HL Deb 05 June 1849 vol 105 cc1138-48

rose to present a petition from a large commercial city on a subject of very great importance that was about to be brought under their Lordships' notice. The petition was from the city of Glasgow, and was signed by names of the first respectability in that great commercial city, and would have been signed by a much larger number than it had been if time were allowed. The petitioners stated that though they did not reside within the realm of England, yet they viewed with very great interest the improvements that were proposed to be made in the English law of bankruptcy by the measure now before their Lordships, and they prayed that their Lordships would, with all convenient speed, pass that Bill into a law.


said, he had had some correspondence with these Glasgow petitioners, and he could, therefore, hear testimony that the allegations of his noble and learned Friend with regard to the position of the petitioners were strictly correct. Though they were few in number, yet they were of great weight and value. It was quite a mistake to suppose that persons in their position had no interest in the bankruptcy law of England; for, in consequence of the mutual trade that subsisted between Scotland and England, they had the greatest possible interest in the law of debtor and creditor being-put upon a proper footing in England. He would only add that these petitioners were not themselves alone, but that they were the exponents of the feelings and interests of a large class of their fellow-subjects. His Lordship then presented a great number of petitions upon the same Subject. The first petition was from the borough of Manchester, and was signed by 3,918 persons, all of them in the highest position as merchants and traders in that city. As a proof of the interest which was taken in the question in that city, he might state that a subscription had been entered into to defray the expenses which the committee had been put to in collecting evidence, &c., and in ten minutes the sum of 1,000l. was subscribed. He might also add, that, though the bankers were not, as a class, much interested in the bankruptcy laws, except from their goodwill towards the trading community in general—for, it was to be observed that bankers were the debtors of their customers, and never their creditors, except in the rare case of a customer being permitted to overdraw his account, or having his bill dishonoured—yet, notwithstanding this, eighteen London bankers had subscribed ten guineas each towards defraying the necessarily heavy expenses of the London committee. There was another petition from the Chairman and Committee of Management of the London Association for the Protection of Trade. The next petition was from the borough of Salford, signed by 826 persons. There was another petition from the Manchester Association for the Protection of Trade. Another petition was from the bankers, merchants, and traders of this metropolis. There were also petitions from the merchants and traders of Plymouth, of Coventry, and of Dudley. In proceeding to move that this Bill be recommitted, he said he had so often trespassed upon the attention of their Lordships upon this subject, that he would refrain from troubling them now at any length. Their Lordships were aware that the Bill was prepared in the early part of last Session, and that it consisted of two parts: the first being a consolidation of all the different statutes relating to bankruptcy now in operation, consisting of 375 parts, and presenting a valuable digest of the whole. The next was the improvement of the bankruptcy law as it at present existed; and while he admitted that it might be susceptible of still further improvements—for where was the human measure that was not?—yet he should be doing great injustice to his measure if he did not say that it contained important and most valuable improvements. In the first place, it simplified and extended those parts of the present bankrupt law which related to the prevention of undue dealings with the property of bankrupts, and would render the task of further improvement more easy and practicable. In the next place, there was a very important improvement to prevent fraudulent concessions, preferences given to creditors who might be personal friends, and preferences given to creditors who had no claim to relationship, but who—which was a most gross species of fraud—who undertook to pay the bankrupt tradesman for the preference; and, lastly, preventing the giving a preference to the bankrupt's family relations, which often went to a great extent. As an instance, he might mention a case which had come before his friend, Mr. Commissioner Fane, where the mother of the bankrupt claimed for a debt—pro-bably a fraudulent one—to the extent of 1,500l., and a preference was given to that party at the expense of the other creditors. All this had been carefully sifted, attended to, and guarded against, so as to make these eases scarcely possible to occur under the new system. Another improvement was, that certain acts of insolvency, which formerly did not make a man bankrupt would now make him one. The next improvement was the jurisdiction of the Bankruptcy Court. He had rejected the principle of rotation of officers—that was, that when a vacancy occurred in the metropolis the senior commissioner in the provinces was to be promoted to the vacancy. He had rejected this, because he felt that a man might be a very good commissioner at Exeter, where there were probably not more than twenty or thirty cases a year to try, and yet might not be fit for a commissionership in London, where he would have 200 or 300 cases in a year. But he also objected to it on the ground that they ought not to fetter the Great Seal in his appointment of officers. Where selection was prevented, there responsibility ceased; and how could they complain of a bad appointment, or hold the Lord Chancellor responsible for it, when he was obliged to appoint the name thst stood first in the list of rotation? He had, therefore, got rid of that principle altogether, and left the Lord Chancellor unfettered in his appointments, and therefore fully responsible for his selection. The same principle was observed with regard to the registrars. Another improvement was, that he abolished the increase of 500l. given to the chief commissioner, and 300l. given to the chief registrar, as he could see no possible reason why they should have that increase of salary; and, farther, he proposed to reduce the number of commissioners from six to four. He did not think that was too great a reduction, as the commissioners at present only sat on the average two days a week, and the reduction of their number which he proposed would not make them sit more than four days a week. He had at one time thought of reducing the number to three; but though he believed that three commissioners could do the work sufficiently well in ordinary times, yet if there were again to come—which God forbid! but which might come at any moment—another commercial crisis, the commissioners might then be overwhelmed with business, and therefore he did not think it would be wise to reduce the number to a bare adequacy to discharge the ordinary duties of their position. He had therefore, with the approbation of his noble and learned Friend who now held the Great Seal, struck out of the Bill the clauses relating to the increase of salaries to the chief commissioner and the chief registrars, and had inserted clauses reducing those officers from six to four. To the proposition for restoring arrest on mesne process, he had not been able to give his consent, although many of the petitioners had strongly urged it. The next point was, in relation to the course of the legislation for some years past respecting debtor and creditor. For many years past the direction of their legislation had been to provide for the debtor at the expense of the creditor. Debt, if innocently incurred, was a misfortune, and not a fit subject for imprisonment as a punishment. Both now and in the former Bills he had introduced into the House of Commons, he had always kept three points in view for which debtors ought to suffer imprisonment—cases of fraud; cases of contumacy, such as refusing to answer questions, or to give up property; and cases of gross extravagance, in contracting debts where the parties had no reasonable prospect of paying, which was a case of fraud, though it was not usually so denominated. In all these cases there was crime, and therefore he thought imprisonment was a fit and proper punishment. This power of imprisonment had been carefully considered by the Committee which sat last year, and the result had been that a considerable change had been made in the Bill which was submitted this year to a Select Committee—a change which would give a more efficient remedy to the creditor, and would be a greater infliction on the debtor, but only in those cases where too much lenity was formerly exhibited towards him. Primâ facie the creditor was in the right, and the debtor in the wrong. Primâ facie the creditor was the injured, and the debtor the injuring, party. The presumption was against the debtor, and in favour of the creditor; and hence in the present Bill he had acted upon the principle of giving the creditor all the help he could to recover his debts; for it was quite clear that the creditor suffered even where there was innocence on the part of the debtor, and therefore his case most deserved the attention of the Legislature. Having given this outline of the measure, he would now give a short outline of its history in this House. The Bill, as he said, had been introduced in the early part of last Session; and the committee of merchants and traders who watched the Bill, were for some time at issue with himself and some of his noble and learned friends. The committee wished to restore arrest under mesne process, under certain and very great restrictions; but, after mature consideration, he could not consent to that course. No doubt the arrest under mesne process was very convenient to the creditor, because it enabled him to arrest the debtor before his means were altogether exhausted. But then it gave him too much. If a man were arrested and threatened to be carried off to a sponging-house, where he must be for two or three days to give notice of bail, he would rather pay all demands, however exorbitant, than be liable to such restraint; and besides, the feelings of relations were worked upon, and they paid for him. He therefore objected to the restoration of the arrest under mesne process, and the consequence was, that for some time there was a species of histility—of a very mitigated kind, it was true—between the committee and himself. The Bill was referred to a Select Committee, and he (Lord Brougham) obtained leave that the objectors should attend the Committee—that they should bring forward as many witnesses as they pleased—that they should cross-examine the witnesses on the other side; and he (Lord Brougham) aided them, by endeavouring to bring out points in their favour from some of the witnesses. They had thus all the practical advantages of being themselves members of the Committee; and the result was, that at the end of the investigation there was an almost entire agreement in favour of the measure as it now stood. The Bill as thus amended was printed at the end of last Session, and was allowed to stand over for further examination. In the course of this Session, the Bill was again referred to a Committee, which proceeded in the same irregular but highly convenient way; and the consequence was, that they came to a full and entire agreement respecting the Bill. There was then a further delay, in consequence of petitions being presented from Liverpool, Manchester, and from the Law Association, begging further time for deliberation. He (Lord Brougham) thought they had had plenty of time for that already; but he did not object. He had the Bill printed at the close of last Session; on the first night of the present, he had reintroduced it, and got it referred to a Select Committee. That Committee had been attended by many gentlemen from the provinces—from Manchester, Liverpool, Leeds, Sheffield, and Hull. Many new suggestions were made to the Committee. They were discussed and rediscussed. Those that were valuable were accepted; those that were not so were rejected; and, at last, all parties came to this conclusion, that the Bill, as it now stood, was entitled to the entire, and unanimous, and hearty approval even of those who had at first opposed it. Only one alteration of importance had since been made in it. He had acceded to the objection made by his noble and learned Friend who held the Great Seal, against the creation of an intermediate court of appeal from the decision of a single commissioner. There might be too great a leaning among the commissioners, from courtesy to each other, to confirm their own decrees, and therefore, as he had agreed to dispense with a fifth commissioner, he also agreed to the proposition that there should be an appeal to such one of the Vice-Chancellors of the High Court of Chancery as the Lord Chancellor should appoint from time to time to sit in Bankruptcy. He then proceeded to explain the reasons which had induced the Committee first to introduce into, and afterwards to strike out of, this Bill the clauses which were generally known by the name of the "Deadmen's Clauses." If an insolvent trader happened to die after a fiat was struck against him, his estate could be administered as that of a bankrupt; but if he died before the fiat was struck, no such remedy could be had by his creditors, and their only resource was a creditor's suit, which was a very irksome and very expensive proceeding. To remedy this state of things, he had introduced the "deadmen's clauses." His noble and learned Friend had objected to them on the ground that, if they were made law, there must be a creditor's proceeding and a bankruptcy proceeding too. He had given in to that objection, and had struck out in consequence the "deadmen's clauses." His noble and learned Friend (Lord Cottenham) had pledged himself to provide a remedy for the inconvenience of which he complained; and as a substitute for the clauses which he had struck out, proposed that in the case of a trader only a petition should be presented, without filing a bill or answer subject to the rules in the Master's office, and the practice in the Court of Chancery. The Bill as it now stood had met with the most entire concurrence of the respectable classes in both town and country, to whom he had before referred. They were most anxious that it should at once pass into a law; and some parties in the country, who had been anxious for the adoption of the amendments now introduced, had even declared that they would prefer having the amendments omitted, than that the Bill should be delayed beyond the present Session. The importance of the subject would be apparent when he mentioned the startling fact to their Lordships that upwards of 50,000,000l. a year was lost in this country by bankruptcy and insolvency. Much of this loss was, no doubt, owing to the distressed state of the times, and the convulsed state of Europe; but beyond doubt much of it was owing to the bad state of the laws affecting bankruptcy and insolvency. He considered that two most important effects would be produced by this Bill on trade, and on the morals of the community. In the first place, the trader, who must give credit to a certain extent—for without credit trade could not be carried on—would in future "rive a more limited extent of credit, and would be more cautious in his transactions; while, on the other hand, the debtor, finding the much greater stringency of the law as affecting his proceedings, would find himself compelled to greater honesty, and to greater care and prudence in his transactions, and would feel the necessity of squaring his expenses somewhat more accurately by his means than before. He should have greatly grieved if the adoption of any more stringent measure against the debtors would have led to any greater carelessness in the granting of credit; but in the present Bill, they had, he believed, hit upon the right medium, though, of course, if any further improvements should be suggested hereafter, they could be adopted; and he, for one, would be among the first to give them his best consideration. Before concluding, he felt that he should act unjustly, if he did not give praise where praise was due, and if he did not mention the name of that most meritorious officer of the Bankruptcy Court, Mr. Miller, by whom the invaluable digest of the bankruptcy laws had been drawn up. That gentleman had done a work that many commissioners would have failed to do, in forming an able digest of the entire of the laws affecting bankruptcy in this country. He had only to add that he had received a communication from the Lord Chancellor that day, stating what he had already mentioned to their Lordships, with regard to the amount of salaries; and, with the support of his noble and learned Friend to the measure, he trusted that at this late period of the Session no unncessary delay would be offered to its further progress.

House in Committee on recommitment.


expressed the great satisfaction he felt at hearing from his noble and learned Friend that he thought himself justified in introducing such alterations into the Bill as did not affect its spirit—[Lord BROUGHAM: Its principle]—alterations which had insured the support of his noble and learned Friend the Lord Chancellor, and the best and most learned authorities in that House. So amended and so altered as he had no doubt the Bill would be, he felt, with his noble and learned Friend opposite, that it was of the utmost importance that it should advance without any delay, and should become the law of the land before the end of the present Session. Dry as the details of the Bill might be, they involved considerations of a most popular character, involving as they did the most intimate relations of society, into which they would introduce the most sound and practical amendments; for, when he was told that no means now existed for separating the honest from the fraudulent debtor, and when he found the difficulty to be so great of bringing to account that mass of persons unfortunately so considerable in this country, namely, dishonest debtors, who preyed on the resources of the community: and when he found, as was stated by the noble and learned Lord, that the bad debts of every year amounted to no less a sum than 50,000,000l., an amount sufficient to shipwreck the fortunes of any other country, and attended with a salvage which did not exceed a fourth or fifth part of that large sum—he could not but feel that any attempt to remedy such a state of things, founded as it was on the experience of various bodies of men from all parts of the country, all uniting in approbation of the present measure, was an object of the highest public importance to the country. It was also a matter of the highest social importance; and one of the provisions of this Bill, which he viewed with the highest approbation, was that in which a mode was prescribed for separating debtors into three classes—the virtuous debtor, whose bankruptcy arose from unavoidable losses and misfortunes; the unfortunate debtor, whose conduct was, nevertheless, satisfactory; and the spendthrift, the outcast, the speculating and the fraudulent debtor, whose conduct was not satisfactory, and whose bankruptcy did not arise from unavoidable misfortunes. The commissioners were hereafter to distinguish in their certificates the bankrupts who were not to blame for their misfortunes—those who were unable to meet their engagements, but whose conduct was not blameworthy—and those who preyed on the interests of society, and sacrificed individuals, and even bodies of men, to their own dishonest and nefarious projects. Such a change in the law would work a beneficial effect in the constitution of society itself. Considering, therefore, that the machinery of this Bill, approved as it had been by his noble and learned Friend who generally sat on the woolsack, was a machinery which would be attended not only with economy in its own administration, but also with a larger economy to those individuals who were to be benefited and saved by its operation—considering, also, that it would be subject hereafter to any improvements which experience might suggest, he did hope that it would be received as a boon of great value by the commercial interest; and, hoping so, he trusted that the House would pass it through all its stages with as much speed as possible. He gave his entire concurrence to the Bill, and thought his noble and learned Friend entitled to public gratitude for the laborious attention which he had bestowed upon it.


must give expression to the gratification with which he had listened to the speech of the noble Marquess in support of this Bill; for the approbation and assistance of the Government in a measure like this were of the very first importance. He hoped, therefore, that the Bill would proceed with rapidity through its other stages in that House; and that when it reached the other House of Parliament it would receive from the Government such support as would insure its passing into law even at this late period of the Session. The noble Marquess had alluded to the economy of this plan; but had not declared exactly the amount which would be saved by it to the public. He would therefore state that, on a balance of the reductions made in some quarters, and of the augmentations made in others, there would be a saving to the public of not less than 12,000l. a year. In addition to this, the Bill would introduce the most essential improvements into the law of bankruptcy. He concluded by expressing his entire concurrence in the views of his noble and learned Friend (Lord Brougham), and his great gratification at the approbation of them expressed by the noble Marquess.


considered that in form and substance this Bill was a great improvement on the existing law of bankruptcy. He had no doubt that it would be found in practice extremely beneficial.


observed that there was one explanation which he had forgotten to give respecting this Bill, and which he would now supply. The Bill, as it originally stood, gave to the commissioner, without the intervention of a jury, the power of imprisoning the bankrupt upon his own examination, or upon the bankrupt's own evidence, for a period not exceeding a year, for fraud, for gross extravagance, or for contumacy. That power was objected to, and it was said that the commissioners ought not to be invested with such a criminal jurisdiction, so that a single judge, sitting without a jury should have such a power over the liberty of the subject. He had yielded to that objection, though very reluctantly; for he well knew that the only person who could judge correctly of the bankrupt's conduct was the commissioner who had had cognisance of the whole case. However, the principal evidence in all cases against the bankrupt was his own, and that evidence was not given voluntarily, for if he did not answer a question put to him, he must go to prison; and, therefore, it seemed like punishing a man upon evidence which was extorted from him. Now, that was so contrary to all the principles of our ordinary jurisprudence, that he had consented to strike out that part of the law. The Committee had therefore substituted for it the refusal of protection. The debtor was in such case left to the mercy of the creditor, and the result was the same, for, as protection was refused, he might be imprisoned by the creditor, but not beyond a certain time, when protection was again extended to him.

Bill reported without amendment.

Amendments made.

Bill to be read 3a on Thursday next.

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