BANKRUPT PERSON. A person who has been adjudicated a bankrupt by the Court of Bankruptcy. In the early days of banking, when a banker failed, his bench, or banco. at which he did business, was broken by the people, whence the word bankrupt. (It. banco, a bench. Lat. ruptus, broken.) When a banker receives notice that a customer has committed an act of bank ruptcy, or that a receiving order has been made, he must not pay any further cheques upon the account (not even if they have been specially provided for), and he should return them marked " Refer to drawer." (See ACTS OF BANKRUPTCY.) On the making of a receiving order an official receiver is thereby constituted receiver of the property of the debtor (see RECEIVING ORDER), and any funds which a banker may hold belonging to the debtor must be handed over, when required, to the official receiver or trustee in bankruptcy.
Any personal earnings of a bankrupt during his bankruptcy may be used by him for the support of himself a.nd family, but. if he earns more than is reasonably necessary for such a purpose. the surplus belongs to the trustee, if he claims it. Such money includes wages earned by the personal labours of the bankrupt, but it does not include money earned by carrying on a trade or business.
Any property acquired by a bankrupt prior to his discharge is liable to be claimed by his trustee. In " The Laws of England," by the Earl of Halsbury, it is stated that " until the trustee intervenes, all trans actions by a bankrupt after his adjudication with any person dealing with him bo;ai fide and for value in respect of his after acquired property other than real estate, with or without knowledge of the bankruptcy, are valid ; the trustee, when he intervenes, is bound by such transactions, and by the rights of third persons so acquired."
A banker cannot, as a rule, recognise which is " after acquired property " and which is not, and therefore he should not open an account with an undischarged bank rupt, nor should he cash a cheque to a payee or indorser who is known to be an undis charged bankrupt, otherwise he may come into conflict with the claims of the trustee and beobliged to account to him for moneys paid to the bankrupt or by the bankrupt's order.
Caution is necessary if the wife of an undischarged bankrupt wishes to open an account in order to carry on the business, unless the trustee has consented thereto.
With respect to a bankrupt obtaining credit, Section 31 of the Bankruptcy Act, 1883, provides :— Where an undischarged bankrupt who has been adjudged bankrupt under this Act obtains credit to the extent of twenty pounds or upwards from any person without informing such person that he is an undis charged bankrupt. he shall be guilty of a misdemeanor, and may be dealt with and punished as if he had been guilty of a mis demeanor under the Debtors Act, 18(49, and the provisions of that Act shall apply to proceedings under this Section." By Section 32 of the same Act —