called by Lindley nominal partners, including former partners so held out, fall within the same rule,1 but not those who are only liable to certain particular creditors by estoppel.2 Lindley says: "A dormant partner may be either included in an adjudication against the firm, or be adjudged bankrupt on a petition against him separately. The same, it is apprehended, is true of nominal partners." It has been held that a nominal partner cannot maintain a petition for adjudication against himself and the others, as insolvents, because, as between themselves, they are not partners.5

$25. Corporations. - Moneyed, business, and commercial corporations were made subject to the statute of 1867. This description includes banks organized under State laws, insurance companies, railroad companies, and, in short, all private corporations, excepting such as are devoted to ecclesiastical or charitable purposes.

National banks were held not to be within the law of 1867, for the reason that special provisions are made for them by the acts under which they are incorporated.9

§ 26. Residing. That one "resides" within the United States means, in this and similar statutes, that he is more than a transient sojourner; a resident, an inhabitant, or a

1 Ex parte Murton, 2 M. D. & De G. 152; Ex parte Arboin, 1 De G. 359; Re Rowland, L. R. 1 Ch. 421; Re Krueger, 2 Lowell, 66, Fed. Cas. No. 7941; Re Jewett, 15 N. B. R. 126, Fed. Cas. No. 7306; Ex parte Hayman, 8 Ch. D. 11; Re McFarland, 10 N. B. R. 381, Fed. Cas. No. 8788. See Moore v. Walton, 9 N. B. R. 402, Fed. Cas. No. 9779. 2 Wall v. Balcom, 9 Gray, 92; Ex parte Sheen, 6 Ch. 235.

650.

403.

7 Re Merchants' Ins. Co., 6 N. B. R. 43, Fed. Cas. No. 9441.

8 Adams v. B. H. & E. R. R. Co., 1 Holmes, 30, Fed. Cas. No. 47; affirmed, nom. Sweatt v. B. H. & E. R. R. Co., 3 Cliff. 339, Fed. Cas. No. 13,684; Ala. & Chattanooga R. R. Co. v. Jones, 5 N. B. R. 97, Fed. Cas. No. 126; Re Cal. Pac. R. R. Co., 3 Sawyer, 240, Fed. Cas. No. 2315; Winter v. Iowa, etc. R. R. Co., 2 Dillon, 487, Fed. Cas.

* Lindley, Partnership, 6th ed., p. No. 17,890; N. O., etc. R. R. Co. v. Delamore, 114 U.S. 501; Re South. Minn. R. Citing Ez parte Hamper, 17 Ves. R. Co., 10 N. B. R. 86, Fed. Cas. No. 13,188. So under the winding-up acts. See infra, § 467.

5 Hanson v. Paige, 8 Gray, 239.

6 Thornhill v. The Bank of Louisiana, 3 N. B. R. 435, Fed. Cas. No.

9 Re Manuf. Nat. Bank, 5 Biss. 499, Fed. Cas. No. 9051. National

13,990. The Act of 1898 does not banks are excepted now. Act of 1898,

person having a domicile, are substantially equivalent expressions. In one case the debtor's most usual abiding place, which was his place of business, was held to be his only residence, though his family lived elsewhere, and he often visited them. This decision may be questioned. It is no objection to the residence that it has been acquired lately, and with the intent to benefit by the bankrupt law.3

The provision that the debtor shall apply in the place where he has resided for the last six months, or for the longest period during that time, does not require him to have resided within the United States for six months, or in any particular State for the greater part of that time; but, for the supposed convenience of his creditors, that the place in which he has resided the longest, though it be only for one day, shall be chosen.*

§ 27. Jurisdiction of Debtor who has removed from the United States. -It was held under the statute of Massachusetts, which applied only to debtors residing within the State, that a permanent removal by one who had committed an act of bankruptcy ousted the jurisdiction of the courts of the State. This was soon changed by an act of the Legislature.

6

§ 28. Traders.- Most of the statutes make certain acts by traders a ground for proceeding by creditors, which are not so when done by non-traders.

Under the early acts in England which applied only to traders, so much refinement was indulged in by the courts in deciding what was a trading, that later statutes gave an alphabetical list of the occupations which were to be so considered.

1 Re Kinsman, 1 N. Y. Leg. Obs. 309, Fed. Cas. No. 7832; Stiles v. Lay, 9 Ala. 795; Roosevelt v. Kellogg, 20 Johns. 208; McDaniel v. King, 5 Cush. 469; Cutter v. Folsom, 17 N. H. 139; Cobb v. Rice, 130 Mass. 231; Re Walker, 1 Lowell, 237, Fed. Cas. No. 17,061; Re Goodfellow, 1 Lowell, 510, Fed. Cas. No. 5536. See infra, § 465.

2 Re Watson, 4 N. B. R. 613, Fed. Cas. No. 17,272.

8 Re Goodfellow, 1 Lowell, 510, Fed. Cas. No. 5536; McConnell v. Kelley, 138 Mass. 372.

4 Re Goodfellow, 1 Lowell, 510, Fed. Cas. No. 5536; Re Foster, 3 N. B. R. 236, Fed. Cas No. 4962.

5 Claflin v. Beach, 4 Met. 392. 6 Stat. 1844, c. 178, now regulated by Stat. 1895, c. 209.

There has been no such difficulty in this country, and I shall not cite many of the cases.

That a trade is illegal, or the whole scheme of a trading corporation is fraudulent, is no objection to proceeding in bankruptcy or winding up, if there are outstanding valid debts.1 The courts have held that the fact of the trading being but a small part of the debtor's vocation did not necessarily relieve him; 2 but to be a trader, one must be both a buyer and a seller, and some trifling trading in connection with other business may be excused.

§ 29. Retired Trader.

It was held under the act of 1867 that a trader who had given commercial paper and retired from business, before or after its maturity, was to be considered as still a trader for the purposes of this clause, until the paper was paid. So when the bankrupt law of England only applied to traders, one who had retired was subject to its operation until all his trade debts were paid.5 Under later English statutes, creating different acts of bankruptcy for traders and non-traders, it has been held that one must be actually a trader when he commits those acts.6 A note given by one who had retired from business, for a debt contracted while in trade, was held not to be given in the course of business, nor by a trader.7

1 Ex parte Meymot, 1 Atk. 196; Cobb v. Symonds, 5 B. & A. 516; Ex parte Day, 1 Ch. D. 699; Leifchild's Case, L. R. 1 Eq. 231; Re London and County Coal Co., L. R. 3 Eq. 355.

2 Ex parte Gibbs, 2 Rose, 38; Heanny v. Birch, 3 Camp. 233.

3 Hankey v. Jones, 2 Cowp. 745. 4 Re Weikert, 3 N. B. R. 27, Fed. Cas. No. 17,361; Davis v. Armstrong, 3 N. B. R. 33, Fed. Cas. No. 3624.

5 Ex parte Bamford, 15 Ves. 449; Bailie v. Grant, 9 Bing. 121; Ex parte Griffiths, 3 De G. M. & G. 174. [So of a married woman subject to bankruptcy. Re Dagnall (1896), 2 Q. B. 407.]

6 Ex parte Schomberg, L. R. 10 Ch. 172; Ex parte McGeorge, 20 Ch. D. 697.

7 Jack's Case, 1 Woods, 549, Fed. Cas. No. 7120.

CHAPTER III.

ACTS OF BANKRUPTCY.

-

§ 30. Voluntary Petition. A person who by his residence. and indebtedness is subject to be made bankrupt may, under our law, file a petition in the proper court for an adjudication. This is called a voluntary petition, and is, of itself, an act of bankruptcy; so that, if the debtor fails to prosecute the proceedings the creditors may intervene and carry them forward.1

In England the debtor may file what is called a liquidation petition, which is an act of bankruptcy, of which his creditors only, and not he, can take advantage to make him judicially bankrupt, though he may offer a composition.2

In voluntary petitions the questions of residence and indebtedness are heard ex parte, and an adjudication is conclusive.3

§ 31. Involuntary Proceedings. Acts of bankruptcy by a debtor which will authorize proceedings against him by his creditors are certain acts or omissions specified in the statute which tend to prove that he is either unwilling or unable to pay his debts. Those of the former class involve an intent to delay or defraud creditors; those of the latter class are independent of intent.4

§ 32. Intent. If an act is done whose natural tendency and effect is to defraud creditors, the intent is inferred. And this presumption is not rebutted by proof that the debtor was

1 Re Harris, 3 N. Y. Leg. Obs. 152, Fed. Cas. No. 6110; Re Randall, 5 Law Reporter, 115, Fed. Cas. No. 11,550; Re Goodfellow, 1 Lowell, 510, Fed. Cas. No. 5536; Re Fowler, 1 Lowell, 161, Fed. Cas. No. 4998. See Act of 1898, § 59 f.

2 Robson, Bankruptcy, 7th ed., p.

741. [This subject is now controlled by B. A. 1890, § 3. See Robson, p. 745.]

8 Re Fowler, 1 Lowell, 161, Fed. Cas. No. 4998; Oriental Bank v. Richer, 9 App. Cas. 413; Pennell v. Butler, 18 C. B. 209.

4 Act of 1898, § 3; infra, § 466.

impelled to the act by motives which had no reference to his creditors; such as that the immediate occasion of departing the realm, or of giving a preference, was fear of a criminal prosecution.1 Speaking of preferences, an eminent judge says: “Every person is presumed to intend the natural and probable consequences of his own acts; and if such acts do, in fact, . . . give a very large preference, it is competent for the jury to infer the intent. It does not rebut this intent to show that the debtor has also another motive to the proceeding." 2

So Lord Westbury said: "There are two maxims that must never be weakened, that you must ascribe to every subject a knowledge of the law . . .; that you must ascribe to every man a knowledge of that which is a necessary and inevitable result of an act deliberately done by him."3 All the authorities agree in this. In England preference must be the sole motive; but this rule is not followed here.5

§ 33. Departing the State. In the first English statute upon this subject, that of 34 & 35 Henry VIII., c. 4, one of the two acts of bankruptcy therein defined was of persons who "suddenly flee to parts unknown, not minding to pay or restore to any their creditors, their debts and duties." And to depart the realm with intent to defraud creditors has remained one of such acts through all changes and revisions of the laws.

As strangers trading to England were subject to the bankrupt laws if they committed any of the defined acts within the realm, such a person might render himself liable to adjudication by leaving the country to go to his own home. But the intent could not be inferred from the act in such a case, and

1 Traders' Bank v. Campbell, 14 Wall. 87; Woodier's Case, Bull. N. P. 39; Raikes v. Poreau, Cooke (7th ed.), 80; Vernon v. Hankey, Cooke (7th ed.), 111; Ex parte Kilner, 2 Dea. 324; Holroyd v. Whitehead, 3 Camp. 530, 2 Rose, 145; Fowler v. Padget, 7 T. R. 509; Deffle v. Desanges, 8 Taunt. 671; Warner v. Barber, Holt, N. P. 175.

2 Per Shaw, C. J., Denny v. Dana, 2 Cush. 160, 172.

8 Lord Westbury in Carter v. McLaren, L. R. 2 Sc. App. 120, 126.

4 Re Drummond, 1 N. B. R. 231, Fed. Cas. No. 4093; Re Sutherland, Deady, 344, Fed. Cas. No. 13,638; Ex parte Goater, 22 W. R. 935; Hardy v. Clark, 7 Blatch. 262, Fed. Cas. No. 6058; McKenzie v. Garrison, 10 Rich. 238.

See infra, § 71.