INSOLVENCY. In a popular sense the word insolvency applies only to persons with outproperty or means sufficient to satisfy their creditors. The legal definition embraces all who are unable to pay their debts at maturity in the ordinary course of business, even though they may possess assets exceeding their lia bilities. A failure to meet overdue obligations renders a person liable to proceedings against him in a court of insolvency, in which his assets may be taken into the possession of the officers, marshaled and distributed to his credit ors. Should there be an amount in excess of what is required to pay the creditors and the expenses of administration, the balance so re maining is the property of the debtor. From a very early period in the history of civil gov ernment, laws have existed providing for pro ceedings by creditors against insolvent debtors, by which the debtor's property could be taken from his possession, to be held by another as a trust fund to be applied to the payment of his just debts. In case of an insufficient amount to pay all debts in full, provisions are usually made for a pro rata distribution. These laws have generally provided for classes of preferred debts, payments of which were to be made in full, even though such payments exhausted the entire assets. Preferred claims commonly in cluded all claims of the government or state, and often claims for labor to a limited amount, and claims for the necessaries of life. Pro
visions are usually made for the exemption of certain articles to the use of the debtor, not to be included in the assets. The Constitution of the United States provides that Congress may establish uniform laws on the subject of bankruptcy throughout all the States, and the first act upon that subject was passed in 1800, since which time there has been some Federal bankruptcy law, with brief interregnums. A uniform national law upon the subject now exists. The first act of Congress upon this subject provided for proceedings by the cred itors only, but in 1841 an amendment provided for voluntary proceedings by the debtor, by which he could surrender his property and ob tain a discharge from all of his debts, provided he had been guilty of no fraud. In the absence of a national law on the subject of insolvency, the States all have authority to enact and en force laws upon that subject. The Federal act now provides for voluntary proceedings by the debtor, as well as proceedings against him by the creditors, with provisions for his discharge. The various State acts have usually contained such provisions. The Federal act during its continuance suspends all State insolvency laws covering the same ground. See BANKRUPTCY LAWS.