bankruptcy proceedings, otherwise the policy shall pass to the trustee as assets; and (6) rights of action arising upon contracts rights of or from the unlawful taking or detention of, or injury to, his property.

action upon contracts. 454

property.

All real and personal property belonging to bankrupt estates shall be appraised by three disinterested appraisers; they shall be appointed by, and report to, the court. Real and per- Appraisal of sonal property shall, when practicable, be sold subject to the 398 approval of the court; it shall not be sold otherwise than subject -sale. to the approval of the court for less than seventy-five per centum of its appraised value.

convey title.

The title to property of a bankrupt estate which has been Trustee to sold, as herein provided, shall be conveyed to the purchaser by the trustee.

on.

d Whenever a composition shall be set aside, or discharge re-vesting title voked, the trustee shall, upon his appointment and qualification, be vested as herein provided with the title to all of the property -setting comof the bankrupt as of the date of the final decree setting aside position aside. the composition or revoking the discharge.

393

certain, trans

recovery of

property.

e The trustee may avoid any transfer by the bankrupt of his may avoid. property which any creditor of such bankrupt might have fers, etc. avoided, and may recover the property so transferred, or its value, from the person to whom it was transferred, unless he was a bona fide holder for value prior to the date of the adjudication. Such property may be recovered or its value collected from whoever may have received it, except a bona fide holder for value.

f Upon the confirmation of a composition offered by a bank- Title revested rupt, the title to his property shall thereupon revest in him.

THE TIME WHEN THIS ACT SHALL GO INTO EFFECT.

on confirming composition.

Force and effect.

voluntary

§ 71. a This Act shall go into full force and effect upon its 851 passage: Provided, however, That no petition for voluntary -petition for bankruptcy shall be filed within one month of the passage bankruptcy. thereof, and no petition for involuntary bankruptcy shall be involuntary. filed within four months of the passage thereof.

Cases pending

laws.

b Proceedings commenced under State insolvency laws before under State the passage of this Act shall not be affected by it. Approved, July 1, 1898.

97

TITLE IV.

THE LAW AND PRACTICE IN BANKRUPTCY

ANNOTATED.

THE CONSTITUTION OF THE UNITED STATES.

THE ACT OF JULY 1, 1898.

THE ACT OF MARCH 2, 1867, AND AMENDMENTS.

[The section numbers of the law of 1867 refer to sections in the Revised Statutes of the United States.]

CONSTITUTION OF THE UNITED STATES.

ART. I, SEC. 8.-"The Congress shall have power tablish

** uniform laws on the subject of bankruptcies throughout the United States."

Extent of the power. The subject is divisible in its nature into bankruptcy and insolvent laws, though the line of partition between them is not so distinctly marked as to enable any person to say with positive precision what belongs exclusively to one and not to the other class of laws. The difficulty of discriminating with any accuracy between insolvent and bankruptcy laws would lead to the opinion that a bankruptcy law may contain those regulations which are generally found in insolvent laws, and that an insolvent law may contain those which are common to a bankruptcy law. Sturgis v. Crowninshield, 4 Wheat. 122.

The word bankruptcy is employed in the Constitution in the plural and as part of an expression “the subject of bankruptcies." The ideas attached to the word in this connection are numerous and complicated. They' form a subject of extensive and complicated legislation. Of this subject Congress has general jurisdiction. In re Edward Klein, 1 How. 277, note; s. c. 2 N. Y. Leg. Obs. 185; in re Silverman, 4 B. R. 523; s. c. 1 Saw. 410; s. c. 2 Abb. C. C. 243.

Bankruptcy bears a meaning co-extensive with insolvency, and is equivalent to that word in the Constitution. Kunzler v. Kohaus, 5 Hill, 317; Sackett v. Andross, 5 Hill, 327; Morse v. Hovey, 1 Barb. Ch. 404; s. c. 1 Sandf. Ch. 187.

The grant is a grant of plenary power over the “subject of bankruptcies." The subject of bankruptcies includes the distribution of the property of the fraudulent or insolvent debtor among his creditors, and the discharge of the debtor from his contracts and legal liabilities, as well as all the intermediate and incidental matters tending to the accomplishment

or promotion of these two principal ends. Congress is given full power over this subject, with the one qualification, that its laws thereon shall be uniform throughout the United States. In re Silverman, 4 B. R. 523; s. c. 1 Saw. 410; s. c. 2 Abb. C. C. 243; in re Reiman & Friedlander, 11 B. R. 21; s. c. 13 B. R. 128; s. c. 7 Ben. 455; s. c. 12 Blatch. 562.

The power of Congress extends to all cases where the law causes the property of a debtor to be distributed among his creditors. This is its least limit. Its greatest is a discharge of the debtor from his contracts. All intermediate legislation affecting substance and form, but tending to further the great end of the subject distribution and discharge is in the competency and discretion of Congress. In re Edward Klein, 1 How. 277, note; s. c. 2 N. Y. Leg. Obs. 185; in re Silverman, 4 B. R. 523; s. c. 1 Saw. 410; s. c. 2 Abb. C. C. 243.

To this power there is no limitation, and consequently it is competent to Congress to act on the whole subject of bankruptcy with a plenary discretion. In re Irwine, 1 Penn. L. J. 291.

The power conferred is without restriction, save in its uniformity. It is plenary, and in reference to its subject may be exercised with the same latitude as the like power has been and may be by the British Parliament. Kunzler v. Kohaus, 5 Hill, 317; in re Edward Klein, 1 How. 277, note; s. c. 2 N. Y. Leg. Obs. 185.

Congress in passing laws on the subject of bankruptcies is not restricted to laws with such scope only as the English bankruptcy laws had when the Constitution was adopted. The power is general, unlimited, and unrestricted over the subject. In re Silverman, 4 B. R. 523; s. c. 1 Saw. 410; s. c. 2 Abb. C. C. 243; in re Reiman & Friedlander, 11 B. R. 21; s. c. 13 B. R. 128; s. c. 7 Ben. 455; s. c. 12 Blatch. 562; Thompson v. Alger, 53 Mass. 428.

The framers of the Constitution did not intend to limit the power to any 'particular class of persons. Morse v. Hovey, 1 Sandf. Ch. 187; s. c. 1 Barb. Ch. 404; in re Edward Klein, 1 How. 277, note; s. c. 2 N. Y. Leg. Obs. 185; Kunzler v. Kohaus, 5 Hill, 317; in re California Pacific R. R. Co., 11 B. R. 193; s. c. 3 Saw. 240; in re Silverman, 4 B. R. 523; s. c. 1 Saw. 410; s. c. 2 Abb. C. C. 243.

It is not necessary that a bankruptcy law shall provide for the debtor's discharge. In re California Pacific R. R. Co., 11 B. R. 193; s. c. 3 Saw. 240. Congress may establish a system of voluntary as well as involuntary bankruptcy. Loud v. Pierce, 25 Me. 233; Lalor v. Wattles, 8 Ill. 225; Kunzler v. Kohaus, 5 Hill, 317; in re Edward Klein, 1 How. 277, note; s. c. 2 N. Y. Leg. Obs. 185; Morse v. Hovey, 1 Sandf. Ch. 187; s. c. 1 Barb. Ch. 404; Thompson v. Alger, 53 Mass. 428; State Bank v. Wilborn, 6 Ark. 35; Keene v. Mould, 16 Ohio, 12; Cutter v. Folsom, 17 N. H. 139; McCormick v. Pickering, 4 N. Y. 276; Rowan v. Holcomb, 16 Ohio, 463; Dresser v. Brooks, 3 Barb. 429; Hastings v. Fowler, 2 Ind. 216; Reed v. Vaughan, 15 Mo. 137; in re Irwine, 1 Penn. L. J. 291.

The directly granted power over bankruptcies carries the incidental authority to modify the obligation of contracts so far as the modification may result from a legitimate exercise of the delegated power. A discharge may therefore be granted releasing the debtor from contract subsisting at

the time when the law was passed. Kunzler v. Kohaus, 5 Hill, 317; Sackett v. Andross, 5 Hill, 327; in re Edward Klein, 1 How. 277, note; s. c. 2 N. Y. Leg. Obs. 185; Morse v. Hovey, 1 Sandf: Ch. 187; s. c. 1 Barb. Ch. 404; Loud v. Pierce, 25 Me. 233; Keene v. Mould, 16 Ohio, 12; McCormick v. Pickering, 4 N. Y. 276; in re Irwine, 1 Penn. L. J. 291.

Congress may pass a law which will have the effect to make void an assignment which is valid under the State laws. In re Henry Brenneman, Crabbe, 456.

The power to enact a bankruptcy law implies the power to make it efficient. The end implies the means. Russell v. Cheatham, 16 Miss. 703. Congress has the power not only to establish uniform laws on the subject of bankruptcies, but also to commit the execution of the system to such Federal courts as it may see fit, and to prescribe such modes of procedure, and means of administering the system as it may deem best suited to carry the law into successful operation. Shearman v. Bingham, 5 B. R. 34; s. c. 7 B. R. 490; s. c. 3 C. L. N. 258; Goodall v. Tuttle, 7 B. R. 193; s. c. 3 Biss. 219; Mitchell v. Manuf. Co. 2 Story, 648.

Congress has the power to define what and how much of the debtor's property shall be exempt from the claims of his creditors. In re Reiman & Friedlander, 11 B. R. 21; s. c. 13 B. R. 128; s. c. 7 Ben. 455; s. c. 12 Blatch. 562.

To come within the constitutional provision, a bankruptcy law must be a uniform law throughout the United States. A law which prescribes one rule in one district and a different one in another can not be regarded as a uniform law. Kittredge v. Warren, 14 N. H. 509.

The laws established by Congress on the subject of bankruptcies under the power conferred by the Constitution, must, indeed, be uniform throughout the United States. But the extent to which this power shall be exercised rests in the discretion of Congress. Uniformity is required in the national legislation only, and the laws of the several States may be left in force so long and to such extent as Congress may see fit. Day v. Bardwell, 3 B. R. 455; s. c. 97 Mass. 246.

State Insolvent Laws.-The power granted by Congress may be exercised or declined as the wisdom of that body shall decide. If, in the opinion of Congress, uniform laws concerning bankruptcies ought not to be established, it does not follow that partial laws may not exist or that State legislation on the subject must cease. It is not the mere existence of the power, but its exercise which is incompatible with the exercise of the same power by the States. It is not the right to establish these uniforin laws, but their actual establishment which is inconsistent with the partial acts of the States. Sturgis v. Crowninshield, 4 Wheat. 122; Blanchard v. Russell, 13 Mass. 1; Farmers' Bank v. Smith, 3 S. & R. 63; Betts v. Bagley, 29 Mass. 572; Adams v. Storey, 1 Paine, 79; Pugh v. Bussel, 2 Blackf. 294; Alexander v. Gibson, 1 N. & McC. 480. Contra, Vanuxem v. Hazelhursts, 4 N. J. 192; Oldens v. Hallet, 5 N. J. 466; Golden v. Prince, 3 Wash. 313; Mason v. Nash, 1 Breese, 16; Ballantine v. Haight, 16 N. J. 196.

One prominent reason why the power was given to Congress was to secure to the people of the United States, as one people, a uniform law by which a debtor might be discharged from his previous engagements, and his future acquisitions exempted from his previous engagements. The rights of debtor and creditor equally entered into the minds of the framers of the Constitution. The great object was to deprive the States of the dangerous power to abolish debts. In re Edward Klein, 1 How. 277. note; s. c. 2 N. Y. Leg. Obs. 185.

The peculiar terms of the grant deserve notice. Congress is not authorized merely to pass laws the operation of which shall be uniform, but to establish uniform laws on the subject throughout the United States. This establishment of uniformity is perhaps incompatible with State legislation on that part of the subject to which the acts of Congress may extend. Sturgis v. Crowninshield, 4 Wheat. 122.

The right of the States to pass a bankruptcy law is not extinguished but merely suspended by the enactment of a general bankruptcy law. The repeal of that law can not confer the power on the States, but it removes a disability to its exercise, which was created by the act of Congress. Ibid.

The bankruptcy act, as soon as it took effect, ipso facto, suspended all action upon future cases arising under the insolvent laws of the State, where the insolvent laws act upon the same subject-matter and the same persons as the bankruptcy act; and all proceedings upon such cases commenced under the State laws after that time are null and void. Commonwealth v. O'Hara, 1 B. R. 86; s. c. 6 Phila. 402; s. c. 6 A. L. Reg. 765; Perry v. Langley, 1 B. R. 559; s. c. 1 L. T. B. 34; s. c. 7 A. L. Reg. 429; Van Nostrand v. Carr, 2 B. R. 485; s. c. 30 Md. 128; Martin v. Berry, 2 B. R. 629; s. c. 37 Cal. 208; s. c. 2 L. T. B. 180; Corner v. Miller et al., 1 B. R. 403; Shears v. Solhinger, 10 Abb. Pr. (N. S.) 287; in re Reynolds, 9 B. R. 50; s. c. 8 R. I. 485; in re Lucius Eames, 2 Story, 322; Bishop v. Loewen, 2 Penn. L. J. 364; Griswold v. Pratt, 49 Mass. 16; Rowe v. Page, 13 B. R. 366; s. c. 54 N. H. 190.

The State insolvent laws are not entirely abrogated. They exist and operate with full vigor until the bankruptcy law attaches upon the person and property of the debtor. In re John Ziegenfuss, 2 Ired. 463; Reed v. Taylor, 4 B. R. 710; s. c. 32 Iowa, 209.

Two statutes having the same general object, and acting upon the same persons and the same cases, by different modes and in different jurisdictions, must be in conflict with each other. Though the modes by which the remedy is administered may vary, yet, where the bankruptcy act and the State insolvent law have substantially the same scope and object, and act upon the same persons and cases. the State insolvent law is suspended. The act of Congress is both a bankruptcy act and an insolvent act. Martin v. Berry, 2 B. R. 629; s. c. 37 Cal. 208; s. c. 2 L. T. B. 180; Van Nostrand v. Carr, 2 B. R. 485; s. c. 30 Md. 128.

The jurisdiction of the bankruptcy act does not depend upon the right of the debtor to ultimately obtain a discharge. If his case comes within the provisions of the bankruptcy act, he can not obtain a discharge under