HC Deb 13 May 1863 vol 170 cc1666-73

Order for Second Reading read.

MR. HADFIELD

rose to move the second reading of this Bill, which, as many hon. Members knew, had obtained the almost unanimous approbation of the legal profession; and the Law Societies of Yorkshire, Liverpool, Manchester, and Chester, had petitioned in its favour. He did not know what objection could be raised to the Bill, especially as it had no retrospective operation, and did not affect Ireland. The object of the Bill was to place real estate on the same footing with regard to future judgments as personal property—that was to say, that no purchaser or mortgagee should be obliged as at present to make searches for judgments. From a Return for which he had. moved, it appeared that in one year and ten months 3,051 judgments were registered, and, of this number, 1,894, or somewhat more than three-fifths, were for sums under £200. What possible interest could the House have in prolonging such a state of things? Every power should be given to a creditor to enforce his claim, but that power should not be allowed to affect transactions which were not his own. Yet, for the sake of these 3,051 judgment creditors, every purchaser, according to Lord St. Leonards in his invaluable work on Vendors and Purchasers, was obliged to search the registry to see whether a judgment was recorded against the vendor; and this search must extend to the very morning of the day on which the purchase was completed. He was acquainted with a case where a judgment was discovered and telegraphed on the morning of the day which had been fixed on to complete an important purchase. He estimated the yearly number of conveyances of all kinds, that were affected by the present law, at 30,000 and upwards; and this opinion was confirmed by an official Gentleman connected with the Stamp Office department. Was it to be tolerated that every honest purchaser, against whom there was no pretence for saying that there was any collusion between him and the vendor, should he put to such a risk? It added to the perplexity of conveyancing that there was a difference of opinion amongst eminent men learned in the law. He had stated what Lord St. Leonards advised as to the necessity of searching for judgments, and the same doctrine had been held by conveyancers generally for a long time past; but the Master of the Rolls had decided (see Lane v. Jackson, 20 Beavan, 535) that "it was not incumbent on a purchaser for valuable consideration to search for judgments." This decision would be important, if it could he depended upon as sound in law; but, unfortunately, that was not the fact. It had taken counsel by surprise; but assuming it to be law, the case added to the difficulties thrown on a bonâ fide purchaser. This learned judge held, that though a purchaser was not obliged to search for a judgment, yet if he, or his solicitor or agent, had notice of one, he would be bound by such notice, and could recover against the purchased property. In that same case an unsuccessful attempt was made to fix the purchaser with the consequences of a verbal notice alleged by the vendor to have been given to the purchaser's solicitor, but positively denied by that Gentleman. If the notice had been deemed to be sufficient, these consequences would have followed—namely, the vendor would keep the money he had received on the sale of his property, and he would have enabled a judgment creditor of his own to recover his debt from the purchaser, to whom the property had been sold, and paid for; and, as he (Mr. Hadfield) considered, the law would have given the creditor precedence over the purchaser, who had previously held a mortgage upon the property. Five Acts had passed during the present reign in order to soften the asperity of the law on this particular subject, and he hoped that the House would now go a step further, and say that it was not wise to throw a doubt upon transactions between the buyer and seller of real estate. In the year 1860, the House of Lords sent down a Bill, which provided, in addition to all other requisites, execution should issue within three months from the date of the judgment, and the House of Commons sanctioned it; but that did not obviate the necessity of a search within those three months. This state of things was what he sought to put an end to by this Bill. Why should a purchaser in Northumberland be put to the expense of consulting the registry in London? And why should every purchaser of real estate in the country be under such a responsibility? The cost of doing so formed a serious item in a small conveyance; and if there was more than one necessary party to the conveyance, the expense was, of course, proportionally increased. As to notice, the Bill provided that no judgment should affect transactions between the seller and a bonâ fide purchaser or mortgagee, for full and valuable consideration, and whether such purchaser or mortgagee had notice or not. He thought notice a very dangerous thing. It was of importance that the existence of a judgment against a person who wanted to go into the market to sell his property, should not be known; because a person having a judgment against him was not in a position to demand as fair a price as could be ob- tained by a person who had no judgment against him. It was known that a commercial society was formed, to report on registered judgments, and warn against giving credit to persons in embarrassed circumstances. The question might present some difficulties, but Parliament ought not to adhere to old abuses and obsolete laws which throw such obstacles in the way of purchasers. He moved the second reading of this Bill, with a strong conviction that the profession throughout the whole country would hail it as a great improvement, and that it would tend most beneficially to facilitate the transfer of real estate.

MR. HUMBERSTON

rose to second the Motion, and trusted that the House would assent to the second reading, for he thought that the law as it stood was extremely vexatious both to buyers and sellers of landed property. He had himself known a case in which a large estate had to be sold in lots; but, in consequence of the existence of judgment debts, and in consequence of no one purchaser being able or willing to pay the judgment debts, great delay took place in the sale of the estate; and as there was at the time a falling market, the value of the property was much depreciated, and the most ruinous results ensued to the owner of that property as well as to the creditors. He did not see the slightest use in retaining the law in its present state. No banker would take a judgment of this kind as security; they would only take the security of a deposit of deeds or a mortgage. The absurdity of the law became at once apparent by supposing it applied to personal property. With respect to personal property a judgment was of no value until execution issued, and that was an intelligible state of things; but suppose the law affecting real property were extended to personal property, and that a purchaser had to search for judgments before he could buy a picture at Christie & Manson's, the thing would be absurd. To make a judgment a lien on real estate only had the effect of clogging the transfer of that estate with unnecessary restrictions and imposing upon the conveyance of property unnecessary expense. He thought, that if they abolished this law, they would only be following in those steps of legal reform which they pursued last year, when they passed an Act with the object of simplifying titles and making the purchasers of land secure.

MR. MALINS

gave his cordial support to this Bill, and trusted that the House would agree to pass it without delay. When he first commenced the practice of his profession, the law with respect to the liability of personal property to judgments was in precisely the same position as it was at present. Whether it was a picture worth a thousand guineas, or a chair or table, until the sheriff had in his hand the writ of execution, and took the personal property into his possession, a judgment was not of the slightest value; but with regard to land, whether the estate were great or small, as soon as a creditor obtained judgment that judgment became a lien upon the land; and at that period a purchaser was obliged to search the records of every Court of Record in the kingdom—the King's Bench, the Common Pleas, and the Exchequer—for twenty years back, in order to ascertain whether or not the estate he was about to buy was liable to any judgment debts. That was the state of the law until 1838. It was found, however, to entail such monstrous evils that an Act was then passed—the 1 & 2 Vict., c. 110—by which it was enacted that thereafter a judgment should be binding upon every kind of estate in land—(before that it had applied to freehold estate only, and not to copyholds and leaseholds)—but no judgment was to be binding unless it had been registered in one Court—the Court of Common Pleas; and it was also provided that a registered judgment should be binding for five years only. That was an immense improvement on the former state of the law. Lord St. Leonards, however,—a man more distinguished, than any one else for his knowledge and experience of the laws relating to real property, and who had spent a lifetime in framing measures which would simplify and facilitate the transfer of land—saw that to make judgments a lien upon landed estates, even to the limited extent of the Act of 1838, was still a very great evil; and he introduced a Bill in 1859 which enacted that no such judgment should bind land unless a writ of execution were issued on such judgment within a limited time. He (Mr. Malins) thought that the matter would be intelligible if they said that a judgment should either bind all the property of the debtor or none; but he was unable to see any reason why land should be bound when the personal estate was not bound. He did not see the slightest difficulty in the creditor taking a memorandum of security, charging the land for the amount of his debt, in the same manner as a banker or other person took the title deeds, or a mortgage. The fact was, that the creditors who had these judgment bonds were in many instances men who had lent money at 60 or 70 per cent. The law as it stood before was better than it was at present, because the passing of the Act of 1859 had introduced a most ridiculous and inconvenient state of things. That Act took one step in advance, it was true; but his hon. and learned Friend now proposed to take another, and to enact that no judgment or recognizance entered after the passing of the Act should affect land, as against purchasers and mortgagees, whether the purchaser or mortgagee had notice or not of the judgment or recognizance. That went a little beyond the Act of Lord St. Leonards, which enacted that the purchaser of an estate from a man who had judgments against him, perhaps far exceeding the value of the estate, should maintain his purchase against all the judgment creditors, provided that no one of them had issued an execution. Still, that Act made it imperative on the purchaser of any estate, however small its value, to go to the expense of sending up to London to search the register of the Common Pleas, in the first place, to see whether any judgment had been registered; and, in the second place, to search in another place and see if a writ of execution had been issued. The law would be much more simple as between the debtor and creditor if the judgment were still made a judgment upon the land; but that if the debtor proceeded to sell, the lien should cease in favour of the mortgagee or purchaser for valuable consideration. The proposition before the House was very simple, and he trusted his hon. and learned Friend the Solicitor General would not oppose the second reading.

THE SOLICITOR GENERAL

said, that if the House were to pass this measure, it would alter the whole law of debtor and creditor as it now existed in this country. It might have been supposed from the speech of the hon. Member who introduced the Bill, that the world consisted of but four classes—vendors, mortgagees, purchasers, and solicitors, and that these classes were suffering under some intolerable hardship. Yet the whole grievance from which it was now proposed to relieve persons who might be engaged in these transactions amounted to no more than this—namely, that if the purchaser took the course which strict prudence would suggest, and which might be necessary in some cases, though not in all, he would have to make a search, which would cost 30s. if he was buying from one individual, and somewhat more if he was buying from more than one. Would they, in order to relieve those persons of such a grievance as this, subvert the whole law of debtor and creditor as it was now to be found on our statute book? The preamble of the Bill stated that it was desirable to place freehold, copyhold, customary, and leasehold estate on the same footing as personal property with regard to judgments as against purchasers and mortgagees. But personal property might be delivered from hand to hand; whereas they could not deal with real estate in that way. The old remedy at law against real estate was by the writ of elegit, which enabled the judgment creditor to get possession of an undivided moiety of the proceeds of an estate, and there to remain until the debt was paid. The Act 1 & 2 Vict. was intended to supply a defect which existed in the law, and to give to creditors security against the lands of their debtors. It enacted that the effect of the registration of a judgment should be the same as if the debtor had done that which every honest debtor ought to do in the first instance, namely, to give his creditors the best security in his power. In order to avoid any risk of the creditor unduly pressing his debtor, it was provided that until the judgment had been registered for one whole year no step could be taken under the Act for realizing of the debt against the land of the debtor. The policy of that restriction was, he admitted, a fair subject for consideration. But the present Bill proposed that no judgment entered after the passing of the Act should affect any land, of whatever tenure, as against a bonâ fide purchaser or mortgagee. In other words, that although the Act 1 & 2 of the Queen gave the creditor a specific security upon land, the owner might sell that land over the head of his creditor, and that the purchaser should be able to maintain his purchase against the claims of the creditor, even although he might have had notice of the judgment. In point of justice there could be no comparison between the creditor who had given his money and the purchaser, whose dealing for the estate was at his own risk and for his own benefit, without any previous right or obligation, and whose desire it ought to be that the purchase money should be honestly distributed amongst the parties having charges on the estate. The purchaser had only to search the regis- try in order to ascertain who were the parties whose acquiescence in the sale was necessary to the making out of a good title. He agreed with his hon. and learned Friend the Member for Wallingford (Mr. Malins) that Lord St. Leonard's Act, which passed in 1860, imposed forms which were inexpedient. He was not in the House when that Act passed, and washed his hands of it; but the inconveniences arising from it afforded no reason for taking away the securities provided by the 1& 2 Vict., merely in order that purchasers and mortgagees should be saved some slight trouble. The memorandum spoken of by his hon. and learned Friend would cost more money than the present searches. The Bill of the hon. Member for Sheffield would have a mischievous tendency, which could only be mitigated by multiplying work for lawyers, which work would in the end do no good to either purchasers or vendors.

Motion made, and Question put, "That the Bill be now read a second time."

The House divided:—Ayes 23; Noes 43: Majority 20.