INSOLVENT (Lat. in,, privative, solvo, to pay). The condition of a person who is un able to pay his debts. 2 Bla. Com. 285, 471; Brouwer v. Harbeck, 9 N. Y. 589.
One who is unable to pay his debts as they fall due in the usual course of trade or business. 2 Kent 389 ; 1 M. & S. 338 ; Lee v. Kilburn, 3 Gray (Mass.) 600 ; Mitchell v. Bradstreet Co., 116 Mo. 226, 22 S. W. 358, 724, 20 L. R. A. 138, 38 Am. St. Rep. 592 ; al though his assets in value exceed the amount of his liability ; In re Ramazzina, 110 Cal. 488, 42 Pac. 970 ; or the embarrassment is only temporary ; Langham v. Lanier, 7 Tex. Civ. App. 4, 26 S. W. 255 ; but it is held that mere inability to pay debts promptly as they mature is not conclusive ; Mensing v. At chison (Tex.) 26 S. W. 509 ; that one who has sufficient property subject to legal pro cess to satisfy all legal demands is not in solvent ; Smith v. Collins, 94 Ala. 394, 10 South. 334; and that a person who suspend ed business because of difficulties arising out of the commencement of an action was not necessarily an insolvent ; American Water works Co. of New Jersey v. Venner, 18 N. Y. Supp. 379.
One who is unable to pay commercial pa per in the due course of business is insol vent; Warren v. Nat. Bank, 10 Blatchf. 493, Fed. Cas. No. 17,202; Clarke v. Mott (Cal.) 33 Pac. 884.
A corporation is insolvent when its' assets are insufficient for the payment of its debts, and it has ceased to do business, or has tak en, or is in the act of taking, a step which will practically incapacitate it from conduct ing the corporate enterprise with reasonable prospect of success, or its embarrassments are such that early suspension and failure must ensue; Corey v. Wadsworth, 99 Ala.
68, 11 South. 350, 23 L. R. A. 618, 42 Am. St. Rep. 29.
A bank is insolvent cash value of its assets realizable in a reasonable time is not equal to its liabilities exclusive of stock liabilities ; Ellis v. State, 138 Wis. 513, 119 N. W. 1110, 20 L. R. A. (N. S.) 444, 131 Am. St. Rep. 1022. An allegation that a corpora tion cannot pay its current obligations as they mature is sufficient for insolvency pro ceedings in equity ; American Can Co. v. Pre serving Co., 171 Fed. 540.
The clearing house rules, making members responsible for clearances of outside banks, for which they engage to clear, for one day after notice of the termination of their agree ment, require payment of checks of such out side bank though known to be insolvent ; and a contract for a deposit by the latter of cash and notes as indemnity for such clearances is valid, and the payments are not within a statute forbidding payments by an insolvent corporation made with intent to prefer cred itors, and the money and securities held un der the aforesaid contract are applicable to the amount of the checks so paid ; O'Brien v. Grant, 146 N. Y. 163, 40 N. E. 871, 28 L. R.
A. 361.
An insolvent building association may make an assessment on stock of a borrowing member to cover losses, and thereby equalize the members, so that they may go out on an equal footing at the closing up of the asso ciation ; 'Wohlford v. Say. Ass'n, 140 Ind. 662, 40 N. E. 694, 29 L. R. A. 177.