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2 March 1867.

in bankruptcy, in any civil action, (a) unless the same is founded on some debt or Bankrupt not to claim from which his discharge in bankruptcy would not release him.(b)

be liable to arrest pendente lite.

2 Mar. 1867 27.

14 Stat. 529.

Creditors to

share pro rata. Preference of wages.

IX. DISTRIBUTION OF THE BANKRUPT'S ESTATE.

63. All creditors whose debts are duly proved and allowed, shall be entitled to share in the bankrupt's property and estate pro ratâ, without any priority or preference whatever; except that wages due from him to any operative, or clerk or house servant, to an amount not exceeding fifty dollars, for labor performed within six months next preceding the adjudication of bankruptcy, shall be entitled to priority, and shall be first Sureties to make paid in full: Provided, That any debt proved by any person liable as bail, surety, proof of pay. guarantor or otherwise, for the bankrupt, shall not be paid to the person so proving the same, until satisfactory evidence shall be produced of the payment of such debt by such person so liable, and the share to which such debt would be entitled may be paid into court, or otherwise held for the benefit of the party entitled thereto, as the court may direct.

ment.

General meetings of creditors.

Duties of assignee.

Dividend to be declared.

64. At the expiration of three months from the date of the adjudication of bankruptcy in any case, or as much earlier as the court may direct, the court, upon request of the assignee, shall call a general meeting of the creditors, (c) of which due notice shall be given, and the assignee shall then report, and exhibit to the court and to the creditors just and true accounts of all his receipts and payments, verified by his oath, and he shall also produce and file vouchers for all payments for which vouchers shall be required by any rule of the court; he shall also submit the schedule of the bankrupt's creditors and property as amended, duly verified by the bankrupt, and a statement of the whole estate of the bankrupt as then ascertained, of the property recovered, and of the property outstanding, specifying the cause of its being outstanding, also what debts or claims are yet undetermined, and stating what sum remains in his hands.

65. At such meeting, the majority in value of the creditors present shall determine whether any and what part of the net proceeds of the estate, after deducting and retaining a sum sufficient to provide for all undetermined claims, which, by reason of the distant residence of the creditor, or for other sufficient reason, have not been proved, and for other expenses and contingencies, shall be divided among the creditors; (d) but unless at least one-half in value of the creditors shall attend such meeting, either in person or by attorney, it shall be the duty of the assignee so to determine. List of creditors. In case a dividend is ordered, the register shall, within ten days after such meeting,

Ibid. 28.

dividends.

prepare a list of creditors entitled to dividend, and shall calculate and set opposite to the name of each creditor who has proved his claim, the dividend to which he is entitled out of the net proceeds of the estate set apart for dividend, and shall forward by mail to every creditor a statement of the dividend to which he is entitled; and such creditor shall be paid by the assignee in such manner as the court may direct.

66. The like proceedings shall be had at the expiration of the next three months, or Second and final earlier, if practicable; (e) and a third meeting of creditors shall then be called by the court, and a final dividend then declared, unless any action at law or suit in equity be pending, or unless some other estate or effects of the debtor afterwards come to the hands of the assignee, in which case the assignee shall, as soon as may be, convert such estate or effects into money, and within two months after the same shall be so converted, the same shall be divided in manner aforesaid. Further dividends shall be made in like manner as often as occasion requires; and after the third meeting of creditors no further meeting shall be called, unless ordered by the court.(g)

Power to sell uncollectable claims.

67. If, at any time, there shall be in the hands of the assignee any outstanding debts or other property, due or belonging to the estate, which cannot be collected and received by the assignee without unreasonable or inconvenient delay or expense, the

(a) The district court has power to release a bankrupt from arrest, on state process, in an action upon a debt that may be discharged in bankruptcy. Ex parte Glaser, 1 Bank. Reg. 73; 8. c. 15 Pitts. L. J. 265. Otherwise, if the arrest were prior to the institution of proceedings in bankruptcy. Ex parte Walker, 1 Bank. Reg. 60; Ex parte Hazleton, 2 Bank. Reg. 12.

(5) A bankrupt is not liable to arrest, pending proceedings in bankruptcy, for a claim that would be barred by the discharge. Ex parte Kimball, 2 Bank. Reg. 74. Where the petitioner has been declared a bankrupt, the court will discharge him from arrest on an execution for costs. Ex parte Borst, 2 Bank. Reg. 62. But the bankrupt court has no power to discharge a bankrupt from arrest on state process, in an action of tort, in the nature of deceit; and evidence is not admissible to contradict the averments in the declaration. Ex parte Devoe, 16 Am. L. R. 690; 6. c. 2 Bank. Reg. 11; Ex parte Patterson, 1 Bank. Reg. 58; Ex parte Pettis, 16 Am. L. R. 695. Nor will a bankrupt be dis charged from arrest for a debt contracted in a fiduciary capacity, as a commission merchant. Ex parte Kimball, 2 Bank. Reg. 114;

8. c. 6 Int. R. Rec. 215. And see Ex parte Jacoby, 6 Int. R. Rec. 149; Ex parte Simpson, 2 Bank. Reg. 17.

(c) No second or further meeting of creditors ought to be called, or requested by the assignee, unless there be moneys in his hands for a dividend. Ex parte Son, 1 Bank. Reg. 58; s. c. 15 Pitts. L. J. 242. The bankrupt may be discharged, though the second and third meetings were not held at the expiration of three and six months respectively from the date of the adjudication. Ex parte Littlefield, 3 Bank. Reg. 13.

(d) The distribution of the assets of a bankrupt cannot be interfered with by state process. Ex parte Bridgman, 2 Bank. Reg. 84.

(e) What business may be transacted at such adjourned meetings. Ex parte Sherwood, 25 Leg. Int. 76; s. c. 1 Bank. Reg. 74. (g) The surplus funds in the hands of the assignee, after settlement of the estate, where no debts have been proved, and there is reasonable cause to believe that none will be proved, will be ordered to be paid to the bankrupt, on his petition, setting forth the facts. Ex parte Hoyt, 3 Bank. Reg. 13.

assignee may, under the direction of the court, sell and assign such debts or other 2 March 1867. property in such manner as the court shall order.

subsequent proof

68. No dividend already declared shall be disturbed by reason of debts being subse- Dividends not to quently proved, but the creditors proving such debts shall be entitled to a dividend be disturbed, by equal to those already received by the other creditors, before any further payment is of claims. made to the latter.

signees prior to

69. Preparatory to the final dividend, the assignee shall submit his account to the Accounts of ascourt and file the same, and give notice to the creditors of such filing, and shall also final dividend. give notice that he will apply for a settlement of his account, and for a discharge from all liability as assignee, at a time to be specified in such notice; and at such time, the court shall audit and pass the accounts of the assignee, and such assignee shall, if Examination of required by the court, be examined as to the truth of such account, and if found correct he shall thereby be discharged from all liability as assignee to any creditor of the bankrupt. The court shall thereupon order a dividend of the estate and effects, or of such part thereof as it sees fit, among such of the creditors as have proved their claims, in proportion to the respective amount of their said debts. (a)

assignee.

70. In addition to all expenses necessarily incurred by him in the execution of his Compensation of assignee. trust, in any case, the assignee shall be entitled to an allowance for his services in such case, on all moneys received and paid out by him therein, for any sum not exceeding one thousand dollars, five per centum thereon; for any larger sum, not exceeding five thousand dollars, two and a half per centum on the excess over one thousand dollars; and for any larger sum, one per centum on the excess over five thousand dollars. And if, at any time, there shall not be in his hands a sufficient amount of money to defray the necessary expenses required for the further execution of his trust, he shall not be obliged to proceed therein, until the necessary funds are advanced or satisfactorily secured to him.

ditors.

71. If by accident, mistake or other cause, without fault of the assignee, either or Power to order both of the said second and third meetings should not be held within the times limited, meetings of cre the court may, upon motion of an interested party, order such meetings with like effect as to the validity of the proceedings as if the meeting had been duly held. (b) 72. In the order for a dividend, under this section, the following claims shall be Priority of debts entitled to priority or preference, and to be first paid in full in the following order :-I. The fees, costs and expenses of suits, and the several proceedings in bankruptcy under this act, and for the custody of property, (c) as herein provided: (d)

II. All debts due to the United States, and all taxes and assessments under the laws thereof: (e)

III. All debts due to the state in which the proceedings in bankruptcy are pending, and all taxes and assessments made under the laws of such state: (g)

IV. Wages due to any operative, (h) clerk or house servant, to an amount not exceeding fifty dollars, for labor performed within six months next preceding the first publication of the notice of proceedings in bankruptcy:

V. All debts due to any persons who, by the laws of the United States, are or may be entitled to a priority or preference, in like manner as if this act had not been passed: Always provided, That nothing contained in this act shall interfere with the assessment and collection of taxes by the authority of the United States or any state.

X. OF THE DISCHARGE.

and claims.

14 Stat. 531.

73. At any time after the expiration of six months from the adjudication of bank- 2 Mar. 1867 ? 29. ruptcy, or if no debts have been proved against the bankrupt, or if no assets have come to the hands of the assignee, at any time after the expiration of sixty days, (i) Application for and within one year from the adjudication of bankruptcy,(k) the bankrupt may apply

(a) See Ex parte Brisco, 2 Bank. Reg. 78. (b) Anon., 1 Bank. Reg. 1.

(c) See Ex parte Bogert, 2 Bank. Reg. 178.

(d) The claim of the bankrupt's attorney for services and disbursements is not one to be paid in full. Ex parte Heirschberg, 1 Bank. Reg. 195.

(e) Where the members of a firm become individually bound to the United States, as accommodation sureties, on the bankruptcy of the firm, the government is not entitled to priority of payment out of the partnership assets. Ex parte Webb, 9 Int. R. Rec. 169; B. c. 2 Bank. Reg. 183; 2 Am. L. T. Bank. 87.

(g) A state has, in her sovereign capacity, a lien for taxes, which has precedence over that of a prior mortgage-creditor; but other liens held by a state are to be discharged in the order of their date. Ex parte Brand, 2 Am. L. T. Bank. 66.

(h) An apprentice is such operative. Ex parte Steiner, 1 Penn. L. J. 368.

(i) The bankrupt may apply for a discharge, at the expiration of sixty days, though debts have been proved, if there be no assets. Ex parte Woolums, 1 Bank. Reg. 131. When at the time of the application for a discharge, the assignee has neither received nor paid any moneys on account of the estate, the case

discharge.

is to be regarded as one in which no assets have come into his hands. Ex parte Dodge, 16 Am. L. R. 438; s. c. 1 Bank. Reg. 115, The bankrupt may apply for a discharge at the expiration of sixty days, without any certificate from the assignee. Ex parte Bellamy, 1 Ben. 426. Where debts are proved and there are assets, application for a discharge cannot be filed before the expiration of six months from the adjudication. Ex parte Bodenheim, 2 Bank. Reg. 133.

(k) It is only where the bankrupt can apply for his discharge within less than six months from the adjudication, that he must apply within a year, in order to obtain a discharge. Ex parte Greenfield, 2 Bank. Reg. 98, 100; Ex parte Martin, Ibid. 169. This is the construction of the act adopted by the committee on the revision of the laws (Jenckes, Ch.) in a report to congress on the 10 February 1869. 26 Leg. Int. 85. And the conflicting decisions may be considered overruled. See Ex parte Willmott, 2 Bank. Reg. 76. Where the application for a discharge by a bankrupt without assets, is made more than a year after the adjudication, the granting or withholding of it, is within the discretion of the court; the bankrupt may explain the causes of the delay. Ex parte Canaday, 3 Bank. Reg. 3. But see Ex parte Martin, 2 Bank. Reg. 169.

Notice.

2 March 1867. to the court (a) for a discharge from his debts; and the court shall thereupon order notice to be given by mail to all creditors who have proved their debts,(b) and by publication at least once a week in such newspapers as the court shall designate, (c) due regard being had to the general circulation of the same in the district, or in that portion of the district in which the bankrupt and his creditors shall reside, to appear on a day appointed for that purpose, and show cause why a discharge should not be granted to the bankrupt.(d)

Conditions of discharge.

74. No discharge shall be granted, or, if granted, be valid, if the bankrupt has wilfully sworn falsely in his affidavit annexed to his petition, schedule or inventory,(e) or upon any examination in the course of the proceedings in bankruptcy, in relation to any material fact concerning his estate or his debts, or to any other material fact:

Or if he has concealed any part of his estate or effects, (g) or any books or writings relating thereto; (h) or if he has been guilty of any fraud or negligence in the care, custody or delivery to the assignee of the property belonging to him at the time of the presentation of his petition and inventory, excepting such property as he is permitted to retain under the provisions of this act; or if he has caused, permitted or suffered any loss, waste or destruction thereof:

Or if, within four months before the commencement of such proceedings, he has procured his lands, goods, money or chattels to be attached, sequestered or seized on execution:(i)

Or if, since the passage of this act,(k) he has destroyed, mutilated, altered or falsified any of his books, documents, papers, writings or securities, or has made or been privy to the making of any false or fraudulent entry in any book of account or other document, with intent to defraud his creditors:

Or has removed or caused to be removed any part of his property from the district, with intent to defraud his creditors: (1)

Or if he has given any fraudulent preference contrary to the provisions of this act; (m) or made any fraudulent payment, (n) gift, transfer, conveyance or assignment of any part of his property; or has lost any part thereof in gaming; or has admitted a false or fictitious debt against his estate; or if, having knowledge that any person has proved such false or fictitious debt, he has not disclosed the same to his assignee within one month after such knowledge:

Or if, being a merchant or tradesman, he has not, subsequently to the passage of this act, kept proper books of account: (0)

Or if he, or any other person in his behalf, has procured the assent of any creditor to the discharge, or influenced the action of any creditor, at any stage of the proceedings, by any pecuniary consideration or obligation: (p)

Or if he has, in contemplation of becoming bankrupt, (q) made any pledge, payment,

(a) Where there is no opposition, the order for a final discharge may be made by the register. Ex parte Bellamy, 1 Ben. 426. But if a creditor oppose the discharge, he must certify the proceedings to the court. Ex parte Hughes, 1 Bank. Reg. 9; Ex parte Puffer, 2 Bank. Reg. 17.

(b) Such notice need only be given to those creditors who have proved their debts. Ex parte McIntire, 1 Ben. 543.

(c) If no debts be proved notice of the application for final discharge is to be given by publication. Anon., 6 Int. R. Rec. 149. (d) If the bankrupt do not apply for his discharge within three months, the notice need not refer to the second and third meetings of creditors. Anon., 1 Bank. Reg. 1.

(e) It must be shown that such act was intentional, to bar a discharge. Ex parte Wyatt, 2 Bank. Reg. 94. The omission of the names of certain creditors from the schedule, with their knowledge and consent, will not bar a discharge, on the objection of other creditors. Ex parte Needham, 2 Bank. Reg. 124; s. c. 2 Am. L. T. Bank. 39; see Ex parte Rathbone, 1 Bauk. Reg. 145; Ex parte Hill, Ibid. 114; Ex parte Hussman, 2 Bank. Reg. 140. Nor can the creditor, so consenting, object. Ex parte Whetmore, 2 Am. L. T. 105. Where a husband's equitable interest in his wife's property has been sold under execution, he has no longer any interest to be returned in his schedules. Ex parte Hummitsh, 2 Bank. Reg. 3.

(g) Ex parte Goodridge, 2 Bank. Reg. 105. If the bankrupt has the possession and use of property, which he wilfully omits from his schedules and retains from the assignee, it is no answer to a charge of concealment, that it belonged, of right, to assignees under an earlier assignment in insolvency, under the state law. Ex parte Beal, 2 Bank. Reg. 178; s. c. 2 Am. L. T. Bank. 95.

(h) If the bankrupt has possession of the joint estate and books of account of a firm of which he is a member, he must disclose them to his separate assignee; if he wilfully fail to do so, a discharge will not be granted. Ex parte Beal, 2 Bank. Reg. 178; s. c. 2 Am. L. T. Bank. 95.

(i) The property of a debtor having been attached by a hostile creditor, without the knowledge of the debtor, his subsequent omission to have himself adjudged a voluntary bankrupt, will not be deemed evidence of an intent to give a preference. Ex parte Belden, 2 Bank. Reg. 14.

(k) See Ex parte Rosenfield, 1 Bank. Reg. 161.

(1) One who was not a creditor at the time of the alleged re

moval of property, or whose claim was then barred by the statute of limitations, cannot oppose a discharge on such ground. Ex parte Burk, 2 Am. L. T. Bank. 45.

(m) By this is meant only a preference in fraud of the bankrupt law, that is, contrary to its provisions. Ex parte Rosenfield, 1 Bank. Reg. 161. A fraudulent sale before the passage of the act, is insufficient, in itself, to bar a discharge. Ex parte Hussman, 2 Bank. Reg. 140. What acts amount to a fraudulent preference which will bar a discharge. Ex parte Rosenfeld, 17 Am. L. R. 44; 8. c. 2 Bank. Reg. 49; Ex parte Gay, Ibid. 114; Ex parte Lewis, Ibid. 145; s. c. 2 Am. L. T. Bank. 75.

(n) Where a trader knows, or in reason ought to know, that be is insolvent, and makes payment of an independent debt, not in the course of trade, and without the creditor's knowledge of such insolvency, it is a fraudulent preference and bars a discharge. Ex parte Gay, 2 Bank. Reg. 114; Ex parte Lewis, Ibid. 145; s. c. 16 Pitts. L. J. 45; Wilson v. Brinkman, 2 Bank. Reg. 149. And see Ex parte Randall, 2 Am. L. T. Bank. 69. 8. c. 3 Bank. Reg. 4. The intent is to be proved as a fact, either by direct evidence, or as the necessary and certain consequence of other facts clearly proved. Morgan v. Mastick, 2 Bank. Reg. 163.

(0) To bar a discharge, it is not required that the omission to keep proper books of account should have been wilful, or with a fraudulent intent. Ex parte Solomon, 25 Leg. Int. 364; 8. c. 2 Bank. Reg. 94. Ex parte Newman, 2 Bank. Reg. 99. What are proper books of account must be determined by the circumstances of the particular case. Ex parte Newman, 2 Bank. Reg. 99. A cash book would seem to be indispensable. Ex parte Gay, 2 Bank. Reg. 114. Ex parte Littlefield, 3 Bank. Reg. 13. So is an invoice book, or stock book, for a tradesman. Ex parte White, 2 Bank. Reg. 179; s. c. 2 Am. L. T. 105. Where a trade formerly carried on by the bankrupt has been finally closed, and there is nothing for the assignee to do, or inquire into, concerning the same, the failure to keep proper books of account for that business, will not bar a discharge. Ex parte Keach. 3 Bank. Reg. 3. (p) See Ex parte Mawson, 1 Bank. Reg. 33, 153.

(q) To bar a discharge, a fraudulent payment by way of preference, must have been made in contemplation of bankruptcy; or the creditor must have been a party to the fraud. Ex parte Locke, 2 Bank. Reg. 123. See Ex parte Rosenfield, 1 Bank. Reg. 161; Ex parte Lawson, 2 Bank. Reg. 125.

transfer, assignment or conveyance of any part of his property, directly or indirectly, 2 March 1867. absolutely or conditionally, for the purpose of preferring any creditor or person having

a claim against him, or who is or may be under liability for him, or for the purpose

of preventing the property from coming into the hands of the assignee, or of being distributed under this act in satisfaction of his debts: (a)

Or if he has been convicted of any misdemeanor under this act, or has been guilty of any fraud whatever contrary to the true intent of this act: (b)

rupt.

And before any discharge is granted, the bankrupt shall take and subscribe an oath, Oath of bankto the effect that he has not done, suffered or been privy to any act, matter or thing specified in this act as a ground for withholding such discharge, or as invalidating such discharge if granted. (c)

Ibid. 30.

ruptcy, when

75. No person who shall have been discharged under this act, and shall afterwards become bankrupt, on his own application, shall be again entitled to a discharge, whose Discharge on estate is insufficient to pay seventy per centum of the debts proved against it, unless second barkthe assent in writing of three-fourths in value of his creditors who have proved their granted. claims is filed, at or before the time of application for discharge; but a bankrupt who shall prove to the satisfaction of the court that he has paid all the debts owing by him at the time of any previous bankruptcy, or who has been voluntarily released therefrom by his creditors, shall be entitled to a discharge in the same manner and with the same effect as if he had not previously been bankrupt.

Ibid. 31.

Opposing credit

76. Any creditor (d) opposing the discharge of any bankrupt may file a specification in writing of the grounds of his opposition; (e) and the court may, in its discretion, order any question of fact so presented to be tried at a stated session of the district court.(g) ors. 77. If it shall appear to the court that the bankrupt has in all things conformed to his duty under this act, (h) and that he is entitled under the provisions thereof, to receive a discharge, (i) the court shall grant him a discharge from all his debts, except as hereinafter provided, and shall give him a certificate thereof under the seal of the court, in substance as follows:

Whereas ".

Ibid. 32.

District Court of the United States: District of has been duly Form of dis charge. adjudged a bankrupt under the act of congress establishing a uniform system of bankruptcy throughout the United States, and appears to have conformed to all the requirements of law in that behalf, it is therefore ordered by the court, that said· be for ever discharged from all debts and claims which by said act are made provable against his estate, and which existed on the day of on which day the petition for adjudication was filed by (or against) him; excepting such debts, if any, as are by said act excepted from the operation of a discharge in bankruptcy. Given under my hand and the seal of the court at in the said district, this day of A. D. -. (Seal) Judge. 78. No debt created by the fraud or embezzlement of the bankrupt, (k) or by his defalcation as a public officer, or while acting in any fiduciary character,(7) shall be

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(a) Where the bankrupt had made a general assignment, to which the creditors had given their assent in writing, it was held, that they were estopped from alleging that it was made for the purpose of preventing a distribution under the bankrupt law. Ex parte Schuyler, 2 Bank. Reg. 169; s. c. 2 Am. L. T. Bank. 85. (b) See Ex parte Beatty, 2 Bank. Reg. 177.

(c) Where the bankrupt has taken the oath required by this clause, and a creditor opposes the discharge, with specifications, which he subsequently withdraws, the bankrupt should again take and subscribe the oath, after such withdrawal. Ex parte Machad, 2 Bank. Reg. 113.

(d) In Ex parte Shepard, 16 Am. L. R. 484, s. c. 1 Bank. Reg. 115, it was ruled by Hall, J., that any creditor may oppose the discharge, whether he have proved the debt or not: Judge Blatchford arrived at a different conclusion, in Ex parte Levy, 1 Bank. Reg. 66, where it was held, that creditors who had not proved their claims, were not competent to oppose the discharge: and Clerke, J., has decided that any person who shows an into rest may oppose, whether technically a creditor or not; Ex parte Boutelle, 2 Bank. Reg. 51; and accordingly, it has been held, by Deady, J., that one not a creditor at the time of an alleged fraudulent removal of property, or whose claim was then barred by the statute of limitations, has no standing in court as an opposing creditor. Ex parte Burk, 2 Am. L. T. Bank. 45. And see, to this point, the following cases decided under the act of 1841: Ex parte King, 1 N. Y. Leg. Obs. 22; Ex parte Traphagen, Ibid. 98; Ex parte Tebbetts, 5 Law Rep. 259; Ex parte Book, 3 McL. 317.

(e) A creditor may file his specifications at any time after making proof of his claim. Ex parte Baum, 1 Ben. 274. The specifications must set forth the grounds of opposition, with reasonable definiteness. Ex parte Waggoner, 1 Ben. 532; Ex parte Rathbone, 1 Bank. Reg. 50; s. c. 25 Leg. Int. 60. Otherwise, they will be disregarded. Ex parte Hill. 1 Bank. Reg. 42; Ex parte Beardsley, Ibid. 52; Ex parte Son, Ibid. 58; Ex parte Rathbone, Ibid. 65; Ex parte Mawson, Ibid. 115; Ex parte Tyrrel. 2 Bank. Reg. 73; Ex parte Hansen, Ibid. 75; Ex parte Dreyer, Ibid. 76. But incomplete specifications are amendable. Ex parte McIntire, 1 Bank. Reg. 115; Ex parte Hill, Ibid. 42. The proceed

Ibid. 33.

ings upon an order to show cause may, if necessary, be adjourned. Ex parte Mawson, 1 Bank. Reg. 41; Ex parte Thompson, Ibid. 65; Ex parte Seckendorf, 15 Pitts. L. J. 450; s. c. 1 Bank. Reg. 185. And the creditor may file his specifications on the day to which it stands adjourned. Ex parte Tallman. 1 Bank. Reg. 145. But he must file his specifications within the time prescribed by rule of court. Ex parte McVey, 2 Bank. Reg. 85. He may, how ever, have leave to file them, nunc pro tune. Ex parte Grefe, 2 Bank. Reg. 106. On the hearing, the burden of proof is on the creditor. Ex parte Okell, 2 Bank. Reg. 35.

(g) This means a trial by jury, Gordon v. Stott, 16 Am. L. R. 749. A trial by jury may be awarded, though not specially prayed for. Ex parte Lawson, 2 Bank. Reg. 125. On the trial, the burden of proof is on the creditor. Ex parte Hill, 1 Bank. Reg. 42.

(h) Where specifications in opposition to the discharge are filed, the register may certify conformity, except in the particulars covered by the specifications. Ex parte Pulver, 2 Bank. Reg. 101. If the requirements of the act have been complied with, a discharge can only be refused on some ground set forth in the 29th section of the act. Ex parte Elliott, 2 Bank. Reg. 44. (i) It is incumbent on the bankrupt, to see that all the necessary steps are regularly taken; otherwise he cannot receive a discharge. Ex parte Bellamy, 1 Ben. 426.

(k) Inasmuch as the discharge does not bar a debt created by fraud, the existence of such debt is no ground for a refusal of it. Ex parte Rosenfield, 16 Am. L. R. 618; 8. c. 1 Bank. Reg. 161; Ex parte Patterson, 1 Bank. Reg. 58; Ex parte Wright, 2 Bank. Reg. 14, 57; s. c. 15 Pitts. L. J. 553; Ex parte Bashford, 2 Bank. Reg. 26; Ex parte Pettis, Ibid. 17; Ex parte Clark, Ibid. 44; Ex parte Doody, Ibid. 74; Ex parte Stokes, Ibid. 76. But the debt may be proved. Ex parte Wright, 2 Bank. Reg. 14; 8. c. 15 Pitts. L. J. 553; Ex parte Rundle, 2 Bank. Reg. 49. See Ex parte Robinson, Ibid. 108.

(1) That the creditor's debt is a fiduciary one is no ground for withholding the discharge; it is not affected by it. Ex parte Tracy, 2 Bank. Reg. 98. A balance due by a factor to his principal is not a fiduciary debt, within the meaning of the act. parte Seymour, 1 Ben. 348; Chapman v. Forsyth, 2 How. 202.

Ex

2 March 1867. What debts not

to be affected by the discharge.

Ibid. 34.

Effect of the discharge.

When the valid

ity of discharge may be contested.

Application.

Notice.

Decree.

2 Mar. 1867 35. 14 Stat. 534.

Preferences

given within four months to be void.

discharged under this act; (a) but the debt may be proved, and the dividend thereon shall be a payment on account of said debt; and no discharge granted under this act shall release, discharge or affect any person liable for the same debt for or with the bankrupt, either as partner, joint contractor, endorser, surety or otherwise. In all proceedings in bankruptcy commenced after the first day of January 1869, no discharge shall be granted to a debtor whose assets shall not be equal to fifty per centum of the claims proved against his estate upon which he shall be liable as the principal debtor, unless the assent in writing of a majority in number and value of his creditors to whom he shall have become liable as principal debtor, and who shall have proved their claims, be filed in the case, at or before the time of the hearing of the application for discharge.(b)

79. A discharge duly granted under this act shall, with the exceptions aforesaid, release the bankrubt from all debts, claims, liabilities and demands which were or might have been proved against his estate in bankruptcy; (c) and may be pleaded, by a simple averment that on the day of its date such discharge was granted to him, setting the same forth in hæc verba,(d) as a full and complete bar to all suits brought on any such debts, claims, liabilities or demands; and the certificate shall be conclusive evidence in favor of such bankrupt of the fact and the regularity of such discharge: 80. Always provided, That any creditor or creditors of said bankrupt, whose debt was proved or provable against the estate in bankruptcy, who shall see fit to contest the validity of said discharge, on the ground that it was fraudulently obtained, may, at any time within two years after the date thereof, apply to the court which granted it, to set aside and annul the same. Said application shall be in writing, shall specify which, in particular, of the several acts mentioned in section twenty-nine it is intended to give evidence of against the bankrupt, setting forth the grounds of avoidance, and no evidence shall be admitted as to any other of the said acts; (e) but said application shall be subject to amendment at the discretion of the court. The court shall cause reasonable notice of said application to be given to said bankrupt, and order him to appear and answer the same, within such time as to the court shall seem fit and proper. If, upon the hearing of said parties, the court shall find that the fraudulent acts, or any of them, set forth as aforesaid by said creditor or creditors against the bankrupt, are proved, and that said creditor or creditors had no knowledge of the same until after the granting of said discharge, judgment shall be given in favor of said creditor or creditors, and the discharge of said bankrupt shall be set aside and annulled. But if said court shall find that said fraudulent acts and all of them, set forth as aforesaid, are not proved, or that they were known to said creditor or creditors before the granting of said discharge, then judgment shall be rendered in favor of the bankrupt, and the validity of his discharge shall not be affected by said proceedings.

XI. FRAUDULENT PREFERENCES AND CONVEYANCES.

81. If any person, being insolvent, or in contemplation of insolvency, within four months before the filing of the petition by or against him, with a view to give a preference to any creditor or person having a claim against him, (g) or who is under any liability for him, procures any part of his property to be attached, sequestered or seized on execution, or makes any payment, pledge, assignment, transfer or conveyance of any part of his property, either directly or indirectly, absolutely or conditionally, the person receiving such payment, pledge, assignment, transfer or conveyance, or to be benefited thereby, or by such attachment, having reasonable cause to believe such person is insolvent, (h) and that such attachment, payment, pledge, assignment or con

But where the bankrupt sold goods on commission, and refused to account, it was held to be a fiduciary debt, and unaffected by the discharge. Ex parte Kimball, 2 Bank. Reg. 74; 8. c. Ibid. 114. See Ex parte Lord. 5 Law Rep. 258; Ex parte Wright, 1 West. L. J. 143. Under the act of 1841, it was held that a debt resulting from the neglect of an attorney to pay over moneys collected for his client, was not a fiduciary one. Wolcott v. Hodge, 15 Gray 547.

(a) A fiduciary debt is merged in a judgment obtained for it, before the institution of proceedings in bankruptcy. Wolcott v. Hodge, 15 Gray 547; 8. P. Bangs v. Watson, 9 Gray 211; Hundrahan v. Cheshire Iron Works, 4 Allen 396.

(b) So amended by act 27 July 1868. 15 Stat. 227. This act applies to cases commenced between the 1 June 1868, and the date of its passage. Ex parte Billing. 2 Bank. Reg. 161.

(c) A judgment obtained on breach of promise to marry, is provable in bankruptcy, and barred by the discharge. Ex parte Sidle, 2 Bank. Reg. 77. So is a judgment in trespass for malicious imprisonment. Ex parte Simpson, 2 Bank. Reg. 17. The discharge does not affect lien-creditors. Ex parte Campbell, 16 Am. L. R. 100; s. c. 1 Am. L. T. Bank, 30; Ex parte Schnepf, 16 Am. L. R. 204; s. c. 6 Int. R. Rec. 214; Ex parte Bernstein, Ibid. 222. The discharge will not bar an attachment, at the suit of a creditor omitted from the schedule, which has been levied on property fraudulently concealed from the assignee. Barnes v. Moore, 2 Bank. Reg. 174.

(d) A discharge in bankruptcy must be specially pleaded. Fellows v. Hall, 3 McL. 281; s. c. Ibid. 487. It is not necessary to set forth in a plea of bankruptcy, more than the certificate and discharge. White v. How, 3 McL. 291. If a discharge be pleaded, the plaintiff may show its invalidity through the fraud of the defendant. Fellows v. Hall, 3 McL. 487. What must be averred in a replication to the plea of bankruptcy. Hood v. Spencer, 4 McL. 168. Where the discharge is granted, when too late to be pleaded, the remedy is by motion for a perpetual stay of execution. Cornell v. Dakin, 38 N. Y. 253.

(e) A discharge will not be vacated on general averments. Ex parte McIntire, 1 Bank. Reg. 115.

(g) An endorser though not specially named is included within the terms of this clause. Ahl v. Thorner, 1 Chicago Leg. News 337; s. c. 16 Pitts. L. J. 78; 2 Am. L. T. 104.

(h) If a creditor, having reasonable cause to believe his debtor insolvent, purchase goods of him, and the debtor make the sale with a view of giving a preference, the transaction is void as against the assignee in bankruptcy. Reasonable cause, means a state of facts which would put a prudent man upon inquiry. Ex parte McDonough, 1 Chicago Leg. News 361; s. c. 16 Pitts. L. J. 110. But a mortgage taken as security, though out of the usual course of business, is valid, if the creditor had no reasonable cause to believe his debtor to be insolvent. Lee v. Franklin Avenue German Savings Institution, 1 Chicago Leg. News 370. See Ex parte Palmer, 2 Am. L. T. 107.

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