CHAPTER XLIV.

INSOLVENCY ACT OF 1880.

GENERAL SUBJECT OF THE ACT.

SECTION 1. Every insolvent debtor may, upon compliance with the provisions of this Act, be discharged from his debts and liabili ties. This Act shall be known and may be cited as the Insolvent Act of eighteen hundred and eighty.

VOLUNTARY INSOLVENCY.

SEC. 2. An insolvent debtor, owing debts exceeding in amount the sum of three hundred dollars, may apply by petition to the Superior Court of the county, or city and county, in which he has resided for six months next preceding the filing of his petition, to be discharged from his debts and liabilities. In his petition he shall set forth his place of residence, his inability to pay all his debts in full, his willingness to surrender all his estate and effects for the benefit of his creditors, and his desire to obtain a discharge from his debts and liabilities, and shall annex thereto a schedule and inventory, and valuation, in compliance with the provisions of this Act. The filing of such petition shall be an act of insolvency, and thereupon such petitioner shall be adjudged an insolvent debtor.

SEC. 3. Schedule, what to contain.-Said schedule must contain a full and true statement of all his debts and liabilities, exhibiting to the best of his knowledge and belief to whom said debts or liabilities are due, the place of residence of his creditors, and the sum due to each; the nature of the indebtedness or demand, whether founded on written security, obligation, contract, or otherwise; the true cause and consideration thereof, and the time and place where said indebtedness accrued, and a statement of any existing pledge, lien, mortgage, judgment, or other security for the payment of the same.

SEC. 4 Inventory.-Said inventory must contain an accurate de

scription of all the estate, both real and personal, of the petitioner, including his homestead, if any, and all property exempt by law from execution, and where the same is situated, and all incumbrances thereon.

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SEC. 5. Affidavit.—The petition, schedule, and inventory must be verified by the affidavit of the petitioner annexed thereto, and shall be in form substantially as follows: I, do solemnly swear that the schedule and inventory now delivered by me contain a full, perfect, and true discovery of all the estate, real, personal, and mixed, goods and effects, to me in any way belonging; all such debts as are to me owing, or to any person or persons in trust for me, and all securities and contracts, and contracts whereby any money may hereafter become payable, or any benefit or advantage accrue to me or to my use, or to any other person or persons in trust for me; that I have no lands, money, stock, or estate, reversion or expectancy besides that set forth in my schedule and inventory; that I have, in no instance, created or acknowledged a debt for a greater sum than I honestly and truly owe; that I have not, directly or indirectly, sold, or otherwise disposed of, or concealed any part of my property, effects, or contracts; that I have not in any way compounded with my creditors whereby to secure the same, or to receive, or to expect any profit or advantage therefrom, or to defraud or deceive any creditor to whom I am indebted in any manner. So help me God.

SEC. 6. Order of Court.-Upon receiving and filing such petition, schedule, and inventory, the Court shall make an order declaring the petitioner insolvent, and directing the Sheriff of the county to take possession of all the estate, real and personal, of the debtor, except such as may be by law exempt from execution, and of all his deeds, vouchers, books of account and papers, and to keep the same safely until the appointment of an assignee. Said order shall further forbid the payment of any debts and the delivery of any property belonging to such debtor, to him, or for his use, and the transfer of any property by him; and shall further appoint a time and place for a meeting of the creditors, to prove their debts, and choose one or more assignees of the estate, which shall not be less than thirty days after the making of said order, and shall designate a newspaper or newspapers of general circulation in which publica

tion thereof shall be made. Upon the granting of said order, all proceedings against the said insolvent shall be stayed.

SEC. 7. Publication. A copy of said order shall immédiately be published by the Clerk of said Court in the newspaper or newspapers designated therein, as often as the newspaper is printed before the meeting of creditors, and be served by the Clerk forthwith by United States mail, postage prepaid, or personally, on all creditors named in the schedule. The order of adjudication shall direct the publication thereof in a newspaper published in the county, or city and county, in which the petition is filed, if there be one, and if there be none, in a newspaper published nearest to such county, or city and county; provided, that no order of adjudication upon creditors' petition shall be entered, unless there first be deposited with the Clerk, in addition to the usual cost of commencing said proceedings, a sum of money sufficient to defray the cost of the publication ordered by the Court, and ten cents for each copy, to be mailed to or served on the creditors, which latter sum is hereby constituted the legal fee of the Clerk for the mailing or service required in this section.

INVOLUNTARY INSOLVENCY.

SEC. 8. An adjudication of insolvency may be made on the petition of five or more creditors, residents of this State, whose debts or demands accrued in this State, and amount in the aggregate to not less than five hundred dollars; provided, that said creditors, or either of them, have not become creditors by assignment within thirty days prior to the filing of said petition. Such petition must be filed in the Superior Court of the county, or city and county, in which the debtor resides or has his place of business, and must be verified by at least three of the petitioners, setting forth that such person is about to depart from the State, with intent to defraud his creditors; or being absent from the State with such intent, remains absent; or conceals himself to avoid the service of legal process; or conceals, or is removing any of his property, to avoid its being attached or taken on legal process; or being insolvent, has suffered his property to remain under attachment, or legal process, for four days; or has confessed, or offered to allow judgment in favor of any creditors; or willfully suffered judgment to be taken against him by default; or

has suffered, or procured his property to be taken on legal process, with intent to give a preference to one or more of his creditors; or has made any assignment, gift, sale, conveyance, or transfer of his estate, property, rights, or credits, with intent to delay, defraud, or hinder his creditors, or in contemplation of insolvency, has made any payment, gift, grant, sale, conveyance, or transfer of his estate, property, rights or credits; or has been arrested and held in custody by virtue of any civil process of Court founded on any debt or demand, and such process remains in force, and not discharged by payment, or otherwise, for a period of four days; or being a merchant or tradesman, has stopped or suspended, and not resumed payment within a period of forty days after maturity of any written acknowledgment of indebtedness, unless the party holding such acknowledgment has, in writing, waived the right to proceed under this subdivision; or being a bank or banker, agent, broker, factor, or commission merchant, has failed for forty days to pay any moneys deposited with or received by him in a fiduciary capacity, upon demand of payment, except savings and loan banks, or associations who loan the money of their stockholders and depositors on real estate, and provide in their by-laws for the re-payment of such deposits. The petitioners may, from time to time, amend and correct the petition, so that the same shall conform to the facts, by leave of the Court before which the proceedings are pending, but nothing in this section shall be construed to invalidate any loan of actual value, or the security therefor, made in good faith upon a security taken in good faith on the occasion of the making of such loan; the said petition shall be accompanied by a bond with two sureties in the penal sum of at least five hundred dollars, conditioned that if the debtor should not be declared an insolvent, the petitioners will pay all costs and damages, including a reasonable attorney's fee, that the debtor may sustain by reason of the filing of said petition. The Court may, upon

motion, direct the filing of an additional bond with different sureties when deemed necessary.

SEC. 9. Order Court. Upon the filing of such creditors' petition, the Court shall issue an order requiring such debtor to show cause, at a time and place to be fixed by said Court, why he should not be adjudged an insolvent debtor, and at the same time, or thereafter, upon good cause shown therefor, said Court may make an order for

bidding the payment of any debts, and the delivery of any property belonging to such debtor to him or for his use, or the transfer of any property by him.

SEC. 10. Copy of petition to be served on debtor.—A copy of said petition, with a copy of the order to show cause, shall be served on the debtor, in the same manner as is provided by law for the service of summons in civil actions, but such service shall be made at least ten days before the time fixed for the hearing; provided, that if, for any reason, the service is not made, the order may be renewed, and the time and place of hearing changed, or by a supplemental order by the Court, or if such debtor can not be found, or his place of abode ascertained, service shall be made by publication, as is provided in the Code of Civil Procedure for service of summons by publication.

SEC. 11. Demurrer.-At the time fixed for the hearing of said order to show cause, or such other time as it may be adjourned to, the debtor may demur to the petition for the same causes as is provided for demurrer in other cases by the Code of Civil Procedure. [See elsewhere.] If the demurrer be overruled, the debtor shall have ten days thereafter in which to answer the petition. If the debtor answer the petition, such answer shall contain a specific denial of the material allegations of the petition controverted by him, and shall be verified in the same manner as pleadings in civil actions; and the issues raised thereon may be tried with or without a jury, according to the practice provided by law for the trial of civil actions.

SEC. 12. Court to require debtor to file schedule, etc.—If the respondent shall make default, or if, after a trial, the issues are found in favor of the petitioners, the Court shall make an order adjudging that said respondent is, and was at the time of filing the petition, an insolvent debtor, and shall require said debtor, within such time as the Court may designate, to file in Court the schedule and inventory provided for in sections three and four of this Act; and thereupon all proceedings shall be had in said matter in the same manner as if said debtor had voluntarily filed his petition.

SEC. 13. Proceedings, when dismissed.-If, upon such hearing or trial, the issues are found in favor of the respondent, the proceedings shall be dismissed, and the respondent shall recover costs from the petitioning creditors in the same manner as on final judgment in civil actions.