SUCCESSION DUTY BILL. (Hansard, 17 June 1853)

§ SIR FITZROY KELLY
said, he wished to know whether it was intended by this clause to impose a tax where there was a present gift of the property, but accompanied by a secret trust or reservation. He would suppose that a father, with the purpose of evading the legacy duty, made a present of a certain amount of property to his son in his lifetime, or when he believed himself to be near his death. The money or the estate was received and became the property of the son, with a secret understanding and reservation that the son should for the rest of the lifetime of the father give him the interest of that property. On the death of the father the money or the estate became absolutely the property of the son; and he wished to know whether it was the intention of the Government that a Court of Law should decide in these cases, when it was admitted that the intention of both father and son was to evade the legacy duty? If this clause passed in its present shape, it would be years and years before the Courts of Law or the court of last resort would finally put a judicial construction upon the exact meaning of this clause. One Judge would say that there had been no fraud, and another would decide the reverse.

§ The CHANCELLOR OF THE EXCHEQUER
said, the hon., and learned Gentleman had put to him two questions which he bad illustrated with cases, and he must say that he thought that the questions of the hon. and learned Gentleman would be much clearer without the illustrations. The 386 second illustration he put was placed on a foundation that made it quite distinct from his first illustration, and then a gloss was put upon it which brought it back exactly into the same category as the first. As to the first illustration, he understood it to be this: suppose a father confers upon a son a gift of 100,000l., with a secret reservation or engagement— a secret trust or arrangement—under which there is to be paid to the father during his life an annuity of 3,000l. a year, that secret trust or arrangement not being capable of being enforced in a Court of law, would it, according to the intentions of the Government, come within the purview of the Bill? The answer as to the intentions of the Government was this: So far as they could clothe their intentions in words, they did not suppose that the words they used in the former part of the clause would bring such a case as that within its operations. But with respect to the second part of the clause, he was not prepared to give the same answer. The object of that second part was to cover, as far as they could, cases where parties meant to evade the Act. They were not, prima facie, exempt by the operation of the second portion of the clause; but it must depend, he apprehended, on the specialties of each case. The intention to evade might exist, and yet not be such as would satisfy a Court of competent jurisdiction. If there were circumstances to satisfy a Court of competent jurisdiction that the arrangement had been made for the purpose of evading the operation of the Act, then, whatever the nature of the arrangement was, it would, according to the intentions of the Government, come within the meaning of the clause. If the evidence fell short of that, he need not tell the hon. and learned Gentleman that it could not come within its operation.

§ SIR FITZROY KELLY
said, he would suggest the introduction of words to give full effect to the intentions of the Government, thus at once putting an end to all doubt as to the meaning of the clause, but leaving, of course, the question open as to the policy of the enactment. Was it really the intention of the Government to enact a law that no parent should give to his children any amount of property when he knew his death was approaching, without such act being considered as an intention to commit a fraud? If such were the meaning of the Government, they should state it.

§ The CHANCELLOR OF THE EXCHEQUER
No; that is not our meaning.

§ SIR FITZROY KELLY
said, that was the case that was put; and he wanted to know, before the clause was agreed to, what was the description of case which the Government meant and intended should amount to a fraud under this Bill, if it were passed into a law?

The SOLICITOR GENERAL
said, he thought the words of the clause were sufficiently explicit, and, except from the desire of multiplying words, there could be no objection to the adoption of the clause as it stood. If his hon. and learned Friend had observed the words of the clause, he thought he could not entertain any difficulty about the matter. Wherever property wa3 given absolutely, though given with an honourable and moral engagement, as distinct from a legal and equitable contract, that honourable and moral engagement would not come within the meaning of this Bill. When his hon. and learned Friend had accomplished the task of defining every variety and mode that were used to accomplish frauds, then he might hope to express in a definite enactment the means of preventing them; but at present legislators were obliged to have recourse to general provisions to meet such cases. If the father should give his son a property out-and-out, and therefore became bond fide dependent upon the bounty of his child, that in itself would not be an infraction of the law; but if the father gave the estate out-and-out, and by another and independent instrument the son gave, out of the property, or out of some other means, some corresponding advantage, then the union of the two things would manifestly show a purpose of accomplishing by the two acts a fraudulent evasion of the statute. However, if his hon. and learned Friend thought it absolutely necessary, he would not object to the introduction of additional words hereafter.

§ MR. VANSITTART
said, he would now move the omission of the words of which he had given notice.

The ATTORNEY GENERAL
said, it was a general enactment in general terms, not meant or calculated to give any court a right to make the law, but a right of saying whether the facts of a case came within the law already made.

§ MR. WALPOLE
said, he was of opinion 388 the words were much too general, especially the term "other" annexed to "disposition of property," as distinguishing it from the express mode of disposition previously noticed. That was far too wide.

§ MR. MONCKTON MILNES
said, he was of opinion that it was very essential to define what was or was not a fraudulent evasion. As far as he understood, if a man gave his son an estate, and the son by any instrument settled that estate upon his father, it was a fraudulent evasion.

§ SIR JOHN TROLLOPE
said, he considered that the clause as it stood would give rise to a great deal of difficulty, and would be very liable to misconstruction. The latter part of the clause appeared to him not to convey the same meaning as the former part, and he was of opinion that the omission of the words proposed to be omitted would be desirable.

§ The CHANCELLOR OF THE EXCHEQUER
said, he considered that it would not be advisable to omit the words. It seemed to him very necessary to make provision that a court of competent jurisdiction should have power to decide whether any disposition had been fraudulently made to evade the duty. It might be necessary to have to encounter fraud of the most ingenious character, and it was, therefore, their duty to adopt every possible precaution against it; but if the latter part of the clause were struck out, there would be no security against anything but an engagement, secret trust, or arrangement capable of being proved in a court of law. If they wished to stultify their own proceedings by passing an Act that every man would be able to drive a coach and four through, they would adopt the Amendment.

§ MR. HENLEY
said, he considered that various meanings might be attached to this clause; but, without expressing his opinion as to whether the words ought to be expunged, he would wish to ask, what was meant by the words "court of competent jurisdiction?"

§ MR. MALINS
said, he thought it would be found that the words which the hon. Member for Berkshire (Mr. Vansittart) proposed to omit, were altogether unnecessary. He thought they were called upon to pass a penal enactment, when human ingenuity could not state a case to which it would apply.

§ MR. DRUMMOND
said, he would suggest that an answer should be given to the question of the right hon. Member for Oxfordshire (Mr. Henley), with respect to 389 what was to be considered a court of competent jurisdiction. They would find by the 38th and 39th clauses that the Commissioners themselves were to form the court in many important cases, and that the public were left solely to their ipse dixit.

The SOLICITOR GENERAL
said, it would be observed that the portion of the clause contemplated an instrument that was to be set aside, and for that purpose an appeal must of necessity be made to a court of equity. That court of equity might be the Court of Exchequer, which in matters of this kind still exercised an equitable jurisdiction, or the Court of Chancery. If any person was alarmed at the words "court of competent jurisdiction," there could be no difficulty in altering the words into "court of law or equity." An infinite variety of cases might be pointed out in which attempts would be made to evade this duty. This provision, however, was one which had existed for years in connexion with the legacy duty—it would only be administered in the Superior Courts at Westminster Hall, by the Judges of the land— it was a branch of jurisprudence already well known to our laws; and, therefore, he thought it ought not to excite alarm among hon. Members.

§ MR. MULLINGS
said, he differed most entirely from the hon. and learned Solicitor General in regard to the application of the law. He would challenge the hon. and learned Gentleman to point out to him a single case in which a life interest having been given, with a power of revocation, the legacy duty could be made to apply.

§ MR. BAILLIE
said, he did not know what power the Law Courts might have in this country, but it would be found very difficult to carry the law into effect in the Courts of Scotland. The writers to the signet of Edinburgh had sent to London a case in which they stated that it was impossible to understand the Bill, and that the law terms were to them quite unintelligible.

§ The LORD ADVOCATE
said, that in consequence of having seen the statement of the writers to the signet, he had gone carefully through the Bill, and he certainly could not understand why the Bill should he considered so unintelligible, because he found that the addition of a dozen words would make the law perfectly applicable to Scotland. The right hon. and learned Member for Leeds (Mr. Baines) was of the 390 same opinion as himself; and he (the Lord Advocate) could not but think that those who had issued the statement had not given sufficient attention to the subject.

§ SIR JOHN PAKINGTON
said, the present was a most important point, not only for the House hut for the public to consider. The essential point raised by the hon. and learned Member for East Suffolk (Sir F. Kelly) remained unexplained — namely, why, and with what meaning, was the word "fraudulently" used in the latter part of this clause. The meaning of the right hon. Chancellor of the Exehequer no one could misunderstand. The more odious a tax was likely to be, the more necessary it became to fence and guard the collection of that tax by the most stringent powers. But no feeling of that kind could justify the Government in calling that fraudulent which the law of England had not declared to be fraudulent; and this was the point he wished to have explained. Was the clause intended to be declaratory of the existing law, or was it intended to be the creation of a new offence? If it were intended to be declaratory, then he would ask whether the Government was justified in saying that it was now fraudulent to make an arrangement by which to seek to evade the tax. No doubt every species of ingenuity would be resorted to to protect the public from the imposition of this most grievous burden; but he disputed the right of the Government to interpose words in this Bill which declared that to be fraudulent which the law had not declared to be so; still more did he dispute their right to declare that, hereafter, that should be considered fraudulent which the law had hitherto not deemed so. He would warn the Committee whether it was wise, for the sake of the convenience of the Government, to run counter to the moral feelings of the country, by attempting to declare that to be an offence at law which was not an offence.

§ The CHANCELLOR OF THE EXCHEQUER
said, the moral feelings of the country were not in the smallest danger of being shocked or annoyed at all by this clause. In fact, the question had nothing to do with moral feelings—considered on either side of the alternative he had put. The right hon. Gentleman said, either this was a declaratory enactment, or it was the creation of a new offence. Now, he (the Chancellor of the Exchequer) begged to answer that it was neither one nor the other. It was no declaratory enactment, and it was no 391 creation of a new offence. The clause said nothing about fraud, nor what constituted fraud. It used language which was perfectly well known to the law. If three Judges out of four in Westminster Hall had the power to declare that such and such a disposition of property was not fraudulently made for the purpose of evading the duty, then those same three Judges were just as free to declare that a certain act was a fraudulent disposition to evade the succession duty. What the Bill was intended to say was this, that where a competent jurisdiction should declare that a disposition of property had been fraudulently made for evading the duty, then, acting upon the principle of the law and the reasons given by the Court for its judgment, it should be lawful for them to declare a succession to have been conferred.

MR. TATTON EGERTON
said, the Committee had been told what the law on legacies was as established by the decisions of the courts for a long series of years; but it should be remembered that they were now dealing with the whole property of the country at the present moment, and, although he voted for the principle of the Bill, yet he held himself bound to see that that principle was fairly and justly carried out. He very much feared that the right hon. Gentleman (the Chancellor of the Exchequer) was about to introduce a fresh principle and a fresh law, not only as regarded real property, but as affected personal property also. It might take a long series of years to establish the law by a course of uniform judgments on the subjects; and during the interval every person disposing of property would be subject to have his family arrangements disputed and disturbed. In many instances the successor would be liable to be brought before a Court of Law to determine whether disposition was fraudulent or not. In all these cases heavy costs would be incurred, because in no case where the Crown prosecuted were costs allowed. They all knew that the officers of the Crown who would have to carry out this measure would not be affected by any decision that might be come to. They saw what had been done in the recent cases of custom-house prosecutions; and he feared the same consequences would follow from these succession-duty prosecutions. Under these circumstances he hoped his right hon. Friend would consider the proposition which had been made to him, and that he would, at 392 all events, strike out the word "fraudulently" from the clause.

§ The CHANCELLOR OF THE EXCHEQUER
said, that if he struck out the word "fraudulently" it would be a most fatal gain to his hon. Friend. The fear of his hon. Friend was this, that an honourable arrangement made for family purposes might come within the operation of this portion of the clause. He did not think there was much foundation for that fear as the clause now stood; for he did not believe that any court of competent jurisdiction would declare any arrangement for purposes of an honourable character was fraudulently intended to evade the duty. He thought the word "fraudulently" would operate as a protection to such transactions. Certainly, if the word "fraudulently" were left out, it would subject family arrangements to be questioned, especially whenever mixed motives might be reasonably assigned. It would, therefore, be dangerous to omit the word "fraudulently," as it had a definite meaning in law, and which, if retained, would confine the court strictly to the question of intention to evade the duty.

§ MR. MALINS
said, that no case had been suggested to which these words would apply; and the Committee had a right to assume that there was no such case, and that the words were unnecessary. The only case which could occur was the same as had arisen under the legacy duty, that of a man making himself merely tenant for life of his own property, in order to evade the duty payable on his death; and this was sufficiently provided for.

The SOLICITOR GENERAL
said, the hon. and learned Gentleman must be aware that many trusts were created for the purpose of avoiding the legacy duty. As to omitting the word "fraudulently" from the clause, if that were done the power conferred would be most fearful. It was not intended to render the word "fraudulently" more elastic or comprehensive than it was at present understood by the law.

§ SIR JOHN TYRELL
said, he had often been asked what the law was upon a given subject, and he had answered that he did not pretend to understand the law, but he hoped he was able to understand what the intention of the Legislature was, and he hoped the right hon. Gentleman the Chancellor of the Exchequer would not so stultify this matter as that the country should not be able to understand it.

§ SIR CHARLES WOOD
said, the ob- 393 ject of the clause was clear enough. The principle was that the revenue should he fairly collected. It was admitted that there might be bonâ fide arrangements made by which the tax might be evaded. The Government had not the slightest wish to impose a duty on bond fide transactions, but, as great ingenuity would be fairly set to work to evade the duty, the object of this clause was to meet those cases.

§ MR. WALTER
said, he would not preface the question he was about to ask with any observations, but he begged to ask the hon. and learned Solicitor General whether or not a family arrangement which should have the effect of evading the legacy duty, though not designedly made for that purpose, would, under this Act, be considered as fraudulent; and, if not, under what circumstances it would be held to hear a fraudulent character?

The SOLICITOR GENERAL
said, according to his view of the Bill the intention of its framers was, that although a disposition of property should de facto evade the duty, yet it would not thereby become fraudulent; and that even a disposition made with the express intent of evading the duty would not by the mere intention alone become fraudulent. But a disposition made to evade the duty must be attended by some other circumstances by virtue of which it might be said to be made fraudulent; and accordingly, the words of the clause were not that the Court should set aside such disposition, but that the Court should declare a succession to have been conferred on such person, at such time, and to such extent as the Court should think just.

§ SIR WILLIAM JOLLIFFE
said, if the Committee consented to pass the latter part of the clause, they opened the door to oppression and tyranny such as never had been sanctioned by Parliament for a hundred years back. It evidently aimed at this—that oral evidence should be considered sufficient proof of fraud. Let the Committee just look at the inducement to heirs-at-law to get up evidence of this kind in cases where those to whom they were heirs had made gifts shortly before their decease—to illegitimate children, for example—and to prove fraud.

§ MR. SPOONER
said, he must confess that from what had just fallen from the hon. and learned Solicitor General, he thought that great doubt would be thrown upon the subject by the adoption of this clause. He understood (he hon, and learned 394 Gentleman to say that a person in articulo mortis might dispose of property for the purpose of evading the duty, and yet that such a dispposition would not be considered a fraud. He would therefore ask the hon. and learned Gentleman to state what those circumstances to which he referred were, which, in the eye of the law, would be considered a fraud?

The SOLICITOR GENERAL
said, he should be exceedingly happy to give an answer if his mind was sufficiently comprehensive to have every variety of circumstance that could occur before it. How could he determine what these circumstances might be? Wherever doubt was introduced into the disposition of property, wherever a malus animus was apparent, wherever one thing was done and another thing was intended to be done, wherever there was a secret understanding to evade the Act—that was fraud; but where there was a bond fide transaction, though in contravention of the Act, it would not be a violation of it so as to be regarded as fraudulent.

§ MR. WALPOLE
said, he felt alarmed at the explanation of the hon. and learned Solicitor General. It was not, it appeared, a fraud to part with property, in evasion of the Act, when in articulo mortis. What, then, constituted fraud under the Act? As the law stood, the Attorney General could file an information, or bring an action for the amount of legacy duty whenever it was duo, and the only question of law was, whether the duty was payable by him or not; and the only question of fact to be determined was, whether it had been paid or not; but, if this Bill passed, the Attorney General could file his information, or bring his action for the amount of duty on the ground of fraud, which he never could certainly ascertain till he had elicited a discovery from the person who was alleged to be liable to pay that duty by means of a suit in the Court of Chancery; and the consequence of that suit, let the Committee be well aware, was this—that whether the party against whom the suit was brought was adjudged liable or not, he must pay his own costs, because the Crown paid no costs. He was sure the Chancellor of the Exchequer was not aware of that fact, which was not a technical but was an invariable rule.

The ATTORNEY GENERAL
said, he was glad of this opportunity of being enabled to state that he had received the authority of Her Majesty's Government for' 395 the purpose of rectifying the very serious evil to which the right hon. Gentleman had alluded, and that he hoped soon to bring in a Bill to relieve parties from costs where defendants against the Crown gained their cause.

§ MR. PHILIPPS
said, he begged to move as an Amendment that the duty should be at the rate of 2l., instead of 3l. per centum. In doing so, he founded his reasons for urging this proposal upon the justice and policy of the case. He did not believe the right hon. Chancellor of the Exchequer was one of those persons who would impose taxation without having good grounds for it; but, according to the varying rates of the duty contained in this clause, the right hon. Gentleman would seem to have regarded the tax in the light of a tax upon good fortune—a tax upon good luck—measured by the amount of expectancy on the part of the successor. The number of times the duty would be inflicted in the case of brothers and sisters must be much greater than in the case of any other relatives. In the largest families the number of years that must elapse between the death of the eldest and the youngest could not be very great; and the recollection of hon. Members would no doubt present them with many instances of the sort. He himself was at that moment in the possession of property which passed through the hands of four sisters before it reched him, and that in no longer a period than five years. And he thought that for property to come under the constant inspection and control of the fiscal authorities so often as that, and which it would do under this Bill, would be decidedly inconsistent with justice. As to the policy of the tax, he would take the liberty of suggesting to the right hon. Gentleman whether the measure as it stood would not hold out a great temptation to a father so to entail his property that his chsidren should take it as from him, and not in succession one to another, and thus 396 pay the duty of 1 instead of 3 per cent. If the right hon. Gentleman adopted the proposal he (Mr. Philipps) now made, he did not believe the symmetry of his plan would be in the least degree marred. Death was "the king of terrors" to most men, but the cause of joy and rejoicing to a Chancellor of the Exchequer. And whenever he read the obituary of a person who was described as being universally lamented, he would add, "except by the Chancellor of the Exchequer." He should regret, however, to see the revenue of the country maintained from such a source as that. And he trusted the right hon. Gentleman would remember that the cup he was administering to them was not a very palatable one, and allow the infusion of the small drop of sweetness which he (Mr. Philipps) now proposed to add to the dose.

§ The CHANCELLOR OF THE EXCHEQUER
said, he must admit the fairness with which this question had been raised —a question which, though as it stood upon the paper appeared unimportant, was in reality of extreme importance. As regarded what the hon. Gentleman said about the symmetry of the measure, he would be willing to make a concession to him on that score. The hon. Gentleman spoke of a succession of four sisters or brothers in four or five years—

§ MR. PHILIPPS
I said four sisters in five years.

The CHANCELLOR or the EXCHEQUER
Is it real or personal property the hon. Member speaks of?

§ MR. PHILIPPS
Both.

§ The CHANCELLOR OF THE EXCHEQUER
What we are here dealing with is real property. The Committee should recollect, however, that by this Bill they were dealing with real property and settled personalty, upon which, so far from its operation being severe, in all probability it would not be felt at all. There must be an interval in life interests before the duty would accrue; and if the party succeeding died before twelve months had elapsed, the claim for duty would fall to the ground. The extreme rapidity of succession, therefore, qualified itself in a great degree. Every time a new succession accrued to a life interest or realty, in five years the unpaid portion of the duty dropped altogether. But in his opinion the Committee could not consent to lighten the percentage of duty on the succession of brothers and sisters under this Bill, and leave the legacy duties unmitigated. Would the hon. 397 Gentleman effect his proposed alterations in the succession duty, and confine them to real property, whilst the legacy duty would remain as it stood?

§ MR. PHILIPPS
I have no objection whatever to extend it to personalty.

§ The CHANCELLOR OF THE EXCHEQUER
This opens a very wide question indeed. They must now confine themselves entirely to the question before the Committee, which regarded the duty upon successions. The scale of duties upon successions was the vital part of the measure. The 3 per cent rate legacy duty had been a most productive one. In 1852, whilst the duty upon direct successions paid in legacy duty, at 1 per cent 238,000l., that upon indirect successions of brother and sister produced 471,000l. He was not indisposed to hearken to any reasonable suggestion, but what he felt bound to maintain was the policy of the Bill. Upon the whole, and after the most careful consideration, the scale seemed to him to be not unjust. If an alteration were to be made at all in the scale, they must not stop where the hon. Gentleman would stop. Undoubtedly, the duty of 10 per cent was a heavy one, but then it was to be paid by those who, for the most part, had not had expectancy. The general principle of the Bill was expectancy. The Committee would bear in mind that this was a tax in the nature of a property tax, and was not altogether free from clanger—the danger was, the arbitrary multiplication of the rates. He had heard a great deal in that House, recently, of the policy of extending direct taxation. [Mr. PHILIPPS: Not from me.] No, not from the hon. Gentleman, nor from me either. The difficulties in the way of direct taxation were immense, and they must have a very stringent machinery in order to carry it out; and the only reason which could induce that House to grant such powers, would he, first, the necessity for direct taxation; and, secondly, that those stringent enactments would be tempered by the spirit of society, by the freedom of our institutions, and by the responsibility of public officers to that House. But he saw great danger in the doubling and trebling which it was perfectly conceivable must arise upon this tax; and the existence of these high rates in the scale was a very effective barrier and obstacle to that doubling and trebling of the low rates in the scale which otherwise, in any temporary financial difficulties, must be proposed. He opposed, then, the 398 proposition of the hon. Gentleman, because the maintenance of the present consanguinity scale was necessary to the efficiency of this tax, because, under any system of wise and humane legislation, direct successions ought to be treated tenderly and gently in an Act of this kind, and because he thought the preservation of the present high rate as to indirect successions was the greatest security against any future tampering with this tax.

§ MR. BARROW
said, he considered the proposition of his hon. Friend near him (Mr. Philipps) was a most reasonable one. He thought the succession of brother and sister had not much to do with the 10 per cent succession of perfect strangers, seeing that the children of the same parent were almost as nearly connected as parent and child. He was anxious to correct the impression that the succession duties would be levied so rarely as the right hon. Gentleman supposed. In the instance mentioned by the hon. Member (Mr. Philipps) the duty would have been paid four times over within a very short period indeed, for the subsequent clause in the Bill only limited the case to life interests, and left the duty payable on successions in absolute right repayable, whether the party lived two years or seven. He (Mr. Barrow) believed this measure would materially affect the interests of the middle classes of society to which he belonged, and which he represented in that House. It was rot a question whether the eldest son should be taxed or not, but whether the tax would not fall with extreme hardship upon the middle class of society, amongst whom direct successions were not perpetuated. Numerous families eked out a moderate income by three or four sisters living together, and upon the death of each of these this tax would come into operation with very great severity. If he wished to see this Bill hereafter repealed, he should not urge upon the right hon. Gentleman the alteration of the percentage, because he was certain it would help materially to create a feeling out of doors which, sooner or later, would produce a repeal of this and of all other succession taxes.

§ MR. COBBETT
said, he wished to draw the attention of the Chancellor of the Exchequer to the case of step-children, who were to be taxed, according to this Bill, in the same way as strangers, though he 399 thought they stood in the same relation as sons-in-law; and he put it to the Committee whether they ought not to be taxed in the same lenient manner?

§ The CHANCELLOR OF THE EXCHEQUER
said, it was impossible to accede to the suggestion. No doubt particular cases would arise where the application of the scale laid down might seem to involve hardship, and he did not think that the hon. and learned Gentleman had taken the strongest of these cases. There was no reason which would admit step-children, and exclude adopted children. But there was a case which was stronger than either —that of natural children, and there was the case of a sister or brother-in-law, who were treated by this Bill as strangers. He would recommend the Committee not to take up isolated cases which might come under the notice of an individual Member, and strike him with a force disproportioned to its importance; but if they proposed to alter the scale at all, then to consider and revise it in all its bearings.

§ MR. HADFIELD
said, he thought there was one case of peculiar hardship—that of natural children whose parents had subsequently married. He thought their case deserved the serious attention of the Committee, for they were often brought up along with the legitimate children, and treated as members of the same family, and he saw no reason why they should be punished for the faults of others. In Scotland, as they were aware, such children were legitimised, and they would be treated by this Bill as relations by blood; he could not see why they should be treated differently in England.

§ MR. R. PHILLIMORE
said, he thought that a very strong case existed for an alteration in the duty to be paid by natural children. The law relative to natural children was peculiar to England, the law of other countries recognising adopted children as well as natural children.

§ MR. HADFIELD
said, he should move as an Amendment that children born without marriage whose parents married subsequently, should pay a duty of only one per cent.

§ The CHANCELLOR OF THE EXCHEQUER
said, he hoped the hon. Gentleman would not persevere with his suggestion, which opened a large question. He was well aware that it was hard to punish innocent parties; but if privation of benefit was punishment, he feared that society teemed with such instances. If the hon. 400 Gentleman wished to, legitimise such children as he had referred to, and place them in the same position as they were placed in Scotland, it was a fair question for him to introduce, though he did not say he (the Chancellor of the Exchequer) could agree to it; but it was surely beginning at the wrong end to raise such a question as that on' a Bill for levying duties on successions.

§ MR. HENLEY
said, he wished to understand what the operation of this clause would be in the following case. Suppose a father and son were to grant a joint lease of a farm to a tenant for a period of that tenant's life. In course of time the father died, and the son would, of course, pay the duty on succeeding to this farm as well as on the other portions of the estate. But the tenant died a few years afterwards, and the farm reverted into the hands of the son: would the son then have to pay upon any increased value which the farm might have derived during the occupancy of the tenant? He believed that was not the intention of the Government; but he feared that as the clause now stood that would be its effect. He was afraid the terms of the clause would inflict the hardship of the tax upon those who let their land for lives; whereas those who let it for a term of years would be exempt. He hoped the case would be provided for by the Government.

The SOLICITOR GENERAL
said, the subject was under consideration on the part of the Government, including the whole question of leases.

§ MR. WALPOLE
said, he wished to know how the clause would operate in another case. Suppose a man left 2,500l to each of four children; one of them married and settled his fortune upon his wife and children; he wished to know whether that person would not have to pay the succession duty twice over—once when he succeeded his father, and again, in the case of his wife dying without children, when the disposition of his property would revert to him?

The SOLICITOR GENERAL
said, that that was not the intention and would not be the effect of the clause.

§ MR. WALPOLE
said, he thought, as this was a Bill which could not be altered by the House of Lords, it was of paramount importance that its provisions should be clearly settled in that House. Besides 401 the affirmative and negative provisions embodied in the clause, there was another point which he wished explained. There might be property which in fact was the owner's in expectancy, which he would have to pay a duty for, deriving it from some disposition or settlement, other than that made by him. The clause imperatively required the parties enforcing it to demand the duty from the person who might have made the disposition of the property within the terms and purview of this particular clause.

§ MR. MULLINGS
said, he had also looked at this clause, and felt considerable hesitation as to what would be its probable effect. He thought some alteration ought to be made so as to do away with all obscurity and ambiguity.

§ MR. MICHELL
said, he should not propose the verbal Amendment of which he had given notice, relative to leases determinable on lives or ninety-nine years; but if an alteration were not made, he should, at another stage of the Bill, bring up a clause to meet the unfairness of which he complained. It was unfair to put the tax on one class of men, and take it off others. He could only regard such a proceeding as another sop to county Members who gave their support to the Government.

The SOLICITOR GENERAL
agreed to insert such words as would clear up the difficulty.

The SOLICITOR GENERAL
said, that as this clause originally stood, the only policies of assurance exempted from the operation of the tax were those effected by persons on their own lives. In consequence, however, of the arguments which had been urged by various hon. and learned Gentlemen in that House, the Government had determined to amend the clause so as to extend the exemption to all policies of assurance, whether for the lives of the assurers or not. Policies of assurance effected by purchasers in reversion would be exempt; but of course any policy that was treated as property would, like any other property, be charged with this tax,

§ The CHANCELLOR OF THE EXCHEQUER
said, that as although there was no doubt as to the object proposed, there might be some as to the precise words by 402 which it was to be effected, he would suggest that the consideration of this Clause should be postponed.

§ MR. MICHELL
said, be must complain that small leasehold estates were taxed double what large landed estates had to pay, because they were subjected to probate and succession duty, and to stamp duty as well. This was an injustice from which leasehold property ought to be relieved.

§ The CHANCELLOR OF THE EXCHEQUER
said, the hon. Gentleman complained that they were doing a great injustice by making leasehold property pay probate as well as succession duty by this Bill. Why, he might as well object that it did leasehold property an injustice, by making it pay income tax. The Bill did not touch the probate duty, and they were not able to reform everything at once. He hoped the hon. Gentleman would not oppose this clause, which was a clause entirely of relief to the class of property which he befriended.

§ MR. WALPOLE
said, he wished to call attention to what he conceived to be one of the points in the Bill which would operate so oppressively that, when it came to be practically worked, it would be found that such a tax could not be and ought not to be permanent. He was not now going to raise the question of the whole principle of the Bill. He agreed to a tax on legacies of personal estate, and thought there was nothing unreasonable in the taxation of successions to landed estate. He agreed also that if they wished to extend the tax to settled realty and to settled personalty, in principle he could see no absolute objection to it. But what he wished to impress upon the Chancellor of the Exchequer was a point which he (Mr. Walpole) felt most strongly. He believed that in the end they would destroy to a great extent that system of trusts in this country which to his mind was one of the most advantageous systems ever established in any country. The present clause provided that when a duty was payable upon a succession, such duty should be paid when the 403 party became entitled in possession to his succession, but that where there was any other charge which prevented the successor from being entitled to the full enjoyment of the succession— the duty in respect of the increased Value accruing upon the determination of such charge, estate, or interest, should, if not previously paid, compounded for, or commuted, be paid at the time of such determination. As he (Mr. Walpole) read this clause, he believed the result would be to create a mortgage to the Government of all the real and personal estates in the United Kingdom, perpetually to be paid off, and perpetually to be renewed. Let them see the effect that it would have on the system of trust. A person was trustee of a large landed property with estates for life to A, B, C, & c, and innumerable charges for younger children, besides charges for old servants; there might be at the same time a large amount of settled personal property in the funds with innumerable interests connected with it, which he had likewise got to dispose of to the persons that were beneficially entitled to it; if this Bill should pass he would be an accounting party to the Government from the time he accepted his trusteeship. Every time a charge fell in he must go to the Commissioners of Inland Revenue and pay the duty, or employ a solicitor to do it for him. When the property was small, it would be so galling to him that he would give up his trust, and if he employed a solicitor see what an expense they would be putting on that property. He (Mr. Walpole) believed that he was trustee for as many persons as most Gentlemen in that House; but if the Bill should pass into law, nothing would induce him to accept a trust again, except for the purpose of conferring upon those he regarded as much benefit as he could confer upon them even at some personal risk.

§ The CHANCELLOR OF THE EXCHEQUER
How is the trustee damnified any more than an executor under the present Legacy Duties Act?

§ MR. WALPOLE
Under the Legacy Duties Act there was always a person who on the death of another was known to be the representative of the whole of the personal estate, and he was the sole accounting party. He was known by the Government, and nothing more was required than for that person to give a full account of all the property he had. But how was it when they came to deal with a question of succession? When a person died, how 404 was the Government to know the property chargeable with the duty? The person was tenant for life in one estate, and there was a succession duty payable upon the property; he was tenant in tail upon another, the same thing happened; he was tenant for years in a third, the same thing happened; he had a life interest in a settled estate, the same thing happened; the trustees of the property were bound to account, and the Government could only ascertain the person to pay the duty in one of two ways; they must either call upon every relation of the person who died to give an account of everything he knew respecting the person's property that was just deceased, or they must have such stringent penalties imposed upon the trustees as would compel them to come in, whether they were willing or not, to account for the property. They might be obliged to have recourse to the penalties. Parties would try to evade them; and suits would be instituted by the Attorney General to compel payment of the duty. The result would be that they would be forced to repeal the tax, or to make real property liable to a duty on succession in the same way that personal property was liable to it.

§ The CHANCELLOR OF THE EXCHEQUER
said, though his right hon. Friend had spoken with great candour and plainness on this subject, he had really left him very much in the dark as to the course which he thought ought to be pursued. He was glad, however, to find that he was not prepared to state that the extension to real property of the duty now paid by unsettled personalty constituted an act of robbery, and in certain cases an act of plunder—a declaration which was made on the other side of the House, amidst vociferous cheering on the last night of the debate. He did not mean to say that the opinion was entertained by all those who sat on the opposite side, but it was entertained not by an inconsiderable section; it was energetically entertained by them, and boisterously supported. His right hon. Friend did not say he was prepared to abandon the 2,500,000l. of money derived from these successions— he did not glance at such a course—he admitted the principle of the extension was fair; and towards the close of his remarks, he alluded to a different form of proceeding, but he (the Chancellor of the Exchequer) could not see in what particular the exact difference existed. He had left him unable to devise in what essential 405 respect the position of trustees and executors, under the Bill the House was now invited to pass, would be different from the position they now held under the present Legacy Duty Act. Were there no annuities charged upon personal estates; were there no liabilities when those annuities were paid up; were there not Crown debts to be incurred; and did a person, from the fact of his becoming a Crown debtor, refuse to undertake those charges? The trustee would be enabled to give an account with such particularity to the officers of Inland Revenue as would enable them to call at the proper time for the additional succession duty that might be charged on every man's succession. It would be possible to adopt another alternative—to take all the successions at once, and take the whole tax upon them, and be done with them; and so far as giving facilities to parties who desired to take that course, the subject was worth consideration; but it would be a great burden to make it compulsory on the trustees to have all the persons' estates valued at the time for the succession duty, and to charge him for the whole. The reason why that course was not pursued by the Government was through consideration for the taxpayer. It was better for him to pay the duty at the period when the charges or incumbrances fell in, than to have them all valued in the first instance. With regard to the mode of discovering them, he begged to point out to his right hon. Friend that the means of discovery would be placed in the hands of the Government at the period of the first succession.

§ SIR JOHN PAKINGTON
said, that the right hon. Gentleman the Chancellor of the Exchequer had fallen into a great inaccuracy with regard to the language which had been used on that (the Opposition) side of the House, which he felt bound, as a matter of justice, to correct. The right hon. Gentleman had drawn a contrast between the language which had just been used by his right hon. Friend the Member for Midhurst (Mr. Walpole), and that which had previously been used by other Members on the same side of the House, who had described the extension of the legacy duty to real property as an act of robbery or plunder. Now, he (Sir J. Pakington) begged distinctly to state that the right hon. Gentleman was completely mistaken. Neither the word "robbery," nor the word "plunder," had been applied by any one to the extension of the legacy 406 duty to real property. The word "plunder" was used by himself (Sir J. Pakington), and applied to that particular part of the Bill which referred to the manner in which the succession duty was taken from timber; and the word "robbery" was first used by the hon. Member for Bodmin (Mr. Michel!), and repeated by the right hon. Gentleman the Member for Oxfordshire (Mr. Henley), and applied to that particular part of the Bill which took the succession tax from leases for lives, and not from leases for years. He (Sir J. Pakington) was sorry to add, that so far as he was concerned, he was not disposed to recede from the word he had used. There was another hard word which he had used, and that was the word "confiscation;" but the word was not his own; he had quoted it from one of the highest authorities in the kingdom on this subject, and applied it to that part of the Bill which taxed settled personalty by ex post facto legislation. He was at all times unwilling to use exaggerated language; but there were cases where only strong words would fitly and appropriately tell the truth; and he, for one, whether in that House or out of it, was determined to say distinctly what he thought; and when he believed that strong words would best suit the case, he should not be deterred by any lectures from the other side of the House from using them. He begged to add that he agreed with his right hon. Friend (Mr. Walpole). He thought that the same principle of taxation ought to be applied to personal and real property; and it was because he thought that they ought to be dealt with alike, and that there ought to be no invidious distinctions between different classes of property, that he objected to the extension of this tax to real property, until they had redressed its inequalities as regarded personal property.

§ The CHANCELLOR OF THE EXCHEQUER
said, that the right hon. Gentleman had challenged the accuracy of his statement in a matter on which, if he had been inaccurate, he should have been highly culpable. The right hon. Gentleman had stated that he had used the word "plunder" himself, hut only in a particular acceptation, and with reference to a particular clause. Now, he (the Chancellor of the Exchequer) never said that the right hon. Gentleman had used it with reference to the Bill at large. It was also true that the word "robbery" was used by the hon. Member for Bodmin (Mr. Michell) with re- 407 ference to a particular provision of the Bill; but he did not refer to either the hon. Member for Bodmin or the right hon. Gentleman. He would read a few words to the House, and leave the right hon. Gentleman to judge where they came from: —"Lord Galway moved that the Chairman, unless some explanation were given of the meaning of the clause, report progress. He thought the whole scheme an iniquitous one. Indeed he considered it nothing better than a downright robbery." Now, he (the Chancellor of the Exchequer) had not been inaccurate. He had shown where the inaccuracy lay. The right hon. Gentleman could not have heard these words, or he was quite sure he would not have administered the rebuke which he had done.

SIR JOHN PAKIGTON
said, it appeared from what the right hon. Gentleman had stated that hard words were used in three instances, and the right hon. Gentleman had acknowledged that he (Sir J. Pakington) was right in two of them. The third, he confessed, he had not recollected.

MR. PIGOTT
said, he was afraid the Committee would lose sight of the important clause then under discussion in their attempt to fix the precise meaning of words which had been used in a former debate. He was sorry to say that the reply of the Chancellor of the Exchequer had not succeeded in removing the impression which had been produced upon his mind by the objection of the right hon. Gentleman the Member for Midhurst (Mr. Walpole), and therefore he would suggest whether it would not be advisable to take more time for the consideration of the clause. He had been disappointed that the right hon. Gentleman the Member for Midhurst had concluded without moving an Amendment, or suggesting any alternative by which the difficulty might be got rid of.

The SOLICITOR GENERAL
said no obligation would be thrown on any trustee by virtue of this Bill, unless he happened to be the trustee actually in the possession of the property; and, therefore, in ninety-nine of the cases which his right hon. Friend (Mr. Walpole) seemed to apprehend, there would be no new duty, in point of effect, cast upon trustees. Where the trustee was actually the recipient of the rents and profits, he would, no doubt, be liable to pay the duty; but that was an obligation which was small indeed as compared with the onerous obligations which 408 were now discharged by the trustees and executors of personal property, such as leasehold estates, which were now subject to legacy duty. The apprehension of his right hon. Friend (Mr. Walpole), he was certain, would be removed to a great degree before the Committee arrived at the end of the Bill.

§ COLONEL SIBTHORP
said, he must admit that he had, on the previous evening, attempted to stop the progress of this most iniquitous Bill, by moving that the Chairman report progress. He had no hesitation in using the word "plunder" in reference to this Bill; for he did not by any means consider that to be too strong an expression. It was a decided attempt to plunder the aristocracy and the landed proprietors of this country. It was an attempt (which would probably succeed) made by Her Majesty's Government to please a multitude, who cared nothing at all about them, who would laugh at them out of that House, and who would attempt to undermine that which was the best safeguard and security of the Crown and constitution, about which, in his opinion, the Government cared very little. This Bill had been brought forward to please the Manchester school, without which the Government could not hold their places, and by which they were held in the greatest contempt. The Manchester school was composed of people who, of all others, most delighted in undermining; they wore two faces under a hood; they were true moles underground. The Government ought to be independent, and not to be at the beck of a set of people that did not hesitate to plunder their best friends, in order that they might gain the support of the Manchester school. The Chancellor of the Exchequer would, by the operation of this Bill, become the recipient of stolen goods; and there was very little difference between the thieves who stole and those who received the stolen goods.

§ MR. ROUNDELL PALMER
said, that in referring to a discussion on the previous night on the subject of leases, it had struck him that this section of the Bill really met the whole case of leases in every instance in which the succession took place after the Act came into operation, and that it would be wholly unnecessary to introduce into it any provision to meet the falling in of leases for lives, unless in the single instance in which that event had occurred before the Act came into operation He wished to make one suggestion which ra- 409 ther touched the principle of the Bill. He thought that it proceeded upon too technical a distinction between successions taking place upon death and other successions; and he would suggest, that in order to give due effect to the whole principle of the measure on the ground of perfect and equal justice, it should apply to every species of succession, and not be confined simply to successions that arose upon death, as was at present the case.

§ MR. HENLEY
said, if he understood rightly the interpretation which had been given of the clause, a new succession duty would have to be paid upon every falling in of a lease if the property should be let again at an increased rent. With regard to the liability of trustees, the hon. and learned Solicitor General had argued that a trustee would be in no worse position under this Bill than under a will at present. But he would put this case, which was a very common one:—Persons having a life interest in estates had settled them in trustees. Upon that life interest, before the trusts were settled, there had been various charges, many under old family settlements, still not discharged from the estates, and payable out of the life interest. Would the trustees, under such circumstances, be liable to look after the succession of the persons who took those charges? He (Mr. Henley) could not see his way under this Bill, and had taken serious advice as to whether it would not be expedient for him to resign the trusts which he held.

The SOLICITOR GENERAL
said, he thought, as the Bill progressed, the apprehensions of the right hon. Gentleman would be greatly relieved. The duty would be imposed on the successor, the individual who took the beneficial interest. Whenever a successor was in possession, that successor would be liable to the duty. The duty was thrown upon trustees only by the 43rd clause. When the successor was of full age, and in the enjoyment of the property, he was the person liable to pay the duty. The trustee was liable only where he was actually in the receipt and in enjoyment, holding upon trust for some person, described in the Bill as infant, ward, person under age, curator, &c.

§ MR. WALPOLE
said, that the hon. and learned Gentleman had omitted to read the first part of the clause, which stated that— The following persons shall be held accountable to Her Majesty for duty payable in respect 410 of any succession, but in respect only to property or funds received or disposed by them respectively and with their concurrence—that is to say, every trustee, guardian, committee, tutor or curator, or husband, in whom respectively any property, or the management of any property, subject to such duty, shall be vested," & c. It appeared that the executors would have to account for property which belonged to the deceased person on whose death the duty arises. The trustee in this case would have to account for property not belonging to the deceased person, but which belonged to other persons, in respect to which the deceased person only had a life interest. In the one case the clause would call the executor to account for all-personal estate he was likely to be possessed of; in the other case it would call on every trustee of J any property which the deceased person had for his life, or a limited interest in, to account. They would have to ascertain what those particular trusts were, which fact could only he ascertained by the powers given under one of the clauses, or by exacting penalties which they imposed in another clause. He thought that he furnished a strong reason why they should be cautious in passing this Bill into a law. The only remedy he could suggest, in order to make it a good Bill, would he to strike out several of the clauses, and make it a Bill to charge a duty upon a real estate in the same way as it was now charged upon a settled estate.

§ MR. MULLINGS
said, he wished to know, in respect to funds in reversion received and disposed of, the estate not having fallen in, whether or not it was to be continually liable at all times for the amount of duty arising on these successions?

The SOLICITOR GENERAL
said, he would suggest that the discussion of those points should be deferred until they came to the consideration of the 43rd clause, which referred to the liabilities of trustees.

§ MR. CAIRNS
said, he hoped when they came to the 43rd clause, that the Bill would be put in some shape, so as to afford protection to trustees. As regarded the objection of his hon. and learned Friend the Member for Plymouth (Mr. R. Palmer), he must say that he did not think the clause to which he referred applied to leases; but he must say that he was of opinion that the principle of the Bill ought to be extended to what the hon. and learned Gentleman termed the shifting clauses.

§ MR. MALINS
said, though entirely 411 opposed to the principle of the Bill, he begged to express his satisfaction at the temper and moderation of the Chancellor of the Exchequer. He was strongly of opinion that the responsibility of trustees ought not to be increased, and he hoped that before they came to the 43rd clause, this portion of the measure would be reconsidered.

MR. HEADLAM
wished to know, under this clause, whether a landlord would be liable for succession duty in respect to the increased value of an estate by the falling in of leases after he had come into possession?

§ The CHANCELLOR OF THE EXCHEQUER
said, there was no doubt as regarded the intention of the Government. It was not to include the case of leases in this clause. The purpose of the clause was to point out the time when the duty was payable; but, after what had been said, it would deserve further consideration, whether, for the purpose of obviating such an effect as that referred to by the hon. and learned Member for Plymouth, some alteration should not be made in the clause.

§ SIR WILLIAM JOLLIFFE
said, he thought the clause, as it stood, clearly applied to building leases.

The SOLICITOR GENERAL
said, the clause was intended merely to define the time when the duty should be payable, and not to impose the duty or describe the persons liable to the payment of it.

§ MR. BARROW
said, he wished to know whether a son succeeding to his father's property in a few years was or was not, upon the expiration of building leases, to pay duty on the increased value of the property?

§ SIR JOHN WALSH
said, that if the construction of the hon. and learned Member for Plymouth (Mr. R. Palmer) was correct, great complication would follow in the working of the measure; and then two questions would arise. The hon. and learned Gentleman said the succession duty would become payable upon all leaseholds, whenever they terminated, whether they were for terms of years or for lives. That was wholly at variance with the discussion on the previous night. The other question was at what period the increased value was to take place.

§ The CHANCELLOR OF THE EXCHEQUER
said, that of course leases for years would not be subject to the tax, no succession occurring in those terms.

MR. TATTON EGERTON
said, he would suggest the case of a person succeeding to property held under leases, which at the termination of those leases would become much improved in value;— would the successor be charged on the present value or on the prospective value?

The SOLICITOR GENERAL
replied, that he would be charged on the present value.

MR. HEADLAM
said, he would beg to advise that the clause should be reconsidered, in order to put an end to all doubts on the subject.

§ SIR JOHN PAKINGTON
said, he concurred in the suggestion, and moved that the Chairman report progress.