HC Deb 08 June 1857 vol 145 cc1363-72

Order for Second Reading, read,


said, it was not his intention to obstruct the progress of this measure, the importance of which could not he exaggerated. On the contrary, he wished to give it his fullest support, believing that in its general complexion the Bill was a good one. The attention of the country having been painfully directed for some time past to the gross and scandalous frauds connected with certain Banking Companies, the House would no doubt be disposed to receive with great favour any measure directed to the prevention of such reprehensible transactions. There was, no doubt, that many of the clauses of the Bill were directed to such frauds as had recently so much astounded the public mind, and those clauses had his entire approbation. But one of the clauses of the Bill dealt, for the first time, with what were called ordinary breaches of trust, not such as might be committed by Bankers or persons of that description, but by ordinary trustees with reference to the management of property. There was this great anomaly in the English law that, while a parish lad for stealing a loaf of bread, or an humble clerk for wrongfully appropriating a shilling belonging to his employer, to meet some sudden and pressing necessity became amenable to the criminal law, a Trustee, however flagrant and criminal might be his act, could not be touched by that law. But he (Mr. Serjeant Kinglake) doubted the prudence of the course proposed by one of the clauses for the repression of breaches of trust. The shades and differences of breaches of trust were so various that it was impossible to classify them, but, no doubt, there were many recognized as such by Courts of Equity, which might be committed, nevertheless, without any criminal intent whatever. For instance, a Trustee might, without any fraudulent intent, lend the money of his cestuique trust, and by the loss of that money the cestuique trust might be ruined. A Trustee might use the money of his cestuique trust for his own benefit. That was a wilful breach of trust, although no loss should accrue to the estate. If a loss did occur, the Trustee would be obliged to make it good out of his own property. He (Mr. Serjeant King-lake) should be rather disinclined to make that a subject of criminal law. On the other hand, a Trustee might use the money of his cestuique trust with an intent to defraud him, and it was to this latter case he presumed that the Bill of his hon. and learned Friend the Attorney General was intended to apply. But the objection to the first section of this Bill was this—that while it attacked fraud, and fraud alone, it did not attempt to interdict the act which was the source of the fraud itself. Would it not be better to apply the axe to the root of the evil, to inquire what it was that induced the fraud and enabled and encouraged persons to do that which finally ended in fraud? Great facilities were afforded by the laws of this country to trustees to apply trust moneys to their own purposes, and the first clause enacted that only in the case of a fraudulent intent should the trustee be guilty of a criminal offence. This Bill only dealt with the fraud, and a trustee might employ the trust money, but would not be amenable, if he stopped short of fraud, He would suggest whether it would not be wise to introduce a clause, making it a criminal offence for any person to apply the funds of his cestuique trust to his own use, if the result was that a loss accrued to the cestuique trust. The first clause was in these general terms:—"That every trustee who should either appropriate or use or employ money belonging to thecestuique trust for his own use, with intent to defraud, should be liable to an indictment for misdemeanour and to seven years' penal servitude." Now, after a long experience in the criminal courts, he undertook to say that it was impossible to define what was an intent to defraud. If the first clause were passed as it stood, that want of preciseness would hang in terror over trustees, and there was not an honourable or sensitive man who would not at once give up his trusteeship. A jury would have to be appealed to in order to ascertain whether there had been an intent to defraud, and the character and liberty of every trustee in the country would thus he put in an extreme jeopardy. If, then, the House meant to protect honest trustees they ought to interdict the act which led to or permitted fraud, and not to deal with cases of fraud alone. Again, the twelfth clause showed that the framers of the Bill had no confidence in it, because that clause enacted that no prosecution under this Bill should be commenced without the sanction of one of Her Majesty's Judges of the superior courts of law or equity or of the Attorney General. Against that clause he protested, as it was manifestly in direct opposition to the whole spirit of the English law. It was the office of the Judge to act rather as the advocate than the prosecutor of a prisoner brought before him for trial; but it might be, if this Bill were passed as it stood, that a trustee might be arraigned for trial before the very Judge who had sanctioned his prosecution. If the hon. and learned Gentleman would consult the common law Judges, he would find that the great majority of them would be very much disinclined to undertake the duty which he sought to impose upon them. The minds of the Judges ought to be free upon the trial of a prisoner, and not biased by having expressed at a preliminary stage an opinion of his guilt. He hoped the fifteen Judges of the common law courts would never be placed in the invidious position of being supposed to have prejudged a case in which they were sitting in judgment. In conclusion, he trusted that the Attorney General would introduce a clause into his Bill to stop the source of crime by interdicting the facility with which trustees might now use the money of the cestuique trust, subject only to the interference of a court of equity.


suggested to those hon. Gentlemen who were members of the Bank Charter Committee whether it would not be well to abolish that rule of the Bank by which they refused to take notice of private trusts. That was a rule which opened the door to fraud; and as it was better to look to the prevention of such offences as those with which this Bill proposed to deal, than to punish them after they were committed, he thought if this rule were relaxed, and regard were had to the fact of whether stock was held in trust or otherwise, accounts would be placed on a sounder footing, and much would be done towards excluding the possibility of the alienation by trustees of the money of the cestuique trust.


said, that it was not his intention to oppose the second reading of the Bill, but it was a measure requiring great consideration, and he thought it in its present form open to such grave objections, that, unless it underwent considerable alterations in Committee, he should feel it his duty to oppose it at some future stage of its progress. The Bill embraced several classes of offences—offences by trustees, by bankers, brokers, and other agents, and by directors of joint-stock companies, He should only trouble the House, how-over, with some observations by way of illustrating his objections to the measure, in reference to that part of it which affected to deal with the offences of trustees. His objection to this part of the Bill was that it would infallibly tend to deter gentlemen of character, station, and responsibility from accepting any office or duty connected with an important or complicated trust; that it would necessarily tend to throw those offices and duties upon persons of inferior responsibility and station, or to place the administration of this property in the hands of some legal tribunal or of some Government Department; and which of these alternatives would be the worst he could not say. The offence on the part of trustees provided for by the Bill was, as he understood it, this—the appropriation of money or other property for his own benefit by any person who was rightfully the owner of it at law, but who in justice and in conscience held it for the benefit of some other person. The Bill did not attempt to impose a punishment for any breach of trust not committed for the benefit of the trustee. This was quite clear. But what would be the consequence even upon this clear construction of the Act? An attempt was made to fence round the breach of duty by defining the wrongful act. This act was not only to be for the advantage of the person doing it, but it was also to be "against good faith and with intent to defraud." Now, he did not quite agree with the hon. and learned Member for Rochester (Mr. Serjeant Kinglake) in his view of these words; but he certainly thought they would either reduce the Bill to a nullity or would be of no meaning and effect at all. In legal consideration, if you proved that money belonging to another had been appropriated, you proved "the intent to defraud." If this view were not to hold good he knew not how "the intent to defraud" was to be proved, because he ventured to say it was not in one case out of a hundred that you could establish by evidence, over and above the commission of the act itself, that there was any intent to defraud. The wrongful act was generally done in the confident belief that the next week or the next year the trustee would be able to replace the funds confided to him; and he apprehended the intention of the Bill was, not that the crime should depend upon the result, or that the restoration of the property should remove the offence. If a trustee, then, appropriated money to his own benefit, this would be an offence which under the Bill would subject him to seven years' penal servitude. Now, let the House consider the cases to which that would apply. He did not mean to represent that in those cases the parties were innocent; but, though they might have committed an offence, he thought the House should hesitate before it decided to deal with them criminally. For his part, he should desire to draw a distinction between cases in which parties were intrusted with money and those in which they were intrusted with stock or chattels which might be converted into money. In the one case, by misappropriating the trust fund, and not satisfying the obligations of the trust when he was bound to do so, a trustee was guilty of criminal insolvency; in the other case he was guilty of a crime which resembled theft or forgery, and should be punished accordingly. Now, he did not intend to enter into the question whether the law at present was of sufficient stringency in its bearing upon criminal insolvency. If, however, the offence they were dealing with—namely, that of having money confided to your possession and not performing the solemn obligation of paying it when it was due—if this offence belonged to criminal insolvency, he objected to take it out of that category and to deal with it by some exceptional law merely because of some recent instance which had produced a panic in connection with this subject. He would submit one or two cases which would show the consequences of taking this particular class of offence out of the category of crime to which it properly belonged. He would suppose the case in which it was the duty of the trustee to receive money and when it amounted to a certain sum to invest it in a particular way. In that case it was the duty of the trustee to keep the money separate from his own; yet, talk and preach as they might to the contrary, the most innocent person would at the outset place the money which he so received in small amounts to his own account at his own bankers; and there would be nothing criminal in that—it might be a breach of trust, an error, and if the banker failed he would be responsible, but there would be no criminality. The next step easily followed. The trustee wanted to draw upon his banker—he knew that if this money were not there his banker would accommodate him, but as it was there he drew upon that. It might be that that was an irregular act, though scarcely a criminal offence, but let them follow it a step further. The trustee took the money intending to replace it in a few days from securities which he had in his possession—the securities might fall in value, the man might fail, and he would become criminally insolvent. Now, how did that case differ from that of a man who, engaged in commerce, entered upon some speculation in which he knew that if he won the gain would be his own, and that if he lost the loss would be another's? He would be criminally insolvent. So, if a man incurred debts which he had no reasonable prospect of paying, he was criminally insolvent. Let that class of offence, then, be properly defined, and he contended that the crime with which the Bill was intended to deal would come within the category of criminal insolvency. He would cite one more case which was of common occurrence, and it should be the last. A man in trade made his will, and directed that at his death his property should be realized for the benefit of the adult and infant members of his family. Death happened earlier than he expected; the elder branches of his family were the trustees, and the trusts of the will were, that his assets should be realized, and should be divided as he had stated. The trustees knew that in the then state of the assets, if they were realized, there would only be a few hundred pounds for each of them, while, by carrying on the trade for their mutual benefit much greater advantages would accrue. They might be told that if they did so, they would be guilty of a breach of trust; but nobody could say that they would be morally wrong, and the advice generally offered to them probably would be, "If you like to take the responsibility, do it." He (Mr. Rolt) was not sure that that would not fall within the category of crime as laid down in the Bill; but, even suppose that it did not, what possibility would there be of persuading sensitive and honourable men to undertake trusts of this description when there was any doubt in the matter, and when actions perfectly innocent upon their part were liable to be looked upon as criminal? It was vain for that House to endeavour to draw distinctions between offences which really belonged to the same class of crime; they could not weigh the niceties of intent and of moral effect; the distinction was so fine that they could not do it; and, if upon the occasion of any panic being created, or of some crime being committed characterized by more than usual enormity, they were called upon to pass some extraordinary measure of legislation to meet it, he submitted that that was not, to say the least of it, a scientific mode of dealing with the amendment of the law. Let them clearly ascertain and define to what class of crime offences belonged; let them fix plainly the punishment for each class; let their views be general and universal—not exceptional—and they might hope to pass a law which would repress crime, and which would not defeat its own objects by undue stringency and severity. He thought, however, that there were many parts of the Bill which might be made useful, but there were other portions to which he strongly objected, and he did not think that the provision which referred the matter to the Solicitor or Attorney General, or to one of the Judges, would relieve the objections which he entertained to those particular portions. On the whole, the Bill, in his opinion, required the most anxious and careful consideration, and unless such objections as he had urged—which applied not only to trustees, but to bankers and agents also—could be remedied in Committee, he feared that it would lead to some great scheme of a Government Trust Board; perhaps the Board of Trade might be requested to undertake the whole subject; or the execution of trusts might be referred to some legal tribunal, possibly; and he was satisfied that neither of those measures would be beneficial to the country. Still, if the objections which he entertained could be removed, he would gladly assist in passing a measure which would really and effectually repress crime, and prevent persons from enjoying the fruits of their fraud with impunity.


said, that this was a Bill which required the most scrupulous and careful attention was no more than he had stated to the House when he obtained leave to bring it in, and that he should have the assistance of all sides of the House in the consideration of it he then expressed his confident hope; but he begged to point out to his hon. and learned Friends that that assistance would be given in the most creditable and effective manner if they would only take the trouble to embody their objections, and to give expression to their doubts and difficulties by framing Amendments on the Bill as it stood, and by the introduction of clauses which would be necessary in their judgment to give a more safe, cautious, and effectual operation to the measure. He confessed that he had been quite unable to attain to the meaning or to understand the purport of the arguments of his hon. and learned Friend the Member for Rochester (Mr. Serjeant Kinglake). No doubt his hon. and learned Friend had favoured them with a good deal of eloquence, with many appeals on behalf of the Judges, with much excellent advice, and with a pretty long sermon upon a text which was no doubt familiar to all of them—namely, that prevention would be better than cure. The hon. and learned Serjeant had told them that they had much better "interdict the source of the crime" with which the Bill proposed to deal. What the meaning of those words was his stupidity had rendered him unable to ascertain. He did not know how to interdict that source of crime except by stopping altogether the relations between trustees and cestuisqui trustent. As long as those relations existed there would be that source of crime, and the only way in which he could interdict it would be by doing that which would incur the pointed reprehension of his other hon. and learned Friend, whose great difficulty and alarm was lest the Bill should interdict the source of crime which the hon. and learned Serjeant was so exceedingly anxious to interdict. He might interdict the source of crime if he annihilated the office of trustee and substituted for these private obligations the appointment of some general office or board to superintend all trusts, and to take upon themselves the duties of trustees. Now, undoubtedly, he should not desire that—he never should wish to see a Government Board perform these obligations and duties of private life. As long as there were guardians there must be trustees; as long as a man who died committed to some friend or relative the charge and custody of his children and his property, so long there must of necessity exist that relation and that obligation; and he did not know, therefore, how he was to accomplish the object which the hon. and learned Serjeant had inculcated; but if his hon. and learned Friend would only do him the favour to try his hand at legislation, and would embody that interdict of the source of crime in a palpable enactment, he should be most happy to consider such a measure, and if it should prove effectual, he was sure that the House would be most grateful to him. With respect to another point on which the hon. and learned Serjeant had dwelt—the extreme impropriety of the twelfth clause—and which he had approached with so much horror and alarm, he (the Attorney General) had really imagined that that was the clause which would have rendered the Bill most acceptable to those hon. Gentlemen who were anxious beyond measure that no enactment should pass which would interfere with the discharge of an ordinary relation of life; and unquestionably he had a great number of precedents for the introduction of such an enactment. But for that clause a disappointed cestuique trust might go to the Police Court at Bow Street, and drag his trustee before the magistrate upon a charge, perhaps, which was totally unfounded, and he might expose a sensitive, honourable, and respectable man to a public accusation of which, at the moment, possibly he might not have the materials about him to show the utter groundlessness. The consequence would be that there would be considerable danger lest sensitive and honourable men might be prevented from undertaking duties of this description. But one must not be deterred by the fear of difficulties from endeavouring to legislate in order to put down great and grievous crimes, which, passing unpunished, were a reproach to our jurisdiction. He did not know, therefore, how to meet the difficulty except by placing upon one of the Judges of the land, or on the Attorney General, the obligation of examining, first, what he would call the affidavit for a criminal proceeding, in order to see that there was something like a reasonable ground for the charge. The House would remember in how many instances the sanction of a Judge, or a law officer, had first to be obtained before proceedings were taken. In introducing the Bill, he drew particular attention to this enactment, representing that the subject would require great consideration; and he thought, therefore, that it would be as well to defer further observations on it until the Bill went into Committee. His hon. and learned Friend the Member for Gloucestershire (Mr. Rolt) spoke of this Bill as something brought in on the spur of the moment and under the influence of recent events. In moving for leave to introduce the Bill, he carefully guarded himself against the supposition that he was actuated by such feelings. The absence of remedy in the cases to which the Bill referred had undoubtedly been regarded for a considerable time as a blot on our legislation, and the best proof that this measure was not brought in on the spur of the occasion was that, with respect to the greater number of the gross and most distressing exhibitions of fraud which, to the opprobrium of the country, had recently occurred, the law had met the transgression and punished it. This evil, however, still remained, which for reasons he had previously stated had not been included in the definition of larceny, and had, therefore, escaped punishment. He was perfectly well aware of the difficulties attending the introduction of the measure. Many had desired to meet the evil, but few had been bold enough to submit a proposition on the subject. The necessity for legislation, however, was universally felt. Let not the House, then, be deterred by representations that there might be this or that danger from endeavouring to deal with the subject. If there were evil in the way, it must be met and surmounted, and he was perfectly confident that the Members of that House, when they applied themselves in committee to the Bill, which he admitted might need amendment, would be able to put the Bill in a shape which would make it worthy to be added to the legislation of the country as a means of meeting great and scandalous fraud, and removing a blot which was now an opprobrium to the jurisprudence of the country.

Bill read 2°, and committed for Friday.