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veyance is made in fraud of the provisions of this act, the same shall be void, and the 2 March 1967. assignee may recover the property, or the value of it, from the person so receiving it, or so to be benefited: (a)
82. And if any person being insolvent, or in contemplation of insolvency or bank- Fraudulent conruptcy, within six months before the filing of the petition by or against him, makes veyances avoided. any payment, sale, assignment, transfer, conveyance or other disposition of any part of his property to any person, who then has reasonable cause to believe him to be insolvent, or to be acting in contemplation of insolvency, and that such payment, sale, assignment, transfer or other conveyance is made with the view to prevent his property from coming to his assignee in bankruptcy, or to prevent the same from being distributed under this act, or to defeat the object of, or in any way impair, hinder, impede or delay the operation and effect of, or to evade any of the provisions of this act, the sale, assignment, transfer or conveyance shall be void, and the assignee may recover the property, or the value thereof, as assets of the bankrupt.(b) And if such sale, assignment, transfer or conveyance is not made in the usual and ordinary course of business of the debtor, the fact shall be primâ facie evidence of fraud.(c)
83. Any contract, covenant or security made or given by a bankrupt, or other per- Contracts for son, with, or in trust for, any creditor, for securing the payment of any money, as a opposition to be consideration for or with intent to induce the creditor to forbear opposing the appli- võid. cation for discharge of the bankrupt, shall be void; and if any creditor shall obtain Penalty for enany sum of money, or other goods, chattels or security, from any person, as an induce- tering into such ment for forbearing to oppose, or consenting to, such application for discharge, every creditor so offending shall forfeit all right to any share or dividend in the estate of the bankrupt, and shall also forfeit double the value or amount of such money, goods, chattels or security so obtained, to be recovered by the assignee for the benefit of the
XII. PARTNERSHIPS AND CORPORATIONS.
15 Stat. 534.
84. Where two or more persons who are partners in trade shall be adjudged bank- 2 Mar. 1867 ? 36. rupt, either on the petition of such partners, or any one of them, (d) or on the petition of any creditor of the partners, (e) a warrant shall issue in the manner provided by Bankrupt partthis act, upon which all the joint stock and property of the copartnership, and also all the separate estate of each of the partners, shall be taken, excepting such parts thereof as are herein before excepted; and all the creditors of the company, and the separate Probate of debts. creditors of each partner, shall be allowed to prove their respective debts; (g) and the Assignees. assignee shall be chosen by the creditors of the company, (h) and shall also keep separate accounts of the joint stock or property of the copartnership, and of the separate estate of each member thereof; and after deducting out of the whole amount received Distribution. by such assignee, the whole of the expenses and disbursements, the net proceeds of the joint stock shall be appropriated to pay the creditors of the copartnership, and the net proceeds of the separate estate of each partner shall be appropriated to pay his
(a) If the bankrupt have fraudulently confessed a judgment, in contemplation of bankruptcy, with a view to give a preference to the judgment-creditor, and the latter had reasonable cause to believe that such was the intent, he may be enjoined, either by the district court in bankruptcy, or on a distinct proceeding in the circuit court. Irving v. Hughes, 16 Am. L. R. 209. But a judgment cannot be assailed in the bankrupt court; the assignee and creditors must resort to the state court to test its validity. Ex parte Burns, 16 Am. L. R. 105; s. c. 6 Int. R. Rec. 182; but see Ex parte Schich, Ibid. 183. A lien acquired by the levy of an execution is not disturbed by proceedings in bankruptcy. Ex parte Schnepf, 16 Am. L. R. 204; s. c. 6 Int. R. Rec. 214. The assignee cannot recover the value of property transferred by the bankrupt within four months of the adjudication, without showing that a preference was thereby intended. Wadsworth v. Tyler, 2 Bank. Reg. 101: see Tuttle v. Truax. 1 Bank. Reg. 169; Ex parte Foster, 2 Bank. Reg. 81; Ex parte Meyer, Ibid. 137; Ex parte Locke, Ibid. 123; Ex parte Lawson, Ibid. 125. A judgment confessed by an insolvent debtor, is not affected by his subsequent bankruptcy, if the creditor had no notice of his insolvency. Ex parte Wright. 2 Bank. Reg. 155. It seems, that knowledge of such insolvency by the creditor's attorney, is not, necessarily, notice to him. Ibid. Where the members of an insolvent firm make a conveyance of all their joint personal property to certain creditors, who have reasonable cause to believe that the firm is insolvent, and within four months thereafter one of the firm is adjudged a bankrupt, on his own petition, his individual assignee cannot avoid the conveyance of the firm, as an intended preference. Forsaith e. Merritt, 3 Bank. Reg. 11.
(b) A bonâ fide transfer of partnership effects by one member of the firm to another, vests the title in the transferee as his separate estate. Ex parte Byrne, 16 Am. L. R. 499; s. c. 1 Bank. Reg. 122. A bona fide assignment for the benefit of creditors is good against the assignee. Ex parte Arledge, 1 Bank. Reg. 195; Sedgwick r. Place, Ibid. 204; Hawkins' Appeal, 34 Conn. 548. It is of no consequence whether a preference given to a creditor was voluntary or the result of threats or coercion; in either case, it is void. Foster v. Hackley, 2 Am. L. T. Bank. 8; Wilson v. Brinkman, 2 Bank. Reg. 149. The assignee may recover pro
perty fraudulently conveyed before the passage of the act. Bradshaw v. Klein, 16 Am. L. R. 505.
(c) Ex parte Deane, 2 Bank. Reg. 29; Ex parte Hunt, 2 Bank. Reg. 166.
(d) Two or more partners may be adjudged bankrupts, upon the petition of one or more of them. Ex parte Crockett, 2 Bank. Reg. 75. But all the members of a firm must join in, or assent to, a petition to have the firm declared bankrupt, or notice must be given to those who dissent, as in case of an involuntary bankruptcy. Ex parte Lewis, 1 Bank. Reg. 19. And where a member of an existing firm files an individual petition in bankruptcy, and there are firm debts and firm assets, the firm must be de clared bankrupt, before a member thereof can be discharged from its liabilities. Ex parte Winkens, 2 Bank. Reg. 113. He may, however, after adjudication, amend his petition so as to bring in his copartner, in order to a discharge of the firm debts. Ex parte Little, 1 Bank. Reg. 74.
(e) Where a firm is insolvent, it is an act of bankruptcy, for a member thereof, to suffer its property to be taken on legal process, with intent to give a preference to a creditor of the firm; and the net proceeds of the sale of such property, in the hands of the sheriff, will be ordered to be paid to the assignee, where it appears that the creditor had reasonable cause to believe that the firm was insolvent. Ex parte Black, 1 Bank. Reg. 81.
(g) Where a member of a late firm files his individual petition in bankruptcy, all his creditors can prove their claims, whether individual or partnership. Ex parte Frear, 1 Bank. Reg. 201. A firm creditor holding the notes both of the firm and of the individual partners, for a firm debt, is entitled to prove his claim on the firm notes, against the joint estate, and on the individual notes, against the separate estates of the makers. Mead v. Bank of Fayetteville, 16 Am. L. R. 818; s. c. 2 Bank. Reg. 65. (h) A separate creditor who has proved his claim against one of the partners, has no right to participate in the choice of an assignee of the firm. Ex parte Phelps. 1 Bank. Reg. 139. The choice must be made by the greater number of the firm-creditors who have proved their debts. Ex parte Scheiffer, 2 Bank. Reg.
separate creditors; (a) 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 right and interest 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 ; (b) 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. If such copartners reside in different districts, that court in which the petition is first filed shall retain exclusive jurisdiction over the case. (c)
85. The provisions of this act shall apply to all moneyed business or commercial Joint stock com- corporations (d) and joint stock companies; and upon the petition of any officer of any
panies and corporations.
2 March 1867. Separate estates.
such corporation or company, duly authorized by a vote of a majority of the corporators, at any legal meeting called for the purpose, or upon the petition of any creditor or creditors of such corporation or company, made and presented in the manner hereinafter provided in respect to debtors, the like proceedings shall be had and taken as are hereinafter provided in the case of debtors; and all the provisions of this act which apply to the debtor, or set forth his duties in regard to furnishing schedules and inventories, executing papers, submitting to examinations, disclosing, making over, secreting, concealing, conveying, assigning or paying away his money or property, shall in like manner, and with like force, effect and penalties, apply to each and every officer of such corporation or company, in relation to the same matters concerning the corporaFraudulent con- tion or company, and the money or property thereof. All payments, conveyances and
assignments declared fraudulent and void by this act, when made by a debtor, shall in like manner, and to the like extent, and with like remedies, be fraudulent and void when made by a corporation or company. No allowance or discharge shall be granted to any corporation or joint stock company, or to any person or officer or member thereof: Provided, That whenever any corporation, by proceedings under this act, shall be declared bankrupt, all its property and assets shall be distributed to the creditors of such corporations, in the manner provided in this act in respect to natural persons. XIII. INVOLUNTARY BANKRUPTCY.
2 Mar. 1867 ? 39. 14 Stat. 536.
What to be deemed acts of bankruptcy.
Fraudulent removal or transfer of property.
86. Any person residing and owing debts as aforesaid, (e) who, after the passage of this act, shall depart from the state, district or territory of which he is an inhabitant, with intent to defraud his creditors, or, being absent, shall, with such intent, remain absent; or shall conceal himself to avoid the service of legal process, (g) in any action for the recovery of a debt or demand provable under this act :
Or shall conceal or remove any of his property to avoid its being attached, taken or sequestered on legal process; 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: (h)
(a) The partnership and separate estates are to be administered according to this section. Ex parte Frear, 1 Bank. Reg. 201. The United States are not entitled to priority of payment out of the firm assets, on a bond executed by the individual members as accommodation sureties. Ex parte Webb, 9 Int. R. Rec. 169; 8. c 2 Bank. Reg. 183; 2 Am. L. T. Bank. 87. Where there are both joint and separate debts proved, on a separate petition, the joint creditors are not entitled to participate in the distribution of the assets, until the separate creditors are paid in full. Ex parte Byrne, 16 Am. L. R. 499; 8. c. 1 Bank. Reg. 122. The obligee in a joint and several bond given by the members of a firm, is entitled to dividends out of the several assets; the firm and its several members having been adjudged bankrupt. Ex parte Bigelow, 2 Bank. Reg. 121. Where there are both individual and firm creditors, but the assets are individual only, though mainly consisting of goods purchased by the bankrupt from the firm, on its dissolution, prior to the bankruptcy, and being principally the same goods, in the purchase of which the partnership debts had originated, the firm creditors will be entitled to be paid pari passu with the individual creditors. Ex parte Jewett, 16 Am. L. R. 291; s. c. 1 Bank. Reg. 130. But where one of two partners sells his interest in the concern to his copartner, taking his notes therefor, and the latter becomes bankrupt. leaving some of the notes unpaid, the former cannot receive a dividend, until all the firm debts have been paid. Ex parte Jewett, 16 Am. L. R. 294; 8. c. 1 Bank. Reg. 131.
(b) Where a member of a late firm files his individual petition in bankruptcy, and inserts in his schedules debts contracted by the firm, and there are no partnership assets to be administered, he will be entitled to be discharged from all his debts. individual and copartnership. Ex parte Abbe, 16 Am. L. R. 824; s. c. 2 Bank. Reg. 26; and see Ex parte Bidwell, 2 Bank. Reg. 78.
(c) A district court has no power, on the petition of copartners, one of whom resides in another district, and has no place of business within the jurisdiction, to decree such copartner a bankrupt. Ex parte Praukard, 1 Bank. Reg. 51. And under a petition filed by one member of a firm, his copartners, residing in another district, cannot come in and ask for a discharge. Ex parte Boylan, 1 Ben. 266.
(d) A corporation created for the purpose of carrying on any lawful business, defined by its charter, and clothed with power to do so, is such an one as is contemplated by the act. Rankin v. Florida, Atlantic and Gulf Central Railroad Co., 1 Bank. Reg. 196.
(e) If the debtor be a married woman, having a separate estate, it must appear upon the face of her notes that she intended to bind her separate estate, or there must be an allegation that they were given for the benefit of such separate estate. Ex parte Howland, 2 Bank. Reg. 114.
(g) See Barnes v. Billington, 1 W. C. C. 29.
(h) A general assignment for the benefit of creditors, made prior to the passage of the act, is not an act of bankruptcy. Es parte Wells, 16 Am. L. R. 163; s. c. 6 Int. R. Rec. 181. Nor is one made since its passage, unless with intent to hinder, delay or defraud creditors, or to defeat or delay the operation of the bankrupt law. Langley v. Perry, 17 Am. L. R. 427; s. c. 2 Bank. Reg. 180; reversing 8. c. 16 Am. L. R. 429; 1 Bank. Reg. 155. And see Grow v. Ballard, 2 Bank. Reg. 69; Farrin v. Crawford, 2 Bank. Reg. 181. An assignment, with intent to hinder, delay or defraud creditors, is an act of bankruptcy, whether the assignor be solvent or insolvent. Ex parte Randall, 2 Am. L. T. Bank. 69; 8. c. 3 Bank. Reg. 4. An assignment, by an instrument void for want of a stamp, will not have such effect. Ex parte Dunham, 2 Bank. Reg. 9. A sale of a stock of goods, not made in the
2 March 1867.
Or who has been arrested and held in custody under or by virtue of mesne process or execution, issued out of any court of any state, district or territory, within which such Remaining in ardebtor resides or has property, founded upon a demand in its nature provable against rest on mesue a bankrupt's estate under this act, and for a sum exceeding one hundred dollars, and such process is remaining in force and not discharged by payment, or in any other manner provided by the law of such state, district or territory applicable thereto, for a period of seven days; or has been actually imprisoned for more than seven days, in a civil action founded on contract, for the sum of one hundred dollars or upwards:
Or who, being bankrupt or insolvent, (a) or in contemplation of bankruptcy or Fraudulent preinsolvency, (b) shall make any payment, (c) gift, grant, sale, conveyance or transfer of money or other property, estate, rights or credits; (d) or give any warrant to confess judgment; (e) or procure or suffer his property to be taken on legal process, (g) with intent to give a preference to one or more of his creditors, or to any person or persons who are or may be liable for him as endorsers, bail, sureties or otherwise, or with the intent, by such disposition of his property, to defeat or delay the operation of this
Or who, being a banker, merchant or trader, has fraudulently (h) stopped or Fraudulent sussuspended, and not resumed, payment of his commercial paper, (i) within a period of pension of pay-' fourteen days; (k) shall be deemed to have committed an act of bankruptcy, and, subject to the conditions hereinafter prescribed, shall be adjudged a bankrupt, on the petition (1) of one or more of his creditors, (m) the aggregate of whose debts, provable under this act, amount to at least two hundred and fifty dollars; provided such petition Petition. is brought within six months after the act of bankruptcy shall have been committed.
87. And if such person shall be adjudged a bankrupt,(n) the assignee may recover Rights of asback the money or other property so paid, conveyed, sold, assigned or transferred contrary to this act, provided the person receiving such payment or conveyance had reasonable cause to believe that a fraud on this act was intended, (o) and that the debtor was insolvent; and such creditor shall not be allowed to prove his debt in bankruptcy.(p)
usual and ordinary course of the debtor's business, is prima facie fraudulent. Ex parte Deane, 2 Bank. Reg. 29; and see Ex parte Cowles, 1 West. Jur. 367; s. c. 1 Bank. Reg. 42. A conveyance by a father to his son, in consideration of the father's support, is an act of bankruptcy. Avery v. Johann, 2 Am. L. T. Bank. 92. See Brock v. Terell, 2 Bank. Reg. 190.
(a) If a man's debts cannot be made in full out of his property by levy and sale on execution, he is insolvent within the meaning of the bankrupt law. Ex parte Randall, 2 Am. L. T. Bank. 69 8. c. 3 Bank. Reg. 4. Merchants not able to pay all their debts in the usual and ordinary course of business, as persons carrying on trade usually do, are insolvent within the meaning of the statute. Ex parte Lewis, 2 Bank. Reg. 145; s. c. 2 Am. L. T. Bank. 75; 16 Pitts. L. J. 45; Wilson v. Brinkman, 2 Bank. Reg. 149; Ex parte Wright, Ibid. 155; Morgan v. Mastick, Ibid. 163; Ex parte Dibblee, Ibid. 185.
(b) A mortgage given by a debtor before becoming insolvent, and not in contemplation of bankruptcy, though with intent to prefer the mortgage-creditor, is not an act of bankruptcy. Ex parte Dunham, 2 Bank. Reg. 9. But every failing debtor who gives a preference to a part of his creditors, thereby commits an act of bankruptcy. Ex parte Drummond, 1 Bank. Reg. 10. The denial of the bankrupt himself is not sufficient to disprove that a general assignment was made in contemplation of bankruptcy. Ex parte Brodhead, 2 Bank. Reg. 93.
(c) A payment by an insolvent debtor, to a particular creditor, with intent to give a preference, is an act of bankruptcy. Mor gan v. Mastick, 2 Bank. Reg. 163; Farrin v. Crawford, 2 Bank. Reg. 181. There is no difference between a fiduciary debt and an ordinary one, as respects a payment thereof with intent to give a preference, so as to constitute an act of bankruptcy. Ex parte Dibblee, 2 Bank. Reg. 185.
(d) The execution, by a firm of machinists, of chattel mortgages on their tools and machinery, to secure certain creditors, shortly followed by a suspension of payment, is an act of bankruptcy. Ex parte Rogers, 2 Bank. Reg. 129. The return of goods ordered, pending negotiations for an extension, is not an act of bankruptcy. Doan v. Compton, 2 Bank. Reg. 182.
(e) The confession of a fraudulent judgment is an act of bankruptcy. Ex parte Schick, 6 Int. R. Rec. 183; and a confession of judgment by an insolvent, if the intent be to give a preference, is an act of bankruptcy, without regard to any question of fraud. Ex parte Sutherland, 1 Bank. Reg. 140; Ex parte Sanger, 2 Bank. Reg. 164; 8. c. 2 Am. L. T. Bank. 80. But in deciding whether the giving of a warrant to confess judgment be an act of bankruptcy, the character of the debtor's business may be taken into consideration. Ex parte Leeds, 16 Am. L. R. 693; s. c. 1 Bank. Reg. 138; Ex parte Dibblee, 2 Bank. Reg. 185. A judgment confessed in fraud of creditors will be enjoined. Irving v. Hughes, 16 Am. L. R. 209; s. c. 2 Bank. Reg. 20. (g) An insolvent debtor commits an act of bankruptcy by confessing a judgment and allowing his property to be taken on an execution issued thereon, with intent to give a preference; Ex parte Craft, 1 Bank. Reg. 89; Ex parte Dibblee, 2 Bank. Reg. 185; and where a firm is insolvent, it is an act of bankruptcy for a member thereof to suffer its property to be taken on legal process, with intent to give a preference. Ex parte Black, 1 Bank. Reg. 81. But suffering a sale to take place, from inability to re
sist, is not an act of bankruptcy, though the effect be to give a preference. Rankin v. Florida, Atlantic and Gulf Central Railroad Co., 1 Bank. Reg. 196.
(4) A fraudulent stoppage of payment of his commercial paper, by a banker, merchant, etc., is, per se, an act of bankruptcy. Ex parte Wells, 16 Am. L. R. 163; 8. c. 1 Am L. T. Bank. 20; Ex parte Cowles, 1 West. Jur. 367; s. c. 1 Bank. Reg. 42. A stoppage of payment is not an act of bankruptcy, unless originally fraudulent, and continued for fourteen days. Ex parte Jersey City Window Glass Co., 16 Am. L. R. 419; Ex parte Leeds, Ibid. 693; s. c. 1 Bank. Reg. 138. A mere stoppage of payment, continued for fourteen days, is not, unless fraudulent, an act of bankruptcy. Gillies r. Cone, 2 Bank. Reg. 10; Doan v. Compton, 2 Bank. Reg. 182. But a stoppage continued for fourteen days is primâ facie fraudulent, and casts the burden of proof upon the debtor. Ex parte Jersey City Window Glass Co., 16 Am. L. R. 419; Ex parte Ballard, 2 Bank. Reg. 84; Hensheimer v. Shea, 1 Chicago Leg. News 345; s. c. 16 Pitts. L. J. 85; 2 Am. L. T. 107. If commercial paper be not paid, when due, and the maker is without adequate legal excuse, this, if continued for fourteen days, is an act of bankruptcy. Ex parte Thompson, 1 Chicago Leg. News 345; 8. c. 16 Pitts. L. J. 85; 2 Am. L. T. 107. See Davis v. Armstrong, 3 Bank. Reg. 7.
(i) The non-payment, at maturity, of promissory notes which are not commercial paper, is not an act of bankruptcy. Ex parte Lowenstein, 2 Bank. Reg. 99. A promissory note for the unconditional payment of a certain sum of money, to the order of the payee, is commercial paper, within the meaning of the act. Heinsheimer v. Shea, 1 Chicago Leg. News 345; 8. c. 2 Am. L. T. 107; 16 Pitts. L. J. 85.
(k) A stoppage, not fraudulent, becomes an act of bankruptcy by continuing for fourteen days. Ex parte Wells, 16 Am. L. R. 163; s. c. 1 Am. L. T. Bank. 20; Ex parte Weikert, 3 Bank. Reg. 5; contrà, Ex parte Jersey City Window Glass Co., 16 Am. L. R. 419; Ex parte Leeds, Ibid. 693.
(1) The petition should state the facts clearly, or the debtor may decline to answer it. Ex parte Randall, 2 Am. L. T. Bank. 69; s. c. 3 Bank. Reg. 4. If defective, it may be amended, after argument, and before judgment thereon. Ex parte Waite, 1 Bank. Reg. 84. An amendment, merely formal, will be allowed; but not one going to the whole foundation of the proceedings. Ex parte Craft, 2 Bank. Reg. 44. Thus, an amendment introducing entirely new acts of bankruptcy, will be disallowed. Reed v. Crowley, 1 Am. L. T. Bank 79; s. c. 1 Bank. Reg. 137. (m) A sole creditor fully secured by judgment, if a cloud on the title be removed, is not a proper petitioning creditor in bankruptcy. Avery v. Johann, 2 Am. L. T. Bank. 92.
(n) Whilst the adjudication of bankruptcy stands unrevoked, all inquiry into the validity of the petitioning creditor's debt is precluded. Ex parte Fallon, 2 Bank. Reg. 92.
(0) So amended by act 27 July 1868. 15 Stat. 228. (p) A creditor who has accepted a security from an insolvent debtor, will not be permitted to relinquish his security, and prove his debt. Ex parte Princeton, 1 Bank. Reg. 178. Ex parte Colman, 2 Bank. Reg. 172. But this clause only affects the debt sought to be preferred; not others owing to the samə creditor. Ex parte Arnold, 2 Bank. Reg. 61.
2 Mar. 1867 40. Proceedings on the petition.
Arrest of debtor.
Service of order to show cause.
88. Upon the filing of the petition authorized by the next preceding section, if it shall appear that sufficient grounds exist therefor, the court shall direct the entry of an order, requiring the debtor to appear and show cause, at a court of bankruptcy to be holden at a time to be specified in the order, not less than five days from the service thereof, why the prayer of the petition should not be granted; and may also, by its injunctions, restrain the debtor, and any other person, in the meantime, from making any transfer or disposition of any part of the debtor's property, not excepted by this act from the operation thereof, and from any interference therewith. (a)
89. And if it shall appear that there is probable cause for believing that the debtor is about to leave the district or to remove or conceal his goods and chattels or his evidence of property, or make any fraudulent conveyance or disposition thereof, the court may issue a warrant to the marshal of the district, commanding him to arrest the alleged bankrupt and him safely keep, unless he shall give bail to the satisfaction of the court, for his appearance from time to time, as required by the court, until the decision of the court upon the petition, or the further order of the court, (b) and forthwith to take possession provisionally of all the property and effects of the debtor, and safely keep the same until the further order of the court.
Ibid. 42. Decree of bankruptcy.
90. A copy of the petition and of such order to show cause shall be served on such debtor, by delivering the same to him personally, or leaving the same at his last or usual place of abode; or, if such debtor cannot be found, or his place of residence ascertained, service shall be made by publication in such manner as the judge may direct. No further proceedings, (c) unless the debtor appear and consent thereto, shall be had, until proof shall have been given, to the satisfaction of the court, of such service or publication; and if such proof be not given on the return day of such order, the proceedings shall be adjourned, and an order made that the notice be forthwith so served or published.
91. On such return day, or adjourned day, if the notice has been duly served or published, or shall be waived by the appearance and consent of the debtor, (d) the return of order. court shall proceed summarily to hear the allegations of the petitioner and debtor, (e)
Ibid. 2 41. Proceedings on
and may adjourn the proceedings from time to time, on good cause shown; and shall, if the debtor, on the same day, so demand in writing, (g) order a trial by jury at the first term of the court at which a jury shall be in attendance, to ascertain the fact of such alleged bankruptcy; and if upon such hearing or trial, (h) the debtor proves to the satisfaction of the court or of the jury, as the case may be, that the facts set forth in the petition are not true, or that the debtor has paid and satisfied all liens upon his property, in case the existence of such liens were the sole ground of the proceeding, the proceedings shall be dismissed and the respondent shall recover costs.
92. If the facts set forth in the petition are found to be true, or if default be made by the debtor to appear pursuant to the order, upon due proof of service thereof being made, the court may adjudge the debtor to be a bankrupt, and, as such, subject to the provisions of this act, and shall forthwith issue a warrant to take possession of the estate of the debtor. The warrant shall be directed, and the property of the debtor shall be taken thereon, and shall be assigned and distributed in the same manner and with similar proceedings to those herein before provided for the taking possession, assignment and distribution of the property of the debtor upon his own petition.(i) The order of adjudication of bankruptcy shall require the bankrupt forthwith, or within such number of days, not exceeding five after the date of the order or notice thereof, as shall by the order be prescribed, to make and deliver, or transmit by mail, post-paid, to the messenger, a schedule of the creditors and an inventory of his estate
(a) The district court in bankruptcy may enjoin a judgmentcreditor from proceeding in a state court. Ex parte Reed, 24 Leg. Int. 196; s. c. 6 Int. R. Rec. 21; Ex parte Jacoby, Ibid. 149; Ex parte Metcalf, Ibid. 223; Irving v. Hughes, 16 Am. L. R. 209. But see Ex parte Campbell, 16 Am. L. R. 100; s. c. 6 Int. R. Rec. 174; Ex parte Burns, 16 Am. L. R. 105; s. c. 6 Int. R. Rec. 182; Ex parte Donaldson, 16 Am. L. R. 213; Ex parte Hazleton, 2 Bank. Reg. 12; Ex parte Hirsch, Ibid. 1. An injunction may be issued, under this clause, without notice. Ex parte Muller, 2 Am. L. T. Bank. 33; and where the alleged act of bankruptcy is denied, a jury trial ordered, and an injunction awarded to restrain any disposition of the debtor's property in the meantime, such injunction will not be dissolved, on affidavits, before trial. Ex parte Metzler, 1 Ben. 356.
(b) As soon as this act went into operation, it, ipso facto, suspended all action upon future cases arising under the state insolvent laws. Commonwealth v. O'Hara, 6 Int. R. Rec. 125; s. c. 15 Am. L. R. 765; Day v. Bardwell, 97 Mass. 246; Van Nostrand v. Barr, 2 Bank. Reg. 154; Tobin v. Trump, 26 Leg. Int. 317. But see Meekins v. Creditors, 19 La. An. 497; Ex parte Hawkins, 17 Am. L. R. 205; Sedgwick v. Place, 1 Bank. Reg. 204.
(c) This is intended of proceedings upon the petition and against the debtor; not of collateral proceedings by or against
third persons, or even the debtor. Ex parte Muller, 2 Am. L. T. Bank. 33.
(d) A debtor not served may appear by attorney and waive any other notice. Ex parte Weyhausen, 1 Ben. 597.
(e) An answer to the petition of creditors denying the commission of the acts of bankruptcy, and averring that the debtors should not be declared bankrupt for any cause therein alleged, amounts to a general issue, and no replication is necessary. Ex parte Dunham, 2 Bank. Reg. 9. If the debtors withdraw their appearance, and suffer a default, it is not an admission of the truth of the allegations contained in the petition. Ex parte Lathrop, 3 Bank. Reg. 11.
(g) A response to the rule to show cause, which denies the acts of bankruptcy charged in the petition, and demands a trial by jury, is sufficient, without a formal answer. Phelps v. Clasen, 2 West. Jur. 221. See Ex parte Sutherland, 1 Bank. Reg. 140; Ex parte Pupke, 1 Ben. 342.
(h) The burden of proof is on the creditor; he must establish the debt, before giving evidence of acts of bankruptcy. Brock v. Hoppock, 2 Bank. Reg. 2.
(i) Where there is no opposition, a discharge may be granted to an involuntary bankrupt. Ex parte Clark, 3 Bank. Reg. 3.
in the form and verified in the manner required of a petitioning debtor by section "eleven." (a)
2 March 1867.
default of appear
93. If the debtor has failed to appear in person, or by attorney, a certified copy of Proceedings in the adjudication shall be forthwith served on him, by delivery or publication in the manner herein befere provided for the service of the order to show cause; and if the bankrupt is absent or cannot be found, such schedule and inventory shall be prepared by the messenger and the assignee, from the best information they can obtain. If the petitioning creditor shall not appear and proceed on the return day, or adjourned day, the court may, upon the petition of any other creditor, to the required amount, proceed to adjudicate on such petition, without requiring a new service or publication of notice to the debtor.
XIV. OF THE SUPERSEDEAS.
14 Stat. 538.
94. If, at the first meeting of creditors, or at any meeting of creditors to be 2 Mar. 1867 2 43. specially called for that purpose,(b) and of which previous notice shall have been given, for such length of time and in such manner as the court may direct, three- Proceedings may be superseded by fourths in value of the creditors, whose claims have been proved, shall determine and agreement of resolve that it is for the interest of the general body of the creditors that the estate creditors. of the bankrupt should be wound up and settled, and distribution made among the creditors by trustees, under the inspection and direction of a committee of the creditors, it shall be lawful for the creditors to certify and report such resolution to the court, and to nominate one or more trustees to take and hold, and distribute the estate, Nomination of under the direction of such committee.
on filing consent
95. If it shall appear to the court, after hearing the bankrupt and such creditors as Court to confirm. may desire to be heard, (c) that the resolution was duly passed, and that the interests of the creditors will be promoted thereby, it shall confirm the same; (d) and upon the Estate to be conexecution and filing, by or on behalf of three-fourths in value of all the creditors veyed to trustees whose claims have been proved, of a consent that the estate of the bankrupt be wound of creditors. up and settled by said trustees according to the terms of such resolution, the bankrupt, or his assignee in bankruptcy, if appointed, as the case may be, shall, under the direction of the court, and under oath, convey, transfer and deliver all the property and estate of the bankrupt to the said trustee or trustees, who shall, upon such conveyance and transfer, have and hold the same in the same manner, and with the same powers and rights, in all respects, as the bankrupt would have had or held the same if no proceedings in bankruptcy had been taken, or as the assignee in bankruptcy would have done had such resolution not been passed; and such consent and the proceedings thereunder shall be as binding in all respects on any creditor whose debt is provable, who has not signed the same, as if he had signed it, and on any creditor whose debt, if provable, is not proved, as if he had proved it; and the court, by Jurisdiction of order, shall direct all acts and things needful to be done to carry into effect such the court over resolution of the creditors; and the said trustees shall proceed to wind up and settle the estate under the direction and inspection of such committee of the creditors, for the equal benefit of all such creditors, and the winding up and settlement of any estate under the provisions of this section shall be deemed to be proceedings in bankruptcy under this act; and the said trustees shall have all the rights and powers of Powers of trus assignees in bankruptcy.
(a) So amended by act 27 July 1868. 15 Stat. 228. (b) After an assignee has been appointed, at a subsequent meeting of creditors, they may make an arrangement by trust deed, to have the assignee removed and a trustee appointed in his stead. Ex part Jones, 2 Bank. Reg. 20.
96. The court, on the application of such trustees, shall have power to summon Examination of and examine, on oath or otherwise, the bankrupt and any creditor, and any person the bankrupt indebted to the estate, or known or suspected of having any of the estate in his possession, or any other person whose examination may be material or necessary to aid the trustees in the execution of their trust, and to compel the attendance of such persons and the production of books and papers, in the same manner as in other proceedings in bankruptcy under this act; and the bankrupt shall have the like right to apply Discharge. for and obtain a discharge, after the passage of such resolution and the appointment of such trustees, as if such resolution had not been passed, and as if all the proceedings had continued in the manner provided in the preceding sections of this act.
ings in bank
97. If the resolution shall not be duly reported, or the consent of the creditors shall when proceednot be duly filed, or if, upon its filing, the court shall not think fit to approve thereof, ruptcy to be rethe bankruptcy shall proceed as though no resolution had been passed, and the court sumed. may make all necessary orders for resuming the proceedings. And the period of time which shall have elapsed between the date of the resolution and the date of the order
(c) In case of opposition, the creditors are the moving parties Ex parte The American Water-proof Cloth Co., 1 Ben. 526. (d) It is a substantial objection to the approval of the resolu tion, that a committee was composed of two only, one of whom is the trustee. Ex parte Stillwell, 2 Bank. Reg. 164.