CONSIDERATION. (Hansard, 6 June 1867)

§ SIR ROUNDELL PALMER,
while approving of some parts of the measure, objected to it in two particulars. In the first place, the Bill took away the common law right of creditors to obtain execution on judgment against Railway Companies, and that, he thought, ought not to be done. He should propose an Amendment to leave this power in the hands of the creditors, unless the Court of Chancery should appoint a receiver. The other Amendment of which he had given notice was this—The 7th clause proposed to give an extraordinary power to the Directors to propose a scheme of arrangement with creditors upon a certain majority of shareholders being obtained in its favour; it added that the scheme might be with or without provision to alter the rights of shareholders as amongst themselves, and gave to the Court of Chancery power to confirm the arrangement, and give it the same force as if an Act of Parliament had been obtained. He could not conceive how any alteration of the legal rights of different classes of shareholders, as between themselves, could be justified by the vote of any majority. The creditors must, of course, first be provided for; and, as to them, arrangements made with the concurrence of certain majorities might be justified by the analogy of the Bankrupt Acts. But if after providing for the creditors there was any surplus left, the shareholders ought to continue entitled to that surplus, according to their original rights; and nobody ought to have the power to take those rights away without the consent of every individual interested.

§ MR. WATKIN
opposed the Amendment the hon. and learned Gentleman intended to propose. It was not desirable that a locomotive should be liable to be seized for a very small debt, and the traffic of a railway thus brought to a standstill.

§ MR. STEPHEN CAVE
having given a brief history of the progress of the Bill, stated that it had originated in the Railway Companies Arrangements Bill, brought in by the Secretary of State for India (Sir Stafford Northcote), and after being read a second time, had, in conjunction with the Debenture Holders Bill, introduced by the hon. Member for Stockport (Mr. Watkin), been referred to a Select Committee. This Committee was a very strong one, numbering among its members the Attorney General and the late President of the Board of Trade. It was not too much to say that the duty intrusted to them had been performed with the greatest care and ability. The first part of the measure precluded a railway company from being stopped by a contract creditor, giving him instead the remedy of a receiver. It did not, however, interfere with distress for rates and taxes, or rent, nor with claimants in cases of tort—such, for instance, as injuries to person or property. In other cases it substituted for execution, after two months' default, a receiver appointed by the Court who would distribute the net earnings according to priorities to be determined by the Court. Part 2 was intended to meet cases of companies desirous of making arrangements short of winding up. It followed the analogy of voluntary arrangements between debtor and creditor by deed under the Court of Bankruptcy. Great care was taken to protect all parties who were interested. The majority of three-fourths was according to the Companies Act of 1862, and the minority was protected by appeal to the Court. Part 3 regulated the compulsory winding-up of insolvent Companies. Some exception had been taken to this being done after the appointment of a receiver and manager for a year only; but that minimum time was fixed after great consideration, and it could be enlarged by the Court. Part 4 regulated proceedings in Court. Part 5 provided a remedy for an evil mentioned in various debates during the present Session—that, namely, of providing funds for permanent works by a floating, instead of a fixed debt. It allowed debenture stock to be issued at any rate of interest, and gave facilities for raising money to pay off existing debentures. Part 6 extended the Abandonment Act of 1850; and part 7 remedied an injustice to landowners in the case of the insolvency of a railway company; which had been long complained 1724 of. The Committee having obtained power to consolidate the two Bills, it was only necessary, according to the rules of the House, that the new Bill should be re-committed. This was done on the 21st of May, pro formâ. The Bill was then reprinted as amended by the Committee, and was in the hands of Members on the morning of the 24th. It passed through Committee on the 27th, and had since been re-committed for an Amendment. Fault had been found with him for not having explained the nature of the Bill. It was his duty to do so at any time if required; but as it closely followed that which had been laid down by the House in the debates on the earlier stages, as the principle of such a Bill as would meet the exigencies of the times, he considered that objections, if any, would only be taken in Committee on the details, and as both sides of the House and all interests were well represented in the Select Committee, and great anxiety was expressed for the rapid passing of the measure, he did not feel justified in doing anything to cause delay. And when it was said, or at any rate suggested, that a concealment almost amounting to a fraud had been practised upon the House by altering the title and hurrying the Bill through, he would ask what sort of concealment was that to which not only the Government, but the Opposition, were parties — not only the promoters, but the opponents of the original measure? And when it was said that the alteration of the title had been misleading, he could only say that, having been informed that the title could not be the same, the Committee had made the smallest alteration they could—namely, from Railway Companies Arrangement Bill to Railway Companies Bill, which would scarcely mislead the most careless. It would be difficult to find a more innocent fraud than one practised with due notice to the representatives of all parties concerned. The hon. and learned Member's opinion upon these points was, of course, entitled to the highest respect; but he thought he would see, when the House entered upon the discussion of the Amendments, which he had placed upon the Notice Paper, that one of them completely frustrated one of the main objects of the Bill. There could be no objection to the one which he had now proposed.

§ MR. STEPHEN CAVE
said, this Amendment was antagonistic to the principle of the Bill. The hon. and learned Gentleman did not propose any instructions to the Court of Chancery as to the circumstances under which it should refuse or allow an execution. He thought this was a proposition to which the House ought not to consent. Perhaps the hon. and learned Gentleman's object would be gained by small debts, say under £20, being exempted from the operation of the Bill.

§ MR. MILNER GIBSON
supported the clause as it stood. The proposition was not directed against existing creditors, but future creditors of railway companies would give them credit with the full knowledge that they could not levy executions in case of default in payment, and so stop the traffic on the public highways. They would, however, have a better remedy—namely, by applying to the Court of Chancery for the appointment of a receiver, so that they would be paid out of the earnings of the company. Existing creditors, moreover, would retain their powers of execution and would have this new mode of redress in addition.

§ SIR ROUNDELL PALMER
contended that the clause would encourage solvent companies in delaying the payment of their debts. He could not see any necessity for obliging the creditors of solvent companies to resort to the cumbrous and perhaps tedious plan of getting a receiver appointed. If a company were insolvent it would itself apply for such an appointment; but the debts of solvent railway companies ought to be on the same footing as the debts of any other solvent undertaking.

§ MR. AYRTON
hoped that the hon. and learned Gentleman would not press his Amendment, because a creditor would have a better remedy without it, inasmuch as a solvent company would, under the provisions of the Bill as it stood, make immediate payment, while a receiver ought to be appointed in the case of a company that was insolvent.

§ MR. LEEMAN
also trusted that the House would not agree to the Amendment 1726 proposed by the hon. and learned Gentleman.

THE SOLICITOR GENERAL
thought it would be better to leave the clause as it stood, especially as the whole matter had been most carefully considered in Committee. No company that was solvent would think for an instant of allowing a receiver to be appointed.

§ MR. LEEMAN
objected to the introduction of the words, which, he said, would fetter the discretion of the Court, by introducing a doubt as to the priority in which judgment debts were to be paid.

§ MR. AYRTON
supported the Amendment, which, he said, was not likely to mislead a Judge. Under the Bill as it stood a creditor was not a "person interested in the railway."

§ MR. LAING
contended that, if the object of the Amendment were not to create a prejudice in favour of judgment creditors, the insertion of the words was needless.

§ MR. STEPHEN CAVE
had no objection to the insertion of the words "in payment of the debts of the Company or otherwise," if that would meet the view of the hon. and learned Gentleman.

§ MR. WATKIN
said, the wording of the clause had been very carefully considered in Committee, and hoped it would not be altered.

§ MR. AYRTON
supported the proposed addition. Unless the words were inserted every creditor, in self-defence, must sue out judgment, and apply to the Court of Chancery.

§ MR. LAING
opposed the Amendment.

§ MR. DODSON
pointed out that the words did not, as supposed, give the right to create pre-preference stock. He suggested the substitution for "altering" of the words "settling and defining."

§ MR. STEPHEN CAVE
said, he was willing to accept this Amendment.