Page:Encyclopædia Britannica, Ninth Edition, v. 3.djvu/360

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344

BANKRUPTCY

were removed by later legislation. The English distinction between traders and non-traders, it will be observed, is not recognized in Scotch law. The statute made null and void all voluntary dispositions, assignations, and other deeds at or after or within sixty days before bankruptcy. The principal Bankruptcy Act now in force is the 19 and 20 Viet. c. 79 (amended by 20 and 21 Viet. c. 19, and 23

and 24 Viet. c. 33).

By section 9 of the principal Act, notour bankruptcy is now constituted—

1. By sequestration (or adjudication in England and Ireland) ; and

2. By insolvency concurring either (a), with a duly executed charge for payment followed by imprisonment or apprehension, or flight or retreat to sanctuary, by execution of arrestment of debtor s effects, not discharged within fifteen days, by execution of poinding of any of his movables, or by decree of adjudication of any part of his movable estate ; or (b), with sale of effects belong ing to the debtor under a poinding or under a sequestration for rent, or retiring for twenty-four hours to the sanctuary, or making application for the benefit of cessio bonorum.

Notour bankruptcy continues, in case of sequestration, until the debtor has obtained his discharge, and in other cases until insolvency ceases. Sequestration may be awarded of the estate of any person in the following cases:—

1. Living debtor subject to jurisdiction of Scotch courts, (a), on his own petition with concurrence of qualified creditors ; or (b), on petition of qualified creditors, provided he be a notour bankrupt, and have had a dwelling-house or place of business in Scotland within the previous year.

2. In the case of a deceased debtor, subject at his death to the jurisdiction of the court, (a), on the petition of his mandatory; or (b), on the petition of qualified creditors (§13).

Sequestration may be awarded either by the Court of Session or by the sheriff. A sequestration may be recalled by a majority in number and four-fifths in value of the creditors, who may prefer to wind up the estate by private arrangement. If the sequestration proceeds, the creditors hold a meeting, and by a majority in value elect a trustee to administer the estate, and three commissoners (being creditors or their mandatories) to assist and control the administration and declare the dividends. The bankrupt (under pain of imprisonment) must give all the information in his power regarding his estate, and he must be publicly examined on oath before the sheriff ; and " conjunct and confident persons" may likewise be examined. The bankrupt may be discharged either by composition or with out composition, In the latter case (1) by petition with concurrence of all the creditors, or (2) after six months with concurrence of a majority and four-fifths in value of the creditors, or (3) after eighteen months with concurrence of a bare majority in number and value, or (4) after two years without concurrence. In the last case the judge may refuse the application if he thinks the bankrupt has fraudulently concealed his effects, or wilfully failed to comply with the law.

The procedure in cessio bonorum is regulated bj r 6 and 7 Will. IV. c. 56 (which gave jurisdiction to sheriffs) and Act of Sederunt of June 1839. A debtor who is or has been in prison, or has had a warrant of imprisonment served against him, may present a petition setting forth his in ability to pay his debts, and his willingness to surrender his estate, and praying for interim protection. The debtor is examined by the sheriff on oath, and the creditors may be heard against the petition. A decree of cessio bonorum operates as an assignation of a debtor s movables to a trustee for behoof of creditors. The bankrupt under a cessio has no power to insist on his discharge, and there fore cannot protect his subsequent acquisitions against hiK creditors. By the late statute a majority of the creditors (subject to review by the court) may, in certain cases, resolve that the bankrupt shall be entitled to apply for a decree of cessio only, and not to a discharge in the sequestration, and the court may grant the cessio injthe sequestration without requiring a new process.

By the Bankruptcy (Ireland) Amendment Act, 1872 (35 and 36 Viet. c. 58), the law of Ireland has been assimilated to the new system established by the English Bankruptcy Act, 1869.

(e. r.)


Bankruptcy in the United States.


In the United States, Congress alone has power to pass a bankrupt law which shall have authority throughout the country. The several States may enact such statutes when there is no law of Congress in operation ; but these statutes will fully bind only the citizens of the State which enacts it. There is no power to obtain effectual control of property without its limits so as to prevent local prefer ences ; nor can the State laws discharge contracts due to non-residents. The general Government has made so little use of the power confided to it, that many of the States were obliged to pass bankrupt laws, notwithstanding the imperfection of their operation in some cases, and those, often, the most important in the interests involved. Massachusetts had an excellent system, established in 1838, which is specially mentioned because the Act of Congress is largely drawn from this source. All State laws on the subject are suspended while a general law of bankruptcy is in force.

The first general Bankrupt Act was passed in 1800, and repealed in 1803. In 1841 another law was put in opera tion, with a special view of meeting the urgent needs of debtors who had been ruined by the commercial revulsion of 1837-38, and who could receive no effectual relief from local laws. This Act was repealed in thirteen months ; but in the meantime a very large number of cases had been dis posed of, amounting, for exnm pie, to 3250m Massachusetts alone. The law now in operation took effect June 1, 1867. It was framed with much care by a committee of the House of Representatives, of which Mr Jenckes, of Rhode Island, was the chairman and chief working member. Its authors hoped that it would form a permanent addition to the com mercial jurisprudence of the country.

The administrative machinery is simple. The district

courts, which have always had the original jurisdiction of causes in admiralty, revenue, and other national matters, are made courts of bankruptcy. The judge of each district ascertains how many registers are needed for the convenient despatch of causes in his territory, and they are appointed by the chief justice of the United States and the district judge concurrently. The registers have, by law, functions chiefly administrative and ministerial ; but they, in fact, hear and decide many judicial questions by consent of the parties, and subject to the revision of the judge. In pro ceedings in bankruptcy proper, such as adjudications, dis charges, proof of debts, marshalling assets, there is an appeal from the district to the circuit court, and no farther. Actions at law, or suits in equity, to which assignees in bankruptcy are parties, may be brought either in the State or the Federal courts. If in the latter, the whole case if in equity, or the law points in an action at law, may be carried to the Supreme Court at Washington when the amount in dispute exceeds $5000, or questions of law, which the judges of the circuit court consider doubtful, may be certi fied by them to the Supreme Court, whatever may be the amount involved ; and all decisions of the highest court of a State, involving questions of law under the Bankrupt

Act, may be reviewed by the Supreme Court, if adverse to