Bankruptcy must be distinguished from insolvency, the latter is simply a present inability to pay one's debts while bankruptcy is the result of an adjudication by the courts, and may be a voluntary, or involuntary surrender of control by the bankrupt, of his property and affairs. The principal having been adjudicated a bankrupt, the court through the creditors of the bankrupt having appointed a trustee to take charge of the principal's affairs, the authority of the agent is revoked except for the purpose of performing purely formal acts.30

28 Audemeich vs. Betterley, 8 Allen (Mass.), 302.

29 See various State Statutes.

With the bankruptcy, the bankrupt ceases to be the owner of his own property, and he himself would have no right to make any contract in reference to it, so any agent acting through authority bestowed by the principal would by the bankruptcy of the principal, be divested of his authority to continue to act.31

Mere insolvency of the principle on the other hand will not determine the authority of the agent. Bankruptcy of the agent will not of itself terminate the agency, but since the effect of becoming a bankrupt usually tends to rob the agent of his acquired prestige and responsibility, the principal would thereby ordinarily, be justified in declaring the contract of agency at an end. The fact of the bankruptcy of the agent may not in any way affect the usefulness of the agent, especially where the duties of the agent do not carry with it any special responsibility in the agent.32