great difficulty, and any failure to perform it satisfactorily is not to be charged wholly to the editor. For example: Section 3 defines acts of bankruptcy, and of these voluntary preferences form an important part; but that subject is treated in section 60, and again in sections 67 and 70. So actions by trustees to set aside fraudulent transfers are referred to in several sections; and this is true of other provisions. To meet this difficulty, which rendered a perfect classification impossible, cross-references will be found; and an unusually comprehensive index will serve as a further guide.

It will be observed that in repeated instances there is a conflict between the decisions here compiled. It is quite alien to the purpose of this work to weigh, reconcile or distinguish such opinions. The reader will bear in mind that for the most part the rules of equity jurisprudence govern proceedings in bankruptcy, and will apply the principle that in such cases the decision is limited by the particular facts in the case. Nothing is here attempted except a reference to the authority.

It is not to be predicated of any work of this character that it will be free from imperfections; but the conviction is confidently expressed that the opinions of the federal courts on the subject of bankruptcy have been exhaustively collated and accurately digested, and that the work will be of considerable assistance to the bench and bar, and equally to students, in advising them of the established principles of jurisprudence respecting this important subject.

The editor desires to acknowledge the assistance of Hon. Alex. C. Botkin, chairman of the Commission to Revise and Codify the Criminal and Penal Laws of the United States, who rendered such services as his official duties would permit in the preparation and arrangement of the notes.

New York, Dec. 20, 1898.

INTRODUCTORY.

The etymology of the word "bankruptcy" carries us to Florence when it occupied a prominent place among the commercial cities of the world. It was the custom there, when a merchant failed to pay his debts, to break his bench or counter, and to that usage is to be traced the derivation of the word that has come to be attached to systems of legislation that possess no slight importance in the history of the race.

It should be here stated, however, that laws respecting insolvency, or the willful refusal of debtors to discharge their obligations, are older than the word. Such ordinances date back at least to the Draconian code, which was in force six centuries before the Christian era, when Florence was a village of huts on the marshes of the Arno. The Twelve Tables dealt with this subject with characteristic severity, and among other provisions permitted creditors to dismember the body of their debtor.

But "bankruptcy" has a more restricted signification. Its germinal principie is to be found in the cessio bonorum of the Roman law during the time of Caesar. Under its more humane provisions, the debtor who surrendered all of his goods to his creditors was relieved of the harsh penalties of the older systems, and, in the course of time, they were further mitigated by discharging him of his obligations. This is the distinguishing feature of modern bankruptcy.

The first English law on this subject was enacted in 1542 during the reign of Henry VIII. It was essentially a penal statute. Debtors who fled the kingdom or concealed themselves were made criminals, and their effects were seized and distributed among their

creditors without extinguishing their obligations. These provisions were applied to all who "craftily obtaining into their hands great substance of other men's goods, do suddenly flee to parts unknown, or keep their houses, not minding to pay, or return to pay, but at their own wills and pleasures consume the substance obtained by credit from other men for their own pleasure and delicate living, against all reason, equity and good conscience."

Under this statute the administration of the estates of bankrupts was devolved immediately upon the Lord Chancellor and other high officers. This tended to fix a principle that it may be profitable to call to the attention of the reader, viz., that jurisdiction under laws respecting bankruptcy was exercised in conformity to the rules of equity. The practice was preserved after the adoption of the first amendment, which occurred in the time of Elizabeth. It made an important change in procedure by authorizing the Lord Chancellor to appoint commissioners who should take possession of the property of the bankrupt and dispose of it for the benefit of creditors.

As we have stated, the Court of Chancery retained its supervisory jurisdiction, and equitable principles still obtained in the administration of estates. But the Statute of Elizabeth effected two departures from the previous law that were of very considerable moment. By the first of these, the law was restricted in its operation to traders; and this feature persisted in the legislation of England until 1861, and was copied in the first bankruptcy act adopted in the United States, and, indeed, in the law of 1841, though in the latter, the meaning of the word was enlarged to include bankers and some other classes.

Again, in the Statute of Elizabeth, we first find the term, "acts of bankruptcy." Certain acts and practices were designated upon the commission of which a debtor could be declared a bankrupt, and such adjudication was fundamental to the authority of the commission to seize his property and distribute it. Various changes

have been made from time to time as to what constitutes sufficient. grounds for such a decree, but we have no knowledge of any law in England or this country that does not make some "act of bankruptcy a prerequisite to the exercise of the jurisdiction in involuntary proceedings.

It would scarcely be of interest to trace the evolution of procedure through the successive laws of England. The next important change in the history of the system was effected by the Statute of Anne in the year 1706. It relieved bankruptcy of the character that had been imposed upon it by previous statutes, that of being a statutory crime, for which the debtor's person, as well as his property could be seized; but it did much more. It provided that when the debtor should have surrendered all of his property to the commission, and complied with all of the requirements of the law, he should receive a certificate of conformity, and that this certificate, upon being confirmed by the Lord Chancellor, should operate as a discharge of his person, and any property that he might subsequently acquire, from all debts owing by him at the time of his bankruptcy.

This humane enactment has been followed in all subsequent legislation on the subject. It recognized that the object of the system is two-fold: (1) To dedicate the property of an insolvent debtor to the ratable payment of his debts; and (2) to grant him a discharge from his existing obligations, to the end that he may be restored to the activities of life, freed from the burdens visited upon him by previous misfortunes in business. It may be justly remarked that there is nothing more to be accomplished by any law on the subject; all other provisions are matters of detail more or less effectively designed to accomplish these ends.

The English act of 1825 was principally a codification of existing laws that were scattered through the statute books of more than three centuries in confusion and chaos.

Rari apparent, nantes in gurgite vasto.

At the same time, it introduced some amendments. These were partly directed to the establishment of more efficient methods for the discovery of assets and the realization of the full value of the bankrupt's estate. A provision was also inserted for the adjustment and proof of contingent and unliquidated claims, which were excluded under previous laws. But the most important of the amendments effected by the act of George IV was the establishment of voluntary bankruptcy. Upon this subject, Mr. Robson, in his

"Treatise on the Law of Bankruptcy," says:

This statute also contained a provision enabling a trader to be accessory to his own bankruptcy, by authorizing a commission to issue at the instance of a creditor upon a declaration of insolvency by the debtor; or, in other words, it authorized a concerted bankruptcy, which had previously been regarded as a fraud on the bankrupt law. The principle of this provision was still further recognized by subsequent statutes, to the extent of allowing a debtor to petition for an adjudication against himself. The policy of allowing a debtor to petition for adjudication against himself has been much canvassed, and was not authorized by the Bankruptcy Act, 1869, although it allowed a declaration of insolvency to be filed by a debtor as the foundation of an adjudication against him on the petition of a creditor; and also proceedings to be instituted by a debtor for the liquidation of his affairs in the same manner as if he had become bankrupt.

In the act of which we are speaking (1825), we find the first introduction of the practice of relieving the estate of bankrupts from the jurisdiction of the courts by compositions. It provided that the commission might be superseded when a specified majority of creditors, in number and amount, signified their willingness to accept a certain percentage of their claims. This law was infirm in accomplishing the end sought, and unjust in its operation in that it did not release the debtor from the claims of dissenting creditors.

The law of 1831 established the Court of Bankruptcy, consisting originally of four judges and six commissioners. The judges were constituted a court of review, and provision was made for an appeal from it to the Lord Chancellor, and a limited appeal from him