Law Commons^™

Rethinking Antebellum Bankruptcy, Rafael I. Pardo

Scholarship@WashULaw

Bankruptcy law has been repeatedly reinvented over time in response to changing circumstances. The Bankruptcy Act of 1841—passed by Congress to address the financial ruin caused by the Panic of 1837—constituted a revolutionary break from its immediate predecessor, the Bankruptcy Act of 1800, which was the nation’s first bankruptcy statute. Although Congress repealed the 1841 Act in 1843, the legislation lasted significantly longer than recognized by scholars. The repeal legislation permitted pending bankruptcy cases to be finally resolved pursuant to the Act’s terms. Because debtors flooded the judicially understaffed 1841 Act system with over 46,000 cases, the Act’s administration continued …

The Purloined Debtor: Edgar Allan Poe’S Bankruptcy In Law And Letters, Erin L. Sheley, Zvi Rosen

Faculty Scholarship

This Article represents the first interdisciplinary case study of Edgar Allan Poe’s bankruptcy as an inflection point in the legal and cultural history of debt. Although Poe hardly leaps to mind for portrayals of legal procedure, much of his oeuvre reveals a terror of legal process as an interstitial principle. The anxiety around identity in Poe’s work reveals an ongoing struggle between an individual subject and two opposing yet equally degenerate legal statuses: possession and indebtedness. This opposition renders a distinct form of legal process legible in these texts: the then emerging law of bankruptcy. Poe declared bankruptcy at a …

On Bankruptcy’S Promethean Gap: Building Enslaving Capacity Into The Antebellum Administrative State, Rafael I. Pardo

Scholarship@WashULaw

As the United States contends with the economic crisis triggered by the COVID-19 pandemic, federal bankruptcy law is one tool that can be used to resolve the financial distress suffered by individuals and businesses. When implementing this remedy, the question arises whether the law’s application should be viewed as limited to addressing private debt matters, without regard for the public interest. This Article answers the question by looking to modern U.S. bankruptcy law’s first forebear, the 1841 Bankruptcy Act, which Congress enacted in response to the depressed economic conditions following the Panic of 1837. That legislation created a judicially administered …

Racialized Bankruptcy Federalism, Rafael I. Pardo

Scholarship@WashULaw

Notwithstanding the robust national power conferred by the U.S. Constitution’s Bankruptcy Clause, the design and administration of federal bankruptcy law entails choices about the extent to which non-bankruptcy-law entitlements will remain un-displaced. When such entitlements sound in domestic nonfederal law (i.e., state or local law), displacing them triggers federalism concerns. Considerations regarding the relationship between the federal government and the nation’s smaller political subdivisions might warrant preserving nonfederal-law entitlements even though their displacement would be authorized pursuant to the bankruptcy power. But such considerations might also suggest replacing those entitlements with bankruptcy-specific ones. Some scholarship has theorized about the principles …

Financial Freedom Suits: Bankruptcy, Race, And Citizenship In Antebellum America, Rafael I. Pardo

Scholarship@WashULaw

This Article presents a new frame of reference for thinking about how the federal government facilitated citizenship claims by free people of color in the antebellum United States. While scholars have accounted for various ways in which free black litigants may have made such claims, they have not considered how the Bankruptcy Act of 1841 enabled overindebted free people of color to reconstruct their economic lives, thereby restoring the financial freedom that was and continues to be an essential component of American citizenship. Relying on a variety of primary sources, including manuscript court records, this Article shows how six free …

Federally Funded Slaving, Rafael I. Pardo

Scholarship@WashULaw

This Article presents a new frame of reference for thinking about the federal government’s complicity in supporting the domestic slave trade in the antebellum United States. While scholars have accounted for several methods of such support, they have failed to consider how federal bankruptcy legislation during the 1840s functionally created a system of direct financial grants to slave traders in the form of debt discharges. Relying on a variety of primary sources, including manuscript court records that have not been systematically analyzed by any published scholarship, this Article shows how the Bankruptcy Act of 1841 enabled severely indebted slave traders …

The Empty Idea Of “Equality Of Creditors”, David A. Skeel Jr.

All Faculty Scholarship

For two hundred years, the equality of creditors norm—the idea that similarly situated creditors should be treated similarly—has been widely viewed as the most important principle in American bankruptcy law, rivaled only by our commitment to a fresh start for honest but unfortunate debtors. I argue in this Article that the accolades are misplaced. Although the equality norm once was a rough proxy for legitimate concerns, such as curbing self-dealing, it no longer plays this role. Nor does it serve any other beneficial purpose.

Part I of this Article traces the historical emergence and evolution of the equality norm, first …

Bankrupted Slaves, Rafael I. Pardo

Scholarship@WashULaw

Responsible societies reckon with the pernicious and ugly chapters in their histories. Wherever we look, there exist ever-present reminders of how we failed as a society in permitting the enslavement of millions of black men, women, and children during the first century of this nation’s history. No corner of society remains unstained. As such, it is incumbent on institutions to confront their involvement in this horrific past to fully comprehend the kaleidoscopic nature of institutional complicity in legitimating and entrenching slavery. Only by doing so can we properly continue the march of progress, finding ways to improve society, not letting …

Documenting Bankrupted Slaves, Rafael I. Pardo

Scholarship@WashULaw

Bankrupted Slaves tells a story about institutional complicity in antebellum slavery — that is, the story of how the federal government in the 1840s and 1850s became the owner and seller of thousands of slaves belonging to financially distressed slaveowners who sought forgiveness of debt through the federal bankruptcy process. Relying on archival court records that have not been systematically analyzed by other scholars, Bankrupted Slaves analyzes how the Bankruptcy Act of 1841 and the domestic slave trade inevitably collided to create the bankruptcy slave trade, focusing the analysis through a case study of the Eastern District of Louisiana, which …

Sheppard V. Taylor, 5 Peters 675 (1831): Deception On The High Seas And The Quest For Lost Wages, Steven Zerhusen

Legal History Publications

This Article follows the case of the ship Warren, which set sail in 1806 to take part in illicit trade with the Spanish colonies, unbeknownst to all on board except for the supercargo. After dealing with the suicide of the captain and capture in Concepcion Bay, Chile, the crew languished for years in Spanish prison. After trying for almost 20 years the proceeds of the ship were finally returned to the owners, and the crew filed petition. Not until 1831 was their libel upheld, and wages from their voyage 25 years earlier to be paid to the crew. This article …

Ideas, Interests And Institutions And The History Of Canadian Bankruptcy Law 1867-1880, Thomas G. W. Telfer

Law Publications

Michael Trebilcock's scholarship has long recognized the importance of ideas, interests, and institutions in shaping policy. Taking the same analytical approach that Michael Trebilcock and Ninette Kelley use in their ground-breaking book on the history of Canadian immigration, which focuses on economic interests, contested ideas, and institutions, this article examines the Canadian historical experience to gain an understanding of the ideas, interests, and institutions that have been influential in shaping the evolution of Canadian bankruptcy law. Specifically, the article addresses the rise of Canadian bankruptcy legislation in the early post-Confederation period and its ultimate repeal in 1880. Bankruptcy law represented …

Self-Organizing Legal Systems: Precedent And Variation In Bankruptcy, Bernard Trujillo

Law Faculty Publications

Models of legal ordering are frequently hierarchical. These models do not explain two prominent realities: (1) variation in the content of a legal system, and (2) patterns of non-hierarchical ordering that we observe. As a supplement to hierarchical explanations of legal order, this Article, drawing from physical and social science research on complex systems, offers a self-organizing model. The self-organizing model focuses on variation in the content of legal systems and attempts to explain the relationship between that variation and patterns of ordering. The self-organizing model demonstrates that variation and ordering are not opposite categories, but rather constitute one continuous …

Ladies In Red: Learning From America's First Female Bankrupts, Marie Stefanini Newman

Elisabeth Haub School of Law Faculty Publications

Several years ago, the Honorable Joyce Bihary, a bankruptcy judge in Atlanta, Georgia, asked me3 why our country's first bankruptcy law specifically referred to debtors using “he” or “she” rather than a gender-neutral noun (such as “bankrupts”) or the male possessive pronoun “he.” Implicitly, she was also asking whether there were any women debtors under our early bankruptcy laws. Although I had read the Bankruptcy Act of 1800 more than once, I did not recollect its use of these gender-inclusive pronouns. Nor did I know why the Act employed them. Despite having given considerable thought to contemporary women in debt, …

Absolute Priority And New Value, James J. White

Articles

This paper is based on a lecture given on December 6, 1990 ast the Second Annual Robert E. Krinock Lecture. The absolute priority rule is a specific application of the broader doctrine that reorganization plans must be "fair and equitable." Both have their origins in the railroad reorganization cases of the early 20th century. The general doctrine is now codified in section 1129(b)(2) of the Bankruptcy Code and the rule is codified in subsection 1129(b)(2)(B)(ii) which provides that the debtor must pay a nonconsenting class of unsecured creditors in full or "the holder of any claim or interest that is …