 4 Barb., Sup. Ct., 546. 
 
 An assignment, executed by a man in embarrassed or insolvent 
 circumstances of his property in trust for the benefit of creditors, is 
 valid, if it unconditionally and absolutely devotes the whole of the 
 assigned property to the payment of his debts, provided it be made 
 without any intent to hinder, delay, or defraud his creditors ; and if 
 such assignment is valid in its creation, no subsequent fraudulent- or 
 illegal acts of the parties can invalidate it. — Browning vs. Hart, 6 
 Barb., Sup. Ct., 91. 
 
 A, who was largely in debt and embarrassed in his business, and 
 unable to pay his debts, sold his stock of goods in his store to B for 
 $1500, and received from him two notes for*$400 each, payable in 
 one and two years after date, and allowed the residue of the pur- 
 chase-money to be retained by B in payment of a debt of $63 which 
 he owed him, and to secure him for his liabilities as indorser or sure- 
 ty for the then late firm of A & B, but which liabilities were never 
 paid by B, it was known to B at the time of the purchase that A 
 had been prosecuted, and was insolvent. Held, that such sale and 
 purchase were fraudulent and void as against creditors. — Browning 
 vs. Hart, 6 Barb., Sup. Ct., 91. 
 
 A voluntary conveyance by a grantor who is, at the time of mak- 
 ing it, insolvent, is void as respects creditors ; and the land, after the 
 death of the grantor, is assets, by descent or devise, in the hands of 
 his heirs or the devisee of the residuum of his estate, in an action by 
 the creditor against the heirs and devisees. — Manhattan Company 
 vs. Osgood, 15 Johns., 162. And where some of the defendants were 
 also executors of the grantor, and petitioned for a sale of the.grant- 
 or's estate on account of an alleged deficiency of personal assets, 
 
§ 39-42.] INVOLUNTARY BANKRUPTCY. 251 
 
 this was held evidence against the defendants to show the insolv- 
 ency of the grantor. — Id. 
 
 The circumstance that a man was insolvent at the time of exe- 
 cuting a conveyance of land is. a matter to be left to the jury, as 
 tending to influence them in finding that the deed was fraudulent. 
 — M'Connell vs. Brown, Litt. SeL Cas., 459. 
 
 A conveyance by a person indebted at the time, absolute on its 
 face, but intended to enable the grantee to sell the land and pay 
 the debts of the grantor, rendering the surplus, if any, to him, is 
 void as against his creditors. — Jackson vs. Brush, 20 Johns., 6. 
 
 An assignment for the benefit of creditors of the assignor is fraud- 
 ulent and void on its face if it makes provision for only part of the 
 creditors of the assignor, and, without making any provision for the 
 rest of the creditors, directs the assignee to reassign to the assign- 
 or the surplus, if any remains after satisfying the debts " provided 
 for in the assignment. — Story vs. Skinner, 4 Barb., Sup. Ct., 546. 
 
 In North Carolina the Statute of 1840 relative to such convey- 
 ances applies as well to those made before its passage as to those 
 subsequently made. — Arnett vs. "Wanett, 6 Iredell, 41. 
 
 Under the 1 3 Elizabeth, in order to avoid voluntary conveyances 
 to children, it is necessary to show that the maker of the deed wa§ 
 indebted at the time, or so soon afterward as to co*nnect the purpose 
 of making the deed with that of contracting the debt and defeating 
 it. — Smith vs. Reavis, 7 1redell, 341. 
 
 In this State fraudulent conveyances are made absolutely void by 
 statute, and are not merely avoidable. — Flynn vs. Williams, 7 Ire- 
 dell, 32. " • 
 
 In order to make a deed of trust, conveying property for the sat- 
 isfaction of certain creditors, valid as against judgment creditors of 
 the grantor, it not being shown that, independent of the property 
 conveyed, the grantor had enough at the dates of the deed to sat- 
 isfy other creditors, the party relying upon the deed must produce 
 evidence of the existence of the debts therein mentioned, or at least 
 of such an amount of them as will show, primd facie, that the trans- 
 action was bond fide. The onus of proving fraud alleged to im- 
 peach the deed is then thrown upon the party alleging it. — Feimes- 
 tervs. M'Rorie, 12lred., 287. 
 
 Where an insolvent debtor transfers his- effects to an infant, on 
 an agreement made bond fide that the infant would pay certain 
 debts contracted by them both as a firm, without providing securi- 
 ty for the performance of such stipulation, such transfer is fraudu- 
 lent in law, and void as against creditors. — M'Corkle vs. Hammond, 
 2 Jones, Law 1ST. C, 444. 
 
 -Where there was an existing debt, and the debtor made a volun- 
 tary conveyance, and afterward became insolvent, so that the cred- 
 itor at the time must lose his money unless the property so convey- 
 ed could be reached, such voluntary conveyance is presumed, as a 
 matter of law, to be fraudulent. — Black vs. Sanders, 1 Jones, Law 
 K C, 67. 
 
 A provision in a deed of trust for the postponement of the sale of 
 
252 THE BANKRUPT LAW. [§ 39-42. 
 
 the property for nine months, and then to be sold by the trustee on 
 a credit of six months, is not a fraud in law so as to require the 
 court to declare such deed void upon its face. — Gilmer vs. Earn- 
 hardt, 1 Jones, Law N". C, 559. The deed in such a case might not 
 be absolutely void, but evidence of extrinsic circumstances of fraud 
 and of the intent of the debtor, given dehors the deed, might render 
 it void. 
 
 By the act of 1840, c. 28, a purchaser from a grantor, who has be- 
 fore granted the same premises fraudulently to another grantee, 
 will only be protected when he has bought for a valuable con- 
 sideration, and without notice of the prior fraudulent deed. — Heatt 
 vs. Wade, 8 Ired., 340. 
 
 As to retaining possession in North Carolina, see Vick vs. Kegs, 
 2 Hayn., 126 ; Falkner vs. Perkins, id., 224 ; Smith vs. Niel, 1 Hawks, 
 341 ; Trotter vs. Howard, id., 320 ; Howell vs. Elliott, 1 Badg. & 
 Dev., 76. 
 
 In Ohio it has been held, that a person largely indebted can not 
 give away his property, without amply providing for the payment 
 of his debts. Such a gift is never upheld, unless property is re- 
 tained, clearly and beyond doubt, sufficient to pay all the donor's 
 ftebts at the time of the gift. — Crumbaugh vs. Kugler, 2 Ohio, U. S., 
 373. 
 
 Such a gift would be construed to be a gift made by the donor 
 with intent to hinder and delay creditors, and would be an act of 
 bankruptcy within the meaning of this section. 
 
 A mortgage given to a creditor to secure the debt of the mort- 
 gagor, and in order to prefer such creditor, is not fraudulent and 
 void. — Kemp vs. Walker, 16 Ohio, 118. 
 
 A conveyance made to secure notes tainted with usury, and also 
 notes not subject to any objection, is void only to the extent of 
 the usurious notes, and may be supported as to the residue. — Mor- 
 ris vs. Way, 16 Ohio, 469. 
 
 In Pennsylvania, to render a voluntary conveyance bad as to 
 subsequent creditors, it must appear that it was made in contem- 
 plation of future indebtedness. — Waterson vs. Wilson, 1 Grant's 
 Cases, Penn., 74. 
 
 A conveyance of real estate by a father to his son, with the in- 
 tention of delaying and hindering creditors, is void, whether the 
 consideration amounts to the value of the land sold or not ; and, in 
 such case, the son can not set up an outstanding title to the land 
 in another against the purchaser at a sheriff's sale of the father's 
 title, the father being in possession at the time of the sale. — Zerbe 
 vs. Scheller, 16 Penn. State R, 4 Harris, 488. 
 
 A deed, whether voluntary and without consideration, or for a 
 valuable consideration, made upon a parol trust, declared at the time 
 of its execution that the grantee should hold in trust for the chil- 
 dren of the grantor, if intended as a fraud upon the grantor's cred- 
 itors, is void as against the creditors, but is valid as against the 
 grantor and the children for whose benefit it was designed, and the 
 grantee will be entitled to hold as against the children or their 
 
§ 39-42.] INVOLUNTARY BANKRUPTCY. 253 
 
 vendee ; and this, whether the trust is by parol or in writing, and 
 whether the grantee of the children is in possession or not. — Mur- 
 phy vs. Hubert, 1,6 Penn. State R., 4 Harris, 50. 
 
 A conveyance by a debtor, for a nominal consideration, of all his 
 real estate in trust, to sell and apply the proceeds to such persons 
 and in such proportions as he should, by writing, under his hand 
 appoint, is fraudulent as against a prior creditor, even though the 
 debtor, by deed made a few days after, and recorded at the same 
 time with the conveyance in trust, and before such prior creditor 
 has recovered judgment, appointed the proceeds first to certain 
 creditors, and then to creditors generally. — Mitchell vs. Stiles, 1 3 
 Penn. State R, 1 Harris, 306. 
 
 A conveyance of real estate made with the intent, known to the 
 grantee, to delay, defeat, and hinder a particular creditor of the 
 grantor from obtaining his debt, is fraudulent and void as against 
 such creditor, though made for a full and valuable consideration. — 
 Ashmead vs. Hean, 13 Penn. State R, 1 Harris, 584. 
 
 If a transfer of property would have the effect to prevent the 
 collection of the grantor's debts, a grantee, without consideration, 
 whether there was fraud on his part or not, would take no title as 
 against creditors. — Clark vs. Depew, 25 Penn. State R, 1 Casey; 
 509. 
 
 The declarations of a grantor as to a fraud on his part, are not 
 evidence against a bond fide purchaser for value, though they were 
 made before the execution of his conveyance, the purchaser having 
 no knowledge of the grantor's fraudulent design.— M'Elfatrick vs. 
 Hicks, 21 P(3hn., 9 Harris, 409. 
 
 Although the fraud of the grantor would not defeat the title of 
 a bond fide purchaser without notice of the fraud or intended fraud 
 of such grantor, the execution of such a deed by a debtor would 
 be evidence of an act of bankruptcy under the provisions of this 
 section. 
 
 Where the conveyance of land is alleged to be fraudulent, the 
 conduct and declarations of the grantor at that time relative to 
 other property of his claimed by the grantee, though made in the 
 grantee's absence^ are admissible to establish fraud. — Covanhoven 
 vs. Hart, 21 Penn., 9 Harris, 495. 
 
 The pecuniary condition of the parties to an alleged fraudulent 
 transfer at and about the time of the transactions under investiga- 
 tion, is generally competent and important proof, as it enables the 
 jury to judge of the reasonableness of their conduct; and therefore 
 where the alleged consideration of a conveyance of land is a previ- 
 ous indebtedness of the grantor to the grantee for money loaned, it 
 is competent for the latter to show that the former, who had opene/i 
 a mercantile establishment near the time when the loans were made, 
 was not possessed of any considerable means of property. Vide 
 case last cited. 
 
 As to how far possession by a mortgagor or vendor, after mort- 
 gage or sale, is evidence of fraud in Pennsylvania, vide Young vs. 
 M'Clure, 2 Watts Ter„, 147 ; Dawes vs. Cope, 4 Binn., 258 ; Babb vs. 
 
254 THE BANKRUPT LAW. [§ 29-42. 
 
 Clenson, 10 S. & R, 419; Shaw vs. Levy, IT id, 99; Hower Vs. 
 Gessman, id, 251 ; Streefer vs. Eckhart, 2 Whart., 302 ; Hoofsmith 
 vs. Cope, 6 Whart, 53; Levy vs. Wallis, 4 DalL, 167; Waters vs. 
 M'Clellan, id, 208 ; Chancellor vs. Phillips, id, 213,; Myers vs. Har- 
 vey, 2 Perm, R., 478'; Clow vs. Woods, 4 S. & R, 275; Welsh vs. 
 Hayden, 1 Perm. R, 57 ; S. P., 8 S & R, 510. 
 
 In Tennessee, a conveyance of land made while an action of slan- 
 der was pending against the vendor, for the purpose of avoiding 
 the payment which might be recovered in said action, the vendee 
 having- full knowledge of the circumstances, and the fact of a pay- 
 ment of consideration being doubtful, is fraudulent and void. The 
 plaintiff in the slander suit having recovered judgment, brought his 
 bill* to set aside the conveyance and subject the land to the pay- 
 ment of the judgment, and it was decreed accordingly. — Farns- 
 worth vs. Bell, 5 Sneed, Tenn., 531. 
 
 As to retaining possession in Tennessee and Kentucky, see Ragan 
 vs. Kennedy, 1 Tenn. R, 91 ; Callen vs. Thompson, 3 Yerg., 475 ; 
 Manley vs. Killough, 7 Yerg., 440 ; Mitchell vs. Beal, 8 id., 142 ; 
 Bayley vs. Smithers, 1 Litt., 112 ; Goldsbury vs. May, id, 256 ; 
 Handley vs. Webb, 3 J. J. Marsh, 643 ; Walsh vs. Medley, 1 Dana, 
 269; Brummel vs. Stockton, 3 Dana, 134; Laughlin vs. Ferguson, 
 6 id., 117 ; C. Dana, 120 ; 5 Litt.', 243 ; 1 J. J. Marsh, 282 ; 3 id., 453 ; 
 3 Dana, 204. 
 
 In Texas, a voluntary conveyance to defraud creditors is void as 
 to subsequent bond fide purchasers' without notice. But purchas- 
 ers for a valuable consideration with notice are not protected by 
 the statute to prevent frauds, etc. — Hart. Dig., art. 1452 ; Fowler vs. 
 Stoneum, 11 Texas, 478. 
 
 A fraudulent conveyance can be defeated only by creditors, or 
 purchasers without notice, and not by the administrator of the 
 maker of the conveyance. And where an action is brought by 
 creditors against the administrator and the fraudulent vendees, the 
 creditors may recover as against the latter, even if by any accident 
 they fail as to the,former. — Cobb vs. Norwood, 11 Texas, 556. 
 
 In Vermont, a conveyance by a debtor of all his property to se- 
 cure the future support of himself and his family, without making 
 provision for the payment of all his debts, is fraudulent in law as 
 to the creditors for whom no provision is made. — Jones vs. Spear, 
 21 Vt.,_6 Washb., 426. 
 
 In Virginia, a conveyance by a debtor to a trustee to secure A, 
 who is surety or indorser for the debtor and all other creditors in 
 law, without particularly describing their debts, with the right to 
 contract other debts to be secured by the deed, and in case of pay- ■ 
 ment by the debtor of debts on which A was surety, then he to be 
 a creditor under the deed, with the privilege also to the debtor of 
 holding the property sixteen months and ■selling the same, paying 
 over the proceeds to the trustee, was held to be fraudulent on its 
 face. — Spence vs. Bagwell, 6 Gratt., 444. 
 
 Where a deed conveyed a stock of goods and a store-house for 
 the current year in trust to pay certain debts, but with a proviso 
 
§ 39-42.] INVOLUNTARY BANKRUPTCY. 255 
 
 that the grantor should keep possession of and sell the goods in 
 the ordinary course of his business, and occupy the store " until de- 
 fault in the payment of any of the debts secured, or until the trustee 
 should be requested by any of the said creditors to close the deed 
 by a sale," it was held, that the deed was fraudulent per se, and null 
 and void against creditors. — Addington vs. Etheridge, 12 Gratt., 
 Va., 436. 
 
 In Virginia, a deed of trust was executed conveying land, slaves, 
 crops on hand and made, and crops growing to secure bond fide 
 creditors, not to be enforced till the end of two years, the profits to 
 be received by A, and the proceeds of sale, after paying the debts 
 secured, to be paid to the grantor, which deed was executed with- 
 out the knowledge of the creditors. It was held, that such a deed 
 was not fraudulent. — Dance vs. Seaman, 11 Gratt. ,'Virg., 778. 
 
 An absolute bill of sale of personal property, with possession con- 
 tinuing with the vendor, is fraudulent per se as to creditors, with- 
 out other evidence of fraud', or being connected with other circum- 
 stances. — Alexander vs. Deneale, 2 Munf., 311 ; Robertson vs. Ewell, 
 3 id., 1 ; Land vs. Jeffries, 5 Rand., 211 ; Clayton, vs. Anthony, 6 id., 
 285 ; Snyder vs. Gee, 4 Leigh., 535. 
 
 A deed of arrangement between a debtor and one of his credit- 
 ors, conveying all the property of the debtor to the creditor, and 
 which deed the debtor has power to revoke and alter at any time, 
 and attempts to use it as a shield to protect himself against the 
 claims of his other creditors, is fraudulent and void against credit- 
 ors whose interests are affected by the deed, notwithstanding the 
 deed, upon the face of it, purports to be for the benefit of all the 
 creditors. Such a deed is, in truth, for the benefit of the debtor ; 
 and if a creditor accepts it, he takes it, not for his own benefit, but 
 for the purpose of carrying out the views and objects of the debtor 
 in fraud of the other creditors. — Smith vs. Hurst, 15 Eng. Law and 
 Eq., 520. 
 
 A conveyance by a debtor to his creditor in satisfaction of the 
 debt, and the residue of the purchase-money secured by judgment 
 bonds payable within six years, and to be applied in payment of 
 other creditors, is fraudulent within the 13 th Eliz. — Kepner vs. 
 Burkhardt, 5 Barr., 478. 
 
 A secret conveyance of personal property by a wife on the eve 
 of her marriage, in trust for the use of her children by a former 
 marriage, is fraudulent and void as against her husband. — Manes 
 vs. Durant, 2 Rich., Eq., 404. 
 
 Any conveyance which materially hinders and delays creditors 
 in the assertion of their rights, especially if there is any reserva- 
 tion of a benefit to the grantor, is fraudulent and- void as to credit- 
 ors. — Arthur vs. Commercial and. Railroad Bank r 9 S. & M., 394. 
 
 If a debtor, in failing' circumstances, whether an individual or a 
 corporation, conveys all his property to trustees to hold for an in- 
 definite period, until out of the profits all his debts have been paid, 
 and then to be reconveyed, the conveyance is fraudulent and void 
 as to creditors. — Id. 
 
256 THE BANKRUPT LAW. [§ 39-42. 
 
 A deed of trust, as security for a debt, is primd facie valid, and a 
 claimant under such deed is. not bound to show a consideration for 
 it in the first instance, and a party impeaching such deed must do 
 so by proof. — Brown vs. Bartie, 10 S. & M., 268. 
 
 A bill of sale of personal property, executed and acknowledged, 
 but not recorded, is void as to creditors if made to their injury, but 
 is binding on the donor, her executors, etc., and all persons claiming 
 under her or them, both at common law and under the Maryland 
 act of 1729, c. 8, § 6. The executor of the donor has no right to 
 the goods, and is estopped to allege that the deed is a fraud upon 
 the creditors. The property is not' assets in his hands, and he is 
 not accountable for it as executor. — Dorsey vs. Smithson, 6 H. & 
 J., 61. 
 
 A deed conveying all the grantor's property to Certain trustees 
 in trust: first, to defray the expense attending the execution of the 
 trust ; second, to the payment of the several creditors named in the 
 schedule annexed to the deed ; third, to the payment of the claims of 
 such creditors as shall, on or before a given day, execute and deliver 
 to the trustees full and absolute releases and acquittances of such 
 claims ; and fourth, if any surplus shall remain, to apply the same to 
 the satisfaction of the claims of all other creditors of the grantor, with- 
 out distinction or priority, was held to be fraudulent and void, both 
 at common law and under the Statute of the 13th Elizabeth But 
 see note at the end of the case. — Albert vs. Winn, 1 Gill, 446. 
 
 Upon review of all the authorities, it was the opinion of the 
 court in this case that a deed which does not fairly devote the 
 property of the debtor in desperate circumstances to the payment 
 of his creditors, but prescribes to them the terms upon which they 
 shall receive part payment, is in law fraudulent 'and void. 
 
 Where a conveyance of real estate is good in part and bad in 
 part, as against the provisions of a statute, it is void in toto, al- 
 though there be no fraud intended. Vide case last cited. 
 
 Where a sale of slaves was made to his mother by a person in 
 embarrassed circumstances just before the term of court at which 
 several judgments were rendered against him, and there appeared 
 to be many suspicious circumstances attending the transfer, and no 
 proof of consideration except the evidence of the vendor, it was 
 held that the sale was fraudulent against his creditors. — Walton 
 vs. Kennedy, 3.Strobh, Eq., 1. 
 
 A and B were insolvent, and owned several large tracts of land; 
 and it was agreed between them, their creditors, and their father, 
 who was. also largely involved with them, that the sheriff should 
 sell the land for the purpose of making title ; and it was understood 
 that C, a brother of A and B, would act as agent of the creditors 
 and debtors of the sales. D had bargained for the purchase of a 
 certain tract with the father, which tract C bid in at the sale for a 
 nominal consideration; and for another tract there were several 
 bids at the sale, but it was finally knocked down to C for a small 
 consideration. The other tracts were all bid in by him for merely 
 nominal considerations. The bid for D's lot was transferred to 
 
§ 39-42.] INVOLUNTARY BANKRUPTCY. 257 
 
 him, and he took the deed. Held, that the Bale to D and the sale 
 on which there we/e several bids should stand, the proceeds going 
 for the benefit of the creditors of A and B ; but that the other sales 
 must be annulled as fraudulent, and resales were ordered. — Simon- 
 ton vs. Davis, 4 Strobh., Eq., 133. 
 
 A settlement by a debtor upon his wife and children, for no val- 
 uable consideration, of such an amount of property as to impair his 
 means, so as to delay and hinder his creditors, is as to them void, 
 although made without any fraudulent intent. — Parish vs. Mur- 
 phree, 13 How., IT. S., 92. 
 
 It is no evidence of fraud, which will avail a subsequent pur- 
 chaser, that one who has conveyed property to a trustee for the 
 benefit of his wife and children remains in possession of the proper- 
 ty.— Hundall vs. Teasdall, 1 M'Cord, 227. 
 
 The pendency of suits against the vendor at the time of sale, and 
 the retention of the thing sold by him, are almost conclusive evi- 
 dence of fraud. — Smith vs. Henry, Bailey, 118. See Kennedy vs. 
 Ross, 4 Const., R. T. C, 125 ; Hudnal vs. Wilder, 4 M'Cord, 294; 
 Anderson vs. Fuller, 1 M'Mullan, 27. 
 
 A vendor's retaining possession after an absolute and uncondi- 
 tional sale of chattels, is only primd facie evidence of fraud. — Terry 
 vs. Belcher, 1 Bailey, 568. 
 
 It will be observed that this act of bankruptcy may be commit- 
 ted by the bankrupt within the United States or elsewhere. The 
 United States Bankrupt Act of 1841 did not contain such a pro- 
 vision, and it had been decided in the English Courts where the 
 Bankrupt Acts did not contain such enactments, that conveyances 
 executed out of England were not within the meaning of those acts. 
 — Inglish vs. Grant, 5 Term Rep., 530. 
 
 The same , words, " or elsewhere," have been inserted in all the 
 recent English acts. Lord Mansfield held, that there was a locali- 
 ty in .acts of bankruptcy. The trader, whether a native or a for- 
 eigner, must be in England when he commits the act of bankruptcy 
 upon which the commission is founded. By the words of this sec- 
 tion, however, the act of bankruptcy is", complete, no matter where 
 the assignment, etc., may have been made or the transaction have 
 taken place. 
 
 It will be seen, therefore, that under this section a debtor com- 
 mits an act of bankruptcy by making an assignment, a gift, a sale, 
 or a conveyance or transfer of his estate, property, rights, or cred- 
 its, to delay, defraud, or hinder his creditors, whether such transac- 
 tion takes place within the United States or in any foreign coun- 
 try. 
 
 Sixth. — Having been arrested and held in custody under, or by 
 virtue of mesne process or execution, issued out of any court of any 
 State, ^District, or Territory within which such debtor resides or has 
 property, founded upon a demand in its nature provable against a 
 bankrupt's estate wider this act, and for a sum exceeding one hund- 
 red dollars, and such process is remaining in force and not discharged 
 by payment, or in any other manner provided by the law of such 
 
 R 
 
258 THE BANKRUPT LAW. [§ 39-42. 
 
 State,, District, or Territory applicable thereto, for a period of seven 
 days. 
 
 There must be an actual arrest and holding in custody for a pe- 
 riod of seven days, and the act of bankruptcy is not complete until 
 the seven days have expired. — Higgins vs. M' Adams, 37 Law J., 1. 
 
 The custody must be either under mesne, or final process, issued 
 out of any court of any State, District, or Territory within which 
 such debtor resides or has property. The demand, in respect of 
 which such process has issued, must be in its nature provable under 
 the estate of the debtor when bankrupt. The amount of such de- 
 mand must exceed the sum of one hundred dollars. The process 
 must remain in force, and not be discharged by payment, or in any 
 other manner provided by the law of such State, District, or Terri- 
 tory applicable thereto, for the period of seven days. This was not 
 created an act of .bankruptcy by the United States Bankrupt Act 
 of 1841, and has been adopted from the English Bankrupt Acts. 
 Vide 12 & 13 Vict., chap.' 106, § 39. The lying in prison, as it is 
 there called, must be for a period of twenty-one days. The time of 
 remaining in custody must be calculated from the arrest, the day 
 of the arrest being included. — Glassington vs. Rawlins, 3 East., 407. 
 In case of a surrender in discharge of bail, from the day of the sur- 
 render. — Tribe vs. Webber, Willes, 464. Where the debtor has 
 been suffered by the sheriff to go at large after the arrest, the seven 
 days are to be reckoned from his return into custody. — Barnard vs. 
 Palmer, 1 Camp., 509. The principle upon which the remaining in 
 custody is declared an act of bankruptcy is, that it is a test of the 
 insolvency of the debtor. If a debtor be arrested and detained in 
 custody in any State, District, or Territory in which he does not re- 
 side or has no property, such arrest and detention in custody would 
 not be, under this provision, an act of bankruptcy. 
 
 There needs no intent to delay creditors on the part of the trader 
 to constitute this act an act of bankruptcy. The arrest must be a 
 legal arrest, and it will be insufficient to ground an act of bank- 
 ruptcy, however lawfully it subsequently becomes, if it were illegal 
 in its inception. — Deac, 77. The debt for which the arrest is made 
 must be a real subsisting legal debt. — Eden, 35. Therefore, an ar- 
 rest by an executor before probate is insufficient. — 3 Lev., 439 ; S. 
 C, T. Raym., 478. So arrest on a bond, before the day of judgment, 
 and so is an arrest on an equitable demand, when the remedy is by 
 bill for specific performance. — Ex parte Hillyard, 1 Atk, 147 ; 2 
 Ves., 407 ; Eden, B. L., 35. A penalty due to the crown is a suffi- 
 cient debt.— Cobb vs. Symonds, 1 D. & R, 111 ; S. C, 5 B. & A, 516. 
 And a party lying in prison under a magistrate's warrant of com- 
 mitment, in force at the time he was under civil process for debt, is 
 an act of bankruptcy. — Rex vs. Page, 7 Pir., 616 : 3 Moo., 656 : S. C, 
 1 B. & B., 368 ; Eden, 34. 
 
 The remaining in custody must be for the uninterrupted period 
 of seven days, and the bankrupt must be in actual custody seven 
 days, under the arrest or commitment ; and where an interruption 
 has taken place, the act of bankruptcy will have relation to the sub- 
 
§ 39-42.] INVOLUNTARY BANKRUPTCY. 259 
 
 sequent imprisonment. — King vs. Leith, 2 T. R., 141 ; Coppendale 
 vs. Brigden, 2 Burr., 814. As where a trader was arrested, and, be- 
 fore the expiration of the seven days, is hailed out, and afterward 
 render in discharge of his bail and remain in custody seven days, it 
 is the second imprisonment from the time of his render which con- 
 stitutes the act of bankruptcy, Tribe vs. Webber, Willes, 464 ; ex 
 parte Dufresne, 1 B. & B., 50 ; Cane vs. Coleman, 1 Salk., 109 ; or, 
 where he is allowed to go at large for a few days, the period is com- 
 puted from his return. — Barnard vs. Palmer, 1 Camp., 509. But 
 where the bail was matter of form, and put in without justification, 
 only with the view of turning the party over from the custody of 
 one party to that of another, it was considered a continuation of 
 the same imprisonment, and the seven days were reckoned from the 
 first arrest, — Rose vs. Green, 1 Burr., 437. The word prison does 
 not necessarily mean the county jail, or any of the county prisons; 
 it will suflice that the bankrupt was in actual custody during the 
 seven days. Where a trader was arrested in his own house, but, 
 being too ill to be removed, remained there in custody of the fol- 
 lower of the sheriff's officer, and was afterward imprisoned, the pe- 
 riod was held to commence from the day of the arrest, Stevens vs. 
 Jackson, 1 Marsh, 464 ; S. C, 4 Camp., 164 ; but see Benton vs. Sut- 
 ton, 1 B. & P., 24 ; and so, where the party had the benefit of the 
 day rules, the period was not considered to be interrupted, for he 
 was still deemed to be in custody. — Soames vs. Watts, 1 C.&P., 
 400. Where a trader was in custody at the suit of one plaintiff, 
 and was detained at the suit of another, the period was computed 
 from the arrest. — Coppendale vs. Brigden, 2 Burr., 814. The docket 
 being struck previous to the expiration of the seven days, will not 
 affect the act of bankruptcy ; but the bankruptcy can not be sup- 
 ported unless issued subsequent thereto. — Gordon vs. Wilkinson, 8 
 T. R., 507 ; ex parte Dufresne, 1 V. & B., 51 ; 1 Rose, 333. The day 
 of the arrest or going to prison is reckoned the first day, or part of 
 the seven days, and on the termination of the whole of the last day 
 the act of bankruptcy will be complete, Glassington vs. Rawlins, 
 3 East., 407 ; Saunderson vs. Greg, 3 Stark., 72, but does not relate 
 back to the first day, as under the 21 Jac, 1, c. 19, but only to the 
 last. — Moser vs. Newman, 6 Bing., 556 ; Higgins vs. M'Adam, 3 Y. 
 & J., 1 ; Tucker vs. Barrow, 3 C. & P., 85. 
 
 In order to prove an act of bankruptcy by lying in prison, the ar- 
 rest, detention, and cause of such arrest or detention, must be proved. 
 The arrest may be proved by a copy of the writ and the return of 
 cepi corpus, or by proof of the writ, the warrant, and the arrest. 
 The detention may be proved by producing the prison-book, con- 
 taining entries of the date of the several commitments and dis- 
 charges to and from prison, Rex vs. Aickles, 1 Leach, 436 ; but they 
 are not evidence of the cause of the commitment, for the commit- 
 ment itself is higher proof, and, if in existence, ought to be pro- 
 duced. — Salter vs. Thomas, 3 B. & P., 188. The cause of commit- 
 ment may be proved by the production of the committitur. The 
 English authorities are thus cited by the author, the provision not 
 
260 THE BANKRUPT LAW. [§ 39-42. 
 
 having existed in either of the previous United States Bankrupt 
 Acts. 
 
 An arrest and detention in custody for any tort, such as personal 
 injuries, libel, assault, criminal conversation, or other cause of ac- 
 tion ejusdem generis, for -which the laws of the various States author- 
 ize arrest on mesne process, or in execution, will not be an act of 
 bankruptcy ; the section enacts, that it must be on a demand in its 
 nature provable under the bankruptcy. 
 
 Seventh. — Saving been actually imprisoned for more than seven 
 days in a civil action founded on contract for the sum of one hund- 
 red dollars or upward. 
 
 It may be questionable whether the former paragraph of the sec- 
 tion with respect to the " process having been issued out of the 
 court of a State, District, or Territory within which the debtor re- 
 sides or has property," is to be incorporated with this, or whether 
 an actual imprisonment under process issued by the court of any 
 State, District, or Territory wherever the debtor may happen to 
 be, for more than seven days, will be an act of bankruptcy. Wheth- 
 er, in fact, a debtor from the State of Pennsylvania, residing there, 
 or having property there, if arrested in the State of New York by 
 process from the court of the latter State, commits an act of bank- 
 ruptcy by lying in prison in New York for more than seven days ? 
 If the imprisonment for more than seven days, the inability to pro- 
 cure bail, if under mesne process, or to pay the amount of the exe- 
 cution, is a test of insolvency, such imprisonment in any State would 
 afford the same evidence, and this may be probably the proper 
 construction of this subdivision of the section. It was held, under 
 the English Bankrupt Act from which this provision is taken, that 
 where a debtor was taken in execution under a judgment, and sent 
 to the (jounty jail, and also under a coroner's warrant which had 
 been issued against him, in the mean time, on a criminal charge, and 
 he continued in prison for more than twenty-one days under both 
 the judgment and the warrant, that such remaining in prison con- 
 stituted an act of bankruptcy. — Mx, parte Crabb, 39 Eng. Law and 
 Eq., 397. 
 
 The action must be a civil action, founded upon contract, express 
 or implied, and the amount for which the debtor is imprisoned must 
 be one hundred dollars at the least. 
 
 Eighth. — Who being bankrupt or insolvent, or in contemplation 
 of bankruptcy or insolvency, shall make any payment, gift, grant, 
 sale, conveyance, or transfer of money or other property, estate, rights, 
 or credits, or give any warrant to confess judgment, or procure or 
 suffer his property to be taken on legal process with intent to give a 
 preference to one or more of his creditors, or to any person or per- 
 sons who are or may be liable for him as indorsers, bail, sureties, or 
 otherwise, or with the intent by such disposition of his property to 
 defeat or delay the operation of this act. 
 
 The 35th Section having declared all fraudulent preferences and 
 conveyances void, this section enacts that they shall also constitute 
 acts of bankruptcy. The subject has been fully treated in the notes 
 to that section, to which the reader is referred. 
 
§39-42.] INYOLUNTAEY BANKRUPTCY. 261 
 
 The Bankrupt Act of 1841 created substantially the same act of 
 bankruptcy. Procuring or suffering his property to be taken on 
 legal process, either with the intent to prefer a particular creditor, 
 or to defeat or delay the operation of the act, is made an act of 
 bankruptcy. Until the property has been actually taken by legal 
 process the act of bankruptcy is not complete, and it is only from 
 that time that the rights of the assignees accrue, Belcher vs. Gum- 
 mort, 9 Q. B., 873 ; and such an act of bankruptcy is not carried 
 back to any earlier period. A fraudulent judgment and execution, 
 or any collusion in assisting a creditor to obtain such judgment at 
 an earlier date than in due course of law, constitute an act of bank- 
 ruptcy. The words of the section are comprehensive, including any 
 legal process upon which property can be taken. There is a dis- 
 tinction between a debtor's procuring and suffering his property to 
 be taken. Vide Gore vs. Lloyd, 12 M. & W., 463 ; Gibson vs. King, 
 Car. & M., 458. 
 
 A debtor, by procuring bills of exchange, his property to be 
 taken in execution with intent to defeat his creditors, commits an 
 act of bankruptcy. — Edwards vs. Cooper, 11 Q. B., 33. Merely al- 
 lowing judgment to go by default, under which the debtor's goods 
 are taken in execution, if the debtor does no more, is not procuring 
 the goods to be taken in execution so as to constitute an act of 
 bankruptcy. Vide case last cited. Where a creditor, being press- 
 ed by his landlord for rent due, gave him a warrant to confess judg- 
 ment, with an understanding that judgment should be entered up, 
 but not be executed unless other executions came against his prop- 
 erty ; other writs did come in, and the goods were taken in exe- 
 cution upon the judgment so confessed, this was held not to be an 
 act of bankruptcy, as procuring the goods to be taken. — Gore vs. 
 Lloyd, 12 Mee. & W., 463 ; 12 Law J., Exch., 366. The legal proc- 
 ess, whether attachment, execution, or whatever mode of seizure, 
 must be shown to have been procured by the debtor with the in- 
 tent to defeat or delay his creditors. Vide, for the evidence of such 
 fact, 13 C. B., 285 ; 13 Law J., Exch., 366 ; and the cases cited in 
 the notes to Section 29, "Order of Discharge." 
 
 Ninth. — Who being a banker, merchant, or trader, has fraudu- 
 lently stopped or suspended, and not resumed, payment of his com- 
 mercial paper withingi period of fourteen days. 
 
 This act of bankruptcy is confined exclusively to bankers, mer- 
 chants, and other traders. It is the first time in legislation here or 
 in England that such an act of bankruptcy has been created. By 
 the English Bankrupt Acts, the suspension of payment by a bank- 
 er, merchant, or trader of his commercial paper and liabilities, is 
 resolved into an act of bankruptcy by summoning him before the 
 Court of Bankruptcy, and if the debt or demand be not paid or 
 arranged to the satisfaction of the creditor within a prescribed 
 time, the non-arrangement or non-payment within such prescribed 
 period constitutes an act of bankruptcy. 
 
 This provision of the section will apply immediately to the case 
 of banking and trading corporations and joint-stock companies. 
 Vide Section 37 and notes. 
 
262* THE BANKRUPT LAW. [§ 39-42. 
 
 The provision will also include any banker, merchant, or trader 
 who may he liable upon bills of exchange or promissory notes which 
 are usually denominated commercial paper. The act of bankruptcy 
 is confined to fraudulently stopping or suspending, and not resum- 
 ing payment of commercial paper within a period of fourteen days. 
 It will not apply, therefore, to stopping or suspending payment of 
 usual and ordinary debts which have not assumed the form of ne- 
 gotiable securities. 
 
 It will be observed that the stopping and suspension must have 
 occurred with a fraudulent intent, and the creditor who petitions 
 against any banker, merchant, or trader for adjudication in bank- 
 ruptcy must establish that fact. 
 
 Mere inability on the part of a banker, merchant, or trader to 
 ■meet his commercial paper at maturity is not created an act of 
 bankruptcy. " If, therefore, such suspension of payment and non- 
 resumption of payment within fourteen days can be proved to have 
 been caused by circumstances over which the debtor had no control, 
 either from temporary pressure, or embarrassment, or the failure of 
 other parties, by which he has become involved, without any fraud 
 upon his part, such a transaction would not amount to an act of 
 bankruptcy. 
 
 Where a creditor, availing himself of this provision of the section, 
 seeks a compulsory adjudication of bankruptcy by reason of the 
 debtor having committed this particular act of bankruptcy, he must 
 establish the fact that the debt was incurred by the debtor in the 
 character of a merchant, a banker, or a trader. The two former 
 definitions need no comment, but it will be necessary to ascertain 
 accurately what constitutes a trader within the meaning of the 
 Bankrupt Law. Vide notes to this section, title " What consti- 
 tutes a Trading," infra. 
 
 Right of the Assignees to recover from the Fraudulent Assignee or 
 Transferree. — In the event of an adjudication in bankruptcy, the as- 
 signees under the debtor's estate can recover back the money or 
 other property so paid, conveyed, sold, assigned, or transferred con- 
 trary to the provisions of this act; but the assignees must establish 
 either that the person receiving such payment or conveyance had 
 reasonable cause to believe that' a fraud on this act was intended, 
 or that the debtor was insolvent. Vide notes to Section 35, title 
 "Fraudulent Preferences and Conveyances," where this subject is 
 discussed. 
 
 Proof by such Creditor not allowed. — Any creditor who has re- 
 ceived any payment or conveyance, or any goods, money, or proper- 
 ty from the debtor under any such conveyance, gift, sale, or trans- 
 fer made by such debtor to him within six months before the bank- 
 ruptcy, and where such transaction amounts to an act of bankruptcy 
 by the debtor, and where the creditor had reasonable cause to be- 
 lieve that a fraud on the act was intended by the debtor, or that 
 the debtor was insolvent at the time of the transaction, will not be 
 allowed to prove his debt under the bankrupt's estate. 
 
 Proceedings for Adjudication. — It will be remembered that a peti- 
 
§39^i2.] INVOLUNTARY BANKRUPTCY. 263 
 
 tion for a compulsory adjudication in bankruptcy must be presented 
 or filed within six months after the commission by the debtor of 
 any one or more of the acts of bankruptcy before enumerated. 
 
 The form of the petition, and the affidavits which should accom- 
 pany it, will be prescribed by the general rules and orders. 
 
 Upon the court being satisfied that sufficient grounds exist, an 
 order is to be entered requiring the debtor to appear and show 
 cause, at a time to be specified in the order, not less than five days 
 from the service thereof, why the prayer of the petition should not 
 be granted. 
 
 A copy of the petition, and of the order requiring the debtor to 
 show cause, is to be served either upon the debtor personally, or by 
 leaving the same at his last or usual place of abode. If such debtor 
 can not be found, or his place of residence ascertained, service is to 
 be made by such publication as the court may direct. 
 
 In the event of a creditor who files his petition for adjudication 
 having good reason to believe that the debtor is about to dispose 
 or make any transfer or disposition of his property, not excepted 
 by the act from its operation, before the adjudication in bankruptcy 
 can be completed, he should present evidence, either vivd voce or by 
 affidavits, to the court for a provisional or ad interim injunction to 
 restrain the debtor or any other person from doing so ; and if also 
 there is probable cause for believing that the debtor is about to 
 leave the district, or to remove or conceal his goods and chattels, 
 or his evidence of property, or make any fraudulent conveyance or 
 disposition thereof, the court has power to issue a warrant to arrest 
 the debtor against whom the petition has been filed ; the warrant 
 of arrest is to be issued, and directed to the marshal of the district, 
 who, acting as the messenger of the Court of Bankruptcy, is to arrest 
 the debtor and imprison him until he gives bail to the satisfaction 
 of the court for his appearance as required, until the decision of 
 the court upon the petition for the adjudication has been given. 
 
 The court has also power, upon being satisfied that the above al- 
 legations made by the petitioning creditor are well founded, to is- 
 sue a warrant directing the marshal, as messenger, forthwith to take 
 possession provisionally of all the property and effects of the debt- 
 or, and keep the same to abide the event of the decision upon the 
 petition for adjudication. 
 
 It is to be observed, that on an application for a warrant to ar- 
 rest the debtor, the court is to be satisfied that there is probable 
 cause for believing that such debtor is about to leave the district, 
 not that he is about to remove from the district, and it is presumed 
 that it will be sufficient to show generally that the defendant is 
 about to quit the district without suggesting his object, or how 
 long he is to be absent. 
 
 Leaving the district, and removing from the district, have very 
 different significations. Removal from a State implies a residence 
 within it, and an intention permanently to leave it, and permanent- 
 ly to reside elsewhere ; in other words, a change of domicile is in- 
 tended ; but leaving the district may be construed to mean a mere 
 
264 THE BANKRUPT LAW. [§39-42. 
 
 temporary departure for the purpose of avoiding the consequences 
 of adjudication in bankruptcy, and an intention not to be within 
 the jurisdiction of the court should such an event take place. 
 
 To justify the court in granting the application for a provisional 
 injunction, and in justifying an arrest upon the ground that there is 
 probable cause for believing that the debtor is about to remove or 
 conceal his goods or chattels, or his evidence of property, or that he 
 is about to make any fraudulent conveyance or disposition thereof, 
 sufficient proof should be given of the intent, such as a threat by a 
 debtor that he would assign and put his property out of his hands, 
 or, in case of an intentional leaving, that he was packing up his 
 goods at his place of business, or such other facts as may be capa- 
 ble of being testified in each particular case. Vide notes to Section 
 39, fourth " Act of Bankruptcy." 
 
 Opposing the Adjudication. — Assuming that the debtor appears 
 to snow cause against the adjudication, he has the right, in the first 
 instance, upon the day of his appearance, to demand in writing a 
 trial by jury, to ascertain the facts of such alleged bankruptcy, and, 
 if he does not do so, the court will then proceed to a hearing. 
 
 The practice in the English Courts of Bankruptcy is, that inas- 
 much as all the allegations against the debtor have been made ex 
 •parte, and that he is entitled upon a hearing to cross-examine the 
 creditor who has filed the petition, and the witnesses who have 
 been examined or made affidavits in support of it, that the petition- 
 ing creditor must begin and establish by evidence the allegations 
 of his petition, and all the requisites necessary to support the adju- 
 dication, before calling upon the debtor to show cause. — Ex parte 
 Clay, 1 Fonblanque, 212. 
 
 Should the creditor succeed in establishing a case which, if unan- 
 swered, would be sufficient for an order of adjudication, the debtor 
 then by his counsel adduces evidence in answer to, or rebuttal of, 
 the petitioning creditor's case. 
 
 We now proceed to consider what proofs the creditor must ad- 
 duce to obtain an adjudication in bankruptcy. 
 
 He must establish, 
 
 1st. The petitioning creditor's debt; 
 
 2d. An act of bankruptcy committed by the debtor; 
 
 3d. If he is proceeding against a banker, merchant, or trader, he 
 must, in addition, establish a trading within the meaning of the , 
 Bankrupt Law. 
 
 Petitioning Creditor's Debt. — The debt upon which to found an 
 adjudication of bankruptcy must be, in its nature, provable under 
 the bankrupt's estate. If it be a debt due to one creditor or to a 
 firm, it must amount to two hundred and fifty dollars ; or if the pe- 
 tition be by one or more creditors, the aggregate of their debts must 
 amount to at least two hundred and fifty dollars. 
 
 The debt must have existed at the time of the act of bankruptcy 
 relied upon to support the adjudication. 
 
 A question may arise upon the construction of this section, wheth- 
 er the debt must be actually due, and recoverable at law by the 
 creditor, at the time when the petition is presented. 
 
§ 39-42.] INVOLUNTARY BANKRUPTCY. 265 
 
 Under Section 1 9, debts due, but not payable until a future day, 
 are provable: Vide Sec. 19 and notes. But the author suggests 
 that this section requiring the debt of the petitioning to be a prov- 
 able debt, characterizes only the nature of the debt, and does not 
 mean that the adjudication can be supported upon a debt not actu- 
 ally due. The last English Bankrupt Act, 24 & 25 Vict., chap. 
 134, sec. 89, expressly enacts "that any creditor who has given 
 credit to -any debtor for any sum payable at a certain time, which 
 time shall not have arrived when such debtor committed an act of 
 bankruptcy, may petition, or join in petitioning, whether he shall 
 have any security for such sum or not." Before this provision, ev- 
 ery debt of a petitioning creditor must have been actually due, and 
 one for which an action at law could have been maintained. The 
 author suggests that this also must be the position of a petition- 
 ing creditor's debt, upon the proper construction of this section. 
 A debt barred by the Statute of Limitatians would be unavail- 
 ing. — Mayor vs. Paine, 3 Bing., 284. To support an adjudication 
 against the drawer or indorser of a bill of exchange, presentment 
 and notice of dishonor must be proved. — Cooper vs. Machin, 1 
 Bing., 426. One partner can not petition against another partner, 
 unless the debt be such as he might maintain an action upon. — 
 Marson vs. Barber, Gow on Partnership, 1 7. 
 
 Executors may petition on a debt due to the testator, and one ex- 
 ecutor of three may by himself petition. — Treasure ~vs. Jones, 1 Sel- 
 wyn, N". P., 265. A petition for adjudication may be filed before 
 the executor has obtained probate. — Ex parte. Paddy, 3 Madd., 241 ; 
 Buck, 235. A trustee is not a sufficient petitioning creditor without 
 the concurrence of his cestui que trust, as he can not swear, except 
 by legal fiction, that the money is due to him, nor that the money 
 has not beea paid to the cestui que trust. — Ex parte Gray, 4 Deac. & 
 Chitt., 778 ; ex parte Bather, Buck., 426. An infant, it is said, can 
 not be a petitioning creditor, but there is no express decision upon 
 the point, and upon principle there seems to be no reason why he 
 should not be. — Ex parte Barrow, 3 Ves., 554. In the case of a debt 
 due to a partnership, the petition of one partner only is not suffi- 
 cient ; it must be by all the partners — not individually, but by their 
 authority. — Buckland vs. Newsome, 1 Taunt., 447. 
 
 Upon the death of a petitioning creditor before adjudication upon 
 his petition, it was ordered by the Court of Bankruptcy that adju- 
 dication should be made upon the depositions of his executors. — Ex 
 parteT&rmer, 1 Mont. & Mac, 292 ; ex parte Winwood, 1 Glyn. & J., 
 252. 
 
 A husband can not alone be a petitioning creditor in respect of a 
 debt partly due- in right of his wife dum sola, and partly due to 
 him in his own right. — Ramsey vs. George, 1 Rose, 108. The debt 
 may be upon an account if the creditor swear to a sufficient balance. 
 — Flower vs. Herbert, 2 Ves., 327 ; but vide the case ex parte Bowes, 
 4 Ves., 168.' A debt will be sufficient, though the debtor has been 
 insolvent, and it was included in his schedule, or though a security 
 of higher nature has been taken for it from the debtor since the act 
 
266 THE BANKKUPT LAW. [§ 39-42. 
 
 of bankruptcy.— Meparte -Shuttleworth, 2 Glyn., L. J., 68 ; exparte 
 Griffiths, 21 L. J. Bank., 50. % 
 
 In all cases where creditors have taken securities they may peti- 
 tion, the courts of law take notice of the rule in equity that the debt 
 is the principal, and the security the incident. A mortgagee may 
 be a petitioning creditor for the amount of his debt without giving 
 up his security. — Me parte Jackson, 5 Ves., 35V. A creditor who 
 has taken his debtor in execution can not be a petitioning creditor 
 against him for the same debt, because his debt, in contemplation 
 of law, is satisfied ; but if he has not taken the debtor in execution 
 under the judgment he has obtained in the action, he may petition. 
 —Bryant vs. Withers, 2 M. & S., 123. 
 
 As the debt must be one provable under the bankruptcy, it need 
 scarcely be observed, that in cases of claims for unliquidated dam- 
 ages — as in actions for torts — no petitioning creditor's debt can act- 
 ually or impliedly exist until judgment has been obtained. — Me 
 parte Charles, 16 Ves., 256; 14East.,197. A sum of money award- 
 ed by a referee or arbitrator, until set aside, is a good petitioning 
 creditor's debt. — Me parte Lowndes, 1 Mont, 24. A debt due to a 
 surety will suffice. 
 
 The*assignees of a bankrupt may petition in respect of a debt 
 due to the bankrupt's estate. 
 
 A factor who has sold goods in his own name for an unknown 
 principal may petition, but he ceases to be a sufficient petitioning 
 creditor when he has communicated the name of the purchaser to 
 his principal, who has debited the debtor, and taken any steps to re- 
 cover the debt directly from the purchaser. — Sadler vs. Leigh, 4 
 Camp., 185 ; 2 Rose, 286. 
 
 In the case of a debt due to any copartnership or incorporated 
 company, the officer authorized to sue may present and file the pe- 
 tition. 
 
 Where a further debt is contracted by the bankrupt, after leav- 
 ing off trade, and he makes a payment without directing to which 
 debt it is to be applied, it will be. taken to apply to the old debt ; 
 and if it be hereby reduced to a sum less than two hundred and 
 fifty dollars, it will not support an adjudication. So if the fiat issues 
 on an attorney's untaxed bill of costs, which, on taxation, is reduced 
 below the required amount, it will not support the fiat. — Me parte 
 Forde, 1 Mont. & Ch., 91. 
 
 A creditor buying in notes to the amount of £100, at ten shillings 
 on the pound, has a sufficient debt. — Me parte Lee, 1 P. Wms., "782. 
 
 Where a creditor, to an amount sufficient to support a commis- 
 sion after notice of an act of bankruptcy, received a payment, dimin- 
 ishing the original debt to a sum insufficient to support the commis- 
 sion, it was held that," as that payment was void, there was still a 
 good petitioning creditor's debt. — Mann vs. Shepherd, 6 T. R., 79. 
 
 Two firms of several partners each may jointly petition, though 
 the debt of neither amounts to two hundred and fifty dollars, if the 
 two debts equal two hundred and fifty dollars. — Doe vs. Ingleby, 
 14 M. & W., 91. Where the debt was for a bill of exchange for 
 
§ 39^£2.] INVOLUNTARY BANKRUPTCY. 267 
 
 fifty pounds sterling, drawn and issued before the act of bankrupt- 
 cy, but becoming due afterward, it was objected that the sum of 
 fifty pounds was not due, but only that sum minus the rebate of 
 interest ; but it was held that the debt was sufficient to support the 
 commission, upon the principle that the debt was contracted at the 
 time the bill was given. — Brett vs. Levett, 13 East., 213. Fifty 
 pounds was the amount of the debt to support a bankruptcy in En- 
 gland. 
 
 In the case of a bill of exchange, where it is not expressed on the 
 face of it that interest should be paid, it can not be added so as to 
 make up a legal petitioning creditor's debt, Cameron vs. Smith, 2 
 B. & A., 305 ; ex parte Burgess, 2 Moo., '745 ; S. C, 8 Taunt., 960 ; 
 even though it be noted and protested, pursuant to 9 & 10 Will. 
 TIL, c. 17. — Ma parte Greenaway, Buck, 412. 
 ' Where there is only one petitioning creditor, there must be a 
 debt due to him separately, for which he alone might maintain an 
 action at law. 
 
 The debt must be proved to have been contracted before and 
 subsisting at the time of the act of bankruptcy — Clarke vs. Asken, 
 Pea., 458, n. Where it was necessary to prove a good petitioning 
 creditor's debt on the 20th of May it was held not sufficient to 
 show that on the 20th of January preceding a sum of £700 was due 
 from the bankrupt, there being subsequent receipts and payments, 
 and other continuing transactions between the petitioning creditor 
 and the bankrupt ; for, after a period of three months, it was con- 
 sidered impossible to say, under these circumstances, whether £1000 
 or £5 were really due, Gressley vs. Price, 2 C. & P., 48 ; overruling 
 Jackson vs. Irwin, 2 Camp., 50, where it was held, that from proof 
 of the existence of the debt before the act of bankruptcy, it would 
 be presumed to be still in existence when the act was committed. 
 
 The case where a bill or note is produced for the purpose of prov- 
 ing a good petitioning creditor's debt is an exception to the gener- 
 al rule, that the date of an instrument is a primd facie proof of the 
 time of its execution, and it may be taken to be now settled, that 
 some evidence is necessary beside the date to show that the instru- 
 ment produced for that purpose had its existence before the act of 
 bankruptcy took place ; and for this reason, that a proceeding in 
 bankruptcy is retrospective to invalidate all transactions between 
 the act of bankruptcy and the fiat, and, therefore, it may be neces- 
 sary to require more proof than in ordinary cases. — Anderson vs. 
 Weston, 6 Bing., N". C, 301. Therefore, an I O U, bearing date be- 
 fore the bankruptcy, is not evidence of a petitioning creditor's debt, 
 without some proof that it was in existence* before the bankruptcy, 
 Wright vs. Lainson, 2 M. & W., 739 ; and so as to a promissory 
 note, Fletcher vs. Manning, 12 M. & W., 571 ; the case of Taylor 
 vs. Kinlock, 1 Stark., 175, to the contrary, proceeded on a mistaken 
 report of a case on the Northern Circuit, 2 Stark, 594 ; 2 Stark. Ev., 
 161 ; and so where a debt arises on the indorsement or acceptance 
 of a bill, the indorsement of a bill or acceptance itself must be proved 
 to have been made before the commission or fiat, no presumption 
 
268 THE BANKRUPT LAW. [§39-42. 
 
 arising from the date of the bill. — Rose vs. Rowcroft, 4 Camp., 245 ; 
 Cowie vs. Harris, M. & M., 141. But the indorsement may be after 
 the act of bankruptcy, Glaister vs. Hewer, 7 T. R., 498 ; but if the 
 course of dealing between the parties raise a presumption to that 
 effect, that is sufficient, as, if it be shown that about that time goods 
 ,were sold of a corresponding amount; — Cowie vs. Harris, id. So 
 where a note bore date before the bankruptcy, and was proved to 
 be in existence before the docket was struck, this was considered 
 primd facie proof that it was in existence before the act of bank- 
 ruptcy. With respect to the subject matter of the debt, the debt 
 must be a legal one, not a mere equitable claim, 1 Atk., 147 ; 2 Ves., 
 407, or debt, ex parte Hawthorn, Mont., 132. An order by the lord 
 chancellor for payment of a sum to an uncertified bankrupt, was 
 held insufficient to constitute a debt to support a fiat. — In re Cham- 
 bers, 3 Mont. & Ayr., 303. It is doubtful whether a mortgagee in 
 trust can alone issue a fiat against the mortgagor or the mortgage 
 deed, unless the legal validity of the debt Has been previously 
 established in an action at law. — Ex parte Gray, 2 Mont. & Ayr., 
 283. 
 
 An acceptance by one of two partners in the name of the firm 
 for a pre-existing debt of his own, without the authority of the other 
 partner, will not support a joint fiat against both partners, ex parte 
 Austen, 1 Mont., Dea. & D., 247 ; nor is an acceptance in the name 
 of the bankrupt, without his authority, sufficient to sustain a fiat 
 against him, though he is responsible for the payment of it. — Me 
 parte Edwards, 2 Mont., Dea. & D., 241 ; 5 Jur., 706. 
 
 A judgment debt, on which the debtor has been already taken 
 in execution, will not support a fiat, Cohen vs. Cunningham, 8 T. R., 
 123 ; nor, semble, will a demand for rent, with respect to which an 
 action of replevin is already pending, Emery vs. Mucklow, 4 M. & 
 S., 263 ; but a simple contract debt will, though it has been merged 
 in a higher security, as a bond, Ambrose vs. Clendon, 2 Stra., 1042 ; 
 or a judgment, Briant vs. Withers, 2 M. & S., 123, which is invalid 
 by reason of being given or obtained after an act of bankruptcy. 
 So a creditor entering into a composition deed, after an act of bank- 
 ruptcy committed by his debtor, is not precluded from being a pe- 
 titioning creditor in respect of the original debt, Doe vs. Anderson, 
 5 M. & S., 161 ; and see Ambrose vs. Clendon, 2 Stra., 1042 ; Ca. T., 
 Hard, 267. 
 
 So where a creditor receives a bill of lading as a security for his 
 debt from the consignee, and the consignor afterward stops the 
 goods in transitu, the creditor may issue a fiat on his original debt. 
 — Mc parte Ashton, 2 Deac. & Ch., 5. So where the debtor has be- 
 come insolvent, and included the debt in his schedule. — Jellis vs. 
 Mountford, 4 B. & M., 256 ; ex parte Shuttleworth, 2 Glyn. & J., 68. 
 So where a note was given on a wrong stamp as security for a debt, 
 the debt was held sufficient to support a sequestration in Scotland. 
 — Geddes vs. Mowat, 1 Glyn. & J., 414. 
 
 A debt, though barred by the Statute of Limitations, will be 
 good, if the bankrupt himself make no objection to it, Swayne vs. 
 
§ 39-42.] INVOLUNTARY BANKRUPTCY. 269 
 
 Wallinger, 2 Stra., 746 ; Quantock vs. England, 5 Burr., 2628 ; Ma- 
 yor vs. Pyne, 3 Bing., 285 ; but if lie object to it, it will not ; Id., 
 and Gregory vs. Hurrill, 5 B. & G, 341 ; 8 M., 18,9 ; and Taylor vs. 
 Hipkins, 5 B. & A., 489. A verdict for damages in an action for 
 breach of promise of marriage does not, before judgment, constitute 
 a debt. — Me parte Charles, 14 East., 197. 
 
 The debt must be of such a nature, that an action at law might 
 be brought for it by the petitioning creditor against the bankrupt. 
 Therefore it will not support a fiat, if the creditor have covenanted 
 with the debtor not to sue him for it, Small vs. Marwood, 4 M. & 
 R., 181 ; 2 B. & C, 300 ; or if it be founded on an illegal considera- 
 tion, Wells vs. Gozling, 1 B. & B., 447 ; 4 M., 78 ; or on a promis- 
 sory note made in violation of the statutes made for the protection 
 of the Bank of England. — Mcparte Randleson, Mont. & Ayr., 86. 
 
 One partner can not sue out a fiat against another for a partner- 
 ship debt, except perhaps where accounts have been liquidated and 
 the partnership determined, and the creditor paid all the debts, ex 
 parte Noakes, 2 Mont., 144; and where a partner, has filed a bill, 
 and treated a debt as mixed with the partnership, he can not after- 
 ward support a fiat upon it, ex parte Gray, 2 M. & Ayr., 283 ; but 
 for a debt not arising out of a partnership transaction, or where 
 they are not equally concerned in the profit and loss, one partner 
 may sue out a fiat against another, Windham vs. Paterson, 1 Stark, 
 144 ; or where' the profit was equally to be divided between them, 
 but the loss to be exclusively borne by one only. — Marston vs. Bar- 
 ber, Gow, c. 1 7. So where H P, the bankrupt, borrowed money 
 of his partner by way of personal loan, and on the dissolution of 
 the partnership purchased the stock at a stipulated price, W P had 
 a good petitioning creditor's debt, though he had entitled the ac- 
 count " H P in account with H. and W P." — Mc parte Richardson, 3 
 Dea. & Ch., 244. So where A advances £200 to B to set. up trade, 
 on an agreement that A should have one eighth of the profits, he 
 may support a fiat on such advance. — Mcparte Notley, 1 Mont. & 
 Ayr., 46. , 
 
 The debt of a natural-born subject residing and trading in an en- 
 emy's country will not support a commission. — M'Connell vs. Hec- 
 tor, 3 B. & P., 1 1 3. The mere residence, however, will not affect the 
 debt, if it do not appear that it was for the purpose of trading, and 
 that the creditor went there with a knowledge of the existing hos- 
 tilities. 
 
 A debt contracted by an infant will not support an adjudication 
 of bankruptcy, but an acceptance after he came of age, upon a bill 
 drawn when he was an infant, was holden to be a good petitioning 
 creditor's debt. — Stevens vs. Jackson, 4 Camp., 164. 
 
 An uncertified bankrupt, ex parte Cartwright, 2 Rose, 230, an in- 
 solvent debtor, Jellis vs. Mountford, 4 B. & A, 256, may, in most 
 cases, be a petitioning creditor. An executor of a bankrupt can not 
 sue out a commission on a debt due to his testator before his bank- 
 ruptcy. — 1 Atk ,100. 
 
 The debt must be a present existing debt, and not one depending 
 
270 THE I^ANKRUPT LAW. [§ 39-42. 
 
 on a contingency. — Deac., B. L., 90 ; ex parte Page, 1 Glyn. & J., 100. 
 A warrant of attorney has been deemed a debitum inpresenti suffi- 
 cient to support a commission, though given as a security against 
 running acceptances. — Miles vs. Rawlyns, 4 Esp., 194. The debt 
 should be of a liquidated nature, or capable, from computation, of 
 being liquidated. Vide 2 Ves., 168. 
 
 Proof of a surety debt will support a commission against the 
 party liable on it, Hughes vs. Hall, Palm., 325 ; but a security for a 
 contingent debt will not be sufficient. 
 
 The acceptor of an accommodation bill, paying the amount after 
 an act of bankruptcy, has not a sufficient petitioning creditor's debt. 
 — Ex parte Holding, 1 Glyn. 
 
 Where the act of bankruptcy is founded on a lying in prison, and 
 the debt was contracted after the arrest, it was holden insufficient. 
 — Ex parte Dqggett, Whitm., B. L., 42. 
 
 Where a bankrupt drew a bill in favor of A, to whom he was 
 previously indebted, and committed an act of bankruptcy before 
 either the bill was diie or had been presented for acceptance, it was 
 held that the bill was a good petitioning creditor's debt, although it 
 appeared that, subsequent to the commission, the bill had been paid 
 by the acceptors. — Ex parte Douthat, 4 B. & A., Eden, 48. 
 
 Where there has been an exchange of acceptances between two 
 merchants, and before the maturity of the bill one of them commits 
 an act of bankruptcy, the other can not prove under the bankruptcy, 
 nor is it a good petitioning creditor's debt until he has paid his own 
 bill. — Sarratt vs. Austin, 4 Taunt., 200. 
 
 It has been held in England that a penalty due to the crown is a 
 sufficient debt to support a commission, Cobb vs. Symonds, 5 B. & 
 A, 516 ; so also is an assessment for church and highway rates, and 
 the assessor would be a good petitioning creditor. — Lloyd vs. Heath- 
 cote, 2 B. & B., 288. 
 
 The debt must be proved to have been contracted, or to have 
 subsisted, while the party was a trader. — Dawe vs. Holdsworth, 
 Pea., 64; Meggott vs. Mills, 1 Raym., 28|,; S. C, 12 Mod., 151 ; 
 Baillie vs. Gr&nt,post. Where a person contracted a debt and aft- 
 erward became a trader, and, the debt still remaining unpaid, he 
 went out of trade, and afterward committed an act. of bankruptcy, 
 a commission founded on this debt and an act of bankruptcy was 
 held to be valid. — Baillie vs. Grant, 1 CI. & Fin., 238. 
 
 If a simple contract debt is contracted while the party is in trade, 
 though he give the creditor a bond for it after leaving off trade, this 
 will not extinguish the debt so as to prevent the creditor from su- 
 ing out a commission on it. — Dawe vs. Holdsworth, Pea., 64. But 
 if a trader, indebted in £100, quit his trade, and afterward become 
 indebted to the same creditor in £100 more, and subsequently pays 
 £100 without saying on what account, the creditor in this case can 
 not take out a commission on the old debt. — Dawe vs. Holdsworth, 
 Pea., 64 ; Meggott vs. Mills, 1 Raym., 287. 
 
 Where a creditor filed an affidavit of debt under the Bankruptcy 
 Consolidation Act, 12 & 13 Vict., c. 106, § "78, he was bound to notice 
 
§ 39-i2.] INVOLUNTARY BANKRUPTCY. 271 
 
 and.deduct any sum due to the debtor arising out of the same trans- 
 action as that out of which his own debt arises, and to claim for the 
 difference only ; and if he omits to do so, he was held not to have 
 had reasonable or probable cause for making the affidavit in the 
 amount at which it was made. — Marshall vs. Sharland, 1 Eng. Law 
 & Eq. Rep., 231. 
 
 Where, therefore, in an action for goods sold and delivered, the 
 plaintiff sought to recover the price of a cargo of coals, the freight 
 of which he was bound to pay to the captain of the vessel before 
 they could be discharged, and the (defendant proved at the trial, as 
 a set-off, payment of the freight, and reduced the verdict of the 
 plaintiff by that amount, it was held, that the plaintiff had not any 
 reasonable or probable cause for making an affidavit of debt in the 
 Bankruptcy Court for the full price of the coals, without deducting 
 what had been paid by the defendant for freight ; and the court under 
 1 2 & 1 3 Vict. , c. 1 06, § 86, ordered that the defendant should have the 
 costs of the suit. — Marshall vs. Sharland, 1 Eng. Law & Eq. Rep., 231. 
 
 A factor who sells goods in his own name, without a del credere 
 commission, is a good petitioning creditor against the purchaser for 
 his principal, Sadler vs. Leigh, 4 Camp., 185; 2 Rose, 286; but he 
 ceases to be so when the principal has agreed with him to consider 
 the purchaser as his debtor, and has taken steps for recovering the 
 debt directly from his purchaser. — Ex, parte Dalby„4 Deac, 261 ; 
 Mont. & Chit, 636. 
 
 An adjudication founded on the petition of a British subject resi- 
 dent in England, for a debt due to himself and partners, also Brit- 
 ish subjects, but resident and carrying on trade in an enemy's 
 country, is bad, M'Connell vs. Hector, 3 B. & P., 113 ; and see De 
 Mettou vs. Mello, 12 East., 234 ; 2 Camp., 420 ; Kensington vs. In- 
 glis, 8 East., 275, even though he be naturalized in a neutral State. 
 — O'Meally vs. Wilson, 1 Camp., 482. The residence of a British 
 subject in an enemy's country for the purpose of a trade, licensed 
 by the government of this country, is not a disability to a peti- 
 tion. — Ms parte Baglehoe, 18 Ves., 525; 1 Rose, 271 ; Roberts vs. 
 Hardy; 3 M. & S., 533; 2 Rose, 457. 
 
 In order to obtain an adjudication of bankruptcy against a bank- 
 er, merchant, or trader upon the conjmission of the act of bankrupt- 
 cy in the ninth subdivision of the section, the fact that the debtor 
 is a banker, merchant, or trader must be established by proof, as 
 well as the petitioning creditor's debt and the act of bankruptcy. 
 It will be necessary, therefore, to state concisely what amounts to 
 a" trading within the meaning of the Bankrupt Law. 
 
 What constitutes a Trading. — Until the recent English Bankrupt 
 Act, 24 and 25 Vict., chap. 134, no person but a trader was liable to 
 be made bankrupt. The question of what constituted a trading 
 has been the subject in England of interminable litigation, and the 
 authorities are too numerous to cite in a treatise of this character. 
 The principles upon which the leading authorities are founded will 
 be sufficient for the purpose. 
 
 To constitute a trading, the transactions must not be isolated ; 
 
272 THE BANKRUPT LAW. [§ 89—42. 
 
 but if the intention be to carry on the particular pursuit to seek a 
 livelihood thereby, a single act of trading will suffice. — Heanny vs. 
 Birch, 3 Camb., 233. 
 
 The intention to trade, and not the quantity, is the test. — Ex, 
 parte Moule, 14 Ves., 602. A single instance of having traded ■will 
 not support an adjudication of bankruptcy where the intent to trade 
 generally is not proved. — Me parte Wilkes, 2 Mont. & Ayr., 667. 
 The true criterion to decide the question of trading is, not whether 
 the party bought and sold to increase his income, but whether he 
 pursued trading as his means of living. Where buying and selling 
 is only auxiliary to the enjoyment of real property, as where the 
 owner of a colliery sells coal that he has bought, with occasionally 
 a portion of his own taken from his own mine, this is not a sufficient 
 trading within the meaning of the act. — Mc parte Salkeld, 3 Mont., 
 D. & D., 125. The publisher of a newspaper, buying the whole im- 
 pression from the proprietors, reselling at a profit, and bearing the 
 loss of such as remain unsold, has been held to be a trader within 
 the Bankrupt Law. — Gimmingham vs. Laing, 1 Rose, 472. 
 
 The quantum of the dealing or the smallness of the profit is im- 
 material, if it be. proved that it was the intention of the party to 
 deal generally, in which case evidence of one act of buying and 
 selling is sufficient to constitute a trader within the Bankrupt Law. 
 — Newland vs. Bell, Holt, 221, per Gibbs, C. J. ; ex parte Lavender, 
 4 Deac. & Ch., 487 ; 2 Mont. & Ayr., 11. 
 
 The purchase of one lot of timber, with intent to sell again, will 
 make a man a trader, even if the timber be standing at the time of 
 the purchase. — Holroyd vs. Gwynne, 2 Taunt., 176; Patman vs. 
 Vaughan, 17 R, 572 ; Gale vs. Halfknight, 3 Stark., 56 ; Eden, 3. 
 
 It is not necessary that the trade should be legal, ex parte Mey- 
 mott, 1 Atk., 197 ; Cobb vs. Symonds, 5 B. & Aid., 516 ; Wright vs. 
 Bird, 1 Price, 20, nor that it should be carried on in England ; it is 
 enough if it be to England. — Dods worth vs. Anderson, T. Ray, 375 ; 
 Bird vs. Sedgwick, Salk, 110 ; Alexander vs. Vaughan, Cowp., 398 ; 
 Allen vs. Cannon, 4 B. & Aid., 418. And, by analogy to the case 
 last cited, if trading to England be carried on in the United States, 
 it is sufficient. 
 
 Whether a man is a trader within the meaning of the Bankrupt 
 Law, is a question of law and not of fact. — Hankey vs. Jones, Cowp., 
 752. A trading to support an adjudication depends upon the in- 
 tention ; and it is a question for a jury whether there is enough to 
 evidence such intention. The declarations of a debtor that he was 
 in partnership with another as a trader, who afterward became 
 bankrupt, are sufficient evidence to constitute a trading, although 
 no acts of buying or selling were proved to have taken place dur- 
 ing such partnership. — Parker vs. Barker, 3 Moore, 226. 
 
 An adjudication of bankruptcy may be supported upon a debt 
 accruing before the bankrupt commenced to trade, and on an act 
 of bankruptcy committed after he had ceased to trade. — Baillie vs. 
 Grant, 9 Bing., 121. Where part of the petitioning creditor's debt 
 was contracted after the bankrupt discontinued trading, and the 
 balance was under the amount required by the statute, it was held 
 
§ 39-42.] INVOLUNTARY BANKRUPTCY. 273 
 
 not sufficient to support an adjudication. — JSxparteDaYby, 4 Deac, 
 261 ; Mont. & Chitty, 636. Unless an adjudication could be sup- 
 ported upon an act of bankruptcy by a trader after he had ceased 
 to trade, any merchant might, by retiring from trade when under 
 pressure or embarrassment, evade the operation of the Bankrupt 
 Law entirely. It has been laid down in the English decisions that 
 an act of bankruptcy, when once committed, can not be purged ; 
 i. e., its effect can not be obviated by any subsequent conduct of the 
 bankrupt. 
 
 "Where a trader carried on business on his own account in Lon- 
 don, and was also one of a firm in Ireland, and sent goods from En- 
 gland to that firm, it was held that the whole firm were traders 
 within the English Bankrupt Statutes. — Williams vs. Nunn, 1 
 Taunt., 210. 
 
 To support an adjudication of bankruptcy, where it is necessary 
 to prove the debtor was a trader, the debt of the petitioning cred- 
 itor must have been contracted either previous to the trading, or 
 during the time such trading was being carried on ; but he can not 
 be made a bankrupt in respect of debts contracted subsequently to 
 his retiring from trade. — Ex, parte Dewdney, 15 Ves., 495 ; 1 Sel- 
 wyn's N. P., 115 ; 1 Rose, 402 ; 3 C. & P., 500. 
 
 A solicitor was adjudicated bankrupt as a scrivener on evidence 
 clearly establishing the fact. On appeal against the adjudication he 
 was examined, and the court being satisfied that, upon the addition- 
 al evidence, he was not a scrivener within the meaning of the Bank- 
 rupt Law, annulled the adjudication, the lord chief justice express- 
 ing his agreement in the decision only on the authority of cases de- 
 termined by Lord Eldon and Lord Chief Justice Gibbs. — In re Du- 
 faur, Eng. Law & Eq., 550. 
 
 The earlier English cases establish that a contract to victual the 
 navy will not make a man a trader, although he sell the surplus. — 
 Gilison vs. Thompson, 3 Keble, 415. Commissioners of the navy, 
 sutlers of the army, and farmers of customs were held not to be 
 traders and liable to the Bankrupt Laws. — Skinner, 392 ; and case 
 last cited. 
 
 In ex parte Wilson, 1 Atk, 218, it was said that a person who 
 received money as a banker, although his books are kept in a differ- 
 ent manner from that in which bankers' books are usually kept, and 
 although, upon receiving any large sum, he pay it to his own estab- 
 lished banker, upon whom he gives drafts for the payment of large 
 bills upon him, he only keeping cash to answer small drafts, is a 
 banker within the Bankrupt Statutes. 
 
 A trader resident abroad, drawing bills upon this country for the 
 value of other bills sent here for the sake of the exchange, and con- 
 tracting debts here, is a trader within the Bankrupt Laws. — Inglis 
 vs. Grant, 5 T. R., 530. But an occasional drawing and redrawing 
 of bills, though for the sake of profit, as where it is done for the 
 purpose of raising money to improve a person's own estate, does not 
 render the person subject to the Bankrupt Laws. — Hankey vs. 
 Jones, Cowp., 745. 
 
 S 
 
274 THE BANKRUPT LAW. [§39-42. 
 
 The English Courts have held, that a person who has only held 
 shares in a joint-stock banking company for two years, and has re- 
 ceived two years' dividends upon them, is a trader, exparte Wynd- 
 ham, 1 Mont. Dea. & De., 146 ; and a creditor of the company may 
 issue a fiat against him without proceeding in the first instance 
 against the public officer of the company. — Me parte WooA, id., 92. 
 An army or navy agent is not, as such, deemed a banker. — Eden, 
 6; 1 Mont., 12. 
 
 Mr. Christian, in his treatise on the Bankrupt Law, observes, that 
 " the privilege of sweeping the streets, and of taking away the 
 sweepings or manure, can hardly be thought a buying of merchan- 
 dise. It is either part of the surface of the earth and riot personal 
 property, or it is derelict, and does not become property till it is 
 collected and occupied. But with respect to dust and ashes, they 
 are articles of property, trade, and merchandise, and the law upon 
 the subject seems to be the same, whether a man buys a basket of 
 ashes or a basket of coals. By acts of Parliament, the owners are re- 
 strained from selling themselves, but the parish officers are to sell the 
 whole for the benefit of the parish ; but that can make no difference 
 with respect to the purchaser. One can not, therefore," he says, 
 " see any reason why a purchaser of dust and ashes, and who seeks 
 to make a profit of them by selling them again, should not be a 
 bankrupt, for a dealer in dung is just as much a trader as a dealer 
 in diamonds." 
 
 It has been held, that where two parties took a lease of certain 
 salt-works and brine-pits for the purpose of manufacturing and sell- 
 ing salt, which they made chiefly from the springs and rock salt 
 upon the premises demised, but some of the brine they obtained by 
 channels from adjoining premises, it was not a trading within this 
 part of the clause. — Ex, parte Atkinson, 1 Mont. Dea. & D., 300. 
 
 La cases where infants have traded and held themselves out to 
 the world as adults, they are liable to be made bankrupts, but un- 
 less this is the case, a bankruptcy against an infant was superseded, 
 although he was trading with a partner of mature age.;— _Eb parte 
 Banvis, 6 Ves., 601 ; ex parte Henderson, 4 Ves. Jun., 440 ; ex parte 
 Hehir, 3 Dea. & Ch., 107. 
 
 In Cobb vs. Sy-monds, 5 B. & A, 516 ; S. C, 1 D. & R, 111, the 
 question was, whether a smuggler who had bought and sold smug- 
 gled goods, and never trafficked in legal merchandise, could be said 
 to be a trader, subject and liable to the Bankrupt Laws. The 
 court in that case said, " The words of the statute, 1 Jac, 1, c. 15, 
 § 2, and the authority of Lord Hardwicke, in the case of ex parte 
 Meymott, 1 Atk., 197, and the principle of the thing, called upon us 
 to declare that a party circumstanced as now disclosed to us is an 
 object of the Bankrupt Laws. The words of the act are general — 
 ' persons seeking their trade of living by buying and selling.' Now 
 these words do not authorize us in determining that the. Legisla- 
 ture did not intend to include in them every species of buying and 
 selling, whether legal or illegal. Indeed, it would be very strange 
 if a party could set up his own illegality to prevent himself being 
 
§ 39-42.] INVOLUNTARY BANKRUPTCY. 275 
 
 made a bankrupt. As to the authority of Lord Hardwicke, it is 
 true that the point now under discussion was not the point decided 
 in ex parte Meymott ; but Lord Hardwicke refers to it, and assumes 
 it to be an incontrovertible proposition. As to the principle of the 
 thing, the very circumstance that such party's trade is illegal, puts 
 his estate in greater danger, and requires that his real creditors, 
 whose debts are unaffected by the illegal transactions, should have 
 the benefits accruing from a commission ; the object of the Bank- 
 rupt Laws being to protect the meritorious creditors, and prevent 
 them being placed in jeopardy by the improper speculations of their 
 debtor. See Ld. Raym., 444 ; 1 Atk, 197. 
 
 But where there is distinct proof that a person bought goods, 
 in conjunction with others, to carry on a systeto of fraud, by making 
 away with the goods, and never selling any of them, it is no trad- 
 ing. — Milliken vs. Brandon, 1 C. & P., 380. A trader may become 
 a bankrupt, although he has not taken out a license to render his 
 trading legal. — Sanderson vs. Bowles, 4 Burr., 2066. 
 
 As a general rule, all persons engaged in any business (as distin- 
 guished from a profession, whether learned or otherwise), whatever 
 their rank in society may be, might and still may be bankrupts as 
 traders. — 1 Doria & Macrae, 84-112, 119. 
 
 The buying and selling should be of " goods or commodities" with- 
 in the meaning of this section of the act. Buying and selling land, 
 or any interest in land, is not a trading. — Port vs. Turton, 2 Wils., 
 469 ; nor is buying and Selling government stocks or securities. — 
 Colt vs. Netterville, 2 P. Wms., 308. 
 
 The Act of Bankruptcy— Proof of.— Reference to the preceding 
 notes upon the subject of acts of bankruptcy will sufficiently inform 
 the practitioner as to the nature of the testimony to be adduced to 
 support the adjudication. 
 
 Acknowledgments or admissions by the bankrupt before his bank- 
 ruptcy are admissible in evidence. — Watts vs. Thorp, 1 Camp., 376 ; 
 Hoare vs. Cory ton, 4 Taunt., 560. 
 
 The act of bankruptcy must have been committed and be com- 
 plete previously to the petition for the adjudication ; and where 
 this is not the case, and the creditor fails to establish it upon the 
 hearing, application should be made to ±he court to withdraw the 
 petition for adjudication and present another ; this would be granted 
 upon such terms as to costs that the court might deem reasonable. 
 
 The act of bankruptcy must be proved by some person who can 
 speak to the, fact from his own knowledge. 
 
 K the execution of a deed constitute the act of bankruptcy, such 
 deed must be proved in the usual way by calling the attesting wit- 
 ness, and it has been held in the English courts that an admission 
 by the debtor of the execution of the deed will not dispense with 
 this evidence, even if the debtor, at the hearing of the proceedings 
 for adjudication, should produce such deed upon notice. — Abbott vs. 
 Plumbe, 1 Doug., 216 ; Gordon vs. Secretary, 8 East., 548. This 
 proposition, however, has been doubted. At all events, in practice, 
 the debtor might be summoned as a witness upon the hearing, and 
 
276 THE BANKRUPT LAW. [§ 39-42. 
 
 examined as to his execution of the deed, and if he admitted such 
 execution, that evidence would he sufficient, and supersede the ne- 
 cessity of calling the subscribing witness. — Bowles vs. Langworthy, 
 
 5 T. R, 366. The deed or conveyance will he good evidence of an 
 act of bankruptcy as against the dehtor, although it is void in its 
 terms through fraud, as in the case of an insolvent trader who has 
 conveyed all his property to an infant son. — Whitwell vs. Thomp- 
 son, 1 Esp., 68. 
 
 Where a deed can not he produced before the register or court 
 upon the hearing for adjudication, parol evidence of its contents 
 may he given; or, if any person having possession of such deed, and 
 duly summoned to produce it, does not do so, he may be committed 
 for contempt. 
 
 Proof of the fraudulent nature of the conveyance or transfer may 
 be inferred from extrinsic circumstances, as the situation of the 
 trader and his affairs at the time, as well as from the deed itself, or 
 from the grant or transfer. The circumstances which, extrinsic of 
 the deed or transfer, usually afford evidence of fraud, are the em- 
 barrassed state of the trader's affairs, or that he was actually in- 
 solvent at the time, and that he knew he was so, Newton vs. Chant- 
 ler, 1 East., 138, and was on the eve of a conteirfplated bankruptcy, 
 Devon vs. Watts, 1 Doug., 85 ; that he intended to give an undue 
 preference to a particular creditor, Morgan vs. Horsman, 3 Taunt., 
 241 ; or that there was nothing due to the assignee, Scott vs. Thomas, 
 
 6 C. & P., 611 ; and this is proved by his conduct and contempora- 
 ry declarations, or other acts ; that he executed the deed at an un- 
 seasonable hour of the night, or under other suspicious circum- 
 stances. — Compton vs. Bedford, 1 Bla., 362. 
 
 And it would be sufficient to show in evidence that this would 
 be the effect of the conveyance ; and it would be no answer to show 
 that, as between the parties themselves, the transaction was fair 
 and honorable, Mont., B. L., 66 ; and for a good and valuable con- 
 sideration, or that it was the result of importunity, Butcher vs. East., 
 Doug., 294, or even of compulsion, Newton vs. Chantler, 1 East., 135, 
 on the part of the creditor, if the necessary consequence would be 
 to give an undue preference to one or more creditors to the preju- 
 dice and exclusion of the rest, Worsley vs. Demattos, 1 Burr., 46V ; 
 though it might show the leader's solvency at the time of executing 
 the deed, and the benefit resulting to the creditors in general. 
 
 The declaration of the trader connected with the fraudulent as- 
 signment are evidence toward establishing the act of bankruptcy. 
 — Ridley vs. Gyde, 9 Bing., 349. 
 
 As to the proof of a fraudulent sale, gift, or transfer, the evidence 
 must depend upon the particular circumstances of each case. 
 
 To prove, as an act of bankruptcy, that goods had been fraudu- 
 lently given to certain creditors by the bankrupt, the plaintiff ten- 
 dered evidence that they had, since the petition, returned them to 
 the assignees. Held, inadmissible as against a third party, for it 
 only amounted to an expression of an opinion by them that they 
 were not entitled. — Backhouse vs. Jones, 6 N. C, 65. 
 
§ 39-42.] INVOLUNTARY BANKRUPTCY. 277 
 
 Payment of a debt by a check may, under certain circumstances, 
 amount to a fraudulent preference, when such payment was made 
 without pressure, after a resolution had been come to by the debt- 
 ors to suspend payment of their debts generally, it was held, under 
 the circumstances of the case, a fraudulent preference, whether the 
 debtors contemplated bankruptcy or not. — Ex, parte Simpson, 1 De 
 G., 19 ; 14 Law J., 1 ; title " Bankrupt." 
 
 Proof that the acceptor of a bill, two days before the expiration 
 of the time for which the bill was originally drawn, called upon the 
 indorser and informed him privately that he was insolvent ; the in- 
 dorser insisted upon being paid the amount of the bill, offering at 
 the same time to become security to the creditors for so much as 
 the estate should produce, whereupon the acceptor paid it, and four 
 days after became a bankrupt ; it appeared also that the' bill had 
 been altered, so as to make it fall due before this transaction, but 
 without the indorser's knowledge ; these circumstances were held 
 sufficient evidence of a fraudulent preference and act of bankrupt- 
 cy. — Singleton vs. Butler, 2 B.-& P., 283 ; Cook vs. Rogers, 7 Bing., 
 446. 
 
 The mere circumstance of the trader's being in insolvent circum- 
 stances, or contemplating insolvency, at the -time of the assignment, 
 is not conclusive evidence that he contemplated bankruptcy, there 
 being no fraud, and no design to put the property in a train of dis- 
 tribution different from that of the Bankrupt Law. — Burney vs. 
 Viney, 1 B. & B., 482, and vide 5 Taunt., 109 ; 1 B. & C, 5 ; D. & 
 R, 25. 
 
 Where A, a trader, purchased goods from B on the 8th of Octo- 
 ber for exportation, but finding that he must stop payment, and that 
 he could not apply goods to the purpose for which they were 
 bought, he returned them on the 1 6th of October to B, and on the 
 1 7th he stopped payment ; though expecting remittances from 
 abroad more than sufficient to pay his debts, he had no doubt that 
 his creditors would give him time ; they, however, refusing, he was 
 made bankrupt on the 2d of November. Under these circumstances 
 it was held, that the jury were warranted in finding that the deliv- 
 ery of the goods was not made in contemplation of bankruptcy. — 
 Fidgeon vs. Sharp, 1 Marsh, 196 ; Wheelwright vs. Jackson, 5 Taunt., 
 549 ; Moore vs. Barthrop, 1 B. & C, 5. 
 
 Whether a party contemplated bankruptcy is a question for the 
 court under all the circumstances of the case. — Poland vs. Glyn., 4 
 Bing., 22 n. ; Flook vs. Jones, 4 Bing., 20. To make out a case of 
 fraudulent preference, the trader's knowledge is not sufficient unless 
 actual bankruptcy was contemplated. — Atkinson vs. Brindall, 2 N. 
 C, 225. 
 
 Where the act of bankruptcy is sought to be proved by the 
 execution of an assignment to delay and hinder creditors, such as- 
 signment must be proved to be of the trader's own property, and 
 not of property conveyed by another person to, or in trust for 
 him. 
 
 Where A and B, being partners and insolvent, A assigned certain 
 
278 THE BANKRUPT LAW. [§ 39-42. 
 
 property to B in trust for the wife of B, who was his daughter, it 
 was held to be no act of bankruptcy by B, though he was a party 
 to the deed. — Whitwell vs. Thompson, 1 Esp., 68, 11. 
 
 A return to the lender of a check given for a specific purpose and 
 not applied to it, would not, it seems, be considered fraudulent so as 
 to constitute an act of bankruptcy, Moore vs. Barthrop, 1 B. & C, 
 5 ; 2 D. & R., 25 ; so as to a return of goods by hirer to lender un- 
 der a threat of issuing a fiat in bankruptcy. — Ex parte Whitby, 1 
 Mont. & Ch., 671. 
 
 In the cases of proving an act of bankruptcy by the giving of 
 fraudulent preferences,' it has been held that a legal preference is 
 where property is duly and regularly transferred, per Mansfield, C. 
 J. Cowp., 123 ; illegal, where it is delivered by the bankrupt in con- 
 templation, and on the eve of bankruptcy, voluntarily to a particu- 
 lar creditor, with a view of conferring on him a preference over the 
 other claimants. 
 
 Two things must concur: insolvency in the debtor — voluntary 
 payment or transfer by him. — Crosby vs. Crouch, 2 Camp., 166 ; 11 
 East., 256 ; Alderson vs. Temple, 4 Burr., 2235 ; 1 W. Black., 660. 
 
 Hence, where bankers fraudulently sold out stock belonging to 
 one of their customers, but afterward, on the evening before their 
 bankruptcy, sent him certain bonds to indemnify him, stating at the 
 same time that they should be obliged to suspend their payments 
 on the following morning, this was holden to be a fraudulent prefer- 
 ence in contemplation of bankruptcy, and void, even although it ap- 
 peared that the bonds had long before, and while the bankrupts 
 were solvent, been put by them into an envelope with the custom- 
 er's name upon it, and a memorandum of their being so deposited . 
 as a collateral security for the stock until replaced, but which cir- 
 cumstance was unknown to the customer. — Wilson vs. Balfour, 2 
 Camp., 579. 
 
 So where a trader, intending to commit an act of bankruptcy, 
 made a bill of parcels of certain goods to one of his creditors to 
 whom he wished to give a preference, and sent it to him, together 
 with an order on the person in whose possession the goods then 
 were, to deliver them to him, and he got them accordingly ; it was 
 holden that this, although a form of sale, being merely colorable for 
 the purpose of giving a preference to the particular creditor, was 
 void, and that the assignees of the debtor, upon his bankruptcy, 
 were entitled to recover the value of the goods from the creditor. 
 — Rust vs. Cooper, Cowp., 629 ; and vide Nixon vs. Jenkins, 2 H. 
 Black, 135. 
 
 Substituting a Petitioning Creditor. — If the creditor who has 
 petitioned for adjudication does not appear and prosecute the pro- 
 ceedings on the return day, or upon the day to which such proceed- 
 ings have been adjourned, the court may, upon the petition of any 
 other creditor to the required amount, proceed to adjudicate upon 
 the original petition, without requiring a new service or publication 
 of notice to the debtor. 
 
 This provision is adopted from the English Bankruptcy Amend- 
 
§ 39-42.] INVOLUNTARY BANKRUPTCY. 279 
 
 ment Act, and in practice it is usual there to apply by petition 
 for an order "to substitute another creditor in the place of the orig- 
 inal petitioning creditor, and to serve such order and notice upon 
 the latter.— Ex parte Ward, 3 Mont., D. & D., 24. 
 
 The schedule of forms to the English Bankrupt Law Consolida- 
 tion Act of 1849 contains the necessary order of substitution, and 
 questions have been raised as to the requisite statements in such 
 order to show jurisdiction. — Christie vs. Unwin, 11 Ad. & E.,373; 
 Brancker vs. Molyneux, 4 Man. & G., 226. 
 
 The petition by another creditor is in lieu of the original debt, or 
 alleged trading* and act of bankruptcy, and no fresh proof will be 
 necessary of such alleged matters, although no order of substitu- 
 tion should have been, made. See Kynaston vs. Davis, 15 Mees & 
 W., 705 ; 10 Jurist, 620 ; 15 L. J. Ex., 336. 
 
 According to the rule laid down by Sir J. Leach, then Master of 
 the Rolls, in ex parte Cousins, 2 Glyn. & J., 270, the first petitioning 
 creditor would be liable for the costs if the petition fails through 
 his misconduct or fraud ; but if through a mistake of law or fact, 
 the costs would be paid out of the estate. — Mc parte Whalley, 3 
 Mont. & Ayr., 206 ; ex parte Magnus, 2 Mont., D. & D., 604. 
 
 The petition may, for adjudication by the creditor, be amended 
 if not in accordance with the facts, 1 Fonb.,B. C, 51 ; and where a 
 petition, and the affidavits in support of it, had been wrongly inti- 
 tuled, and the petition had been amended under an order, the court 
 allowed the, affidavits to be taken off the file to be amended. — Mc 
 parte Burton, 3 De Gex & S., 5*78 ; 1 id., 257, 381. 
 
 Opposing the Adjudication. — Upon the return day, the debtor may 
 appear in person or by counsel to show cause why the adjudication 
 should not be made against him. He may at once, as h&s been be- 
 fore mentioned, demand a trial by a jury of the facts alleged in the 
 petition or in the accompanying affidavits, in which case such trial 
 will be appointed, or, if the debtor waives such right, the court or 
 the register will proceed at once to a hearing. 
 
 Should the debtor fail to appear either by himself or his counsel, 
 proof should be adduced of the due service of the order upon him, 
 and the court will then proceed to adjudge the debtor a bankrupt, 
 and make the formal adjudication. 
 
 Concurrently with the order of adjudication, a warrant is to issue, 
 directed to the marshal, to take possession of the property and the 
 estate of the debtor ; and if the debtor has failed to appear in per- 
 son or by attorney to show cause against the adjudication, and it is 
 therefore made against him ex parte, a certified copy of such ad- 
 judication is to be forthwith served upon him by delivery or pub- 
 lication in the . manner provided by the section for the service of 
 the order to show cause. 
 
 The order of adjudication of bankruptcy will require the bank- 
 rupt forthwith, or within such number of days, not exceeding five, 
 after the date of the order or of notice thereof, as shall be prescribed 
 in said order, to make and deliver, or transmit by mail post-paid, to 
 the messenger a schedule of his creditors and an inventory of his 
 
280 THE BANKRUPT LAW. [§ 39^i2. 
 
 estate in the form, and verified in the manner required of a petition- 
 ing debtor by Section 13. Vide notes to that section. 
 
 If the debtor has not appeared to show cause against the adjudi- 
 cation,\and taken no part in opposing the proceedings, it then will 
 be the duty of the messenger, in the event of his absence or inability 
 to find the bankrupt, to prepare a schedule and inventory of the 
 bankrupt's estate from the best information he can obtain. 
 
 During the proceedings for adjudication before a register, the 
 6th Section of the act provides that any party may take the opinion 
 of the district judge upon any point or matter arising in the course 
 of such proceedings, or upon the results of such proceedings, which 
 shall be stated by the register in the shape of a short certificate to . 
 the judge, who shall sign the same if he approve thereof, and such 
 certificate so signed shall be binding on all the parties to the pro- 
 ceeding. 
 
 No appeal is given to the alleged bankrupt against the order of 
 adjudication, as by the English acts, nor any process by which he 
 can annul such adjudication ; it is therefore to be presumed that the 
 decision of the register or of the court, or, in the event of his de- 
 manding a trial by jury, the verdict of such jury, will be final. 
 
 It was held, under the United States Bankrupt Act of 1841, that 
 the District Court had jurisdiction to supersede the bankruptcy, 
 and this will be the proper course to adopt where any circumstances 
 occurring subsequently to the adjudication would justify such an 
 application. — Morris's Estate, Crabbe, 70. 
 
 The Order of Adjudication. — The order of adjudication will be in 
 the form to be prescribed by the general rules and orders. 
 
 The following decisions of* the English Courts of Bankruptcy 
 with respect to an application by the alleged bankrupt to suspend 
 or rehear the proceedings for adjudication where he has made de- 
 fault to appear at the proper time specified in the notice, may upon 
 this subject be practically useful. 
 
 A was adjudged a bankrupt in February, 1851, and on the 19th 
 of the same month a duplicate of an adjudication was served on 
 him. He did not, within the time limited by the 104th Section of 
 the 12 and 13 Vic, c. 106, show cause to the court against the va- 
 lidity of the adjudication, and on the 28th of February the adjudi- 
 cation was advertised in the Gazette. On the 19th of March, A pre- 
 sented a petition to the commissioner, praying that the petition for 
 adjudication of bankruptcy, or the adjudication thereunder, might 
 be annulled. 
 
 Held, reversing the decision in 15 Jur., 984; S. C, 1 Eng. Rep., 
 312, that the commissioner had no jurisdiction to annul the adjudi- 
 cation after the time allowed by the 104th Section for showing 
 cause against the validity of the adjudication had expired ; and 
 that the petition so presented to the commissioner was not a proper 
 proceeding to dispute the adjudication within the meaning of the 
 233d Section of the act; and that, although a petition of appeal to 
 the vice-chancellor from the order on that petition was presented 
 within twenty-one days from the date of that order, according to 
 
§ 39^42.] INVOLUNTARY BANKRUPTCY. 281 
 
 the 12th Section, but more than twenty-one days after the adver- 
 tisement of adjudication, that the bankrupt was not entitled to have 
 the adjudication annulled. — Carter ex parte, Eng. Law & Eq. Rep., 
 112. 
 
 Four partners were. adjudicated bankrupts, two of whom resided 
 abroad. The adjudication was made on the 8th of November. 
 On the 13 th notice was given of an application, on behalf of the 
 partners abroad, to suspend the advertisement. On the 17th the 
 meeting was held to show cause against the issue of the advertise- 
 ment, and the application was then made. The commissioner re- 
 fused to suspend the issue of the advertisement on the ground that, 
 as the application was not made within the seven days, every thing 
 was in fieri, and the commissioner had authority to grant the appli- 
 cation. The matter was therefore sent back to the commissioner. 
 — In re Castelli, 8 English Law & Eq. Rep., 280. 
 
 Where, under Section 223 of the Bankrupt Law Consolidation 
 Act of 1849, 12 & 13 Vic, c. 106, the bankruptcy commissioner ad- 
 judicates a trader who has petitioned, under Section 212, to be a 
 bankrupt, he must state in the order of adjudication the facts giv- 
 ing him jurisdiction so to do under Section 223, otherwise the or- 
 der of adjudication is void. — Lee vs. Rowley, 8 Ellis & B., 857. 
 
 In the adjudications and proceedings, the bankrupts were de- 
 scribed as of C. Lane in the city, colonial broker, and of W. Lane in 
 the county of Middlesex, distillers. In the advertisement of the 
 bankruptcy in the Gazette, the description was identical, except 
 that W. Lane was said to be in the county of Essex. Held, that 
 the misdescription was immaterial. — Regina vs. Gordon, 33 Eng. 
 Law & Eq., 556. 
 
 Removal of the Proceedings. — The English Bankrupt Acts give 
 power to one District Court to order the petition which has been 
 presented to that court to be prosecuted in any other district, and 
 to transfer any petition for adjudication of bankruptcy and the pro- 
 ceedings thereunder, and the prosecution or further prosecution 
 thereof, from the Court of Bankruptcy in any one district to the 
 court in any other district. 
 
 This act contains no such provision, but it is presumed that the 
 District Courts would have the inherent power, after the proceed- 
 ings have been instituted, to change the venue, and order the pro- 
 ceedings to be transferred to another district. In practice it will 
 be found that the exercise of such a power will be of considerable 
 importance. A debtor who has contracted debts and committed 
 frauds in one state or district may, by a fictitious or collusive res- 
 idence in another state sufficient to entitle him to petition for vol- 
 untary bankruptcy, evade the consequences of his misconduct or 
 fraud. 
 
 This jurisdiction is exercised by' the English Courts with a view 
 to the interests of the creditors of the bankrupt generally, and to 
 the more economical and advantageous administration of the estate. 
 
 Where the petition of adjudication had been filed in the country 
 district in which the bankrupt resided and had property, but the 
 
282 - THE BANKRUPT LAW. [§'39-42. 
 
 great majority resided in London and elsewhere out of the district 
 in which the petition had been filed, the court, upon the application 
 of one of such creditors, made with consent of the others, directed 
 the removal of the petition and the proceedings thereunder from 
 the country district to the Court of Bankruptcy in London. — Ex 
 parte Sewell, 17 Jur., 333 ; 32 L. J. Bank., 29. The bankrupt was 
 allowed his expenses of changing the venue of the fiat after adjudi- 
 cation. — Ma parte Cheeseborough, 1 De Gex, 333; Anon., Mont. & ■ 
 Chit., 142. 
 
 The place of business of the bankrupt was in a town partly in 
 one county and partly in another, but was actually in one of the 
 two counties belonging to the more remote District Court. It was 
 held, that the fiat ought not to be transferred on that account to 
 the nearer. — Ex, parte Baylies, 1 De Gex, 440. A fiat in bankrupt-, 
 cy against partners carrying on business in one bankruptcy dis- 
 trict was issued in another district in which one of the partners 
 was residing. The court, on petition, removed the fiat to the for- 
 mer district, although it was alleged that the separate property of 
 the one partner, to which recourse would be necessarily had, was 
 wholly situate in the district in which the fiat was issued. — Ex, 
 parte Grylls, 12 Jur., 171 ; 17 L. J. Bank, 1 ; vide ex parte Hind, 1 
 De Gex, 161. 
 
 The principle laid down by the Court of Review was, that after 
 the jurisdiction had accrued, the power to change that jurisdiction 
 should not be exercised unless a case of clear benefit to the estate 
 was shown, and the absence of injustice to the bankrupt. — Ex parte 
 Mitchell, 3 Mont., D. & D, 397. 
 
 Where the bankrupt carried on business in London, which was 
 his last place of domicile, having been also engaged in mining spec- 
 ulations in Cornwall, and had been subsequently living with a rela- 
 tion near Dover under a feigned name, a fiat that had been issued 
 to commissioners at Dover was ordered to be impounded, and the 
 proceedings under it transferred to the Court of Bankruptcy in 
 London, to which a new fiat was ordered to be issued. — Ex parte 
 Gregory, 2 Mont., D. & D, 92. 
 
 The venue will not be changed because the existing means of 
 communication between the place of trading and the District Court 
 to which it belongs are not so convenient as those between the 
 place of trading and another District Court. — In re Oram, 3 Mont., 
 D. & D., 330 ; 7 Jur., 696. 
 
 It .has been held, under the English Bankrupt Acts, that where 
 adjudication has been once made, the court has no jurisdiction upon 
 the application of the bankrupt to annul such adjudication where 
 the bankrupt does not appear and show cause against such adjudica- 
 tion in compliance with the provisions of the act ; if he desires to 
 annul it, his only remedy is by an appeal to the Superior Court. — 
 Ex parte Carter, 20 Eng. Law & Eq. Rep., 19. 
 
§ 43.] CHANGE FROM BANKRUPTCY TO ARRANGEMENT. 283 
 
 CHANGE FROM BANKRUPTCY TO ARRANGE- 
 MENT. 
 
 Section 43. And he it further enacted, That if, at the 
 first meeting of creditors, or at any meeting of creditors 
 to be specially called for that purpose, and of which pre- 
 vious notice shall have been given for such length of 
 time and in such manner as the court may direct, three 
 fourths in value of the creditors whose claims have been 
 proved shall determine and resolve that it is for the in- 
 terest of the general body of the creditors that the estate 
 of the bankrupt should be wound up and settled, and dis- 
 tribution made among the creditors by trustees, under 
 the inspection and direction of a committee of the credit- 
 ors, it shall be lawful for the creditors to certify and re- 
 port such resolution to the court, and to nominate one or 
 more trustees to take, and hold, and distribute the estate, 
 under the direction of such committee. If it shall appear 
 to the court, after hearing the bankrupt and such credit- 
 ors as may desire to be heard, that the resolution was 
 duly passed, and that the interests of the creditors will 
 be promoted thereby, it shall confirm the same ; and upon 
 the execution and filing, by or on behalf of three fourths 
 in value of all the creditors whose claims have been 
 proved, of a consent that the estate of the bankrupt be 
 wound up and settled by said trustees, according to the 
 terms of such resolution, the bankrupt, or his assignee in 
 bankruptcy, if appointed, as the case may be, shall, under 
 the direction of the court, and under oath, convey, trans- 
 fer, and deliver all the property and estate of the bank- 
 rupt to the said trustee or trustees, who shall, upon such 
 conveyance and transfer, have and hold the same in the 
 same manner, and with the same powers and rights, in all 
 respects, as the bankrupt would have had or held the 
 
284 THE BANKRUPT LAW. [§43. 
 
 same if no proceedings in bankruptcy had been taken, 
 or as the assignee in bankruptcy would have done had 
 such resolution not been passed; and such consent, and 
 the proceedings thereunder, shall be as binding in all re- 
 spects on any creditor whose debt is provable, who has 
 not signed the same, as if he had signed it, and on any 
 creditor whose debt, if provable, is not proved, as if he had 
 proved it ; and the court, by order, shall direct all acts 
 and things needful to be done to carry into effect such 
 resolution of the creditors ; and the said trustees shall 
 proceed to wind up and settle the estate under the direc- 
 tion and inspection of such committee of the creditors, for 
 the equal benefit of all such creditors, and the winding 
 up and settlement of any estate under the provisions of 
 this section shall be deemed to be proceedings in bank- 
 ruptcy under this act ; and the said trustees shall have 
 all the rights and powers of assignees in bankruptcy. 
 The court, on the application of such trustees, shall have 
 power to summon and examine, on oath or otherwise, the 
 bankrupt, and any creditor, and any person indebted to 
 the estate, or known or suspected of having any of the 
 estate in his possession, of any other person whose exam- 
 ination may be material or necessary to aid the trustees 
 in the execution of their trust, and to compel the attend- 
 ance of such persons, and the production of books and 
 papers, in the same manner as in other proceedings in 
 bankruptcy under this act ; and the bankrupt shall have 
 the like right to apply for and obtain a discharge after 
 the passage of such resolution and the appointment of 
 such trustees as if such resolution had not been passed, 
 and as if all the proceedings had continued in the man- 
 ner provided in the preceding sections of this act. If the 
 resolution shall not be duly reported, or the consent of 
 the creditors shall not be duly filed, or if, upon its filing, 
 the court shall not think fit to approve thereof, the bank- 
 
§ 43.] CHANGE FROM BANKRUPTCY TO ARRANGEMENT. 285 
 
 ruptcy shall proceed as though no resolution had been 
 passed, and the court may make all necessary orders for 
 resuming the proceedings ; and the period of time which 
 shall have elapsed between the date of the resolution 
 and the date of the order for resuming the proceedings 
 shall not be reckoned in calculating periods of time pre- 
 scribed by this act. 
 
 Several experiments were made in England for the winding up 
 of insolvent debtors' estates subject to the supervision of the bank- 
 ruptcy courts, few of which operated successfully. 
 
 Under a deed entered into between a debtor and his creditors 
 with trustees appointed on behalf of each, one of the English acts 
 of 1861 allowed such estate to be administered, subject to the con- 
 trol and regulation of the bankruptcy courts. The machinery was 
 cumbrous and complicated, and the system was seldom adopted. 
 
 The recent English act for the amendment and consolidation of 
 the law of bankruptcy contained the provisions which are adopted 
 in this section. 
 
 After an adjudication in bankruptcy, either voluntary or com- 
 pulsory, at the first meeting of creditors, or at a meeting to be spe- 
 cially called for such purpose, of which notice for the period and in 
 the manner which the court may direct is to be given, three fourths 
 in value of the creditors, who have proved their debts have the 
 right to determine and resolve that it is for the interest of the gen- 
 eral body of the creditors that the bankrupt's estate should be 
 wound up and settled, and the assets of the estate divided among 
 the creditors by trustees, under the inspection and direction of a 
 committee of the creditors. 
 
 The resolution should nominate the trustees, and should be certi- 
 fied by the creditors, and reported to the court. The bankrupt, and 
 any of the creditors who have proved their debts, may be heard in 
 opposition to the resolution, and the court may either confirm or 
 refuse to confirm such resolution. Li the event of the court refus- 
 ing to confirm the resolution, the proceedings in the bankruptcy 
 will be continued. If the court confirm the resolution, a consent 
 by or on behalf of 'three fourths in value of all the creditors whose 
 claims have been proved to such resolution, is to be signed and filed. 
 
 The bankrupt, or the assignee under the bankruptcy, if such has 
 been elected or appointed, is then, under the direction of the court, 
 and under oath, to transfer and deliver all the, property and estate of 
 the bankrupt to the trustees nominated in the resolution, and they 
 are to hold the same with the same powers and rights in all re- 
 spects as the assignees under the bankruptcy. The consent, and 
 the proceedings thereunder, are to be binding in all respects upon 
 all the creditors whose debts are provable under the bankruptcy, 
 whether signed by such creditors or not. 
 
286 THE BANKRUPT LAW. [§43. 
 
 Under the supervision and order of the court, the trustees are to 
 proceed to wind up and settle the estate under the direction and 
 inspection of the committee of the creditors, making the same dis- 
 tribution of the estate in all respects as would have been made had 
 the bankruptcy proceeded. 
 
 On the application of the trustees, the court is to have the same 
 power to examine the bankrupt, and all other persons, as provided 
 by Section 26. Vide that section and notes. 
 
 The bankrupt also is to have the same right to apply for and ob- 
 tain his order of Discharge under the bankruptcy after the passage 
 of the resolution and the appointment of the trustees, as if the pro- 
 ceedings in the bankruptcy had not been thus superseded. Any 
 period of time which may have elapsed between the date of the 
 resolution of the creditors and the date of the order for resuming 
 the proceedings in bankruptcy, in the event of the resolution not be- 
 ing confirmed by the court, is not to be reckoned in calculating pe- 
 riods of time prescribed by this act. 
 
 When such a resolution has been passed and confirmed by the 
 court, it practically supersedes the bankruptcy, and places the con- 
 trol of the bankrupt's estate in the hands of the trustees, subject to 
 the supervision of the committee of creditors, and the regulation 
 and control in all respects of the court. 
 
 The trustees are to have all the rights and powers of assignees 
 in bankruptcy. If the resolution shall not be duly reported, or the 
 consent of the creditors shall not be duly filed, or if, upon its filing, 
 the court .shall not think fit to approve thereof, the bankruptcy 
 shall proceed as if no resolution had been passed, and the court 
 may make all necessary orders for resuming the proceedings. 
 
 It has been held that the Court bf Appeal will not interfere with 
 the discretion of a commissioner in bankruptcy who has decided 
 that a proposed arrangement is not a proper one to force upon a 
 dissentient minority of creditors, unless it is satisfied that such dis- 
 cretion has not been prudently and reasonably exercised, and that 
 the evidence is clear and strong that the arrangement is such as 
 ought to be agreed to. — Ex, parte Syers, 39 Eng. Law and Eq., 304. 
 
§44.] PENALTIES AGAINST BANKRUPTS. 287 
 
 PENALTIES AGAINST BANKRUPTS. 
 
 Section 44. And be it fwtker enacted, That from and 
 after the passage of this act, if any debtor or bankrupt 
 shall, after the commencement of proceedings in bank- 
 ruptcy, secrete or conceal any property belonging to his 
 estate, or part with, conceal, or destroy, alter, mutilate, or 
 falsify, or cause to be* concealed, destroyed, altered, muti- 
 lated, or falsified, any book, deed, document, or writing re- 
 lating thereto, or remove, or cause to be removed, the 
 same or any part thereof, out of the district, or otherwise 
 dispose of any part thereof, with intent to prevent it from 
 coming into the possession of the assignee in bankruptcy, 
 or to hinder, impede, or delay either of them in recover- 
 ing or receiving the same, or make any payment, gift, sale, 
 assignment, transfer, or conveyance of any property be- 
 longing to his estate with the like intent, or spends any 
 part thereof in gaming ; or shall, with intent to defraud, 
 willfully and fraudulently conceal from his assignee, or 
 omit from his schedule any property or effects whatsoev- 
 er ; or if, in case of any person having, to his knowledge 
 or belief, proved a false or fictitious debt against his es- 
 tate, he shall fail to disclose the same to his assignee 
 within one month after coming to the knowledge or be- 
 lief thereof ; or shall attempt to account for any of his 
 property by fictitious losses or expenses ; or shall, within 
 three months before the commencement of proceedings in 
 bankruptcy, under the false color and pretense of carry- 
 ing on business and dealing in the ordinary course of 
 trade, obtain on credit from any person any goods or 
 chattels with intent to defraud ; or shall, with intent to 
 defraud his creditors, within three months next before 
 the commencement of the proceedings in bankruptcy, 
 pawn, pledge, or dispose of, otherwise than by band fide 
 
288 ' THE BANKRUPT LAW. [§ 44. 
 
 transactions in the ordinary way of his trade, any of his 
 goods or chattels which have been obtained on credit and 
 remain unpaid for, he shall be deemed guilty of a misde- 
 meanor, and, upon conviction thereof in any court of the 
 United States, shall be punished by imprisonment, with 
 or without hard labor, for a term not exceeding three 
 years. 
 
 In the earlier legislation in England ugon the subject of bank- 
 ruptcy, misconduct on the part of the bankrupt was punished with 
 extreme severity. Concealing or embezzling his effects to the value 
 of twenty pounds was made a capital felony, and that punishment 
 was not changed to transportation for life until a comparatively 
 recent period. 
 
 Indeed, by the Statute of 5 & 6 Vict., chap. 122, if any person ad- 
 judged bankrupt after the commencement of that act should not, 
 upon the day limited for his surrender, surrender himself to the court, 
 and submit himself to be examined from time to time upon oath ; 
 or if any bankrupt should not, under his bankruptcy, discover all 
 his real and personal estate, and when he disposed of or transfer- 
 red such estate, or if he should have removed, concealed, or em- 
 bezzled any part of such estate to the value of ten pounds or up- 
 ward, or any books of account, papers, or writings relating thereto, 
 with intent to defraud his creditors, every such bankrupt should 
 be deemed guilty of felony, and be liable to be transported for life, 
 or for such term not less than seven years as the court should ad- 
 judge. 
 
 The more recent legislation has much mitigated the severity of 
 the law as respects bankrupts. 
 
 The United States Bankrupt Act of 1841 did not contain any en- 
 actment making the misconduct of the bankrupt a criminal offense. 
 
 The provisions of this section are adopted from the recent En- 
 glish Bankruptcy Amendment Act, and they also incorporate of- 
 fenses committed by fraudulent insolvents under the existing laws 
 of many States of the Union. 
 
 The following is an enumeration of offenses, which, when com- 
 mitted by the bankrupt, are created by this section misdemeanors, 
 and render the bankrupt upon conviction liable to punishment by 
 imprisonment, with or without hard labor, for a term not exceeding 
 three years : 
 
 First. — If any debtor or bankrupt shall, after the commencement 
 of proceedings in bankruptcy, secrete or conceal any property belong- 
 ing to his estate. 
 
 Second. — If he shall part with, conceal, or destroy, alter, mutilate, 
 or falsify, or cause to be concealed, destroyed, altered, mutilated, or 
 falsified, any book, deed, document, or writing relating thereto. 
 
 Third. — If he shall remove, or cause to be removed, any property 
 
§ 44.] PENALTIES AGAINST BANKRUPTS. 289 
 
 belonging to his estate, or any part thereof, out of the district, or oth- 
 erwise dispose of any part thereof, with intent to prevent it from com- 
 ing into the possession of the assignee in bankruptcy, or to hinder, 
 impede, or delay either of them in recovering or receiving the same. 
 
 Fourth. — If he shall make any payment, gift, sale, assignment, 
 transfer, or conveyance of any property belonging to his estate, with 
 the like intent. 
 
 Fifth. — If he spends any part of the property belonging to his es- 
 tate in gaming. 
 
 Sixth. — If he shall, with intent to defraud, willfully and fraudu- 
 lently conceal from his assignee, or omit from his schedule any prop- 
 erty or effects whatsoever. 
 
 Seventh. — If, in case of any person having, to his knowledge or 
 belief , proved a false or fictitious debt against his estate, he shall fail 
 to disclose the same to his assignee within one month after coming 
 to the knowledge or belief thereof. 
 
 Eighth. — If he shall attempt to account for any of his property 
 by fictitious losses or expenses. 
 
 Ninth. — If he shall, within three months before the commencement 
 of proceedings in bankruptcy, under the false color and pretense of 
 carrying on business and dealing in the ordinary course of trade, ob- 
 tain on credit from any person any goods or chattels with intent to 
 defraud. 
 
 Tenth. — If he shall, with intent to defraud his creditors, within 
 three months next before the commencement of proceedings in bank- 
 ruptcy, pawn, pledge, or dispose of otherwise than by bond fide trans- 
 actions in the ordinary way of his trade, any of his goods or chat- 
 tels which have been obtained on credit and remain unpaid for. 
 
 To constitute any one of the above offenses, it must have been 
 committed by the bankrupt after the date of the passage of this act, 
 and the offenses created in the ninth and tenth subdivisions within 
 three months next before the commencement of the proceedings in 
 the bankruptcy. 
 
 It may be useful to take a cursory view of the state of the crim- 
 inal law in this country and in England upon offenses, some of them 
 analogous, and some exactly similar to those created by this section. 
 
 By the Statute 13 Elizabeth, which makes void all conveyances, 
 etc., with intent to defraud creditors, it is provided that the parties 
 to any " such feigned, covinous, or fraudulent feoffment, gift, grant, 
 alienation, bargain, conveyance, bonds, suits, judgments, executions," 
 etc., "which at any time shall wittingly and willingly put in use, 
 avow, maintain, justify, or defend the same or any part of them as 
 true, simple, and done, had, or made bond fide, and upon good con- 
 siderations ; or shall alien or assign any the lands, tenements, goods, 
 leases, or other things before-mentioned, to him or them conveyed, 
 as is aforesaid," besides the civil penalty, " being lawfully convicted 
 thereof, shall suffer imprisonment for one half year without bail or 
 mainprise." 
 
 By Statute 27 Elizabeth the same provision is extended to those 
 concerned in similar devices to defraud purchasers. See 2 Russ. on 
 
 T 
 
290 THE BANKRUPT LAW. [§ 44. 
 
 Crimes, 315; Roberts' Digest, Brit. Stat., 294; 1 Chitty's Stat., 
 385. 
 
 There is but one case reported in the English books under this 
 statute of an indictment and conviction. In that case the judg- 
 ment was arrested after conviction upon technical grounds ; but Mr. 
 Justice Maule, in delivering the opinion of the Court of Appeals in 
 Criminal Cases, held, that an indictment would lie under the Statute 
 27 Elizabeth for a fraudulent alienation of real estate. — Reg. vs. 
 Smith, 6 Cox, C. C, 36. 
 
 In New York, the removal of goods out of the county to prevent 
 them being levied upon is a misdemeanor. Any person who shall 
 remove any of his property out of any county with intent to pre- 
 vent the same from being levied upon by execution, or who shall 
 secrete, assign, or convey, or otherwise dispose of any of his proper- 
 ty, with intent to defraud any creditor, or to prevent such property 
 being made liable for the payment of his debts, and any person who 
 shall receive such property with such intent, shall, on conviction, be 
 deemed guilty of a misdemeanor ; and where the property so re- 
 moved, secreted, concealed, assigned, conveyed, received, or other- 
 wise disposed of, shall be worth fifty dollars or less, such offense may 
 be tried by a court of Special Sessions of the Peace in the manner 
 directed in the third title of chapter second of the fourth part of 
 the Revised Statutes; and in such case the punishment for such 
 offense shall be limited as prescribed in said title. See 26 of ch- 300 
 of 1831; Rev. Stat., N. Y., pt. ii, c. v., tit. 1, art. 10, § 30. 
 
 In Pennsylvania, if any person shall fraudulently or maliciously 
 tear, burn, or in any way destroy any deed, lease, will, bond, or any 
 bill or note, check, draft, or other security for the payment of money, 
 or the delivery of goods, or any certificate of loan or other public 
 security of this Commonwealth or of the United States, or any of 
 them, or any certificate of the stock or debt of any bank, corpora- 
 tion, or society, either of this Commonwealth or the United States, 
 or either of them, or of any foreign country, or any receipt, acquit- 
 tance, release, or discharge of any debt, suit, or other demand, or 
 any transfer of assurance or money, stock, goods, chattels, or other 
 property, or any letter of attorney or other power, or any day-book 
 or other book of accounts, or any agreement or contract whatever, 
 with intent to defraud, prejudice, or injure any person, bank, body 
 corporate, society, or association, the person so offending shall be 
 
 fuilty of a misdemeanor, and, on conviction, be sentenced to pay a 
 ne not exceeding five hundred dollars, and to undergo an imprison- 
 ment not exceeding three years, or either, or both, at the discretion 
 of the court. — Rev. Acts, Bill 1,§ 129. 
 
 Fraudulently secreting or removing property by a debtor, is, by 
 the laws of Pennsylvania, also a misdemeanor. Any person who 
 shall remove any of his property out of any county with intent to 
 prevent the same from being made liable for the payment of his 
 debts, any person who shall receive such property with such intent, 
 or who shall, with like intent, collude with any debtor for the con- 
 cealment of any part of his estate or effects, or for giving a false 
 
§44.] • PENALTIES AGAINST BANKRUPTS. 291 
 
 color thereto, or shall conceal any grant, sale, lease, bond, or other 
 instrument or proceeding, either in writing or by parol; or shall be- 
 come a grantee, purchaser, lessee, obligee, or other like party in any 
 such instrument or proceeding, with lite fraudulent intent, or shall 
 act as broker, scrivener, agent, or witness in regard to such instru- 
 ment or proceeding, with the like intent, such person or persons, on 
 conviction thereof, shall be guilty of a misdemeanor, and be sen- 
 tenced to pay a sum not exceeding the value of the property or 
 effects so secreted, assigned, conveyed, or otherwise disposed of or 
 concealed, or in respect to which such collusion shall have taken 
 place, and undergo an imprisonment not exceeding one year. 
 
 The laws of the State of Pennsylvania upon the subject of fraud- 
 ulent insolvency are analogous to the provisions of this section upon 
 the subject of fraudulent bankruptcy. 
 
 It is enacted that it shall appear to the court, upon the hearing 
 of any petition in insolvency, either by examination of the petitioner 
 or other evidence, that there is just ground to believe either, 
 
 1st, That the insolvency of the petitioner arose from losses by 
 gambling, or by the purchase of lottery tickets ; or, 
 
 2dly, That such petitioner had embezzled or applied to his own 
 use any money or other property with which he had been intrust- 
 ed, either as bailee, agent, or depositary, and to the prejudice of op- 
 posing creditors ; or, 
 
 3dly, That he has concealed any part of his estate or effects, or 
 colluded or contrived with any person for such concealment, or con- 
 veyed the same to any person for' the use of himself or any of his 
 family or friends, or with the expectation of receiving any future 
 benefit to himself or them, and with intent to defraud his creditors, 
 in every such case it shall be the dufy of the court to commit such 
 person for trial. 
 
 If such debtor shall, upon trial, be convicted of any of the acts 
 mentioned in the preceding section, he shall be adjudged guilty of 
 a misdemeanor, and shall be sentenced as follows : 
 
 1st. If found guilty of embezzlement or concealment of property, 
 as aforesaid, he shall be sentenced to undergo an imprisonment, by 
 separate or solitary confinement at labor, not exceeding seven years. 
 
 2dly. If it shall appear, by the verdict of the jury on such trial, 
 that the insolvency of the petitioner was caused by gambling or the 
 purchase of lottery tickets as aforesaid, he shall be sentenced to an 
 imprisonment not exceeding three years. — Rev'd Acts, Bill 1, Sec. 
 132-3. 
 
 If any person, with an intent to defraud the creditors of an in- 
 solvent debtor, or any of them, shall collude or contrive with such 
 insolvent debtor for the concealment of any part of his estate or ef- 
 fects for giving a false color thereto, or shall contrive or concert any 
 grant, sale, lease, bond, or other instrument or proceeding, either in 
 writing or by parol, or shall become a grantee, purchaser, lessee, 
 obligee, or other like party in any such instrument or proceeding 
 with the like intent, or shall act as broker, scrivener, agent or wit- 
 ness in regard to such instrument or proceeding, with the like in- 
 
292 THE BANKRUPT LAW. [§ 44. 
 
 tent, such person shall he guilty of a misdemeanor, and, on convic- 
 tion thereof, he sentenced to pay a fine not exceeding ten thousand 
 dollars, and to undergo an imprisonment not exceeding two years, 
 and shall forfeit all claim which he may have to any part of the 
 estate of such dehtor. 
 
 These statute's, so far as concerns the secreting of goods, may be 
 treated as creating a new offense, which, though of recent origin, is 
 of frequent occurrence in the courts. To constitute it — and the 
 statutes are throughout so similar as to make the proceedings un- 
 der them the same — it is necessary there should be : 
 
 1st, An actual secreting, assigning, or conveying of goods, etc., 
 or a reception of the same. 
 
 2dly, An intent to prevent such property from being made lia- 
 ble for the payment of debts, or, in case of deception, a guilty 
 knowledge of such intent. 
 
 1st. There must be an actual secreting or assigning of the goods. 
 It is not enough that the debtor, in his creditor's face, refuses to sur- 
 render property which the creditor claims. Thus it was held that 
 a refusal of a defendant to deliver up a watch to a sheriff's deputy 
 was not within the statute. — People vs. Morrison, 13 Wend., 399. 
 
 The object of the law is not to make a man indictable who re- 
 sists process, since for this another procedure exists ; but to pre- 
 vent the secret and covinous disposal of property in such a way 
 as to elude the pursuit of the law, and baffle an execution. A point- 
 ed illustration of this is the case of a trader who, after obtaining 
 credit by stocking his store with goods, either hides such goods un- 
 til such time as he may be able, without suspicion or disturbance, 
 to convert their proceeds to his own use, or consigns them to auc- 
 tion under such covers as may enable him to turn them into cash 
 without his creditor's knowledge. It would seem, from analogy to 
 the Statutes of Elizabeth,, that the offense would continue to be in- 
 dictable even if a consideration were received, if the intent to de- 
 fraud was proved. 
 
 2dly. An intent must be shown to_ prevent the property from 
 being made liable for the payment of debts ; or, in case of receivers, 
 a guilty knowledge of such intent. 
 
 It is not enough that it should be shown that the debtor's ob- 
 ject was. to give a preference to a particular creditor. — Com. vs. 
 Hickey, 2 Parsons, 317. 
 
 All creditors are protected by the act ; and as " creditors," it 
 seems, may be classed even those whose debts are not yet due. — 
 Johnes vs. Potter, 5 S. & R. , 5 1 9. 
 
 In Pennsylvania, according to Judge Lewis, the Court of Crimi- 
 nal Sessions for the City and County of Philadelphia, created by the 
 act of 19th of May, 1838, has jurisdiction of an indictment for fraud- 
 ulent insolvency when the prisoner was committed for trial by the 
 Court of Common Pleas of that county. Upon the fact, elicited in 
 the course of an application for the benefit of the Insolvent Laws, 
 either party, the debtor or creditor, may apply to the court to bind 
 the petitioner over to answer the charge of intending to defraud 
 
§ 44.] PENALTIES AGAINST BANKRUPTS. 293 
 
 his creditors ; and if acquitted by the jury, he must be discharged 
 under the Insolvent Law by the court, and the court has no power 
 to direct an issue to ascertain the facts in the shape of a civil case. 
 Where a petitioner, after he had applied for the benefit of the In- 
 solvent Law, made an assignment of all his estate in trust for par- 
 ticular creditors, the court refused to bind him over for trial, con- 
 sidering the assignment as different in its nature from that contem- 
 plated by the act of 1816. 
 
 In Maryland, in cases of fraudulent insolvency, the statute de- 
 clares that the offender shall suffer as in case of willful and corrupt 
 perjury, and be forever debarred from any benefit of the act. — Dor- 
 sey's Laws, p. 533, c. 110, § 9, 1805. 
 
 In Ohio, the statute provides that the offender shall be fined in 
 any sum not exceeding five hundred dollars, or be imprisoned in 
 the cell or dungeon of the jail of the county, and be fed on bread 
 and water only, not exceeding ten days, or both, at the discretion 
 of the court.— Rev. St. of Ohio, ed. of 1854, p. 286, c. 33, § 12. 
 
 In Pennsylvania, it was held, that an indictment on the statute 
 passed subsequently to the act of 24th of April, 1198, to prevent in- 
 solvent debtors from secreting their property from their creditors, 
 can not be sustained on an assignment of transfer, which is only 
 fraudulent in law. To constitute a criminal offense, there must be 
 a fraud in fact — a criminal intention to interfere with the rights of 
 the creditor. — Com. vs. Hickey, 3 Penn. L. Jour., 86. 
 
 In Maine, the making of a fraudulent assignment, with intent to 
 hinder, delay, or defraud creditors, is punished by a fine not exceed- 
 ing one thousand dollars, and imprisonment in the county jail not 
 more than one year. — Rev. Sts. of Maine, p. 691, § 2. 
 
 In New York, Michigan, and Wisconsin, the statute provides that 
 the debtor in such case shall, upon conviction, be adjudged guilty 
 of a misdemeanor. — N. Y. Rev. Sts., 5th ed., vol. iii., p. 972 ; Rev. Sts. 
 of Mich., c. 141, § 17 ; Rev. Sts. of Wis., ed. of 1858, pp. 400, 401. 
 
 In Vermont, the party to such a fraudulent conveyance forfeits 
 the value of the property fraudulently conveyed. — Rev. Sts. of Vt., 
 tit. 28, c. 114, §§ 23, 24. 
 
 In Illinois, the offender is punished by a fine not exceeding one 
 thousand dollars. — Rev. Sts. of 111., ed. of 1858, pp. 400, 401. 
 
 In England, upon an indictment under 1 & 2 Vict., c. 110, § 99" 
 against an insolvent for willfully and fraudulently omitting sums 
 of money which had been received by him prior to the date of the 
 vesting order, and which, in accordance with 1 & 2 Vict.,c. 110, 
 § 69, should have been inserted in the special balance sheet which 
 had been filed by the defendant ; there, however, they had been 
 omitted, Lord Abinger, C. B., held, that the indictment would not 
 lie under the circumstances. The special balance sheet was, as it 
 were, a mere memorandum of the insolvent's receipts and disburse- 
 ments for the guidance of the court, and a man should not be held 
 thus criminally responsible for errors therein. The consequence of 
 such an interpretation of Section 99 as would be necessary for the 
 purpose of this indictment, would be to make a highly penal clause 
 
294 THE BANKRUPT LAW. [§ 44. 
 
 apply to cases possibly of no intentional fraud, and of comparative- 
 ly trifling inaccuracy. The section applied only to cases where the 
 omission would affect the interests of creditors, and not where it is 
 a mere omission of money received and subsequently expended by 
 the insolvent. — Reg. vs. Warner, 1 C. & Marsh., 628. 
 
 In England, it appears to have been holden, that where an indict- 
 ment against a bankrupt for concealing property did not, in stating 
 the property, sufficiently specify the particular parts of it, though 
 it might have sufficiently specified others, and those specified might 
 have been of the necessary value, such indictment was bad, on the 
 ground 'that the statement as to the parts not specified tended to 
 embarrass the prisoner ; and the decision appears to have proceed- 
 ed upon the principle, that where value is essential to constitute an 
 offense, and the value is ascribed to many articles collectively, the 
 offense must be made out aB to every one of these articles, the 
 grand jury having only ascribed that value to all those articles col- 
 lectively. — Rex vs. Forsyth, Russ. & Ry., 274. 
 
 An indictment against a bankrupt for concealing part of his per- 
 sonal estate must conclude against the form of the statute, or it is 
 bad in arrest of judgment. The indictment, after stating the pris- 
 oner was a tradesman, alleged that he did not disclose or discover 
 all his estate and effects to the commissioners, but fraudulently and 
 feloniously concealed and embezzled part of his personal estate, 
 specifying it. To this indictment it was objected, in arrest of judg- 
 ment, that the offense was not stated to be done against the form 
 of the statute, and, upon a case reserved, the judges were unani-. 
 mously of opinion that the omission of contra formam stdtuti was 
 not cured by the 7th George IV., chap. 64, §§ 21, 22, and was fatal 
 to the indictment.— Rex vs. Radcliff,2 M., C. C, 68 ; S. C, 2 Lew., 
 57. 
 
 In point of law, the prosecutor may prefer separate indictments 
 for the fraudulent omission of each article. To an indictment for 
 fraudulently omitting ten chairs, ten tables, two carts, etc., the pris- 
 oner pleaded autrefois acquit ; and the former indictment was the 
 same as the present, except that the two carts mentioned in the 
 present indictment were not mentioned in the former one. It was, 
 however, submitted, that the two charges were substantially the 
 same ; the charge in each indictment was, that the prisoner had 
 fraudulently sworn to a schedule which did not contain a true enu- 
 meration of his goods.-^Patteson, J. : " I can not say that the plea 
 of autrefois acquit is in strictness a good defense to the whole of 
 this indictment. The prisoner may have fraudulently omitted out 
 of his schedule the goods mentioned in this indictment which were 
 not mentioned in the last, and, in point of law, I think a prosecutor 
 may prefer separate indictments for each omission ; but, though the 
 present indictment be in point of law maintainable, I can not help 
 saying that, excepting under very peculiar circumstances, I think 
 such a course ought not to be pursued ; and if the case goes on, I 
 shall strongly advise the jury to acquit the prisoner, unless they 
 think that the goods, now for the first time brought forward, were 
 
§44.] ' PENALTIES AGAINST BANKRUPTS. 295 
 
 omitted out of the schedule under circumstances essentially differ- 
 ent from the others." — Rex vs. Champneys, 2 M. & Rob., 26. 
 
 In Rex vs. Evani,R. & M., C. C, 70, it was held, that the indict- 
 ment might be preferred in Middlesex if the prosecutor could prove 
 an actual concealment there, although the last examination of the 
 bankrupt took place in London. 
 
 It has been held necessary to prove regularly the trading, the pe- 
 titioning creditor's debt, the act of bankruptcy, the issuing of the 
 commission, and the subsequent proceedings. While the commis- 
 sion subsists, its validity may be assumed for certain civil purposes ; 
 but when a criminal case occurs, unless the party was a bankrupt, 
 all falls to the ground. — Rex vs. Punshon, 5 Campb., 97. In a case 
 where the defendant was indicted for refusing to give the commis- 
 sioners an account of his effects, he was acquitted on the ground 
 that he was an infant at the time the debt was contracted, and 
 could not, therefore, be a bankrupt for debts which he was not 
 obliged to pay. — Rex vs. Cole, 1 Ld. Raym., 443. And it has since 
 been held that a commission against an infant is void ; and the 
 Court of Chancery refused to lend its aid to a prosecution on that 
 statute by ordering the clerk under <the commission to attend the 
 trial and produce the proceedings. — 1 Hawk, P. C, c. 49. 
 
 It was also ruled, that on an indictment against a bankrupt, 
 where the petitioning creditor's debt was alleged to be due to A, 
 B, and C, surviving executors of the last will and testament of D, 
 after proof that A, B, and C were the executors, and were directed 
 by the will to carry on the business, it was necessary to prove that 
 they all assented to act in discharge of the trust, and that a general 
 omission by the prisoner of a debt due to the executors of D would 
 not supply the defect. — Rex vs. Barnes, 1 Stark. R., 243. 
 
 It was held in England that the bankrupt is not indictable for 
 concealment until he has concluded his last examination. A bank- 
 rupt was indicted for not delivering up certain account-books, and 
 it appeared that the final examination had never been completed, 
 but that it had been adjourned sine die; it was held that he must 
 be acquitted, for, until the examination was concluded, he had a 
 locus peniientice, and might deliver up all his books correctly. — Rex 
 vs. Walters, 5 C. & P., 138. 
 
 Upon an indictment against a bankrupt for concealing his effects, 
 where the evidence was, that the prisoner, on his last examination, 
 stated that a book given in by him contained an account of all his 
 effects, it was holden to be incumbent on the prosecutor to produce 
 the book, or to account for its non-production. The book was a 
 necessary part of the prosecutor's case, in order that it might have 
 been seen whether that book mentioned the property. — Rex vs. Eva- 
 ni, 1825, R. & M., C. C. R., 70. In the same case it was held, at the 
 trial, that it was not necessary that the goods should be concealed 
 by the prisoner himself, or that he should have had the possession of 
 them after the bankruptcy ; but that it was sufficient if another 
 person had them as his agent and subject to the control of the pris- 
 oner, and had taken them by the direction, and with the privity and 
 
296 THE BANKRUPT LAW. [§ 44. 
 
 knowledge of the prisoner, to the place where they were deposited. 
 Vide same case. 
 
 Where an indictment for conspiracy stated the bankruptcy of 
 one of the defendants in a prefatory allegation, Lord Tenterden, 
 C. J., held, that the assignment could not be put in evidence with- 
 out calling the attesting witness. — Rex vs. Pope, 5 C. & P., 208. 
 
 Parol evidence of any thing a bankrupt says at the time of his 
 last examination can not be received, although it appear that no 
 part of what he said was taken down in writing. The paper pur- 
 porting to be the final examination did not contain any questions 
 or answers ; it merely stated that the commissioners, not being sat- 
 isfied with the answers of the bankrupt, adjourned the examination 
 sine die, and it was proposed to give parol evidence of what the 
 bankrupt said before the commissioners, which it was contended 
 might be done, as it was shown that what the bankrupt said was 
 not taken down ; and besides, by Section 36, the commissioners 
 are empowered to examine by parol. — Park, J. : "I can receive no 
 evidence of the examination but the writing." The examination is 
 required to be in writing by the Act of Parliament, and that part 
 which relates to the examining parol applies only to the questions 
 which may either be put by parol or by written interrogation. — 
 Rex vs. Walters, 5 C. & P., 138. 
 
 Where an indictment alleged that after the examination of the 
 bankrupt, and after he had subscribed the same, a question was put 
 to the bankrupt, and it was objected to any evidenc being given of 
 questions and answers which were not reduced to writing. It was 
 replied that the material answers alone were taken down ; and it 
 sometimes happened that answers which at the time seemed imma- 
 terial, afterward became material. The answers proposed to be 
 given in evidence were given after the examinations were conclud- 
 ed in the first instance, that they also were reduced to writing. — 
 Williams, Justice : " I can not receive parol evidence of any an- 
 swers to questions that were put to the bankrupt before the com- 
 missioners subscribed their names to the examination. I must pre- 
 sume that all the answers prior thereto that were material were 
 taken down and included in the examination before their signatures 
 were aflixed to it. But answers to questions put subsequently to 
 such examination may be given in evidence." — Rex vs. Radcliffe, 2 
 Lew., 27. 
 
 _ In England it has been held, that the balance sheet of a bankrupt, 
 signed and sworn by him, was not evidence against him on an in- 
 dictment for concealing his effects, to prove the petitioning credit- 
 or's debt. — Rex vs. Britton, 1 M. & Rob., 29 V. The ground of this 
 decision was, that the balance sheet could not be given in evidence, 
 unless there was a valid commission, and, therefore, the balance 
 sheets being part of the proceedings, could not be put in evidence 
 to prove the petitioning creditor's debt as a part of the commission. 
 — Per Patteson, J., in Reg. vs. Wheater, infra. But it has since 
 been held, that the examination of a person taken on oath before a 
 commissioner of bankruptcy is admissible against him on a charge 
 
§ 44.] PENALTIES AGAINST BANKRUPTS. 297 
 
 of forgery, he having been cautioned and allowed to elect what 
 questions he would answer. — Reg. vs. Wheater, 2 Moo., C. C. R., 45. 
 
 It was decided in England that a bankrupt's wife could not be 
 examined on the part of the prosecution, on an indictment against 
 the bankrupt for offenses against the 5 Geo. 2, chap. 30, 1 Hawk, P. 
 C. ; c. 49 Fraudulent Bankruptcy, § 4. 
 
 It was held by Coleridge, J., that the words " with intent to de- 
 fraud his creditors" override the whole section, and that an indict- 
 ment against a bankrupt for not surrendering on the day limited, 
 which did not aver that it was " with intent to defraud his credit- 
 ors," was bad. — R. vs. Hall, Ass., 1846. 
 
 On an indictment under the 5 & 6 Vict., c. 122, § 32, against a 
 bankrupt for not surrendering upon the day limited, Coleridge, J., 
 held that the production of the adjudication enrolled, with a copy 
 of the gazette containing the advertisement of the act of bankrupt- 
 cy, sufficiently supported the indictment, although it averred the 
 trading petitioning creditor's debt and act of bankruptcy. — R. vs. 
 Hall, Ass,, 1846., M. S. ' 
 
 The bankrupt's examination may be proved by its production, 
 and by the evidence of the solicitor to the commission, or other 
 person who was present at the time, and can speak of its having 
 been regularly taken. 
 
 In order to bring the prisoner within the statute, it must appear 
 that there was a criminal intent in his refusing to disclose his prop- 
 erty. Thus, where the prisoner was indicted under the 5th Geo. 2, 
 c. 30, for not submitting to be examined and truly disclosing his 
 property, and the evidence was that on the last day of his examina- 
 tion he appeared before the commissioners and was sworn and ex- 
 amined, but as to certain parts of his property refused to give any 
 answer, stating that this was not done to defraud his creditors, but 
 under legal advice to dispute the validity of his commission, and 
 the prisoner was convicted, the judges, on a case reserved, held the 
 conviction wrong. — Page's case, Russ. & Ry., 392 ; 1 Brod. & B., 
 308. 
 
 Where a bankrupt was indicted under the 6 Geo. 4 for not sur- 
 rendering, and it appeared in evidence that he was in custody under 
 a detainer collusively lodged, it was urged for the prosecution that, 
 though in custody, he was bound to give notice of his situation to 
 the commissioners, in order that they might issue their warrants to 
 bring him before them, or that he ought to have applied for a habeas 
 corpus to enable him to appear before them, or that, at all events, 
 he ought to have applied to the chancellor to enlarge the time for 
 surrender. But Littledale, J., said, " that the act was to be con- 
 strued favorably toward the prisoner, who was not bound to make 
 the application contended for ; and that, as the commissioners had 
 power, to issue their warrant, and by diligent search might discover 
 where he was, the bankrupt was not bound to give them notice." 
 He was also of opinion that the prisoner was not guilty of felony, 
 though the detainer under which he Was in custody was collusive. 
 —Mitchell's case, 1 Lewin, C. G, 20 ; 4 C. & P., 251. 
 
■298 THE BANKRUPT LAW. [§ 44. 
 
 If, on his examination, the. bankrupt refer to a document as con- 
 taining a full and true discovery of his estate and effects, it is in- 
 cumbent on the prosecutor to produce that book, or to account for 
 its non-production, for -otherwise it can not be known whether the 
 effects have been concealed or not. — Evani's case, 1 Moody, C. C, 70. 
 
 It is not necessary that the concealment should have been effect- 
 ed by the hands of the prisoner himself, or that he should be shown 
 to have been in the actual possession of the goods concealed. After 
 the issuing of the commission, it is sufficient if another person, having 
 the possession of the effects as the agent of the prisoner, and hold- 
 ing them subject toTiis control, is the instrument of the conceal- 
 ment. — See Evani's case, 1 Moody, C. C, 74. 
 
 The evidence of the concealment, and of the guilty intent with 
 which the act is done, ought to be very satisfactorilymade out, and 
 should be so clear as to leave little doubt on the point. 
 
 Concealment of goods in the houses of neighbors or of associates, 
 or in secret places in the bankrupt's own house, or sending them 
 away in the night and endeavoring to escape abroad with part of 
 his effects, etc., constitute the usual proofs in cases of this descrip- 
 tion. — See Alison, Principles, C. M., Law of Scotland, 571. 
 
 Upon an indictment under the Bankrupt Law Consolidation Act, 
 12 & 13 Vict., c. 106, § 253, it is not enough to prove the petition 
 to, and adjudication of the Court of Bankruptcy, but the prelimin- 
 ary matters, namely, the petitioning creditor's debt, the trading, 
 and act of bankruptcy must be also proved. "Where, therefore, 
 upon such an indictment, the act of bankruptcy relied on was the 
 filing a petition in the insolvent court, and the only evidence offer- 
 ed was a copy of the petition, duly signed and certified by the prop- 
 er ofiicer, in accordance with the 239th Section of the act, but the 
 time of filing such petition was only shown by an indorsement on 
 the back of the copy, such indorsement not being certified in any 
 way, or referred to by the petition, it was held, that although the 
 petition to, and adjudication by the Court of Bankruptcy were 
 proved, yet that it was also necessary to prove the act of bankrupt- 
 cy, and that the evidence was not sufficient for that purpose. — Re- 
 gina vs. Lands, 33 Eng. Law and Eq., 536. 
 
 It was in the same case also held, that if the notice to surrender 
 was duly served, and the bankrupt did not surrender pursuant to 
 it, he would be guilty of the offense of not surrendering, though he 
 had no actual knowledge that he had been made a bankrupt ; and 
 also that, assuming the words in the 251st Section, "with intent to 
 defraud his creditors," applied to the case of a bankrupt not sur- 
 rendering, yet that the absconding with the intent proved, was suffi- 
 cient. — Regina vs. Gordon, 33 Eng. Law and Eq., 556. 
 
 Held, by a majority of the judges, that the conviction was bad, 
 as a separate notice to surrender had not been left for each of the 
 bankrupts at their last place of business. — Regina vs. Gordon, 33 
 Eng. Law and Eq. And also, that although the petition was allot- 
 ted to Commissioner G, yet that any other commissioner might sit 
 and act for him ; consequently, that the notice to surrender, though 
 
§ 45, 46.] PENALTIES AGAINST OFFICERS. 299 
 
 signed by Commissioner H, was good, and that it was the bank- 
 rupt's duty to surrender before Commissioner F, who was sitting 
 for Commissioner G on the day appointed ; that it was no objection 
 to the notice that it was to surrender on one of two days, one of 
 which was passed at the time of the service of the notice, as the 
 last of the two days was the day limited according to the statute 
 for the surrender. — Regina vs. Gordon, 33 Eng. Law and Eq., 556. 
 
 Held also, that searching at the counting-house, and giving the 
 bankrupt notice to produce, were sufficient to allow of production 
 of secondary evidence of the documents left at the counting-house. 
 — Regina vs. Gordon, 33 Eng. Law and Eq., 556. 
 
 PENALTIES AGALNST OFFICERS. 
 
 Section 45. And he it further enacted, That if any 
 judge, register, clerk, marshal, messenger, assignee, or any- 
 other officer of the several Courts of Bankruptcy shaE,for 
 any thing done or pretended to be done under this act, 
 or under color of doing any thing thereunder, willfully 
 demand or take, or appoint or allow any person what; 
 ever to take for him or on his account, or for or on ac- 
 count of any other person, or in trust for him or for any 
 other person, any fee, emolument, gratuity, sum of mon- 
 ey, or any thing of value whatever, other than is allowed 
 by this act, or which shall be allowed under the author- 
 ity thereof, such person, when convicted thereof, shall for- 
 feit and pay the sum of not less than three hundred dol- 
 lars, and not exceeding five hundred dollars, and be im- 
 prisoned not exceeding three years. 
 
 Section 46. And he it fwther enacted, That if any per- 
 son shall forge the signature of a judge, register, or other 
 officer of the court, or shall forge or counterfeit the seal 
 of the courts, or knowingly concur in using any such 
 forged or counterfeit signature or seal for the purpose of 
 authenticating any proceeding or document, or shall ten- 
 der in evidence any such proceeding or document with a 
 false or counterfeit signature of any such judge, register, 
 or other officer, or a false or counterfeit seal of the court, 
 
300 THE BANKRUPT LAW. [§ 45, 46. 
 
 subscribed or attached thereto, knowing such signature 
 or seal to be false or counterfeit, any such person shall be 
 guilty of felony, and, upon conviction thereof, shall be lia- 
 ble to a fine of not less than five hundred dollars, and 
 not more than five thousand dollars, and to be imprison- 
 ed not exceeding five years, at the discretion of the court. 
 
 Extortion, in its general sense, signifies any oppression by color 
 of right, but technically it may be defined to be the taking of money 
 by an officer by reason of his office. 
 
 Almost every State of the Union makes such offense an indictable 
 misdemeanor. 
 
 It is also an offense at common law, punishable by fine and im- 
 prisonment, and the removal from the office in the execution of which 
 it was committed. 
 
 In New York, the statute provides, that no fee or compensation al- 
 lowed by law shall be demanded or received by any officer or per- 
 son for any service, unless such service was actually rendered by 
 him, except in the case of charges for prospective costs, as specified 
 in the act. 
 
 A violation of the act is deemed a misdemeanor. — 2 New York 
 Rev. Stat., title 4, part 3, cap. 10, § 6. 
 
 In Vermont, the Constitution provides that if any officer shall wit- 
 tingly and willfully take greater fees than the law allows him, it 
 shall ever after disqualify him from holding any office in the State, 
 until he shall be restored by act of Legislature. 
 
 In Ohio, it is an indictable offense in public officers to exact and 
 receive any thing more for the performance of their legal duties than 
 the fees allowed by statute. — Gilmore vs. Lewis, 12 Ohio Rep., 281. 
 
 In New Jersey, it is enacted, that any officer who receives greater 
 fees than are allowed by law, shall restore to the party aggrieved 
 double damages and costs, and shall be punished by fine and impris- 
 onment, or both, or by fine or imprisonment at hard labor, or both, 
 the fine not to exceed four hundred dollars, nor the imprisonment 
 the term of two years. — Rev. Stat, of New Jersey, p. 264, § 25. 
 
 In Pennsylvania, a few years after a decision had been pronounced 
 that a statute, which gave a penalty of fifty dollars for extortion, 
 took away the remedy by indictment, the Legislature passed an 
 act by which that remedy was restored, and enacting that, in addi- 
 tion to the action for the penalty, in all cases where an officer shall 
 willfully, fraudulently, and corruptly charge, demand, or take any 
 of the fees, where the business for such fees arte chargeable shall not 
 have been done and performed, he may be indicted for misdemean- 
 or. — Lewis's Crim. Law, 272. 
 
 In Maine, the statute provides that if any person shall corruptly 
 and willfully demand and receive of another for performing any 
 service or official duty, for which the fee or compensation is estab- 
 lished by law, or shall receive security for any greater fee or com- 
 
§ 45, 46.] PENALTIES AGAINST OPPICEES. 301 
 
 pensation than is allowed or provided for the same, or if any wit- 
 ness shall falsely and corruptly certify that, as such, he has traveled 
 more miles or attended more days than he has actually traveled or 
 attended, he shall be punished, on indictment and conviction, by a 
 fine not exceeding thirty dollars for each offense; or he shall for- 
 feit a sum not more than thirty dollars for each offense, to be re- 
 covered by action of debt, in which latter case the forfeiture shall 
 accrue to the person who shall first sue for the same in his own 
 name; but no indictment or action for such offense shall be sus- 
 tained, unless commenced within one year after the commission of 
 the offense. — Rev. Stat, of Maine, p. 680, § 17. 
 
 In Georgia, the statute upon this subject provides that any officer 
 demanding or extorting any fees by color of his oflice illegally shall 
 be subject to indictment, and, on conviction, shall be punished by 
 fine, at the discretion of the court, and shall, moreover, be dismissed 
 from oflice. — Hotchkiss's Law of Georgia, p. 736, § 57. 
 
 In Wisconsin, no judge, justice, sheriff, or other officer whatever, 
 
 or other person to whom any'fees or compensation shall be allowed 
 
 by law for any service, shall take or receive any other or greater 
 
 'fee or reward for such service but such as is or shall be allowed by 
 
 the laws of this State.— Rev. Stat, of Wis., p. 677, § 43. 
 
 By the Act of Congress, 3d of March, 1825, Sec. 12, it is declared, 
 that if any officer of the United States shall be guilty of extortion 
 under or by color of his oflice, every person so offending shall, on 
 conviction thereof, be punished by fine not exceeding five hundred 
 dollars, or by imprisonment not exceeding one year, according to 
 the aggravation of the offense. 
 
 Forgery of the signature of any judge, register, or other officer 
 of the Court of Bankruptcy, or forging or counterfeiting the seal 
 of any of the courts, or knowingly concurring in the use of any 
 forged, or counterfeited signature for the purpose of authenticating 
 any proceeding or document in the course of the proceedings in 
 bankruptcy, or tendering in evidence any proceeding or document 
 with a false or counterfeited signature of any judge, register, or 
 other officer of the Court of Bankruptcy, with a guilty knowledge, 
 is made by the section a felony, with a liability, upon conviction, to 
 be fined, and to be imprisoned for a term not exceeding five years. 
 
 The statutes of the United States contain no enactment of a sim- 
 ilar character. Forging and counterfeiting public securities, treas- 
 ury-notes, stamps, deeds, or powers of attorney, for the purpose of 
 defrauding the United States, or for the purpose of selling or con- 
 veying any shares in public stock, debts, pensions or annuities, or 
 certificates of registry, or enrollment of ships, are made criminal 
 offenses by various acts of the United States, but there is no en- 
 actment similar to that contained in this section. The act of 1790, 
 § 15, declares, that if any person shall feloniously steal, take away, 
 alter, falsify, or otherwise avoid any record, writ, process, or other 
 proceedings, in any of the courts of the United States, by means 
 whereof any judgment shall be reversed, made void, or not take ef- 
 fect, or if any person acknowledge, or procure to be acknowledged 
 
302 THE BANKRUPT LAW. [§ 45, 46. 
 
 in any of the courts aforesaid, any recognizance, bail, or judgment, 
 in the name or names of any other person or persona, not privy or 
 consenting to the same, every such person or persons, on conviction 
 thereof, shall be fined not exceeding five thousand dollars, or be im- 
 prisoned not exceeding seven' years, and whipped not exceeding 
 thirty-nine stripes. This enactment, however, would not compre- 
 hend the species of offense created by this section. 
 
 The criminal statutes of the State of New York make it the 
 crime of forgery in the second degree to forge or counterfeit the 
 seal of any public office authorized by law, or the seal of any court 
 of record. 
 
 The Revised Statutes of Massachusetts make it a felony to make, 
 or to forge, or counterfeit any public record, or any certificate, re- 
 turn, or attestation of any clerk of a court, public register, notary 
 public, or any other public officer in relation to any matter wherein 
 such certificate, return, or attestation may be received as legal 
 proof. 
 
 By the laws of Pennsylvania, if any person shall falsely and fraud- 
 ulently forge or counterfeit, or falsely and 'fraudulently be concern- 
 ed in the forging and counterfeiting the great or less seal of the 
 Commonwealth^ the public and common seal of any court, office, 
 county, or corporation, or any other seal authorized by law ; or shall 
 falsely and fraudulently utter and publish any instrument or writ- 
 ing whatever impressed with such forged and counterfeited seal, 
 knowing the same to be forged and counterfeited, he shall be guilty 
 of a misdemeanor, and on conviction, be sentenced to pay a fine not 
 exceeding one thousand dollars, and to undergo an imprisonment 
 by separate or solitary confinement at hard labor not exceeding 
 seven years.. 
 
 The Code of Virginia makes it felony, if any free person forges 
 any public record, or any certificate of a judge, justice, public reg- 
 ister, or any public officer, in relation to any matter where such 
 document may be received as legal proof, and makes the uttering 
 or attempting to employ as true such forged record or certificate, 
 knowing the same to be forged, equally a felony. 
 
 The statutes of Ohio -also contain similar enactments. 
 
§47.] FEES AND COSTS. 303 
 
 FEES AND COSTS. 
 
 Section 47. And he it further enacted, That in each case 
 there shall be allowed and paid, in addition to the fees 
 of the clerk of the court as now established by law, or as 
 may be established by general order, under the provi- 
 sions of this act, for fees in bankruptcy, the following fees, 
 which shall be applied to the payment for the services of 
 the registers : 
 
 For issuing every warrant, two dollars. 
 
 For each day in which a meeting is held, three dollars. 
 
 For each order for a dividend, three dollars. 
 
 For every order substituting an arrangement by trust- 
 deed for bankruptcy, two dollars. 
 
 For every bond with sureties,, two dollars. 
 
 For every application for any meeting in any matter 
 under this act, one dollar. 
 
 For every day's service while actually employed under 
 a special order of the court, a sum not exceeding five dol- 
 lars, to be allowed by the court. 
 
 For taking depositions, the fees now allowed by law. 
 
 For every discharge when there is no opposition, two 
 dollars. 
 
 Such fees shall have priority of payment over all other 
 claims out of the estate, and before a warrant issues, the 
 petitioner shall deposit with the senior register of the 
 court, or with the clerk, to be delivered to the register, 
 fifty .dollars as security for the payment thereof; and if 
 there are not sufficient assets for the payment of the fees, 
 the person upon whose petition the warrant is issued 
 shall pay the same, and the court may issue an execution 
 against him to compel payment to the register. 
 
 Before any dividend is ordered, the assignee shall pay 
 
304 THE BANKRUPT LAW. [§ 48. 
 
 out of the estate to the messenger the following fees, and 
 no more : 
 
 1st. For service of warrant, two dollars. 
 
 2d. For all necessary travel, at the rate of five cents a 
 mile, each way. 
 
 3d. For each written note to creditor named in the 
 schedule, ten cents. 
 
 4th. For custody of property, publication of notices, 
 and other services, his actual and necessary expenses upon 
 returning the same in specific items, and making oath 
 that they have been actually incurred and paid by him, 
 and are just and reasonable, the same to be taxed or ad- 
 justed by the court, and the oath of the messenger shall 
 not be conclusive as to the necessity of said expenses. 
 
 For cause shown, and upon hearing thereon, such fur- 
 ther allowance may be made as the court, in its discretion, 
 may determine. 
 
 The enumeration of the foregoing fees shall not pre- 
 vent the judges, who shall frame general rules and orders 
 in accordance with the provisions of section 10, from pre- 
 scribing a tariff of fees for all other services of the officers 
 of Courts of Bankruptcy, or from reducing the fees pre- 
 scribed in this section in classes of cases to be named in 
 their rules and orders. 
 
 INTERPRETATION CLAUSE. 
 
 Section 48. And be it further enacted, That the word 
 " assignee" and the word " creditor" shall include the plu- 
 ral also ; and the word " messenger" shall include his as- 
 sistant or assistants, except in the provision for the fees 
 of that officer. The word "marshal" shall include the 
 marshal's deputies ; the word " person" shall also include 
 " corporation ;" and the word " oath" shall include " affirm- 
 ation." And in all cases in which any particular number 
 
§ 49.] DISTRICT OF COLUMBIA AND TEBKITOEIES. 305 
 
 of days is prescribed by this act, or shall be mentioned 
 in any rule or order of court, or general order which shall 
 at any time be made under this act, for the doing of any 
 act, or for any other purpose, the same shall be reckoned, 
 in the absence of any expression to the contrary, exclu- 
 sive of the first and inclusive of the last day, unless the 
 last day shall fall on a Sunday, Christmas day, or on any 
 day appointed by the President of the United States as 
 a day of public fast or thanksgiving, or on the Fourth of 
 July, in which case the time shall be reckoned exclusive 
 of that day also. 
 
 DISTRICT OF COLUMBIA AND TERRITORIES. 
 
 Section 49. And he it further enacted,Tha.t all the ju- 
 risdiction, power, and authority conferred upon and vest- 
 ed in the District Court of the United States by this act 
 in cases in bankruptcy are hereby conferred upon and 
 vested in the Supreme Court of the District of Columbia, 
 and jn- and upon the Supreme Courts* of the several Ter- 
 ritories of the United States, when the bankrupt resides 
 in the said District of Columbia or in either of the said 
 Territories. And in those judicial districts which . are 
 not within any organized circuit of the United States, 
 the power and jurisdiction of a Circuit Court in bank- 
 ruptcy may be exercised by the district judge. 
 
 The Territorial courts are not constitutional courts in which the 
 judicial power conferred by the Constitution on the general govern- 
 ment can be deposited. They are incapable of receiving it. They 
 are legislative courts, created in virtue of the general right of sov- 
 ereignty which exists in the government, or in virtue of that clause 
 which enables Congress to make all needful rules and regulations 
 respecting the territory belonging to the United States. The ju- 
 risdiction with which they are invested is not a part of that judicial 
 power which is defined in the third article of the Constitution, but 
 is conferred by Congress in the execution of. those general powers 
 which that body possesses over the Territories of the United States. 
 
306 THE BANKRUPT LAW. [§ 50. 
 
 In legislating for them, Congress exercises the combined powers of 
 a general and of a state government. 
 
 The powers conferred on the courts of the United States do not 
 apply to the Territorial courts unless they are specially named. 
 
 In the District of Columbia, the Supreme Court is to exercise all 
 the jurisdiction and powers rested by this act in the District Courts 
 which are constituted Courts of Bankruptcy, and where the bank- 
 rupt resides in either of the Territories of the United States, the 
 same jurisdiction is conferred upon the Supreme Courts of the sev- 
 eral Territories. 
 
 COMMENCEMENT OF THE ACT. 
 
 Section 50. And be it further enacted, That this act 
 shall commence and take effect as to the appointment of 
 the officers created hereby, and the promulgation of .rules 
 and general orders, from and after the date of its ap- 
 proval : provided, that no petition or other proceeding 
 under this act shall be filed, received, or commenced be- 
 fore the first dry of June, Anno Domini eighteen hund- 
 red and sixty-seven. 
 
 Approved March 2d, 1867. 
 
INDEX. 
 
 ABATE. 
 
 Actions to which assignees are parties, not to abate by death, or removal of as- 
 signees, 71. 
 
 Death of petitioning creditor not to abate the proceedings, 30. 
 
 If, after issuing of the warrant, the proceedings in bankruptcy may be contin- 
 ued, 30. 
 
 ABSENT. 
 
 Debtor being, from the State, District, or Territory, of which he is an inhabit- 
 ant, remaining, with intent to defraud his creditors. 
 An act of bankruptcy; 232. 
 Evidence in support of, 232. 
 Intent to delay creditors must be proved, 232. 
 
 ABSENT CREDITORS. 
 Proofs by, 102. 
 
 ACCOMMODATION BILLS. 
 
 Proof in respect of, 80-82. ' 
 
 ACCOUNTS. 
 
 Bankrupt to prepare from his schedule, 28. 
 
 Assignees to keep regular accounts, 66. 
 
 Creditors to have access to them, 66. 
 
 Register to audit, 115. 
 
 Before dividend, assignee to submit his accounts to the court, 117. 
 
 To file such accounts, 117. 
 
 May be examined as to the truth of his accounts, 117. 
 
 ACTIONS. 
 
 By and against assignees. Vide "Assignees." 
 Rights of, pass to assignees, 34. 
 
 ACTS OF BANKRUPTCY. 
 
 What constitute generally, 225, 226. 
 Enumeration of, 227-262. 
 
 Departing from the State, etc., with intent to defraud creditors, 227. 
 Evidence in support of, 227-232. 
 Remaining absent with intent to defraud creditors, 232. 
 Evidence in support of, 232. 
 
 Concealing himself to avoid service of legal process, 232. 
 Evidence in support of, 232-235. 
 Concealing or removing property, 235. 
 . Evidence in support of, 235, 236. 
 
 'Making any assignment, gift, sale, conveyance, or transfer of his estate, property, 
 
 rights, or credits, either within the United States or elsewhere, with intent to 
 
 delay, defraud, or hinder his creditors, 236. 
 What constitutes such act of bankruptcy, 236-257. 
 Remaining in prison, having been arrested by mesne process or execution, issued 
 
 out of any court of any State, District, or Territory, for seven days, 257. 
 Evidence in support of, 258-260. 
 
308 INDEX. 
 
 ACTS OF BANKRUPTCY— Continued. 
 
 Having been actually imprisoned for more than seven days in a civil action 
 founded oft contract for the sum of one hundred dollars or upward, 260. 
 
 Evidence in support of, 260. 
 
 Conveyances, gifts, grants, transfers, etc., when bankrupt or insolvent, in con- 
 templation of bankruptcy, 260. 
 
 Evidence in support of, 261, 262. 
 
 Vide " Fraudulent Preferences and Conveyances." 
 
 Banker, merchant, or trader, fraudulently stopping or suspending, and not re- 
 suming payment of his commercial paper within a period of fourteen days, 261. 
 
 Evidence in support of, 262. 
 
 Evidence of trading, 271. 
 
 Filing of the petition in voluntary bankruptcy to be an act of bankruptcy, 25. 
 
 ADJUDICATION. 
 
 Proceedings for, in compulsory bankruptcy, 262-264. 
 
 What must be proved, 264-278. 
 
 Who may petition, 265, 266. 
 
 Petitioning creditor's debt, 264. 
 
 Nature of, 264-271. 
 
 What debt necessary, 264-271. 
 
 Act of bankruptcy must be proved, 263. 
 
 Proof of, 275-278. 
 Opposing adjudication by the debtor, 264. 
 
 Practice on showing cause, 264. 
 
 Against merchant, banker, or trader, 264. 
 
 Proof of trading, 271-275. 
 Interim, injunction may be granted, 263. , 
 
 Evidence in support of, 264. 
 
 Warrant to arrest may be granted, 263. 
 
 Warrant to seize debtor's property, 263. 
 
 In what cases, 263, 264. 
 Substituting petitioning creditor, 278, 279. 
 Order of adjudication, 280. 
 
 ADMINISTRATOR. 
 
 When bankrupt, property in his possession as, does not vest in his assignees, 54. 
 The court, upon his bankruptcy, will appoint a receiver, 54. 
 
 ADMISSIONS. 
 
 Effect of admissions made by the bankrupt, 275. 
 
 When admissible, 275. 
 
 Evidence to explain intention, 226. 
 
 Admissions contained in letters of the bankrupt, 228. 
 
 ADVERTISEMENTS AND NOTICES. 
 
 Notice of assignee's appointment, 35. 
 
 Notice to debtor, 224. 
 
 Notice of application for order of discharge, 122. 
 AGENTS. 
 
 Proofs by, 79. 
 
 Bankruptcy of, 79. 
 
 When liable for damages, they may be assessed and proved under his estate, 79. 
 
 Property in the hands of, when bankrupt, not vesting in the assignees, 54. 
 AGREEMENT. 
 
 Proof for breaches of, 79. 
 
 Damages to be assessed under direction of the court, 79. 
 ALABAMA. 
 
 Property exempted by State laws of, 58. 
 
 Conveyances void as against creditors in the State of, 242. 
 ALIENS. 
 
 Subject to the Bankrupt Law, 29. 
 
INDEX. 309 
 
 ALLOWANCE TO THE ASSIGNEE, 117. 
 
 ALLOWANCE TO THE BANKRUPT. 
 Household furniture to be set apart, 33. 
 Wearing apparel, 33. 
 
 ANNUITY. 
 
 Proof in respect of, 79. 
 
 APPEALS. 
 
 From District to Circuit Courts, 22. 
 
 Limitation as to amount, 22. 
 
 Limitation of time for appeal, 22. 
 
 When appeal to be entered, 22. n 
 
 Waiver of appeal, 23. 
 
 Security on appealing, 23. , 
 
 Notice of appeal, 22. 
 
 Appeal by creditor when claim rejected, 104. 
 
 Costs of appeal, 104. 
 
 APPROPRIATION. 
 
 Property specifically appropriated does not vest in the assignees, 54. 
 
 ARBITRATION. 
 
 Assignees may submit disputes to arbitration, 74. 
 
 ARKANSAS. 
 
 Property exempted by State laws of, 58. 
 Conveyances void as against creditors in, 243. 
 
 ARRANGEMENT. 
 
 Change from bankruptcy to, 283. 
 
 Resolution by the creditors, 285. 
 
 Transfer of property to trustees, 285. 
 
 Rights and powers of trustees under, 286. 
 
 Discretion of the court to approve, 284-286. 
 ARREST. 
 
 When bankrupt protected from, 113, 114. 
 
 When warrant to arrest may be granted, 263. 
 
 ASSIGNEES. . 
 Choice of, 30. 
 
 To be made at the first meeting, 30. 
 If no choice made by creditors, register may appoint, 30. 
 Assignee chosen or appointed to accept the trust, 30. 
 Elections and appointments subject to the approval of the judge, 30. 
 Additional assignees may be appointed, 30. 
 What creditors may vote, 31. 
 Assignees to give security, 31. 
 Failing to give security, 31. 
 ' Creditors ineligible to be assignees, 32. 
 Removal of assignees by the court, 32. 
 Property of the bankrupt vesting in, 36. 
 
 The judge or register by deed to convey the bankrupt's property to, 36. 
 Assignee to give notice of his appointment, 35. 
 How such notice to be given, 35. 
 
 Assignees take all the rights and interests of the bankrupt, 36. 
 Time when the property vests in the assignees, 53. 
 Bills and notes in possession of the bankrupt, 38. 
 Choses in action, and claims of the bankrupt, 38. 
 Contracts of bankrupt, 39. 
 Conditional estates, 41. 
 Leases, 41. 
 
 Assignees may elect whether they take leases, 41. 
 Eoreign property of the bankrupt, 42. 
 
310 INDEX. 
 
 ASSIGNEES— Continued. 
 
 Liens available against assignees, 43. 
 Property of the bankrupt attached on mesne process, 44. 
 
 Property of the bankrupt fraudulently conveyed by him, vide ''Fraudulent Pref- 
 erences and Conveyances and Acts of Bankruptcy." 
 Mortgages, 48. 
 Keal estate, 50. 
 
 Redeemable personal property, 49. 
 Property in right of wife, 49. 
 Property of bankrupt partner, 50. 
 After-acquired property, 51. 
 Stocks and shares in publte companies, 52. 
 Property protected by the act, 53. 
 Property not vesting in the assignees, 53. 
 Trust property, 53. 
 
 In the possession of the bankrupt as factor, broker, or agent, 54. 
 Debts which have been assigned, 54. 
 Bankrupt executor or administrator, 54. 
 Property specifically appropriated, 54. 
 In bankrupt's possession for a particular purpose, 56. 
 Contract not accepted, 56. 
 Goods in transitu, 56. 
 Interest of the bankrupt's wife, 56. 
 Claim upon a foreign government, 57. 
 Pension or salary for services, 57. 
 Property exempted from the operation of the act, 57-62. 
 Assignee's title, evidence of, 62. 
 
 Actions by and against assignees, limitations of, 14, 67-71. 
 Actions against assignees for acts done in that character, 63. 
 Notice of action, 63. 
 Tender of amends, 63. 
 
 No lien on books as against the assignees, 64. 
 May require the bankrupt to execute deeds, 64. 
 Sale of the bankrupt's property by, 65. 
 Assignees to keep accounts, 66. 
 Actions not to abate by death or removal, 71. 
 Evidence of assignee's authority to sue, 71. 
 Assignee to deposit moneys in bank in his name as assignee, 73. 
 To distinguish bankrupt'sproperty, 73. 
 Court may direct the investment of money, 74. 
 Assignee may submit disputes to arbitration, 74. 
 May compound and settle disputes, 74. 
 Eemoval of, by the court, 74. 
 By creditors, 75. 
 May resign their trust, 75. 
 1 Compensation to, 75, 117. 
 Subject to orders of court, 75. 
 
 Making, declaring, and paying the dividend, 115-121. 
 To exhibit their accounts, 119. 
 Paying the dividend to creditors, 120. 
 Entitled to necessary funds or security, 121. 
 May sell debts under order' of the court, 121. 
 Allowance to, 121. 
 Discharge of, 121. 
 
 Assignment to assignees to be recorded within six months, G2. 
 ASSIGNMENT. 
 
 Debtor making, with intent to defraud creditors, 236. 
 
 When act of bankruptcy, 236-260. 
 
 What are fraudulent under the statutes of Elizabeth, 236-242. 
 
 What are fraudulent in the various States, 242-255. 
 
 Of bankrupt's lease by assigness, 42. 
 
INDEX. 311 
 
 ATTACHMENT. 
 
 Against bankrupt's property, when void, 44. 
 
 When it creates a lien as against the assignees, 43. 
 
 By creditor with notice of act of bankruptcy, yoid, 45. 
 AWARD. 
 
 Proof under, 79. 
 
 BAIL. 
 
 When bankrupt bail, his liability may be proved, 79, 80. 
 
 When another is bail for the bankrupt, may prove for what has been actually 
 
 paid, 80. 
 When paid after the bankruptcy, 80. 
 Vide " Order of Discharge." 
 
 BANKER. 
 
 Act of bankruptcy by, 261. 
 
 Fraudulent stopping or suspending payment, 261. 
 
 When act of bankrrptcy, 261. 
 
 Evidence in support of, 262. 
 
 Trading must be proved, 262. 
 
 What constitutes a trading, 271-275. 
 
 BANKRUPT. 
 
 Vide " Acts of Bankruptcy." 
 
 Vide "Order of Discharge." 
 
 To execute deed at the request of his assignees, 64. 
 
 Examination of, 106-112. 
 
 To produce his wife for examination, 112. 
 
 If unable to attend examination, 111. 
 
 May amend or correct his schedule, 113. 
 
 When protected from arrest, 113. 
 
 May attend and clear himself from default, 113. 
 
 Protection to, 114. 
 
 When entitled to bis order of Discharge, vide " Order of Discharge." 
 
 New promise by, to pay debts, 146-150. 
 
 BANKRUPT LAW. 
 
 Constitutionality of, 8. 
 Construction of, 14. 
 
 BILLS OF ErCHANGE AND PROMISSORY NOTES. 
 Proof by creditors holding, 80. 
 In possession of the bankrupt — 
 
 Vest in his assignees, 38. 
 
 When not, 38. 
 
 BONDS. 
 
 Proofs upon, 82. 
 
 BOOK-DEBTS. 
 
 Assignee may sell, under order of the court, 121. 
 
 BOOKS. 
 
 Merchant or tradesman not keeping books subsequently to the passage of the 
 act, order of Discharge thereby invalidated, 123. 
 
 BOOKS, PAPERS, AND DOCUMENTS. 
 
 Right of the assignees to all of the bankrupt's, 33. 
 Bankrupt to deliver up, 33. 
 
 Falsifying or mutilating, after the passage of the act, 129, 288. 
 Indictable as misdemeanor, 288. 
 
 BREACH OF TRUST. 
 
 Debt' created by, not discharged,' 125. 
 Creditor may prove such debt, 125. 
 
312 INDEX. 
 
 BROKER. 
 
 Incurring debt in fiduciary character, 149. 
 
 Goods in possession of, belonging to principal, will not vest in the assignees, 54. 
 
 Goods set apart by, if bankrupt, will not pass, 54. 
 
 Securities received by, for a principal, will not pass to the assignees, 54. 
 
 CALIFORNIA. 
 
 Conveyances void as against creditors in, 243. 
 
 CHILDREN'S EARNINGS. 
 Proof in respect of, 86. 
 
 CIRCUIT COURTS. 
 
 Jurisdiction and powers of, 11. 
 Concurrent jurisdiction, 12. 
 Appellate Courts from the District Courts, 13. 
 
 District 'judge has the power and jurisdiction of — where no circuit, organ- 
 ized, 305. 
 
 CLAIMS. 
 
 Vide "Proof of Debts." 
 
 COLORADO. 
 
 Property exempted by State laws of, 59. 
 
 COLUMBIA, DISTRICT OF. 
 Jurisdiction in bankruptcy, 15. 
 Vested m the Supreme Court of, 305. 
 
 COMMENCEMENT OF THE ACT. 
 
 Petitions and other proceedings may be filed on the 1st of June, J 867, 306. 
 
 COMMENCEMENT OF THE PROCEEDINGS IN BANKRUPTCY. 
 
 Filing the petition by debtor or creditor against debtor deemed to be, 220, 221. 
 
 COMMON CARRIER. 
 
 Proof against, for damages, 84. 
 COMPOSITION DEED. 
 
 Proof upon, 86. 
 
 CONCEALING. 
 
 Debtor concealing himself to avoid service of process, 232. 
 When act of bankruptcy, 232. 
 Evidence of, 232-235. 
 
 CONCEALING OR REMOVING PROPERTY, 235. 
 When act of bankruptcy, 235. 
 Evidence of, 235. 
 
 CONFESSION OF JUDGMENT. 
 
 When fraudulent, and made within four months previous to the filing of the pe- 
 tition, 152. ', 
 
 When amounting to a fraudulent preference, 154-182. 
 
 Must be voluntary by the debtor to amount to & fraudulent preference, 163. 
 
 When given with intent to give a preference, act of bankruptcy, 260. 
 
 Right of assignees to recover the property taken under, 262. 
 
 Allowing judgment to go by default, not sufficient to create act of bankruptcy, 
 261. 
 
 Debtor must be a voluntary party to, 261. 
 
 CONNECTICUT. 
 
 Conveyances void as against creditors in, 243. 
 
 Exemption laws of the State similar to Massachusetts, vide "Massachusetts." 
 CONSTITUTIONALITY OF THE BANKRUPT LAW, 8. 
 CONTEMPLATION OF BANKRUPTCY. 
 
 What transactions are void, 260. 
 
 Payment made in, 260. 
 
INDEX. 313 
 
 CONTEMPLATION OF BANKRUPTCY— Continued. 
 Gift made in, 260. 
 Grant made in, 260. 
 Sale made in, 260. 
 
 Conveyance or transfer made in, 260. 
 Confession of judgment made in, 260. 
 Procuring property to be taken in, 260« 
 Evidence in support of, 261, 262. 
 Vide "Fraudulent Preferences and Conveyances." 
 
 CONTINGENT DEBTS AND CONTINGENT LIABILITIES. 
 Proofs in respect of, 84-86. 
 What are construed to be, 84-86. 
 
 CONTRACTS. i 
 
 Made void to induce a creditor to forbear opposing order of Discharge, 183. 
 Penalty upon a creditor accepting such security, 183. 
 
 CONVEYANCE. 
 
 What fraudulent under statutes of Elizabeth, 236-243. 
 What fraudulent in the various States, 243-255. 
 When act of bankruptcy, 243-257. 
 Evidence in support of, 243-257. 
 
 CORPORATIONS. 
 
 What corporations subject to the Bankrupt Law, 185. 
 May petition for voluntary bankruptcy, 217. 
 Duly authorized officer to present petition, 217. 
 Assignments, conveyances, and payments fraudulently made declared void, 
 
 217. 
 Proceedings to be carried on as against ordinary debtors, 217. 
 Both in voluntary and compulsory bankruptcy, 210-217. 
 Acts of bankruptcy by, vide "Acts of Bankruptcy." 
 No order of discharge to be granted to, 185. 
 Forfeiture of charter, 218. 
 
 COSTS. 
 
 Proof for, 83. 
 
 COVENANTS. ■ 
 
 Proof under the estate npon, 83. 
 
 Bankrupt's discharge from, vide " Order of Discharge." 
 
 CREDITOR. 
 
 Proof by, generally, 78. 
 
 Proof by, holding security, 93. 
 
 Proof by non-resident, 102. 
 
 Proof by absent, 102. 
 
 Proof by, when abroad, 102. , 
 
 Creditor who has accepted a preference not allowed to prove, 103, 262. 
 
 May act at meetings by attorney, 103. 
 
 Appeal by, when claim rejected, 104. 
 
 CREDITORS. 
 
 Meetings of, 29. • 
 
 Register to preside at first meeting, 30. 
 
 Meeting may be adjourned, 30. 
 
 Creditors to choose assignees, vide "Assignees, Choice of." 
 
 DAMAGES. 
 
 Proof for, 87. 
 
 When unliquidated, may be assessed by order of the court, 87. 
 Vide "Order of Discharge." 
 
 DEBTS. 
 
 What provable, and what non-provable, 78-96. 
 
314 INDEX. 
 
 DEBTS AND DEPOSITIONS. 
 
 Commencement of the proceedings in bankruptcy, 221. 
 DEPARTING PEOM THE STATE, DISTRICT, OR TERRITORY. 
 
 When act of bankruptcy, 227. 
 
 Evidence of intent, 228-232. 
 DISCHARGE OP BANKRUPT UNDER THE ACT. 
 
 Vide "Order of Discharge." 
 DISTINCT CONTRACTS. 
 
 Proof where bankrupt liable upon, 99. 
 DISTRESS POR RENT. 
 
 When landlord has the right to, notwithstanding the bankruptcy, 93. 
 
 Effect of, after the bankruptcy of the tenant, 93. 
 
 When the landlord may prove and distrain also, 93. 
 DISTRICT COURTS. 
 
 Their jurisdiction and power, 7. 
 
 Original jurisdiction in bankruptcy, 10. 
 
 The courts to be always open, 10. 
 
 Sittings of the court, 10. 
 
 Control over State Courts, 10. 
 .Orders and decrees of, 10. 
 DIVIDEND. 
 
 Assignees to make, declare, and pay, 118-120. 
 
 Claims entitled to priority, 119. 
 
 Claims to be paid in full, 119. 
 
 Wages to operatives, etc., 119. 
 
 Creditors to determine the amount of, 120. 
 
 Duty of register, when ordered, 120. 
 
 Second and final, 120. 
 
 Purther dividends, 120. 
 
 Effect of subsequent proofs upon, 120. 
 
 Omission tb hold meetings for, 121. 
 DOWER 
 
 Of bankrupt's wife does not pass to the assignees, 38. 
 
 ELECTION. 
 
 Proof of debt an election not to proceed by action, 97. 
 
 By assignees to take bankrupt's lease, 41. 
 EMBEZZLEMENT. 
 
 Debt created by, not discharged, 148. 
 EQUITABLE DEBTS. 
 
 Proof in respect of, 87. / 
 EQUITY OP REDEMPTION 
 
 Passes to the assignees, 34-49. 
 
 Both as to personal and real property, 48, 49. 
 EXAMINATION 
 
 Of the bankrupt, 106-112. 
 
 To.be in writing, and signed by him, 110. 
 
 Confidential communications privileged, 110. 
 
 Questions he is compellable to answer, 109. 
 
 Obtaining the order for examination, J12. 
 Of bankrupt's wife, 112. 
 Of other persons, 106-112. 
 EXECUTOR. 
 
 Proof by, 87. 
 
 Proof against, when bankrupt, 87. 
 
 EXEMPTIONS OP BANKRUPT'S PROPERTY PROM THE OPERATION 
 OF THE ACT 
 
 By the laws of the various states, 57-62. 
 Vide also "Assignees." 
 
INDEX. 315 
 
 FACTOR. 
 
 Property in the possession of, will not pass to the assignees, 54-56. 
 
 Fiduciary capacity of, 149. 
 
 When selling goods in his own name, a good petitioning creditor, 271. 
 
 FEES AND COSTS. 
 Fees to be taken, 303. 
 Enumeration of, 303. 
 
 Petitioner to deposit before warrant fifty dollars, 303. 
 Court may compel payment to the register, 303. 
 Fees to the messenger, 304. 
 General rules and orders to prescribe a tariff of, 304. • 
 
 FIDUCIARY DEBTS. 
 
 Not discharged by order of Discharge, 148. 
 
 What are, 148-151. 
 FLORIDA. 
 
 Conveyances void as against creditors in, 244. . 
 
 FORGERY. 
 
 Forging signatures or seals of the court, 299. 
 
 Counterfeiting signature to authenticate any document, 299-301. 
 
 Analogous statutes, 301, 302. 
 FRAUD. ' 
 
 Debts created by, 148. 
 
 FRAUDULENT GIFTS AND TRANSFERS. 
 What amount to, 154-183. 
 
 FRAUDULENT PAYMENTS AND PLEDGES. 
 What amount to, 154-183. 
 
 FRAUDULENT PREFERENCES AND CONVEYANCES. 
 
 What are construed to be, 153-183. 
 
 When acts of bankruptcy, vide "Acts of Bankruptcy." 
 
 Rights of assignees to recover the property from preferred creditors, 153-183. 
 
 Conveyance or transfer should be voluntary and in contemplation of bank- 
 ruptcy, 153-183. 
 
 American and English decisions upon what constitute, 153-183. 
 
 Prima facie evidence of fraud, what is, 183. 
 FURNITURE. 
 
 Necessary household excepted from the operation of the act, 33. 
 
 GAMING. 
 
 Loss of property by, 130. 
 Invalidates order of Discharge, 130. 
 Evidence, 130. 
 An indictable misdemeanor, 289. 
 
 GENERAL ORDERS. 
 Provision, as to, 23. 
 To be framed by justices of Supreme Court, 24. 
 
 GEORGIA. 
 
 Conveyances void as against creditors in; 244. 
 
 GIFT. 
 
 Fraudulent where act of bankruptcy, 236-276. 
 Evidence in support of, 255-257, 276. 
 
 HABEAS CORPUS.^ 
 
 For person committed, 111. 
 
 May test the validity of questions put upon the examination by, 111. 
 Upon return to, what should be specified in the warrant of commitment, 111, 
 112. 
 
316 INDEX 
 
 HUSBAND AND WIFE. 
 
 Proof of wife's debts under estate of bankrupt husband, 87. 
 Covenant by husband to pay trustees wife's income, provable, 87. 
 
 ILLINOIS. 
 
 Conveyances void as against creditors in, 244. 
 
 IMPRISONMENT. 
 
 Of debtor, when act of bankruptcy, 260. 
 Evidence in support of, 260. 
 
 INDICTMENT. 
 
 Against bankrupt for misdemeanors, 287-299. 
 
 Enumeration of indictable misdemeanors, 288, 289. 
 
 American and English decisions upon analogous indictments, 289-298. 
 
 INFANT. 
 
 Question whether he can petition for voluntary bankruptcy, 26. 
 
 American decision in the affirmative, 26. 
 
 When he can be made bankrupt compulsorily, 269. 
 
 Where he has held himself out as an adult, 27. 
 
 Debt contracted by, when a good petitioning creditor's debt, 269. 
 
 INJUNCTION. 
 
 Upon creditor to restrain him from prosecuting action, 98. 
 
 Must be for a debt provable, 99. 
 
 Dissolution of, 99. 
 
 When order of Discharge not obtained, 99. 
 
 In what cases issued to restrain insolvency proceedings, 14. 
 
 Injunctions upon State Courts, 13. 
 
 Interim injunction in compulsory bankruptcy, 263. 
 
 Upon what grounds granted, 263. 
 
 INTEEPRETATION CLAUSE. 
 
 Calculation of time, 305. • 
 
 INVOLUNTAEY BANKRUPTCY. 
 
 Petition for, by creditor, 225. 
 
 Elements necessary to support, 264. 
 
 Petitioning creditor's debt, 264-271. 
 
 Trading, 271-275. 
 
 Act or acts of bankruptcy, 227-262. 
 
 Petition must be filed for, within six months after the commission of an act of 
 bankruptcy, 263. 
 
 Vide titles "Adjudication," "Bankrupt," and "Acts of Bankruptcy." 
 IOWA. 
 
 Property exempted by State laws of, 59. 
 
 JOINT AND SEPARATE ESTATES. 
 Vide "Partners." 
 
 What is joint estate, 90, 187. 
 
 What is separate estate, 90, 187. 
 
 Principles of administering joint and separate estate of bankrupt partners, 186. 
 
 Election to prove under joint or separate estate, 91. 
 JOINT-DEBTS. 
 
 Vide "Proof of Debts." 
 
 JOINT-STOCK COMPANIES. 
 
 What joint-stock companies' subject to the bankrupt law, 185, 217. 
 Acts pf bankruptcy by, vide " Acts of Bankruptcy." 
 Petition by, for voluntary bankruptcy, 217. 
 Petition against, for compulsory bankruptcy, 217. 
 
 Proceedings in bankruptcy to be carried on, as in case of ordinary debtors, 185. 
 No order of Discharge to be granted, 185. 
 Vide "Corporations." 
 
INDEX 317 
 
 JUDGMENT. 
 
 For damages, when provable, 87. 
 
 JURY. 
 
 Bankrupt opposing adjudication may demand, 224. 
 Such trial to take place at the first term of the court, 224. 
 Opposing the order of Discharge, question whether to be tried by a jury or the 
 court, 134. 
 
 KANSAS. 
 
 Property exempted by State laws of, 59. 
 
 KENTUCKY. 
 
 Conveyances void as against creditors in, 245. 
 
 LEASES. 
 
 Assignees take bankrupt's interest in, 41. 
 
 They may elect to take, 41. 
 
 What amounts to such election, 41. 
 
 Not bound to accept where prejudicial to the bankrupt's estate, 42. 
 
 Liability of bankrupt to covenants in, 42. 
 
 When bankrupt discharged from covenants in, vide " Order of Discharge." 
 
 LIENS. 
 
 Proof by creditors holding, 94. 
 Right of, as against assignees, 45-48. 
 By contract, 45. 
 By special agreement, 46. 
 By usage, 47. 
 
 By attachment completed, 43, 44. / 
 
 Assignees take, subject to, when legally and bona fide existing, against the bank- 
 rupt, 43,44. 
 American decisions upon, under bankrupt law of 1841, 43, 44. 
 By statute, 43. 
 How lost, 47,48. 
 
 LDJE ESTATE. 
 
 Of bankrupt in any property passes to the assignee, 50. 
 
 LIMITATION OF ACTIONS. 
 
 Vide "Actions against Assigneees.." 
 
 LIMITATIONS. 
 Statute of, 78. 
 
 Debt barred by, not provable, 78. 
 Nor a good petitioning creditor's debt, 268. 
 If the bankrupt object; 268. 
 
 LOUISIANA. 
 
 Conveyances void as against creditors in, 245. 
 
 LYING IN PRISON. 
 
 When act of bankruptcy, 257-260. 
 
 MAINE. 
 
 Property exempted by State laws of, 59. 
 What deeds are fraudulent in the State of, 245. 
 Indictments for fraudulent assignments in, 293. 
 Offenses by fraudulent insolvents in, 293. 
 
 MARRIAGE SETTLEMENTS. 
 Proof under, 87. 
 
 MARSHAL. 
 
 Made messenger of the court. 
 
318 INDEX. 
 
 MASSACHUSETTS. 
 
 Property exempted by State laws of, 59. 
 
 MERCHANT. 
 
 Act of bankruptcy by, 261. 
 
 Fraudulently stopping or suspending payment, 261. 
 
 "When act of bankruptcy, 261. 
 
 Evidence in support of, 262. 
 
 Trading must be proved, 262. 
 
 What constitutes a trading, 271-275. 
 
 MESSENGER. 
 Duties of, 25. 
 
 To publish notices of adjudication, 25. 
 To serve notices on creditors, 26. 
 To give notices of meetings of creditors, 26. 
 Of meetings for choice of assignees, 26. 
 To attend first meeting of creditors, 29. 
 To make return of what has been done under the warrant, 30. 
 If bankrupt absent after adjudication, to prepare schedule and inventory, 225. 
 Warrant to arrest debtor, 263. 
 Warrant to seize debtor's goods, .263. 
 Interim injunction, 263. 
 
 To retain property seized until adjudication decided, 263. 
 Fees 1 payable to, 304. 
 Extortion by, 299. 
 
 MICHIGAN. 
 
 Property" exempted by State laws of, 60. 
 
 MINNESOTA. 
 
 Property exempted by State laws of, 60. 
 
 MISSISSIPPI. 
 
 Property exempted by State laws of, 60. 
 
 MISSOURI. 
 
 Property exempted by State laws of, 60. 
 
 MORTGAGES. 
 
 Interest of bankrupt as mortgagor or mortgagee vests in the assignees, 48. 
 Distinction between mortgage of land and of goods, 48. 
 Mortgage of ship at sea, 49. 
 When bankrupt has executed several, 49. 
 Eights of assignees under, 49. 
 
 Proof by creditor holding, 93. , 
 
 Of goods and chattels bona fide made and duly recorded do not vest in the as- 
 signees, 34. * 
 
 MUTUAL DEBTS AND MUTUAL CREDITS. 
 What are in law, 89. 
 Definition of mutual credits,. 89. 
 Must have a tendency to terminate in debts, 89. 
 How proof to be made, 88-90. 
 Legal principles which govern the decisions upon, 90. 
 
 NEBRASKA. 
 
 Property exempted by State laws of, 61. 
 
 NEVADA. 
 
 Property exempted by State laws of, 61. 
 
 NEW HAMPSHIRE. 
 
 Property exempted by State laws of, 61. 
 Conveyances void as against creditors in, 248. 
 
INDEX. 319 
 
 NEW JERSEY. 
 
 Property exempted by State laws of, 61. 
 Conveyances void as against creditors in, 248. 
 Penalties against extortion in, 300. 
 
 NEW YORK. 
 
 Property exempted by State laws of, 61. 
 Conveyances void as against creditors in, 249. 
 Penalties against extortion in, 300. 
 
 NON-RESIDENT CREDITORS. 
 Proofs by, 102. 
 
 NORTH CAROLINA. 
 
 Conveyances void as against creditors in, 251. 
 NOTICE. 
 
 Of adjudication in voluntary bankruptcy, 29. 
 
 How to be given, and form of, 29. 
 
 Of dividend to be given by register, 116. 
 
 Assignees to give to the creditors before dividend, 117. 
 
 Court to order to be given to creditors of bankrupt's application for order of 
 Discharge, 122. 
 
 Of creditor's application to contest order of Discharge when granted, 126. 
 
 Notice to debtor of application for compulsory bankruptcy, 224. 
 
 OFFENSES CREATED BY THE ACT. 
 
 Penalties against bankrupts, 287. 
 Vide "Penalties against Officers." 
 
 OFFICERS OF THE COURTS OF BANKRUPTCY. 
 Penalties against, 299. 
 Extortion by, 299-301. 
 
 OHIO. 
 
 Property exempted by State laws of, 61. 
 
 ORDER OF DISCHARGE. 
 
 Application by the bankrupt for, 133. 
 
 When he may apply, 133. 
 
 Oath to be taken, 133. 
 
 Notice to be given, 133. 
 
 Grounds of opposition, 127-133. 
 
 Enumeration of, 127-133. 
 
 Evidence in support of, 127-133. 
 
 Creditor contesting, when granted, 135. 
 
 Evidence to be 1 adduced, 1,35. 
 
 Specification of particular acts relied upon, 135. 
 
 What the court must be satisfied of, 135, 136. 
 
 Are creditors who have not proved their debts to be heard in opposition, 134, 
 
 135. 
 Bankrupt pleading Discharge, 138. 
 Form of plea, 138. 
 
 Impeaching, by replication to plea, 136. i 
 
 Omission to plead Discharge, 139. 
 Effect of, upon foreign debts, 140. 
 Debts and claims not discharged, 148-150. 
 Criterion, whether debt provable or non-provable, 148. . 
 American decisions under the act of 1841, 141-146-148-151. 
 English decisions on the same subject, 148-151. 
 Breach of fiduciary relation, 149. 
 Defalcation as a public officer, 148. 
 Effect of proving fiduciary debts, 149. 
 Discharge under second bankruptcy, 151. 
 Discharge in bankruptcies occurring after , one year from the date of this act, 151. 
 
320 INDEX. 
 
 ORDERS. 
 
 Authority of the courts to make, 8. 
 
 To compel obedience to, by process of contempt, 8. 
 
 6REGON. 
 
 Property exempted by the State laws of, Gl. 
 
 PARTNERS. 
 
 Petitions by, 186. 
 
 Petitions against, 186. 
 
 Administration of partnership estate, 186. 
 
 Voluntary bankruptcy by, 191. 
 
 Compulsory bankruptcy against, 191-197. 
 
 Authority to bind copartner by commission of act of bankruptcy, 192. 
 
 What constitutes a partnership, 198-206. 
 
 Joint indebtedness must be proved, 198. 
 
 Joint and separate estates of, 187, 188. 
 
 What is joint estate, 187. 
 
 What is separate estate, 188. 
 
 Joint acts of bankruptcy, or individual acts must be proved, 191. 
 
 Proof of debts under partnership estates, 90. 
 
 Election to prove under joint or separate estate, 91. 
 
 Proof by, on the estate of each other, 92. 
 
 Proofs between estates, 92. 
 
 Position of assignees when one partner bankrupt, 50. 
 
 American decisions upon, 50. 
 
 Where all partners bankrupt, 51. 
 
 Order of Discharge to, 207. 
 
 Residence of, in different districts, 207. 
 PAYMENT. 
 
 Of dividend by assignees. 
 Vide "Dividend." 
 
 By bankrupt, when preferential and void, 260, 262. 
 
 When such payment an act of bankruptcy, 260, 262. 
 
 Right of assignee to recover amount so paid from the creditor, 262. 
 
 PENALTIES AGAINST BANKRUPTS. 
 Enumeration of, 288, 289. 
 Offenses since the passage of the act, 287, 288. 
 Secreting or concealing his estate, 288. 
 Concealing, destroying, mutilating, or falsifying books, 288. 
 Removing or disposing of property, 289. 
 Making fraudulent assignment, etc., 289. 
 Gaming, 289. 
 
 Concealing property from his assignee, 289. 
 Omitting property from his schedule, 289. 
 Allowing fictitious debt to be proved, 289. 
 Obtaining goods on credit with intent to defraud, 289. 
 Pawning, pledging, or disposing of goods fraudulently, 289. 
 Period within which such offense committed, 289. 
 Analogous statutes in the States, 290-293. 
 Analogous English statutes, 293-299. 
 Evidence in support of indictment, 290-299, 
 Punishment upon conviction, 288. 
 
 PENALTIES AGAINST OFEICERS. 
 Exacting or extorting fees, 299, 300. 
 Analogous statutes in the States, 300, 301. 
 
 PENNSYLVANIA. 
 
 Conveyances void by the laws of the State of, 252. 
 
 PERISHABLE PROPERTY, 105. 
 
INDEX. 321 
 
 PETITION. 
 
 Proceedings for adjudication to be by, 24. 
 
 In voluntary bankruptcy, 26. 
 
 Where to be presented, 27. 
 
 Schedule to be annexed, 28. 
 
 Inventory to be annexed, 28. 
 
 Oath of allegiance to be taken, 28. 
 
 When petitioner a citizen, 28. 
 
 When filed to be an act of bankruptcy, 28. 
 
 When no opposition, register to adjudicate upon, 29. 
 
 In compulsory bankruptcy, petition to be by creditor, 222. 
 
 By one or more jointly, 222. 
 
 One debt, or aggregation of debts, to be at least two hundred and fifty dol- 
 lars, 222. 
 
 To be presented within six months after commission of an act of bankrupt- 
 cy, 222. 
 
 PETITIONING CREDITOR'S DEBT. 
 
 Requisites of, 264. 
 
 Must be a debt provable nnder the estate, 264.- 
 
 If due to one creditor, must amount to two hundred and fifty dollars, 264. 
 
 If to one or more creditors, the aggregate must be the same amount, 264. 
 
 Must have existed at the time the act of bankruptcy was committed, 264. 
 
 Must be a debt actually due, 265. 
 
 Not claims for unliquidated damages, 266. 
 
 Executors may petition on debt due to testator, 265. 
 
 Assignees of bankrupt, for debt due to bankrupt, 268. 
 
 By partners, must be by them jointly, 265. 
 
 Trustee alone can not petition, 265. 
 
 Creditors holding securities may petition, 266. 
 
 Mortgagee may petition without giving up his security, 266. 
 
 Judgment creditor may petition, 268. 
 
 Must be of a nature that an action at law might be brought, 269. 
 
 Insolvent debtor may petition for debt due to him, 269. 
 
 Penalty due to the government sufficient, 270. 
 
 Assessment for rates sufficient, 270. '• 
 
 Another creditor may l 3 substituted, 278. 
 
 PLEDGES. 
 
 Proof by pledgee, 94. 
 
 POWERS. 
 
 Vested in the bankrupt may bo executed by the assignees, vide "Assignees." 
 PREFERRED DEBTS. 
 
 Entitled to priority of payment, 118. 
 
 1st. Eees, costs, and expenses of suits in the bankruptcy proceedings, 118. 
 For the custody of property, 118. 
 
 2d. All debts due to the United States, and all taxes and assessments under the 
 laws thereof, 118. 
 
 3d. All debts due to the State in which the proceedings in bankruptcy are pend- 
 ing, and all taxes and assessments under the laws of such State, 118. 
 
 4tl». Wages to operatives, clerks, or house-servants, not exceeding $50 for labor 
 performed within six months next before the first publication of the proceed- 
 ings in bankruptcy, 118. 
 
 5th. Debts due to any persons who by the laws of the United States are entitled 
 to priority or preference, 118, 119. 
 
 PROCEEDINGS IN BANKRUPTCY. 
 
 Commenced by the filing of the petition, 220, 221. 
 
 PROCURING PROPERTY TO BE TAKEN IN EXECUTION, 154-178. 
 Must be, within four months before the petition, 178. * 
 When act of bankruptcy, 260, 261. 
 Ground of opposition to discharge, 129. 
 
322 INDEX. 
 
 PROMISSORY NOTES. 
 
 Vide "Bills of Exchange." 
 
 PROOF OF DEBTS. 
 
 Provable and non-provable debts, 78. 
 Principles regulating proofs, 78. 
 By agents, 79. 
 Breaches of agreement, 79. 
 Annuities, 79. 
 Award, 79. 
 , Bills of exchange and promissory notes, 79. 
 On which the bankrupt is surety, 82. 
 Bonds, 82. 
 Costs, proof for, 83. 
 Covenants, 83. 
 
 Common carrier, proof against, for damages, 84. 
 Contingent debts and contingent liabilities, 84-86. 
 Children's earnings, 86. 
 Composition deed, 86. 
 Damages, 87. 
 Equitable debts, 87. 
 Husband and wife, 87. 
 Executor, proof by, 87. 
 
 Proof against, 87. 
 Marriage settlements, 87. 
 Judgments, 88. 
 
 Mutual debts and mutual credits, 88-90. 
 Partnership debts, 90-92. 
 By creditors holding security, 93. 
 Rent, 93. 
 
 Mortgages and pledges, 94. 
 Creditor holding liens, 94. 
 Sureties, 95. 
 Trustee, 96. 
 Wages, 96. 
 
 Stock-exchange transactions, 96. 
 An election not to proceed at law, 97-99. 
 Where bankrupt liable on distinct contracts, 99. 
 No action for debt provable, to be prosecuted to final judgment, 98. 
 Distinct contracts, 99. 
 How proofs are to be made, 101. 
 By non-resident creditors, 102. 
 By absent creditors, 102. 
 By creditor in a foreign country, .102. 
 Proofs to be delivered to the assignees, 102. 
 Proof of claims may be postponed, 103. 
 
 Creditor who has accepted a preference not allowed to prove, 103. 
 List of debts proved to be made by the register, 103. 
 Appeal by. creditor when claim rejected, 104. 
 
 PROPERTY IN DISPUTE, 106. 
 
 PROPERTY OF BANKRUPT NOT VESTING IN HIS ASSIGNEES. 
 Vide "Assignees." 
 
 PROPERTY OF BANKRUPT VESTING IN HIS ASSIGNEES. 
 Vide "Assignees." 
 
 PROVABLE AND NON-PROVABLE DEBTS. 
 Principles which regulate, 78. 
 
 REFUSAL. 
 
 By the bankrupt to obey order of the court, may be committed, 107. 
 To answer questions on examination, 109. 
 To sign examination, 109-111. 
 
index. 323 
 
 registers. 
 
 Their duties and powers, 15. 
 
 How appointed, 15. 
 
 Who eligible, 16. 
 
 Bond to be given by, 16. 
 
 Fees receivable by, 16. 
 
 No power to commit for contempt, 17. 
 
 Nor hear disputed adjudication, 17. 
 
 Nor allowance of order of Discharge, 17. 
 
 Nor suspension of order of Discharge, 17. 
 
 To state case for the opinion of the court, 17. 
 
 Restriction upon acting as attorney or counsel, 18. 
 
 Remuneration of, 18. 
 
 To hear voluntary applications, 1 8. 
 
 To attend meeting of creditors, 18. 
 
 To receive proof of debts, 18. 
 
 Traveling and incidental expenses of, 18. 
 
 Not to be assignee of any estate in which he acts as register, 18. 
 
 To summon and examine witnesses, 19. 
 
 To take depositions of persons summoned, 19. 
 
 Such depositions to be in writing and signed by, 19. 
 
 Such depositions to be filed in the clerk's office, 19. 
 
 Subject to removal by the district judge, 19. 
 
 May take the opinion of the district judge upon any question, 20. 
 
 False swearing before, perjury, 21. 
 
 To refer the matter to the judge when witness refuses to be examined, 2.1. 
 
 To make out list of debts proved under the estate, 103. 
 
 Duty of when dividend ordered, 120. 
 
 One register may act for another, 17. 
 
 REMOVAL OF THE PROCEEDINGS IN BANKRUPTCY. 
 
 Power of District Court to remove proceedings to another court, 281, 282. 
 
 REMOVING OR CONCEALING PROPERTY. 
 When act of bankruptcy, 235. 
 Evidence in support of, 235, 236. 
 When done by bankrupt with intent to prevent its coming into possession of the 
 
 assignees, indictable as a misdemeanor, 289. 
 Evidence in support of such indictment, 292. 
 
 RENT. 
 
 Proof for, 93. 
 
 RIGHTS AND DUTIES OF ASSIGNEES. 
 Vide "Assignees." 
 
 SALARIES AND PENSIONS. 
 
 For military, naval, or civil services do not pass to the assignees, 57. 
 SALE. 
 
 Court to make orders as to sale of bankrupt's property, 65. 
 
 The title to be given by the assignees, 65. 
 
 Care to be taken, 65, 66. 
 
 By bankrupt fraudulent when act of bankruptcy, 260. 
 
 Fraudulent, to hinder or delay creditors an indictable misdemeanor, 289. 
 
 SCHEDULE. 
 
 Vide "Petition." 
 SERVANTS. 
 
 Vide "Preferred Debts." 
 SHIPS. 
 
 No mortgage of, as security for debt made in good faith and for present con- 
 sideration invalidated, 34. 
 
 Should be duly recorded, 34. 
 
324 " INDEX. 
 
 SPECIAL CASE. 
 
 May be stated for opinion of court, 20. 
 
 STATE COURTS. 
 
 Their jurisdiction, 13. 
 
 STATE INSOLVENT LAWS. 
 
 Effect of the Bankrupt Law upon, 13. 
 
 STOCK-EXCHANGE TRANSACTIONS. 
 When not provable, 96. 
 
 SURETY. 
 
 Proof where bankrupt is surety, 82. 
 Proof where bankrupt is principal, 95. 
 
 TENNESSEE. 
 
 Property exempted by State laws of, 61. 
 
 TERRITORIES. 
 
 Jurisdiction of Supreme Courts in, 15, 305. 
 
 TEXAS. 
 
 Property exempted by State laws of, 62. 
 
 TRADER AND TRADING. 
 Act of bankruptcy by, 261. 
 What constitutes act of bankruptcy, 261. 
 Stepping or suspending payment, 261. 
 Evidence of act of bankruptcy, 262. 
 Trading must be proved, 262. 
 What constitutes trading, 271-275. 
 
 TRANSFER. 
 
 Eraudulent when act of bankruptcy, 236. 
 • Evidence in support of, 236-253, 276-278. 
 
 TRESPASS. 
 
 When the proper form of action by assignees, 68, 69. 
 
 TROVER. 
 
 When the proper form of action by assignees, 68, 69. 
 TRUSTEE. 
 
 Proof by, 96. 
 
 UNLIQUIDATED DAMAGES. 
 
 How to be assessed under the bankruptcy, 77. 
 When provable, 87. 
 How to be proved, 87. 
 
 VERMONT. 
 
 Property exempted by State laws of, 62. 
 
 Conveyances fraudulent by the State laws of, 254. 
 
 Conveyance by fraudulent insolvent, penalty therefor, 293. 
 VESSELS. 
 
 Mortgage of, in good faith and for present consideration and duly recorded, not 
 affected by the bankruptcy, 34. 
 
 VOLUNTARY BANKRUPTCY. 
 
 Who may petition, 24. 
 
 What residence necessary, 26. 
 
 Amount of indebtedness, 27. 
 
 Form of petition, prescribed by general orders, 27. , 
 
 Where to be presented, 27. 
 
 Infants, 26. 
 
 Married women, 27. 
 
INDEX. 325 
 
 VOLUNTARY BANKRUPTCY— Continued. 
 Executor, 27. 
 Aliens, 26. 
 
 Undischarged bankrupt, 27. 
 Schedule to be annexed to petition, 28. 
 Inventory to be annexed to petition, 28. 
 Oath of allegiance to be taken by debtor, 28. 
 Only when he is a citizen, 28. 
 Petition, when filed, to be an act of bankruptcy, 28. 
 
 Petition, when filed, to be deemed the commencement of proceedings in bank- 
 ruptcy, 28. 
 Register to publish notice of adjudication, 29. 
 Porm of notice, 29. 
 To serve notice on creditors, 29. 
 Notice of meetings of creditors, 29. 
 Opposition to adjudication, 29. 
 
 Death of petitioning debtor after the issuing of the warrant, 30. 
 Proceedings may be continued, 30. 
 Effect of death before the issuing of the warrant, 30. 
 
 WAGES. 
 
 Proof in respect of, 96. 
 
 Operatives, clerks, and house-servants to be paid in full, 119. 
 
 WARRANTS. 
 
 To arrest bankrupt. 
 To messenger to seize goods. 
 Vide "Adjudication." 
 
 WEARING APPAREL. 
 
 Excepted from the operation of the act, to be given up to bankrupt, 57. 
 Exemptions by State laws as to, 58-62. 
 
 WIPE. 
 
 Of bankrupt may be examined, 112. 
 
 WISCONSIN. 
 
 Property exempted by State laws- of, 62. 
 
 WITNESSES. 
 
 Examination of, 111. 
 Of other persons, 111. 
 
 WRITS OF ERROR. 
 When allowed, 22. 
 Must •comply with the statutes regulating, 23. 
 
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