§ Order of the Day for the Second Reading, read.
§ LORD BEAUMONT
moved the Second Reading of his Bill bearing the title of "Purchase of Lands Facilitation, by means of Trust Funds (Ireland) (No. 2) Bill." The noble Lord, in supporting the measure, referred to the Act passed in 1830, commonly known as "Lynch's Act," which related to the lending of money on landed estates in Ireland. By that Act trustees were authorised to lend trust funds on landed security in. Ireland, even in cases 201 where no such power was created by the instrument of trust. He (Lord Beaumont) did not defend that Act; but as the Legislature, whether rightly or wrongly, had adopted it, he thought those persons who had acted on the faith of it should be protected. A great deal of money had been lent under that Act, and trustees considered that they had a good and perfect security; and in many cases they were still satisfied with the security they held. But since the passing of that Act, the Encumbered Estates Act had become law, and it gave power to creditors to enforce a sale of the land on which they had a mortgage. The last mortgagee might throw the estate into the market, and under the last-named Act the prior mortgagee, who was generally a trustee, had not power to bid at the sale. He could not prevent the land going at a price much below its value, while if he had the right of bidding, he might buy it in. Thus it clearly appeared that in the present state of the law, the first mortgagee was robbed of his money when the estate was sold under its real value. By the Bill he proposed to give power to trustees to protect their cestuique trusts, by enabling them to bid, if they thought proper, at any forced sale of the lands on which the trust funds were secured. He would thus prevent the puisne creditor first forcing an estate into the market, then buying it at a low price, and subsequently selling it again, with a Parliamentary title, for double the sum he had given for it. He did not propose to give power to trustees to deal with trust money in a manner they ought not; but only asked for the trustee power to protect the trust. He asked their Lordships to allow money lent in Ireland to be placed on the same terms as in England, where there was the right of foreclosure; in Ireland the trustees could not help themselves as the mortgagee in England was able to do. A mortgagee in England was entitled to be paid off before the land was sold; he could foreclose and hold the land till he was paid, and the land redeemed. The prior mortgagee being a trustee, had no such power in Ireland of protecting his cestuique trust; he was at the mercy of the owner and of the puisne creditor, because the Encumbered Estates Act had given power to subsequent creditors to throw the estate into the market. The noble Lord here read a letter from Mr. Hargrave, containing his opinion on the principle of the Bill, and enclosing the opinion also of Dr. Longfield. The sub- 202 stance of the two opinions was a general approval of the Bill; that the power proposed to be given would be useful; that the power conferred upon the owner by the Encumbered Estates Bill was an invasion of the rights of the prior mortgagee; and that in certain cases the trustee ought to be authorised to purchase. Having read these letters, the noble Lord went on to say that Baron Richards had expressed his approval of the general tendency of the Bill, but bad not entered into the subject so explicitly as Mr. Hargreave and Dr. Longfield. He proposed to give power to the trustee to sell, as he ought to be able to do so when the market was good, as, if he could sell then, the money originally lent under Lynch's Act, could be paid up. The question really was whether the prior mortgagee was to lose all the money he advanced, for as the law stood the trustee could not fulfil his trust, for the security on which the money was lent was taken from him; and all he obtained was a portion of the purchase money arising out of a forced sale in a depreciated state of land and in a glutted market; or, in other words, the question was whether the trustee was to be allowed to buy in the land on which trust funds were lent, and to sell when the estate would realise the full amount of the mortgage, or whether the whole of his security was to be taken from him by other parties. The power he proposed to give the trustees would only be used for the benefit of their trusts. When large estates in Ireland were brought to the hammer under the Encumbered Estates Act, they sold for little or nothing; there were no bidders; the parties most interested in keeping up the value of land were excluded from the market; land jobbers bought, and the sum given did not pay off even the first incumbrancer; but he hoped, if Parliament sanctioned the principle of his Bill, that its operation would enable trustees to realise the whole amount of the mortgage. The Encumbered Estates Act was forcing sales, causing a glutted market, and excluding purchasers. Their Lordships might rely upon it that, as things were now going on in Ireland, unless they adopted some measures with the view of inducing capital to go into that country, and enabling parties to manage their property advantageously, they would make the Encumbered Estates Bill a most dangerous measure, against which the hostility of the country would eventually be directed. If his measure were passed, he had no doubt that capital would make its way 203 there under a wealthy proprietary, and that the prosperity of the land would be promoted. He proposed in the next place to enable trustees to lend money to a person willing to buy, but who had not sufficient means of his own to go into the Encumbered Estates Court and purchase. Thus the sale of property would be facilitated, and deserving parties assisted; and to his portion of the Bill he understood the Lord Chancellor of Ireland could see no objections whatever.
§ Moved—That the Bill be now read 2a.
The LORD CHANCELLOR
trusted that their Lordships would not allow the money provided for their children by men long gone to their graves, to be transported to Ireland for the purpose of remedying any defects in the Encumbered Estates Act. The people looked to this House for the protection of their property. He thought there had already been some departures from that protection, which, for the honour of the House, their Lordships ought not to have adopted. He thought the present Bill was one of that character, the effect of which would be to extend a Bill of that class, which was passed some years ago. Property in Ireland had become much embarrassed. There was great difficulty in obtaining loans; and, for the convenience of persons in Ireland who wanted the money, and not for the advantage of persons in England, the Legislature passed a Bill to authorise trustees, who had no authority before, to advance money upon mortgage in Ireland? What had been the consequence? Evidently the grossest abuses of trust; and this Bill was, in one part, intended to relieve those trustees from those breaches of trust, and, in another part, to enable them to extend those breaches of trust. The trustees of infants and married women had lent money upon mortgage, and the noble Lord said every farthing was to be lost. Did Parliament expect, when it gave authority for the investment of money in Ireland, that the trustees would come back and say, "We have executed the trusts contrary to the will of those to whom the property formerly belonged; Ave have withdrawn the property of those who could not protect themselves from investments of security, and lent it in Ireland, and now there is no chance of getting a shilling back unless you give us further power to become purchasers of the estates on which the property is advanced." The Legislature Was first juggled into permitting an abuse of trusteeship, and was now to be juggled 204 into a permanent investment of trust funds in Ireland, intended to meet the exigencies of the families of the testators. It might or it might not be correct that there was no chance of recovering the property; but, at all events, let the trustees remain subject to the liability to make that property good.
The LORD CHANCELLOR
The noble Lord said they were not liable. He (the Lord Chancellor) believed he was labouring under a mistake. The trustees were limited in the investment of trust funds upon the security of lands in Ireland, in the same way as in England and Wales. They were not relieved from the responsibility of lending upon improper security. In England trustees were allowed to advance money upon mortgage; but the Court of Chancery said, "Take care what you advance upon; you shall never advance upon a second mortgage, nor beyond two-thirds of the value of the property, nor upon any property on which a prudent man would not advance his own money." He (the Lord Chancellor) said, if these trustees had lent their trust moneys upon improper security, they were responsible for an abuse of their trusts. The Bill which authorised the investment of money in Ireland, placed trust funds in a position different to that in which they were left by those who provided them, and, therefore, that Bill ought to have been strenuously opposed; but it was never intended to withdraw the common protection, requiring the investments to be made upon good security. The object of the Encumbered Estates Bill was to turn into money the funds which had become invested in Ireland, but were always intended to remain in money. Was the prosperity of Ireland such as to authorise the permanent investment of trust property in that country? The noble Lord said by and by the estates would produce all the money. He (the Lord Chancellor) asked, When? and echo answered, When? He had stated truly the effect of the first part of the Bill, and he called upon their Lordships to do justice to infants and married women who were likely to lose those trust funds by rejecting it. The Encumbered Estates Act being, as the noble Lord said, very bad, and very cruel, and very unjust in its operations, the second part of this Bill was to afford a remedy. But how? By perpetuating the authority of the Commissioners in the hands of the Court of Chan- 205 cery in Ireland. An evil was complained of, and they were asked to protract it. He (the Lord Chancellor) begged to move, as an Amendment, that the Bill he read a Second Time that day Six Months.
§ Amendment moved, to leave out "now," and insert, "this day Six Months."
The EARL of GLENGALL
observed that the Encumbered Estates Bill was introduced by the Government with the hope of diverting English capital to Ireland. Upon that Bill he charged all the mischief that the noble Lord (Lord Beaumont) had described, and he considered Parliament was degraded and disgraced so long as it allowed such an arbitrary law to remain on the Statute-book. Before its enactment, property in Ireland generally was worth twenty years' purchase; in the north of the country it was worth a great deal more; and in Galway and Kerry about eighteen years' purchase. Thousands of acres had since been sold for between ten and eleven years' purchase, and more than a million of the money of those who had advanced it, on the supposition that Irish estates were worth more than twenty years' purchase, had been already totally lost. It was very pleasant for the owner of an estate owing 20,000l. to get his estate sold, and to buy it in, through some friend, for 10,000l., because he thereby wiped out a clear 10,000l. of debt. But the creditors were cheated of that amount, and he could bring before their Lordships half a dozen most flagrant cases, in which the most infamous frauds had been in that way perpetrated. He considered it was one of the causes which had led to the immense tide of emigration which had set out from Ireland, and to the frightful depopulation of that unhappy country. Still, whilst abusing the Bill, he should be sorry if it were supposed he was abusing the Commissioners. He believed they had endeavoured to get the best price they could for the estates, and to them no blame could attach. The condition of Ireland was a lamentable thing to consider, and they should use every means to raise and improve it. The population was this year two millions less than it was in 1840, whereas it ought to be two millions more. In conclusion, he hoped their Lordships would pass the Bill. There was one clause to which he objected, but that could be amended in Committee.
§ LORD BEAUMONT
replied. The Lord Chancellor, though he had made an effective speech, seemed not to have read the Bill.
§ LORD BEAUMONT
contended that the noble Lord, judging by his speech, must have mistaken its import. The fact was, that the money had already gone to Ireland, and there was no way of getting it back, unless, by this Bill, the trustees were enabled to purchase and resell. The trustee had perfect security when he originally lent the money, for the land could hot be sold; but under the Encumbered Estates Act, which had an ex post facto effect, there was a power given to sell for a mere trifle, and thus the property was taken from the trustee for ever. The Bill would enable trustees in Ireland to be placed on the same footing as mortgagees in England. The three Encumbered Estates Commissioners had given it as their opinion that some such measure was rendered necessary by the circumstances of the case. He would, of course, record his vote in its favour; and he believed it would some day or other pass, for there were very many parties who were now demanding it.
§ On Question, that ("now") stand part of the Motion, their Lordships divided:—Content 3; Not Contents 16: Majority 13.
§ Resolved in the Negative; and Bill to be read 2a on this day Six Months.
§ House adjourned to Monday next.