Bankruptcy

“ If the bankrupt, at the time of bankruptcy by disenabling himself from performing the contract in question, and by repudiating its obligation, could give the proving creditor the right to maintain at once a suit in which damages could be assessed at law or in equity, then the creditor can prove in bankruptcy on the ground that bankruptcy is the equivalent of disenablement and repudiation. ”

“ It is no new doctrine that the assignee or trustee in bankruptcy stands in the shoes of the bankrupt, and that the property in his hands, unless otherwise provided in the bankrupt act, is subject to all of the equities impressed upon it in the hands of the bankrupt. ”

“ And the working man thinks to himself of the twenty or thirty pounds that he owes, and how pleasant it would be if an accountant would add it up and a judge tell him that he need not worry any more about it; but when he begins to inquire further into the subject he finds that bankruptcy is one of the good things of this world that he cannot afford.
Bankruptcy, successful bankruptcy, is not so easy of achievement as you might think. It is not everyone who knows how to become a bankrupt. ”

“ By the corresponding provision of the bankrupt act of 1867, any person who, being bankrupt or insolvent, or in contemplation of bankruptcy or insolvency, 'procures or suffers his property to be taken on legal process, with intent to give a preference to one or more of his creditors,' 'or with the intent, by such disposition of his property, to defeat or delay the operation of this act,' was deemed to have committed an act of bankruptcy. ”

“ Until, then, we have established a living wage for the worker, the question of his bankruptcy is in a large measure academic. At present bankruptcy, like divorce, is rightly regarded as a luxury for the well-to-do. I know that to some minds the word “bankruptcy” connotes poverty, but if you look into the facts and history of the matter, you will find that, though bankruptcy may on occasion lead to poverty, a poor man never does, or can, become a bankrupt. ”

“ The two sections are accordant, and identical in their provisions. They keep up the great distinction between insolvency and bankruptcy, which some of our judges have undertaken to abrogate; they keep up, also, the great distinction between the proper subjects of bankruptcy—to wit: traders, and those who are not traders; and they keep up the distinction between the release of the person (which is the object of insolvent laws) and the extinction of the debt with the consent of creditors, which is the object of bankrupt systems. ”

“ Those who had formerly predicted that the funding system would break up when the debt should amount to one hundred or one hundred and fifty millions, erred only in not distinguishing between insolvency and actual bankruptcy; for the insolvency commenced as soon as the government became unable to pay the interest in cash, or to give cash for the bank notes in which the interest was paid, whether that inability was known or not, or whether it was suspected or not. Insolvency always takes place before bankruptcy; for bankruptcy is nothing more than the publication of that insolvency. ”

“ The bankruptcy law should receive such an interpretation as will effectuate its beneficent purposes, and not make it an instrument to deprive dependent wife and children of the support and maintenance due them from the husband and father, which it has ever been the purpose of the law to enforce. Systems of bankruptcy are designed to relieve the honest debtor from the weight of indebtedness which has become oppressive, and to permit him to have a fresh start in business or commercial life, freed from the obligation and responsibilities which may have resulted from business misfortunes. ”

“ The equitable distribution of the bankrupt's assets, or the equitable adjustment of creditors' claims in respect of those assets, by way of reorganization, may therefore be regulated by a bankruptcy law which impairs the obligation of the debtor's contracts. Indeed every Bankruptcy Act avowedly works such impairment. ”

“ A bankruptcy terminates by an ordinary composition (concordat) , a sale of the debtor’s assets (union) , or a composition by relinquishment of assets. It is a striking feature of the French system, and highly creditable to French commercial integrity, that a discharge in bankruptcy, even when accompanied by a declaration d'excusabilité, leaves the unpaid balance a debt of honour. At the time of the French Revolution the National Convention passed a resolution that any man who contracted a debt should never be free from liability to pay it. ”

“ Under the National Bankruptcy Act, a person is insolvent “when the aggregate of his property, exclusive of any property that he has conveyed, transferred, concealed or removed, or permitted to be removed with intent to hinder, delay or defraud his creditors, is not, at a fair valuation, sufficient in amount to pay his debts.” ”

“ Until recently in English law bankruptcy was merely a trader’s remedy designed to protect an unfortunate business man from life-long imprisonment for debt resulting from unfortunate business ventures. Latterly the privilege of bankruptcy has been extended to every [Pg 107] citizen that has a debt of fifty pounds and ten pounds to pay the fees necessary to filing his petition. ”

“ Failure is purely and simply the suspension of payments resulting from circumstances independent of the will of him who fails. Bankruptcy, on the contrary, is suspension of payments resulting either from imprudence or from mistakes of the bankrupt. ”

“ The new form of bankruptcy is more flexible and often more efficient, permitting, as it does, a disposition of the assets upon credit as well as for cash, and in consideration of shares of stock or bonds to be issued by the buyer. Whoever, being a corporation, may resort to the old form, is at liberty, acting in good faith, to resort to the new. ”

“ There was not a solitary piece of coin in the Treasury; but there was a printing-press at command. Assignats were fabricated in the night, and sent forth in the morning wet from the press. [275] At last they ended in nothing,—but not until a great and generous people was enveloped in bankruptcy and every family was a sufferer. Bankruptcy has its tragedies hardly inferior to those which throb beneath the “sceptred pall.”
Similar misconduct among us must result in similar consequences, with all the tragedies of bankruptcy. ”

“ They invoke the settled rule that state insolvency laws which are tantamount to bankruptcy because they provide for an administration of the debtor's assets and a winding up of his affairs similar to that provided by the national act are suspended while the latter remains in force, and proceedings under them are utterly null and void whether commenced within four months of the filing of a petition in bankruptcy or before. ”

“ On the 9th of September, 1869, a creditor of the corporation respondents filed a petition in bankruptcy against the company, in the office of the clerk of the District Court, and on the twenty-fourth of the same month the District Court adjudged the said paper manufacturing company to be bankrupts within the true intent and meaning of the Bankrupt Act. ”

“ If a certain class of debts cannot be discharged by proceedings in bankruptcy, then they cannot be discharged by this proceeding, for it is a proceeding in bankruptcy. If all other debts may be discharged by a composition in bankruptcy, then the debtor and the other creditors get its benefit and are bound by it, while the one whose debt may not be thus discharged does not. He neither takes its benefit nor is he bound by it. ”

“ And I have argued that the wretched performance of its duties within its proper sphere continues, because its time is chiefly spent over imaginary duties.42 The facts that often, in bankruptcy {439} cases, three-fourths and more of the assets go in costs; that creditors are led by the expectation of great delay and a miserable dividend to accept almost any composition offered; and that so the bankruptcy-law offers a premium to roguery; are facts which would long since have ceased to be facts, had citizens been mainly occupied in getting an efficient judicial system. ”

“ After the recovery of that judgment, the respondents petitioned in the bankruptcy case for an order, fixing the amount of indebtedness of the bankrupt, as finally allowed, and the expenses of administration, including a reasonable fee for the attorney of the trustee, to the end that all debts and expenses might be fully paid out of money raised by mortgage of the land so recovered, and that the bankruptcy proceedings be dismissed. ”

“ The court by order is to direct all acts and things needful to be done to carry into effect the resolution of the creditors, and the winding up and settlement of any estate under the provision of this section shall be deemed to be proceedings in bankruptcy, and the trustees shall have all the rights and powers of assignees in bankruptcy. It further provides that the court may compel the production of witnesses, books, and papers before the trustees, in the same manner as in other cases of bankruptcy, and that the bankrupt shall in like manner be entitled to his discharge. ”

“ The bankrupt act of 1898, § 2, invests the courts of bankruptcy 'with such jurisdiction, at law and in equity, as will enable them to exercise original jurisdiction in bankruptcy proceedings, in vacation in chambers, and during their respective terms;' to make adjudications of bankruptcy ”

“ It is an occurrence in the life and fortunes of an individual. When a man cannot pay his debts, we say that he has become bankrupt, or has failed. Bankruptcy is not merely the condition of a man who is insolvent, and on whom a bankrupt law is already acting. ”

“ Since many wage earners who go into bankruptcy do not proceed under Chapter XIII because they are unemployed (and consequently have no earnings to use for extension arrangements) , have an inextricably large indebtedness, or are simply unaware of the existence of an alternative to straight bankruptcy, the 20% figure is even more significant. ”

“ There are a lot of big, expensive law books written on this subject by clever fellows who spend their lives soothing the bankrupt’s last hours and winding him up according to law and order, with costs out of the estate, but you need not study these to learn how to become a bankrupt. Most bankrupts are [Pg 115] pig-headed fellows, and achieve bankruptcy in their own foolish amateur way. ”