acquired over property delivered by a bankrupt, or one in contemplation of bankruptcy. It is also material to remark, that if the holder of goods accept a specific security in lieu, or voluntarily part with the possession of the whole, or part of them, he afterwards loses all right of lien upon them.

CHAPTER XVI.

Bankruptcy and Insolvency.

A BANKRUPT is a trader who, either from the want of sufficient property, or from the pressing difficulty of converting what he possesses into money, is unable to meet those demands of his creditors which the law gives them the power of enforcing, and who has committed some act indicative of the situation in which he is so placed. It is in the latter attribute that the bankrupt has been held chiefly to differ from an insolvent, who may, equally with a bankrupt, be unable to meet the demands upon him, but who has not, by secreting himself from creditors, or other open evasive act, revealed his insolvency to the world. But under the Bankruptcy Act of 1861 (now superseded by the act of 1869) the legal distinctions between bankrupt and insolvent disappeared, and both description of debtors, in respect of procedure, became amenable to the same jurisdiction.

In the ordinary course of law, creditors may seize either the person or the effects of their debtor, but they cannot take both at the same time, and if they take the body in execution, they cannot afterwards resort to the effects. All the creditors must run through the same process to recover their several debts. By the bankrupt laws, on the contrary, a form of proceeding is allowed, at the instance of one or more of a man's creditors, at the common expense, and for the common benefit of them all. The debtor is at once, by operation of law, divested of all his property, real and personal, which is transferred to trustees either chosen by his creditors or appointed by law. But if the debtor make a full discovery, and appear to have acted without fraud, he then becomes entitled to a complete discharge, both of his person and generally of any property he may subsequently acquire; and also to a reasonable allowance out of his former effects proportioned to his good conduct, and the amount of the dividend which his estate yields to his creditors.

Of late years the bankrupt laws have undergone much inquiry and discussion, and attempts have been made to improve this complicated branch of mercantile jurisprudence. So early as 1825 the great mass of statutes on the subject had been consolidated, and

several new and salutary provisions introduced; among others, that which allowed the proof of contingent debts; that which allowed all debts to bear interest in the event of a surplus; that which allowed the tender of a composition; and that which allowed a trader in insolvent circumstances publicly to declare it, whereby steps might be taken to secure an equitable distribution of his property to all his creditors.

In 1831 was introduced the 1 & 2 W. 4, c. 56, for lessening the expense, delay, and uncertainty in bankruptcy proceedings. This act established a court of bankruptcy, by abolishing the seventy commissioners of bankrupts, and the substitution of ten judges in their places, with registrars, clerks, &c. Various other alterations of importance were adopted. 1. The substitution of a fiat from the lord chancellor, in lieu of the petition of bankruptcy. 2. The appointment of official assignees of the bankrupt's estate. 3. The allowing of all attorneys and solicitors to practise in the Bankruptcy Court, and debts to be proved by affidavit. 4. The appointment of fixed commissioners, on the nomination of the judges of assize, to adjudicate bankruptcy business in the country. And 5, allowing assignees to employ the bankrupt in the arrangement of the estate, and refer any matter to arbitration, and the reference by them to be made a rule of court.

Despite of these and numerous subsequent amending statutes, the bankrupt laws proved wholly inadequate to the due protection of mercantile credit, and by secret transfers, concealment of property, or other fraudulent devices, the chief bulk of the bankrupt's effects continued to vanish from the grasp of the law. In consequence the subject was again urgently pressed on the attention of the legislature by the higher classes of the commercial world, and the result, after anxious and protracted inquiry, was the act of 1849, the 12 & 13 V. c. 106. The improvements introduced by this act were many and important, and may be briefly recapitulated.

First, the simplification of the process in bankruptcy by substituting a petition for a fiat. Secondly, a saving of time and expense, to be effected by conferring upon the commissioners original jurisdiction in certain matters that had been only cognizable by one of the vice-chancellors sitting at Lincoln's Inn. Thirdly, the useful clauses facilitating the winding-up of insolvent estates out of court. Fourthly, a classification was introduced of the various cases of commercial delinquency, and of awarding accordingly certificates of desert and conformity.

For the first time, a broad distinction was drawn by law between honest and fraudulent debtors. Traders who, at an early period of their insolvency, place their affairs before their creditors, and obtain their assent to such propositions as they are able to make, can obtain protection for their persons, and can wind up their affairs, either by trustees, without the interference of the court, or

under control of the court with the aid of an official assignee, but in either case without the stigma of bankruptcy; but, if bank. ruptcy cannot be avoided, then, after hearing the case, and judging of the conduct of the bankrupt during his examinations, it was left to the commissioner of the court to grant either a first-class certificate, which declared that the trader's inability to pay his debts had arisen from misfortune only, or a second-class certificate, in which it was declared to have arisen partly from misfortune; or a thirdclass, in which it was declared not to have arisen from misfortune. These discriminations of the debtor's conduct appeared at the time of greater importance to society and the morality of trade than any other portion of the act.

Subsequently Lord Chancellor Westbury, while attorney-general, sought to provide a useful digest and improvement of the jurisprudence and administration of insolvency. It failed to be carried in its original scope, but issued in the act of August 6, 1861, to amend the law relating to bankruptcy and insolvency in England. This act, the 24 & 25 V. c. 134, was not a consolidating act, but retained much of previous legislation, and only partly repealed some of the statutes to which reference has been previously made.

The act commenced from and after October 11, 1861; it is to be construed, together with so much of the bankrupt acts of 1849 and 1854 as remain unrepealed, as one act, and be cited as the Bankruptcy Act of 1861.

One of the more prominent features of the act of 1861 was the bringing under the same judicature the previously divided administration of the laws of bankruptcy and insolvency. Besides the abolition of the Insolvent Court, except as to such functions of its judges as pertain to the carrying out and conclusion of pending business, the other important changes made and the general principles of the act may be thus described ::

First, to effect a more general, speedy, and economical administration of the insolvent laws. Secondly, and as a consequence of these improvements, to afford increased facilities for private arrangement, composition, and agreement between creditor and debtor. Thirdly, to bring about a gradual approximation to the abolition of the punishment of imprisonment as a means of satisfaction for debt; and, fourthly, to effect the issue already mentioned of an assimilation of the laws of insolvency and bankruptcy.

As to the practical results under the new administration, an important one was to vest the management of the debtor's property more in the hands of creditors and less in officials. Next, is the abolition of the distinction in bankruptcy between traders and non-traders. All persons of full age, male and female, peers and commoners, denizens and aliens, and natural-born subjects, except foreign ambassadors, became liable to the bankrupt law. Lunatics

might be made bankrupt upon an act committed in a lucid interval. Thirdly, the county courts, except those within the limits of the metropolis, had, for the first time, jurisdiction in bankruptcy, same as the district courts of bankruptcy. They had jurisdiction in all cases where a debtor made himself bankrupt and his debts did not exceed £300, and resided without the metropolitan district, the boundary of which included every parish within twenty miles of the General Post-office. The London Court of Bankruptcy had power to transfer any petition for adjudication from a district court to a county court, not being a metropolitan county court. Lastly, the classification of certificates as indicative of degrees of commercial delinquency, or conformity to bankrupt procedure, ceased. The act of 1861, however, was not found to work satisfactorily, and was consequently suspended by the Bankruptcy Act, 1869 (32 & 33 V. c. 71), which is now the governing statute on the subject.

II. INSOLVENCY.

Although bankruptcy and insolvency are now assimilated in jurisdiction, it may not be altogether irrelevant to describe the legal definition by which they had been divided.

By the term insolvent is generally meant a person that is not in a condition to pay his debts, in the ordinary course, as persons carrying on trade usually do, Bayley v. Schofield, 1 M. & S. 350. Between bankruptcy and insolvency the distinction that has been held is twofold. First, as to persons, the bankrupt being a trader, which an insolvent need not be. Secondly, as to property; for the bankrupt, after receiving his certificate, was discharged, not only as to his person, but as to his future acquired property, by which clearance he became eligible to resume trade and obtain credit afresh. The condition of the insolvent was essentially different, his person only being protected, not his after acquisitions. At the moment of his discharge he contracted a future liability to pay his debts, by a solemn instrument which he signed, and which the creditors had the power of enforcing ever after. The insolvent, though personally relieved by due process of law, when no fraud had been proved against him, continued still liable, to the latest period of his life, to pay his debts in full; the creditors reserving authority to compel the payment of their debts, when the insolvent was in a condition to liquidate them, by bringing him up from time to time before the court, which decided whether he was then able to pay his debts out of the property he had acquired.

III. PERSONS LIABLE TO BANKRUPTCY.

By s. 69 of the statute of 1861, all debtors, whether traders or not, became subject to bankruptcy, but no debtor not a trader was

liable to be adjudged bankrupt except in respect of certain specified acts. This distinction is continued by the Act of 1869.

The term trader is generally applied to one who gains a livelihood by buying and selling, and who is capable of making binding contracts, whether a natural-born subject, alien, or denizen. The act of 1869 expressly enumerates as traders, alum-makers, apothecaries, auctioneers, bankers, bleachers, brokers, brick-makers, builders, calenderers, carpenters, carriers, cattle or sheep salesmen, coach proprietors, cowkeepers, dyers, fullers, keepers of inns, taverns, hotels, or coffee houses, limeburners, livery stable keepers, market gardeners, millers, packers, printers, sharebrokers, shipowners, shipwrights, stock brokers, stock jobbers, victuallers, warehousemen, wharfingers, persons using the trade or profession of a scrivener, receiving other men's monies or estates into their trust or custody, persons insuring ships or their freight or other matters against perils of the sea, persons using the trade of merchandize by way of bargaining, exchange, bartering, commission, consignment, or otherwise, in gross or by retail, and persons who, either for themselves or as agents or factors for others, seek their living by buying and selling or buying and letting for hire goods and commodities, or by the workmanship or the conversion of goods or commodities; but a farmer, grazier, common labourer or work man for hire, or a member of any partnership, association, or company which cannot be adjudged bankrupt under the act, is not to be deemed as such a trader for the purposes of the act.

A party who lets furnished lodgings is not a trader within the bankrupt laws, notwithstanding he buys the furniture for the purpose of being let with the lodgings, 1 Dea. 99.

Attorneys have been made bankrupt as scriveners, but in the common course of their profession they cannot be made bankrupt. Nor the proprietor of a coal-mine, selling coals; nor of a stonequarry, selling stones. Neither can any public officer, in respect of his office, be made bankrupt; nor one who buys or sells under particular restraint, as a schoolmaster who buys books to sell to his scholars, or a contractor for victualling the army.

A single act of buying or selling is not sufficient to bring a person under the bankrupt laws; whether a man be a trader, within the statute, is a question not of fact but of law upon the fact, Cowp. 572. A trading depends not upon the quantity, but the intention; and it is a question for a jury whether there be enough to evidence that intention.

By 9 Anne, c. 12, no trader within the bankrupt laws is exempt therefrom, by placing himself in the service of an ambassador or public minister.

A married woman, carrying on trade in the city of London, or carrying on business as a trader, her husband being a convict, may be adjudged a bankrupt.