sion in the dicta of many able judges, and was made the foundation of a course of decisions in a very important class of cases.

Thus, it has been said, "strictly and truthfully speaking, an insolvent has no property, and therefore he has no natural right to dispose of his property in his possession otherwise than with the consent of the real owners-his creditors." 1 Again, "at the date of the assignment, Holloman was insolvent, and he knew it. It was his duty to go into bankruptcy;" and in the case of Wilson v. The City Bank," and other analogous cases, it was for the time maintained that the silent acquiescence of the debtor, without invoking the protecting shield of the bankrupt act, in permitting a creditor to obtain judgment and secure a lien when the debtor was insolvent and known so to be by the creditor, was a fraud upon the bankrupt act. This doctrine, however, failed to meet the approval of the Supreme Court of the United States.5

Mr. Justice Miller, in delivering the opinion of that court, in the case of Wilson v. City Bank, on appeal, said, "It is said, however, that the grand feature of that law (the bankrupt law), is to secure equality of distribution among creditors in all cases of insolvency, and to secure this it is the legal duty of the insolvent, when sued by one creditor in an ordinary proceeding likely to end in judgment and seizure of property, to file himself a voluntary bankrupt, and that this duty is one to be inferred from the spirit of the law and is essential to its successful operation. The argument is not without force, and has received the assent of a large number of the district judges to whom the administration of the

'Mr. Justice Deady, 'In re Silverman, 1 Saw. 416.

Mr. Justice Woods, in Jackson v. McCulloch, 13 N. B. R. 285; and see remarks of Mr. Justice Blatchford, in Hardy v. Clarke, 3 N. B. R. 392.

35 N. B. R. 270.

Warren v. Tenth Nat. Bk. 7 N. B. R. 481; Smith v. Buchanan, 8 Blatch. 153; Haskell v. Ingalls, 5 N. B. R. 205; Catlin v. Hoffman, 2 Sawyer, 486; see Rogers v. Palmer, 102 U. S. 263.

Wilson v. City Bank, 17 Wall. 473.

6

• Ibid. 484, 485.

bankrupt law is more immediately confided. We are, nevertheless, not satisfied of its soundness.

"We have already said there is no moral obligation on the part of the insolvent to do this unless the statute requires it, and then only because it is a duty imposed by the law. It is equally clear that there is no such duty imposed by that act in express terms. It is, therefore, an argument solely of implication. This implication is said to arise from the supposed purpose of the statute to secure equality of distribution in all cases of insolvency, and, to make the argument complete, it is further necessary to hold that this can only be done in bankruptcy proceedings under that statute. Does the statute justify so broad a proposition? Does it, in effect, forbid all proceedings to collect debts in cases of insolvency in other courts, and in all other modes than by bankruptcy? We do not think that its purpose of securing equality of distribution is to be carried so far."

§ 52. Inasmuch, then, as there is no legal duty imposed upon an insolvent, by the mere fact of insolvency, to resort to bankruptcy, and since no legal rights are acquired by creditors to their debtor's property solely by his insolvency, it would appear that an insolvent debtor may make any disposition of his property not prohibited by law,1 but a general assignment for the benefit of all his creditors equally is not prohibited by law; on the contrary, "whenever such a disposition has been voluntarily made by the debtor, the courts in this country have uniformly expressed their approbation of the proceeding.""

The only provisions of the bankrupt act under which it has been or can be claimed that an assignment honestly made for the equal benefit of all creditors is an act of bankruptcy, are the clauses of section 5021, respecting fraudulent conveyances, to wit, assignments, &c., made by a debtor,

'Mr. Justice Baldwin, in Davis v. Turner, 4 Gratt. 426; see also Stewart v. Platt, 101 U. S. 731.

2 Mr. Justice Field, in Mayer v. Hellman, 13 N. B. R. 442.

2

with the intent to delay, defraud, or hinder his, creditors, and the subsequent clause of the same section in reference to conveyances by an insolvent made with the intent to defeat or delay the operation of the act. For the bankruptcy courts to declare such an assignment as has been described a fraudulent conveyance, under the former of these clauses, would be to disregard the authority of courts of law and equity in this country, upon the construction of the words. employed from the earliest time, and no decision of the bankruptcy courts in this country has ever gone fully to this length. The opinions adverse to such assignments have, for the most part, been rested upon the latter clause of the section. The words "with intent to defeat or delay the operation of the act," appear for the first time in the bankrupt act of 1867, and they have not acquired a distinct and definite interpretation. It is difficult to perceive how any act of a debtor can be said to defeat or delay the operation of a law in the abstract. The words have ordinarily been regarded as referring to the rights of creditors secured under or by the operation of the act. But to say that an assignment honestly made for the equal benefit of all creditors is an act of bankruptcy because it defeats or delays the operation of the act, by depriving creditors of the right to administer the estate of an insolvent, is to say that it is an act of bankruptcy because it deprives them of a right which they have not yet acquired, and which they cannot acquire, except by an appeal to the court in certain numbers and under peculiar circumstances, and the mere insolvency of their debtor is not one of those circumstances.

But if it be said that the rights of creditors protected by this clause are prospective rights which will spring into existence when the insolvent shall be brought under the operation of the act, then every interference by a debtor with his property after his insolvency is equally an act of bank

1 See ante, § 46.

See remarks of Mellish, L. J., in Ex parte Luckes in re Wood, 36 L. T. Chan. 117, quoted ante, § 42, note; Field, J., in Mayer v. Hellman, 13 N. B. R. 442.

ruptcy, since every such interference, to the extent to which it goes, as effectually prevents the property of the insolvent from coming into the hands of the assignee in bankruptcy, and from distribution under the act, as does a general conveyance of his entire estate. Such a proposition is tantamount to affirming that insolvency itself is an act of bankruptcy.

When it is asserted that the clause under consideration was inserted into the act from the English decisions, and is equivalent to the language of Lord Eldon, "puts his property under a course of distribution different from that or dained by the bankrupt law," it may well enough be replied, that admitting the analogy between the phrases (although not entirely apparent), still no intent on the part of the legislature to adopt the English rule on this subject can be gathered from the discussion of the act during its progress through Congress, and it is not to be presumed that a rule of law which was declared by the eminent chancellor who first formulated it, to have been placed on a "singular ground," and to have been "carried to an extravagant length,"2 and the force of which has been materially affected by the amendments to the bankrupt acts in existence at the time of the passage of the act of 1867, was incorporated into that law without more pointed reference to it either in the act itself or in the extended discussion which the passage of the act provoked.

If assignments, honestly made for the equal benefit of all creditors, and carrying out the beneficial design of the bankrupt law, were regarded by Congress as antagonistic to that law, it is somewhat surprising that conveyances so familiar to the law of this country should have been referred to only under the indirect phraseology employed.

§ 53. Assent of Creditors.—Under the English decisions it has been uniformly held, that a creditor who has either executed, or been privy to, or acted under, a deed of assign2 Lord Eldon, in Ex parte Bourne, 16 Ves. 148.

See ante, § 42.

ment, cannot afterwards set it up as an act of bankruptcy.1 And so a creditor who, by standing by and not objecting, assents to the execution by the debtor of the assignment, cannot afterwards rely on its execution as an act of bankruptcy. And this rule is believed to prevail in this country, though perhaps not to the same extent. Thus where a debtor caused his property to be transferred to trustees for the payment of certain specified debts, and was subsequently adjudged bankrupt, it was held that the creditors secured by the assignment might dissent therefrom and prove their debts, but in the absence of an actual dissent, creditors preferred under an assignment will be deemed to assent to its provisions, and cannot prove their claims without surrendering the preference.3

But where an application for an adjudication of bankruptcy was made against the debtor, and the acts of bankruptcy alleged were that the debtor, being a merchant, had suspended payment of his commercial paper, and had not resumed within a period of fourteen days, and it appeared that, before the expiration of the fourteen days, the debtor had made an assignment for the benefit of creditors under the Ohio statute, it was held that the assignment did not prevent the running of the fourteen days; held, also, that the fact that the State court had acquired jurisdiction of the debtor's estate did not prevent the bankrupt court from proceeding under the bankrupt law, no fraud having been shown in the assignment.*

§ 54. Assignment not Void but Avoidable in Bank ruptcy. In the absence of actual fraud, the assignment, even

'Bamford v. Baron, 2 Term R. 594, note; Ex parte Cawkwell, 1 Rose, 313. Ex parte Stray, L. R. 2 Chan. 374; Marshall v. Barkworth, 4 B. & Adol. 508; Jackson v. Irvine, 2 Camp. 49; Oliver v. King, 25 L. J. Chan. 427; Ex parte Strang, L. R. 2 Ch. Ap. 374; see Bradley, J., Barings v. Dabney, 19 Wall. 9. In re W. A. Sanders, 13 N. B. R. 164. And where the petitioning creditor applied to the State court to have'the security of the voluntary assignee increased, this was not such an assent to the proceedings as to estop him from claiming that the assignment was an act of bankruptcy. In re William H. Langley, 1 N. B. R. 559.

3

In re Laner, 9 N. B. R. 494.