CHAPTER THE THIRTY-FIRST:

OF TITLE BY BANKRUPTCY.

THE preceding chapter having treated pretty largely of the acquisition of personal property by several commercial methods, we from thence shall be easily led to take into our present consideration a tenth method of transferring property, which is that of

X. BANKRUPTCY; a title which we before lightly touched upon, so far as it related to the transfer of the real estate of the bankrupt. At present we are to treat of it more minutely, as it principally relates to the disposition of chattels, in which the property of persons concerned in trade more usually consists, than in lands or tenements. Let us therefore first of all consider, 1. Who may become a bankrupt: 2. What acts make a bankrupt: 3. The proceedings on a commission of bankrupt: and 4. In what manner an estate in goods and chattels may be transferred by bankruptcy.

1. WHO may become a bankrupt. A bankrupt was beforeb defined to be a trader, who secretes himself, or does "certain other acts, tending to defraud his creditors." He was formerly considered merely in the light of a criminal or offender; and in this spirit we are told by sir Edward Coke, that we have fetched as well the name, as the wickedness, of bankrupts from foreign nations.

a See page 285.

b Ibid.

Stat. 1 Jac. I. c. 15. § 17. d 4 Inst. 277.

But at present the laws of [472 ]

e The word itself is derived from the word bancus or banque, which signifies the table or counter of a tradesman, (Dufresne, I. 969.) and ruptus, broken;

:

bankruptcy are considered as laws calculated for the benefit of trade, and founded on the principles of humanity as well as justice and to that end they confer some privileges, not only on the creditors, but also on the bankrupt or debtor himself. On the creditors, by compelling the bankrupt to give up all his effects to their use, without any fraudulent concealment on the debtor, by exempting him from the rigor of the general law, whereby his person might be confined at the discretion of his creditor, though in reality he has nothing to satisfy the debt: whereas the law of bankrupts, taking into consideration the sudden and unavoidable accidents to which men in trade are liable, has given them the liberty of their persons, and some pecuniary emoluments, upon condition they surrender up their whole estate to be divided among their creditors.

In this respect our legislature seems to have attended to the example of the Roman law. I mean not the terrible law of the twelve tables; whereby the creditors might cut the debtor's body into pieces, and each of them take his proportionable share: if indeed that law, de debitore in partes secando, is to be understood in so very butcherly a light; which many learned men have with reason doubted. Nor do I mean those less inhuman laws (if they may be called so, as their meaning is indisputably certain) of imprisoning the debtor's person in chains; subjecting him to stripes and hard labour, at the mercy of his rigid creditor; and sometimes selling him, his wife, and children, to perpetual foreign slavery, trans Tiberims: an oppression which produced so [473] many popular insurrections, and secessions to the mons sacer.

denoting thereby one whose shop or
place of trade is broken and gone;
though others rather choose to adopt
the word route, which in French signifies
a trace or track, and tell us that a bank-
rupt is one who hath removed his
banque, leaving but a trace behind.
(4 Inst. 277.) And it is observable that
the title of the first English statute con-
cerning this offence, 34 & 35 Hen. VIII.
c. 4., "against such persons as do make
bankrupt," is a literal translation of the
French idiom, qui font banqueroute.

But I mean the law of cession, introduced by the christian emperors; whereby if a debtor ceded, or yielded up all his fortune to his creditors, he was secured from being dragged to a gaol, omni quoque corporali cruciatu semoto h." For, as the emperor justly observes', "inhumanum erat spoliatum fortunis "suis in solidum damnari." Thus far was just and reasonable: but, as the departing from one extreme is apt to produce it's opposite, we find it afterwards enacted, that if the debtor by any unforeseen accident was reduced to low circumstances, and would swear that he had not sufficient left to pay his debts, he should not be compelled to cede or give up even that which he had in his possession: a law, which under a false notion of humanity, seems to be fertile of perjury, injustice, and absurdity.

THE laws of England, more wisely, have steered in the middle between both extremes: providing at once against the inhumanity of the creditor, who is not suffered to confine an honest bankrupt after his effects are delivered up; and at the same time taking care that all his just debts shall be paid, so far as the effects will extend. But still they are cautious of encouraging prodigality and extravagance by this indulgence to debtors; and therefore they allow the benefit of the laws of bankruptcy to none but actual traders; since that set of men are, generally speaking, the only persons liable to accidental losses, and to an inability of paying their debts, without any fault of their own. If persons in other situations of life run in debt without the power of payment, they must take the consequences of their own indiscretion, even though they meet with sudden accidents that may reduce their fortunes for the law holds it to be an unjustifiable practice, for any person but a trader to encumber himself with debts of any considerable value. If a gentleman, or one in a liberal profession, at the time of contracting his debts, [474 ] has a sufficient fund to pay them, the delay of payment is a species of dishonesty, and a temporary injustice to his creditor: and if, at such time, he has no sufficient fund, the dishonesty and injustice is the greater. He cannot therefore murmur, if he suffers the punishment which he has voluntarily drawn

Cod. 7. 71. per tot.

i Inst. 4. 6. 40.

k Nov. 195. c. 1.

upon himself.
But in mercantile transactions the case is far
otherwise. Trade cannot be carried on without mutual cre-
dit on both sides: the contracting of debts is therefore here
not only justifiable, but necessary. And if by accidental
calamities, as by the loss of a ship in a tempest, the failure
of brother traders, or by the non-payment of persons out of
trade, a merchant or trader becomes incapable of discharg-
ing his own debts, it is his misfortune and not his fault.
To the misfortunes therefore of debtors, the law has given a
compassionate remedy, but denied it to their faults: since, at
the same time that it provides for the security of commerce,
by enacting that every considerable trader may be declared a
bankrupt, for the benefit of his creditors as well as himself,
it has also (to discourage extravagance) declared that no one
shall be capable of being made a bankrupt, but only a trader;
nor capable of receiving the full benefit of the statutes, but
only an industrious trader.

THE first statute made concerning any English bankrupts, was 34 & 35 Hen. VIII. c. 4., when trade began first to be perly cultivated in England; which has been almost totally altered by statute 13 Eliz. c. 7., whereby bankruptcy is confined to such persons only as have used the trade of merchandize, in gross or by retail, by way of bargaining, exchange, rechange, bartering, chevisance, or otherwise; or have sought their living by buying and selling. And by statute 21 Jac. I. c.19. persons using the trade or profession of a scrivener, receiving other men's monies and estates into their trust and custody, are also made liable to the statutes of bankruptcy: and the be[ 475]nefits as well as the penal parts of the law, are extended as well to aliens and denizens as to natural-born subjects; being intended entirely for the protection of trade, in which aliens are often as deeply concerned as natives. By many subsequent statutes, but lastly by statute 5 Geo. II. c. 30.TM, bankers, brokers, and factors, are declared liable to the statutes of bankruptcy; and this upon the same reason that scriveners are included by the statute of James I., viz. for the relief of their creditors; whom they have otherwise more opportunities of defrauding than any other set of dealers, and they are pro

That is, making contracts. (Dufresne, II. 569.)

m

$39.

perly to be looked upon as traders, since they make merchandize of money, in the same manner as other merchants do of goods and other moveable chattels. But by the same act", no farmer, grazier, or drover, shall (as such) be liable to be deemed a bankrupt: for, though they buy and sell corn, and hay, and beasts, in the course of husbandry, yet trade is not their principal, but only a collateral object: their chief concern being to manure and till the ground, and make the best advantage of its produce. And, besides, the subjecting them to the laws of bankruptcy might be a means of defeating their landlords of the security which the law has given them above all others, for the payment of their reserved rents; wherefore also, upon a similar reason, a receiver of the king's taxes is not capable, as such, of being a bankrupt; lest the king should be defeated of those extensive remedies against his debtors, which are put into his hands by the prerogative. By the same statute ", no person shall have a commission of bankrupt awarded against him, unless at the petition of some one creditor, [or more, being partners] to whom he owes 100l.; or of two, to whom he is indebted 150l.; or of more, to whom altogether he is indebted 200/. For the law does not look upon persons, whose debts amount to less, to be traders considerable enough, either to enjoy the benefit of the statute themselves, or to entitle the creditors, for the benefit of public commerce, to demand the distribution of their effects.

In the interpretation of these several statutes, it hath been [476 ] held, that buying only, or selling only, will not qualify a man to be a bankrupt; but it must be both buying and selling, and also getting a livelihood by it. As, by exercising the calling of a merchant, a grocer, a mercer, or in one general word, a chapman, who is one that buys and sells any thing. But no handicraft occupation (where nothing is bought and sold, and where therefore an extensive credit, for the stock in trade, is not necessary to be had) will make a man a regular bankrupt; as that of a husbandman, a gardener, and the like, who are paid for their work and labour. Also an innkeeper cannot, as such, be a bankrupt: for his gain or livelihood does not