HC Deb 05 August 1842 vol 65 cc1082-92
Sir J. Graham

moved the Order of the Day for the further consideration of the report on the Bankruptcy Law Amendment Bill.

Mr. M. Philips

said, that as this bill had undergone very little discussion, he was sure he should be excused for opposing it at the present stage, and stating his reasons for doing so. He objected in the strongest possible degree to the appointment of official assignees in all bankruptcies prosecuted in the country. They were to be appointed, it seemed, on the ground that the present system worked badly and inefficiently. He was not aware that it did. He could state at least that in Manchester it worked most satisfactorily. His constituents were perfectly content with it. His constituents, and, indeed, most mercantile men whom he had consulted on the subject, were of opinion that the greatest possible danger was liable to attend the appointment of those official assignees, into, or rather through, whose hands such a vast mass of property must necessarily pass. He believed that the appointment of official assignees in London was not without objection --- nay, that some of them had been guilty of conduct which did not redound very much to their credit. It was possible that men might be appointed with engagements hanging over them, and who would consequently be exposed to the almost irresistible temptation of going astray if the whole property of bankrupts' estates was to be allowed to pass through their hands, and they to be clothed with such powers as this bill proposed. Then, how were they to be remunerated? He understood by a commission of 21 per cent, upon all property passing through their hands. That he considered a most enormous expense to add to the working of the bankruptcy law. If it afforded a clear and decided guarantee for the more speedy and efficient arrangement of bankruptcies he might be inclined to sanction such a provision, but under existing circumstances it ap- peared to him to he a very serious impediment in the way of the measure. In order to illustrate his view of the question, he would suppose an official assignee having to deal with a property of 20,0001., of which 15,0001. was mortgaged. As he understood it, this official assignee would have 2½ per cent. commission upon the money actually passing through his hands, although the only difficulty or trouble as regarded the 15,0001. would be in his handing it over to the party originally lending it. The assignees were not to perform the duties of accountants, who Would be an extra charge besides. He wanted to hear from the law officers of the Crown any recommendation in favour of the appointment of these individuals. So far as the bankruptcy practice in the country was concerned these officers were thought incumbrances; and they were at a loss to find anything in favour of their appointment, One of his objections to the bill was to the appointment of com-missioners at salaries of 1,8001. a-year. That appeared to him to be an enormous salary for the functions to be discharged. The number of commissioners proposed to be appointed was ten; but he felt confident that this number was totally inadequate for the purpose. He must claim at least two for transacting the bankruptcy business of Manchester; as he was informed by those practically acquainted with bankruptcy business that it was impossible the bankruptcy business of Manchester could be worked by a less number than two commissioners. In confirmation of that opinion, he had only to state that, from the lst of January, 1841, to the 1st of January, 1842, no less than 725 meetings of bankruptcy had been held in Manchester alone., and if these commissioners had perambulatory duties assigned to them, it was impossible that this amount of business could be done by them. With regard to the amount of remuneration, the salary of the stipendiary magistrate of manchester for attending the police-court at Salford throughout the year, de die diem, was 1,0001. a year; and when that office had to be filled some years ago, the applications from the London bar for the officer had been extremely numerous, and from parties of a standing at the bar which had excited the surprise of persons in the country. He could not, therefore, think the amount of salary proposed to be given for the present offices necessary. His be- lief was that thirty commissioners would not be sufficient, Leeds, Liverpool, Birmingham, Bristol, and every large town would have great demands for their time as well as Manchester. If this number should be required, look at the cost of these judges at 1,8001. a year each. To this there was the addition of 2½ per cent. for the working of the official assignees. The old system, though not perfect, worked satisfactorily; and in order to carry out the proposed system it appeared that very great expense was to be gone to, which would have to come out of the bankrupts' estates. He should feel it his duty to give the strongest opposition to this bill if it were intended to persevere with the clause giving these large salaries. In Manchester alone, in one year, property to the amount of 75,0001. had gone through the hands of the commissioners; and if 2½ per cent. were to be charged on that amount, as the commission of the official assignees, the cost would be enormous; and this in addition to the commissioners' salaries. [Sir J. Graham: That is not the amount of commission to be charged.] He should be glad to be set right. The House would at least agree with him that he had made out a case that an extra charge was to be thrown on bankrupts' estates by the operation of this bill. Mercantile men had several strong objections to the bill, particularly to the third clause, with regard to the issuing of the fiat. He hoped the bill would be postponed. He had, indeed, been requested by his constituents to move that it be read a third time that day three months, if it should be persevered in.

The Attorney-General

said, there was no such thing as 2½ per cent. named in the bill. The percentage was governed by the discretion of the commissioners, and the scale on which the commissioners permitted that per centage to be taken was the following: for the collection of debts under 1001. 5 percent. from 100l. to 5001. 2½ per cent; from 5001. to 1,0001. 1 percent.; and above that sum, 10s. per cent. With regard to the realization of property under 1,0001., 2½ percent.; above 1,0001 per cent,; and in all mortgage cases 1 percent. With regard to the expense to be incurred by the appointment of these commissioners, the exact amount of their salaries would be the subject of discussion. All the expenses of the present system of working, in point of fact, came out of the bankrupts' estates, and the present expenses of the collections made in the country amounted to about 30,000. l year. The collection of the different sums to be paid within the London district amounted to not less than 1,000,0001. sterling; and the interest paid on that sum actually defrayed the whole expenses, or at least the greater part of the expenses, of the entire establishment. So that, if economy were the object of the hon. Gentleman, and saving the pockets of creditors, he should advocate a system that, by collecting the funds of bankrupts, and placing them in security, thereby realised more than would pay the whole expenses.

Mr. W. Williams

did not doubt but that the bill was a great improvement on the law as it now stood; yet many influential and experienced tradesmen in the working of the bankruptcy law were anxious to have the bill postponed to the next Session, in order that they might make such suggestions as might render the measure more complete than at present. He knew of no class of persons whose opinions on this subject ought to have greater weight. He should not, however, vote against going into committee on the bill, if her Majesty's Ministers determined to proceed with it.

Mr. Forster

had had no opportunity of examining the bill. Hs admitted that the present law required alteration and reform, but a much more enlarged reform than was proposed by this bill. He should be sorry to postpone the happy period of the exercise of patronage afforded by the bill to her Majesty's Ministers; but as commercial men had not had an opportunity of considering the bill it ought to be postponed.

Mr. Bernal

said, that that House had often been accused of sending bills to another quarter, at a period of the Session when they had not time to test the merits of the bills sent up to them; but really, with all humility, he thought it rather late in their sessional year, for the Peers to send such a bill down for their approbation or rejection. He would put it to the Government, if time had been afforded to the commercial community to examine the bill, and report their opinions on this measure, and would rest the propriety of postponing it on the answer given. He believed there were a great many objections to many parts of the bill, and many omis- sions to be supplied, if they might judge from certain printed papers that had emanated from meetings held in the city of London.

Sir J. Graham

had no difficulty in answering the question put to him. He did think, for the benefit of the trading community, that it was most desirable, at this advanced period of the Session, that they should proceed with this measure. The bill rested on high authority. It came down to them from the other House of Parliament, where it had been discussed by the Lord Chancellor of England and the Master of the Rolls, and where it had undergone the revision of two Peers who had held the great seal in this country, and of one who had held the great seal of the sister kingdom. The measure, therefore, came down to them sanctioned by high authority. He must deny altogether that the bill had come down to them by surprise. In the main, it rested upon the Report of the Bankruptcy Commission and though it did not go the whole length of carrying out the recommendations of that report, yet the bill was a large step in the reform of this branch of the law. They had the experience of ten years of the working of the experiment which had been tried on so large a scale in this metropolis, the great emporium of the commerce of the world, and the center of the trade of the kingdom, to guide them. Nor was the experiment confined to the metropolis, but took in an ambit of 40 miles round London; so that their experience must be considered most extensive. Then, as to the lateness of the period at which the measure was brought forward in the House of Commons; he had the happiness of being a colleague of Lord Brougham, when that noble Lord introduced the experimental measure, with reference to London, which was now in force, and of which he had just spoken, and it was almost at as late a period of the Session that that great change of the law was brought forward, and all the arguments now urged, were urged then; the lateness of the Session, surprise, the vast amount of patronage conferred by the bill, were all urged. Then, as now also, it was said, that the official assignees were quite certain to betray their trust, and not to act in a satisfactory way; it was said also, that it was quite impossible that six commissioners could manage the vast interests to be confided to their care. He begged to call attention to a memorial addressed to the Chancellor of England, and signed by fifty-six bankers, and various merchants, and 537 most respectable traders of the city of London, and presented to the late Government. The hon. Member for Manchester (Mr. M. Philips) had talked of the admirable way in which the present system of bankruptcy worked in the country. The fact was, there were 700 judges of bankruptcy in the country, the whole paid by fees, the commissioners in London being paid by salaries. But what said the memorialists? They prayed for the extension, to the rural districts, of the same system which was at present in operation in London, and of the beneficial working of which they had had experience now for nearly eleven years. In consequence of this memorial, the Government issued a commission. That commission had reported, and the bill, though it did not go the whole length of the report, adopted the most important suggestions in it. He (Sir J. Graham) said, therefore, appoint commissioners for the rural districts. If ten be necessary, appoint ten; if more be necessary, appoint more—men eminent in the law, and inaccessible to improper influences. Resting on the experience of the metropolis, appoint official assignees to be paid, not by a percentage of 2½ as the hon. Member for Manchester imagined, but erroneously, for there was no such provision in the bill; but paid moderately, as the Lord Chancellor should, from time to time, appoint. With respect to the conduct of the official assignees, it would be recollected that the late Lord Chancellor had issued a commission to inquire, and the Lord Chancellor's power was absolute, to check abuse in that department. Whether the House agreed to pass the other clauses of the bill or not, he trusted that they would sanction the enactment of the two points to which he had just referred. But, if the House should differ with him on these two points, there was still one clause which he considered was of inestimable value, and which, if it were passed alone, he would say ought to be passed without delay. The clause he meant was one giving to the creditor the power to summon his debtor before the court, and put to him the question, "Do you acknowledge the debt you owe me, or do you not?" because, if the debtor, on the one hand, acknowledged the debt, and would not provide for the payment of it, he committed an act of bankruptcy. It', on the other hand, he denied the debt, and gave securities to pay such sum as should be recovered, or made a free surrender of his goods and property, by admitting it, his personal freedom was guaranteed. Every facility was therefore contained in this measure for proving an act of bankruptcy, and discovering the property of the debtor. And if the debtor acted honestly, and surrendered his property, then most rightly he would be exempt from punishment. But if, on the other hand, he concealed his property, and would not surrender it, or acted, in the slightest degree, with fraud, then his person would become, not on account of his poverty or misfortunes, but of his immorality, vice, and fraud, promptly and rightly subject to the law. There was, in addition to that clause, a most important provision, that the certificate of the bankrupt was not made dependent on the caprice, malevolence, or of the creditors. The creditors would have the opportunity of stating their reasons why the certificate should not be granted; but the granting the certificate was made a judicial measure. He held those four to be capital points. With respect to the issuing of a fiat, Lords Cottenham, Lyndhurst, and Brougham all thought that to take the issuing of fiats from the Lord Chancellor would be dangerous. In this country, where credit was everything, it would not do to take from the highest authority in the law the power of issuing so important a document, because when a trader's credit was tainted, his trade was ruined. He had only further to observe, that if the details of the measure proved not satisfactory to the hon. Member for Manchester, after the bill should have gone through committee, it would be quite competent for him to move the postponement of the third reading for three months, but he (Sir J. Graham) hoped the hon. Member would at present consent to go on with the measure, and defer discussion of the several provisions till a more suitable opportunity.

Mr. B. Wood

agreed that this bill contained many good points, and his chief objection was derived from the time at which it had been introduced to the House. They had had the bill from the Lords just one week. Only last Tuesday it was materially amended by the addition of thirty new clauses. It was quite true that there was a commission appointed three years ago, but the House had got. nothing from that commission until now. The attention of the trading interest consequently in the mean time been much drawn away from that commission. Thus the trading community had known nothing of this bill. The lobby was inundated by persons who were there day after day on the subject. They were told that the House was not likely to sit many days, Was this, then, a fit time to push on important a measure? One clause in particular he would refer to, in order to show what a deal of discussion was likely to ensue on the bill. The 31st clause allowed a bankrupt partner of a solvent firm to sue every debtor of the partnership for debts owing to the partnership, though no title of proof were given that the bankrupt had one single penny in the partnership fund. A man might be a partner in a respectable concern—say Coutts's—he might be a gambler and dishonest, and withdraw all his property from the firm, yet his creditors might go to the bank, demand information of all the debtors of the partnership, and sue every one of them. This clause would create the most important change that had ever yet been introduced into the mercantile affairs of this country. He should have very much preferred the postponement of the bill until next Session, and he thought the right hon. Baronet would have the entire of the trading interest with him if he adopted that course.

Mr. R. Scott

had not the slightest objection to considering the principle of this measure, and he was quite ready to admit there were many points in which the system of bankruptcy in the country might be amended, and that the bill made many important improvements in that system; but he did not think that the details were fully adapted for their object, or that they were not capable of improvement. The best course, he thought, would be to refer this measure, along with two other measures—the Insolvent Debtors Bill and the County Courts Bill—to a select committee, as all three measures, having a connexion with one another, ought to be considered together,. With regard to the commissioners to be appointed under the bill, the House was not in a situation, from want of information, to say how far it would be practicable to work the bill with only ten commissioners. He apprehended great difficulty on that point. was impossible, too, for the House to decide the various questions as to the appointment of official assignees, and not merely regarded the means of their appointment, on which there would e great difference of opinion, but as to they mode of their payment and the nature of the duties they were to perform. It was highly necessary to have a full discussion of the whole subject, and he would suggest to the right hon. Baronet to adopt the course of referring this and the other bills to a select committee, in order that they might have the report before them next Session, before being called upon to decide the many difficult questions which grew out. of this important subject.

Mr. Hawes

considered this one of the most important measures that had been submitted to the House for a length of time. He was not able to understand the opposition to the bill on principle, though he could see objections to particular clauses, He hoped, therefore, that the House would object to consider the measure. When he was told of parties inundating the lobby to oppose the bill, he must say lie heard nothing of it. He heard nothing but commendations of the bill. He was urged by the traders of London, with whom he had, he believed, as extensive a connexion as the hon. Member for South work (Mr. Wood), to press the Government to pass this bill. It was manifest he could have no object with regard to patronage in urging them as he did to pass it, because in polities he was as staunch an opponent of the Government as any one in the House. He asked whether the present system had not worked in London well and cheaply, and whether it had not had the effect of adding security to bankrupts' estates? lie asked, further, whether it had not been the means of withdrawing large sums of outstanding balances and placing them in the funds, so that the interest paid the working of the measure? In the country there were, he had not much doubt, large outstanding balances, and therefore it was easy to see that many parties would object to the bill. One point of the bill was to give additional power to creditors. Now, he would say, that it' they did not give great power to creditors, they would have a discussion in the House at no distant period of a revival of the law of arrest. That used to the !Treat power in the hands of a creditor. He had no equivalent at pre, sent. The bill provided a full equivalent for the law of arrest. But it was said, the expenditure under the bill would be extravagant. How was this proved? At present the average expense of working a commission in London was 251. or thereabouts; the present average expense in the country was somewhere about 701. He was convinced that, whatever might he the opposition which this bill received, it would be ultimately received as a boon.

Sir R. Peel

could not urge too strongly upon the House the importance of their going into committee upon the bill. If they once felt satisfied that the bill was an improvement upon the existing law, he could not too much impress upon the House the policy of at once passing it. If after having with so much labour rolled the stone up hill they permitted it to fall again, they would never be able to replace it, or if at all, not without an increased amount of difficulty. He entreated the House to remember that there were 740 persons throughout the country who were interested in stopping the progress of a reform of this description. They were lawyers, too. Therefore, as they had proceeded thus far, his experience of the profession in all matters connected with reform induced him to urge upon the House at once to agree to the measure, and not to miss an opportunity that might not again occur. The main clauses of the bill could not fail, in his opinion, to operate most usefully.

Mr. Aglionby

thought that there was very good ground for the complaints made, that this bill had been passed with too much haste. He had himself been assured by a deputation that had waited upon him, that they had been unable to procure copies of the bill while in the other House, and that they had only been able to consider its provisions since it came down and had been printed.

Mr. M. Philips

said, his object having been partly answered by the discussion that had already taken place, he should not, as he had intended, move the rejection of the bill.

House in committee.

Clauses to the 30th agreed to.

On the question that the 30th clause, enacting that distress should not be available for more than six months' rent due, to prove for the landlord the residue, stand part of the bill.

The committee divided:—Ayes 7;Nose 85:Majority 78. Noes 85: Majority 78.

List of the AYES.
Bowring, Dr. Scott, R.
Brotherton, J. Wyse, T.
Forster, M. TELLERS.
Gibson, T. M. Clay, Sir W.
Hawes, B. Wood, B.
List of the NOES.
A'Court, Capt. Hodgson, R.
Aglionby, H. A. Hogg, J. W.
Allix, J. P. Howard, P. H.
Arkwright, G. Humphrey, Ald.
Baird, W. Hussey, T.
Baring, hon. W. B. Jermyn, Earl
Beckett, W. Jones, Capt.
Bentinck, Lord G. Kemble, H.
Bodkin, W. H. Knatchbull, rt. hn. Sir E
Botfield, B. Lefroy, A.
Broadley, H. Lincoln, Earl of
Bruce, Lord E. Lowther, J. H.
Burrell, Sir C. M. Lowther, hon. Col.
Clayton, II. R. Lyall, G.
Clerk, Sir G. Martin, J.
Cockburn, rt. hn. Sir G. Meynell, Capt.
Codrington, C. W. Morris, D.
Corry, rt. hon. H. Mundy, E. M.
Darby, G. Newry, Visct.
Divett, E. Nicholl, rt. hon. J.
Douglas, Sir C. E. Norreys, Lord
Duncan, G. Packe, C. W.
Duncombe, T. Palmer, R.
Eliot, Lord Peel, rt. hon. Sir R.
Estcourt, T. G. B. Philips, M.
Flower, Sir J. Pollock, Sir F.
Follett, Sir W. W. Praed, W. T.
Ffolliot, J. Pringle, A.
Forbes, W. Repton, G. W. J.
Fuller, A. E. Sanderson, R.
Gaskell, J. Milnes Scholefield, J.
Gladstone, rt. hn. W. E. Sheppard, T.
Gordon, hon. Capt. Stanley, Lord
Gore, M. Sutton, hon. H. M.
Goulburn, rt. hn. H. Trench, Sir F. W.
Graham, rt. hon. Sir J. Trotter, J.
Grogan, E. Turner, E.
Hale. R. B. Verner, Col.
Hamilton, W. J. Williams, W.
Harcourt, G. G. Wortley, hon. J. S.
Hardinge, rt. hn. Sir H. Young, J.
Hardy, J. TELLERS.
Henley, J. W. Fremantle, Sir T.
Hervey, Lord A. Baring, H.

House resumed,

Chairman reported progress. Committee to sit again.