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Law Review
And American Law Register

Published by the University of Pennsylvania Law School, at 236 Chestnut Street, Phila-

delphia, Pe, and 34th and Chestnut Streets, Philadelphia, Pa.





Writers who deal with the history of English bankruptcy almost unanimously regard the Act of Parliament of 34 & 35 Henry VIII, c. 4 (1542) as the earliest legislation on the subject. Some few, indeed, have even maintained that the first real bankruptcy laws in England were those of 4 Anne, c. 17 (1705), and 10 Anne, c. 15 (1711). It is true that in the modern view of the institution of bankruptcy the Act of Henry VIII can hardly be spoken of as a true bankruptcy law, for it is in fact little more than a criminal statute directed against men who indulged in very prodigal expenditures and then made off. The feature of the Statutes of Anne that has led some authors to look upon them as the earliest English bankruptcy legislation is the discharge of the bankrupt who conformed to the provisions of the law.?

It is the purpose of this article to outline the very earliest beginnings of English bankruptcy. In our inquiry, we shall close where others have seen fit to begin; the early eighteenth century will mark the period of our conclusion. In the most ancient

The criminal character of bankruptcy has still survived. Lord Justice Moulton, in In re A Debtor, 2 K. B. 66 (1910), said, “What the petitioner seeks by his petition is in the highest degree penal in its consequences. It amounts to loss of civil status, carrying with it grave disqualification."

* That the discharge is not indispensable to a bankruptcy law is pointed out in the article on "The Early History of Bankruptcy,66 Univ. OF PA. L. REV. 224 (April, 1918).


records of Eng!isfr. society and jurisprudence we shall search for intimations.pointing to the existence and the gradual development of the various features of the institution of bankruptcy,the.jreyention of fraud on creditors, the process of collective exécation, and the special management of the insolvent estate during bankruptcy.


One writer has said: “Perhaps it can in no case be less necessary to investigate the etymology of a word, because the whole system of the bankrupt law is founded upon positive statute.3 For the purposes of the practitioner this is no doubt true, but for the historian, the etymology and derivation of the word “bankrupt” must be of some value.

Lord Coke says that "we have fetched as well the name as the wickedness of bankrupts from foreign nations; for banque in the French is mensa, and a banquer or exchanger is mensarius, and route is a sign or mark; as we say, a cart rout is the sign or mark where the cart hath gone; metaphorically, it is taken from him that hath wasted his estate and removed his banque, so as there is left but a mention thereof. Some say it should be derived from banque and rompue, as he that hath broken his banque or state." Mr. Justice Heath says ó that the word comes from the Italian banco rotto, but it appears rather to be immediately formed from the Latin bancus ruptus.

It is interesting to find that the first time the word is used in English legislation, it is not applied to the agent or person, but to the act or thing, as in the title to the Statute 34 & 35 Henry VIII: “An act against such persons as do make bankrupt." It is of further interest to note that, in the pleadings and the commission in bankruptcy, "decoctor" was the word used in bankruptcy proceedings, until the statute of 4 George II, c. 26

• Cooke. “Bankrupt Laws,” p. I.
•4 Inst. 277; 2 Bl. Com. 472, n.
Judine v. Da Cossen, i New Reports 234 (Eng. 1805).

(1730). As this word? would naturally be construed spendthrift, and as every spendthrift is not a bankrupt, there was always added after it the words, “Anglice a bankrupt.” 8

LOCAL LAW AND THE LAW MERCHANT. Prior to the Norman Conquest, "business had hardly got beyond ready money between parties both present," and there was not much room for trade confidences. How far the popular law took any notice of petty trading disputes, such as there were, we are not informed; "it seems likely that for the most part they were left to be settled by special customs of traders, and possibly by special local tribunals, in towns and markets. Merchants trafficking beyond seas, in any case, must have relied on the custom of their trade and order rather than the cumbrous formal justice of the time," and one would think some provision must have been made to protect the merchant creditors of an insolvent trader from fraud on the part of their debtor, a provision common to the law of most continental countries during the Middle Ages.

With the improved conditions of the eleventh century, trade and commerce in England revived, being greatly stimulated by the Crusades. The Gild merchant made his appearance after the Norman Conquest, which widened the horizon of the English trader, and the close union between England and Normandy naturally led to an increase in foreign commerce, to which, in turn, must have encouraged domestic trade.

The new transactions of merchants were beyond the scope of the old folk-law of the market. Gradually, the usages of the merchants hardened into a cosmopolitan law, often at positive variance with the principles of local law, but none the less acquiesced in for mercantile transactions, and enforced by tribunals of commanding eminence. Occasionally, some special rule of the Lex Mercatoria received official sanction from king or parliament, but for the most part, the Law Merchant was obeyed, no one knew why.11

* All judicial proceedings were in Latin prior to the enactment of that statute.

'It is used in Cicero's Oration against Catiline in describing Catiline's army.

Sergeant Goodrige's "Forms."

'Sir Frederick Pollock, “English Law Before the Norman Conquest," Essays I, p. 104.

10 Cunningham, "English Industry," 118, 133; Hallam, "Middle Ages,"

iii, 23.

Sir Frederick Pollock says, 12 “The Law Merchant, as it existed through the Middle Ages, was undoubtedly a body of cosmopolitan custom, vesting its claim to allegiance not on any express reception by municipal authority, but on its intrinsic reasonableness evidenced by the general consent and usage of the persons concerned. It was recognized and constantly described as being part of the Law of Nature"; and Sir John Davies says, “The Law Merchant, as it is a part of the law of nature and nations, is universal and one and the same in all countries in the world."

The charters granted to merchant gilds and burgesses expressly or by implication recognized the existence of market and other courts, in which the Law Merchant and not the Common Law was administered. The records edited by Professor Gross 13 show that such courts were in working order as early as the first half of the thirteenth century. It would seem that up to the reign of Edward III, the Law Merchant was administered by local courts,'* for it was not until 1473 that Bishop Stillington, Edward IV's Chancellor, decided that suits between merchant strangers ought to be determined by the law of nature in the Chancery.15

Edward Jenks regards it impossible at present to say whether or not any informal bankruptcy process was practiced

» Edward Jenks, "Law and Politics in the Middle Ages,” Essays I, pp. 47-48.

“The Expansion of the Common Law," p. 117. It appears that the Law Merchant was at least partly based on Roman Law. Thomas Edward Scrutton, “Roman Law Influence in Chancery, Church Courts, Admiralty and Law Merchant," Essays I, p. 220.

Publications of the Selden Society, Vol. 23.

William Searle Holdsworth, “History of English Law," Vol. I, pp. 300-337.

18 “The History of the Law of Nature," Journ. Soc. Comp. Leg., 1900, p. 431; Pollock, “Principles of Contracts," 7th Ed., p. 141.


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