The statutes sometimes specify with great minuteness what the discharge shall do, and against what creditors or claims it shall be effectual. Aside from these provisions, it may be considered as a universal rule, that this discharge or certificate operates fully against all creditors whose debts were actually proved. It is as certain, perhaps, that it does not affect debts which were not proved, because they could not be proved from their own nature. (p) The law may not be so certain as to those of a third class, those which might have been proved, but were not so in fact. We hold, however, that the better reasons and the weightier authority lead strongly to the conclusion that all such debts are barred. (q) And, that the statutes of insolvency may have their full beneficial effect as statutes of

236; Steinman v. Magnus, 11 East, 390; Feise v. Randall, 6 T. R. 146; Hawley v. Beverley, 6 Man. & G. 221; Gibson v. Bruce, 5 id. 399. And in an action against a defendant, to recover moneys alleged to have been paid him by the bankrupt, in fraud of the bankrupt laws, &c., the judge, assuming that there was importunity and pressure on the part of the defendant, left it to the jury to say whether the bankrupt had made these payments in consequence of such importunity and pressure, or with a view of giving defendant a fraudulent preference in contemplation of bankruptcy; it was held, that the defendant had no right to complain of this direction. Cook v. Pritchard, 5 Man. & G. 329; Bryant v. Christie, 1 Stark. 329.

(p) Where an action had been brought upon a debt, and before judgment, the debtor took advantage of the insolvent law, and afterwards the creditor proceeded to judgment, it was held, that the original debt was not provable under the insolveney, because merged in the judgment, and that the judgment was not provable, because not in existence at the time of the publication of the notice of issuing the warrant; but that the judgment debt, being thus in its nature incapable of proof, would be a valid and subsisting claim against the insolvent. Sampson v. Clark, 2 Cush. 173. See, for the English doctrine on this point, Ex parte Birch, 4 B. & C. 880; Greenway v. Fisher, 7 id. 436; Kellogg . Schuyler, 2 Denio, 73; Thompson v. Hewitt, 6 Hill, 254; Buss v. Gilbert, 2 M. & S. 70; Ex parte Charles, 16 Ves. 256; May v. Harvey, 14 East,

197; Crouch v. Gridley, 6 Hill, 252; Hen dricks v. Judah, 2 Caines, 25; Bosler v. Kuhn, 8 Watts & S. 183; Savory v. Stocking, 4 Cush. 607.

(7) "The enactments of the bankrupt law treat the bankrupt as the legal owner of the property up to the issuing of the decree, and tie down the title of the assignee to that time, so as to preclude its relation back. All the property then owned by the bankrupt passes to and vests in the assignee, and consequently, all debts existing before and at the date of the decree, are provable under the bankruptcy, and all debts up to that time barred by the bankrupt's certificate of discharge." Prentiss, J., in Downer v. Brackett, 5 Law Rep. 392, 399; Fisher v. Currier, 7 Met. 424; Graham v. Pierson, 6 Hill, 247; Davis v. Shapley, 1 B. & Ad. 54; Fox v. Woodruff, 9 Barb. 498; Hubbell e. Cramp, 11 Paige, 310; Jemison r. Blowers, 5 Barb. 686, where it was held, that a covenant in a deed for quiet enjoyment, was provable in its character, and therefore barred. But not a fine imposed by the Court of Chancery for violation of an injunction: Spalding v. The People, 7 Hill, 301. It seems that a fiduciary debt, which is excepted from the operation of the bankrupt law, may be proved or not, at the option of the creditor. If it is proved, it is barred. If not, the certificate of discharge has no effect whatever on the existence of the debt. In the matter of Tebbetts, 3 Law Rep. 259; Morse v. Lowell, 7 Met. 152; Chapman v. For syth, 2 How. 202.

repose, we should extend them even to debts which were not proved by reason of some personal hinderance or ignorance of the creditor, but which were in their own nature provable. (r)

If the certificate was granted when it ought not to have been, or if it can be impeached on other grounds, and such a certificate is offered in bar to a suit by a creditor, the plaintiff will not be prevented from impeaching it by the mere fact that he had proved his debt. (s)

SECTION XIV.

OF PRIVILEGED OR PREFERRED DEBTS.

While the whole purpose of the insolvent law is to put all the creditors upon exactly the same footing, there are still some debts or claims which are preferred by law, and paid in full. These vary in the different states. Generally, they may be said to be, all amounts due to the United States; (t) all that are due to the State in which the insolvent resides, and the insolvency takes place; and a certain limited amount due for

(r) As to the effect of an election to prove, by a creditor residing in another State, see ante, sect. 2, note (u), p. 437, where the cases are fully cited.

(s) "The creditors of an insolvent may well prove their claims, and receive their dividends, upon the assumption that the insolvent has in all respects truly conformed to the requisites of the laws, that he has concealed no effects, and made no conveyances for the purpose of giving preferences, nor in any way violated the principles of a full and equal distribution of his effects. Acting upon this assumption, the creditor may prove his claim, and receive his dividend, without prejudice to his right to avoid the discharge of the insolvent, if future developments shall show the commission of those acts, or the neglect of those duties, on the part of the debtor, by reason of which his discharge is rendered invalid. It is no part of the duty of the creditor to assume in advance that the debtor has been guilty of fraudu

lent acts, in violation of the insolvent laws, and to regulate his conduct by such presumption. He may, therefore, prove his claim, and receive a dividend, without compromitting his further right to enforce payment of the residue of his demand, if the debtor has obtained his discharge under such circumstances as to render it invalid in law." Dewey, J., in Morse v. Reed, 13 Met. 62.

(t) United States v. King, J. B. Wallace, 13. Tilghman, C. J.: "Upon the best consideration which the circumstances will permit us to bestow on the point, wo are of opinion, that debts due to the United States are not within the provisions of the bankrupt law; but that the debtor, his lands and effects, present and future, are liable to actions and remedies for their recovery, as before the passing of that act." United States v. Hewes, 2 Law Rep. 329; United States v Wilson, 8 Wheat. 253.

labor or personal service rendered within a brief period before the insolvency. To these are sometimes added the costs of attachments, or other costs which have been terminated by the insolvency.

It has been found peculiarly difficult to collect and arrange the cases on the subject of bankruptcy and insolvency in a satisfactory manner. The decisions are, to so great an extent, founded on the special provisions of statutes, that it has seldom been easy to extract from them what might properly be termed a general principle.. Hundreds of cases have been examined, which have proved wholly useless for the general purposes of a text-book, for it has been our aim to insert such and such only, as should elucidate, in some measure, the principles relating to this subject.

It will be seen that a majority of cases cited are from the English books. The reason is, that the American cases rest, to a much greater extent than the English, on the special provision of the statutes. Few statutes have been cited, but the English Consolidated Bankrupt Act, 12 & 13 Vict. c. 106, and the late United States Bankrupt Act have been often referred to. The one presents very strongly and clearly the present English doctrine on this subject; and the other may be said to be the best illustration which any one American statute affords, of the legislation on this side the Atlantic.

CHAPTER XIII

THE CONSTITUTION OF THE UNITED STATES.

Sect. 1. What are Contracts, within the clause respecting the obligation of them?

IN the tenth section of the first article of the Constitution of the United States, it is provided, that "no State shall.. pass. any . . law impairing the obligation of contracts." (a) Under this clause two questions of great importance have been agitated. One is, what is a contract within the meaning of this section? (b) The second is, what operation upon or interference with a contract, is to be considered as impairing the obligation thereof? Neither question has received a positive and universal answer, settling by definition all the subordinate questions which may arise under it. But we have authoritative and instructive adjudication upon both.

It seems to be settled conclusively, that a grant is a contract; executed, it is true, but still a contract; and that it comes within the scope of this provision (c) and therefore, if there be a grant,

(a) This clause does not apply to laws enacted by the States before the first Wednesday of March, 1789-the day when the constitution of the United States went into operation. Owings v. Speed, 5 Wheat. 420. Nor does it affect the powers of Congress. Evans v. Eaton, Pet. C. C.

322.

(b) "The provision of the constitution never has been understood to embrace other contracts than those which respect property, or some object of value, and confer rights which may be asserted in a court of justice." Dartmouth College v. Woodward, 4 Wheat. 518; per Marshall, C. J.,

629.

(c) Therefore, the grant of lands by the legislature of a State, constitutionally em

powered to make it, cannot be revoked by its successor. See Fletcher v. Peck, 6 Cranch, 87, 136. Marshall, C. J.: “A contract is a compact between two or more parties, and is either executory or executed. An executory contract is one in which a party binds himself to do, or not to do, a particular thing; such was the law under which the conveyance was made by the governor. A contract executed is one in which the object of the contract is performed; and this, says Blackstone, differs in nothing from a grant. The contract between Georgia and the purchasers was executed by the grant. A contract exe cuted, as well as one which is executory, contains obligations binding on the parties. A grant, in its own nature, amounts

in itself valid, any law which is, or permits, a direct interference with the enjoyment of the things granted, or a diminution of their value, or any deprivation of the things granted, or of the rights or interests belonging to them, by the grantor, impairs the obligation of the contract. (d)

This must be true, in general; but it must also be subject to some important qualifications. For the exercise of the ordinary powers of government, which it could not have been intended to take away or control by this provision, may often have the effect of diminishing the value of things previously granted. Thus, if a State sold a piece of land for two dollars an acre, and soon after sold similar and adjoining land, differing in no respect from the first, for one dollar an acre, and announced this as its price, the market value of the lands first sold would fall, perhaps, one half; yet no one could doubt that the State had a right to make this second sale. But it is easy to

to an extinguishment of the right of the grantor, and implies a contract not to reassert that right. A party is, therefore, always estopped by his own grant. Since, then, in fact, a grant is a contract executed, the obligation of which still continues; and since the constitution uses the general term contract, without distinguishing between those which are executory and those which are executed, it must be construed to comprehend the latter as well as the former. A law annulling conveyances between individuals, and declaring that the grantors should stand scised of their former estates, notwithstanding those grants, would be as repugnant to the constitution as a law discharging the vendors of property from the obligation of executing their contracts by conveyances. It would be strange if a contract to convey was secured by the constitution, while an absolute conveyance remained unprotected. If, under a fair construction of the constitution, grants are comprehended under the term contracts, is a grant from the State excluded from the operation of this provision? Is the clause to be considered as inhibiting the State from impairing the obligation of contracts between two individuals, but as excluding from that inhibition contracts made with itself? The words themselves contain no such distinction. They are general, and are applicable to contracts of every

description. If contracts made with the State are to be exempted from their operation, the exception must arise from the character of the contracting party, not from the words which are employed. Whatever respect might have been felt for the State sovereignties, it is not to be disguised that the framers of the constitu tion viewed, with some apprehension, the violent acts which might grow out of the feelings of the moment; and that the people of the United States, in adopting that instrument, have manifested a determination to shield themselves and their property from the effects of those sudden and strong passions to which men are exposed. The restrictions on the legislative power of the States are obviously founded in this sentiment; and the constitution of the United States contains what may be deemed a bill of rights for the people of each State." Dartmouth College. Woodward, 4 Wheat. 656, per Washington, J.; Rehoboth v. Hunt, 1 Pick. 224; Lowry v. Francis, 2 Yerg. 534; Butler v. Chariton County Court, 13 Mo. 112. So, where the grant is to a corporation, the State cannot revoke it; Terrett v. Taylor, 9 Cranch, 43; Wilkinson v. Leland, 2 Pet. 657. See Den d. University of North Carolina v. Foy, 1 Murph. 58.

(d) Winter v. Jones, 10 Ga. 190; Planters Bank v. Sharp, 6 How. 301, 327.