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FEDERAL bankruptcy legislation is authorized by Article I, Section 8, of the Constitution, which gives Congress the power to pass "uniform laws on the subject of bankruptcies throughout the United States".
In the absence of a National Bankruptcy Act, state laws on the subject of bankruptcy may have local operation, although held to be inoperative against non-resident creditors or "foreign" contracts. Such laws (commonly styled insolvency laws to avoid the suggestion of encroachment upon a federal field) are in any case restricted by the declaration of the United States Constitution, Article I, Section 10, that "no State shall pass any
Law impairing the Obligation of Contracts" and are suspended during the operation of a national law, at least to the extent of the provisions conflicting with the national law and all other provisions inseparable therefrom. State laws regulating assignments for the benefit of creditors, receiverships and the dissolution of corporations are likely to raise difficult questions in this regard. National laws are not restricted by the clause relating to the obligation of contracts, but are subject to the amendments to the Constitution including the due process of law clause of the fifth amendment.
Bankruptcy acts were in force from 1800 to 1803, from 1841 to 1843 and from 1867 to 1878. The present bankruptcy law is a composite of the Act of July 1, 1898, and 54 amendatory acts1. The Act of 1898 dealt chiefly with bankruptcy liquidation although provisions for composition were included. Substantial amendments were made in 1903, 1910 and 1926, and minor ones
1 The text of this pamphlet reproduces only the result of the acts on the subject of bankruptcy, the provisions of the Criminal Code superseding section 29 of the Bankruptcy Act, section 20(b) of the Interstate Commerce Act relating to railroad reorganization, and a brief statute on taxes upon the estate (following section 64), other related legislation being referred to in the annotations. An unconsolidated edition of the Bankruptcy Laws of the United States, United States Government Printing Office, Washington, 1951, contains also extracts from several statutes dealing with appeals and with government agencies, which apply to bankruptcy cases, but do not purport to be acts on the subject of bankruptcy.
in 1917 and 1922. The depression brought on extensive legislation, enlarging the scope of bankruptcy to deal with secured claims and introducing a variety of proceedings for debtor relief and corporate reorganization. Nine bills were enacted in the 81st and 82nd Congresses. With one exception to be mentioned, these covered narrow points. For this and other reasons the Act has been amended in 18 of the 21 years, 1932-1952.*
The Act has never been completely revised and formally reenacted, but the Chandler Act of 1938 completely rewrote the laws of composition and corporate reorganization bankruptcy, made special provision for arrangements affecting real property and for wage earner plans, and revised all but a few relatively unimportant sections of the chapters of the Act relating to ordinary bankruptcy3. The first edition of this pamphlet, published in 1939, contained annotations chiefly commenting on the changes introduced by the Chandler Act. The form of these notes has been modernized and references to newer cases and periodicals have been added in later editions. Recent developments have been noted. The changes of most general interest since the Chandler Act are the Referee's Salary Act, June 28, 1946, an amendment to section 60, defining a preference, approved March 18, 1950, and the post-war II "non-controversial" National Bankruptcy Conference bill amending 54 sections of the statute, which was approved July 7, 1952. Most of the 1952 amendments were formal or trivial, but a few were of substantial importance. The extent of each has been noted in an appropriate place following the section or subdivision in question.
The text embodies all amendments through December 31, 1952.*
Our previous edition bore the title "The Bankruptcy Act of 1898 as Amended", a designation in accordance with then estab
2 The exceptional years were 1941, 1943, and 1947. The list of statutes has been lengthened by repeated extensions of section 75, for the relief of farm debtors, originally conceived as emergency legislation. The provisions for composition of the debts of municipal corporations have also been the subject of considerable tinkering.
3 The proponents of the Chandler Act were disinclined to undertake revision of the farm debtor, railroad reorganization, and municipal corporation sections (§§ 75-84) and feared that the form of a comprehensive bill would invite proposals or controversies on one or more of those topics.
* Congress adjourned its last legislative session July 7, 1952.
lished practice. A special statute has now given it the official short title of "The Bankruptcy Act" 4.
The index, comprehensively revised in 1951, has been further corrected and brought up to date.
JAMES ANGELL MACLACHLAN 5
4 Act of December 20, 1950, P.L. 879, 81st Cong., 64 Stat. 1113.
5 Spelling changed from McLaughlin by decree of Probate Court of Middlesex County, Massachusetts, Jan. 21, 1948, correcting an error made in Scotland about 1835.
Note on Chapter XV
Note: Sections 12, 13, 74, 76-80, of Bankruptcy Act, repealed.
Other omitted sections not enacted.