William M. Lacy James Kent.

Commentaries on American law, Volume 2 online

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Co., 1 La. An. 161. Personal covenants are not discharged. Murray v. De
Rottenham, 6 John. Ch. 52. Debts due to <he United States are not barred.
U. S. V. King, Wall., Sr., 12 ; Commonwealth v. Hutchinson, 10 Penn. 446 ;
Saunders v. Commonwealth, 10 Gratt. 494. A discbai^e is not a bar to an
action on a judgment of •another state given ailer the granting of the dis-
chai^, provid^ it would not have that effect if pronounced by a court in
that state. Rees v. Butler, 18 Mo. 173. See also on the effect of judgments
rendered in another state, Haggerty v. Amory, 7 Allen, 458. Tbe dia-
chai^ge is a release from all judgments rendered prior to the bankruptcy.
Blake v. Bigelow, 5 Geo. 437. As to the effect of foreign debts, see Murray
ti. De Rottenham, uhi supra ; Very r. McHenry, 29 Maine, 16 Shep. 206 ;
Lizardi v. Cohen, 3 Gill, 430 : May v. Breed, 2 Cush. 15. See also the cases
Boynton v. Ball, 121 U. a 437 ; McDonald r. Davis, 105 N. Y. 508 ; Fuller
t. Pease, 114 Mass. 390.



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another. The municipal law of the state, is the law of the con •
tract made and to be executed within the state, and travels with
it wherever the parties to it may be found, unless it refers to the
law of some other country, or be immoral, or contrary to the
policy of the country where it is sought to be enforced. This
was deemed to be a principle of universal law ; and therefore
the discharge of the contract, or of the party, by the bankrupt
law of the country where the contract was made, is a discharge
everywhere (a). There is not any bankrupt law, technically ho
called, existing in New York ; but there ii a permanent insolvent
law, enabling every debtor to be discharged from all his debts
upon the terms and in the mode prescribed. The first general
insolvent law of New York was passed in the year 1784, and al-
terations and amendments have from time to time been made,
until the system attained all the Consistency, provision
*and improvement, that the nature of the subject easily [ * 394]
admits (6).*

(a) Ogden v. Saunders, 12 JVheaton, 213. See, also, Sturges v. Crownin-
shield, 4 Ibid. 122. M'Millan v. M'Neill, Ibid. 209. Le Loy v. Crownin-
shield, 2 Masm'a Rep. 161, 162. Pugh v. Basse!, 2 Black/. Ind. Rep. 394.
And see vol. i. p. 419-— 422. It is equally well establislied, that the dis-
charge of a contract by the law of a place where the contract was not made,
or to be performed, will not be a dischaiige in any other country. In Phillips
V. Allen, 8 Bamw, dt Ores9.A77, the discharge of an insolvent debtor by a
Scotch court, was held to be no defence to an action brought in England, by
an English subject, for a debt contracted in England ; but the rule would
have been different if the creditor had come in for his dividend under the
Scotch law, or the debt had been contracted in Scotland. The same rule
was declared in Van Kangh r. Van Arsdale, 3 Caine^s Rep. 154, and it ha.**
repeatedly been recognized in England and Scotland, as well as in this'
country. See Doug. Rep. 170. 1 H. Blacks. Rep. 693. 2 Ibid. 553. 1 EofU's
Rep. 6, 11. 5 Ibid. 124. I^wis r. Owen, 4 Baniw. & Aid. 654. 2 BrlVn
Omm. 689 - 691. WoodhuU v. Wagner, 1 Balthoin's C. C. U. 8. Rep. 296.

(ft) With respect to the operation, value, and policy of the general system
of insolvent law, it was observed by the chancellor and judges of the 8U>
preme court of New York, in a report made by theui to the legislature, Jan-
uary 22d, 1819, in pursuance of a concurrent resolution of the two houses,
that ^* judging from their former experience, and from observation in the
course of their judicial duties, they were of opinion, that the insolvent law
was the source of a great deal of fraud and perjury. They were apprehen-
sive that the eA^il was incurable, and arose principally from the infirmity
inherent in e^ery such system. A permanent insolvent act, made expressly
for the relief of the debtor, and held up daily to his view and temptation,
had a powerful tendency to render him heedless in the creation of debt, and

^ The New York laws provide for a statutory assignment generally known
as the ** Insolvent A-ssignment** or ** Two-third Assignment," under which
the debtor obtains his discharge, upon complying with its pro\isions and
filing a consent of two-thirds in value of his creditors. The general assign-
ment also has its existence there, but does not act as u discharge of the



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Insolveat laws prevail throiigboat the Union, and constitute a
system of an important and interesting character and subject to
diversified modifications, for the relief of the debtor. In the States
of Maine, New Hampshire, Virginia and Kentucky, they are cnn.
fined to the relief of debtors charged in execution. In New Jer-
sey, Delaware, Maryland, Tennessee, North and South Carolina,
Georgia, Alabama, Mississippi and Illinois, the insolvent
[ * 395 ] laws extend to debtors in prison on mesne or final *pro-
cess. In Massachusetts, New York, Connecticut, Rhode
Island, Pennsylvania, Ohio, Indiana, Missouri, and Louisiana,
;they are still more extensive, and reach the debtor whether in or
toat of prison (a).* The insolvent laws of New York enable the
debtor, with the assent of two-thirds in value of his creditors, and

careless as to payment. It indaced him to place his hopes of relief rather
iu contrivances for a dischai^e, than'in increased and severe exertion to per-
form his daty. It held out an easy and tempting mode of procuring an ab-
solute release to the debtor from his debts ; and the system had been, and
still was, and probably ever must be, from the very nature of it, pnKluctive
of incalculable abuse, fraud, and peijury, and greatly injurious to the pub-
lic morals." See, on this subject, supra, vol. i. p. 419 — 422. It was stated
by the Chief Justice, in giAing the opinion of the Supreme Court of the
United States, in Stuiges v. Crowninshield, 4 Wheaion, 122, that the insol-
vent laws of most of the states only discharge the person of the debtor, and
leaves his obligation to pay, out of his future acquisitions, in full force. The
insolvent act of Maryland, of 1774, subjected to the former debts of the in-
solvent, his future acquisitions by descent, gift, devise, bequest, or in a
course of distribution. See 3 Harr. and Johns. 61.

(a) The statutes of Connecticut, Ohio, New Jersey, Pennsylvania, Illinoi.s,
Georgia, and Missouri, for the relief of insolvent debtors, go only to discharge
and exempt the person of the debtor from imprisonment. Statutett of Con-
nect icttt, 138, p. 270. Slalutes of Ohio, 1831. Statutes of Illinois, 1838. S. L,
of Mii30uriy 1835. Princess Dig. of Statutes of Georgia, 2d edit. 1837, p. 287,
293. Purdon^s Dig. of Penn. Laws, 514. Elmtr^s Dig. 255. This is under-
stood to be the limitation of insolvent laws in the greater number of the
states. See supra, vol. i. p. 420. The new insolvent law of Massachusetts
was passed in 183S, granting a complete discharge to debtors, whether in or
out of prison, who comply with its provisions. The application far relief
may be made by the debtor, or by certain of his creditors. It applies, ot
course, only to contracts made sufaeequeut to its passage, and it resembles,
in several of its features, the U. S. bankrupt act of 18(X)^ and appears to be
cautiously and wisely digested. See infra, p. 522, note. In Vermont, it is
even a constitutional provision that the debtor shall not be continued in
prison, where there is not a strong presumption of fraud, after delivering up
and assigning, bona fide, all his estate for the use of his creditors.

* In Maine, see the act of Feb. 21st, 1878. In Delaware there is a questiou
as to the validity of aasignments, owing to a recent decision of the chan-
cellor, except where all the creditor concur, owing to the recent case ot lie
New Castle Iron and Steel Co., in the court of chancery, but the better opin-
ion would seem to be in their favor. In Massachusetts the act is similar in
its provisions to the bankruptcy act, and astjignments are not valid as against
bankruptcy proceedings. For the various rules regarding bankruptcy and
alignments, see the laws of the various states. «



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on the due disclosore and surrender of bis property, to be dis-
charged from all bis deDts contracted witbin tbe state, and sub-
sequent to tbe passing of tbe insolvent act, and due at tbe time of
the assignment of bis property, or contracted for before tbat time,
thougb payable afterwards (a).^ Tbe creditor wbo raises objec-
tions to tbe insolvent's discbarge, is entitled to bave bis allega-
tions beard and determined by a jury. Tbe insolvent is deprived
of tbe beneiit of a discbarge, if, knowing of bis insolvency, or in
contemplation of it, be ba^ made any assignment, sale, or trans-
fer, eitber absolute or conditional, of any part of bis estate, or
has confessed judgment, or given any security witb a view to give
a preference for an antecedent debt to any creditor (6). Tbe dis-
charge applies to all debts founded upon contracts made witbin
the state, or to be executed witbin it; and from debts due to per-
sons resident witbin tbe state at tbe time of tbe publication of
notice of tbe application for a discbarge; or to persons not re-
siding witbin tbe state, but wbo united in tbe petition for bis
discbarge, or wbo accept a dividend from bis estate. Tbe dis-
cbarge likewise applies to all liabilities incurred on contracts
made after January 1st, 1830, by making or endorsing any prom-
issory note or bill of excbange prior to bis assignment, or in-
curred by reason of payments by any otber party
*U> tbe paper, made prior or subsequent to tbe assign- [ * 396 ]
ment. Tbe discbarge likewise exonerates tbe insolvent

(ft) Lftw$ofX. r., April 12th, 1813; February 28th, 1817; February 20th,
182:5; and April 9th, 18J3.' Under the English insolvent debtor's act, the
discharged insolvent becomes liable to a surety, who pays for him, after his
discharge, an annuity due before. Abbott v. Bruere, 5 Bingham, K. C. 598.
The insolvent laws of New York have been redigested and amended, by the
X. y. Reviaed Slatutes, vol. ii. p. 15 — 2:i; but the insolvent act of April Istli,
1813, is declared to be tw/orcp, although consolidated in the Kevised Statute,s,
vol. ii. p. 15 — ^23. See N. Y. R, S., vol. iii. p. 647. It appears, notwithstand-
ing that dictum of the revisers, that the general in.solvent act of l.sl3, and all
the acts amending the same, are in force only in a very modifiedy if in any
degree; lor under the general repealing act, X. V, R. S,, vol. iii. p. 133, sec.
115, and Ibid. p. 154, sec. 549, so much of the insolvent act of 1813, and
the acts amending it, as are not, and also that are, consolidated and re-
enacted in the Revised Statutes, are repealed! The system has been im-
proved by more effectual provisions against fraud and abuse.

(6, N, Y. Revised StatuieSy vol. ii. p. 20, sec. 24. By the law of Louis-
iana, an insolvent debtor cannot give preference. Hodge v. Morgan, 14 Mar-
tinis Louis, Rep. 61. By the insolvent act of Pennsylvania, of 16th June,
18:)6, the insolvent debtor is deprived of the benefit of the act, if it appears
that the insolvency arose from losses by gambling, or by the purchase of lot-
tery tickets.

' See note 5 and I^ws of New York.



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from arrest and imprisonment thereafter, upon all debts existing
prior to the assignment. Any fraud whatever, in relation to any
proceedings under the statute, or its requisitions, renders the dis-
charge null and void (a).*

(a) N. Y. Revised Statutes, vol. ii. p. 15—23. The fraud that goes to de-
feat the relief under the insolvent laws of Pennsylvania, is the fraudulent
concealment or conveyance of the estate, and not the iraudu lent means hy
which the insolvent acquired possession of property, nor his unprincipled
and extravagant waste of it. Case of Benney, 1 Ashmead-s Hep. 261. In
England, by the statutes of l-Geo. IV., 3 Geo. IV., and 5 Geo. IV., the sys-
tem ot their insolvent laws was new modelled, and greatly improved, and
placed under the jurisdiction of the insolvent's court. It is, in many of its
provisions, analogous to their bankrupt system. It applies to all persons
in custody for debt. Voluntary preferences, by the insolvent, before or after
imprisonment, are declared fraudulent. For debts fraudulently, improvi-
dently, or maliciously contracted, and for damages arising upon torts, or
acts ex ddicto, the insolvent is liable to close imprisonment, and to be de-
prived of his discharge lor a period not exceeding two years. The discharge
only protects the person from imprisonment, and does not protect the fliture
acquisitions and property of the debtor; and the act enables the creditor to
reach such property, whether in the funds, or existing as choses in action,
or held in trust. See vol. i. p. 422, as to the effect of the cessio honorum in
the civil law, and to which our insolvent laws are analogous. The learned
commentor on the Fariidas, {Greg. Lop. Gl. 3,) as cited in a note to the
Institutes of the Civil Laics of Spain, by Aso & Manuel, (b. 2, tit. 11, ch. 3,
sec. 2, n. 49,) says, that the future acquirements of the debtor would not be
liable under the cessio bonoruni, in the case of a compulsory cession, and in
any case sufficient must be left for the debtor to live upon ne egeat.

The laws of the individual states, on the subject of bankrupt and insolvent
debtors, have hitherto been unstable and fluctuating; but they will probably
be redigested, and become more stable, since the decisions of the Supreme
Court of the United States have at last defined and fixed the line around the
narrow enclosure of state jurisdiction. The commissioners appointed to re-
vise the civil.code of Petuisylvauia, in their Report in January, 1835, p. 62, 53,
complain, in strong terms, of the existing state of things. Congress will not
exert their constitutional power, and pass a bankrupt law, and no state can
pass a bankrupt or insolvent law, except so far as regards their own citizens;
and even then, only in relation to contracts made after the passage of the
law. Foreign creditors, and creditors in other states, cannot be barred, while
state creditors may be. The former preserve a perpetual lien on after^
acquired property, except so far as the statute of limitations interpose. State
bankrupt and insolvent laws cannot be cherished under such inequalities.

* See note 4. See hereon the act of 1867, section 29, under which no dis-
ci large will be granted it the bankrupt has been guilty of perjury in his
affidavit annexed to his petition, schedule, or inventory, or upon examina-
tion; or if he has concealed his estxite or effects, books or wi'itiugs, or been
guilty of fraud or negligence in the care, custody, or delivery to the assignee
of his property, or caused or permitted waste, loss, or destruction thereof;
or if within four months prior he has procured his goo4ls, &c., to be attached,
sequestrated, or taken in execution; or if since the passing of that act he
has been guilty of destroying, mutilating, altering, or falsifying his books,
Ac, or been privy thereto, or has removed, or caused to be removed, any part
of his property with intent to defeat or defraud ; or given any fraudulent
preference, or made any fraudulent payment, transfer, conveyance, or a-ssi^n-
ment, or lost any part of his property in gaming, or admitted any false debt
against his estate, or if knoyring same to be proved he has not discloM-d same
within one month; or not kept propter books, or procured the assent of any



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* (2.) The reare other provisions beloDgiDg to the insol- [*397]
vent Bjatem, which are exclusively applicable to impriaoned
debtors, who may, in all cases free from fraud, be discharged from
prison, and exempted from future arrest, without the hazard of
any constitutional objection. Imprisonment is no part of the con-
tract, and simply to release the prisoner does not impair it« obli-
gation, but leaves it in full force against his property (a).*

(a) Mason v. Halle* 12 Whealon, 370. Marshall, Ch. J., 4 Wfieaion, 201.

creditor to his discharge, or influenced the action of any creditor by any
pecuniary consideration; or made, contemplating bankruptcy, uny pledge,
assignment, payment, transfer, or conveyance of any part of his property,
directly or indirectly, absolutely or conditionally, with a view to preference;
or convicted of any misdemeanor under that act, or fraud. As to what will
constitute fraud, see Hall v, Naylor, 6 Duer. Rep. 71; Mitchell v. Warden,
20 Barb. 253; Wenzer v. De Banm, 1 £. D.- Smith, 261. A covenant to pay
an annuity is not discharged. Parker v. Ince, 4 Hurl. & N. 53. Contract to
p:\y accruing taxes not discharged. Murray v. De Rottenham, 66 John. Ch.
52. Breach of warrant subsequent to discharge not affected thereby. Bush
r. Cooper's Admr., 18 How. U. S. 82. See, under the Maine statute, (Rev.
Stat, c 70, i 46,) the case of Jones v. First National Bank. 78 Maine, 191,
where the debtor had sworn falsely. As to keeping proper books, under the
Califumia act, 1880. Jie Lukes, 71 Cal. 113. As to influencing actions.
Ester dillo v. Meyerstein, 13 Pac. 869. The debtor's right to a discharge de-
pends entirely upon the statute with which he must fully comply. Re
Palmer, 3 Hughes, 177 (Va.); 14 Bank's Reg. 437. If there are no debts
proved and no assets, the application can be made after sixty days trom the '
adjudication; when debts have been proved and assets have come to the
assignee's hands alter six months from the adjudication. Matter of Wood,
8 Ben. 237; Be Fowler, 3 Low 122; and see act of 1867, sec. 29; Rev. Stat.
^ 5108. See, also, amendment act of 1876, (July 26,) and Be Brightman, 14
Blatchf. (N. Y.) 130. Upon the effect of a new promise made by a bank-
rupt to pay a debt after discharge, see Otis v. Gazlin, 31 Me. 567;^Petten r.
Ellingwood, 32 Me. 259. There must be an express promise; 'part pay-
ment is not enough. Stark v. Stinson, 3 Foster N. H. 259; Maxim o. Morse,
8 Mass. 127; Dusenbury v, Hoyt, 53 N. Y. 521; Fletcher v. Neally, 20 N. H.
464; Spooner v. Russel, 30 Me. 454; Goxtheimer v. Keyser, 11 Pa. 364.

It need not be in writing. Barron v. Benedict, 44 Vt. 518; Apperson r.
Stewart, 27 Ark. 619; Craig v, Seitz, 30 North West, 347; 6 West, 627. But
must be clear, di.stinct, and unequivocal. Allen v, Ferguson, 18 Wall. 1 ; In
re Hazelton, 32 Leg. Int. 13; Fraley v. Kelley, 67 N. 0. 78; Stern v. Nuss-
baum, 47 How. Pr. 489 (N. Y.) In all cases the true test is, did the bank-
mpt mean that he would pay the amount of the debt? Evans t>. Carey, 2i)
Ala. 99; Bennett v. Everett, 3 R. I. 152. It may be made to a third person.
Haines i». Stauffer, 13 Pa. 541; Comfort v. Eisenbeis, 11 Pa. 13; Evans r,
Carey, uhi supra; Bennett v. Everett, ubi supra; but see Underwood v. East-
man, 18 N. H. 582. In a recent case in Pennsylvania a debtor's promi.se iii
these words: ** I will pay you every cent I owe you," there being no identi-
fication of or reference to the debt, was held insufficient. Hobough v. Murphy,
114 Pa. St. 358. The promise to be binding must be obligatory on both
debtor and creditor. Craig v. Brown, 3 Wash. 503; Samuel v. Cravens, 10
Ark. 380. The feet of the creditor proving the debt in the bankruptcy pro-
eeedings does not affect the new promise. Mason v, Hughart, 9 B. Mon. 480.

* The district courts have jurisdiction and can release the debtor provided
the debt for which he is in prison, is one proveable in bankruptcy and from
which his order of discharge will release him. In re Mifflin, 1 Penn. L. J.



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[ * 398 ] * The English process of execution against the body
(and which we have generally followed in this country) is
intended to confine the debtor until he satisfies the debt It is
not a satisfaction strictly, but a means to procure it, though the
language of the writ directs the defendant to be imprisoned to
satisfy the plaintiff for his debt (a). In Scotland, the imprison-
ment on execution is avowedly to enforce payment,and the discovery
of funds; and it does not, like the English imprisonment, preclude
an execution concurrently against the property. The Scottish
law of imprisonment for debt is slow, cautious, and tolerant in
its operation (6). In this country, the progress of public opinion
is rapidly tending to enlarge the remedies against property, and
to abolish imprisonment for debt, except where the judgment is
founded upon tort, misfeasance or fraud (c).

Beers v. Haughton, 9 Peters' U. S. Rep, 329. The insolvent law of New York,
in its application to imprisoned debtors, and as it existed prior to April,
Ift'U, and April, 1840, may be seen in the N. Y. Revised Staiufen, vol ii. p. 24,
39. But since imprisonment for debt in New York is now essentially abol-
ished, a detail of the provisions of that system is no longer requisite.

(a) Imprisonment on ca. «i. is no extinguishment of a lien by mortgage
for the same debt. Davis r. Battine, 2 Buss <fr 3Iyfne, 76. It was said by
the court, in Sir William Herbert's case, (3 Co. 11,) that nt common law,
and prior to the statutes of Hen. III., £d. I. and III., the body of the debtor
was not liable to execution for debt, except in cases of injuries accom-
panied with force, and for the king's debts. Sir William Blaekstone, vol.
iii. p. 281, has followed that opinion, and Sir Francis Palgrove, who has ex-
amined with great research the Anglo-Saxon institutions, says that no arrest
of the person was allowed at common law, except when justified by a
breach of- the peace, or a contempt of the king's authority. The Anglo-
Saxon or Teutonic law, gave a distringas on neglect to obey a summons,
by which the defendant's goods and chattels were seized as pledges to com-
pel his submission to the judgment of the court. Bise and Proffress of the
English Commonwealth^ vol. i. 181. But this position appears from Bracton,
and from the history of legal proces.s, as detailed by Air. Reeves, to be un-
founded, if we consider the common law as it existed as early as the reign
of Henry III. Sir F. Palgrave referH to the Anglo-Saxon common law.
Bracton, 440, 441. 2 Beeves' Hist. Eng. Law, 439, 440.

(6) 1 BelVs Com. 7. 2 Jhid. 537.

(c) In New York, by the act of April 26, ia31, ch. 300, and which went
into operation on March 1st. 1832, arrest and imprisonment on civil proces.«i
at law, and on execution in equity founded upon contract, were abolished.
The provision under that act was not to apply to any person who should
have been a non-resident of the ptate for a month preceding; and even thi.s
exception was abolished by the act of April 25th, 1840, nor to proi*eedings
as for a contempt to enforce civil remedies; nor to actions for fines and ^len-
alties, or on promises to marry; or for moneys collected by any public of-

146; State v. Rollins, 13 Mo. 139; In re Glaser, 1 B. R. 336; In re Edson
Gomstock, 22 Vt. 642. The state court aa well as the district court will re^
leaae the debtor. Jones v. Euerson, 1 Gaines, 4H7. It is the duty of the
district court to see that he is leleaiaed. Jn re Simpeon, 2 B. R. 47; In r^
Wiggers, 2 Bvss. 71.



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* The assigDment of the insolvent passes all his interest, [*399]
legal and eqaitable, existing at the time of executing the
^assignment, in any estate, real or personal ; but no oontin- [*400]

fieer; or for misconduct or neglect in office, or in any professional employ-
ment. The plaintiff, however, in any suit, or upon any judgment or de-
cree, may apply to a Jadge for a warrant to arrest the defendant, upon af-
fidavit stating a debt or demand dne to more than $50; and that the defendant
isahout to remo^'e property oat x>f the jurisdiction of the court, with intent to
defraud his cred itors ; or that he has property or rights in action which he fraud-
ulently conceal8;or public or corporate stock,money,or evidences of debt, which
he uiyastly refuses to apply to the payment of the judgment or decree in
favour of the plaintiff; or that he has assigned, or is about to assign or
dispose of his property, with intent to defraud his creditors; or has fraudu-
lently contracted the debt, or incurred the obligation respecting which the

Online LibraryWilliam M. Lacy James KentCommentaries on American law, Volume 2 → online text (page 64 of 108)