INSOLVENT DEBTORS—COMMITTES APPOINTED. (Hansard, 16 March 1819)

The Attorney General
rose, in pursuance of the notice he had given, to submit a motion to the house with regard to the present state of the 1005 law as it respected insolvent debtors. It was not his intention to move for the abrogation of that law, but to recommend the expediency of inquiring whether it was not susceptible of some improvement. An act of parliament had passed in the year 1813, which might be called new, as far as it became a part of our legal system. It was a law not before known in the ordinary administration of justice, and its object was to provide for the discharge of persons under confinement for debt. From time to time, however, during the last hundred years, acts of this kind had been passed as occasion seemed to require. Before the introduction of that practice, a creditor to a certain amount might, by the law of the country, not only arrest his debtor and detain him till he found bail to try the cause, but, on obtaining judgment, might keep him in execution till he should pay the debt. At different times the legislature had therefore interfered, and applied the principle of the bankrupt laws to the ordinary cases of insolvency, and the debtor was discharged on surrendering his effects. Such laws were, in the strictest sense of the word, ex-post facto; and the question was, whether the honest debtor would not be more effectually protected from oppression, and the creditor from injustice, by some permanent and established system of law upon the subject. The present act would expire at the end of the session, and if not renewed, with such alterations as might appear expedient, the law must return to its former state, by which the debtor who could not pay was subject to imprisonment for life, at the discretion or mercy of his creditor. After the first act had been some time in operation, a motion was made for appointing a committee to consider it; and the result was, that it was so far changed as to give the judge who presided at the insolvent debtors court, a power of refusing to debtors, in case of misconduct, the benefit of the act. It seemed now to be agreed, that the law required still further amendment; and for the purpose of making it more beneficial, he thought it better to refer it to a committee, than to bring in a bill formed upon his own or upon private suggestions. Another ground for referring the whole subject to a committee was, that many persons urged that the law was bad in principle, and that it ought not to exist. The numerous petitions which had been presented to this effect made it expedient 1006 to re-consider the principle, as well as the best practical means of regulating its application. Under these circumstances, no question better deserving of grave inquiry could be imagined, than whether the law as it now stood ought to be continued, or entirely done away. It was undeniable, that the occasional acts which had been passed during the last century for the relief of debtors, had grown in rapidity of succession with the growing population and commerce of the country. It was also clearly more advantageous for the creditor to know before-hand on what terms he contracted with his debtor by some fixed and general law, than that parliament should at different periods be called upon to interfere between them. He believed that the defects of the law had been considerably mistated: many persons had unquestionably been defrauded, but there were also many unfortunate cases in which the debtor could not by any human ingenuity answer his engagements. The important question was, whether, on a fair balance of the inconveniences attending the law, with those of the ancient system, it was desirable that the latter should be restored. He knew that observations had been made as to whether justice had always been administered in the court appointed for the hearing cases of this nature. This would also form a proper subject for the inquiries of a committee; and he could assure the House, that none were more desirous of investigation than those who practised in that court. All that labour and assiduity and integrity could do, had been done; but whether, in the vast multiplicity of business which had come before it, honest judgment had not some times fallen into error, was more than could be said of the highest tribunals, of of the purest characters.—The hon. and learned gentleman concluded with moving "That a Committee be appointed to take into consideration the state of the law respecting the discharge of Insolvent Debtors, and the several Acts passed, in the 53rd, 54th, and 56th years of the reign of his present majesty, relative to the same, and the effects produced thereby; and to report to' the House then observations thereon, and the best means of rendering the same effectual."

§ Mr. Alderman Waithman
said, it would be in the recollection of the House, That on presenting the first Petiton against the Insolvent Debtors act, he had given no- 1007 tice, if a renewal of that act were proposed, that he should move the appointment of a committee to inquire into the nature and character of the measure, and the effects which it had produced. After such a notice, he certainly did not expect that the hon. and learned gentleman would come forward and move for a committee, pledged as he (Mr. W.) was to the measure. His object would have been, if he had had the nomination of the committee, to have proposed gentlemen possessed of a practical knowledge of trade and commerce. He did not wish to speak with disrespect of gentlemen of legal attainments: it was to be recollected, however, that this act had been in force four years, that two attempts at its improvement had already been made, and that notwithstanding it was still in a most defective state. Whether it was owing to the defective formation of the former committees that the grievances existed up to the present moment, he would not pretend to say. He certainly agreed with the learned gentleman, in many of the observations which he had made. It would be said, perhaps, "if you agree to the proposition of the learned gentleman, what is the object of your now addressing the House?" Without meaning to throw out any reflections or imputations upon the House, he might be allowed to my, that this was a subject which, by the majority of the members, was but little understood. It was a subject which they perhaps thought of no great importance; but a more important subject was never before the House, whether considered in a moral or commercial point of view. He felt himself particularly called on, as having presented petitions from various places, against the renewal of the act in its present shape, to explain what his views were to the House. And, in the first place, he would observe, that the subject was brought before the House in the fairest way in which it could be brought. Though some members had, on a former evening, deprecated the raising a clamour against the Insolvent act, he would say that no unfair means had been resorted to in order to provoke petitions against it. The subject came before the House in a way which showed what the feelings of the people were with respect to it. He agreed with the learned attorney-general in thinking that it was necessary there should be some law on the subject; and the petitions which 1008 had been presented to the House, all concurred in expressing a wish for what the learned gentleman stated to be the object he had in view, namely, a measure for the security of creditors and for the protection of honest debtors. The question for the consideration of the House was, what ought now to be done? It had been said that the present measure was equivalent to a commission of bankruptcy. Now, with deference to the hon. member who made this observation, he would observe with respect to the bankrupt laws, that whatever defects they might have, they were yet founded in reason and justice. And they possessed one advantage which did not belong to the Insolvent act—that when a person had entrusted his property to an insolvent, he had an opportunity of stopping the individual in his extravagance, and preventing him from going on till not one farthing was left to his creditors. From the expense attending petitions, and the want of due arrangements, the bankrupt laws were not so beneficial as they might be; but he had never seen an instance in which if the assignees were determined to see justice done, the commissioners were not ready to do their duty. But he would ask the advocates of the present act, if any such advantages resulted from it? The greatest injustice had been committed under it that probably ever was inflicted on the country by any act of parliament. There were individuals in the liberties of the King's-bench and Fleet who owed tens of thousands of pounds to their creditors, who had property to a large amount, and yet the creditors had no means of making them account. He had received a petition which he should have presented to the House last night, but for some informality. It related to a particular case. A person who kept a boarding school for young ladies, who owed between two and three thousand pounds, collected all the sums due to him from his scholars, sold off all his furniture, and contrived to get into prison, where he lived within the rules, on the property of his creditors, who had no means whatever of reaching that property. A petition had been some time ago presented from persons, who stated themselves to have been kept in prison some of them twenty or thirty years. On application to the keeper of the prison, he had been informed that one of the persons who had petitioned, 1009 was possessed of considerable property,— that she had been living there several years on that property, and that she might have taken the benefit of the act, had she chosen to give up that property. Another of the persons kept there had been confined twenty years on some exchequer process. Were creditors to be considered as hard-hearted for keeping their debtors in prison, when they had no means of forcing the debtor to come forward? There was a report of a committee of that House on the subject in 1792. On looking into that report, it would be seen that the same disposition in debtors existed then, which now existed. At that time there were many prisoners who had been twenty years imprisoned. There were there many disreputable persons who followed the profession of the law, without having been regularly brought up to it, and who practised all manner of pettifogging acts. Many of the individuals then in confinement, some for a period of twenty years had been kept in prison for the costs to these pettifogging attorneys. Various persons then, as well as now, chose to stay in prison, living on their property rather than pay their creditors. He had been accused of misrepresenting some of the facts which he had stated on a former occasion. In March 1817, two years ago, the property decided on by the insolvent court amounted to 8,800,000l. He did not know what the exact amount of the sum was at the present period. But he had said, if it bore any proportion to that of the former part of the period during which the act had been in operation, the whole would amount to 14 or 15 millions. He had stated, that not one farthing in the pound had been received. But they were now told that this was a wrong calculation—that many of these debts were twice included—that in cases of bills, where more than one insolvent were concerned in the same bill, such insolvent gave in the whole amount of the bill in the list of his debts. Looking at the return from the Fleet prison, it appeared that a greater number of prisoners were liberated otherwise than by the act, than the number who took the benefit of the act. It appeared that those who chose to make terms with their creditors were immediately liberated, and that those who had expended all their property took benefit of the act. Admitting the accuracy of what had been stated by 1010 the clerks of the insolvent court, that bills were included several times over, this might amount to one-fourth of the whole. The House had been told that this measure answered well in Scotland, and that the Insolvent act was founded on the' cessio bonorum. With respect to the law of cessio bonorum, it was like the bankrupt laws in one respect—it allowed an inquiry into the past conduct of the individual seeking to be liberated. Under the bankrupt laws, the first thing which was done was an investigation of the accounts of the bankrupt, an examination of his balance-sheet. Mow he would ask the learned gentleman, if this was the case with the Insolvent Debtors' act? He might appeal to any gentleman connected with trade, whether it was possible for any individual to obtain a certificate, unless he satisfactorily accounted for the manner in which he had got rid of his property. A great deal had been said respecting poor and distressed debtors. But what was the fact? By an account which he now held in his hands, it appeared that the debts amounting to 1,000l. and upwards, formed nearly three-fourths of the whole. Out of four millions of property, the debts amounting to 1,000l. and upwards, came to 2,835,000l. It would hardly be contended, that those who owed these sums were poor persons thrown into prison by their hardhearted creditors. The attorney-general had told them, that before the present act, there was every year a necessity for a partial insolvent act.—The worthy alderman here went into a statement, to show that from 1806 the number of persons discharged under these partial acts amounted only to a small proportion of the number committed to prison for debt. On coming to 1814, they would find more persons committed and discharged in one year than in three or four years previously under occasional acts. He would state his conviction, that it was necessary to have the subject on a different, foundation altogether. In fact, the place where the court was held, in the city of Westminster, was so far from the seat of business, that creditors rather than go so far, would prefer to lose their dividend altogether. He did not mean to throw out any imputation on any individual connected with the insolvent debtors court, as those individuals were not there to defend themselves; but he would say that it was impossible for any individual 1011 to do justice to creditors, debtors, and the public, who had above three thousand cases annually to decide upon. This was more business than belonged to the whole of the commissioners of bankrupts and the court of chancery. It was impossible that one individual, without a jury, and without assistance, could execute the duties of such an office. He should only trouble the House with one farther observation. Every individual with whom he had conversed was of opinion that something was necessary. It might be necessary to extend the provisions of the Lords act—to revise the bankrupt laws with the view of diminishing the expense of petitioning. If this were done, there would be little necessity for a measure of this kind. But if a measure of this kind must be brought in, he hoped it would differ essentially from the present. As to the committee of the learned gentleman, he knew hot who was in his list. The learned gentleman had, indeed, shown him, the list one day, but he hoped he would not pertinaciously adhere to that list. He had two or three names to propose— he knew not their sentiments on the subject, but he knew they were acquainted with business, and above all, with the effects produced by the insolvent act, and that they would give an impartial consideration to the subject.

§ Mr. Abercromby
observed, that after the committee had terminated their labours and presented their report, the merits of this question would properly come under consideration. He had to apologize to the House for offering any observations on it at all; but there were some few words which had fallen from the worthy alderman that required notice. The worthy alderman had charged some offences on the Insolvent Debtors' act which did not belong to it. The worthy alderman had said that a comparison was drawn some nights ago between the bankrupt laws and the Insolvent Debtors' act, but that comparison could be drawn between them, as the bankrupt laws were founded in justice, and the Insolvent Debtors was not. Was an act which said that an honest debtor who fairly gave up his property should not be abandoned entirely to the mercy of his creditor, not founded in justice? The worthy alderman had said that when assignees were disposed to do their duty, justice was always done, and he had bestowed praise on all Who were connected with the execu- 1012 tion of the bankrupt laws. Now, he himself had been a commissioner of bankrupts many years, and he would say that with every desire, it was impossible for them to do that justice to the parties for which they here received credit.—The Worthy alderman had said that persons went within the rules and set their creditors at defiance —but he was at a loss to know why this offence should be charged on the Insolvent Debtors' act. If a person possessed of property took the benefit of the act, without giving up that property to his creditors, this might be charged on the act; but he could not see why a man's not taking the benefit of the act should be charged on the act. But the very same thing took place when temporary acts were passed—the debtor who chose remained in prison, and the creditor remained without redress.—Without going into the statement of the worthy alderman respecting the large sums decided on by the court, and the small dividends which had been received, he would only observe, that unless the worthy alderman could show that the debtors had property which they fraudulently kept from their creditors, this could not be a charge against the Insolvent Debtors' act.—As to the cessio bonorum, on which the Insolvent Debtors' act was founded, the greatest benefits had resulted from it, both in Holland and in Scotland. In the latter country the greatest benefit had resulted to all classes of persons from this law. When the subject was before the committee, one of the questions For their consideration would be, how to deal with persons Irving within the rules in the possession of large sums which they would not give up to their creditors. If he showed that this could be done, and that the Insolvent act was the road by which this could best be done, he hoped the worthy alderman would agree that it was a measure which the House ought to adopt.— The worthy alderman had intimated a strong desire to have a committee composed of commercial men alone. But, without any disrespect to commercial men, the House would not be doing its duty if it allowed the law of debtor and creditor to be decided by the creditors alone. But though the creditors ought not to sit as judges, they might come forward as witnesses—they might come before the committee in what numbers they pleased; The laws which were passed before the present were ex post facto laws—they were 1013 passed when the gaols were full, and they sat the debtor at liberty without forcing him to transfer his property to his creditor.

§ Mr. Hurst
agreed with the last speaker in his view of the subject, and he thought the attorney-general deserved great praise for the manner in which he brought the measure forward.