BANKRUPTCY, in its more general and ex tended sense, may be defined insolvency, actual or presumed, followed by some open and public act de noting that the insolvency is irretrievable. He is a a bankrupt " Qui fortunce vitio vel suo, vel partim fortunes partim suo vitio, non solvendo factus,foro cessit." Cicero, 2d Philip.
In the early ages of a state, the law of bankruptcy is uniformly cruel and oppressive. The unfortunate debtoris regarded as a criminal, without distinguishing whetherhis inability has arisen from culpability or from misfortune ; and the law looks merely to the interest of the creditor, without paying any regard to the feelings or to the future comfort of the debtor. The severity of the Roman laws against debtors in the in fancy of the republic, and the oppression of creditors, which occasioned so many popular insurrections and so many secessions to the Mons Sacer, are known to every one. As states advance in civilization, and as commerce becomes more extended, less illiberal notions prevail, and the innocent trader, reduced to bankruptcy by misfortune, becomes an object of compassion rather than of severity. Creditors too begin to sec, that it is for the public interest that the funds of the bank rupt should belong to the creditors at large, instead of being loft to be scrambled for by the diligence of _individuals ; and through the frequency of failures which attends the growth of commerce, the principles of the bankrupt law are examined and matured into a regular system. The great fundamental principle upon which every code of bankrupt law must rest is, that from the moment of the failure, the funds of the bankrupt become the common property of his credi tors at large, and are no longer liable to be disposed of by himself, orto be attached by individual creditors. The perfection of every code must depend upon the manner in which this principle is carried into effect, by the adoption of a simple, economical, and speedy mode of distributing the common fund, It was not till a very late period that the bankrupt law of Scotland assumed a systematic form. We, indeed, at an early date, adopted from the Roman law the mild remedy of the cessio bonorum, by which an honest though insolvent debtor, who was willing to surrender all his effects to his creditors, escaped the hardship of a long imprisonment ; and by the statutes 1621, c. 18, and 1696, c. 5, attempts were made to prevent insolvent debtors from granting any deeds in defraud of their creditors. By this last sta tute, bankruptcy was accurately defined, and its date being fixed, a presumption of law was established against all deeds granted within 60 days of it, in fa vour of prior creditors. Still, however, no plan was devised for a general distribution of the bankrupt's effects. The creditors were left to proceed with
their individual diligence as they best could, and the maxim of law being " Jus auk vigilantibus scrip- tun est," an unfortunate debtor was, on the first suspicion of insolvency, overpowered with a torrent of diligence, which even the best credit could scarce ly withstand. The great increase of commerce du ring the last century, and the consequent frequency of failures, imperiously called for an alteration of this system, and after a variety of experiments, the plan which is now in execution was adopted, by the statute 33 Geo. III. c. 74. This statute, though merely tem porary and experimental, has been repeatedly renew ed; and the system which it establishes, although perhaps stilicapable of considerable improvement, is admitted on all hands to possess great and peculiar ex-. cellencies.
By the statute 1696, c. v. any person may be ren dered a bankrupt who is at the time in Scotland, and subject to its laws. The effect of this bank ruptcy against persons who are not traders, is only such as to enable creditors to challenge undue pre ferences, and to follow forth the ordinary processes for attachment and distribution of the funds. But by the 33d Geo. III., a new process called sequestra tion is introduced, by which the whole estate of a bankrupt trader is adjudged from him, and vested in a trustee for the creditors at large. The statute de scribes the persons liable to bankruptcy by seques tration, to be " in general,. any person who, either for himself, or as agent or factor for others, seeks his , living by buying and selling, or by the workmanship of goods or commodities." All persons capable of entering into trade, are liable to sequestration ; peers and others having privilege of parliament ; unmarried women and widows coming under the description, and also married women who carry on trade or mer chandise independent of their husbands. Trading companies may also be sequestrated. The statute makes the following exceptions: holders of India stock, or stock in any of the banks established by public authority, or in the Friendly Insurance Company, the Forth and Clyde navigation, or other inland na vigations, or the British fisheries, common labourers or workmen for hire, landholders and tenants of land, or hnsbandmen, if such persons be not otherwise bonajde under the foregoing description. A grazier, though he also be a tenant, may be sequestrated, if he deals in cattle not the produce of, nor grazed upon, his own farm. A foreigner who has traded to Scot land, or a Scotsman domiciled abroad, cannot be se questrated although found in Scotland.