of the statutes, and there may be good reasons for his so doing, as suspicion of forgery, and the like: and if, in consequence of such refusal, he is arrested, and puts in bail, still it is no act of bankruptcy: (m) but if he goes to prison, and lies there two months, then, and not before, he is become a bankrupt. We have seen who may be a bankrupt, and what acts will make him so: let us next consider, 3. The proceedings on a commission of bankrupt: 12 so far as they affect the bankrupt himself. And these depend entirely on the several [480] statutes of bankruptcy; all which I shall endeavour to blend toge ther, and digest into a concise methodical order. And, first, there must be a petition to the lord chancellor by one creditor to the amount of 100l. or by two to the amount of 1501. or by three or more to the amount of 2001.; which debts must be proved by affidavit : (n) upon which he grants a commission to such discreet persons as to him shall seem good, who are then styled commissioners of bankrupt. (o) The petitioners, to prevent malicious applications, must be bound in a security of 2001. to make the party amends in case they do not prove him a bankrupt. And if, on the other hand, they receive any money or effects from the bankrupt, as a recompense for suing out the commission, so as to receive more than their rateable dividends of the bankrupt's estate, they forfeit not only what they shall have so received, but their whole debt. These provisions are made as well to secure persons in good credit from being damnified by malicious petitions, as to prevent knavish combinations between the creditors and bankrupt, in order to obtain the benefit of a commission. When the commission is awarded and issued, the commissioners are to meet, at their own expense, and to take an oath for the due execution of their commission, and to be allowed a sum not exceeding 20s. per diem each at every sitting. And no commission of bankrupt shall abate, or be void, upon any demise of the crown. (p) 13 When the commissioners have received their commission, they are first to receive proof of the person's being a trader, and having committed some act of bankruptcy; and then to declare him a bankrupt, if proved so; and to give notice thereof in the gazette, and at the same time to appoint three meetings. At one of these meetings an election must be made of assignees, or persons to whom the bankrupt's estates shall be assigned, and in whom it shall be vested for the benefit of the creditors; which assignees [481] are to be chosen by the major part, in value, of the creditors who shall then have proved their debts; but may be originally appointed by the commissioners, and afterwards approved or rejected by the creditors: but no creditor shall be admitted to vote in the choice of assignees, whose debt on the balance of accounts does not amount to 10. And at the third meeting, at farthest, which must be on the forty-second day after the advertisement in the gazette (unless the time be enlarged by the lord chancellor)," the bankrupt, upon notice also personally served upon him, or left at his usual place of abode, must surrender himself personally to the commissioners; which surrender (if voluntary) protects him from all arrests till his final examination is past: and he must thenceforth in all respects conform (12) See further, 6 G. IV. c. 16. s. 12, 13 to 19. p Stat. 5 Geo. II. c. 30. (18) As to the commissioners, their fees, &c. see 6 G. IV. c. 16. s. 20. to 44. (14) 6 G. IV. c. 16. sect. 112, 113. to the directions of the statutes of bankruptcy; or, in default of either surrender or conformity, shall be guilty of felony without benefit of clergy, and shall suffer death, and his goods and estate shall be distributed among his creditors. (9) In case the bankrupt absconds, or is likely to run away, between the time of the commission issued, and the last day of surrender, he may by warrant from any judge or justice of the peace be apprehended and committed to the county gaol, in order to be forthcoming to the commissioners; who are also empowered immediately to grant a warrant for seizing his goods and papers. (r) When the bankrupt appears, the commissioners are to examine him touching all matters relating to his trade and effects. They may also summon before them, and examine, the bankrupt's wife, (s) and any other person whatsoever, as to all matters relating to the bankrupt's affairs. And in case any of them shall refuse to answer, or shall not answer fully, to any lawful question, or shall refuse to subscribe such their examination, the commissioners may commit them to prison without bail, till they submit themselves, and make and sign a full answer; the commissioners specifying in their And any warrant of commitment the question so refused to be answered. gaoler, permitting such person to escape, or go out of prison, shall forfeit 500l. to the creditors. (t) The bankrupt, upon his examination, is bound upon pain of death [482] to make a full discovery of all his estate and effects, as well in expectancy as possession, and how he has disposed of the same; together with all books and writings relating thereto and is to deliver up all in his own power to the commissioners (except the necessary apparel of himself, his wife, and his children); or, in case he conceals or embezzles any effects to the amount of 201.; or withholds any books or writings with intent to defraud his creditors, he shall be guilty of felony without benefit of clergy; and his goods and estates shall be divided among his creditors. (u)13 And unless it shall appear, that his inability to pay his debts arose from some casual loss, he may, upon conviction by indictment of such gross misconduct and negligence, be set upon the pillory for two hours, and have one of his ears nailed to the same and cut off. (v) After the time allowed to the bankrupt for such discovery is expired, any other person voluntarily discovering any part of his estate, before unknown to the assignees, shall be entitled to five per cent. out of the effects so discovered, and such farther reward as the assignees and commissioners shall think proper. And any trustee wilfully concealing the estate of any bankrupt, after the expiration of the two-and-forty days, shall forfeit 100l. and double the value of the estate concealed, to the creditors. (w) Hitherto every thing is in favour of the creditors; and the law seems to be pretty rigid and severe against the bankrupt; but, in case he proves honest, it makes him full amends for all this rigour and severity. For if the bankrupt hath made an ingenuous discovery (of the truth and sufficiency of which there remains no reason to doubt), and hath conformed in all points to the directions of the law; and if, in consequence thereof, the creditors, r Ibid. t Stat. 5 Geo. II. c. 30. s Stat. 21 Jac. I. c. 19. q Stat. 5 Geo. II. c. 30. Stat. 5 Geo. II. c. 30. By the laws of Naples, all fraudulent bankrupts, particularly such as do not surrender themselves within four days, are punished with death; also all who conceal the effects of a bankrupt, or set up a pretended debt to defraud bis creditors. (Mod. Un. Hist. xxviii. 320.) w Stat. 5. Geo. II. c. $0. VOL. I. v Stat. 21 Jac. I. c. 19. (15) See 6 G. IV. c. 16. sect. 112. or four parts in five of them in number and value (but none of them creditors for less than 201.), will sign a certificate to that purport; the com[483] missioners are then to authenticate such certificate under their hands and seals," and to transmit it to the lord chancellor, and be, or two of the judges whom he shall appoint, on oath made by the bankrupt that such certificate was obtained without fraud, may allow the same, or disallow it, upon cause shewn by any of the creditors of the bankrupt. (z) If no cause be shewn to the contrary, the certificate is allowed of course; and then the bankrupt is entitled to a decent and reasonable allowance out his effects, for his future support and maintenance, and to put him in a way of honest industry. This allowance is also in proportion to his former good behaviour, in the early discovery of the decline of his affairs, and thereby giving his creditors a larger dividend. For, if his effects will not pay onehalf of his debts, or ten shillings in the pound, he is left to the discretion of the commissioners and assignees, to have a competent sum allowed him, not exceeding three per cent. ; but if they pay ten shillings in the pound, he is to be allowed five per cent.; if twelve shillings and sixpence, then seven and a half per cent. and if fifteen shillings in the pound, then the bankrupt shall be allowed ten per cent. provided that such allowance do not in the first case exceed 200l., in the second 250l., and in the third 300!. (y)" Besides this allowance, he has also an indemnity granted him, of being free and discharged for ever from all debts owing by him at the time he became a bankrupt; even though judgment shall have been obtained against him, and he lies in prison upon execution for such debts; and, for that among other purposes, all proceedings on commissions of bankrupt are, on petition, to be entered of record, as a perpetual bar against actions to be 13 commenced on this account: though, in general, the production of [484] the certificate properly allowed shall be sufficient evidence of all previous proceedings. (z) 18 Thus the bankrupt becomes a clear man again; and, by the assistance of his allowance and his own industry, may become a useful member of the commonwealth which is the rather to be expected, as he cannot be entitled to these benefits, unless his failures have been owing to misfortunes, rather than to misconduct and extravagance. For no allowance or indemnity shall be given to a bankrupt, unless his certificate be signed and allowed, as before-mentioned; and also, if any creditor produces a fictitious debt, and the bankrupt does not make discovery of it, but suffers the fair creditors to be imposed upon, he loses all title to these advantages. (a) Neither can he claim them, if he has given with any of his children above 100l. for a marriage portion, unless he had at that time sufficient left to pay all his debts; or if he has lost at any one time 51. or in the whole 100%. within a twelvemonth before he became bankrupt, by any manner of gaming or wagering whatsoever; or within the same time x Ibid. y Stat. 5 Geo. II. c. 30. By the Roman law of cession, if the debtor acquired any considerable property subsequent to the giving up of his all, it was liable to the demands of his creditors (Ff. 42,3,4) But this did not extend to such allowance as was left to him on the score of compassion for the mainte nance of himself and family. Si quid misericordiae causa ei fuerit relictum, puta menstruum vel annum, alimentorum nomine, non oportet propter hoc bona ejus iterato venundari: nec enim fraudandus est alimen tis cottidianis. (Ibid. l. 6.) z Stat. 5 Geo. II. c. 30. a Stat. 24 Geo. II. c. 57. (16) See 6 G. IV. c. 16. s. 121, 122, 123, 124, 125, 126. has lost to the value of 100l. by stock-jobbing. Also, to prevent the too common practice of frequent and fraudulent or careless breaking, a mark is set upon such as have been once cleared by a commission of bankrupt, or have compounded with their creditors, or have been delivered by an act of insolvency which is an occasional act, frequently passed by the legislature; whereby all persons whatsoever, who are either in too low a way of dealing to become bankrupts, or, not being in a mercantile state of life, are not included within the laws of bankruptcy, are discharged from all suits and imprisonment, upon delivering up all their estate and effects to their creditors upon oath, at the sessions or assizes; in which case their perjury or fraud is usually, as in case of bankrupts, punished with death. Persons who have been once cleared by any of these methods, and afterwards become bankrupts again, unless they pay full fifteen shillings in the pound, are only thereby indemnified as to the confinement of their bodies; but any future estate they shall acquire remains liable to their creditors, excepting their necessary apparel, household goods, and the tools and imple- [485] ments of their trades. (b) 19 Thus much for the proceedings on a commission of bankrupt, so far as they affect the bankrupt himself personally. Let us next consider, 20 4. How such proceedings affect or transfer the estate and property of the bankrupt. The method whereby a real estate, in lands, tenements, and hereditaments, may be transferred by bankruptcy, was shewn under its proper head in a former chapter. (c) At present therefore we are only to consider the transfer of things personal by this operation of law. By virtue of the statutes before mentioned (d) all the personal estate and effects of the bankrupt are considered as vested, by the act of bankruptcy, in the future assignees of his commissioners, whether they be goods in actual possession, or debts, contracts, and other choses in action; and the commissioners by their warrant may cause any house or tenement of the bankrupt to be broken open, in order to enter upon and seize the same. And when the assignees are chosen or approved by the creditors, the commissioners are to assign every thing over to them; and the property of every part of the estate is thereby as fully vested in them, as it was in the bankrupt himself, and they have the same remedies to recover it. (e) The property vested in the assignees is the whole that the bankrupt had in himself, at the time he committed the first act of bankruptcy, or that has been vested in him since, before his debts are satisfied or agreed for. Therefore it is usually said, that once a bankrupt, and always a bankrupt ; by which is meant, that a plain direct act of bankruptcy once committed cannot be purged, or explained away, by any subsequent conduct, as a dubious equivocal act may (ƒ) be; but that, if a commission is afterwards awarded, the commission and the property of the assignees shall have a relation, or reference, back to the first and original act of bankruptcy. (g) Insomuch that all transactions of the bankrupt are from that [486] time absolutely null and void, either with regard to the alienation of his property, or the receipt of his debts from such as are privy to his bankruptcy; for they are no longer his property, or his debts, but those of the future assignees. And, if an execution be sued out, but not served and b Stat. 5 Geo. II. c. $0. e 12 Mod. 324. c pag. 285. d Stat. 1 Jac. I. c. 15. 21 Jac. I. c. 19. (19) See 6 G. IV. c. 16. sect. 127. (20) See further, 6 Geo. IV. c. 16. sect. 61, &c. and ante 473, note 1. executed on the bankrupt's effects, till after the act of bankruptcy, it is void as against the assignees. But the king is not bound by this fictitious relation, nor is within the statutes of bankrupts ; (h) for if, after the act of bankruptcy committed and before the assignment of his effects, an extent issues for the debt of the crown, the goods are bound thereby. (i) In France this doctrine of relation is carried to a very great length; for there every act of a merchant, for ten days precedent to the act of bankruptcy, is presumed to be fraudulent, and is therefore void. (k) But with us the law stands upon a more reasonable footing: for, as these acts of bankruptcy may sometimes be secret to all but a few, and it would be prejudicial to trade to carry this notion to its utmost length, it is provided by statute 19 Geo. II. c. 32. that no money paid by a bankrupt to a bona fide or real creditor in a course of trade, even after an act of bankruptcy done, shall be liable to be refunded. Nor, by statute 1 Jac. I. c. 15. shall any debtor of a bankrupt, that pays him his debt, without knowing of his bankruptcy, be liable to account for it again. The intention of this relative power being only to reach fraudulent transactions, and not to distress the fair trader. The assignees may pursue any legal method of recovering this property so vested in them, by their own authority; but cannot commence a suit in equity, nor compound any debts owing to the bankrupt, nor refer any matters to arbitration, without the consent of the creditors, or the major part of them in value, at a meeting to be held in pursuance of notice in the gazette. (1) 22 [487] When they have got in all the effects they can reasonably hope 23 for, and reduced them to ready money, the assignees must, after four, and within twelve months after the commission issued, give one and twenty days' notice to the creditors of a meeting for a dividend or distribution; at which time they must produce their accounts, and verify them upon oath if required. And then the commissioners shall direct a dividend to be made, at so much in the pound, to all creditors who have before proved, or shall then prove, their debts. This dividend must be made equally, and in a rateable proportion, to all the creditors, according to the quantity of their debts; no regard being had to the quality of them. Mortgages indeed, for which the creditor has a real security in his own hands, are entirely safe; for the commission of bankrupt reaches only the equity of redemption. (m) So are also personal debts, where the creditor has a chattel in his hands, as a pledge or pawn for the payment, or has taken the debtor's lands or goods in execution. And, upon the equity of the statute 8 Ann. c. 14. (which directs, that upon all executions of goods being on any premises demised to a tenant, one year's rent and no more shall, if due, be paid to the landlord), it hath also been held, that under a commission of bankrupt, which is in the nature of a statute-execution, the landlord shall be allowed his arrears of rent to the same amount, in preference to other creditors, 25 even though he hath neglected to distrain, while the goods remained on the premises: which he is otherwise entitled to do for [488] his entire rent, be the quantum what it may. (n) But, otherwise, h 1 Atk. 262. 1 Stat. 5 Geo. II. c. 30. 24 i Viner, Abr. t. creditor and bankr. 104. k Sp. L. b. 29. c. 16. (21) Both these statutes are repealed, see 6 Geo. IV. c. 16. sections 82, 83, 84, 85. 86. ante 473, note 1. (22) See 6 Geo. IV. c. 16. s. 88, 89. ante 473, note 1. (23) 6 Geo. IV. c. 16. s. 107. 109. (24) See further, 6 Geo. IV. c. 16. sect. 70. 108. (25) But see 6 Geo. IV. c. 16, sect. 74, & ante note 1 |