excerpted from: Rafael I. Pardo, Bankrupted Slaves, 71 Vanderbilt Law Review 1071 (MAY 2018) (Footnotes) (Full Document)
August 19, 1841, was a red-letter day in the history of bankruptcy law. The nation up to that point had experimented only ever so briefly with bankruptcy as a mechanism for addressing the problem of financially overburdened debtors—a roughly three-year experiment that began in 1800 and ended in 1803 (the "1800 Act"). After a nearly four-decade hiatus, bankruptcy would once again be part of the legal landscape. Regardless of one's politics—and mind you, the political sentiments for and against this legislation were quite pronounced—the Bankruptcy Act of 1841 (the "1841 Act" or "the Act") was a big deal.
News of the landmark legislation traveled slowly to New Orleans. During the week following passage of the 1841 Act, the Daily Picayune had little to no information for its readers. On August 20, the Picayune reported that "[t]here was no news from Washington yesterday," relying instead on a report from the Charleston Mercury to inform New Orleanians that the House of Representatives had debated the bankruptcy bill earlier in the week without voting on it and that "there was no indication of the fate of [the bill]." Four days later, although the Picayune had not yet received word about the 1841 Act, the newspaper optimistically predicted that the bill would be sent to and signed by President John Tyler. By August 27, that optimism had turned into pessimism as a result of incomplete information regarding the decision of the House to table the bill, a death knell for the legislation in the eyes of the Picayune's editors. Finally, ten days after the bill's enactment, the Picayune celebrated the Bankruptcy Act of 1841, announcing "that another ‘long agony' is over, and a new and most important measure, in every respect, will soon be in operation."
As alluded to by the Picayune, debtors in the Crescent City and the rest of the nation would have to wait to seek relief under the 1841 Act given the law's effective date of February 1, 1842. But once the courts became open for bankruptcy filings, debtors did not hesitate to seek relief. One such debtor was Arthur Morrell, a New Orleanian who petitioned for relief on February 3, 1842, in the U.S. District Court for the Eastern District of Louisiana. By the end of the month, on February 26, the court had decreed Morrell a bankrupt, thus giving protective cover of the 1841 Act, albeit within a very limited window of time—a little bit over a year—as a result of the Act's repeal on March 3, 1843. Unlike Morrell, however, nearly all of those debtors received their requested relief. Morrell was one of the few debtors denied a discharge, a jury having found that he was not entitled to such relief because of his fraudulent conduct—specifically, concealment of certain slaves from his creditors, slaves that, as argued by John M. Bach, the assignee charged with administering Morrell's bankruptcy estate, were "to be disposed according to Law, as part of the assets of said Morrell, for the benefit of his said creditors."
James, who was approximately thirty-two years old at the time that Morrell filed for bankruptcy relief, was one of the slaves whom him the opportunity to seek a discharge of his debts.
Morrell, of course, was not alone in his plight seeking forgiveness of debt. Like him, over eight hundred debtors in the Eastern District of Louisiana sought relief from their financial distress under the Morrell attempted to place beyond the reach of his creditors "through simulated and fraudulent acts of sale . . . to his wife Lucy Ann Huyler" and through a subsequent "simulated mortgage . . . to secure a pretended note for the sum of $3000, drawn by said Morrell in the name of his said wife, to one Charles J Cook, the brother in law of said them to Bach, James was not among them.
Subsequent documents filed in Morrell's case reveal that, when the court issued the writ of possession to U.S. Marshal Robertson, James "was run off at that time by the said Bankrupt [i.e., Morrell] from the City of N Orleans to prevent the Assignee from getting possession of [James]." Eventually discovering James to be aboard a steamboat in New Orleans in December 1845, Bach requested that the court issue a writ instructing Robertson to take possession of James and then deliver him to Bach. Although Robertson subsequently obtained custody of James, he apparently escaped and eluded recapture for approximately seven years, at which point Bach petitioned the court on December 28, 1852, for an order authorizing Robertson to sell James, Morrell." Morrell's fraudulent scheme came to Bach's attention within several months after Morrell's filing. In response, the assignee requested that the district court issue a writ commanding the U.S. Marshal, Algernon Sidney Robertson, to seize Morrell's slaves, including James, for delivery to Bach. While Robertson initially succeeded in taking possession of two of Morrell's slaves and delivering now forty-two years old.
The court granted Bach's petition on the same day that he filed it. Thirty-nine days later, at approximately noon on Saturday, February 5, 1853, the U.S. Marshal auctioned James at the St. Louis Hotel, selling him to George Clark for $505 in cash, about slaveowners. $14,831 in today's dollars.
Having recounted some of the key events in the Morrell bankruptcy case, it is worth pausing to reflect on them and to absorb their meaning. At first blush, the inclination might be to consider these events as examples of two very familiar stories. First, since time immemorial, individuals have had to confront the challenge of failing to comply with financial obligations due to excessive indebtedness, and the law has responded to that problem in various ways, including providing for judicial sales of debtors' assets to pay the claims of creditors. Second, during the antebellum period, one of American slavery's many horrors was the never-ending sale of black men, women, and children—at least two million slaves between 1820 and 1860 according to one conservative estimate —with some of those sales intended to satisfy the claims of creditors against indebted
One might be tempted to situate the Morrell case squarely at the intersection of these two well-worn paths in American history, concluding that the story is new in form, yet old in substance. But such a conclusion would be improvident. Failing to reckon with the episode of American history of which the Morrell case is part and parcel—the sale of slaves through the federal bankruptcy process— would perpetuate what New Orleans Mayor Mitch Landrieu described, in his May 2017 remarks addressing the removal of the city's Confederate monuments, as "[o]ne story forgotten or maybe even purposefully ignored."
Unfortunately, historians and legal scholars to date have overlooked the sale of slaves in bankruptcy. Almost all of the history on both the domestic slave trade as well as on U.S. bankruptcy law fails to mention this institutional vestige of American slavery. The few scholars who have acknowledged bankruptcy slave sales have done so only fleetingly, thus failing to recognize how and why these sales constituted a crucial component of the federal government's complicity in propping up slavery in antebellum America.
This Article begins the process of revealing the forgotten and untold history of bankrupted slaves—that is, the black men, women, and children who found themselves subjected to sale through the federal bankruptcy process as a result of the desire of their indebted owners to attain financial freedom from the debts that drove them into bankruptcy. Though the term "bankrupt" under the 1841 Act referred to a debtor whom a federal court had decreed to be eligible to seek a discharge of his or her debts, and though slaves themselves did not file for bankruptcy, I use the term "bankrupted slave" (or its plural form) throughout this Article to remind the reader of the awful reality that "slaveholders' identities were merged with those of their slaves." As such, once a court decreed a slaveowner to be a bankrupt, his slaves acquired the status of bankrupted slaves, subjected to a specific type of subordination by the federal government, which would finally culminate in a bankruptcy slave sale.
But why is it that the bankruptcy slave sale must be substantively distinguished from the myriad nonbankruptcy slave sales, in particular those conducted under the auspices of judicial process that were a core feature of commercial life in antebellum America? The answer to that question lies in one of the defining features of the 1841 Act. To effectuate the financial freedom of individuals who sought bankruptcy relief, Congress designed the system to demarcate the beginning of that new life once a federal district court ordered that the individual be declared a bankrupt. Such a declaration terminated all of the bankrupt's interests in his or her property, with all rights and title to such property automatically vesting in the assignee, who was the representative appointed to administer the bankrupt's estate, a federally created res. In other words, the bankrupt's prebankruptcy property became the federal government's property, including any slaves in which the bankrupt had an interest.
Accordingly, for a brief window in this nation's history, bankruptcy legislation made the federal government a widespread holder of property interests—usually a full ownership interest—in slaves. In stark contrast, the other nonbankruptcy judicial processes that resulted in slave sales during the antebellum period generally did not entail the federal government becoming the holder of such interests. The bankrupted slave thus represents extremely entrenched involvement by the federal government in the domestic slave trade—to wit, frequently becoming the owner of slaves until they could be sold to a third-party purchaser at a bankruptcy sale.
In large part, this Article centers on providing an account of the bankruptcy slave trade for the sake of uncovering the role of bankruptcy law—a prominent and permanent feature of modern law that has provided financial relief to millions upon millions of individuals—in furthering slavery in antebellum America. But this Article also provides an opportunity to respond to the clarion call sounded by historians Eugene D. Genovese and Elizabeth Fox-Genovese in 1984. They noted the lack of "an adequate history of antebellum southern law apart from the law of slavery and, to some extent, the criminal law," and thus urged that legal historians ask "to what extent slavery, considered as a social system, shaped the development of commercial, contract, and tort law." Since then, historians have begun to answer that call.
again, no one has yet examined how slavery may have shaped the development of bankruptcy law, which falls under the umbrella of commercial law, or for that matter how bankruptcy law may have affected slavery. While this Article does not purport to a be an exhaustive account examining these potentially causal relationships, its detailed history provides the much-needed springboard for launching continued inquiry into the significance of the bankruptcy slave trade.
This Article proceeds in four parts.
Part I describes the key provisions of the 1841 Act, outlines the salient features of the domestic slave trade in antebellum America, and finishes with a discussion of how these two institutions inevitably collided to form the bankruptcy slave trade, pursuant to which the federal government itself became a of historians interested in the domestic slave trade. And, in the slaveowner in the process of extending financial freedom to certain debtors. The remainder of the Article explores how the bankruptcy slave trade functioned in the Eastern District of Louisiana (the "Eastern District"), home to New Orleans, antebellum America's largest slave market.
Part II sets the evidentiary backdrop for this Article's case study, describing the sources and dataset used to document the history of the Eastern District's bankruptcy slave trade.
Part III provides an account of the victims of that trade, exploring across various dimensions the experience of the 480 black men, women, and children (and then some) who found themselves ensnared by the federal bankruptcy process because of their owners' desire for relief from financial distress.
Part IV then shifts focus to examining the perpetrators of and profiteers from the Eastern District's bankruptcy slave trade, documenting their complicity in making the sale of human beings a key feature of the process for forgiving the debts of bankrupt slaveowners.
This Article concludes that we must never forget that the 1841 Act, the forbearer of modern bankruptcy law, caused great harm and suffering to the black men, women, and children forced into the condition of bankrupted slaves.
. . .
Returning to the story of James in Arthur Morrell's bankruptcy case, February 5, 1853, constituted a significant date for both James and for the history of the 1841 Act in the Eastern District of Louisiana. For James, the date signified the end of one chapter of subjugation— living for 3,997 days as a bankrupted slave—and the beginning of the next chapter of subjugation in his life—this time as George Clark's nonbankrupted slaves. As for the 1841 Act, James's sale in all likelihood constituted the last bankruptcy slave sale in the district, thus marking the end of the bankruptcy slave trade in the Eastern District of Louisiana.
By telling the story of James and the stories of other bankrupted slaves, this Article has begun the long overdue examination of the role that the federal bankruptcy system played in the domestic slave trade of antebellum America. Whether unbeknownst to Congress or not, its design of the 1841 Act not only made the collision of bankruptcy and slavery inevitable, but it also set the stage for making the federal government a widespread slaveowner actively engaged in selling slaves. Furthermore, because the Act's statutory design contained many gaps, Congress created the opportunity for residual bankruptcy policymaking by courts, which further exacerbated, at least in one federal judicial district, the government's entrenchment in slavery. And notwithstanding the quick repeal of the 1841 Act, we witness that the bankruptcy slave trade subsequently continued in the Eastern District for approximately eleven years, claiming as its victims nearly 500 black men, women, and children. While the bankruptcy system has brought a great deal of relief from financial distress for millions upon millions of individuals over approximately the past 120 years, we should never lose sight of the fact that the forbearer of modern bankruptcy law, the 1841 Act, visited great harm and suffering on the black men, women, and children forced into the condition of bankrupted slaves.