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who, like the dishonest debtors of to-day, incurred obligations and liabilities and then surreptitiously removed themselves beyond the jurisdiction, without having been first discharged therefrom. It was without limit as to the persons who could become recipients of its provisions, the restriction as to traders first appearing in the statute of Elizabeth. The right of a trader to become a voluntary bankrupt first appears in the statute of 6 George IV (chapter 16).1

Among the earliest laws affecting insolvents, we find applicants for relief referred to as "persons craftily obtaining into their hands great substance of other men's goods, who suddenly flee to parts unknown or keep their houses, not minding to pay or restore to their creditors their debts and duties, but at their own will and pleasure consume the substance obtained by credit of other men, for their own pleasure and delicate living, against all reason, equity and good conscience." 2

While these early bankruptcy laws went upon the hypothesis that one guilty of bankruptcy was a criminal,3 this view certainly does not now prevail, and in fact did not at the time of Lord Loughborough, who remarked, with reference to bankrupts, "the law, upon the act of bankruptcy being committed, vests his property upon a just consideration; not as a forfeiture; not on a supposition of a crime committed; not as a penalty."

Numerous statutes were enacted in England governing bankruptcy; but one of the most complete was that of August 1, 1849, which is aptly described by its title as "An act to amend and consolidate the laws relating to bankruptcy," and this in turn has been on several occasions amended.

Chief Justice Shaw, in describing the English system, says it is "an adversary proceeding against a defaulting

1 Kunzler v. Kohaus. 5 Hill, 322. 234 and 35 Henry VIII, ch. 4. 33 Pars. on Contracts, 425.

4 Sill v. Worswick, 1 H. Bl. 665; In re De Forrest, 9 N. B. R. 278; Fed. Cas. 3745.

trader, upon doing certain acts indicative of present or impending insolvency. These (bankrupt) laws provide, generally, that upon a trader's doing certain acts considered acts of bankruptcy, a creditor may apply for and obtain a commission (out of chancery), under which the whole of the trader's property is sequestered and taken into the custody of the law, to be administered by officers appointed for that purpose, the proceeds of which, with some slight exceptions, are appropriated to the payment of all the bankrupt's debts, if sufficient therefor; otherwise to pay them in equal proportions, as far as is sufficient for that purpose. The same law further provides that, if the bankrupt will honestly and faithfully co-operate in the proceeding, if he will disclose all his property and effects, and aid the officers appointed for that purpose by information and by all means in his power, and do all the duties required of him in the prem-. ises, he shall be absolved and discharged of all his debts, and receive a certificate as the authoritative evidence of his right to such discharge."1

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The oppressor's hand resting heavily upon our forefathers in the old world, and causing them to migrate to new and untried fields, naturally inclined them to incorporate liberal and wise provisions for the protection of all classes in the Federal constitution. Among them is one evidently suggested by the English bankruptcy statutes, and it is found in section 8 of article 1 of that instrument, which authorizes congress "to establish uniform laws on the subject of bankruptcy throughout the United States." This section, together with section 10 of the same article, providing that "no state shall . . pass any laws impairing the obligation of contracts," are most important factors in the legal and commercial world. Pursuant to the authority contained in section 8, congress has on three different occasions previous to the present one, enacted laws providing a uniform system of bankruptcy, which for evident reasons failed of their purpose and early expired.

1 May v. Breed, 7 Cush. 28.

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The first was the act of April 4, 1800,1 and was limited to five years; but it was repealed by the act of December 19, 1803. The fact that it was intended chiefly for the protection of creditors, the sparseness of the settlements, the scarcity of Federal courts, and the difficulty and slowness of travel, contributed mainly to its failure. The distance be tween places where courts were held, by reason of the method of locomotion, made ready relief almost impossible and soon brought about a demand for the repeal of the law.

The second act was approved August 19, 1841,3 but like its predecessor was short lived, being repealed March 3, 1843.4 In addition to some of the causes that contributed to the failure of the prior law, this one was framed so as to greatly favor the debtor; it also became the subject of political contention; and, under the combined influence, naturally failed.

The next bankruptcy law was approved March 2, 1867, and after an existence of eleven years was repealed by the act of June 7, 1878,6 to take effect September 1, 1878. The law was several times amended, the most important modification being that made by the act of June 22, 1874.7 While this law of 1867 had many imperfections, its provisions were more equable as between creditor and debtor; but the expenses attending litigation and its administration, together with the lack of uniform rules and regulations governing assignees and registers, more than all else, contributed to its failure and induced its repeal.

Every business transaction involving the giving of credit necessarily implies two classes-a debtor and a creditor. Bankruptcy laws are not designed for one but for both classes, and are beneficial to all but the dishonest creditor. The policy and aim of bankrupt laws are to compel an equal distribution of the assets of the bankrupt among all his creditors. Hence, when a merchant or trader, by any of these

12 Stat. L. 19.

22 Stat. L. 248.

35 Stat. L. 440.

45 Stat. L. 614.

514 Stat. L. 517.

620 Stat. L. 99.
718 Stat. L. 178.

tests of insolvency, has shown his inability to meet his engagements, one creditor cannot, by collusion with him, or by a race of diligence, obtain a preference to the injury of others.1

In the absence of a bankruptcy law, the least suspicion of the insolvency of a debtor, his inability to meet financial obligations, etc., naturally causes the zealous creditor to institute attachment proceedings and perhaps cause liquidation of his debtor, who, left to his own resources and given reasonable time, would be able to avoid suspension and perhaps ruin. The sole gainer through the absence of such a law, outside of the dishonest debtor, is he who is first on the ground with his attachment process and whose lien operates to defeat other creditors with equally just claims, but who are perhaps more merciful and less anxious to cause the creditor's liquidation.

In addition to the value of a bankruptcy law in conducing to a better business understanding between the debtor and creditor, it acts as a preventive and check to overtrading, by largely preventing the giving of preferences by the insolvent. In this connection Cadwalader, J., said: "In this respect its operation will be gradual, but must be highly beneficial. When relations and friends of a debtor, and when capitalists, who without affection or friendship would make profit from his embarrassments, learn that they cannot be secured by a preference out of the wreck of his affairs, they will not furnish him the means of overtrading. So long as he could, by securing advances and accommodations, obtain them, the temptation to attempt to retrieve his losses, by doubling his investments, was, before the enactment of the bankrupt law, irresistible; and the system of business was that of mere gambling adventure. But when a debtor who suffers losses knows that he cannot prefer his relations and friends, and when capitalists know that they cannot, without risk, assist him to the injury of other creditors, he will stop his business in season, to give a fair dividend to all

1 Shawhan v. Wherritt, 7 How. 627.

his creditors, and thus make a fair settlement with them in the court of bankruptcy, or, much oftener, out of it. Then, in the course of time, few judicial bankruptcies will occur."1

The purpose of a bankrupt law is to place within the possession of the creditor that to which he may be entitled, within the shortest reasonable time, and at the same time, if the bankrupt has made a fair and honest surrender, and complied with the requisitions made of him, to give him a speedy release, and let him begin anew to provide an honest living for himself and those dependent upon him, and again become a useful and active member of society.2

A bankrupt or insolvent law, viewed as operating on the rights of creditors, is a system of remedy. It takes out of the hands of the creditors the ordinary remedial processes, and suspends the ordinary rights which by law belong to creditors, and substitutes in their place a new and comprehensive remedy designed for the common benefit of all. The rights with which the assignee is clothed as the representative of creditors are to render this great and common remedy effectual.3

Bankruptcy is an ancient English word which has come. down to us at least from the time of Elizabeth, bearing all the way a meaning co-extensive with insolvency, and it was especially equivalent to that word when the constitution was adopted.1

The only substantial difference between a strictly bankrupt law and an insolvent law lies in the circumstance that the former affords relief upon the application of the creditor, and the latter upon the application of the debtor. In the general character of the remedy there is no difference, however much the modes by which the remedy may be administered may vary. But, even in the respect named, there is no difference in this instance. The act of congress (1867) is both a bankrupt act and an insolvent act by defini

1 In re Woods, 7 N. B. R. 126.

2 In re Witkowski, 10 N. B. R. tine, 1 Curt. 176. 209; Fed. Cas. 17920.

Curtis, J., in Betton v. Valen

4 Kunzler v. Kohaus, 5 Hill, 320.

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