Evening star., 1898-11-03
INVOLUNTARY BANKRUPTCY
TIE Law is in Operation, Though No Rules
Have Been Formulated.
What Assistant Attorney General
BraHdenburg Says on the Mode
of Procedure.

The Department of Justice during the
past few days has been importuned by
large number of business men and lawyers
throughout the country to define the status
of the involuntary feature of the bank
rLptcy law passed during the last session
of Congress. This section of the bill went
into effect en- Tuesday, and owing to the
fact that one of the conditions upon which
it should be enforced has not baen fulfilled
there has been some doubt expressed as TO
the legality of carrying the law into op-
GRAFTON.
The bill passed by Congress provided
that when the involuntary feature of the
measure should go into effect it should be
accompanied by a set of rules and orders
formulated by the Supreme Court of the
United States for its execution. The Su-
pr-me Court has not compiled these rules
and orders, therefore there has been some
question as to whether the law could be
properly enforced at the time provided for
November l. 1t has been held in some
quarters that the department should wait
Until the court has furnished them before
proceeding to execute the law.
The Department Of Justice today how
ever, held that the absence of these orders
Will not materially affect the enforcement
OF the law. and that they not abso-
lutely essential to the execution of the
act.
The communications which have been re-
ceived have been referred by Attorney
General Griggs to Attorney E. C. Branden-
burg of the department, who is an expert
or the subject of bankruptcy and who has
been specially assened by the Attorney
General to handle all bankruptcy affairs
under the new law.
Immediate Enforcement OF the Layy
In discussing the question today as to
whether the law could be enforced without
the formulation of rules by the Supreme
Court, as provided by the bill, Mr.. Bran
derburg said:
The absence of these rules will not make
any material difference in the immediate
enforcement of the involuntary feature of
this law, as has been held by some law
yers and business men of the country. The
act provides that the involuntary section
or that which gives the right to one per-
son to have another adjudged bankrupt
shall take effect on November ]. Unoer
that section of the law there is nothing
to prevent the filing of petition in invol-
untary bankruptcy in the courts by the
creditors of any man who they believe to
be bankrupt. Section thirty of the law
makes 1t the duty of the Supreme Court to
promulgate rules, forms and orders as to
procedure for carrying the act into force
and effect These rules, forms and orders
have not yet been handed down. but they
are merely an incident to enforcing the
diiu there is nOtNlnS IN the present
situation to prevent creditors from filing
petitions in the courts which must neces-
sarily er tertain them
In bearing this out, it is merely neces-
sary to direct attention to the fact that in
every section of the country voluntary peti-
tiCns have been filed and in some instances
the courts have adjudged persons bankrupt.
In the case of voluntary bankruptcy, au-
thority was given by the act to file petit
tions after August /. 1895. Under this
provision c 11D DetifjopS asking
for the adjudication of bankrupts have
been filed in some districts, and the courts
have proceeded with the cases. In other
sections the courts have declined to proceed
with adjudications, but have permitted the
filing of petitions awaiting the forthcoming
rules of the Supreme Court before final
adjudication.
THE alleged bankrupt any of his
creditors in case of involuntary bankruptcy
may appear and plead to petition within
ten days after that upon which the petit
ton is filed, or within such further time as
the court may allow. This is provided by
section is of the new law. In view of these
facts, it would be perfectly legitimate for
a court to extend the time for bankrupt
to make an answer to a petition filed by
his creditors If the court should be un-
willing to adjudicate the case until the
rules and orders had been formulated by
the Supreme Court.
When One is InsOIvent.
or any of his creditors may appear and
plead to the petition; that is, the bankrupt
may answer that he is not :nsolvent in the
sense defined by the act. According to the
law a person is insolvent whenever the ag
gregate of his property, exclusive of any
property which he may have conveyed
transferred, concealed or removed or per-
mitted to be concealed or removed with in
tent to defraud, hinder delay his credit
ors, shall not at fair valuation be suffi-
cient in amount to pay his debts. If the
bankrupt denies his insolvency it is his
duty to appear in court with his books
papers and accounts, submit to an exami-
nation and give testimony to all matters
tending to establish solvency or insolvency
If he is able to prove his solvelcy the pro-
ceedings must be dismissed.
while 1t is doubtless a matter of serious
Inconvenience and the business of handling
bankruptcy cases would be materially eX-
pedted by the prompt formulation of the
rules and orders by the Supreme Court
there appears to me to be nothing to pre-
vent the filing of petitions for involuntary
bankruptcy, in which event the courts will
no doubt be guided by knowledge of the
subject which they gained during the elev-
en- years of enactment of the bankruptcy
law of 1867
The Supreme Court is now engaged in
however, when they will be forwarded 10
the department.