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2 March 1867,
veyance is made in fraud of the provisions of this act, the same shall be void, and the 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 con: ruptcy, 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.() 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- void. cation for discharge of the bankrupt, shall be void ; and if any creditor shall obtain Penalty for en. any sum of money, or other goods, chattels or security, from any person, as an induce- teringin to 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 estate.
XII. PARTNERSHIPS AND CORPORATIONS. 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 nerships. 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
15 Stat. 534.
(a) If the bankrupt have fraudulently confessed a judgment, perty fraudulently conveyed before the passage of the act. in contemplation of bankruptcy, with a view to give a preference Bradshaw v. Klein, 16 Am. L. R. 505. to the juigment-creditor, and the latter had reasonable cause to (c) Ex parte Deane, 2 Bank. Reg. 29; Ex parte Hunt, 2 Bank. believe that such was the intent, he may be enjoined, either by Reg. 166. the district court in bankruptry, or on a distinct proceeding in (d) Two or more partners may be adjudged bankrupts, upon the circuit court. Irving v. Hughes, 16 Am. L. R. 209. But a the petition of one or more of them. Ex parte Crockett, 2 Bank. judgment cannot be assailed in the bankrupt court; the assignee Reg. 75. But all the members of a firm must join in, or assent to, and creditors must resort to the state court to test its validity. a petition to have the firm declared bankrupt, or notice must be Ex parte Burns, 16 Am. L. R. 105; 8.c. 6 Int. R. Rec. 182; but given to those who dissent, as in case of an involuntary banksee Ex parte Schich, Ibid. 183. A lien acquired by the levy of ruptcy. Ex parte Lewis, 1 Bank. Reg. 19. And where a mem. an execution is not disturbed by proceedings in bankruptcy. ber of an existing firm files an individual petition in bankruptcy, Ex parte Schnepf, 16 Am. L. R. 204; 8. C. 6 Int. R. Rec. 214. The and there are firm debts and firm assets, the firm must be de assignee cannot recover the value of property transferred by the clared bankrupt, before a member thereof can be discharged from bankrupt within four months of the adjudication, without show- its liabilities. Ex parte Winkens, 2 Bank. Reg. 113. He may, ing that a preference was thereby intended. Wadsworth v. however, after adjudication, amend his petition 80 as to bring in Tyler, 2 Bank Reg. 101: see Tuttle v. Truax, 1 Bank. Reg. 169; his copartner, in order to a discharge of the firm debts. Ex Ex parte Foster, 2 Bank. Reg. $1; Ex parte Meyer, Ibid. 137; Ex parte Little, 1 Bank. Reg. 74. parto Locke, Ibid. 123; Ex parte Lawson, Ibid. 125. A jndgment (e) Where a firm is insolvent, it is an act of bankruptcy, for å confessed by an insolvent debtor, is not affected by his subsequent member thereof, to suffer its property to be taken on legal probankruptcy, if the creditor had no notice of his insolvency. Excess, with intent to give a prefereure to a creditor of the firm; parte Wright, 2 Bank. Reg. 155. It seems, that knowledge of and the net proceeds of the sale of such property, in the hands such insolvency by the creditor's attorney, is not, necessarily, of the sheriff, will be ordered to be paid to the assignee, where it notice to him. Ibid. Where the members of an insolvent firm appears that the creditor had reasonable cause to believe that make a conveyance of all their joint personal property to certain the firm was insoltent. Ex parte Black, 1 Bank. Reg. 81. creditors, who have reasonable cause to believe that the firm is (g) Where a member of a late firm files his individual petition insolvent, and within four months thereafter one of the firm is in bankruptcy, all his creditors can prove their claims, whether adjudged a bankrupt, on his own petition, his individual assignee individual or partnership. Ex parte Frear, 1 Bank. Reg. 201. A cannot avoid the conveyance of the firm, as an intended preference. firm creditor holding the potes both of the firm and of the inForsaitb r. Merritt, 3 Bank. Reg. 11.
dividual partners, for a firm debt. is entitled to prove his claim (b) A bona fide transfer of partnership effects by one member on the firm notes, against the joint estate, and on the individual of'the Arm to another, vests the title in the transferee as his notes, against the separate estates of the makers. Mead o. Bank separate estate. Ex parte Byrne, 16 Am. L. R. 199; 8. c. 1 Bank. of Fayetteville, 16 Am. L. R. 818; 8. C. 2 Bank. Reg. 65. Reg. 122. A bona fide assignment for the benefit of creditors is (h) A separate creditor who has proved his claim against one good against the assignee. Ex parte Arlenge. 1 Bank. Reg. 195; of the partners, bas no right to participate in the choice of an Sedgwick r. Place, Ibid. 204; Hawkins' Appeal. 34 Conn. 518. It assignee of the firm. Ex parte Phelps. 1 Bank. Reg. 139. The is of no consequence whether a preference given to a creditor choice must be mude by the greater number of the firm-creditors was voluntary or the result of threats or coercion: in either case, who have proved their debts. Ex parte Scheiffer, 2 Bank. Reg.
Foster v. Hackley, 2 Am. L. T. Bank. 8; Wilson v. Brinkman, 2 Baok. Reg. 149. The assignee may recover pro
it is void.
Joint stock com
2 March 1867. separate creditors; (a) and if there shall be any balance of the separate estate of any Separate estates. 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 ; Discharge. 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 ;(0) 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) Ibid. 237. 85. The provisions of this act shall apply to all moneyed business or commercial
corporations (d) and joint stock companies ; and upon the petition of any officer of any panies and corporations.
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 persous.
XIII. INVOLUNTARY BANKRUPTCY. 2 Mar. 1867 % 39. 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 bankruptcy. absent; or shall conceal himself to avoid the service of legal process,(9) in any action
for the recovery of a debt or demand provable under this act: Fraudulent re- 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)
14 Stat. 536.
Whit to be dieunnd acts of
moval or transfer of property.
(a) The partnership and separate estates are to be administered (c) A district court has no power, on the petition of copartners, according to this section. Ex parte Frear, 1 Bunk. Keg. 201. one of whom resides in another district, and has no place of busi. The United States are not entitled to priority of payment out of ness within the jurisdiction, to decree such copartner a bankrupt. the firm assets, on a bond executed by the individual members Ex parte Praukard, 1 Bank. Reg. 51. And under a petition filed as accommodation sureties. Ex parte Webb, 9 Int. R. Rec. 169; by one member of a firm, his copartners, residing in another dis8. € 2 Bank. Reg. 183; 2 Am. L. T. Bank. 87. Where there are trict, cannot come in and ask for a discharge. Ex parte Boylan, both joint and separate debts proved, on a separate petition, the 1 Ben. 206. joint creditors are not entitled to participate in the distribution (d) A corporation created for the purpose of carrying on any of the assets, until the separate creditors are paid in full. Ex lawful business, defined by its charter, and clothed with power parte Byrne, 16 Am L. R. 199; 8. c. 1 Bank. Reg. 122. The to do so, is such an one as is contemplated by the act. Rankin obligee in a joint and several bond given by the members of a v. Florida, Atlantic and Gulf Central Railroad Co., 1 Bank. Reg. firm, is entitled to dividends out of the several assets; the firm 196. and its several members having been adjudged bankrupt. Ex (C) If the debtor bo a married woman, having a separate estate, parte Bigelow, 2 Bank. Reg. 121. Where there are both indi- it must appear upon the face of her notes that she intended to viilual and firm creditors, but the assets are individual only, bind her separate estate, or there must be an allegation that they though mainly consisting of goods purchased by the bankrupt were given for the benefit of such separate estate. Ex parte from the firm, on its dissolution, prior to the bankruptey, and Howland, 2 Bank. Reg. 114. being principally the same goods, in the purchase of which the (g) See Barnes v. Billington, 1 W. C. C. 29. partnership debts had originated, the firni creditors will be en. (h) A general assignment for the benefit of creditors, made titled to be paid pari passu with the individual creditors. Ex prior to the passage of the act. is not an act of bankruptcy. Es parte Jewett, 16 Am. i. R. 291 : 8. c. 1 Bank. Reg. 130. But parte Wells, 16 Am. L. R. 163; 8. c. 6 Int. R. Rec. 181. Nor is where one of two partners sells his interest in the concern to one made since its passage, unless with intent to liuder, delay his copartner, taking his notes therefor, and the latter becomes or defraud creditors, or to defeat or delay the operation of the bankrupt. leaving some of the notes unpaid, the former cannot bankrupt law. Langley v. Perry, 17 Am. L. R. 427: 8. c. 2 Bank. receive a dividend, until all the firm debts have been paid. Ex Reg. 180; reversing 8. c. 16 Am. L. R. 429 ; 1 Bank. Reg. 155. parte .Jewett, 16 Am. L. R. 294; 8. c. 1 Bank. Reg. 131.
And see Grow v. Ballard, 2 Bank. Reg. 69; Farrin v. Crawford, 2 (6) Where a member of a late firm files his individual petition Bank. Reg. 181. An assignment, with intent to hinder, delay or in bankruptcy, and inserts in his schedules debts contracted by defraud creditors, is an act of bankruptcy, whetber the assignor the firm, and there are no partnership assets to be administered, be solvent or insolvent. Ex parte Randall, 2 Am. L. T. Bank. he will be entitled to be discharged from all his debts, individual 69; 8. c. 3 Bank. Reg. 4. An assignment, by an instrument void and copartnership. Ex parte Abbe, 16 Ain. L. R. 824; 8. c. 2 for want of a stamp, will not have such effect. Ex parte DunBank. Reg. 26; and see Ex parte Bidwell, 2 Bank. Reg. 78. ham, 2 Bank. Reg, 9. A sale of a stock of goods, not made in the
Or who has been arrested and held in custody under or by virtue of mesne process or 2 March 1867. 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 process, becue 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 Frandulent pre
ferences. insolvency,(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 act:
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 puy-' 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 con- signees. trary to this act, provided the person receiving such payment or conveyance had reasonable cause to believe that a fraud on this act was intended,(0) and that the debtor was insolvent; and such creditor shall not be allowed to prove his debt in bankruptcy.(p) usnal and ordinary course of the debtor's business, is prima facie sist, is not an act of bankruptcy, though the effect be to give a fraudulent. Ex parte Deane, 2 Bank. Reg. 29; and see Ex parte preforence. Rankin v. Florida, Atlantic and Gulf Central Rail. Cowles, 1 West. Jur. 367 ; 8. c. 1 Bank. Reg. 42. A conveyance by road Co., 1 Bank. Reg. 196. a father to his son, in consideration of the father's support, is an (1) A fraudulent stoppage of payment of his commercial paper, Act of bankruptcy. Avery v. Johann, 2 Am. L. T. Bank. 92. See by a banker, merchant, etc., is, per se, an act of bankruptcy. Ex Brork v. Terell, 2 Bank. Reg. 190.
parte Wells, 16 Am. L. R. 163; 8. c. 1 Am L. T. Bank. 20: Ex (?) If a man's debts cannot be made in full out of his property parte Cowles, 1 West. Jur. 367; 8. c. 1 Bank. Reg. 42. A stoppazo by jevy and sale on execution, he is insolvent within the mean- of payment is not an act of bankruptcy, unless originally frauding of the bankrupt law. Ex parte Randall, 2 Am. L. T. Bank. ulent, and continued for fourteen days. Ex parte Jersey City 69; 8. c. 3 Bank. Reg. 4. Merchants not able to pay all their Window Glass Co., 16 Am. L. R. 419; Ex parte Leeds, Ibid. 693 ; s.c. debts in the usual and ordinary course of business, as persons Bank, Reg. 138. A mere stoppage of payment, continued for carrying on trade usually do, are insolvent within the meaning fourteen days, is not, unless fraudulent, an act of bankruptcy. of the statute. Ex parte Lewis, 2 Bank. Reg. 145; 8. c. 2 Am. L. Gillies v. Cone, 2 Bank. Reg. 10; Doan v. Compton, 2 Bauk. Keg. T. Bank. 75; 16 Pitts. L. J. 45; Wilson v. Brinkman, 2 Bank. Reg. 182. But a stoppage continued for fourteen days is primå focie 149; Ex parte Wright, Ibid. 155; Morgan v. Mastick, Ibid. 163; fraudulent, and casts the burden of proof upon the debtor. Ex Ex parte Dibblee, Ibid. 185.
parte Jersey City Window Glass Co., 16 Am. L. K. 419; Ex parto (0) A mortgage given by a debtor before becoming insolvent, Ballard, 2 Bank. Reg. 81; Hensheimer v. Shea, 1 Chicago Leg. and not in contemplation of bankruptcy, though with intent to News 345 ; . c. 16 Pitts. L. J. 86; 2 Am. L. T. 107. If commercial prefer the mortgage-creditor, is not an act of bankruptcy. Ex paper be not paid, when due, and the maker is without adeqnate parte Dunham, 2 Bank. Reg. 9. But every failing debtor who legal excuse, this, if continued for fourteen days, is an act of gives a preference to a part of his creditors, thereby commits an bankruptcy. Ex parte Thompson, 1 Chicago Leg. News 345; 8. C. act of bankruptcy. Ex parte Drummond, 1 Bank. Reg. 10. The 16 Pitts. L. J. 85; 2 Am. L. T. 107. See Davis v. Armstrong, 3 denial of the bankrupt himself is not sufficient to disprove that a Bank. Reg. 7. general assignment was made in contemplation of bankruptcy. (i) The non-payment, at maturity, of promissory notes which Ex parte Brodhead, 2 Bank. Reg. 93.
are not commercial paper, is not an act of bankruptcy. Ex parte (c) A payment by an insolvent debtor, to a particular creditor, Lowenstein, 2 Bank. Reg. 99. A promissory note for the unconwith intent to give a preference, is an act of bankruptcy. Mor- ditional payment of a certain sum of money, to the order of the gan v. Mastick, 2 Bank. Reg. 163; Farrin r. Crawford, 2 Bank. payee, is commercial paper, within the meaning of the act. Reg. 181. There is no difference between a fiduciary debt and an Heinsheimer v. Shea, 1 Chicago Leg. News 315; 8. C. 2 Am. L. T. ordinary one, as respects a payment thereof with intent to give 107; 16 Pitts. L. J. 85. a preference, so as to constitute an act of bankruptcy. Ex parto (k) A stoppage, not fraudulent, becomes an act of bankruptcy Dibblee, 2 Bank. Reg. 185.
by continuing for fourteen days. Ex parte Wells, 16 Am. L. R. (d) The execution, by a firm of machinists, of chattel mort- 163; 8. c. 1 Am. L. T. Bank. 20; Ex parte Weikert, 3 Bank. Reg. gages on their tools and machinery, to secure certain creditors, 5; contrd, Ex parte Jersey City Window Glass Co., 16 Am. L. R. shortly followed by a suspension of payment, is an act of bank 419; Ex parte Leeds, Ibid. 693. ruptcy. Ex parte Rogers, 2 Bank. Reg. 129. The return of goods (1) The petition should state the facts clearly, or the debtor ordered, pending negotiations for an extension, is not an act of may decline to answer it. Ex parte Randall, 2 Am. L. T. Bank. bankruptcy. Doan v. Compton, 2 Bank. Reg. 182.
69; 8. c. 3 Bank. Reg. 4. If defective, it may be amended, after (e) The confession of a fraudulent judgment is an act of bank- argument, and before judgment thereon. Ex parte Waite, i ruptcy. Ex parte Schick, 6 Int. R. Rec. 183; and a confession Bank. Reg. 84. An amendment, merely formal, will be allowed; of judgment by an insolvent, if the intent be to give a preference, but not one going to the whole foundation of the proceedings. is an act of bankruptcy, without regard to any question of fraud. Ex parte Craft, 2 Bank. Reg. 41. Thus, an amendment introEs parte Sutherland, 1 Bank. Reg. 140; Ex parte Sanger, 2 Bank. ducing entirely new acts of bankruptey, will be disallowed. Reg. 164; 8. c. 2 Am. L. T. Bank. 80. But in deciding whether Reed v. Crowley, 1 Am. L. T. Bank 79; s. c. 1 Bank. Reg. 137. the giving of a warrant to confess judgment be an act of bank- (m) A sole creditor fully secured by judgment, if a cloud on riptey, the character of the debtor's business may be taken into the title be removed. is not a proper petitioning creditor in bank. consideration. Ex parte Leeds, 16 Am. L. R. 693; 8. c. 1 Bank. ruptcy. Avery v. Johann, 2 Am. L. T. Bank. 92. Reg. 138; Ex parte Dibbleo, 2 Bank. Reg. 185. A judgment con- in) Whilst the adjudication of bankruptcy stands unrevoked, fessod in fraud of creditors will be enjoined. Irving v. Hughes, all inquiry into the validity of the petitioning creditor's debt is 16 Am. L. R. 209; 8. C. 2 Bank. Reg. 20.
precluded. Ex parte Fallon, 2 Bank. Reg. 92. (g) An insolvent debtor commits an act of bankruptcy by con- (0) So amended by act 27 July 1868. 15 Stat. 228. feasing a judgment and allowing his property to be taken on an (p) A creditor who has accepted a security from an insolvent execution issued thereon, with intent to give a preference; Ex debtor, will not be permitted to relinquish his security, and parto Cratt, 1 Bank. Reg. 89; Ex parta Dibblee, 2 Bunk. Reg. 185; prove his debt. Ex parte Princeton, I Bank. Reg. 178. Ex and where a firm is insolvent, it is an act of bankruptcy for a parte Colman, 2 Bank. Reg. 172.
But this clause only affects merober thereof to suffer its property to be taken on legal pro- the debt sought to be preferred: not others owing to the Bano cess, with intent to give a preference. Ex parte Black, 1 Bank. creditor. Ex parto Aruold, 2 Bank. Reg. 61. Reg. 81. But suffering a sale to take place, from inability to re
Arrest of debtor.
to show cause.
2 Mar. 1867 % 40. 88. Upon the filing of the petition authorized by the next preceding section, if it Proceedings on
shall appear that sufficient grounds exist therefor, the court shall direct the entry of the petition.
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 serInjunctions. vice thereof, why the prayer of the petition should not be granted ; and may also, by
its injunctions, re ain 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,(6) 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. Service of order 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. Ibid. & 41. 91. On such return day, or adjourned day, if the notice has been duly served or Proceedings on
published, or shall be waived by the appearance and consent of the debtor,(d) the return of ordor. court shall proceed summarily to hear the allegations of the petitioner and debtor,(e)
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. Ibid. 2 42. 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 ruptcy. 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 hereinbefore 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 forth with, 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
Decree of bank
(a) The district court in bankruptcy may enjoin a judgment- third persons, or even the debtor. Ex parte Muller, 2 Am. L. T. creditor froin proceeding in a state court. Ex parte Reed, 24 Leg. Bank. 33. Int. 190; 8. c. 6 Int. R. Rec. 21 ; Ex parte Jacoby, Ibid. 149; Ex (d) A debtor not served may appear by attorney and waive any parte Metcalf, Ibid. 2:23; Irving v. llughes, 16 Am. L. R. 209. other notice. Ex parte Weyhausen, 1 Ben. S97. But see Ex parte Campbell, 16 Am. L. R. 100; 8. c. 6 Int. R. Rec. (e) An answer to the petition of creditors denying the commis 174; Ex parte Burns, 16 Am. L. R. 105; 8. c. 6 Int. R. Rec. 182; sion of the acts of bankruptcy, and averring that the debtors Ex parto Donaldson, 16 Am. L. R. 213; Ex parte Hazleton, 2 should not be declared bankrupt for any cause therein alleged, Bank. Reg. 12; Ex parte Hirsch, Ibid. 1. An injunction may amounts to a general issue, and no replication is necessary. Es be issued, under this clause, without notice. Ex parte Muller, 2 parte Dunham, 2 Bank. Reg. If the debtors withdraw their Am. L. T. Bank. 33; and where the alleged act of bankruptcy is appearance, and sullor a default, it is not an admission of the denied, a jury trial ordered, and an injunction awarded to re- truth of the allegations contained in the petition. Ex parte strain any disposition of the debtor's property in the meantime, Lathrop, 3 Bank. Reg 11. such injunction will not be dissolvod, on affidavits, before trial. (g) A response to the rule to show cause, which denies the acts Ex parte Metzler, 1 Ben. 356.
of bankruptcy charged in the petition, and demands a trial by (hi As soon as this act wont into operation, it, ipso facto, sus- jury, is sutlicient, without a formal answer. Phelps v. Clasen, ? pended all action upon future cases arising under the state insol- West. Jur. 221. See Ex parto Sutherland, 1 Bank. Reg. 140; Ex vent laws. Commonwealth v. O'Hara, 6 Int. R. Rec. 125; 8, c. 15 parte Pupke, 1 Ben 312. Am. L. R. 765; Day v. Bardwell, 97 Mass. 246; Van Nostrand o. (h) The burden of proof is on the creditor; he must establish Barr, 2 Bank. Reg. 154; Tobin v. Trump, 26 Leg. Int. 317. But the debt, before giving evidence of acts of bankruptcy. Brock r. see Meekins c. Creditors, 19 La. An. 497; Ex parte Hawkins, 17 Hoppock, 2 Bank. Reg. 2. Am. L. R. 205; Segwick v. Place, 1 Bank Reg. 204.
(i) Where there is no opposition, a discharge may be granted (c) This is intended of proceedings upon the petition and to an involuntary baukrupt. Ex parte Clark, 3 Bank. Reg. 3. against the dobtor; not of collateral proceeding by or against
2 March 1867.
14 Stat 538.
in the form and verified in the manner required of a petitioning debtor by section "eleven."(a) 93. If the debtor has failed to appear in person, or by attorney, a certified copy of Proceedings in
default of appear the adjudication shall be forthwith served on him, by delivery or publication in the manner hereinbefere 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. 94. If, at the first meeting of creditors, or at any meeting of creditors to be 2 Mar. 1867 a 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 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.
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
on filing consent 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 courteser 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 bankruptey under this act; and the said trustees shall have all the rights and powers of Powers of trug. assignees in bankruptcy.
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 and others. 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.
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, the 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 (a) So amended by act 27 July 1868. 15 Stat. 228.
(c) In case of opposition, the creditors are the moving parties (b) After an assignee has been appointed, at a subsequent Ex parte The American Water-proof Cloth Co., 1 Ben. 526. meeting of creditors, they may make an arrangement by trust (d) It is a substantial objection to the approval of the resolu deeri, to have the assignee removed and a trustee appointed in tion, that a committee was composed of two only, one of whom his stead. Ex part Jones, 2 Bank. Reg. 20.
is the trustee. Ex parte Stillwell, 2 Bauk. Reg. 164.
ings in bank ruptcy to be re