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tion, for it affords relief upon the application of either the debtor or the creditor under the heads of voluntary and involuntary bankruptcy.1

"The plain object and policy of the insolvent laws is to require a debtor, as soon as he has reason to believe himself insolvent, and before he has frittered away his property by schemes which appear plausible, to put himself and his assets at once into the hands of the law, with a view to two objects: one to make an equal distribution among all his creditors; the other, to pay every creditor as large a part of his whole debt as the means of the debtor will allow, under the direction and management of officers and agents who are capable of executing a trust, and responsible for the faithful performance of their duties." 2

One distinction between an assignment and an attachment is, that the former is a sequestration of all of a debtor's property to pay all his creditors pro rata, while the latter is a sequestration of his property to pay a single debt. One may work a preference, the other not.3

This difficulty of discriminating with any accuracy between insolvent and bankrupt laws would lead to the opinion that a bankrupt law may contain those regulations which are generally found in insolvent laws; and that an insolvent law may contain those which are common to a bankrupt law.

States have the right to enact insolvent and bankrupt laws, provided there be no act of congress in force establishing a uniform system of bankruptcy, conflicting with their provisions, and provided the law itself be so framed that it does not impair the obligation of contracts.5

All state laws relating to the subject-matter of the Federal statute are suspended or superseded during the existence of

1 Martin v. Berry, 37 Cal. 222. Per Shaw, C. J., Fernald v. Gay, 12 Cushing, 597. See In re Citizens' Savings Bank, 9 N. B. R. 152; Fed. Cas. 2735.

4 Sturges v. Crowninshield, 4 Wheat. 196.

5 Baldwin v. Hale, 1 Wall 223; Sturges v. Crowninshield, 4 Wheat. 122; Denny v. Bennett, 128 U. S.

Maltbie v. Hotchkiss, 5 N. B. R. 489, 497; In re Reynolds, 9 N. B. R. 52; Fed. Cas. 11723.


the Federal law,1 even as between citizens of the same state,2 but are not repealed by it, and are only suspended, so that, upon the repeal of the Federal law, the state law is revived without the necessity of re-enactment.3

The Federal law does not, however, deprive the state tribunals of any portion of their jurisdiction necessary to the final administration of the estates of insolvents who had : made a surrender previous to its passage. But the fact that a state court has taken possession of the property of an insolvent, thereby first gaining jurisdiction, cannot be allowed to defeat the proper execution of the bankrupt law.5

It has been held, however, that a Federal bankrupt act (the act of 1873) "does not ipso facto suspend state laws for the collection of debts," such, for example, as state laws relating to the insolvent estates of persons under legal disability, as lunatics or spendthrifts,' or an insolvent law which merely protects the person of the debtor from imprisonment.

And so it has been held that there is no proper analogy between insolvent laws, properly so called, and those principles of the common law which allow and sanction the conveyance of his property by a debtor for the equal benefit of all his creditors, and no such relation or resemblance as to warrant the conclusion that, because the existence of a Federal bankrupt law suspends all state insolvent laws, it must therefore also suspend those common-law principles. Accordingly, a common-law assignment for the benefit of all his creditors alike was held to be valid, notwithstanding the existence of the Federal bankrupt law, as against a creditor 4 Meekins v. Creditors, 3 N. B. R. 126.

1 Perry v. Langley, 1 N. B. R. 559; Griswold v. Pratt, 9 Metc. 16; In re Reynolds, 9 N. B. R. 50; Fed. Cas. 11723; Thornhill et al. v. Bank, 5 N. B. R. 367; 1 Woods, 1; Fed. Cas. 13992; Shryrock et al. v. Bashore, 13 N. B. R. 481.

2 Kassard v. Kroner, 4 N. B. R. 569. 3 Lavender v. Gosnell, 12 N. B. R. 282; In re Everitt, 9 N. B. R. 90; Fed. Cas. 4579.

5 In re Safe Deposit & Savings Inst., 7 N. B. R. 392; Fed. Cas. 12211.

6 Chandler, Receiver, v. Siddle, 3 Dillon, 477; 10 N. B. R. 236; Fed. Cas. 2594.

7 Mayer v. Hellman, 91 U. S. 496; Hawkins v. Learned, 54 N. H. 333. 8 Sullivan, Assignee, v. Heiskell, Crabbe, U. S. Dist. Ct. 525, 528.

refusing to accept the benefit thereof, and who, in an action for the recovery of his debt, seeks to garnish the assignee upon the ground that the assignment is void. Whether such assignment would be held to be an act of bankruptcy, if the question were raised in a direct proceeding for that purpose, is not passed upon.1

A general assignment for the benefit of creditors under the provisions of a state law, and during the existence of the United States bankrupt act, is superseded by proceedings in bankruptcy, though it may be held valid if the rights of creditors are not thereby prejudiced.3


But so far as such state laws attempt to discharge the contract as against citizens of other states, they are unconstitutional; and so a discharge under a foreign bankrupt law cannot be pleaded in bar to an action on a contract made in this country. A state law discharging the person or the property of the debtor, and thereby terminating the legal obligation of the debt, cannot constitutionally be made to apply to debts contracted prior to the passage of the law; but the law may be made to apply to such future contracts as can be considered as having been made in reference to the law. Statutes of this class must be construed to be parts of all contracts made when they are in existence, and therefore cannot be held to impair their obligation. In fact, the inhibition of the constitution is wholly prospective. The states may legislate as to contracts thereafter made as they may see fit. It is only those in existence when the hostile law is passed that are protected from its effects.

In fine, insolvent laws of one state cannot discharge the

4 Sturges v. Crowninshield, 4 Wheat. 122.

5 McMillan v. McNeill, 4 Wheat. 209.

1 Cook v. Rogers, 31 Mich. 392, 398. See also Sullivan v. Lewis, Crabbe, U. S. Dist. Ct. 525, 528. See language of Marshall, C. J., in Brashear v. West, 7 Pet. 608, 614.

"Ogden v. Saunders, 12 Wheat.

2 Dolson et al. v. Kerr, 16 N. B. R. 213; Baldwin v. Hale, 1 Wall. 223.


7 Denny v. Bennett, 128 U. S. 489.

*In re Hawkins et al., 2 N. B. R. 122

8 Edwards v. Kearzey, 96 U. S. 595, 603; Denny v. Bennett, 128 U. S. 489, 495.

contracts of citizens of other states, because they have no extraterritorial operation,1 and consequently the tribunal sitting under them, unless in cases where the citizen of such other state voluntarily becomes a party to the proceeding, has no jurisdiction in the case. Legal notice cannot be given, and as a result there can be no obligation to appear, and, of course, there can be no legal default.3

Any question that may have existed as to the constitutionality of a Federal bankruptcy law has long since been dissipated by the decisions of the supreme court of the United States. Congress is given plenary power over the subject of bankruptcy, under one limitation only, that the law passed upon that subject shall be uniform throughout the United States.* And this power carries with it a right to establish the details of the system if it shall think proper. But congress cannot impose upon state courts any duties in connection with the enforcement of a bankrupt law."

The retrospective effect of the bankrupt law, by impairing the obligation of contracts, does not render it unconstitutional, as the inhibition to the impairment of contracts does not apply to the Federal government.7

So far as congress has failed to legislate with reference to insolvents, state laws relating to them may be said to be operative. Proceedings instituted under state insolvency laws prior to the passage of the national bankruptcy law, approved July 1, 1898, are not affected by it.

1 Baldwin v. Hale, 1 Wall. 223; Gilman v. Lockwood, 4 id. 409; Boyle v. Zacharie, 6 Pet. 635.

2 Clay v. Smith, 3 Pet. 411; Denny v. Bennett, 128 U. S. 489.

3 Baldwin v. Hale, 1 Wall 223; Ogden v. Saunders, 12 Wheat. 213.

4 In re Silverman, 4 N. B. R. 173; Fed. Cas. 12855; In re Duerson, 13 N. B. R. 183; Fed. Cas. 4117.

Six Penny Savings Bank v. Stuy. vesant Bank, 10 N. B. R. 399; Fed. Cas. 12919; In re Deckert, 10 N. B. R. 1; Fed. Cas. 3728.

6 Goodall v. Tuttle, 7 N. B. R. 193; 3 Biss. 219; Fed. Cas. 5533.

7 In re Jordan, 8 N. B. R. 180; 30 Leg. Int. 296; Fed. Cas. 7514; In re Smith, 14 N. B. R. 295; 2 Woods, 458; 8 Chi. Leg. News, 315; Fed. Cas. 12996; In re Everett, 9 N. B. R. 90; Fed. Cas. 4579.

8 See last paragraph of act. See also Longis v. Creditors, 20 La Ann. 15; Martin v. Berry, 37 Cal 208, where the same is held to be the effect of the act of 1867.






Sec. 1. Meaning of words and phrases.-a. The words and phrases used in this Act and in proceedings pursuant hereto shall, unless the same be inconsistent with the context, be construed as follows: (1) "A person against whom a petition has been filed" shall include a person who has filed a voluntary petition; (2) "adjudication" shall mean the date of the entry of a decree that the defendant, in a bankruptcy proceeding, is a bankrupt, or if such decree is appealed from, then the date when such decree is finally confirmed; (3) "appellate courts" shall include the circuit. courts of appeals of the United States, the supreme courts of the Territories, and the Supreme Court of the United States; (4) 2" bankrupt” shall include a person against whom an

1 An adjudication on a petition in bankruptcy is a final judgment which it is beyond the power of congress to annul or set aside (In re Comstock & Co., 10 N. B. R. 451; 6 Chi. Leg. News, 413; 22 Pittsb. Leg. J. 25; Fed. Cas. 3077), the rights of the parties being fixed at the date of the adjudication. (In re Kerr & Roach, 9 N. B. B. 566; Fed. Cas. 7729.)

2 The word "bankrupt " is defined by Lord Coke as "a sign or mark, as we say a cart-rout, which is the sign or mark where the cart hath gone; so, metaphorically it is taken for him that hath wasted his estate and removed his banque, so that there is left but a mention thereof." 4 Inst. 277. Blackstone defines a "bankrupt " as "a trader who secretes himself or does certain other acts, tending to defraud his creditors." 2 Bl. Com. 471. The word "bankruptcy," under the act of 1841, meant a particular status, to be ascertained and declared by judicial decree. (In re Black et al., 1 N. B. R. 81; 2 Ben. 196; 1 Amer. Law T. Rep. Bankr. 39; Fed. Cas. 1457.)

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