SECTION ARTICLE III. INVOLUNTARY INSOLVENCY. 8. Petition of creditors; Residents of the State to be; Amount of claims necessary; Petition to be filed; Verified, to be; Contents of petition; Amendment of petition; Loans, certain, not to be invalidated; Bond to accompany petition; Conditions of bond: Additional bond to be filed. NOTE a.-Facts, as contradistinguished from evidence, to be stated. b.-Petition to contain only facts. c.-Publication of notice; d.-Fraud under the Act. who is. h.-Fiduciary capacity; NOTE 1.-U. S. law; Sufficiency 2. What creditors to be reckoned in petition. 4.-Secured creditors not 9.-Sufficiency in number 10.-Denial of requisite 11. Who can commit act of 12.-Petition, where to be 13. What is act of bank ruptcy. 14.-Suspension of payment. 9. Order upon filing petition; Course SECTION NOTE a.-Injunction before hearing on merits; When ought not to be granted; Notice to be served, when. b.-Injunction against col lecting debts; When not to issue. c.-Provisions of codes re- NOTE 1.-U. S. law; Petition for 3.-Who liable for breach of. 4.-Construction of certain words in order for injunction. 5.-Contempt of order of 10. Copy of petition to be served; How NOTE 1.-U. S. law: Proceeding of words. 4. Service by publication, 11. Demurrer to petition; If overruled, 12. Default of respondent; Order of 13. Dismissal of proceedings; Costs to be recovered on dismissal. 14. Sheriff or assignee to prepare schedule, when. 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 such 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 (a) Facts only must be stated. This means the facts as contradistinguished from the law, from argument, from hypothesis, and from the evidence of the facts: Green v. Palmer, 15 Cal. 410. (b) A bill, to obtain relief on the ground of fraud, must state the facts constituting the fraud: Gushee v. Leavitt, 5 Cal. 160; Kent v. Snyder, 30 Id. 666; Castle v. Bader, 23 Id. 75; Meeker v. Harris, 19 Id. 278; Gifford v. Carvill, 29 Id. 589; People v. Supervisors of San Francisco, 27 Id. 656. When a party relies upon fraud, either to support his cause of action or in defense, he must set up the facts which constitute the fraud: Capuro v. Builders' Ins. Co., 39 Id. 123; O. & V. R. R. Co. v. Plumas County, 37 Id. 354. (c) Section four hundred and twelve of the Code of Civil Procedure provides the summons in a civil action may be served by publication in cases where the defendant * * * "conceals himself to avoid the service of summons." It has been held that where the affidavit states that diligent search has been made for the defendant, and that he conceals himself to avoid the service of process, it is sufficient for an order for the service by publication: Anderson v. Parker, 6 Cal. 201. Repeating the language of the statute is insufficient: Rickertson v. Rickertson, 26 Id. 149. An affidavit for publication stated: Affiant had inquired of Fogg, who is an intimate friend of defendant, as to his whereabouts, but Fogg was unable to inform him, and that plaintiff did not know where defendant could be found within the state: Held, insufficient. A publication made upon such an affidavit will not give the court jurisdiction of the person of defendant: Swan v. Chose, 12 Id. 283. 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,a 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, excepting savings and loan banks, or associations, who loan the money of their (d) See notes to sec. 55. h (e) Secs. 2026, 2295, Civil Code. (f) Secs. 2367, 2026, Civil Code. e (g) One who buys and sells goods for another on commission, or one who acts as agent in buying and selling, and receives a rate per cent. as his commission, is a commission merchant: Worcester's Dict. (h) A complaint alleging that defendant collected and received certain money as the agent or attorney of the plaintiff, and had embezzled and converted the money to his own use, and praying that he be adjudged guilty of fraud, and for judgment and execution against his person and property, is insufficient to sustain a verdict convicting the defendant of fraud. The complaint should state the facts that constitute the fiduciary capacity, as well as its nature and extent. Where the character or capacity in which a party is alleged to have acted is essential to the charge of fraud, that character or capacity must be averred in direct and positive terms, or the charge must fall: Porter v. Herman, 8 Cal. 619. stockholders and depositors on real estate, and provide in their by-laws for the repayment 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.* * U. S. R. S., Sec. 5021.-That any person residing, and owing debts, as aforesaid, who, after the passage of this act, shall depart from the state, district, or territory of which he is an inhabitant, with intent to defraud his creditors; or, being absent, shall, with such intent, remain absent; or shall conceal himself to avoid the service of legal process in any action for the recovery of a debt or demand provable under this act; or shall conceal or remove any of his property to avoid its being attached, taken, or sequestered on legal process; or shall make any assignment, gift, sale, conveyance, or transfer of his estate, property, rights, or credits, either within the United States or elsewhere, with intent to delay, defraud, or hinder his creditors; or who has been arrested and held in custody under or by virtue of mesne process or execution, issued out of any court of the United States, or of any state, district, or territory, within which such debtor resides, or has property, founded upon a demand in its nature provable against a bankrupt's estate, under this act, and for a sum exceeding one hundred dollars, and such process is remaining in force and not discharged by payment, or in any other manner provided by the law of the United States or of such state, district, or territory, applicable thereto, for a period of twenty days, or has been actually imprisoned for more than twenty days in a civil action founded on contract for the sum of one hundred dollars or upwards; or who, being bankrupt or insolvent, or in contemplation of bankruptcy or insolvency, shall make any payment, gift, grant, sale, conveyance, or transfer of money or other property, estate, rights, or credits, or confess judgment, or give any warrant to confess judgment, or procure his property to be taken on legal process, with intent to give a preference to one or more of his creditors, or to any person or persons who are or may be liable for him as indorsers, bail, sureties, or otherwise, or with the intent, by such disposition of his property, to defeat or delay the operation of this act; or who, being a bank, banker, broker, merchant, trader, manufacturer, or miner, has fraudulently stopped payment, or who, being a bank, banker, broker, merchant, trader, manufacturer, or miner, has stopped or suspended and not resumed payment, within a period of forty days, of his commercial paper (made or passed in the course of his business as such), or who, being a bank or banker, shall fail for forty days to pay any depositor upon demand of payment lawfully made, shall be deemed to have committed an act of bankruptcy, and, subject to the conditions hereinafter prescribed, shall be adjudged a bankrupt on the petition of one or more of his creditors, who shall constitute one fourth thereof, at least, in number, and the aggregate of whose debts provable under this act amounts to at least one third of the debts so provable. Provided, That such petition is brought within six months after such act of bankruptcy shall have been committed. [Provided, also, that no voluntary assignment by a debtor or debtors of all his or their property, heretofore or hereafter made in good faith for the benefit of all his or their creditors, ratably and without creating any preference, and valid according to the law of the state where made, shall of itself, in the event of his or their being subsequently adjudicated bankrupts in a proceeding of involuntary bankruptcy, be a bar to the discharge of such debtor or debtors.] And the provisions of this section shall apply to all cases of compulsory or involuntary bankruptcy commenced since the first day of December, 1873, as well as to those commenced hereafter. And in all cases commenced since the first day of December, 1873, and prior to the passage of this act, as well as those commenced hereafter, this court shall, if such allegation as to the number or amount of petitioning creditors be denied by the debtor, by a statement in writing to that effect, require him to file in court forthwith a full list of his creditors, with their places of residence and the sums due them respectively, and shall ascertain, upon reasonable notice to the creditors, whether one fourth in number and one third in amount thereof, as aforesaid, have petitioned that the debtor be adjudged a bankrupt. But if such debtor shall, on the filing of the petition, admit in writing that the requisite number and amount of creditors have petitioned, the court (if satisfied that the admission was made in good faith) shall so adjudge, which judgment shall be final, and the matter proceed without further steps on that subject. And if it shall appear that such number and amount have not so petitioned, the court shall grant reasonable time, not exceeding, in cases heretofore commenced, twenty days, and, in cases hereafter commenced, ten days, within which other creditors may join in such petition. And if, at the expiration of such time so limited, the number and amount shall comply with the requirements of this section, the matter of bankruptcy may proceed; but if, at the expiration of such limited time, such number and amount shall not answer the requirements of this section, the proceedings shall be dismissed, and, in cases hereafter commenced, with costs. And if such person shall be adjudged a bankrupt, the assignee may recover back the money or property so paid, conveyed, sold, assigned, or transferred contrary to this act: Provided, That the person receiving such payment or conveyance had reasonable cause to believe that the debtor was insolvent and knew that a fraud on this act was intended; and such person, if a creditor, shall not, in cases of actual fraud on his part, be allowed to prove for more than a moiety of his debt; and this limitation on the proof of debts shall apply to cases of voluntary as well as involuntary bankruptcy. And the petition of creditors under this section may be sufficiently verified by the oaths of the first five signers thereof, if so many there be. And if any of said first five signers shall not reside in the district in which such petition is to be filed, the same may be signed and verified by the oath or oaths of the attorney or attorneys, agent or agents, of such signers. And in computing the number of creditors, as aforesaid, who shall join in such petition, creditors whose re |