HC Deb 08 March 1882 vol 267 cc393-402

Order for Second Reading read.


, in moving that the Bill be now read a second time, said, that in 1878 the subject was discussed in that House, and Mr. Sampson Lloyd, then Member for Plymouth, brought in a Bill to amend and consolidate the Law relating to Bills of Sale. One of the ob- jects of Mr. Lloyd's measure was to reduce the time allowed for registration from 21 days to three; but in Committee the time was altered from three to seven days. It also proposed to take bills of sale out of the Order and Disposition Clauses of the Bankruptcy Act, and to make registration necessary to their validity, and that was done. It was also thought right that there should be a better system of registration, and that no bill of sale should be valid if not registered; but subsequently a decision of the Courts of Law, placing a different construction on that part of the Act, had made the clause inoperative. The Bill was read a second time without discussion, and there was no discussion on going into Committee. The measure was considerably altered in "another place," but ultimately became law, and one of the immediate results of its passing was that the number of bills of sale had increased four-fold in two years, from between 13,000 and 14,000 previous to 1878 to 57,000; and it appeared from the evidence taken last year before a Select Committee that sat upon the subject, that there was an enormous number of bills of sale not registered at all. The effect of the Act, especially of the provision taking bills of sale out of the Order and Disposition Clauses of the Bankruptcy Law, was seen in the cases of hardship and oppression which came before the County Courts. So serious was the evil that in January of last year a Circular was issued by the Lord Chancellor calling the attention of the County Court Judges and Registrars to the subject, and asking for information respecting it. That Circular brought forth a large number of replies, which would be found in a Paper which had been laid on the Table of the House. In 1880, the subject arrested the attention of the Chambers of Commerce, and gave rise to more than one discussion. So general was the feeling of the Chambers of Commerce on the matter, that steps were taken by the Council of the Association to have a Bill prepared to amend the Act. That Bill he had the honour to introduce, and after some discussion, in which his right hon. Friend the President of the Board of Trade took part, it was read a second time, and remitted to a Select Committee, presided over by the hon. and learned Gentleman the Attorney General. A considerable amount of evidence was taken before that Committee, and among others Mr. Motteram, Judge of the Birmingham County Court, the Registrar of the Leeds County Court, the late Lord Advocate, and the Editor of The Law Times were examined. The existing state of things stood condemned by the almost unanimous judgment of the Judges and Registrars of the County Courts. They agreed generally that after-acquired property should not pass under a bill of sale, and that the law, as laid down in "Holroyd and Marshall" by the House of Lords, should be altered. The Judge of the Birmingham County Court spoke of the disastrous operation of bills of sale, said that they were frequently the source of litigation, and that by far the greater proportion were not bonâ fide; he estimated that 80 or 90 per cent of bills of sale were fraudulent, and said that many persons were of opinion that it would be a benefit to the community if they were done away with. That was the almost unanimous opinion of the Select Committee; but they did not feel that at present they would be justified in recommending their entire abolition. Mr. Motteram further said that after-acquired property should not be assigned either in substitution for, or in addition to, the property assigned by bills of sale, and that he would abolish bills of sale for sums under £50. This last recommendation was made by many Judges and Registrars. Mr. Daniel, Judge of the Bradford County Court, said that the evils produced by the Act were ruinous to borrowers, and that bills of sale were unfairly used to defeat the claims of bonâ fide unsecured creditors, and to the prejudice of the ordinary Law of Bankruptcy. As a remedy, he would repeal the 20th section of the Act of 1878, and restore the protection to creditors which was given by the Order and Disposition Clauses of the Bankruptcy Act. The Select Committee took the evidence, amongst other witnesses, of four professional money-lenders, whose testimony was of the most graphic and sensational nature. He (Mr. Monk) thought he had never read anything more sensational in Dickens's novels; but, in saying that, he must do those professed moneylenders the justice to say that nothing could be more frank, straightforward, and impartial than the manner in which they gave their evidence They con- cealed nothing from the Committee, and, at the same time, entirely condemned the present state of the law. One witness, a money-lender, said that for loans under £50 the rate of interest ranged between 70 and 90 per cent, and often exceeded the higher figure; and that 15 times out of 20, where the money was not paid promptly, the borrower's goods were seized and sold, often inflicting great hardships and misery. He said that it would be an advantage to smaller borrowers if they were prevented from borrowing on bills of sale; but the prohibition would materially interfere with his own business; and that 99 out of every 100 borrowers were insolvent, and many of them did not understand the effect of a bill of sale; while it was the practice of money-lenders not to register bills of sale at all. Another moneylender said that the abolition of bills of sale would interfere materially with his business, for he had as many as 5,000 in one year; but he favoured their abolition because of the misery that arose out of them. The Bill he (Mr. Monk) had brought in had been carefully considered by his hon. and learned Friend the Attorney General, and he hoped it would receive the support of the Government. Generally, the effect of the Bill was as follows. Clause 3 required bills of sale to have a schedule of the property attached thereto, which should be only valid in respect of chattels named therein, and not to take effect if they were not at the time actually the property of the grantor. Clause 6 had reference to growing crops and produce and plant and machinery brought upon the premises, in substitution for the machinery enumerated in the schedule. These it had been thought very necessary to except, and they were the only exceptions as to after-acquired property passing under a bill of sale. Clause 7 provided that bills of sale should be void unless attested and registered. Clause 8 required all bills of sale to be executed in the presence of a Commissioner taking oaths in a Supreme Court, and also a solicitor, who must state that he had carefully explained to the grantor the object and effect of the bill, so that there might be some security that the people who gave them really understood what they were doing. There were other clauses of great importance. For instance, Clause 9 required bills of sale to be transmitted from the Central Office to the County Courts for local registration. Clause 10 was a most important clause; it invalidated all bills of sale under £50. Clause 11 repealed the 20th Section of the Act of 1878, and made bills of sale again subject to the Order and Dispositions Clauses of the Bankruptcy Act, where bankruptcy or liquidation followed within 12 months. This was a clause inserted to protect creditors. Clause 12 enacted that chattels should not be removed or sold for three clear days after seizure. Formerly, if the grantor was merely an hour in default in paying an instalment, the grantee was able to take possession and sell the goods. Clause 15 extended the right of search to those who wished to inspect bills of sale; and made it general and absolute, instead of being dependent on rules and orders. The application of the Bill was limited to England and Wales, the reason being that Scotland was very fortunate in having no bills of sale. With regard to Ireland, in 1879 an Act almost identical with that passed in 1878 for England was passed for that country; and if hon. Members from thence were desirous of doing so, he (Mr. Monk) would be most happy to co-operate with them in bringing in a similar amending Bill as the one under notice to apply to Ireland. He would conclude by moving the second reading of the Bill.

Motion made, and Question proposed, "That the Bill be now read a second time."—(Mr. Monk.)


said, it seemed to be the opinion of some of the witnesses before the Select Committee that bills of sale should be abolished altogether, and he thought that it would have been much more straightforward if the hon. Member for Gloucester (Mr. Monk) had brought in a Bill for that purpose, for that would be the practical result of the measure under notice. If the measure passed—and he appreciated the spirit which animated its promoter—either bills of sale would be abolished altogether, or they would only be possible at rates of interest far more usurious than those now in use. He did not say that that was not a desirable end; but if bills of sale were to be retained, it seemed to him that the Bill might advantageously be modified in certain of its details. The most important part of the Bill was Clause 11, which would prevent money-lenders who had any regard for their own interest from lending any money at all, because who would lend money to one who might become bankrupt within 12 months? He supposed the Bill would be carried; but with respect to this 11th clause, he thought the term should be four months instead of 12. Then, again, the interval during which goods should not be sold might be extended from three to five days, and bills of sale might be allowed to apply to goods substituted for those originally secured, though not to additional goods. The proposed Bill, he considered, proceeded far in the direction of abolishing bills of sale altogether, and would require to be carefully looked after in Committee.


said, he thought the objections of the hon. and learned Member for Bridport (Mr. Warton) were such as might be dealt with in Committee. With regard to the period of three days, he did not think that there would be any objection to the alteration. The object of making the time short, however, was on the ground of expense, as the longer the bailiff remained in possession the more he would have to be paid. With regard to that part of the Bill making bills of sale subject to the Order and Disposition Clauses of the Bankruptcy Act, the object was to place as much difficulty as possible in the way of fraudulent transactions, and to give protection to honest creditors. The question that the Select Committee last year had to consider was whether bills of sale ought to be abolished altogether, or whether they ought to put as many restrictions as they could in order to secure honesty in the transaction. It was felt that they could not properly deny a man the right to raise money on personal property while they allowed others to raise money on real property; and it seemed right that a man should have the power to pledge his property, whether personal or real, in order to relieve himself from temporary pressure. Whilst they felt bound to recognize that principle, the Committee felt it their duty also to put as many safeguards as they could against fraudulent transactions. The Bill was aimed, not against the principle of raising money, but against the men who traded solely as money-lenders, and whose trade was always more or lesstinged with fraud, not always on the part of the money-lender, but frequently on the part of the borrower. But there was often a great deal of oppression on the part of the money-lender, as was proved before the Committee by professional money-lenders who came to give evidence. One of these persons stated that in one transaction he had charged interest at the rate of 400 per cent. No man paying interest at that rate could ever hope to recoup himself; and the object of the clause in question was to protect honest, bonâ fide creditors who were injured by these dishonest and oppressive transactions. It was also a protection to the borrower himself. He trusted that the present Bill would remedy much of the evil existing, and would give what was so much needed—protection to the creditor, and to the honest, but needy, trader.


said, it was quite possible the Bill would do away altogether with bills of sale. He was not anxious to put restrictions upon commercial transactions, but he agreed thoroughly with the clause doing away with bills of sale under £50. It was in those small sums that the grievance with regard to such bills had arisen, as in many cases persons in embarrassment had gone on under bills of sale until they found themselves in great difficulty; their creditors were cheated, themselves ruined, and their trade and everything swept away. He agreed with the suggestion that five days should be substituted for three days. On behalf of a vast number of small traders, who under pressure were tempted to indulge in bills of sale in the hope that they might relieve themselves from some pressing difficulty, he gave his warm support to the Bill.


said, on the part of the Government, he did not propose to offer any opposition to the Bill, and he thought the House, and the commercial part of it in particular, was indebted to the hon. Member for Gloucester (Mr. Monk) for the trouble he had taken in the matter, and for bringing it in, as no doubt an alteration in the law was necessary in order to remedy a great and growing abuse. There was no doubt whatever as to the existence of that abuse. It was a well ascertained fact that the practice of giving bills of sale had enormously increased since the Act of 1878, and was the means of leading thousands of honest and respectable people to their ruin. The hon. and learned Member for Bridport (Mr. War-ton) had pointed out that the Bill went very far in the direction of abolishing bills of sale altogether. In that respect, the Bill, he believed, embodied the recommendations of the Committee of last year, which were substantially unanimous; but it would be a matter for the House to consider, when it got into Committee upon it, whether they should agree to all the clauses of the Bill as it stood, and whether so very large an alteration in the present system as the measure proposed to effect, could be safely made at once. He thought that the clause which would prevent any bill of sale being given on stock might operate harshly, especially in cases where the borrower had paid for his stock. Again, the clause which prohibited bills of sale being given in respect of loans under £50, would practically prevent the working man from raising money on his goods. These two clauses, taken together, would doubtless affect five out of every six transactions of this nature that were legal under the existing law. The mere fact that such a large number of bills of sale were given in the course of the year seemed to imply some necessity, or at all events some demand, for the convenience of the different classes of the community, and, of course, it would be open for the consideration of the House in Committee whether the evils and abuses complained of might not be remedied without such an entire reverse of the existing system as the Bill proposed. It must be remembered, as a curious circumstance, that the great abuses and scandals which now attached to bills of sale were due to the Order and Disposition Clauses—clauses which were introduced into the Act of 1878, at the instigation and with the support of the Chambers of Commerce of the country. These Chambers of Commerce were now seeking to repair the mistake made in 1878; but he thought the House would also have to see that in repairing one mistake they did not fall into another. He thought that by extending the period within which bills of sale should become void, where the borrower became bankrupt, to 12 months after their making, and by reversing the legislation of 1878, with regard to the Order and Disposition Clauses, the chief abuses of the present system might be put an end to. Sooner, however, than that the present system should remain unaltered, he should prefer to see bills of sale abolished altogether.


said, he quite agreed with the principle of the Bill, but thought, with the right hon. Gentleman who had just spoken, that if bills of sale were to be retained as a security worth anything, some alteration should be made in Committee in the clauses of the Bill. As they stood at present, it would be impossible to give any reasonable security in bonâ fide mercantile dealings between wholesale dealers and retailers. He would appeal to the hon. and learned Gentleman the Solicitor General for Ireland, to the effect that, if legislation on the subject took place for England, he would take care immediately to have a similar measure introduced to apply to Ireland.


said, he was glad that such a Bill had been brought in. He concurred with the right hon. Gentleman the President of the Board of Trade that it would be better to abolish bills of sale off the face of the earth altogether, rather than to allow the law to remain in its present position. The only remark he desired to make had reference to the speech of the hon. and learned Member for Dewsbury (Mr. Serjeant Simon), whose reason for not extending the period within which a borrower's goods should not be sold was the saving of expense to the person in difficulties; but he [Mr. Heneage) very much doubted whether there would be any real saving of expense, because if the sale took place within a short time after, the result would be that the goods would be sold at a great disadvantage, and by extending the period the sum of money obtained at the sale would outweigh the expense. In the case of agricultural stock, he thought a compromise of five days might be accepted.


said, he was very glad to see that the House practically was unanimous in its assent to the second reading of the Bill of his hon. Friend the Member for Gloucester (Mr. Monk). He quite agreed that one of the most important clauses in the Bill was that which related to bills of sale under £50, and he would point out that the increase in bills of sale since the passing of the Act of 1878 had been chiefly in those under that sum. While in 1877 the number of bills of sale under £50 was 4,802, it had increased in 1880 to 38,177, showing an increase of 800 per cent. On the other hand, the number of bills of sale for over £50, which was 10,934 in 1877, had only increased to 17,336 in 1880, being an increase of only 60 per cent. He was unable entirely to agree with what had fallen from the right hon. Gentleman the President of the Board of Trade (Mr. Chamberlain) as to securities upon the floating and changing stock in the trade of a retail dealer. He considered it unsound in principle that a trader should be able to give a preferential security to a particular creditor over goods which he might hereafter purchase, and which he might never pay for; and, considering the enormous rate of interest charged by the lenders—at the least as much as 50 or 60 per cent—he believed such loans did the greatest possible injury to the borrowers. He supported the Bill of his hon. Friend in the belief that it would effect an important and a most beneficial improvement in the law.


supported the Bill, and suggested that there should be no sale until after seven days' seizure of goods—certainly not until after five days.


said, he had to most gratefully thank the House for their general concurrence with the provisions of the measure. When the Bill got into Committee, he should be willing to adopt the extension of days as suggested.

Question put, and agreed to.

Bill read a second time, and committed for Monday next.