The Earl of Liverpoolrose, to move the second reading of this bill. In the first place, he wished to call their lordships' attention to a petition in favour of the alteration in the law now proposed to be made. That petition was signed by almost all the respectable merchants of the city of London—by persons who represented every kind of commercial interest; so that there never had been among merchants a more general concurrence in favour of any measure. It was now his duty to call their lordships' attention to the question which this bill involved. The subject was somewhat abstruse, and to a person who, like himself, was little acquainted with the details of commerce, presented some difficulties. He should, however, endeavour to state as briefly as possible the general grounds on which be wished to recommend the bill to their lordships' consideration. It was to be expected, in the present state of the trade of this country, that many cases would arise, in which the operation of laws enacted at an early period would prove embarrassing—laws which, however proper and politic in their origin, had become totally incompatiblewith the present complicated state of commerce and society. Nevertheless, in any alteration of the law, their lordships would take care not to give their sanction to any thing inconsistent with the general principles of equity, or the existing relations of commerce. With regard to the law of merchant and factor, if the mere principle of the contract of these parties with each other were considered, there could be no doubt that the agent ought to be bound to the principal: but, a new question 1059 arose as to the interests of a third party. The transactions of this kind of trade were not now confined to the single act of merchants delivering goods for sale into the hands of their known factors. Almost the whole commerce of the world was now carried on by commission. The state of trade rendered it impossible for any person in a foreign country to do more now than to make a general consignment of merchandise, which left to the discretion of the agent or factor to determine when he should bring the goods into the market; and if it should not be a proper time for throwing the article into the market, it was often necessary that he should be able to raise money upon it by pledge. There was no doubt that the factor was bound by the instructions he received from his principal. But here came the difficulty with respect to third parties. The factor proceeded to raise money on the goods intrusted to his charge. What could the third party know of the state of the case? Was the person who negotiated for money on the goods the owner or an agent? If the latter, were his instructions limited or unlimited? This he had no means of ascertaining. He would, of course, know that money was to be raised on the goods; but there was no possibility of his knowing any thing more of the ownership than the fact of possession, unless the possessor chose to make disclosures to him. Now, supposing fraud or bankruptcy, was the loss to fall on the principal, or on the pledgee who might have advanced money on the goods? It was said, that if the factor's instructions were merely to sell, he could not pledge; and that in the case of his pledging the loss ought to fall on the pledgee. Such was the state of the law. But, that the loss should so fall appeared to him to be wrong on four grounds:—1. It was contrary to the principles or natural equity. 2. It was contrary to analogy. 3. It was contrary to opinions delivered on the law by very high authority. And 4. It was in opposition to the state of the law in other countries. He thought their lordships would readily admit, that the liability of the third party was contrary to the principles of natural equity, because the pledgee had not, in many cases, the means of knowing any thing more than the fact, that certain goods were in the possession of an individual who wished to raise money upon them. He might have little or no know- 1060 ledge of the character of the factor, and act on the presumption, that there was no fraud: but it might be assumed, that the principal was well acquainted with the person he employed as his agent: he must have a control over him: he could limit or restrict him, or deprive him of all authority to act. A principal, doubtless, might be defrauded by a dishonest agent; but still it ought to be recollected, that the principal must know his agent, had a power over him, and stood with respect to him in a very different situation from the pledgee. The person who advanced money saw nothing, probably knew of nothing, but the goods; and therefore, upon every ground of equity, if there was a loss, it should fall upon the principal or the agent, and not upon the pledgee. The present state of the law made a distinction between possession and title to merchandise; but, he did not see how it was possible for trade to be carried on, if possession were not allowed to be primâfacie proof of title. The petition on the table prayed, that this might be the law; and the greater part of the commerce of London, and two-thirds of the foreign trade of the country, already rested on this principle of general equity. He had also said, that a change of system was recommended by analogy. In support of this opinion he would refer to money transactions. With respect to Exchequer bills, and indeed bills of every description, the principle of protecting the pledgee was sanctioned by law. If any person consigned Exchequer bills to another, who pledged them to a third party, there was no doubt that the pledgee had a right to the property. Therefore, with regard to all kinds of money securities, the law made possession equivalent to title. He did not see why the same protection should not be given to the pledgee in all commercial transactions at was already given with regard to Exchequer bills, bills of exchange, and other money securities. He came now to the point of authority. The first decision which led to the course now acted on being considered law, took place in 1742. Here the noble earl entered into the history of this case, and others which had more recently taken place, and quoted the opinions of lord Ellenborough, and Mr. Justice Le Blanc, who had regretted that the law should be as it now stood. To these two opinions he referred as sufficient authority for altering the present state of the law. He 1061 came now to the last point of consideration, which was, that the law, as it now stood, was Contrary to the state of the law on the same subject in other countries. That where there was no fraud or the part of the lender, the principal should suffer for the acts of his agent, was a principle not only recognised and enforced in every other country of Europe, but uncontradicted by the law of any country, except that of England, and the United States of America, who had borrowed their laws from England. The protection he proposed to afford to the pledgee was even at this moment the law of Scotland, On these grounds he recommended the adoption of this bill, convinced that it was founded on principles of justice and equity.
The bill was read a second time.
EQUITABLE LOAN BILL] Counsel were called in, and Mr. Harrison resumed his argument on behalf of the promoters of the bill. When counsel had concluded, a conversation ensued between their lordships on the question, whether evidence should be heard on the part of the Equitable Loan Company, to prove that the tendency of the Company's operations would be beneficial to the public, and that the conduct of the pawnbrokers was such as required to be counteracted by a more humane society.
The Lord Chancellorthought that the first question to be disposed of was, whether this company was a legal company or not. It. was confessed on all hands, that its legality could not be supported before it had. executed the deed of partnership. It was still a question whether the execution of that deed made it legal. If it was not legal, their lordships, by hearing evidence of its utility, would acknowledge that on that ground they were about to make a law, granting privileges to an illegal body, to enable it to serve the public., It was a totally different question whether, if they applied to be made a legal body, the House would agree to a bill for that purpose. They assumed that they were a legal body in coming before the House, and on that ground they asked the privilege of suing and being sued by their officers. Their lordships ought, therefore, first to determine whether this pretension was founded in truth. With regard to the hearing of evidence against the conduct of the pawnbrokers, an objection of another kind 1062 might be started. Suppose they could prove that twenty or fifty London pawnbrokers had misconducted themselves, would that enable their lordships to decide upon the rights of the rest? And, suppose it did so with respect to the London pawnbrokers, would the rights of the other pawnbrokers all over England be affected by the decision without being heard in their own defence? If so heard, when would the proceedings on the bill terminate? Their lordships might be sitting examining evidence on that day twelvemonth. He was of opinion that the legality of the body who promoted this bill must, be proved, before evidence could be heard as to its utility.
§ Lord Dacrethought, that by proving its public utility, it would establish a claim to the privileges which it solicited.
Mr. Fonblanque ,the recorder of London, and Mr. Andrews, were then heard on the part of the pawnbrokers. After which a conversation ensued between their lordships, on the course which ought now to be pursued.
The Lord Chancellorgave it as his opinion, that the evidence tendered on the part of the company ought not to be received.
The Duke of Athollsaid, he hoped that something might be done for the poor, whose interests the bill professed to consult. It might be liable to objections, but its object was benevolent. He could not concur in the coarse charges thrown out against its supporters, in which they were treated as little better than swindlers. He had looked at the names subscribed to the deed, and he found them honourable. In proposing to reduce the interest of money lent on pledges to the poor one half, they would do a public service.
The Earl of Lauderdalesaid, that the company did not propose to lower the interest on their advances so much as the noble duke had stated. He, likewise, had looked over the names of the subscribers; and he could cite two foreign gentlemen for whose respectability, probably, the noble duke would feel a little difficulty in vouching, who owned more of the stock than the whole Board of Directors.
The Lord Chancellorinformed the counsel that the evidence tendered to prove the beneficial nature of the company could not be received. He then asked the counsel for the bill, whether 1063 they were prepared to produce the deed to prove the company a legal body; it being understood that if they did not, they must take the consequence.
Counsel, having hesitated, were allowed till five to-morrow to decide.