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[ 56 ] All evidence by witnesses to be used in all hearings before such court, shall be under oath or solemn affirmation, when the party is conscientiously scrupulous of taking an oath, and may be oral or by deposition, taken before such court, or before any commissioner appointed by such court, or before any disinterested state judge of the state in which the deposition is taken. Sect. 7.

[ 57 ] If upon the hearing it appears to the court that the requisitions of the act have been complied with, a decree declaring the debtor a bankrupt will be made. But it will be refused and the proceedings dismissed, if it appear either

That the petitioner or petitioners are not creditor or creditors to the amount of at least five hundred dollars.

That the debtor sought to be made a bankrupt is not a merchant or using the trade of merchandise, a retailer of merchandise, a banker, factor, broker, underwriter or marine insurer.

That, being such, he does not owe two thousand dollars.

That he has not committed an act of bankruptcy. See 18.

[ 58 ] When the decree of bankruptcy is made against the debtor, it is provided by the first section of the act, that the person so declared a bankrupt at the instance of a creditor, may, at his election, by petition to such court within ten days after its decree, be entitled to a trial by jury before such court, to ascertain the fact of such bankruptcy; or if such person shall reside at a great distance from the place of holding such court, the said judge in his discretion may direct such trial by jury to be had in the county of such person's residence, in such manner and under such directions as the said court may prescribe and give; and all such decrees passed by such court, and not so re-exaVol. i.—16.

mined, shall be deemed final and conclusive as to the subject-matter thereof.

Chap. 6. of the proof of debts.

[ 59 ] The subject of this chapter will be divided by considering by whom debts are to be proved; the nature of the claims to be proved; when and how the proof is to be made; effect of proof; the consequences of proving a debt; and the fee allowed for proving a debt.

Sect. 1. By whom debts are to be proved.

[ 60 ] In general all persons who have a legal right may prove a debt against the bankrupt. Trustees, joined by the cestuit que trust, Cox, R. 310; Green, B. L. 147; guardians, 1 Atk. 251; committees of lunatics,

1 Rose, Rep. 387; executors and administrators, may also prove debts. When one of several executors becomes a bankrupt, the others may prove a debt against his estate. 3 Bro. 197; and an executor may prove a debt, which he has as such, against his own estate. Glyn & J. 127;

2 Ves. & B. 414; and corporations to whom any debts are due, may make proof thereof by their president, cashier, treasurer, or other officer, who may be specially appointed for that purpose. Act of Cong., sect. 5.

Sect. 2. Nature of debts to be proved.

[ 61 ] The debts which may be proved, are either absolute; conditional or contingent; not due; joint or several; mutual; debts of persons who have become surety for the bankrupt; interest; unliquidated damages: verdicts and judgments.

1. Of absolute debts.

[ 62 ] All debts are provable under the decree in bankruptcy, for which, if payable at the time they are offered to be proved, the creditor mighthave his remedy against the bankrupt, either in law or equity, or otherwise, either in his own name or the name of another; but the claim must be liquidated, for unliquidated damages, as we shall see below, [68] cannot be proved. See Dougl. R. 167; 1 East, R. 120; 15 Ves. 289; 2 Rose, R. 416; 1 Atk. 116; 1 T. R. 17. But a debt founded upon an illegal consideration, cannot be proved under the bankruptcy. See Cowp. R. 39; 2 Marsh. R. 542; Fonb. Eq. B. 1, c. 4, s. 4, note (y); 3 Ves. 373; 13 Ves. 314.

2. of conditional or contingent debts.

[ 63 ] The fifth section of the act of Congress, provides that all annuitants, holders of bottomry and respondentia bonds, holders of policies of insurance, sureties, endorsers, bail, or other persons having uncertain or contingent demands against the bankrupt, shall be permitted to come in and prove such debts or claims under this act, and shall have a right, when their debts or claims become absolute, to have the same allowed them. See 6 John. Ch. R. 266; 2 Sim. R. 165; 4 Sim. R. 37.

3. of debts not due.

[ 64 ] The act provides, sect. 5, that all creditors whose debts are not due and payable until a future day, all annuitants, &c. (see 63,) shall have a right to come in and prove such debts or claims under this act, and such annuitants and holders of debts payable in future, may have the present value thereof ascertained, under the direction of the court, and allowed them accordingly as debts in presenti. See 3 John. Ch. R. 435; 6 John. Ch. R. 266.

4. of mutual debts.

[ 65 ] In all cases, says sect. 5, where there are mutual debts or mutual credits between the parties, the balance only shall be deemed the true debt or claim between them, and the residue shall be deemed adjusted by the set-off.

There is a distinction between mu- tual debts and mutual credits, the former term being more limited than the latter in its signification. Where, for example, a person was indebted to the bankrupt in a sum payable at a future day, and the bankrupt owed him a small sum which was then due, this though in strictness not a mutual debt, was holden to be a mutual credit. 1 Atk. 228, 230; 7 T. R. 378; 8 Taunt. 22; Mont. on Set-off, 48. A mutual credit may be constituted even without the knowledge of the parties. For examples of this kind, see 3 T. R. 507, n.; 4 T. R. 211; Co. B. L. 542; 13 Ves. 65; 1 Holt, N. P. C. 408; 1 Wash. C. C. R. 178.

5. of claims of sureties, bail, dfc. [ 66 ] Sureties, endorsers and

bail, may by virtue of section 5, prove their debts or claims, and shall have a right, when their debts and claims become absolute, to have the same allowed them. According to the English practice, it seems that when costs and expenses have been necessarily incurred by such securities, endorsers or bail, such expenses and costs may be added to the debt. 1 Atk. 261.

6. of interest.

[ 67 ] In England, interest on a bill or note cannot be proved, unless it appears by the express terms of the bill or note to be payable, such interest being considered as damages to be recovered. 15 Wend. R. 70; 3 Bro. C. C. 436; 2 Ves. Jun. 295; 5 Cowen, 587.

7. Unliquidated damages.

[ 68 ] Claims for unliquidated damages sounding in tort cannot be proved. See 8 Ves. 335; 2 Dougl. R. 583; 1 H. Bl. 29; 6 T. R. 695.

8. Verdicts and judgments.

[ 69 ] A bona fde debt is provable, when legal proceedings have been instituted for its recovery, although no final judgment has been rendered upon it. 7 Dow. & R. 436; 1 Mon. Ac Mac. 70; 4 B. & Cr. 880. When the claim is for damages only, which are not provable, and there has been a verdict but no judgment before the decree in bankruptcy, it is not such claim as can be proved. 1 H. Bl. 29; 2 Str. 1194; 1 Wils. 41; Cowp. R. lay; 14 East, R. 197; 11 Ves. 646; 16 Ves. 256; 3 M. Ac S. 326; 2 M. & S. 70; 2 B. JSc B. 8; 1 Glyn Ac J. 385. 2 N. R.190, 191, n.

Judgments, when entered up before the decree, whether by confession or on a verdict, when such judgments are bona fide, for a sum certain, may be proved. See 2 Taunt. 68.

Sect. 3. When and hoiv the proof it to be made.

[ 70 ] When the proceedings are ready, proof is to be taken before a commissioner, sect. 5; or before some state judge of the state where the creditor lives, in such form as may be prescribed by the rules and regulations authorized to be made and established by the courts having jurisdiction in bankruptcy, sect. 7; or before the court as may be ordered. The proof must be under oath or affirmation, sect. 7 ; and the creditor should produce all documents necessary to support his claim.

The claim may be contested either by the assignee or by a creditor, and an issue may be directed by the court to ascertain the validity and amount of such claim ; and the result, unless a new trial shall be granted, if in favour of the claims, is to be evidence of the validity and amount of such debts or claims. Sect. 7.

Sect. 4. Consequences of proving a debt.

[71 ] By the 5th section it is enacted that no creditor or other person, coming in and proving his debt or other claim, shall be allowed to maintain any suit at law or in equity there

for, but shall be deemed to have waived all right of action and suit against such bankrupt, and all proceedings already commenced, shall be deemed to be surrendered thereby, See 1 Glyn & J. 271; 13 Ves. 183; Id. 192; 2 Ves. Ac B. 253; 1 Rose, 394.

Sect. 5. Of the fees allowed for proving a debt.

[ 72 ] No officer of the court, or commissioner, shall be allowed by the court more than one dollar for taking the proof of any debt or claim of any creditor or other person against the estate of the bankrupt; but he shall be allowed in addition his actual travelling expenses for that purpose. Sect. 13.

Chap. 8. of dividends. [ 73 ] The 10th section of the act requires that all proceedings in bankruptcy in each case shall, if practicable, be finally adjusted, settled, and brought to a close by the court, within two years after the decree declaring the bankruptcy.

In order to insure a speedy settlement and close of the proceedings in bankruptcy, it is, by the same section, made the duty of the court to order and direct a collection of the assets, and a reduction of the same to money, and a distribution thereof at as early periods as practicable, consistently with a due regard to the creditors; and a dividend and distribution of such assets as shall be collected and reduced to money, or so much thereof as can be safely so disposed of, consistently with the rights and interests of third persons having adverse claims thereto, shall be made among the creditors who have proved their debts, as often as once in six months from the time of the decree declaring the bankruptcy. Sect. 10. And the pendency of any suit at law or in equity, by or against such third persons, shall not postpone such division and distribution, except so far as the assets may be necessary to satisfy the same. lb.

It will be proper here to consider the notice ; the preferences; the debts to be paid without preference; and how second or future dividends shall be made.

1. of the notice of a dividend.

[74] Notice of such dividend and distribution is required to be given in some newspaper or newspapers, in the district, designated by the court, ten days at least before the order thereof is passed. Sect. 10.

2. Of preferred debts

[ 75 ] Debts due by the bankrupt to the United States, and all debts due by him to persons who, by the laws of the United States, have a preference, in consequence of having paid moneys as his sureties, shall be first paid out of the assets. Sect. 5.

[ 76 ] Any person who shall have performed any labour as an operative in the service of any bankrupt, shall be entitled to receive the amount of the wages due to him for such labour, not exceeding twenty-five dollars; provided that such labour shall have been performed within six months next before the bankruptcy of his employer. Sect. 5.

3. of the debts to be paid without preference.

[ 77 ] All creditors coming in and proving their debts under such bankruptcy, in the manner prescribed by law, the same being bona fide debts, shall be entitled to share in the bankrupt's property and effects, pro rata, without any priority or preference whatsoever, sect. 5, except as is mentioned in [75] and [76].

4. Of a second, or other future dividend.

[ 78 ] Where any creditor shall not have proved his debt until a dividend or distribution shall have been made and declared, he shall be entitled to be paid the same pro rata, out of the remaining dividends or dis

tributions thereafter made, as other creditors have already received; but before the latter shall be entitled to any portion thereof. Sect. 10.

Chap. 9. Of bankrupt partners.

[ 79 ] The 14th section of the act provides, " That where two or more persons, who are partners in trade, become insolvent, an order may be made in the manner provided in this act, either on the petition of such partners, or any of them, or on the petition of any creditor of the partners; upon which order all the joint stock and property of the company, and also all the separate estate of each of the partners shall be taken, excepting such parts thereof as are herein excepted; and all the creditors of the company, and the separate creditors of each partner, shall be allowed to prove their respective debts; and the assignees shall also keep separate accounts of the joint stock or property of the company, and of the separate estate of each member thereof; and after deducting out of the whole amount received by such assignees the whole of the expenses and disbursements paid by them, the net proceeds of the joint stock shall be appropriated to pay the creditors of the company, and the net proceeds of the separate estate of each partner shall be appropriated to pay his separate creditors; and if there shall be any balance of the separate estate of any partner, after the payment of his separate debts, such balance shall be added to the joint stock, for the payment of the joint creditors; and if there shall be any balance of the joint stock, after payment of the joint debts, such balance shall be divided and appropriated to and among the separate estates of the several partners, according to their respective rights and interests therein, and as it would have been if the partnership had been dissolved without any bankruptcy; and the sum so appropriated

to the separate estate of each partner shall be applied to the payment of his separate debts; and the certificate of discharge shall be granted or refused to each partner as the same would or ought to be if the proceedings had been against him alone under this act; and in all other respects the proceedings against partners shall be conducted in the like manner as if they had been commenced and prosecuted against one person alone.

Chap. 10. Of the crimes committed by the bankrupt or other persons in the course of the proceedings.

[ 80 ] By the 4th section it is provided, that if on the examination of the bankrupt he shall wilfully and corruptly swear or affirm falsely, he shall be deemed guilty of perjury, and shall be punishable therefor in like manner as the crime of perjury is now punishable by the laws of the United States.

[ 81 ] And by the 7th section it is enacted that if any person or persons shall falsely and corruptly answer, swear, or affirm, in any hearing or on trial of any matter, or in any proceeding in such court in bankruptcy, or before any commissioner, he or she shall be deemed guilty of perjury, and punishable therefor in the manner and to the extent provided by law in other cases.

Chap. 11. Of the record. [ 82 ] Section 13, directs that the proceedings in all cases in bankruptcy shall be deemed matters of record; but the same shall not be required to be recorded at large, but shall be carefully filed, kept and numbered in the office of the court, and a docket only, or short memorandum thereof, with the numbers, kept in a book by the clerk of the court.

See, generally, Cooke's B. L.; Coop. B. L.; Green's B. L.; Whitm. B. L.; Eden's B. L.; Cull. B. L.; Owen's B. L.; Bell's Com. B. 6;

Bac. Ab. h. t.; Vin. Ab. h. t.; Com. Dig. h. t.; Mont. B. L.

INDEX.

Actions to be brought, continued and defended by the assignees, 13,29.

cannot be sustained by proving creditor, 6'J.

Acts of bankruptcy, what, 20. Appeals, how tried, 8, 58. Arrest suffered by bankrupt an act of bankruptcy, 20. Assignees, how appointed, 5, 11. removed, 5, 10. powers of, 12. duties of, 13. liabilities of, 14.

entitled to bankrupt's property, 29. Assignment, when fraudulent, 22. Bunkers may be made bankrupts, 19. Bankrupt, who is, 1, 19. voluntary, 17. involuntary, 18. who may be feme covert, 19, infant, 19. lunatic, 19. retailers, 19, bankers, 19. factors, IO, brokers, 19. underwriters, 19, discharge of, 22. allowance to, 26.

effect of being a second time a, 27. property of, 2tf, Bankruptcy, effect of a second, 27. Books of accounts, the want of, will prevent

a discharge when, 24.
Brokers may be made bankrupt, 19.
Certificate. See Discharge, and 22, 25,
Circuit court, always open, 6.

jurisdiction of, 7, 8,
Clerk of the court, duties of, I5.

fees of, 1 j, 72. Commissioners, how appointed, 5, 10, removed, 5. qualifications of, 10. duties of, 10. fees of, 10.

Concealment by bankrupt of himself is an act of bankruptcy, 20.

of his property is an act of bankruptcy, 20.

Conveyance of property, when an act of

bankruptcy, 20,33. Corporations how to prove their debts, 60. Courts, district, 2. circuit, 5.

of the District of Columbia, 9. territorial, 9. Creditors may oppose bankrupt,23. their debts must amount to $500, 21,

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