LORD BROUGHAMmoved the Second Reading of the Bankruptcy and Insolvency Bill. It was not necessary he should go at length into the question; he should merely state, as succinctly as possible, the object of the present measure. Their Lordships had passed a Bill having the effect of abolishing imprisonment for debt in cases where a party, giving up all his property to his creditors, petitioned the Court of Bankruptcy for protection. Where no fraud or gross extravagance appeared to have existed, the debtor was entitled to a final 257 order protecting his person from arrest for the same debt. He proposed to make little or no alteration in that law, but only to effect some changes in the machinery by which that relief was afforded, and to transfer to the Insolvent Commissioners the jurisdiction given to the Bankruptcy Commissioners. His reason for this was, that in practice it had been found most inconvenient to mix up two different codes of laws; it had been found that a strong and incurable objection existed among parties themselves, among the merchants and tradesmen of the city of London, as well as among the solicitors and attorneys, to come to the Insolvent Court to work a bankruptcy commission. But insolvents flocked to the court, as they could find relief nowhere else. The reluctance on the part of men reduced by misfortunes and losses in trade to bankruptcy to resort to this court, had very much diminished its efficacy in administering the bankrupt law; and the result was, it became necessary to make some separation of the two branches. The six Bankrupt Commissioners received at present 2,000l. a year each, and were by no means overworked, not from any fault of their own, but because there was no work for them to do. They sat on an average four hours a day for fifteen or sixteen weeks in the year without the insolvency business, and nineteen or twenty weeks including it, and were assisted by a registrar at 1,000l. a year, and official assignees at no less than 1,500l. a year. Now, he thought this was a very expensive machinery for doing so little business. The remedy be would apply was to take away the insolvency from the Bankruptcy Commissioners, giving it to the Insolvency Commissioners, giving them the powers which the Bankruptcy Commissioners had; and to reduce the number of Bankrupt Commissioners to three. He knew there was an opinion that two Commissioners could do the business; but he did not wish to cut down the number so close, because, as was well known, crises took place in mercantile affairs which at the time greatly augmented the bankruptcy business. As to the Court of Review it had been substantially abolished, for the vacancies in the office of Judge had not been filled up; and one of the Vice Chancellors had devoted two or three weeks to the duties, and very efficiently performed them. There was, therefore, no reason why the original business of that court should not be transacted by the Commis- 258 sioners; and appeals on points of law, but not on certificates, he carried before the Lord Chancellor or one of the Vice Chancellors. It had certainly turned out that the Court of Review had been much underworked; but that result could not have been foreseen at the time of constituting that court. The expense, therefore, of the Court of Review would be saved to the public, and the number of the Commissioners would be reduced from six to three. The new system had worked admirably well, far beyond his most sanguine expectations. The Bankruptcy Commissioners had set themselves to work up the old commissions, and nearly 2,000,000l. of money had been reclaimed under them, and distributed among the creditors of old estates, and many persons had by this means had their bankruptcy superseded by paying 20s. in the pound after a lapse of twenty-five years. Two branches of business were connected with the Insolvent Court—the one was the permanent sittings in London, and the other the circuits performed by three Commissioners, three times a year, each occupying six weeks. The circuits taken by the Commissioners were a great expense, and useless as well as expensive, if the business could be as well done by a gentleman resident on the spot; and he might mention by way of illustration that Mr. Commissioner Philips had to go all the way to Carnarvon, a distance of 225 miles to try one insolvency case. He proposed then to abolish the circuits of the Insolvency Commissioners, and vest the jurisdiction in the local judges who had been recently appointed by an Act brought in by the late Government, and carried out by his noble and learned Friend on the Woolsack. He understood that his noble and learned Friend upon the Woolsack had appointed very good judges; but he feared that he must have been overwhelmed with the number of applications for the appointments, for he (Lord Brougham) remembered that when he had only ten commissions to give away he received 1,700 applications.
LORD BROUGHAMsaid, he could only wonder, then, that his noble and learned Friend was alive to tell the story. According to the territorial divisions prescribed by the Local Courts Act, no person would have to travel more than eight miles to find a judge; and it must be evident 259 that it would be most convenient to transfer the country insolvency jurisdiction to the newly established tribunals. He doubted even whether this ought not to be carried further, and these local judges be enabled to administer bankruptcy as well as insolvency. The Bill did not propose that; but only to transfer insolvent business to the local judges. It might well be considered, however, in a future stage of the Bill, whether the measure might not beneficially be so extended. The only point of any importance where the present Bill interfered with the law of bankrupts and insolvency, was in the case of the present protection between traders and non-traders. The difference between bankruptcy and insolvency was twofold. First, as to persons, the bankrupt being a trader, and the insolvent not; secondly, as to property, for the bankrupt was discharged not only as to his person, but as to future acquired property—while the insolvent was discharged only as to his person, and not as to future acquired property. The reason for the distinction was this—that a trader could get no person to trust him unless he were protected as to future acquired property; but it would be unfair to apply that rule to a gentleman or nobleman, the heir to an estate, and say that the property of which he might hereafter become possessed should not be applied to the discharge of his debts. By the provisions of the present Bill the Commissioner in Insolvency would be invested with power to take into consideration all the circumstances of the cases which might come before him. The Commissioner would have to satisfy himself that an insolvent had no prospect of succeeding to property—that his insolvency was attributable to misfortune, and not to wilful extravagance—and, above all, that he had not lain by and spent all the money he had—which, if he was insolvent, was his creditors', and not bis—but had applied to the court for relief whilst he had it in his power to pay a dividend of 4s.s or 5s. in the pound. The Bill provided, that if the Commissioner should be satisfied upon those points, he should be empowered to grant an insolvent protection as to future acquired property. He had now stated all that was material with respect to his Bill; and if it should be read a second time, he would allow it to stand over until after the holidays, and then, perhaps, the best course to be taken would be to refer it and another measure upon the same subject, which had been introduced by his noble 260 and learned Friend on the Woolsack, to a Select Committee. The noble Lord concluded by moving that the Bill be read a second time.
The LORD CHANCELLORsaid, that it was not his intention to oppose any obstruction to the Motion for the second reading of his noble and learned Friend's Bill. In many of the objects sought to be attained by the Bill, and in many of the observations made by his noble and learned Friend, he entirely concurred; indeed, the major part of the provisions of the present measure were nearly identical with those contained in a Bill which he (the Lord Chancellor) had introduced. It was very desirable that the subject should be investigated by a Select Committee, in which all the legal knowledge of the House might be brought to bear upon it. It might not be improper in him to express a doubt as to the expediency of deciding upon matters of detail, with respect to questions which were at present in an unsettled state; such, for instance, as the question as to the necessity of maintaining the existing distinction between bankruptcy and insolvency. It appeared to him, also, that until the amount of the business which would devolve upon the new local courts had been ascertained by experience, it would be unwise to transfer the country insolvency jurisdiction to them. The noble and learned Lord looked forward to the possibility of transferring some part of the bankruptcy jurisdiction to the same tribunals; but, for the reason he had just assigned, he could not at present express a decided opinion with respect to that proposition. It certainly was his opinion, however, that some alteration of the jurisdiction in bankruptcy was imperatively called for. Under the law as it stood, if a bankruptcy took place in Norfolk, it was impossible to take a step in the business without bringing up the bankrupt, his agent, and witnesses to London. A deputation which had recently waited upon him from Brighton had informed him that, notwithstanding the facility of communication between that town and London, the circumstance of parties being compelled to come to the metropolis, operated to prevent many cases of fraud from being investigated.
§ LORD ASHBURTONsaid, that if he had been aware that the second reading of the Bill was fixed for that evening, he would have presented a petition upon the subject which had been placed in his hands, and which was signed by some of the 261 leading traders of the city of London. The importance of the subject under their Lordships' consideration might be estimated from a statement contained in the petition to which he had alluded, namely, that 24,000,000l. sterling were annually lost to the trade of the country by bad debts, in some shape or other. When their Lordships heard that, they could easily imagine the importance which persons engaged in trade attached to an alteration of the laws of bankruptcy and insolvency. The petitioners maintained, that without a recurrence to the law of arrest under mesne process, guarded as it might be from abuse, they did not see the possibility of getting rid of the present evils. He begged to say, also, that he saw no mode of dealing equitably and fairly in the cases of debtor and creditor, without making a distinction between insolvents and bankrupts, because the cases were totally different. Their position in society was different, and their condition of moral delinquency in contracting debt was also totally different.
LORD BROUGHAMsaid, that what had fallen from the noble Lord who had just spoken, had the greatest possible weight with him, not merely from the position which he at one time held as one of the first merchants in the world, but also from the great acuteness which he always displayed in matters of business. He was most anxious that the whole subject should be discussed in Committee; and if it should be found that they had committed an error in abolishing imprisonment for debt, he should feel it was their duty to reconsider that subject. He owned, however, that in his opinion, it would be impossible to revert to that system. With respect to the difficulty of giving jurisdiction in these cases to the judges of the local courts on account of the additional labour, he was informed by Mr. Commissioner Phillips, that in the whole of his circuit through nineteen counties, including Lancashire and Yorkshire, he had had so few insolvency cases, that during the whole of six weeks he had only to sit seventy hours to dispose of four months' arrear of them. It could not, therefore, add more than about an hour's duty to each of these judges; and the commencement of the Act could be postponed until they had become fully initiated in their new duties. He agreed with his noble Friend that it would be well if they could commence by agreeing upon some general principle; as, for example, assimilating the law of insolvency and 262 bankruptcy, and applying it to all persons. It was his belief, however, that they would find this impossible; for he thought neither their Lordships nor the Members of the House of Commons would feel disposed, from patriotic motives, and still less for the sake of assimilating the law, to render themselves liable to be made bankrupts. As he had stated, however, he was quite prepared to reconsider the question, as well as that of arrest for debt, for the late alteration in the law having necessarily been in a great measure experimental, would be most wisely brought again under the notice of the Legislature.
§ Bill read 2a.