The Solicitor General rose ,
pursuant to notice, to move for leave to bring in a bill to alter and amend the Bankrupt Laws, or rather, he said, more correctly speaking, to remove certain defects in those laws. It was by no means his intention to attempt the amendment of the whole of the law upon this subject, but to remove certain great defects, the mischievous consequences of which were every day observed, and most sensibly felt by all Who had any opportunity of considering the question. His object at present simply was, to introduce some regulations which were obviously necessary. According to the existing Bankrupt law, any acts done or debts contracted by the bankrupt, in the course of the period which intervened between the committal of the act of bankruptcy and the taking out of the commission, Was, as it affected the creditors, Completely annulled. The evils resulting from this provision were of the most serious nature; for it often happened that a bankrupt had sold a real estate, and, received the money for it, after the committal of an act of bankruptcy, and yet, unless according to the act of the 21st Of James. 1. such sale had taken place 5 years before the commission was taken out, the purchaser was deprived of his purchase, and it became the property of the assignees of the bankrupt. Another evil resulting from the present law was, that if money was lent to bankrupt at any time during the period just referred to, such money was liable to be distributed among the creditors, and the lender was not, any more than the purchaser of the estate, allowed even the small consolation of receiving a dividend, or any portion of his money from the bankrupt's effects, nor had he, 840 indeed, any remedy at all. The learned gent. referred to the acts which it was object to amend; and proceeded to observe upon their nature, the principal of all which was to protect the debts of a bona fide Creditor's bankrupt. That act the house must be fully aware, which in law was an act of bankruptcy, was by no means an act of notoriety, nor even such generally as a creditor could by the utmost vigilance contrive to know. In most cases, indeed, it was an act known only to the bankrupt himself, or any of his servants, who by his direction denied his being at home upon a creditor's calling for him. Why then, the learned gent. asked, should such mischiefs as those he had described be allowed to accrue to men liable to deal with a bankrupt under such circumstances? and why should their ignorance of an event, which it was almost impossible for them to know, be permitted to involve the forfeiture of their just claims? But these were not all the evils which the present law produced; for it was not less severe against the bankrupt himself than it was against his creditors. The avowed principle of the bankrupt law was, that when a bankrupt gave up all his property he should be discharged from all his debts: but by the law as it now stood, that principle was not acted upon; for the bankrupt's total release from the commission did not protect him from those debts which he might, perhaps unknowingly, have contracted after the committal of the act of bankruptcy which led to such commission; therefore the bankrupt was placed in the extraordinary situation of being called upon to pay that which he could have no property to pay, unless he were guilty of an act of felony.—What he had already stated the learned gent. conceived quite enough to impress upon the house the necessity of amending this law. But there was a still greater evil than any he had mentioned, produced by the present system. If after a commission had been taken out, an act of bankruptcy was proved anterior to that upon which the commission was grounded, all the proceedings of such commission were void, and the commission was superseded. In consequence of which the assignees, who were made responsible for all the bankrupt's property they possessed, or had previously sold, were placed in a situation of extreme hardship. It had not unfrequently happened, and indeed, in 841 the course, his own experience, he had known an instance in which a first, seconds and even a third commission had been set aside in this way. In that instance, as no doubt brothers, the object was to defeat the proceedings taken against the bankrupt, by whom, with that intention the anterior acts of bankruptcy were kept back. If then in addition to the injuries thus arising to the bankrupts, the assignees and the creditors, one considered the enormous expence of actions depending on the committal of acts of bankruptcy, the amount of the bankrupt's property dissipated in such actions, and with no other object in general than mere litigation, it was impossible not to feel astonished that the law should have been suffered to remain so long in its present state. Three modes were suggested, the learned gent. stated, of remedying the evils complained of: the first was, entirely to abolish one of the great principles of the present bankrupt laws, namely, that no man should be considered a bankrupt until the time at which the commission should be taken out. But various objections offered against this suggestion arising out of the expedients notoriously resorted to by bankrupts fraudulently disposed. Another provision was recommended, that no commission should be granted unless the act of bankruptcy alleged by the petitioning creditor had taken place a certain time before the commission according to the advice of some, three or six months. But to this recommendation he knew of several objections, which urged at least the propriety of a much greater distance of time. When it was considered how reluctantly creditors in general took out a commission of bankruptcy, how frequently they granted a deed of trust in order to avoid bringing expence and trouble upon themselves, or disgrace and ruin upon the bankrupt, and when it was recollected that those deeds were often protracted much longer than sit months, he trusted the house would feel that no such period ought to be fixed. But although great inconvenience and injustice might result from such ad arrangement, still the law was not to be left as it stood. It appeared to him, that With out fixing any period upon this point, bona fide debts contracted by the bankrupt at any time before the commission, should be recoverable from the effects of the bankrupt, 842 notwithstanding any previous act of bankruptcy. This seemed to be the only remedy fairly applicable to that part of the law, namely, that all honest debts contracted, all payments made, all conveyances and engagements entered into by the bankrupt, should be good and valid, notwithstanding any previous act of bankruptcy, provided the person or persons entering into such contracts or lending such money to the bankrupt, should have no notice of such act of bankruptcy, or knowledge of the bankrupt's insolvency. He proposed too, that as to such debts, the bankrupts certificate should be a protection, as complete as With regard to any debts claimed under the commission. Another object of the bill he meant to bring forward would be, that no commission of bankruptcy should be superseded in consequence of previous acts of bankruptcy done by the bankrupt: and also, that debts contracted by the bankrupt, which were not payable until after the commission was taken out, should be provable under the commission, whether they were simple debts or those for which securities were given. The learned gent. concluded with observing that these were the only objects which the bill he proposed to bring forward had in view.—Leave was accordingly given to bring in the bill.