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any fraudulent conveyance to a friend or secret trustee, of his lands, tenements, or goods. 7. Procuring any protection, not being himself privileged by parliament, to screen himself from arrest. 8. Endeavoring by petition to the king, or by bill in the courts against any creditors, to compel them to take less than their just debts, or to procrastinate the time of payment originally contracted for. 9. Lying in prison for two months or more upon arrest or other detention for debt, without finding bail, which shows a weakness in his credit, either from his poverty or bad character. 10. Escaping from prison, after an arrest for £100 or upwards. 11. Neglecting to satisfy a just debt to the amount of £100 or more, within two months after service of process for such debt upon any trader having the privilege of parliament.
Lenient Construction of the Act. The whole law of bankrupts being an innovation on the common law, courts of justice have been reluctant to extend or multiply acts of bankruptcy by any construction or implication. Hence it has been held, that a man, removing his goods privately to prevent their being seized in execution, committed no act of bankruptcy, as the statutes mention only fraudulent gifts to third persons, and procuring them to be seized by sham process, in order to defraud creditors; but this, though a palpable fraud, is not adjudged an act of bankruptcy. So also a banker's stopping or refusing payment is no such act, for there may have been good reasons for his so doing, as suspicion of forgery ; but if, on such account, he lies in prison two months, he then is deemed a bankrupt. III. PROCEEDINGS ON A COMMISSION OF BANKRUPTCY.
By Petition. These, so far as they affect the bankrupt himself, depend entirely on the several statutes of bankruptcy. There must be first a petition to the lord chancellor by one creditor to the amount of £100, or by two to the amount of £150, or by three or more to the sum of £200, which debts must be proved by affidavit.
1 The English Bankrupt Act of 1849 has increased the number of these enumerated cases to fifteen, and modified six of them. The Act of the United Congress gives six instances of acts of bankruptcy. 1. Departure from he state, with intent to defraud creditors. 2. Concealing himself to avoid arrest. 3. Fraudulently procuring himself to be arrested. 4. Procuring his goods to be attached, distrained, or taken in execution. 5. Removing his goods, or conceal. ing them to prevent their being levied upon. 5. Making a fraudulent sale or transfer of lands or goods, or evidences of debt.-Sharsuovd.
Commission Granted. The chancellor thereupon grants a commission to discreet persons, who are termed commissioners of bankrupt, and security of £200 is required to make the party amends, if they do not prove him a bankrupt. If they receive compensation from the bankrupt for suing out the commission, so as to obtain more than their ratable dividends of the bankrupt's estate, they forfeit all they have received, and also their whole debt. The commissioners meet at their own expense, and as a maximum are allowed a compensation of 20s. per diem each.
Choice of Assignee. After they have been sworn to duly perform their duties, they first receive proof of the party's being a trader, and having committed an act of bankruptcy. If proved, they declare him a bankrupt, and give notice thereof, and appoint three meetings. At one of these meetings, an election of assignees is made, to whom the bankrupt's estate shall be assigned, and be vested for the benefit of creditors. These assignees are selected by the major part in value of the creditors, who have at the time proved their debts, but may be appointed by the commissioners, and afterwards be approved or rejected by the creditors. No creditor, whose debt does not amount to 101., shall vote for assignees.
Surrender by the Bankrupt. At or before the third meeting, within forty days from the original advertisement, the bankrupt, after receiving notice, must surrender himself personally to the commissioners, which surrender, if voluntary, protects him from arrest, until his first examination be past. Thenceforth he must conform to the statutes of bankruptcy, or be guilty of felony, without benefit of clergy, and shall suffer death, and his estate be distributed among his creditors.
Arrested for Absconding. If the bankrupt abscond, or is likely to do so, between the time of the commission and the last day of surrender, he may, by warrant, be apprehended, and committed to the county jail, and his goods and papers be seized by the commissioners.
Examination of the Bankrupt. When the bankrupt appears, the commissioners are to examine him, as to all matters relating to his trade and effects. They may also summon and examine his wife and any other person, in relation to his affairs. If they refuse to answer or to subscribe to their examination, they may be sent to prison without bail, till they yield and give full
The bankrupt is bound on this examination to make a full discovery of his estate, as well in expectancy as in possession, and how he has disposed of the same, together with all books and writings relating thereto.
Punishment of the Bankrupt. He is also to deliver, as far as lies in his power, to the commissioners, all his effects, except the necessary apparel of himself and family. If he conceals or embezzles any effects to the amount of 201., or withholds any books or writings, with intent to defraud his creditors, he shall be guilty of felony, without benefit of clergy, and his goods be divided among his creditors. And unless his inability to pay his debts arose from some casual loss, upon conviction of misconduct or negligence, he may be placed in the pillory for two hours, and have one of his ears nailed thereto and cut off.
Concealed Effects. After the time allowed for the bankrupt to make such discovery has expired, any party voluntarily discovering any part of the estate, hitherto unknown to the assignees, shall be entitled to five per cent out of the effects so discovered, and possibly a further reward. Any trustee concealing any effects of the bankrupt is subjected to a penalty.
Certificate of Creditors. If however, the bankrupt proves frank and honest, the law displays no such severity. If he has made a full discovery, and if in consequence thereof, four-fifths of his ereditors of 201. and upwards, will sign a certificate to that purport, the commissioners are to authenticate such certificate, and transmit it to the lord chancellor, and he or two of the judges, whom he shall appoint, on oath made by the bankrupt, that such certificate was without fraud, may allow the same, or disallow it, upon cause shown by any of tho creditors of the bankrupt.
Discharge of the Bankrupt. If the certificate be allowed, the bankrupt is entitled to a decent allowance out of his effects, for his future support, and to put him in the way of honest industry. This is also in proportion to his former behavior in the early discovery of the decline of his affairs, thereby giving his creditors a larger dividend. He also has an indemnity granted him of being free and discharged forever from all debts owing by him at the time he became a bankrupt, even though judgment has been obtained against him, and he lies in prison upon execution for such debts. The proceedings in bankruptcy are on petition to be entered of record, as a perpetual bar against actions to be commenced on this account, though in general, the production of the certificate, properly allowed, shall suffice.
When Allowance not Granted. No such allowance shall be granted, unless such certificate be signed and allowed, nor where the bankrupt does not make discovery of a fictitious debt produced, but suffers other creditors to be imposed upon. Neither can he claim it, if he has given a marriage portion of over 1001. to any child, unless he had at that time sufficient left to pay his debts; or if he lost at any one time 5l., or in all 1001. within the year before he became bankrupt by gaming or wager, or 1001. in stock jobbing during the same time.
Second Bankruptcy. When once a man has been cleared by a commission of bankruptcy, or has compounded with his creditors, or has been delivered by an act of insolvency, and afterwards again becomes bankrupt, he must pay at least fifteen shillings on the pound. Bankrupts are only thereby indemnified as to the confinement of their bodies, but any further estate they may acquire remains liable to their creditors, excepting their necessary apparel, household goods, and tools of trade. IV. TRANSFER OF GOODS BY BANKRUPTCY.
By the Assignees. Under the statute, all the personal estate and effects of the bankrupt are vested by the act of bankruptcy in the future assignees of the commissioners, whether goods, in actual possession, or debts, contracts, and other choses in action, and the commissioners may open any house of the bankrupt and seize the same. When the assignees are chosen by the creditors, the commissioners are to assign every thing over to them to hold as if vested in the bankrupt himself, with the remedies to recover it.
Acts of the Bankrupt after Bankruptcy. This transfer includes all the property of the bankrupt from the time he committed the first act of bankruptcy; once a bankrupt, always a bankrupt. All transactions of the bankrupt from that date are null and void, either with regard to the alienation of his property, or the receipt of his debts from those who are privy to his bankruptcy, for they are the property of his future assignees. An execution sued out, but not served and executed on the bankrupt's effects, till after the act of bankruptcy, is void against the assignees. An exception exists in the case of the king, whose execution binds such goods. In France, every act of a merchant for ten days precedent to the act of bankruptcy, is presumed fraudulent, and hence void. But in England, no money paid by a bankrupt to a bona fide creditor, even after an act of bankruptcy done, shall be liable to be refunded. Nor shall any debtor of a bankrupt, who pays him his debt without knowledge of his bankruptcy, be liable to account for it again.
Compromise of a Debt. The assignees may pursue any legal method of recovering this property vested in them, but cannot commence a suit in equity, nor compound any debts owing to the bankrupt, nor refer any matter to arbitration, without the consent of the creditors, or the major part of them in value, at a meeting to be held after notice.
Dividend Declared. Having collected all the effects possible, and reduced them to money, the assignees must, after four and within twelve months subsequent to the commission being issued, give twenty-one days notice to the creditors of a meeting for dividend or distribution, at which time, they must produce their accounts, and verify them by oath if required. They then declare a ratable dividend upon the debts, which have been proved, according to their quantity, and not according to the quality of the debts.
Secured Debts. Mortgages, for which the creditor has real security in his hands, are safe, for the commission of bankruptcy reaches only the equity of redemption. So also are personal debts, where the creditor has a chattel in his hands, as a pledge for the payment, or has taken the debtor's goods in execution.
Landlord's Claim. The landlord has a preferred claim for one year's rent due, even though he had neglected to distrain, while the goods were on the premises, which he is otherwise allowed to do, no matter as to the quantum of rent.
Judgments, Notes and Bonds. But otherwise, judgments and recognisances, both which at other times, as debts of record, have a priority, and also bonds, and obligations by deed or special instrument, which are called debts by specialty, are put on a level with debts by mere simple contract, and all paid pari passu. Debts, not due at the time of the dividends made, as bonds and notes of hand, payable at a future day certain, shall be proved and paid equally with the rest, allowing a discount in proportion. Insurances and obligations upon bottomry or respon