COMMITTEE. (Hansard, 25 April 1860)

§ MR. HADFIELD
said, he could not but complain of the Bill being brought on when so many hon. Members interested in the measure were absent. He was desirous of introducing a clause enabling trustees to exercise a judgment in the investment of trust funds, so that they might be enabled 94 to invest such moneys in safe securities yielding a better interest than Consols. He had proposed a clause in the Bill of last year to empower trustees to lend money upon the security of freehold, copyhold, and leasehold property, and in Bank and Indian Stock, which was admitted by the right hon. and learned Gentleman, who ultimately drew up the clause, and he was surprised now to find that the right hon. and learned Gentleman was himself proposing its repeal. He was anxious to learn the reasons for that course, as he believed the clause had been approved of by the highest legal authorities on both sides of the House. If the consideration of the Bill in Committee could not be postponed, he hoped the right hon. and learned Gentleman would allow this question at least to stand over until hon. and learned Gentlemen standing high in the legal profession, who took an interest in the subject, wore present, especially the hon. and learned Member for Wallingford (Mr. R. Matins), who was engaged that morning elsewhere.

§ MR. WALPOLE
said, that in reference to the observations of the hon. Member for Sheffield, he wished to express his regret at the absence of the hon. and learned Member for Wallingford (Mr. Malins), who was, perhaps, as conversant with this subject as any other man in the kingdom; but he would take care that the hon. and learned Member, and every other Gentleman who took an interest in the subject, should have ample opportunity for discussing the Bill. He knew what were the views of his hon. and learned Friend, and when they came to the clause referred to by the hon. Member for Sheffield (Mr. Hadfield)—the repeal clause—he would explain the Amendments which he proposed to introduce, and which he hoped would remove that hon. Gentleman's objections. He had prepared such Amendments on the clause to which the hon. Gentleman had alluded as would have the effect of remedying the inconvenience apprehended by the repeal of the clause in the Bill of last year.

MR. HODGKINTSON
said, he wished to move an Amendment to prevent the expense now frequently caused by the registration of Crown obligations. At present, when a person became surety to the Crown 95 for malt or other duties his bond was registered against him in the Court of Common Pleas, and the effect of that registration was that the bond immediately operated as a mortgage not only upon the present property of the bondsman, but upon all his subsequently acquired property. This was not explained at the time of signing the bond, and the effect was seldom discovered until the surety had occasion to sell any of his property. A great inconvenience was sustained by the delay in relieving from this liability even the smallest amount of property which it might become necessary to sell under a railway Bill, or otherwise. The consequence was that maltsters and others found great difficulty in obtaining sureties. It was to remedy this inconvenience that his Amendment was directed. Its effect would be to place obligations to the Crown on the footing of ordinary judgment debts.

§ MR. WALPOLE
said, the object of the clause was to prevent judgments operating as a lien upon land to the damage of mortgagees or purchasers. Great expense and inconvenience were often incurred in consequence of the neglect or misconduct of the vendor in not affording the purchaser the means of ascertaining the existence of such encumbrances. The object in view was to simplify and not to complicate matters, and he for one should not be disinclined to include in the clause Crown debts as well as the debts of private individuals; but such a proposition had been twice submitted to the House, and the law officers of the Government for the time being on both occasions considered that there was an exceptional reason why Crown debts should be treated differently to judgments. In the absence of those learned authorities, however, it was not for him to offer any opposition to such an Amendment.

SIR GEORGE LEWIS
said, his attention had not been particularly called to this matter, which affected more especially the financial department. He believed the Revenue Board were disposed to make a considerable fight for the retention of this security; but he could not at that moment absolutely express an opinion as to whether the Chancellor of the Exchequer would think it absolutely necessary for the protection of the revenue to retain the security precisely in its present state. Perhaps it would be better to postpone the point until his right hon. Friend could be present, as he understood the proposal was intended to affect not only all bonds signed 96 after the passing of the Act, but all existing bonds. He suggested that the Amendment should be postponed for the present.

§ MR. HODGKINSON
said, he had no objection to confine the proposed Amendment to a prospective operation.

SIR GEORGE LEWIS
observed, that in that case it might be possible that, provided arrangements could be devised for securing the revenue against loss, the department would not object to some such change as was suggested.

§ SIR FITZEOY KELLY
said, he thought it desirable that the consideration of the clause should be postponed, if the postponement would not interfere with the further progress of the Bill. He thought the Crown ought to make the concession asked for; but, regard being had to the present state of the Committee and the absence of the Chancellor of the Exchequer, the Government ought to have an opportunity of considering the matter.

§ SIR FRANCIS GOLDSMID
said, it could not be the policy of the officers of the revenue to entrap anybody into obligations, and it was desirable to provide against any person being subjected to the danger of entering into an obligation without full notice of the consequences which it involved. He wished, therefore, to make a suggestion, which he thought would have that effect, without causing injury to the revenue. It occurred to him that if this Amendment were adopted, and the officers of the revenue nevertheless thought it right to have a charge upon the property of a debtor, it might be made part of the sum for which a debtor and his surety were liable.

§ MR. ROLT
said, that the clause under consideration proposed to effect a very great change in the law of real property. What was proposed was to sweep away the security which creditors by judgment now possessed, in having a lien on the land. When a judgment was recovered, an arrangement was entered into with the debtor that the debt should be registered, and thus a cheap and easy security was afforded to the creditor. That, however, it was proposed to sweep away, and the inevitable consequence would be that whatever judgment was now entered up against an owner of land would, the day after the present Bill came into operation, be executed, or the proprietor must give new security. If a measure for the register of the title to land were introduced, as the House had been led to expect, in the 97 course of the Session, this part of the system might be considered; but to deal with this small fragment or portion of the question in this summary way, was most injurious. It was to repeal, to a great extent, the statute of the 1st and 2nd Victoria, by which mesne process was abolished. As the law at present stood, a simple process existed by which a creditor could have a valid registered security against his debtor, without proceeding to extremities against him. This process it was proposed to abolish, and no substitute was proposed. The principle of the clause was not a lawyer's question, it was a public general question, affecting the rights of creditors and of the landowners of the country, although the details might be a lawyer's question. The consideration which the Bill gave to the rights of the Crown alone showed the importance of the measure. The alleged principle of the clause was to save the trouble of consulting the register; whereas the whole scheme of improvement in modern conveyancing went to refer every transaction to the register. He repeated that the subject ought to be treated as part of an entire scheme, and ought to be taken up rather by the Government than by a private Member of that House.

§ MR. WHITESIDE
said, he agreed with his hon. and learned Friend (Mr. Bolt) that the question was one of considerable importance. It was not the first time, however, that it had come before the House. When he had the honour of being connected with the Government, the whole principle was considered with respect to Ireland. He found nothing in the general law of the country that favoured the policy of making a judgment a lien on real property. The system of making judgments liens on real estate had given rise to great difficulties and complications in dealing with land in Ireland. Under the old system, the moment a judgment was obtained, it was registered and became a mortgage; off went the solicitor and obtained a receiver; the land was brought into the Court of Chancery, and every kind of embarrassment was experienced when it was attempted to deal with it by sale. He had attempted to settle this question, but his Bill had been put in the waste basket. He agreed in thinking that the subject was one that ought to be taken up by the Government. The Bill, however, had been prepared by Lord St. Leonards, and as he thought the clause before 98 the Committee a good one, it should have his cordial support.

§ MR. LONGFIELD
observed that Crown debts in Ireland almost without exception were recognizances. He joined with his hon. and learned Friend (Mr. Bolt) in thinking that the two first clauses ought to be postponed, and if sine die, all the better. They operated retrospectively, depriving creditors of their security; and altogether the question was too large to be dealt with in a crude way by a couple of clauses.

§ MR. HADFIELD
said, that the present state of the law in this respect occasioned great expense, endless complication, and continual complaints, and was attended with no good result. He should like to make an appeal to the right hon. Gentleman the Home Secretary on the subject of Crown debts. Owing to the fact that they operated as a charge upon land, landed proprietors were repeatedly prevented from giving security. If any doubt was felt as to the security, an extent ought to be issued at once.

§ MR. HADFIELD
said, he would move, after the word "recognizance," to insert the words, "to be entered up after the passing of the Act." The effect of that would be to respect and keep in full force judgments entered up previous to the passing of the Bill, and to confine the operation of the Bill to judgments entered up after it became law.

MR. HENLEY
said, that the Amendments proposed in the clause bore out what had been said by the hon. and learned Gentleman (Mr. Rolt) as to the inconvenience of the fragmentary mode in which this subject was being dealt with. All that had been said in favour of the clause was that it would save a search in the registry but he did not think it would have that effect. According to the Amendment proposed by the hon. Member for Sheffield (Mr. Hadfield), all judgments in existence previous to the passing of the Bill would remain in force. That, to begin with, would necessitate a search, which would be attended with trouble and expense; and if a man entered a memorandum on the registry of the issue of a writ of execution on a judgment one day before the conveyance of an estate was executed and the consideration money paid, that entry would operate as a lien upon the land, and would enable the execution creditor to hold the land in spite of the pur- 99 chaser. Besides, much had been said as to the inconvenience of judgments affecting land; but the clause under consideration would not relieve land from judgments, except in the special cases of sale or mortgage. Instead of its being a step to get rid of judgments affecting land, he had great doubt whether its effect would not be to clinch them. He thought purchasers would not only have to search the register; but also carefully to watch another office to see whether or not execution had been issued.

§ MR. WALPOLE
said, the objections taken by his right hon. Friend. (Mr. Henley) were quite conclusive against the Amendment of the hon. Member for Sheffield. A judgment when entered up was not intended to be simply a security on land, but, once registered, in the proper Court, remained as a lien on the land for twenty years to come; and the effect; of the Amendment would be, on the sale or mortgage of any property, to necessitate a search for judgments for twenty years. His hon. and learned Friend (Mr. Rolt) had stated all the objections that could possibly be taken to the Bill. But what did those objections amount to? That judgments had been somehow considered as a lien upon land, and that it was now sought to take away that kind of security. There were two kinds of property—freehold and leasehold. A man, for example, had a freehold property worth £20 a year, but another, who was the leaseholder of the adjoining fields, realized thousands a year by letting the ground on building leases. What was the present state of the law? A judgment entered up could not affect the leasehold property, but it operated against the adjoining freehold, and hung like an incubus on the title to it. The Bill now under consideration would not affect the owner of an estate who did not intend to sell, but would simply operate in the interest of the purchaser or mortgagee of an estate who had become such by the payment of a valuable consideration. The effect of the clause, if passed as it stood, would be that a judgment, where execution had been issued and registered, would remain as a lien upon land for three months, and no longer, from the time when it was registered. In his opinion, the real objection to the clause was that it did not go far enough. If any objection could be taken to it, that objection was that they ought to declare by Act of Parliament 100 that a judgment should not affect land unless a specific charge was created on land, which charge the judgment was intended to effect.

MR. HENLEY
remarked, that according to the provisions of the Bill the necessity of a search for three months at least was not obviated. It would still be necessary to search the register for that period.

§ MR. BARROW
contended that no purchaser was safe against a secret security given behind his back, so long as it was incumbent on him before making the purchase to search for judgments over a period of twenty years; and that ordinary transactions in the sale of small freeholds could not be carried on if a purchaser's security depended upon a search over so long a period. The charge on land created by a recognizance to the Crown prevented this Government from obtaining the better class of sureties.

§ MR. ROLT
said, it was absurd to designate a judgment as a secret security, for the truth was that in this country all securities were secret, except judgments which were patent upon the register to all the world. The whole cry of those in favour of improvements in conveyances was, that there ought to be a revision of the whole system, and that every transaction connected with the dealing with land— judgments, conveyances, equitable mortgages, and everything else—ought to appear upon the register. At present the only thing that appeared upon the register was the record of a judgment; and now a Bill was brought in which practically abolished that record. That was surely a curious sequitur. He repeated that the whole subject ought to be revised, and not that this security should be abolished without any substitute. The only argument in favour of the clause was, that it was a relief to mortgagees and purchasers. But as his right hon. Friend (Mr. Henley) had pointed out, the necessity for a search was not done away with. If the clause was to pass, he thought it absolutely necessary that the Amendment of the hon. Member for Sheffield should be incorporated with it.

MR. DEASY
said, he concurred in most of the observations of the hon. and learned Gentleman who had last spoken. He spoke with diffidence on a matter connected with English law, but it appeared to him that the effect of the clause would be, whenever a judgment was registered, that 101 the person registering it would be under an obligation either to levy the amount at once, or to require from the debtor sortie specific security by way of either legal or equitable mortgage. In Ireland, before 1850, judgments were a general security on land, but by Sir John Romilly's Act a judgment did not affect land till execution was issued, while at the same time power was given to any judgment creditor to register his judgment against particular lands. The consequence was, that when a judgment was obtained in Ireland it was registered, the person who obtained it immediately got a statutable mortgage on the land. He doubted, therefore, very much whether the Bill would facilitate in any appreciable degree the transfer of land, an object which it was desirable to facilitate, while, on the other hand, it would expose owners of land, who were not relieved from the obligation of searching, to considerable expense and inconvenience. He trusted the right hon. Gentleman would not press the clause.

§ MR. MURRAY
said, he thought the clause a useless piece of machinery.

§ MR. M'MAHON
said, he was of opinion that the sooner real estate was put on the footing of personal the better; and he regarded the clause as a step in the right direction.

SIR GEORGE LEWIS
remarked that if the clause remained a search would still be necessary; and he suggested the propriety of the omission of the proviso, the effect of which was to require a three months' search for judgments. On personal property a judgment created no lien; and if personal property were disposed of after judgment and before execution the sale was valid. If, therefore, the object of the clause was to place freehold property on the same footing in respect to judgments as personal property now stood, it would be well to omit the proviso, but he was inclined to vote generally in favour of the clause.

§ MR. ROLT
said, much greater alterations would be required in the Bill than the omission of the proviso, in order to meet the wishes of the right hon. Gentleman.

§ MR. EDWIN JAMES
suggested a postponement of the clause. The hon. and learned Attorney General had promised a Bill on the transfer of land, a most important subject; and there was actually pending before the House a Bill to alter the law of Bankruptcy and Insolvency in 102 which questions must arise with regard to judgments. He thought, then, the proposed enactment had better be postponed. He disliked this kind of fragmentary legislation. Still, if the clause were pressed, he should vote for it.

§ MR. HADFIELD
objected to an indefinite postponement.

§ MR. LONGFIELD
said, that he wished to know whether it was intended the Bill should extend to Ireland. If that was not intended, he hoped that words would be introduced to make that intention clear.

§ MR. WALPOLE
said, it was not intended to apply the Bill to Ireland, and the Attorney General for Ireland had given notice of a clause specially to exempt that country from its operation.

§ MR. ROLT
expressed an opinion that the clause would promote litigation and would lead to an alteration in the law without laying down any settled rule for the future.

§ MR. WALPOLE
said, the clause had been approved by the Judges and the legal Lords in the other House.

SIR GEORGE LEWIS
said, the question was whether constructive notice was fraud according to the clause.

§ MR. ROLT
said, it often happened that persons wilfully abstained from inquiries which, if made, would have given them knowledge of facts.

§ MR. LONGFIELD
remarked that he thought the clause would in some cases protect bonâ fide purchasers, but, in others it would give rise to litigation.

MR. DEASY
said, he was afraid the clause would lead to much litigation.

SIR GEORGE LEWIS
said, the clause in removing one difficulty created another. He thought it would be better to strike the clause out.

§ MR. HADFIELD
said, they could not adopt a system of registration unless they did away with constructive notice. They must, in order to facilitate the transfer of land, give the owner of property the same 103 right as the owner of consols or railway shares.

§ MR. M'MAHON
suggested that they should strike out the words, "Unless the purchaser or vendor shall have been guilty of fraud."

MR. DEASY
said, the clause was so worded that it would leave much to the discretion of the Judges, as it altered the present rule of law and laid down no other.

§ MR. WALPOLE
said, he trusted the Committee would agree to pass the clause pro formâ, and he would then take an opportunity of consulting the Attorney General upon it, and if the opinion of that hon. and learned Gentleman was adverse to it they could have further discussion on the Report, as to whether the construction put upon it by the hon. and learned Member for West Gloucestershire was correct or not.

§ MR. M'MAHON
said, this provision would affect leases already existing, and would violate as against the tenant the general rule which now obtained that the waiver of a condition operated as a general waiver, and was not restricted to the particular case.

§ MR. WALPOLE
denied that the clause was retrospective, and said that it only assimilated the law of England to that of Ireland. It was not reasonable that, where, for example, there was a continuing covenant, a waiver of a breach of the covenant in one particular instance should operate as a general waiver of all breaches.

§ MR. NEWDEGATE
said, he would put this case. If a tenant, because he had once broken up half an acre of land, was to be allowed to go on breaking up acres of land, as the suggestion of the hon. Member for Wexford (Mr. M'Mahon), would allow him to do, there would soon be an end to the enjoyment of property.

§ MR. LONGFIELD
said, the object of the clause was to get rid of the rule in Dumper's case, which Lord Mansfield said was a case always wondered at and always followed. He should support the clause.

§ MR. ROLT
said, that in practice, the doctrine of scintilla juris was now really never heard of, and the clause therefore merely galvanized a fossil to kill it again.

§ MR. WALPOLE
replied that the clause would at all events do no harm, and it 104 would have the effect of rendering unnecessary the learned chapter in Sugden on Powers, which was so puzzling to students.

§ MR. ROLT
So that we are to have an Act of Parliament in order that certain chapters may be left out in the next edition of Lord St. Leonards' book.

§ MR. HADFIELD
said, that under the Act of last year persons who concealed any document material to the title might be indicted for a misdemeanour and imprisoned for two years. This provision naturally rendered solicitors cautious how they omitted anything from the abstract of title, and in one instance which had come to his knowledge, the Taxing Master thought the clause justified the insertion of abstracts for which they would not otherwise have been allowed to charge. But the effect of this clause, added to the clause of last year, would be that if a solicitor did not abstract a deed he was liable to indictment, and if he did abstract it, though probably advised by counsel to do so, he would not be allowed to charge for it. He intended to move for the repeal of the former Act, and in the meantime he should oppose that clause.

§ MR. WALPOLE
said, the Act of last year provided against a gross act of fraud, by which a purchaser might be deprived of property which he had purchased. It simply said that where a seller of land or his attorney or agent concealed any instrument, deed, or other document material to the title of the purchaser, or falsified pedigree on which a title depended, in order to induce a purchaser to accept such title, with intent to defraud, then he or they should be deemed guilty of misdemeanour. No prosecution could take place, however, without the sanction of the Attorney General, and, that being so, there was no reason why an abstract of title should be loaded with abstracts of deeds which were totally unnecessary except to swell the profits of the solicitors.

§ MR. WALPOLE
said, he was anxious to explain the course he meant to take with respect to this clause. By the rules of equity, when a person by deed or will gave to his trustees the power of investing money in Real Securities or Government Stock, the Court of Chancery decided that the trustees could make investments in 105 mortgages on land or in Government Stock only. No trustee was permitted in such circumstances to invest any property of a testator in Bank Stock or East India Stock. A great hardship arose from this rule; for when a trustee found money invested in Bank Stock he was compelled to call in the money and invest it in Three per Cent Consols. The rule was that no person was entitled to invest money in a way that would be injurious to the remainder, man; but, inasmuch as Bank Stock or East India Stock was quite as good for the person in remainder as Three per Cent Consols, there seemed to be no reason why such a rule should now exist, however strongly it might have been called for in years gone by. Accordingly a clause was introduced into the Bill of last year to remedy this grievance, and it was that clause which the 12th Clause of the present Bill proposed to repeal. The Judges in the Court of Chancery thought the clause of last year was not free from ambiguity, and hence the reason why the House of Lords proposed to repeal it. He was in favour of the principle of the clause in the Bill of last year; but, considering that its language was somewhat ambiguous, he had proposed two clauses which he now intended to move in case the former clause were repealed. The clauses he had prepared were in substance the same with that in last year's Bill, only, he hoped, somewhat more clearly expressed; and he had introduced two alterations, one providing that the clause should not come into operation till November, and the other that the powers given to trustees should extend to investments in Stock of the Bank of Ireland.

§ MR. ROLT
said, he thought the clause of last Session vicious in principle, and that it ought to be repealed. The Courts of equity simply held that plain words ought to receive their plain meaning, and that when a man, by his will, said his property should be invested in Consols, it ought to be so invested; but the clause of last Session said the will of the testator was not to be carried into effect, but that the property might be invested in Bank Stock. He did not wish that the repeal of the clause should prejudice any act done while it existed, but he hoped it would be repealed, and he might observe that he had the same objections to the clauses prepared by the right hon. Gentleman (Mr. Walpole) as to the clause of last year.

§ MR. MALINS
said, the rule of the Court of Chancery up to last year was, that if a testator gave specific directions as to the investment of his property those directions were followed; but, if not, that the trust funds must be invested in Real Security or in Government Security. The consequence was that it very often happened that, though a testator's property was invested in good and profitable security, the trustee was obliged to draw it out and reinvest it in the Three per Cent Consols, to the ruin, perhaps, of the family. Why should a trustee be prevented from investing in Bank Stock or East India Stock, which gave a much more profitable return, than the Three per Cent Consols? He would agree to the repeal of the clause of last year only on condition that the clauses proposed by the right hon. Gentleman (Mr. Walpole) were to be afterwards adopted.

§ MR. ROLT
explained that he did not object to the trustee being allowed to invest in Bank Stock and East India Stock if the testator said nothing on the subject.

MR. HENLEY
said, he took a view different from that taken by the hon. and learned Member for Wallingford (Mr. Malins). He objected to giving power to a trustee to invest money in Bank Stock or in East India Stock when the testator wished it to be laid out in Government securities. He was not friendly to the clause of last year, and did not care whether it was repealed or not, especially as its application by the Court of Chancery had been extremely limited.

§ MR. BERNAL OSBORNE
observed that the speeches of the opposing counsel had been so contradictory that he could not say how the question now stood. There could be no difficulty, however, about this clause, which came home to the case of every trustee. Everybody might understand it, and he supposed that that was the reason why the gentlemen of the long robe were opposed to it.

MR. DEASY
observed that on the whole it would be better to retain the clause of last year.

§ SIR FITZROY KELLY
said, the House seemed to be of opinion that the clause of last year should be substantially retained. Doubts as to the exact meaning of that clause had, however, arisen in the Court of Chancery, and therefore he thought they ought to adopt some provision less ambiguous. The difficulty had arisen as to the true meaning of the words "East India Stock," for since the Bill of last 107 year passed new East India Stocks had been created. Perhaps the difficulty could be got over by inserting in the clause of last year the words "any East India Stock formerly the capital stock of the East India Company."

§ MR. PULLER
remarked that if the clause wore struck out it would be necessary to declare with regard to future investments what description of East India Stock was meant by the Act of last year.

§ MR. AYRTON
considered that it would be necessary to alter the clause, for no one could either understand it or act upon it. He should vote that the clause be expunged.

§ MR. LONGFIELD
said, he believed it would be better for them to retain the advantage which they enjoyed under the clause in the Measure of last Session than to run the risk of forfeiting that advantage by repealing that clause, with a hope that they might afterwards get a better one.

§ MR. WALPOLE
said, that as far as he was personally concerned, he had no objection to their retaining the clause of last Session and omitting the clause in the Measure which was then under their consideration.

§ MR. ALDERMAN SALOMONS
said, he thought there ought to be no misunderstanding as to the description of India Stock that was really meant.

§ MR. MALINS
said, he agreed with the hon. Member (Mr. Longfield) that as they had got something good in the Act of last Session it would be better to be satisfied with it until they got something better. He should, therefore, vote to expunge the clause.

§ MR. WALPOLE
said, he would then move the insertion of the Clauses to which he had referred.

MR. DEASY
said, he did not see any reason why the clauses should not apply to Ireland.

§ MR. WALPOLE
said, he had no objection that they should do so.

§ MR. HADFIELD
said, he would then move a clause enacting that Clause 32 of the 22 & 23 Vict. c. 35, shall operate retrospectively.