TITLE I. THE LAW AND PRACTICE IN BANKRUPTCY. BANKRUPTCY ACT OF APRIL 4, 1800. An Act to establish an uniform System of Bankruptcy throughout the United States.1 (Repealed by act of December 19, 1803, chap. 6.) Section 1. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That from and after the first day of June next, if any merchant or other person residing within the United States, actually using the trade of merchandise, by buying and selling in gross, or by retail, or dealing in exchange, or as a banker, broker, factor, underwriter, or marine insurer, shall, with intent unlawfully to delay or defraud his or her creditors, depart from the State in which such person usually resides, or remain 1 Decisions on the Bankruptcy taches. When the negotiable paper Law of the United States, 1800.- was assigned after the commission The holder of a promissory note, of bankruptcy, the party takes it drawn before, but transferred after subject to any set-off as between the a commission of bankruptcy had is- drawer and payee. Ibid. sued against the drawer, is entitled Under the Bankruptcy Law of the to prove his debt under the commis- United States, a joint debt may be sion, and to receive a dividend. set off against the separate claim of Humphreys v. Blight's Assignees, 4 the assignee of one of the partners; Dall. 370. but such set-off could not have been In the case of negotiable paper, made at law, independent of the the assignee takes it discharged of Bankruptcy Law. Tucker v. Oxley, all the equity as between the original 5 Cranch, 34; id. 2 Cond. Rep. 182. parties, of which he had no notice. A joint debt may be proved under But wherever the assignee has no- a separate commission, and a full tice of such equity, either positively dividend received; it is equity alone or constructively, he takes the as- which can restrain the joint creditor signment at his peril. A commis- from receiving his full dividend unsion of bankruptcy is legal notice til the joint effects are exhausted. that wherever mutual debts subsisted between the bankrupt and his creditors, the right of set-off at Ibid. Wherever the terms in which a power is granted by the Constitution absent therefrom, or conceal him or herself therein, or keep his or her house, so that he or she cannot be taken, or served with process, or willingly or fraudulently procure him or herself to be arrested, or his or her lands, goods, money or chattels to be attached, sequestered or taken in execution, or make or cause to be made any fraudulent conveyance of his or her lands, or chattels, or make or admit any false or fraudulent security or evidence of debt, or being arrested for debt, or having surrendered him or herself in discharge of bail, shall to Congress, or wherever the nature The right to compensation from of the power itself requires that it Spain, held under an abandonment shall be exclusively exercised by made to underwriters, and accepted Congress, the subject is completely by them for damages and injuries taken away from state legislatures, which were to be satisfied under the as if they had been forbidden to act treaty by the United States, passed upon it. The power granted to Con- to the assignees of the bankrupt, gress of establishing uniform laws who held such rights by the proon the subject of bankruptcy is not visions of the Bankruptcy Law of of this description. Sturgis v. the United States, passed April 4, Crowninshield, 4 Wheat. 122; id. 4 1800. Comegys v. Vasse, 1 Peters, Cond. Rep. 409. 193. In the distribution of a bankrupt's The Circuit Courts of the United effects in this country, the United States have jurisdiction of matters States are entitled to a preference, arising under the Bankruptcy Law of although the debt was contracted the United States, as they have of by a foreigner in a foreign country; any other subject, where the Conand although the United States had proved their debt under the commission of bankruptcy, and had voted for an assignee. Harrison v. Sterry et al., 5 Cranch, 289; id. 2 Cond. Rep. 260. A conveyance on the eve of bankruptcy, to give a preference to a particular class of creditors, is a fraud on the Bankruptcy Law, and void. Ibid. Such assignment may be valid to secure money actually advanced on the credit of it, and subsequent to its date. Ibid. stitution and laws of the United States give jurisdiction; but the District Courts have not the same jurisdiction in cases of bankruptcy as the chancellor of England has. Lucas et al. v. Morris et al., 1 Paine's C. C. R. 396. The Districts Courts of the United States have not, like the chancellor in England, exclusive jurisdiction over the entire execution of the Bankruptcy Law. They cannot remove assignees, nor compel them to account. Ibid. Upon the death of an assignee, unUnder a separate commission of der the Bankruptcy Law of the bankruptcy, against one partner United States, the right of action for only, his private property and his a debt due to the bankrupt vested in interest in the funds of the company the executor of the assignee. Richpasses. Ibid. ards et al., Assignees, etc., v. Mary remain in prison two months or more, or escape therefrom, or whose lands or effects being attached by process issuing out of, or returnable to, any court of common law, shall not, within two months after written notice thereof, enter special bail and dissolve the same, or in districts in which attachments are not dissolved by the entry of special bail, being arrested for debt after his or her lands and effects, or any part thereof, have been attached for a debt or debts amounting to one thousand dollars or upwards, shall not, upon notice of such land Ins. Co., 8 Cranch, 84; id. 3 after, is not within the first section Cond. Rep. 45. of the Bankruptcy Act of April 4, Where the original ground of ac- 1800, chapter 19. Wood v. Owings, 1 tion is founded on contract, but the Cranch, 239; id. 1 Cond. Rep. 302. immediate cause arises ex delicto, A certificated bankrupt or insoland the claim is for damages, un- vent, discharged from the particular liquidated by any express agreement, contract, need not be made a party or such as the law will not imply an to the bill on the contract. Van agreement to pay, the certificate of Reimsdyke v. Kane, Ex'r, 1 Gall. C. bankruptcy is no bar; because such C. R. 371. claim could not have been proved under the commission. Dusar v. Murgatroyd, 1 Wash. C. C. R. 13. The power given to Congress to pass uniform laws relative to bankruptcy is exclusive of such power in But if the agreement were to pay the state governments; and this, a particular sum, on failure to per- whether the former has thought form the contract; or if the case was proper to exercise it or not. Golden such that the plaintiff has his elec- v. Prince, 3 Wash. C. C. R. 313. tion to bring either trespass or case A discharge from a debt under the for money had and received, and bankruptcy laws of the place of conwaives the former by bringing the tract is good in every other place latter; the damages become a debt, where pleaded, as an extinguishment which the law implies a promise to of the debt. But a like discharge pay, and the certificate is a bar. where the contract is not made has Ibid. no effect. Le Roy v. Crowninshield, 2 Mason's C. C. R. 151. In an action brought against the owner of a vessel for damages for an injury sustained on board a ship by the neglect of the master, a certificate of bankruptcy cannot be pleaded in bar. Ibid. A debtor concealing himself from, and being denied to, his creditors does not constitute an act of bankruptcy under the laws of the United States, unless the service of process One guilty of perjury in proceed- is thereby prevented. Barnes et al. ings under the Bankruptcy Law, can- v. Billington, 1 Wash. C. C. R. 29. not be prosecuted for the offense after the repeal of the law. United States v. Passmore, 4 Dall. 372. A deed executed before the 1st of June, 1800, although acknowledged If the debtor order himself to be denied to creditors and others, and is in consequence thereof denied to an officer who comes to serve a process, it is an act of bankruptcy, pro attachment, give sufficient security for the payment of what may be recovered in the suit in which he or she shall be arrested, at or before the return-day of the same, to be approved by the judge of the district, or some judge of the court out of which the process issued upon which he is arrested, or to which the same shall be returnable, every such person shall be deemed and adjudged a bankrupt: Provided, that no person shall be liable to a commission of bankruptcy if the petition be not preferred, in manner hereinafter directed, within six months after the act of bankruptcy committed. vided the officer comes to serve the debtor, to bring about an act of process and not on any other busi- bankruptcy. Ibid. ness, and the denial has taken place within six months of the issuing of the commission. Ibid. Giving a bond, with warrant to confess judgment to one creditor upon the eve and in contemplation of bankruptcy, does not constitute a bankruptcy, unless the judgment entered on the bond and the issuing of the execution was at the instance or by the procurement of the debtor. Such a bond would be a fraud on the general creditors. Ibid. Where two of three assignees of a bankrupt enter into an agreement in the absence of the third, the contract is not binding on the absent assignee, unless he had previously given authority to make it, or substantially recognize and acknowledge it. Aliter, among partners. Blight v. Ashley et al., 1 Peters' C. C. R. 16. The agreement of the assignees of a bankrupt to give a preference to a particular creditor is not valid without the assent of the commissioners and a certain portion of the creditors. Ibid. Denial to an officer, whereby he is prevented serving process, must be really adversary, and not by concert between the creditor and the No debt but such as is due and owing at the time of the bankruptcy can be proved under the commission; and, consequently, an indorser or acceptor of a bill of exchange, drawn by the bankrupt, who has not paid it before the bankruptcy, cannot prove the debt. Marks et al., Assignees, v. Barker et al., 1 Wash. C. C. R. 178. The acceptor or indorser of a bill of exchange, who pays the bill after the bankruptcy of the drawer, may offset the same against the bankrupt's assignees; but he must show the debt to be a subsisting one in him at the time the action was brought, for this is a case of mutual credit given before the bankruptcy, although the money was not paid until after. Ibid. The District Courts of the United States have not power in bankruptcy cases to remove assignees, or compel them to account. Lucas v. Morris, Paine's C. C. R. 396. The holder of the negotiable paper, payable "without defalcation" under the laws of Pennsylvania, assigned after a commission of bankruptcy has issued, may come in under the commission; allowing all just offsets existing at the time of § 2. And be it further enacted, That the judge of the district court of the United States, for the district where the debtor resides, or usually resided at the time of committing the act of bankruptcy, upon petition in writing against such person or persons being bankrupt, to him to be exhibited by any one creditor; or by a greater number, being partners, whose single debt shall amount to one thousand dollars, or by two creditors whose debts shall amount to one thousand, five hundred dollars, or by more than two creditors whose The plain the bankruptcy, and which would came into their hands. have been admitted if the assign- tiff claimed to have a preference and ment had not been made. Hum- priority over the general creditors of phreys v. Blight's Assignees, 1 Wash. Baker. By the Court. Although the C. C. R. 44. United States might, under the The purchaser of a negotiable sixty-fifth section of the law to note, who becomes so after a commission of bankruptcy has issued, may prove under the commission; and he holds the note subject to all legal offsets. Ibid. regulate the collection of duties, be entitled to claim of the defendants to the amount which came into the hands of B., as the assignee of S., the provisions of the law do not extend to the surety who has paid the bond the same rights and privileges. Pollock v. Pratt & Harvey, 2 Wash. C. C. R. 490. The sixty-fifth section of the Bankruptcy Law of the United States, passed the 2d of March, 1799, does not repeal the provisions of the laws of the United States which give A. H. devised an estate to C. S. to the surety who pays bonds for for life; and after the death of C. S. duties a preference over the cred- he directed that the estate should itors. Mott v. The Assignees of be sold and divided among the Maris, 2 Wash. C. C. R. 196. The provisions of the Bankruptcy Law except from its general opera tion, not only the preference of the United States, but also the right of preference for satisfaction of debts due to the United States. Ibid. grandchildren of the testator who should be living at the death of C. S. B. married one of the grandchildren, and after the death of C. S., B. became bankrupt. B. and wife, after the decease of C. S., sold the property claimed under the will of A. H., P. paid a sum of money to the and the plaintiff claimed under this United States, as surety of S., in a conveyance. By the Court.— The debond for duties. S. became insol- cisions of the English courts abundvent, and assigned his effects to antly prove that a possibility, Baker, who received $4,000 un- whether belonging to the husband der the assignment, mixed the or the wife, would not pass to the same with his own funds and assignees of the husband, on his beafterward became bankrupt, and coming bankrupt, if it were not for the defendants were appointed the strong language of the statutes his assignees, but no effects of bankruptcy. Krumbaar v. Burt, known to be part of the estate of S. 2 Wash. C. C. R. 406. |