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will be entered, directing the notice to be published pursuance of that power, granted in the constitution my difficulties were increased on account of the in several papers, and a printed or written letter to be of the United States to congress, to establish a uni- very great defects in the bill itself. That a bank sent to each of the creditors. notifying them when form system of bankruptcy throughout the United rupt law, on proper grounds, uniform throughout the and where to appear, which notice must be published States. It provides that all persons whatever resid-union was desirable, I then thought, and still think seventy days before the bankrupt is examined before ing in any part of the union, owing debts which have so. I considered the bill as passed in August, highly the commissioner. not been created by defalcation as a public officer, defective, and that it ought to be materially amended. Thus it will be seen that there will be no more or as executor, administrator, guardian, trustee, or On the first vote in August I refused to go for it.difficulty in the court receiving the confession of judg-in any other fiduciary capacity, may petition for the The bill was lost. and on a reconsideration by the ment and petition of one thousand bankrupts in one benefit of this law. It provides further, that all house of that vote, as the time for it to take effect day than there would be in entering up so many con- merchants, all retailers of merchandise, and all was postponed to the first day of February, 1842-I fessions of judgments in other cases in other courts. bankers (private) factors, brokers, underwriters, or came to the conclusion that I would vote for it.The proceeding is one of mere form. marine insurers, owing debts to the amount of not This amendment, though it did not satisfy me, yet less than $2,000 shall be liable to become bankrupt induced me to give my support to the measure, the upon petition of one or more of their creditors to time for it to take effect being postponed to a day so whom they owe debts amounting to not less than remote as to afford congress an opportunity to alter, $500. We think it most likely that the power grant- by amendment, or repeal the law at this session, if, to congress was intended to apply only to mer- on more mature consideration it should be deemed chants and traders, and that it is unconstitutional for advisable. Subsequent reflection has but confirmed congress to pass an act interfering with the insolvent me in the opinion I first entertained: that the defects systems of the states. As there is no clause in the in the law were such as to overbalance any good late bankrupt act allowing the state courts concur- that might be derived from it." rent jurisdiction there can be little doubt but that it supercedes the insolvent laws of the states entirely if it be constitutional. A striking feature in this plan is that it is not merely intended to discharge the person of the unfortunate debtor from prison, but to abolish the debt entirely; being likewise ex post facto in its operation, as it interferes with the obligation of contracts in force before the passage of the law. To show some of the hardships that may arise if such be the case, we quote the following from an article in the Baltimore Republican on the subject:
3d. The court will appoint as many commissioners as shall be found necessary to take down all the testimony in writing, which testimony of the bankrupt and such witnesses as the creditors shall from time to time introduce, will be returned to the court for examina-ed tion, and, finally, like proceedings in chancery, be placed on file in the clerk's office for examination for all time to come. Thus, if a dishonest bankrupt escapes and obtains a discharge, it will be the fault of the creditor; for every word is to be taken down in writing, and kept as a reference for the benefit of the creditor. So that, even should a dishonest man obtain a discharge, the creditors have an everlasting opportunity to set it aside, if they shall establish an act of fraud!
4th. In carrying this act into effect, the judges do not receive one dollar for the labor that will devolve upon them; not one dollar, directly or indirectly, and the officers of the court will receive no compensation that will benefit them. So that all the labor of the court and officers will be the same to them as other gratuitous duties. They nevertheless, are willing to discharge the duty, from a just conviction of the immese importance of this law to the moral as well as pecuniary interests of the people.
[Special courts were called in Illinois, Indiana, Ohio, Connecticut, and other States, for the purpose of receiving applications under this law.]
This is the first class of voluntary bankrupts, including every man residing in the United States, and from the extensive range of the law, an inconsiderate reader would conclude that it must benefit the humblest man, as well as the most extravagant because he is included in it; but if we examine the operation of the law we shall find that a larger por tion of the community are deprived of the benefit of the insolvent laws without deriving any countervailing advantage whatever from the bankrupt law.
3d. OBJECTIONS TO, AND ALLEGED DEFECTS OF THE Difficulties between the period of application and of final release.
the United States.
4TH. EXPENSES. The N. Y. American says: "An impression has gone abroad, particularly in the country, that the expenses under the bankrupt law, amount to a large sum, so large, as to deter many from taking the benefit of the act. The total amount of expenses for each applicant is but $26 67, of which $12 86 are paid for the advertisements.
"I will conclude for the present by showing that the present bankrupt law is impracticable and cannot be carried into effect, because, as before shown, it repeals all state insolvent laws, and the administration of it is given exclusively to the judges of the district courts of the United States, each judge to attend to all cases arising within his district.
It is a known fact that a majority of persons petition for the benefit of the insolvent laws, to reThe Baltimore Sun, of the 5th February, says: lease their persons from imprisonment, and not for "The bankrupt law begins to develope itself, and as purpose of saving their property (if they have its proportions unfold, they present nothing yet real-any) from execution; whilst another class of extraly repulsive, though some deficiencies are brought gaut debtors who are seldom imprisoned in any into observation. We will advert briefly to its prac-event, are in favor of the bankrupt law only to get tical effects. According to the opinion of the late clear of their debts and travel in splendor through Chief justice Marshall, expressed probably some twenty years ago, our insolvent laws will be hereaf ter a dead letter; and should this opinion obtain in our courts of justice, all proceedings had in virtue of their operation subsequent to the 2d of February, 1842, will be null and void. Chief Justice Marshall held, that whenever the national government exercised the right to pass a national bankrupt act, the insolvent laws of the states would be virtually repealed. Out of this opinion proceeds this deficiency in the new law, that it makes no provision for the release of the debtor from imprisonment in the interim between his application and final release, and he is in consequence entirely unprotected from malicious prosecution. Thus it is in the power of the 5TH. APPROVAL OF THE LAW. The Philadelphia Gacreditor who has only a claim of a single dollar zette holds the following language: "The bankrupt against the bankrupt, to incarcerate him during the law disappoints people in every section of the counterm of his pending application-some ninety days; try. The mere proposition of it was a perfect bugfor the debtor can neither pay the dollar nor give bear to many individuals. In this city, its passage security therefor, without fraud or injustice to the was considered equivalent to signing the death warother creditors, nor dare the creditor receive it withThe insolvent laws were administered in the city of rant of half the Philadelphia merchants. The law out becoming amenable to the law. Here seems a Baltimore by three commissioners, and in the coun- was not only resisted stoutly by individuals here, but deficiency, and its only remedy appears to be in the ties in the state by the judges of the orphans courts corporate bodies undertook to enter their solema instant repeal of the state law authorising imprison- in part during the recess of the county courts, and protest against its enactment by congress. They de ment for debt. By some it is supposed that the na- thus speedy relief was brought home to every man's precated its dishonest influence, and inferred erron ture of the difficulty is one which would justify the door. But the case is entirely altered by the bank-eously that every man who was indebted here would court in releasing the debtor on security for his ap- rupt law, and every man in this state before he can necessarily take advantage of the law. Every kind pearance on the day set apart for his final hearing; obtain the benefit of it must make his personal ap- of imaginary evil was conjured up, and some overwe cannot see the necessity of security, if the whole pearance before the district judge in the city of Bal-sensitive people saw nothing but crime and perjury, of his assets go at once into the hands of an assig- timore, although he may live in the remotest county, and a train of monstrous evils following at the very hee, and this fact the framers of the law had in and be in jail for the sum of sixpence and costs, in heels of the bankrupt law. In this city, as every view doubtless, when they neglected to provide for which case an officer must bring him before the where else, the number of applicants is very small. this emergency, supposing it to be provided for. But judge to meet his creditors after twenty days notice They bear no comparison to the number which evewe see the whole operation upon a broader ground. of his application; and seventy days after this time ry body expected would present themselves. So far The grand object of the law was to protect from im- he will be decreed entitled or not to a final discharge as we can learn, the results of its operation are prisonment the bankrupt who honestly gives up his or certificate; thus the petition is pending 90 days, most happy. Inexorable creditors have been obligwhole effects to his creditors, use; hence the law ne- during all which time the petitioner must remain in ed to yield, and thousands who were willing to surver contemplated the imprisonment of the debtor; jail or be subject to the executions of his creditors." render every farthing of their property are now no and it appears to us that the bankrupt law as comThe honorable P. G. Goode in a letter to the editor longer "under the harrow." Compromises have pletely abrogates the law of imprisonment for debt, been made on every side, amicable agreements enas it does the insolvent law of the state. If this is of the Sidney Aurora, dated Washington, February, tered into, old affairs closed up, and fresh clean what it was intended to do, there exists no deficien- 1842, assigns his reasons for voting for the repeal of ledgers opened by men whose hands have been cy here; and we see no propriety in the operation of the bankrupt law at the then session, and before it shackled, so that their time was misused and their a national law which repeals one portion of the was to go into operation, although he had voted for industry profitless and unavailable. The practical state laws relating to a particular subject, and not the bill at the time it passed. workings of the law are as happy as they are decianother. sive upon the interests of both parties. We consider the law one of the most benign in its influence and important in its results which has ever been enacted by the American congress. [Phila. Gas.
The Wilmington Democrat, urges the following objections to the law: "The bankrupt law, passed at the late extra session of congress, was enacted in
"Let us look at some few of, what I consider, defects of the law, contrasted with the benefits that are expected to flow from it.
Will any one say that it is right and just that the principal debtor should be discharged from liability, while his security continues bound for the debt of the principal, who is thus discharged?
He says "When this law was before the house, in August, I had much doubt of the propriety of its passage, owing to the grounds taken by the bill; and
Will any one say, that debts for money, paid by a security, shall be forever blotted out, and that he shall have no recourse on his principal for whom he has paid the money, whatever may be the change in the future circumstances of the parties?
That debts for work or labor, over $25, or due more than six months, shall be cancelled by mere operation of law?
That bankrupts may receive fortunes from ancestors by gift or operation of law, and enjoy them in the face of creditors, wholly exonorated from liabi lity? That those who have given property to their wives and children, (unless such gift can be voided for fraud), shall go free of debt while this property remains in the family? And that all debtors of bankrupts shall be put to the enormous expense and cost of being sued in the United States courts?
I cannot believe that such a law will meet the approbation of the country when it comes to be understood. It is so expensive and attended with so much cost that it will oppress those really unfortunate and deserving, while it will, on the other hand, I fear, build up a state of splendid bankruptcies. Gentlemen may become rich by failing a few times. But, says its advocates, let us try it! The trial will, I fear, do the mischief. I repeat, I most sincerely regret, that it has been my duty to vote for the repeal: but, under the circumstances, I could not do other
The bankrupt law is a direct injury and a curse to
CONSTITUTIONALITY OF THE LAW.
h. IN REGARD TO THE CONSTITUTIONALITY OR UN- which should be uniform throughout the states; and
A day or two after the New Era says:
It would seem, his honor said, that the bankrupt
d. That congress has not the power to impair the
s this opinion was given in a case of voluntary
We are authorized to make this statement for the information of such as are concerned, and therefore repeat, that, without the final action being had on the petition for discharge, all previous proceedings are utterly valueless.
United States district court—in bankrupcy-March 3. Judge Betts presiding. The number of petitions yesterday was twenty-seven. The following only were were opposed:
Stephen S. Clark,-two days given to file objections. The same in the case of Horace James, Theodore P. Bogert and Thomas D. Lee.
Wm. T. Palmer-objections filed; referred to Og den Edwards.
Mr. Goddard, who appeared for the petitioners, asked the court if it was necessary that there should be a daily notice of the second notice, published for seventy days, or whether the act would not be complied with if published once. He thought it was in the power of the court to order such notice as it
They had communicated with the judges of the supreme court, who were desirous of adopting some rule, which should be uniform throughout the Union. and he regretted that he had not heard from them: it would seem that it was either not sufficiently clear, and required some consideration, or so clear as not to require any further rule.
His honor said he saw no reason to make any alteration, particularly as he had sent to the supreme court, who would probably devise a rule to be unifrm throughout the states. He however did not see the necessity of publishing in more than one paper, and should make such order in all proceedings before
i a few days the opinion will be before the puband, as it is a question of vital importance, both ffecting the powers of our government as well as
r important interests. I may have occasion here- ued until the next sitting of the court.
r to notice this decision-not for the purpose of ng into question either the motives, integrity, or I abilities of the court, but for the purpose of idering a question growing out of this decision
He should also make a rule that in case of the sickness or absence of the judge upon any return day, the period for showing cause should be contin
N. Y. Express.
t be correct), vitally affecting the powers and of Jonathan Ramaley, vs. J. W. Dobbins, constable,
reignty of the government of the United States,
United States district court. Habeas corpus.
New York paper says in relation to the pro-
12th day of March next, for the hearing of Relator and his creditors, and that notice of this order was published according to law.
The court decided that the relator being thus according to law, brought within the jurisdiction of the court and being bound at all times to abide its or ders and decrees in the matter of his petition, he was entitled to its protection, by being privileged from arrest in the case before them, pending the proceedings in his application for relief under the bankrupt law, and it therefore ordered that the said relator be discharged from his arrest, and that the arresting creditor pay the cost of the proceeding on the writ [Pittsburg Chronicle.
of habeas corpus.
A case was decided during the present week in one of the state courts at Philadelphia, in which the decisions heretofore made in the United States district courts by judges Story, Heath, Betts and Gilchrist were further confirmed. A motion was made to discharge a person from arrest, because he had been decreed a bankrupt in the district court of the United States on the 26th of April last. The state court after hearing the remarks of counsel, pro and con, decided as follows:
We have no doubt about this case, the debtor is not entitled to his discharge from arrest until he has attained his final certificate. In the meantime any creditor may arrest him, except when he is actually attending before the court or the commissioner, or on his way to or thence. The decree of bankruptcy is for the benefit of creditors, and only serves to vest the estate of the bankrupt in assignees, for the It does not proequal benefit of all his creditors. tect the debtor from process against his person.
Judge Gilchist, U. S. district judge of the state of South Carolina, differing from judges Irwin of Pennsylvania, and Potter, of South Carolina, has decided that a petitioner for the benefit of the bankrupt act is not entitled to exemption from arrest by his creditors; and intimates the opinion that such exemptron would not arise until the petitioner shall have actually received his final discharge and certificates thereof.
The supreme court of Virginia have decided that a voluntary applicant for the benefit of the United States bankrupt law, could not upon the mere filing his petition, and notifying his creditors of his intentions to apply for a decree declaring him a bankrupt, but before such a decree be obtained, claim an exemption from arrest at the instance of one of his
The Pittsburg Chronicle notices the following decision in bankruptcy, made in that city last week.It is in accordance with others which have been made here and elsewhere:
In the case of Roland vs. Haveland, which was recently brought before his honor Judge Grier, on motion of T. Hamilton, esq., rule on plaintiff to show cause of action, and why the defendant should not be discharged on common bail because defendant had been declared a bankrupt; the court refused to grant such rule, the defendant not having obtained his final discharge under the bankrupt law.
BANKRUPT LAW. John Durham, (M.) was yesterday brought before Judge Harrington of the superior court of this state, on a habeas corpus directed to the sheriff and gaolor of Kent county, who returned that he had the petitioner in custody under two writs of capias ad satisfaciendum issued on the 28th June and 14th July, 1842.
Mr. Comegys for the petitioner produced a certificate that the petitioner had been declared a bankrupt by the District court of the Delaware district, on the 28th July, 1842, upon his petition filed before the issuing of the writs of ca. sa.; and he moved his discharge from prison on the ground that the decree of bankruptcy entitled him to such relief. He argued that the bankrupt law suspended the operations of the state insolvent laws at least so far as they were in conflict. That law contemplates the presence and aid of the bankrupt to assist the assignee in the collection of his assets, and it requires his personal presence in court at all times to answer such interrogatories as may be put to him by his creditors. His presence is necessary to a successful prosecution of his petition in the bankrupt court; and if a creditor may throw him in prison pending his application, or keep him there after he is decreed to be a bankrupt, it might defeat his petition and, so far, frustrate the object and design of the bankrupt law. He argued also that the imprisonment could only be with a view to extort from him money or property which by the decree was vested in the assignee and no longer under his control: and if its object could be effected it would be in fraud of the bankrupt law which requires an equal distribution of the bankrupt's effects.
beas corpus for bringing him there for that purpose;
9th. PERSONS APPLYING WHETHER PARTNERS, MER-
But the judge refused the motion; and said, that
Debts to the amount of $65 have been proved a53 against Harvey and Ingalls. gainst William Ingalls, and to the amount of $1,392
The petitioner's creditors having their insolvency alone. these ca. sa's. lawfully thrown him in prison had a right to keep him there until discharged by due course of law;
law of congress.
New York U. S. court--before Judge Belts. In the which, without payment of the debt, can only be by case of Levi Dodge, Judge Betts said objections had resort to our state insolvent laws, or the paramount been made to the sufficiency of the petitioner's paStory, J. upon these questions, was of opinion. (1) But this law makes no provision pers. That the petitioner does not show that the for the discharge of the person of a bankrupt only as various firms of which he was a member are insolthat results from a discharge of his debts which takes vent, and that they are not in a situation to apply for that the costs of the proceedings ought to be apporupon the joint fund of the partners in proportion to place on the final decree and certificate in bankrupt- the benefit of the law. There are other objections tioned upon the separate funds of the bankrupt, and (2) That the as to the manner in which certain judgments are set forth. The general allegation is that the schedule the relative value thereof pro rata. separate creditors of the bankrupt are solely entitled is uncertain and indefinite; that the inventory is loose and uncertain in the description. The main objec- to be paid out of the separate estate of the bankrupt, tion, however, is, that the petitioner was a member and the joint creditors are entitled solely to be paid of various firms, and it is not stated if they are dis-out of the joint estate of the partnership, there being solved. The provisions of the act do not look to the no surplus beyond the amount due to the creditors condition of other parties with whom the petitioner upon either fund or estate.
may be connected. It is immaterial whether the firm
If the petitioner is subjected to inconvenience in the prosecution of his petition in the district court it is one of the misfortunes of his con lition resulting from the lawful exercise of his creditors' power over him. His confinement does not stop those proceed ings as his personal presence in court is not necessa In the case of Henry B. Williams, of Boston, it ap ry except for examination when that is required;and if that necessity arises, he will have ample relief by It may happen that a firm may be perfectly sol- peared that the balance in court, from which the whole of which sum belongs to the separate estate application to the bankrupt court which has power to carry out the act of congress in all cases. The vent, while one of the partners is not. That objec- costs are to be deducted, is the sum of $578 70, the A person may apobvious form would be by a motion in that court for ation cannot be made available. habeas corpus to bring him up for the purpose dissolution of a copartnership, or the insolvency of member of the firms of E. Whiting & Co. and Tursuch examination but not for his discharge. When Ply for the benefit of this law, without averring the of said Williams. The bankrupt, Williams, was a that object was effected he would be remanded to others with whom he may be connected. The ob- pin & Williams. Debts to the aniount of $917 12 prison until by a full discharge of his debts his perjections on these grounds are not sustained. Objec-have been proved against II. B. Williams, and to the tions are also made to the manner in which the real amount of $1,075 against E. Whiting & Co. or rather Sonal discharge was effected. The judge added, that even if he was wrong in the estate is set forth in the schedule. He states the against Williams as a member of that firin. The objections are opinion that this imprisonment was not in conflict county and town, and gives the name of the grantor. with any rights the petitioner has under the bankrupt That is sufficiently accurate. law in the present state of the matter, the motion for verruled. In the case of Otis P. Jewett, objections are made his discharge, being grounded upon a supposed interference with the proceedings in the district court, to his schedule as not being accurate and sufficient. That court is fully There is no doubt that the schedule is very loose and ought to be made in that ecurt. But competent to sustain its own jurisdiction and to re-vague, and without any thing to exculpate that looselieve from proceedings in the state courts by enjoin-ness, the court would certainly not receive it. ing the parties; but the application to a state judge he says under oath that he has made it as accurate must he founded on the want of lawful authority to as he possibly could, and he gives his reasons for not imprison upon the ca. sa. and must show a discharge having made it more full and complete. If he has of the judgment or other immunity of the person not made a prompt, fair and full statement, such as he should have made, that may be shown on proof and it will vitiate the proceedings. As a question of The prisoner was remanded to custody. [Delaware Journal. law the papers are deemed sufficient, but the opposJudge Dickerson, of New Jersey, has decided that party may go on and show if he can bring proof the day appointed to show cause against the bat k-that the petitioner could have made a fuller and fairrupt's discharge, is too late for an opposing creditorer statement.
Upon these facts the question submitted to the court was, whether the creditors of the said Williams individually, and the creditors of E. Whiting & Co. shall share pari passu the funds in court, in proportion to their respective claims, or in what manner the funds shall be distributed?
Story J. upon this question, was of opinion, that the fund was exclusively distributable among the separate creditors of the said bankrupt. Williams, and [Boston Daily Adv. that there being no surplus, the joint creditors of the firm of E. Whiting & Co. are not entitled to any share in the said fund. 10th. PREFERENCES GIVEN FRAUDS AND RIGHTS OF
The decision in the case of Chester S. Kasson, on to come in, file his reasons against such discharge; the question whether jewelry can be retained by a and apply for an order to take testimony. He must have appeared earlier, and must have his testimony ready, with the report of the commissioner thereon, so that the matter may be heard and determined on the day appointed for showing cause. Still, if the creditor show to the court any good cause for his delay, the court will give him further time to take or complete his proofs.
The court (Judge Judson presiding), overruled the objections on both points, and decided that the defendant had committed acts of bankruptcy, and ought to be declared bankrupt by the court.
In the case of a bankrupt firm, in Boston, one tuber of which resided in that city, and the other New Hampshire, Judge Story decided, that the latter could get his discharge through the Boston
Another point decided was that the court will not, except in extreme cases, exercise its extraordinary power of suspending the operation of the process of the state courts; but will leave the assignee to pursue his own rights by regular process of law. Hence if execution issue against the bankrupt's property after he has been decreed a bankrupt, the assignee must pursue his remedy a proper courts, the same as any third person whose property is levied on improperly. If execution be issued after the filing of the petition, and before such decree, the course is the same. The assignee, when one is appointed, must follow the goods in whosesoever hands they may be-provided tors. he has any right to them; the court expressed its opinion, however, that in such a case the execution creditor's lien must prevail; and that the property of the assignee, in the goods, &c., of the bankrupt, relates back no farther than the time of the decree of bankruptcy.
So, also where the bankrupt is under arrest, or is imprisoned under civil process, the court will not interfere with the operation of such process; but if the tankrupt's presence is necessary before the court, or 2 comm.sin to be examined, &c. it will grant a ha
Circuit court of the United States—In bankruptcy.— before the district court on the report of a commisOpinions were delivered in two cases, which came sioner and were adjourned into the circuit court.
The first was the case of William Ingalls of Bos
is the sum of $796, of which sum $53 33 belong to ton, in which it appeared, that the balance in court the estate of said William Ingalls; and $742 67 befrom which the costs taxed are first to be deducted, long to the estate of Harvey & Ingalls, of which firm of the act of congress was presented by William InIngalls was a member. The petition for the benefit
The questions submitted to the court were (1) How shall the costs be apportioned? (2) How shall the funds be distributed between the private creditors of William Ingalls and the partnership creditors of Harvey & Ingalls?
BANKRUPTS OVER PROPERTY.
It has been
that whilst a petition of creditors praying that a decided in Boston, in the U. States district court debtor may be declared bakrupt, is pending, said injunction to prevent him was ordered to be issued. debtor has no right to dispose of his property, and an
In New York, in a case where one of the credi The only petitioner opposed yesterday was John tors of the applicant excepted to his being decreed Petitioner, will be given this day. [New York Courier. a bankrupt upon the ground that he was owing Involuntary bankruptcy. The New Haven Herald debts which had been created by reason of a defal contains a report of a case tried a few days since be- cation while acting in a fiduciary capacity, the court fore the U.S. circuit court sitting at Hartford, overruled the exception, and decided that any per wherein David Wakeman, as creditor, was petitioner son (otherwise qualified) may become a volunteer for a decree of bankruptcy against Rufus Hoyt, a bankrupt under the act, who is owing debts which falcation as a public officer, or as executor, adminis carriage manufacturer residing in Fairfield county shall not have been created in consequence of a deThe materials used in the manufacture were pur-trator, guardian or trustee, or while acting in any The facts in the case are thus stated: chased at Bridgeport, New York, and other places. other fidudiary capacity, although he may at the On the 15th of June, 1842, Hoyt being deeply embar-same time, owe other debts which have been thus rassed and pressed for security by the petitioning cre- created. ditor, executed to certain family connexions to whom he was indebted, mortgages and assignments of all his property, including the stock, tools, &c. in his carriage establishment, for the purpose of securing to There was no evidence or claim that at the the mortgagees a preference over his general creditime of making the mortgages on which the petition ing creditor relied as constituting acts of bankruptcy, Hoyt had any intention of applying for the benefit of the bankrupt act.
It has been discovered in the N. York U. S. district court by Judge Betis, that the creditors of a bankrupt who fail to file and prove their claims are shut out from any dividend directed to be made within the time limited in the notice to creditors, to those who have so filed and proved their claims. If any future dividend should be declared they may come in and present their claims.
In Kentucky, before Judge Morris, in a petition of creditors to have a man declared an involuntary The application was opposed on two grounds: 1. That Hoyt was not "a merchant or using the bankrupt, on the ground that, being a retail dealer, trade of merchandise, or a retailer of merchandise," he had in January, 1842, in contemplation of bankwithin the meaning of the act; and 2, that the mort-ruptcy, fraudulently conveyed away all his proper gages, &c. though made with the intent to secure a ty, preferring some and excluding other credits; cy, such conveyances must be fraudulent according preference to particular creditors, were not fraudu- it was decided that to constitute an act of bankrupt lent, and did not constitute acts of bankruptcy.
to the laws of Kentucky---it is not sufficient that it
2. That it was not made in contemplation of bankwas fraudulent as violating the policy of the bankruptcy, as the respondent at the time avowed his determination not to apply for the benefit of the bankrupt law. rupt law.
3. That it was yielded to the importunity of his creditors.
Before the same judge a man petitioned to be a declared bankrupt. It appeared that the petitioner was a defaulter as former clerk of the Louisville city council. Held, that defaulters are not entitled to the benefits of the bankrupt law, as voluntary ap plicants, to a discharge from any of their debts, and that the applicant was a defaulter within the mean
ing of the act.
The Richmond Compiler says: "In the case of Ezekiel Daws, a merchant owing debts to the amount of $2,000, a petition having been filed by creditors to whom he owed more than $500, praying that he might be declared a bankrupt, and the question being whether he had made a fraudulent conveyance, Judge Mason yesterday decided that a deed of trust by such a merchant, made when he was insolvent, for the purpose of giving some creditors preference or priority over others, is to be considered in contemplation of bankruptcy, within the meaning of the second section of the bankrupt act, and fraudulent within the meaning of the first section. This decision is a preliminary step to a bill by the assignee in bankruptcy against the trustees on the deed, to have the trust fund disposed of rateably amongst all the bona fide creditors of Daws.
In another case, the same question which is decided by Jude Mason, has been adjourned into the circuit court, to be determined by Judge Daniel.
was no moral fraud-that all the debts preferred were
A highly important decision, as to the effect of the bankrupt law, in cases of voluntary assignments for the benefit of certain preferred creditors, was had in the district court of Philadelphia, on Saturday the 21st ult. before judge Randall, in which Henry Breneman, late merchant of Columbia, Lancaster county, was declared a bankrupt, on the application of certain Philadelphia creditors. Mr. B. had convey ed all his property by deed of assignment on the 10th March, 1842, to Reuben Mullison, in trust to pay certain preferred creditors On the seventh day of April last, certain creditors applied to have Mr. B. declared a bankrupt-contending that the assignment is in violation of the act of congress entitled "an act to establish a uniform system of bankruptcy through out the United States," passed August 19, 1841, and therefore void, and is in itself an act of bankruptcy. And the respondent contended,
1. That the assignment is not fraudulent within the meaning of the act of congress, as all the preferred debts are honestly and justly due.
dry debts and sums of money owing by said Henry Breneman, which he is unable to pay at present." It would be difficult indeed to establish that any act was done in contemplation of bankruptcy within the meaning of the act of congress, if this is not such an act. Again, it is said this assignment was yielded to the importunity of his creditors and therefore it is not an act of bankruptcy.
In England it has been decided that a debtor, who
yielding to the importunity of his creditor delivers
lieve himself from any present difficulty which is
In my opinion the petitioners have fully established their right to the decree prayed for, and it is accordingly accorded to them."
Some of the creditors of Walker & Kennet, of this
The second section of the act provides for the case of involuntary bankrupts, by declaring that all future payments, securities, conveyances, &c. made or given by any bankrupt, in contemplation of bankruptcy shall city, filed a petition praying a decree of bankruptcy be void and a fraud on the act, and the assignee under against them. An issue was made, and on the trial the bankruptcy shall be entitled to claim the property it appeared that W. & K. being in failing circumas part of the bankrupt's estate; and then provides that in case of a voluntary application, if any such assign-stances, in April last, made an assignment of all their ment had been made by the petitioner after the 1st of property and effects to trustees for the benefit of their crediiors, preferring some of them. The deed apJanuary, 1841, (upwards of seven months before the peared to have been made, and the preference given, passage of the law, and more than a year before it took because of the inability of W. & K. to pay all their effect,) in contemplation of the passage of a bankrupt debts-and it was held that it was fraudulent and law he should not be entitled to his discharge, unless void, and the making thereof an act of bankruptcy. assented to by a majority of the creditors not prefer- A decree was accordingly entered. red, thus showing a marked distinction between the cases of voluntary and involuntary bankrupts.
Judge Conklin, of the northern district of New York, has given an important opinion in a recent case of bankruptcy. An assignment was made by a firm in Oneida county, on the 20th of April last. They directed, in that instrument, that all their property, and the proceeds thereof, should be divided and distributed among their creditors by their assignees, in the same manner as if the same were in the hands of an assignee under the bankrupt act of the United States, by virtue of proceedings duly had in bankruptcy. Their assignment was excepted to by some of their creditors, as in itself an act of bankruptcy, or at least as contravening the purpose of the bankrupt act, and they were petitioned against in bankruptcy. The decision of his honor, Judge Conklin, declares their assignment void, and at the same time notifies the world that voluntary assignments, whether they give preferences or do not give Again, it is made the duty of the assignee to claim them, must henceforth cease under the bankrupt law the property as part of the assets of the bankruptcy of the United States. Probably a consent in writ- but how can this be done, unless the party be declaring, for consideration, signed by all the creditors, ed a bankrupt, for until the decree of bankruptcy might uphold a voluntary assignment. By acquies- there can be no assignee. The doctrine contended cence, too, on the part of all the creditors, in a par- for by the respondent's counsel would completely ticular instance, the trust created by such an instru- nullify so much of the law as prohibits a preference ment might be executed, and not be disturbed after- of one creditor over another. A man might assign wards. But in either of these cases, the debtor the whole of his estate to one or more favorite credishould not himself become a petitioner in bankrupt- tors, to whom he was bona fide indebted, and not apcy, until the completion of the trust." ply for the benefit of the bankrupt law, but, if pressSome time in March last, Henry Breneman, mer-ed by his other creditors, be content with an exempchant in Columbia, made an assignment of all his tion from personal arrest, by a discharge under the effects under the insolvent laws of this state, prefer- state insolvent law, and if his creditors cannot proring certain of his creditors. A petition was after-ceed against him and have him declared a bankrupt, wards presented to the district court, Judge Ran- by adverse proceedings the assignment would remain dall, by two of his Philadelphia creditors, praying to effectual. Such I conceive could not have been the have said Breneman declared a bankrupt under the intention of congress. law of congress. The case was under examination in Philadelphia for several days, when Judge Ran- as well as debtors, but the construction of the redall delivered his opinion, deciding that the petition spondent would render it for the benefit of debtors of said creditors ought to be granted, and according only. It has been said that congress has no power to ly declared Breneman a bankrupt. This decsion, of pass a law which would have the effect of making course, takes his property out of the hands of his void an assignment recognized by the laws of Pennassignees and divides it equally among all his credi-sylvania. This argument was not much pressed; in tors, and decides also that the insolvent laws of the deed it could not be, for independent of the express state are superceded by the general bankrupt law, power given to congress, by the eighth section of the In a recent case at Pittsburg, where the sheriff in cases where a man's debts exceed $2,000, the only first article of the constitution of the United States, levied upon various articles of household furniture case in which he can be declared a bankrupt against the decisions which recognise the validity of assign- which had previously been returned by the owners, his will. ments with such preferences recognize them express on their application for the benefit of the bankrupt ly on the ground that there was no bankrupt law in law, in their schedule for the benefit of their creditors, existence at the time. But it is said the respondent Judge Irwin gave it as his opinion, that "from the never intended applying for the benefit of the bank- time of filing a petition in bankruptcy, the petitionrupt law and therefore the assignment was not made er is by law deemed a bankrupt, and the property in contemplation of bankruptcy Bankruptcy howe mentioned in his schedule, if not secured, by previver does not consist in the proceedings in court; it ous lien, belonged to his creditors generally, and could takes place in the course of a man's business, and the not be legally seized upon execution by any of them. proceedings in court are to ascertain whether the That if it remained in possession of the petitioner it party was or was not a bankrupt at the time the origi- was in trust for his creditors, and that after the denal petition was filed. Bankruptcy is said to be the cree in bankruptcy, their rights related back to the state of a man unable to pursue his business and meet time of filing the petition, and that it would be the his engagements in consequence of the derangement duty of the assignee in bankruptcy to demand such of his affairs. Now what can more effectually ren- property, or sue for it or its value, as circumstances der a man unable to pursue his business and meet his might require. Unless, thererore, it was proved that engagementss than a transfer of all his property for the application for the benefit of the bankrupt act was the benefit of some of his creditors and to the exclu- not bona fide made, an injunction would be directed sion of others. Can it be supposed he did not con- to issue to prevent the sale of the property mentioned template the entire breaking up of his business and in the execution until further order, with permission his inability to meet his engagements at the time he to the respondents to move to have it dissolved, in executed the assignment. In this case the instru- case the petition is not prosecuted, or in caso a decree ment itself avers as part of the consideration “sun-, in bankruptcy should not be granted."
The law was intended for the benefit of creditors
Judge Conklin, of the northern district, New York, has decided in a bankrupt case, that voluntary assignments, whether they give preferences, or do not give them, are utterly void under the bankrupt law.
i A similar petition was filed against John J. Anderson, he having made a similar assignment. A jury was empannelled to try the issues. On the trial the court instructed the jury
1. That if they should find from the evidence, that A. at the time he made the deed, was insoivent-that the deed was made; and the preferences therein provided for given, because of such insolvency-then then said deed is fraudulent and void, and the making thereof an act of bankruptcy. And,
2d. If by the testimony of persons acquainted with A's circumstances, it appeared that they knew of no preperty of A. not included in the assignment, it devolved on A. to prove that he had other property; otherwise it must be presumed that the assignment included the whole.
The jury, after receiving the charge of the judge, was adjourned until the following day. [St. Louis New Era, September 17.
In Boston, last week, an application was made to of his property, by conveying it by mortgage to preprevent a respondent, named Davis, from disposing ferred creditors, during the pendency of a petition to the court that he might be declared bankrupt. Subsequently he sold some of his property, and put the mojunction be issued forthwith. ney in his pocket. The court ordered that an in
Story, J., on Tuesday proceeded to deliver his opi-
Decision of the supreme, circuit, and district courts of
A case has been recently determined by the hon. U. S. Heath in bankruptcy, which involves principles of much importance to debtors and creditors. A petition was filed by two creditors of Mr. Thos. J. Flack, of this city, alleging him to be insolvont, and to have been guilty of a fraud in giving preferences to creditors in contemplation of bankruptcy, and claiming, consequently, that he should be declared a bankrupt. It was the first contested case of "involuntary bankruptcy." Much testimony was of fered upon Mr. Flack's condition. Mr. Flack failed in March last. It appears that he was brought into sudden difficulty by liabilities he had incurred for a merchant who had failed, but who had, when the liabilities were assumed, assigned a number of claims as security to Mr. Flack exceeding in amount the sum of the liabilities. There was no very specific testimony to show what probably the securities would yield-but one of the creditors testified that reducing one creditor to another in payment by an assignment? 1. Has not an insolvent debtor, a right to prefer them to one-half of their nominal value, and making large deductions from other assets of Mr. Flack, he ment, or subsequent acquired lien will avoid such He has, if made bona fide and no subsequent attachwas likely, if allowed to liquidate his affairs himself, assignment, may include choses in action as a policy to pay all his debts and retain a surplus of several of insurance, &c. Mr. Justice M'Lean, of Ohio, holds, (1) that no thousand dollars. and meanwhile maintian his family. assignment should be accompanied by an actual de- ja fiduciary debt. (2) That the debt in that case, Nor is it necessary that such an relief can, under the bankrupt act, be given against And the disposition of the creditors at large, (the livery of the policy. So also an assignment is good having been contracted before the passage of the petitioning creditors excepted), seemed to be to per- against a subsequent attachment although the credi- bankrupt act, the applicant was not thereby deprived mit Mr. Flack to continue undisturbed in his busi-tors were not originally parties to the assignment, if of the benefit of the act as to other debts. ness and to pay them as means should accrue to him; they have in fact assented thereto before the attach- Mr. Justice Thompson, of New York, holds, (1) confidence being strongly entertained in his integrity,ment, and the assignment is valid if the creditor That the existence of a fiduciary debt does not preand prudence, and industry. There was no attempt, have actually received the benefit of it. And it is clude the party from taking the benefit of the bankbut on the contrary a disclaimer of all purpose, to no objection to such an assignment, that it defeats rupt act as to all other debts. (2) That the bankshow any fraud, in fact, on the part of Mr. Flack- all other creditors of their legal remedies? even if a-rupt act being intended for the benefit of creditors, but the fraud charged to him was only constructive mounting to a majority in number and value; unless a fiduciary creditor is not bound to come in and take in 1st paying his creditors on debts incurred in his there be some express provision of a bankrupt law to his dividend under the act, but he has an election to own business; 2d. having made an assignment of invalidate the deed. It is not fraud upon an attach-do so if he chooses. (3) That unless the fiduciary claims due to him out of Maryland, for the benefit of ing creditor, to provide for the payment of all the creditor does not elect to come in under the bankhis creditors generally, but with the object declared creditors, in preference to one, who means to attach ruptcy, his debt is not discharged thereby, but that on the face of the assignment to prevent attachments by process, the property conveyed. It has never been the bankrupt is or may be entitled to a discharge from abroad of his means. It was as to this assignment in alleged in the United States that a general assign- all other debts. proof that the trustee under it was in the habit of ment of all a man's property for the benefit of his In this state of the authorities, Mr. Justice Story said paying over to Mr. Flack the sums he received as creditors is per se fraudulent. The right to make it he was reluctantly compelled to examine the questhe trustee, and that Mr. Flack applied those pay results from the absolute ownership which every man tion de novo; and upon the best consideration be had ments to satisfy his, Mr. Flack's, debts arising on his claims over that which is his own. It is not even been able to bestow upon the subject, his opinion was own business. It was argued that this conduct of necessary to the validity of a deed of assignment for that the existence of fiduciary debts, owing by the the trustee indicated the actual design of the assign the benefit of creditors, that creditors should be con- petitioner, constituted no positive incapacity, or valid ment to be to keep Mr. Flack in control of the claims, sulted at all.-Spring et al. v. and that therefore the assignment was void. The rance Co., 8 Wheaton, 268. 5 Cond, R., 434. South Carolina Insu- objection to his being declared a bankrupt, and obtainjudge overruled this objection, and decided the as-v. Minturn, 2 Gall. Browning the benefit of the act, if he owes other debts, not C. C. R. 557. Halsey v. Whit- of a fiduciary character. signment to be fair and meritorious. ney, 4 Mason C. C. Rep., 206. Brooks v. Marburry, 11 Wheaton, 78. 6 Cond. Rep. 223. Brashear v. West 7 Peters, 608.
On the other ground the testimony was, that Mr. Flack had, since his failure, paid a number of notes as they fell due, which were upon his own business transactions; and such payments were insisted to be undue preferences and a fraud on the bankrupt act, and "fraudulent" acts within the terms of the law as to the instances in which a debtor may be coerced into bankruptcy. The court determined:-1. That preferences to creditors when the debtor contemplates bankruptcy, are frauds which might authorise a debtor to be declared a bankrupt involuntarily. 2. 'That positive proof of an intention to become a bankrupt under the act, or of expectation of being compelled into bankruptcy as an involuntary bankrupt, was not necessary; but that the contemplation or anticipation of such an event or measure might be inferred from circumstances, as the desperate condition of the debtor's affairs, and his having no prospect of arranging with his creditors. 3. That inabiy to pay promptly was not an insolvency which was to argue a view to technical bankruptcy; that to preclude any such inference it was enough to show that the debtor was likely eventually to pay his debts, or to a great extent.
sue him, and hurry their suits to judgment and exe- owes debts in a fiduciary capacity is entitled to a dis-
An assignment of a debtor of all his effects for the benefit of such of his creditors as should release their debts in sixty days from the date of the assignment, where there was no fraud, was held to be valid.Pierpont & Lord v. Graham, 4 Wash. C. C. R.232.
The debtor may prefer one creditor, pay him fully, and exhaust his whole property, leaving nothing for others equally meritorious.-Clark et al. v. White. 42 Peters, 178.
Upon the other questions in the case, the learned judge said, that after considerable reflection, he had come to the following conclusions:
11th. DISCHARGE, WHEN DEBTS ARE DUE IN A FIDU
1. That fiduciary debts are provable under the proceedings in bankruptcy equally with the other debts, at the creditor's election.
2. That if the fiduciary creditor elects to come in and prove his debt, and to take a dividend, he is barred of all other remedy therefor, except out of the
3. Upon another point he had felt more difficulty, namely, whether fiduciary debts, not proved under the proceedings in bankruptcy, are extinguished by a discharge and certificate under the act. After some hesitation, he had come to the conclusion that they DECISION IN BANKRUPTCY. Judge Story, says the are not. Upon this construction of the acts, as sayBoston Post, lately delivered a decision as to fiduciary ing the right of the fiduciary creditors, and exempting debts under the bankrupt law, in the United States them at their option from the operation of the act, circuit court in that city, as follows: "First that the from motives of public policy, and the design of putexistence of fiduciary debts, contracted before the ting strong marks of distinction and reprobation passage of the act, would not deprive the petitioner upon official and fiduciary defalcations, we might of a right to a discharge in bankruptcy from all his readily see why the party may still be permitted to other debts. Secondly-that the claims of those hav- obtain the benefit of the act, as to other debts, withing legal demands against the administrator would out in any manner impairing this policy. It leaves still remain good against him, notwithstanding his the party, as to his fiduciary debts, where he finds discharge in bankruptcy. Thirdly-that if these him, to the justice, and it may be, to the mercy of The judge fully reviewing all the facts of the case, creditors came in with the other creditors for a share the creditors. determined that there was no ground for imputing to in the assets of the bankrupts, they would be stop- By the fourth section of the act, the bankrupt is Mr. Flack a contemplation of bankruptcy in making ped from further proceeding against him after his denied any discharge, or certificate, if after the passthe payments complained of-but that, or the con- discharge; and fourthly-that fiduciary debts, con- ing of the act, he shall apply trust funds to his own trary, there was every thing in his course of pro- tracted subsequently to the day of the passage of the use." It was plain that such a misapplication after ceeding to show that he had no such a result in view, bankrupt law, would entirely prevent the discharge the passing of the act, is treated as a gross fraud, and that there was nothing in his situation to en- of the bankrupt. to deprive a party of any force the conclusion that a bankrupt process was to certificate under the act as to all his debts whatsoever, not only such as are fiduciary, but all others.
In this mode of construing the act, the learned judge said, the distinction between the fiduciary debts and others is constantly preserved. Misapplication of fiduciary funds before the passing of the act, deprives the party of all right to a discharge from them only; misapplication after the passage of the act, deprives him of all right to a discharge from any debts whatsoever.
be anticipated by him as unavoidable. The judge The Boston Daily Advertiser furnishes a report of commented at much length on the testimony to de-a case before the circuit court of the United States, scribe the condition of Mr. Flack's affairs, and to il- in which an elaborate opinion was delivered by lustrate the good faith of his conduct since his failure. Judge Story, involving important questions relative He dismissed the petition. to the rights under the bankrupt law of persons owCounsel for the petitioning creditors, J. Glenn and ing debts in a fiduciary capacity. The question J. M. Campbell, esqs.; for Mr. Flack, D. Stuart and arose upon the petition of J. C. Tebbets, to be disCharles F. Mayer, esqs. [Ball. Clipper. charged from his debts-his application being op posed on the ground, that in 1836 he was appointed A Hole in the bankrupt law. One of the chief bene- administrator of an estate and received the sum of The remaining question was as to the form of the fits which the bankrupt law was expected to secure, $12,404, belonging to the estate which he had never bankrupt's discharge. Ought it be in a general form, was the prevention of frauds in regard to confidential accounted for. or with a special exception of fiduciary debts? He debts. The law provides that no man shall be libe- In the list of his debts, this debt appeared as among thought it should be in a general form,-first, berated from his debts under it, who has given any prefe- the ordinary individual debts due from him or his cause no other form was contemplated by the act; rence to one creditor over another. But mark the short copartners, whereas in fact, the debt was created in and secondly, there was no necessity to except fiduvision of legislators. The way the thing is doing is consequence of a defalcation by him, while acting ciary debts from the general term of the discharge this:-a man fails; he gives no preference to any body. in his fiduciary capacity as administrator. Upon and certificate, for if they are by implication exBut certain creditors among his friends immediately this, the question arose, whether a bankrupt who cepted from the operations of the act, where the