therein.

If sufficient reason is shown the judge will remove After the removal the referee must call a meeting for the appointment of a new trustee.3

the trustee.

Under clause 18 costs may be imposed on a creditor in a proper case who fails to substantiate his objections to the bankrupt's discharge.1

1 Form 53.

2 Form 54.

8 Form 55.

Re Wolpert, 1 N. B. N. 238.

CHAPTER III.

BANKRUPTS.

§ 466. Act of 1898. SEC. 3. ACTS OF BANKRUPTCY. -a. Acts of bankruptcy by a person shall consist of his having (1) conveyed, transferred, concealed, or removed, or permitted to be concealed or removed, any part of his property with intent to hinder, delay, or defraud his creditors, or any of them; or (2) transferred, while insolvent, any portion of his property to one or more of his creditors with intent to prefer such creditors over his other creditors; or (3) suffered or permitted, while insolvent, any creditor to obtain a preference through legal proceedings, and not having at least five days before a sale or final disposition of any property affected by such preference vacated or discharged such preference; or (4) made a general assignment for the benefit of his creditors; or (5) admitted in writing his inability to pay his debts and his willingness to be adjudged a bankrupt on that ground.

b. A petition may be filed against a person who is insolvent and who has committed an act of bankruptcy within four months after the commission of such act. Such time shall not expire until four months after (1) the date of the recording or registering of the transfer or assignment when the act consists in having made a transfer of any of his property with intent to hinder, delay, or defraud his creditors or for the pur

pose of giving a preference as hereinbefore provided, or a general assignment for the benefit of his creditors, if by law such recording or registering is required or permitted, or, if it is not, from the date when the beneficiary takes notorious, exclusive, or continuous possession of the property unless the petitioning creditors have received actual notice of such transfer or assignment.

c. It shall be a complete defence to any proceedings in bankruptcy instituted under the first subdivision of this section to allege and prove that the party proceeded against was not insolvent as defined in this Act at the time of the filing the petition against him, and if solvency at such date is proved by the alleged bankrupt the proceedings shall be dismissed, and under said subdivision one the burden of proving solvency shall be on the alleged bankrupt.

d. Whenever a person against whom a petition has been filed as herein before provided under the second and third subdivisions of this section takes issue with and denies the allegation of his insolvency, it shall be his duty to appear in court on the hearing, with his books, papers, and accounts, and submit to an examination, and give testimony as to all matters tending to establish solvency or insolvency, and in case of his failure to so attend and submit to examination the burden of proving his solvency shall rest upon him.

e. Whenever a petition is filed by any person for the purpose of having another adjudged a bankrupt, and an application is made to take charge of and hold the property of the alleged bankrupt or any part of the same, prior to the adjudication and pending a hearing on the petition, the petitioner or applicant shall file in the same court a bond, with at least two good and

sufficient sureties, who shall reside within the jurisdiction of said court, to be approved by the court or a judge thereof, in such sum as the court shall direct, conditioned for the payment, in case such petition is dismissed, to the respondent, his or her personal representatives, all costs, expenses and damages occasioned by such seizure, taking, and detention of the property of the alleged bankrupt.

If such petition be dismissed by the court or withdrawn by the petitioner, the respondent or respondents shall be allowed all costs, counsel fees, expenses and damages occasioned by such seizure, taking, or detention of such property. Counsel fees, costs, expenses, and damages shall be fixed and allowed by the court, and paid by the obligors in such bond.

The first act of bankruptcy is similar to that mentioned in the Act of 1867: "or shall make any assignment, gift, sale, conveyance, or transfer of his estate, property, rights, or credits, either within the United States or elsewhere, with intent to delay, defraud, or hinder his creditors."1 Transfer under its definition before cited (§ 1, (25)) covers all methods of conveying property absolutely or conditionally, and "conceal" includes secrete, falsify, and mutilate (§ 1, (22)). This act of bankruptcy will, therefore, be committed if the debtor disposes of his property in any way to hinder his creditors.

The intent will be presumed if the natural result of the conveyance will be to hinder creditors.2

Under the law of England it was held that the act of departing the realm with intent to delay creditors was complete at the time the debtor departed with this intent, though no creditors were delayed. And this section should be construed in a similar way as the fact of creditors being delayed is not

1

§ 39, 14 Stats. 536, R. S. § 5021. 2 Supra, § 32.

8 Supra, § 33.

made a necessary part of the act of bankruptcy. It was also held in England and the United States that it was not necessary to prove that legal process had been issued where the act of bankruptcy was a concealment of property to escape such process.1 Concealment means also a concealment of title by fraudulent transfers. It is not necessary to show that any

creditor knew of the intent to defraud.3

It is a defence if the debtor prove that he was not insolvent at the time the petition was filed (§ 3 c), but he may commit this act of bankruptcy while solvent; it is not necessary to prove him insolvent at the time he did the act.1

If a transfer be made for value, it is not an act of bankruptcy under this section when the proceeds are used to pay debts. It is not a preference for a debtor to sell or transfer his goods for value in good faith, as the debtor has the right to attempt to continue his business, and the present clause should receive a similar construction.

6

This act of bankruptcy will be complete if the intent be to hinder or delay only one creditor. The same result was reached under the law of 1867 when the act of bankruptcy was a delaying of creditors generally. The reason given was, that an intention to delay one creditor if carried out would delay them all. No question of this kind can arise under this act, because it is forbidden to delay "creditors, or any of them."

Clause 2 is more restricted than the preference under the Act of 1867, where the act could be committed by a person in contemplation of bankruptcy. "Transfer" will probably, however, be held to cover the same grounds as the words used in the former act,-"make any payment, gift, grant, sale, con. veyance, or transfer of money," etc.