The bankrupt

Out of debt

Dirck Jansen of Albany County, New York, had gotten himself into a pretty pickle.

He was in debt — seriously in debt — and his creditors were closing in. And there wasn’t a whole lot he could do to raise cash and try to stay afloat.

There was this minor little matter called the Revolutionary War that was occupying a large part of his attention — he’d served as an officer of the 10th Albany Militia Regiment1 — and people who owed him money were often unreachable behind enemy lines.

So in early 1783 Jansen did the only thing he could think of to do: he applied to the New York State Legislature for relief. And two-and-a-half pages of statute later, he became, officially, one of New York State’s early bankrupts.

The law passed 8 March 1783 for the relief of Dirck Jansen and his creditors allowed Jansen to “assign and deliver all his estate for the benefit of his creditors” in order to “obtain a general discharge.”2 It required him to turn over

his estate real and personal both in law and equity and all books vouchers and securities relating to the same except his wearing apparel, his arms and other military accoutrements, and also excepting one bed and the necessary bedding for his own use.3

Four men were named to receive the property, including a fellow officer of the 10th Albany Militia, Samuel Ten Broeck, and then to sell it and settle proportionately with Jansen’s creditors after meeting with the creditors to “examine and ascertain the debts due to each.”4 Jansen himself was required to testify under oath about his property holdings5 and would be guilty of a felony if he concealed any asset, received any debt payment without reporting it or hid any records with an intend to defraid his creditors.6

Not surprisingly, the first debts that had to be paid by the bankruptcy committee were to the people of this state for taxes.7 The only property that might be protected were “the messuage” — the dwelling house8 — and “lands with the appurtenances now possessed by the said Dirck Jansen lying and being in the manor of Livingston in the county of Albany” — and only if the rest of what the committee collected was enough to pay the creditors.9

And if everything was done in accordance with the law, “Dirck Jansen … shall be discharged from all debts due or contracted by him before the time” when he turned everything over to the bankruptcy committee.10

The relief granted to Jansen was extraordinary. Bankruptcy proceedings under British law prior to 1825 could only be initiated by creditors, not by debtors, and before 1813 basically ended up with debtors being bonded to their creditors to work off the debts.11 And not long after Jansen’s discharge by statute, the new Constitution of the United States gave the federal Congress the power to “establish … uniform Laws on the subject of Bankruptcies throughout the United States.”12

Congress initially passed the Bankruptcy Act of 1800, under which creditors could force a bankruptcy but only as to merchants and traders.13 That act was repealed in 1803.14 It wasn’t until 1841 that the first voluntary bankruptcies were allowed under federal law15 and that statute was repealed in 1843.16

Later acts, in 186717 and 189818, set up the basic structure of what became the modern law of bankruptcy, but not until 1938 with the passage of the Chandler Act did voluntary bankruptcy by debtors seeking to be discharged from their debts become the norm.19

But there are always the exceptions… and Dirck Jansen and a few others in scattered records early on out in the states prove that it’s worth looking for them.


 
SOURCES

  1. James A. Roberts, compiler, New York in the Revolution as Colony and State (Albany, N.Y. : N.Y. Comptrolller’s Office, 1897), 106; digital images, Google Books (http://books.google.com : accessed 27 May 2013).
  2. “An Act for the relief of Dirck Jansen and his creditors,” Chapter 23, Laws of 1783, in Laws of the State of New York passed at the Sessions of the Legislature Held in the Years 1777 (-) 1784, inclusive…, Vol. I (Albany : Weed Parsons, 1886), 539-541; digital images, Google Books (http://books.google.com : accessed 27 May 2013).
  3. Ibid., § I, at 539.
  4. Ibid., § II, at 539.
  5. Ibid., § V, at 540.
  6. Ibid., § VI, at 540.
  7. Ibid., § VII, at 540.
  8. Henry Campbell Black, A Dictionary of Law (St. Paul, Minn. : West, 1891), 771, “messuage.”
  9. “An Act for the relief of Dirck Jansen and his creditors,” in Laws of the State of New York … in the Years 1777 (-) 1784, at 540-541.
  10. Ibid., § VIII, at 541.
  11. Wikipedia (http://www.wikipedia.com), “History of bankruptcy law,” rev. 19 Feb 2013.
  12. U.S. Constitution, Article I, section 8, clause 4.
  13. “An Act to establish an uniform System of Bankruptcy throughout the United States,” 4 April 1800, 2 Stat. 19 (1800); digital images, “A Century of Lawmaking for a New Nation: U.S. Congressional Documents and Debates, 1774-1875,” Library of Congress, American Memory (http://memory.loc.gov/ammem/index.html : accessed 27 May 2013).
  14. Ibid., marginal note.
  15. “An Act to establish a uniform system of bankruptcy throughout the United States,” 19 August 1841, 5 Stat. 440 (1841).
  16. Ibid., marginal note.
  17. “An Act to establish a uniform System of Bankruptcy throughout the United States,” 2 March 1867, 14 Stat. 517 (1867).
  18. “An Act To establish a uniform system of bankruptcy throughout the United States,” 1 July 1898, 30 Stat. 544 (1898).
  19. See Act of 22 June 1938, 52 Stat. 840 (1938).
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3 Responses to The bankrupt

  1. Excellent history of an important subject. Thanks, Judy, as always, for a great read of useful information! ;-)

  2. Celia Lewis says:

    Fascinating information on early bankruptcy law, Judy. What a challenging time this man experienced – left with very little after a lot of hard work I’m sure. Thanks for leading us along this legal pathway!

  3. So 1783 holds the story of an early bankrupt. Your posts always fascinate. I did not realize that the watershed of bankruptcy proceedings was the Chandler Act in 1938. I suppose that must have been prompted by all the debts of the Great Depression. My uncle lost his farm in 1933 and had to farm another man’s land until he could buy back his farm in 1943.

    As for Jensen, I was glad to find, reading along, that they left him his “dwelling house” to put his “one bed” in. I’m glad that the law sometimes gives people a way to survive instead of being turned out into the street.

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