FRAUDULENT DEBTORS' BILL

HL Deb 12 August 1831 vol 5 cc1250-6

Lord Wynford moved the third reading of the Fraudulent Debtors' Bill, and stated, that he had some amendments which he proposed to introduce, in order to obviate, the objections of his noble and learned friend (Lord Plunkett). It often happened, that when judgment was recovered in this country, the only means by which the creditor could get what the law said he ought to get, was, by the imprisonment of the person of the debtor. This remedy might have been effectual when prisons were not quite so comfortable as at present. But now, when the prisoners had the Rules, it was found that prisons afforded very comfortable lodgings, and the consequence was, that imprisonment was, in many instances, quite inadequate to compel debtors to pay their debts, although they had abundant means of doing so. Al- though they should have double the amount of their debts in the Funds, or in the hands of third persons, they often preferred remaining in prison, or going abroad, to the payment of their debts. Large properties were thus spent in prison and in foreign countries, which ought to go to pay the debts due to creditors, whose ruin was often the consequence of non-payment. There were in one of the prisons of the metropolis one hundred persons who had the means to pay, and yet chose to remain in prison rather than pay one farthing; and thousands had absconded and gone abroad, to avoid the payment of their debts. He had received many communications, by post, from bankers and others, complaining of this state of the law, and urging him to proceed with his Bill. He had long turned this subject in his mind, and he had consulted other noble and learned Lords, and found, after much reflection and inquiry, that there was, in fact, no remedy for this evil but that of subjecting the parties to the laws of bankruptcy. An amendment of the law of outlawry, or a change in the Insolvent Debtors' Laws, he apprehended would be found wholly insufficient for that purpose. The objection to the operation of the Bankrupt-laws had always been, not that they gave too little, but, on the contrary, that they had the effect of giving too much, protection to debtors, and it was notorious, that no debtors were so well treated, in every respect, as those who had become such under the laws of bankruptcy. The object of this Bill, however, was not to extend the Bankrupt-laws to all descriptions of persons, but only to those, not being traders, who fraudulently refused to pay their debts when they had the power to pay them. It was only applying to them the same law to which the most honorable merchants were subject. And then it ought to be observed, that the bankrupt had some privileges which did not belong to the mere insolvent, for if his bankruptcy was owing to misfortune, and he himself was clear from blame, he had an allowance made to him, and both his person and future property were protected by his certificate. It had been objected, that a debtor of this description might, under this Bill, in case he did not surrender in a given time, be transported as a felon; but that would depend on the discretion of the Lord Chancellor; and a decidedly fraudu- lent debtor would have no reason to complain that he was made liable to be transported. Then it had been objected, with respect to those residing abroad, that this Bill did not make it necessary that they should be personally served with notice. But it would often be impossible to serve them personally, as they could effectually prevent that by a change of name; and persons residing abroad, who had property in this country, were almost always very well informed as to what was passing here, and, therefore, he thought that service being made at their last place of abode, and advertisements inserted in The Gazette, and in their county newspaper would be quite sufficient notice. It had been objected that judgment creditors would, by this Bill, be deprived of their lien on the freehold property of the debtors, and reduced under the commission to the condition of simple contract creditors; but he had a clause to propose, by which it was provided, that the commission should not deprive judgment creditors of their lien, provided it should appear to the Lord Chancellor, on inquiry, that the judgments had been fairly and bona fide obtained; and it was not desirable that fraudulent judgments should be protected. He had also an amendment to propose, providing that no estates in remainder, nor any estates, except those in actual possession, should be sold under the Bill. Another amendment was, that the provisions of the Bill should not take effect against persons residing abroad, until the expiration of twelve months from the passing of the Bill, within which time they might exempt themselves, by returning and paying or compounding with their creditors. The object of this Bill was not to imprison debtors, but to compel them to pay their debts, for he considered imprisonment for debt to be improper, except to compel the debtor to give up his property.

Lord Plunkett

felt still bound to resist the Bill altogether, notwithstanding the clauses which his noble and learned friend proposed to introduce, which, he was ready to allow, were great improvements, because he considered it harsh and oppressive to the debtors who were to be the objects of it. It would be an especial hardship upon those who were not engaged in trade, but merely went abroad for their own business or amusement. [Lord Wynford: They might remain at home till they paid their debts]. It might be proper, that they should so remain at home; and, if the noble and learned Lord could find some proper means to keep them at home, he should be glad of it; but this measure was too harsh. If the noble Lord could prevent landed proprietors from leaving the kingdom at all, he certainly should have no objection to such a proposition, but this really was a species of ne exeat regno interference which he could not understand. According to the present Bill, if any private gentleman went abroad, and did not compound with his creditors after three months' notice in the Gazette, and in the public papers of the county in which he had last resided, to be served at his said residence, he would be subjected at once to the operation of the Bankrupt-laws. Now, many such persons would go abroad for the purpose of not keeping up a residence at home: that provision, therefore, in such cases could not be complied with. But this Bill, their Lordships must perceive, would besides convert a mere breach of contract, into a criminal act; and if the question, whether the absent party had gone abroad with a view to elude his creditors, should be tried by a Jury, and decided in the affirmative, the unfortunate emigrant would be liable to be prosecuted as a felon and transported for life. He objected, moreover, to the general principle of the Bill, because it applied a code of laws framed for traders to private individuals—a class never contemplated by the framers of the laws which it was now proposed should affect them. With regard to judgments, the noble and learned Lord said, they would still be effectual as liens upon the property, provided it were found, on inquiry before the Lord Chancellor, that they were not fraudulently entered up. But the great value of a judgment was, that it should not be inquired into. Therefore, judgment creditors must be exempted from the operation of this clause, and to place such persons under the same course of proceedings as was adopted in the Bankrupt-laws, was manifestly unjust. Independently of these objections, he had other grounds for objecting to the course now proposed. The Bankrupt-laws might be very proper within their own limits; but he was afraid, that when they were applied to those who were not traders, they would work infinite injustice. He objected to this Bill, because he thought, that the remedy would be infinitely worse than the disease which it was intended to cure. His noble friend might be inclined to apply to him the Horatian maxim— —"Si quid novisti rectius istis, Candidus imperti: si non, his utere mecum. He was not, however, inclined to take the remedy out of his noble and learned friend's hands. If their Lordships felt inclined to support this Bill, he would not press his objections further; but if they did not feel so inclined, he must persist in his resistance to the Bill.

Lord Tenterden

said, that his official engagements of late had afforded him no time for making himself acquainted with any Bills, and certainly not with the Bill of his noble and learned friend. He would therefore propose, that the third reading of this Bill should be postponed for a few days, in order that he might have time to look into it. If then he saw any objections to this Bill, he would take the opportunity of stating them.

The Lord Chancellor

thought it necessary that the Bill should be reprinted; for the Bill, as now printed, contained a clause which referred to the superintendence of the Great Seal, and of which no mention was made in the Bill as it originally stood. He, therefore, agreed with his noble friend, the Lord Chief Justice, in thinking that it would be for the convenience of all parties to have the further consideration of this Bill postponed for some time, that they might have an opportunity to consider the new arrangements introduced into it.

Lord Wynford

said, that there was no occasion that the clause to which the noble Lord on the Woolsack had alluded should be inserted in the Bill, as the power of superintendence was already in the Great Seal under the Bankrupt Act. [The Lord Chancellor did not mean as respected judgments, but as to felony.] There was nothing at all about felony in the Bill; the clause merely intended to give the Court of Chancery the power it possessed already under the Bankrupt Act, but it did not go to compel the Court to exercise it. It was felony for a bankrupt not to surrender, but then the Great Seal had the power of enlarging the time for such surrender, and thereby virtually defeated the object of the prosecution. He proposed to leave the matter as it stood at present; and, therefore, the, hardships which had been pointed out by the noble and learned Lord, the Chancellor of Ireland, did not exist, because the Lord Chancellor of England possessed this power in the usual course of the exercise of his authority. He was more confident than ever in the Bill, now that he had heard how weak were the arguments which his noble friend, the Chancellor of Ireland, had to urge against it. When all the amendments which noble Lords had suggested were added to the Bill—and he was most anxious that it should receive every improvement that could be suggested—he would certainly take the opinion of their Lordships upon it. He had not the slightest objection to the proposal of his noble friend, the Lord Chief Justice. He would therefore move, that these clauses, be printed, which he had now added; that the Bill be then recommitted; and, that it be read a third time on Tuesday next.

The Earl of Eldon

felt great satisfaction that the noble Lord had consented to postpone the further consideration of this Bill. In protecting the just rights of creditors, their Lordships ought to take care not to injure innocent persons, against whom no fraud could be justly imputed. Men might be accused as fraudulent, when, in point of fact, they were not so. He had a strong inclination to assist his noble friend in attaining the object he had in view; but in legislating upon this subject, they must be extremely careful not to involve the interests of those who did not deserve to be brought within the operations of a law, which should only apply to persons really guilty. If the utmost care was not taken, appearances might be assumed as proofs of fraud. For instance, a gentleman might go abroad, leaving certain debts at home, and would become, under the provisions of this Bill, subject to the Bankrupt-laws, made for the protection of trade; non constat that the creditor would take care to serve him with sufficient notice, even under the terms of this very Bill. It ought to be framed with an accurate knowledge of the manner in which it would operate in all its bearings; and it should be required of the creditor in every case under this law that he had done every thing which the law prescribed, to enable him to bring his debtor within its operation. His only wish was, to ascertain the state of the laws; and, at the same time, to give his noble and learned friend all the assistance he could, to further the general object he appeared to have in view.

Bill postponed.