LOUD BROUGHAMrose to present a petition from merchants and traders of the City of London who were concerned in the trade with Scotland, on the subject of the Scotch bankruptcy law. After doing so, he said he should certainly feel much disappointed if their Lordships did not favour him with their attention while he stated some matters respecting this petition, for it must be admitted that, generally speaking, though petitions were respectfully received by their Lordships, there was a great indisposition to attend to anything respecting them unless they had to touch upon some personal or party matter, and then there was no lack of attention either to the petition or the Motion made thereupon, on any matter mingled with it. He was sorry, however, to add that not only 1143 was this a petition, but it was a petition on a subject which was in itself not very likely to be a lively one. It was upon the subject of Scotch bankruptcy law, and praying their Lordships, that the Bill for the improvement of the administration of bankruptcy and insolvency in Scotland, which he (Lord Brougham) had lately introduced into their Lordships' House, may speedily become the law of Scotland. Before entering on the subject of the grievances of which they complained, he should first state to their Lordships who the petitioners were, and what their interest was in the subject, before he proceeded to give their statement of their grievance, and their suggestions for the remedy of that grievance. The petitioners represented the first houses in the City of London in every respect, and the first houses concerned in the trade of Scotland. There were upwards of 200 of these firms, the partners in which had signed this petition; and when he looked at the names of these firms, many of them he recognised as well known to him as being among the first in the City of London, and others he knew as holding that position by their description from persons intimately acquainted with them. To show their importance, it might suffice to state, that five of the houses out of the 200 represented by the petition carried on business with Scotland to the amount of considerably upwards of 1,000,000l. sterling a year. He had other petitions to the same effect, complaining of precisely the same grievance, from parties not in London, but connected with and carrying on trade in Scotland. There was a petition from Sir James Campbell, and other office-bearers in the Glasgow and West of Scotland Guardian Society for the Protection of Trade, and who, as such, were interested in the proper administration of the estates of bankrupts and insolvents. Every one who was acquainted with Glasgow was acquainted with the house of Sir James Campbell and Company; and this society was composed of mercantile houses who were all great traders in the city of Glasgow. He had also a petition from a corporate body (the directors of the Chamber of Commerce and Manufactures, established by Royal charter in the city of Glasgow, under the seal of the corporation), and signed by the chairman and secretary. Another petition with which he was entrusted was from the Merchants' House of Glasgow, also a corporate body, signed by the Lord Dean of Guild, and sealed with the seal of the corporation. 1144 He had also two petitions, to nearly the same effect, from different parts of England; one from Bradford from the Town Council; and another from Carlisle, the merchants and manufacturers of which city, from their proximity to Scotland, were deeply interested in this matter, arising out of the constant commercial intercourse between them and the northern parts of the United Kingdom. From Huddersfield he had a petition signed by twenty-three merchants and manufacturers, and from Cupar Fife a petition signed by various procurators practising before the Sheriff Court there, who were parties interested in the proper administration of the estates of bankrupts and insolvents in Scotland, and in the assimilation of the bankruptcy and commercial laws throughout the United Kingdom. He believed that a vast number of other petitions would very soon be presented to their Lordships, all upon the same subject, all complaining of the present system, and all craving a speedy and effectual remedy. The case was shortly this—and he would solicit the attention of his noble and learned Friends while he alluded to it, for it must be admitted, that though they were not bound to listen to all the suggestions which mercantile men might give for the reform of the law relating to bankruptcy, and though their Lordships were bound to exercise their own discretion according to the best lights they could obtain, yet when the question was as to the sufferings which were experienced under the present state of the law, they were bound to listen to those who were the sufferers, and who addressed their Lordships for the purpose of detailing their grievances, because it was the most important fact in the case that such grievances existed, and that such sufferings were by the petitioners endured. Now, the petitioners set forth the manner in which the law affected them, and he should endeavour, as distinctly as he could, to explain the state of the law. In 1831 a great change took place in England on the subject of the bankrupt law, as was well known to his noble and learned Friends, and that change was deemed to be necessary by the evils of the previously existing system. Now, suppose that, instead of the evils then complained of, and which led Parliament to reform the law—suppose it had been the case in England that the assignees of a bankrupt not only were apt to forget their duty, to go to sleep over their duty, and not duly to gather in and realise the bankrupt's estate, but that 1145 they had an indirect interest in not doing their duty. In one instance, he remembered, it had been found—and this was one great ground of the change made in 1831—that there was occasionally an indirect interest on the part of the assignees inconsistent with their duty; and where a bankrupt had funds, it was found that there was a tendency to allow the proceedings to linger on the part of the persons intrusted with these funds. In Scotland, however, the matter was a great deal worse. There was not only the same chance of neglect, and the same tendency on the part of these persons to slumber over their duties, but the trustee was there a paid officer, which the English assignee never was, and he was interested directly in delay by receiving payment. The trustee received a commission, which commission was awarded to him in the manner he would presently describe, and the consequence of his being a paid officer their Lordships would soon perceive. Suppose another difference had existed between the English bankrupt law in 1831, and the law as it at present stood in Scotland. Suppose the assignee had not only been the administrator of the funds arising out of the estate, but had been also vested with judicial functions, and had to adjudicate upon the claims of creditors as well. Yet that was the case in Scotland at this instant. He did not believe a system could have been more cunningly devised to frustrate the great object and views of the equal distribution of the bankrupt's estate, and the prevention of fraud and of delay—he did not think anything more cunningly devised to accomplish these two ends could have been conceived than the system which had long prevailed, and which still, he was sorry to say, almost in the full force of its abuses, continued to prevail in the bankrupt law of Scotland. First, there was the choice of the trustee. For this officer no qualification was required. He ought to be both an accountant and a judge. Instead of this, however, he was required to possess no learning whatever—no qualification of any sort. But there was one requirement—the trustee must have a majority of votes. Every kind of means, approaching even to corruption, were consequently used for the purpose of obtaining office, and after that, as in the case of an election for the other House of Parliament, the return of the trustee was capable of being set aside. As there was always a competition for the office—always what 1146 might be called a contested election—so there was, he would not say always, but very often, a petition, as it were, against the return of the trustee; and an application to the Court to set aside that return, led, as in the case of a Parliamentary petition, to "a scrutiny,"—namely, a scrutiny of the votes of the creditors by whom the trustee was elected. The case would, under such circumstances, be heard before the sheriff, who was judge-ordinary of the district, from whom there was an appeal to the Court of Session, and from the Court of Session to this House. The trustee had judicial functions. He had to decide upon the claims of creditors; but from his decision there was again an appeal to the sheriff, from him to the Court of Session, and from the Court of Session to that House. The trustee was never a lawyer, but it happened generally that he was a; trader, though he was not sometimes even that He ought to be both a lawyer, and an accountant, while it often happened that! he was neither the one nor the other. As the office of trustee was a paid one, there were many who devoted themselves to the post for the emoluments to be derived from it, and thus was created a class of accountants such as existed a few years ago at Guildhall, and whom his noble and learned Friend the Lord Chief Justice would, if he were present, recognise under the description of accountants who could give no account. In his judicial capacity, when sitting to decide upon the claims of creditors submitted to him, questions of the greatest difficulty were brought before him—sometimes questions of law, sometimes questions of equity, and constantly questions of fact—in all which the trustee acted both as judge and jury. Those who were acquainted with the state of the Scotch law would know that the practice in the Courts there was unhappily different from our own—that the principle of fusion had been adopted there, and that there was no difference between the court of law and of equity. This trustee, however, was in all cases ignorant of law, so that when a very important bankruptcy occurred he was aided by an assessor, who was a lawyer. This was, of course, all at the expense of the bankrupt's estate, and therefore, at the cost of the creditors, and he himself had known an instance not long ago—not more than twenty or twenty-five years since—of a very important bankruptcy in which the trustee was aided by a learned person who was afterwards a Judge 1147 in the Court of Session—Lord Cuninghme—and they sat for many days, and he might say weeks, in unravelling the circumstances connected with this bankruptcy, eminent counsel being engaged, with appeals possible at every stage and at every decision given by the trustee, and with the appeal of which he had reason to know something; for it did not stop with the Sheriff, but went next to the Court of Session, and afterwards to their Lordships' House; he referred to the remarkable case of "Grant and Baillie," the only instance he remembered in which the Judges of England were called in to decide a Scotch case. By the Bill which he (Lord Brougham) had introduced, power of appeal was only given to the Court of Session, for he looked upon the appeal of the trustee to the sheriff as entirely useless. Under the present system three of the creditors, or agents of the creditors, were chosen commissioners. These commissioners had no qualification, and were supposed to be a council, by whose advice and opinion the trustee might, if he thought fit, be ruled, though he was not bound to be so. The natural consequence was, that when the trustee considered there was a responsibility involved in the trust, he would call in the council; but when he thought He could do without them, he would not call them in. One function of great importance was performed by these commissioners—they audited the accounts of the trustee and awarded his commission, so that his salary was so far in their hands. Now, the trustee was frequently enabled to exercise a great voice in the choice of the commissioners; the kind of votes by which they were elected very much depended upon him; and the consequence was, that in many cases it was found that the commissioners, owing their election to the trustee, were disposed to favour him in auditing his accounts, and in fixing his payment. There was one part of the existing law which very much facilitated any improper proceedings on the part of the bankrupt and trustees. Not less than eight, though not more than fourteen, days from the period of sequestration, as the bankruptcy was called, were allowed the bankrupt for all these contrivances, and for fraudulent purposes, if he was inclined to devote it in that way. There was no power of taking possession of the bankrupt's property until eight days, and it might be fourteen days, after the bankruptcy. In the meantime the bankrupt 1148 could make away with his property, and, if a dishonest man, he might occupy that time in creating votes on fraudulent or fictitious claims, so as to elect a trustee of his own nomination, in giving illegal preferences, and in making away with and concealing his property. Now, it was quite bad enough that there should be an elective court of justice at all, but it was monstrous that there should be a court of justice appointed by election in each particular case; and that, be it remembered, not a court of arbitration appointed by the choice of the two parties, but by a number of creditors, with all the evils incident to such a system. By that body, and in that way, was the court in each instance constituted. He had referred to the possibility of appeal. The appeal might take place in the case of the choice of the assignee, or trustee as he was called in Scotland, and perhaps two or three years, as had been known to be the case, elapsed before the choice was confirmed. All this while the unhappy creditors, who had or ought to have had no interest whatever in the matter, were kept out of their rightful claims. They did not care one rush which of the two rival candidates to the office was successful: all they wished was to have the business done. The petitioners stated how much they suffered under this system. "The season," they said, "for which the bankrupt's goods were manufactured passes away, the articles get out of fashion, and a fall in the market often takes place which greatly diminishes the value of the bankrupt's property." Another evil was, that the bankrupt was often disposed to offer a composition with which the creditors would be satisfied, but, until the choice of trustee was finally confirmed, that composition could not be accepted, and in the meantime the bankrupt otherwise disposed of money with which he had intended to satisfy the claims against him, and the creditors were often entirely frustrated in their endeavours. With regard to the system of class certificate which now prevailed in this country, instead of adopting the English change in the law in this respect, and taking from the creditors the whole of the power of granting certificates, this power remained throughout Scotland in the hands of the creditors, subject to all the evils pointed out by the Commission of 1839 and 1840. By dint of canvassing, by private interest, and not unfrequently by direct bribery, the bankrupt now gave certain powers to certain creditors for the 1149 express purpose of obtaining their vote. Again, no provision was made for the public examination of the bankrupt. The old Act said he should be examined publicly; but, practically, the bankrupt was never examined in public, but always privately. There was also no examination—at least no effectual examination—of the creditors themselves. He would fain hope that the petitioners were mistaken in their statement that, under the present system, there was no provision for the examination either of the bankrupt or of the creditors. He thought that must be a mistake, because under the Act of 1851 he believed provision was made to enable the Court to examine the bankrupt, and, in fact, to compel his examination. Upon all these grounds the petitioners prayed their Lordships to adopt the Bill which now lay before them awaiting a second reading—a Bill which he had the honour of introducing; and they added also, that the course which that Bill took relating to arrangements in cases of insolvency was advisable, and ought to be adopted. The Faculty of Advocates having had under their consideration the Lord Advocate's Bill on the subject, disapproved of a good part of the Bill, expressed no opinion as to whether it went far enough or not, but added that they did not approve of one portion of the Bill, which, in his opinion, was the only step of any importance in the measure—namely, that of giving immediate possession of the bankrupt's papers and books. He was bound to say that the measure which he brought before their Lordships, and in behalf of which these petitioners addressed the House, the other petitioners joining in that prayer, had been most carefully prepared by persons well versed in the Scotch bankruptcy law—by practitioners both at the Scotch and English bars; and the measure had been by them prepared with the greatest possible knowledge of all the details. He had only to mention the name of his learned Friend, Mr. John Gilmour, who had framed the measure, to prove that the Bill had received attention from one possessing a perfect knowledge of the law on the subject, and a complete acquaintance with the practical working of the present system. It was said that the change which had taken place in the English law, and to which he had alluded, was less applicable to Scotland than to England. There might be other parts of the law than those he had mentioned, in which the Scotch was more to be approved than 1150 the English law. What was the moral of this? It was that the whole matter should be carefully considered by those Commissioners who had been recently appointed to take into consideration the assimilation of the mercantile law in different parts of the United Kingdom. That Commission proceeded from the Government, as their Lordships were aware, in consequence of a great conference held last year, at which, in the first place, the noble Lord on the cross bench (the Earl of Harrowby) presided, and over which, secondly, he (Lord Brougham) had presided, composed of representatives from all the great trading towns in England, Scotland, and Ireland. The idea of that conference had, he believed, arisen from the formation of different societies for the amendment of the mercantile law, particularly in some parts of Scotland. A learned person, Mr. James Stewart, having been in Scotland, had had communications with those parties, and he rather believed it was in consequence of the communications between him and some of those bodies in the west of Scotland, that the conference was appointed. It had given him (Lord Brougham), he must say, great satisfaction to preside over the conference in question, because a more moderate and more rational assembly of persons could hardly be conceived upon any matter so interesting to the feelings of the individuals themselves. They were all interested in the trade, commerce, and manufactures of the different towns from which they came; but there was no tone of violence, no headlong steps taken towards a change, no desire of change from the mere love of change, but, on the contrary, what was done was done in the most rational and temperate manner he had ever heard. Another gentleman, Mr. Leone Levi, who had devoted a large degree of attention to the subject of the continental mercantile law, had promulgated the idea of an international commercial code: and a noble Duke and his Royal Highness Prince Albert were understood to support the opinion he expressed, that the state of the world was ripe for the formation of a general international commercial code. Others, however, had had some doubts about this, and had thought that, at all events, we should begin more humbly, by considering whether or not a commercial code should be established for the United Kingdom, leaving other countries out of the question—at least for the present. The conference had bound itself to that opinion, but without 1151 giving up the hope that they might live to see a more general union among the different nations of Europe on this subject, and the formation of one general international commercial law among all civilised nations. The differences at present existing between the various codes were not very great; but where those differences existed they were very embarrassing. He ought to apologise for having so long detained their Lordships; but he had deemed it his duty to the petitioners who had entrusted to him the presentation of the petition to state the facts which he had laid before the House. He did not intend to press forward this Session the Bill to which he had alluded; but he considered it would be in its proper place if referred to the Assimilation Commissioners.
§ Petitions read, and ordered to be on the table.