HL Deb 04 April 1854 vol 132 cc359-64

in moving the second reading of this Bill, said he was sorry to have to bring before their Lordships so dry and technical a subject, but it was one of very great importance, and well deserved their consideration. It was probably known to their Lordships that in Scotland there had prevailed for upwards of a century and a half a most admirable system, one which was not only of the greatest benefit to suitors on bills of exchange in that country, but to all merchants, traders, and others engaged in commerce there. When a party in England or Ireland held a bill of exchange or a promissory note, although there might be no doubt whatever of the genuineness of the signature of the acceptor, the drawer, or the endorser, although there might be no flaw in the instrument itself, or in the title of the holder, still, in case of such a bill being dishonoured, the holder must obtain a verdict and judgment after a trial, in order to have execution—it was necessary for him to go through all the forms and proceedings of an action at law for the purpose of enforcing his right and obtaining a remedy. In 999 cases out of 1,000 there was nothing like a legal defence against such actions, because the drawer, the acceptor, or the endorser, by signing their names, admitted their liability, and there could be no defence against such an action, unless it could be proved that a forgery had been committed, or that the instrument itself had been altered in its character, or that it had been obtained by unlawful means, and that the holder was cognisant of the illegality, if he had taken it before maturity. Scotland was far better off than we were in this particular. In this country, a party holding a bill incurred all the risks of the delay of the law, and incurred the expense of legal proceedings, and very often it became quite uncertain whether he would recover the money at all; for he might be stopped by legal quibbles and niceties for awhile, and a considerable delay often occurred before he could obtain judgment, and a further delay before execu- tion issued; while in the interval between the accruing of his right and his ability legally to enforce it, the party he was suing might become insolvent, so that instead of obtaining 20s. he might not obtain ls. in the pound. Although he was a bonâ fide creditor, he might be excluded; various means of disposing of the property might be resorted to, in not a few cases the goods and chattels of the debtor being actually carried away while the proceedings were pending. In Scotland, the mode of procedure with respect to bills of exchange was otherwise, and as they considered that by assimilating the trading and mercantile laws of the two portions of the United Kingdom very great improvement might arise in Scotland from adopting our system of jurisprudence, so, in some particulars—and this was one of them—he considered we might, with great advantage to ourselves, take a leaf out of their book, and import from Scotland the great improvement in its mercantile law with respect to bills of exchange. The manner in which they proceeded in Scotland was this:—Within six months after the dishonoured instrument became due, the protest was required to be registered, and if it, were within that period of time recorded on the register, there was no necessity to bring an action, the notarial protest itself in effect giving the holder immediate judgment against any of the parties liable on the bill or note, an extract being given to the holder so registering the protest, and this containing a warrant of the Court for execution against the debtor on six days' service of notice. If the party from whom payment was sought had a good defence, he had ample opportunities given him of proving it; and, in that case, he went through a form of proceeding termed a "suspension," which meant an application to stay the process of the law either altogether, if he were really not liable and ought not to have been called upon to pay the money, or to suspend it until it was clearly ascertained whether he was liable or not. He had to apply to a Judge, who at once examined into the grounds alleged for staying execution, and if they were such as would be insufficient at law, the petition was at once dismissed. When the grounds, however, were such as, if proved, would entitle the debtor to resist payment, the prayer of the petition was granted, and execution stayed till the grounds of the suspension were discussed, when both parties were al- lowed the opportunity of deliberately making good their pleas and averments; and upon the proof and argument thus submitted the Court finally determined whether execution should issue or not. The result of the system was, that there were rarely any contests upon bills themselves; for upon the facts that were then adduced depended mainly whether the holder or the debtor upon the particular bill would succeed. But, in such cases as those there was a discretionary power given to the Court or Judge as to requiring security; for, wherever there was reasonable ground for supposing that the holder of the bill was right and the other was wrong, or had no real defence to the action, security was given by bond to the holder of the bill to the amount not only of the debt, but the costs of the proceedings. The bond into which the sureties were required to enter became, if the holder was successful in the suit, a warrant for instant execution against the sureties. If, on the other hand, the holder's title appeared to be tainted with fraud or other illegality, the Judge had a discretion of making him give security instead of the debtor. That plan had been found to act most admirably in Scotland, and its effects, after many years' experience, had been of the most beneficial character. It was introduced many years ago, when the trade of Scotland might be comprised in a very narrow compass, having originated, he thought, in 1681; but it was then in a very imperfect state, being applied only to foreign bills. After the Union the system was extended to inland bills of exchange; but it was far from perfect at that time, as it did not apply to promissory notes, and in the case of bills of exchange applied only to the acceptor, but not to the drawer or endorsers, with one exception, and that was in case of non-acceptance, when its provisions were extended to those parties. The remedy, therefore, was still imperfect; but since 1772, when the Act of 12 Geo. III. c. 72, extended the procedure to promissory notes, and allowed summary diligence to proceed against drawers and endorsers, as well as against acceptors, the benefits of the system were experienced to their full extent. And here he might remark, although he by no means wished to ascribe the prodigious increase in the commerce of Scotland to this more than to other causes, yet it was to be observed that the increase was contemporaneous with the last and very important extension of the law to which he bad just referred; and he would show their Lordships how perfectly consistent it was with the most ample system of paper credit. He would only remind the House of the prodigious increase of the trade and commerce of Glasgow within the last forty-five years, the population having increased from under 100,000 to above 400,000, and the river dues in a much larger proportion. Some years ago those dues were let under the corporation for 500l. a year, and the lessee might perhaps have gained 100l. or 2001., but certainly the whole gross amount of the dues was under 1,000l.; but now what did their Lordships think they amounted to? From the last returns to which he had access he found they amounted to no less than 80,000l. a year, showing an increase of commerce within half a century which he ventured to say was unexampled in any other part of the kingdom, perhaps in any other part of the old world. He would now call their Lordships' attention to the number of protested bills as compared with the number for the non-payment of which there was any legal defence. In 1845 the number of protested bills in all Scotland was 3,600, of which 33 only were contested—not above 1 per cent—while of these 33 contests only 1 was successful. Not above 1 in 1,000 had been successfully contested; so that so far from using a common figure of speech, when he mentioned that in 999 cases out of 1,000 there was no defence to the action, he happened to have given the exact proportion. In the year 1849, which was a year of distress, there were 4,743 bills protested in Scotland; while in 1853 there were only 2,407. Nearly the same proportions of disputed claims and of successful contests existed in these years. He was informed by a gentleman managing one of the houses in the metropolis, most largely engaged in trade with Scotland, that in 33 years there had not been one single instance of an attempt by a party liable upon a Scotch bill of exchange to stay execution, that is, to take proceedings in suspension. He need not stop to dwell upon the obvious advantages of this system, which took from the debtor the possibility of setting up defences for the mere purposes of embarrassment and delay, while, at the same time, by requiring security, it tested his solvency and position; for where parties applied for a suspension of proceedings they must provide securities whose own solvency was closely scrutinised, and who must render themselves liable for the debt, interest, and costs. Thus a test was afforded of the solvency of the debtor; for, if he were verging to insolvency he would not easily obtain sureties who would stand a close examination upon their own solvency. If it were said it was a hardship upon a man to make him find security, the remedy was at hand; the party liable on the bill had only to pay the money into court, and he was then welcome to try his cause, This improvement in the law relative to bills of exchange was anxiously desired by the trading interests of this country. He had already presented a petition from Manchester, very numerously and respectably signed, praying that the law with respect to bills of exchange might be assimilated to that of Scotland. At Leeds, Liverpool, Birmingham, Sheffield, and other places, meetings had been held upon this subject, and resolutions had been adopted, anxiously requesting the importation of the Scotch law and practice into this country. If their Lordships should now give the Bill a second reading, he intended to move that it be referred to a Select Committee. It would, perhaps, be better to refer the Bill to the Committee to which the Common Law Procedure Bill would be sent, and it had been suggested that the remedy he propounded might possibly be supplied by the additions and modifications of certain provisions of the Common Law Procedure Bill. Of this, however, he entertained considerable doubt. The noble and learned Lord moved the second reading of the Bill.


entirely approved of the course proposed to be taken. He regarded the practice of the law of England, which gave the acceptor of a bill of exchange the opportunity of contesting his liability when he had not, and never could have supposed himself to have had, a shadow of defence on trial, as unnecessary, and not only contrary to the custom of Scotland, but also of Europe. It was no hardship upon the debtor that the protest of a dishonoured bill should have the effect of a judgment, but a very great hardship upon the creditor that his claim upon a dishonoured bill of exchange should only be enforceable by an action at law. In Westminster Hall, and in every assize town, there were always a number of undefended causes upon bills of exchange. A man did not pay them when he ought to pay, the creditor was obliged to bring his action, a jury were summoned, counsel were engaged, and when the cause was called on the Judge was told, "This is an undefended action." The defendant did not appear, and the plaintiff took a verdict as a matter of course. The Bill would not prevent a person from contesting his liability if he had a reasonable ground of defence. It was very desirable to introduce this improvement into our law, and he thought it expedient to refer the Bill to the same Committee as the Common Law Procedure Bill.


said, that when his noble and learned Friend laid the Bill on the table he expressed that which he now repeated, namely, his entire approbation of the principle contained in its provisions. His noble and learned Friend (Lord Brougham) had privately communicated to him his intention to refer the Bill to the Select Committee on the Common Law Procedure Bill, a course which met with his approbation; but he confessed, on consideration, it would be better to refer it to that Committee only in the event of the Committee deeming it a fit subject to be dealt with by them; because, though it might be very desirable that it should become law, it might be found expedient not to make it form part of the other Bill. He observed that it contained as many as forty clauses, which, if incorporated with the Common Law Procedure Bill, would render the latter so cumbrous as possibly to interfere with its passing through both Houses of Parliament.


was understood to assent to this suggestion.

Bill read 2a, and referred to the Select Committee on the Second Common Law Procedure (1854) Bill.

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