said, that in moving for certain returns relating to petitioners in the Insolvent Courts, and making a few observations on the subject of imprisonment for debt, it was not his intention to enter upon the important question of bankruptcy generally, because the subject was at that time under the consideration of his noble and learned Friend on the woolsack, and he believed that before long the result of his inquiries would be laid before their Lordships. That to which he was about to direct their Lordships' attention was the proceedings which had taken place during the last thirty years with respect to imprisonment for debt, and to give them a short and summary account of those proceedings. It was exactly thirty years ago, and about this very day, that he had directed the attention of the other House of Paliament to that most important matter, amongst a great number of others connected with the structure and administration of the law. 1251 Out of the statements he then made, and the Motion for an Address to the Crown which he moved, arose two Commissions—one respecting the law of real property, at the head of which, most fortunately for the improvement of the law, was placed his noble and learned Friend the Lord Chief Justice; the other upon common law procedure—upon everything relating to the common law, in fact, except the law of real property and the criminal law, the former of which was excepted from the inquiry because it was in other hands, and the latter because it was in the hands of the Commission over which his noble and learned Friend presided. From these two Commissions proceeded reports of the greatest moment. The report of the Commission presided over by the Lord Chief Justice gave rise to a number of most important improvements of the law in various Bills that were brought in by himself (Lord Brougham), with the hearty assistance of Lord Lyndhurst, upon the Reports of the Commission, and which passed their Lord-ships' House and received the sanction of the other branch of the Legislature, and which, in particular, effected a great and important—he would say an invaluable—improvement in the procedure respecting real property. From the other Commission also proceeded various Reports, some of more and others of less value, but all of considerable importance. But that to which he was about chiefly to direct their Lordships' attention was the Report of the Commission upon imprisonment for debt. The members of that Commission included his hon. and learned Friend the present Chief Baron (Sir Frederick Pollock), Mr. Justice Wightman, and Mr. Starkie; and they reported their clear and decided opinion in favour of abolishing imprisonment for debt, not only upon mesne process but in execution upon final judgment; but they gave the preference to the latter over the former, on the ground that the efficacy of arrest upon mesne process was undeniable, because there was some chance of obtaining payment of a debt, an almost certain prospect of preventing the absconding of the debtor, and at all events it was a force which could be applied to him whilst he had property at his disposal; whereas, said they, if you wait until the whole case is gone through, brought to judgment, and execution taken out on that judgment, in very many cases you find no property 1252 upon which to levy execution. However, he (Lord Brougham) was decidedly of opinion, as their Lordships also were of opinion, that it was better to adopt the other course, and put an end, first of all, to arrest upon mesne process. Accordingly a Bill was brought in by his late noble and learned Friend, Lord Cottenham, then Chancellor, under which arrest upon mesne process entirely ceased. The principle upon which he (Lord Brougham) had ventured to state in 1828 that imprisonment for debt ought to cease, and which was entirely sanctioned by the opinion of the learned Commissioners upon whose recommendations the Bill now on their Lordships' table was founded, both as to the abolition of the one species of imprisonment and the other, was that on all occasions, and in every possible and practicable way, a distinction ought to be drawn between a debt which arose from mere misfortune, and a debt which originated in crime; that whatever a debtor could do to satisfy the lawful demand of his creditor, he was bound to do; that if he refused to do what he could—if, for instance, he would not come to be examined—that was an offence for which imprisonment would be most justly awarded, and awarded with the avowed object of compelling him to do what he ought to do. If on coming to be examined he refused to disclose his property, that was another offence of the same description, and he was well punished by imprisonment, because it was his fault, and not his misfortune, and a fault moreover, for which the creditor paid. If—his property being disclosed, either by his own admission or the information of others—he refused to give it up to his creditors, that was a third case for the punishment of imprisonment, because it was his fault and not his misfortune. So likewise if he secreted or made away with his property, or if by fraud he was found to have contracted a debt, or if any other tangible offence had been committed by him to the injury of his creditors, as by contracting debts which he knew he could have no means of paying, in such case he deserved to be imprisoned, because it was his crime and not his misfortune. In many cases he ought to be imprisoned where the imprisonment was not adopted as a compulsory mode of making him pay. In cases of gross fraud—of which, he grieved to say, there were many more of late than formerly, and many many more than we could desire—he would be well 1253 punished by way of example to others, and in order to deter from the commission of the like offences. These were the principles which he had ventured to state in 1828 as fitted to govern and to limit the punishment of imprisonment for debt, and which had been acted upon by the learned Commissioners, and so far as arrest upon mesne process went, had been adopted also by the Legislature. In 1840 another Commission sat and produced a report which was of equal value with the former. Over that Commission his right hon. and learned Friend, Mr. Justice Erskine, presided, Mr. Commissioner Evans, of the Bankruptcy Court, being an active member, with Mr. Commissioner Holroyd and others. They, too, came to a clear and decided conclusion against the continuance of imprisonment for debt. Now he (Lord Brougham) was of opinion that in the case of a man who had contracted a debt at another's expense, which he could not or would not pay, in order to entitle him to claim relief, it was for the debtor to show that he could not, that his inability was not a voluntary one, that it was his misfortune, not his fault; that in short he did not come within the description which the learned Commissioners gave in behalf of their recommendation to do away with a law which they said had a "tendency to level the distinction between guilt and misfortune." These were the principles which he (Lord Brougham) ventured to say ought to govern the law of imprisonment for debt. If it appear that the principles which he laid down tended to limit imprisonment for debt, they ought not from a mistaken view of humanity to think only of one party—of the debtor—they ought to think as much at least of the creditor; for he was clearly of opinion that in limiting imprisonment for debt, they ought to see that not only the creditor did not suffer but gained by the change in the law. The creditor gained materially by the change of the law which, twenty years ago, put an end to arrest on mesne process, and enlarged the recourse of the creditor; and he (Lord Brougham) believed he would gain now if imprisonment for debt or in execution on judgment were judiciously abolished. If he were to show their Lordships in what way imprisonment for debt on execution operated, he should go far to prove the necessity, or at least the high expediency, of making this change in the law. He would take the case of the Insolvent Court, for instance. But, first, he 1254 would say a word as to a notion which many persons ran away with—namely, that the right of the creditor to arrest his debtor was as old as our laws—that it was an old common law right, and had been at all times, until a foolish humanity intervened, the law of the land. Than this nothing could be more contrary, as his noble and learned Friend knew, to the fact. No doubt the right was an ancient one, but certainly it did not belong to, or originate with the common law. Under the common law, there was no imprisonment for debt unless there was actual force; gradually, however, one exception after another arose. Still, in the times of the Plantagenets, the right to imprison was not universal; and, indeed, it was not until the reigns of Henry VII. and Henry VIII. that the law which made universal the right of the creditor to arrest the debtor was adopted. The relaxation of the law had been gradual, like its enforcements. The first instance of an Insolvent Act having been framed was about a century and a half ago—not in the time of the Plantagenets or the Tudors, but of the Stuarts and the Brunswicks. Under that Act a man might get out of prison, provided his debts did not exceed £100, but upon condition that he enlisted in the army. Then came the Lords' Act of a century ago, the first provision for compelling the surrender of the debtors' property, and awarding seven years' transportation for the refusal; and after that the more regular system of the Insolvent Debtors' Court was established. So much for the historical matter. As to the operation of the existing system, if he (Lord Brougham) showed their Lordships how imprisonment for debt usually operated, he thought he should make out a strong case in favour of an alteration of the law. He would take the Insolvent Court, and if their Lordships would agree to the Returns for which he was about to move, they would find that, during the year 1845, there were 3,905 persons who were imprisoned, and were petitioners to the Court for their discharge. All of them had been imprisoned, because imprisonment was required for about two mouths before the petition could be entertained. Of that number, how many did their Lordships think were discharged under the law, upon their own oaths, without any opposition or examination whatever? Why, 2,758, or considerably more than two-thirds—seven-tenths of the whole number; and that without any opposition, any interrogatory, 1255 any examination whatever; 786 were subsequently discharged, after some kind of opposition; whilst 361 were ordered by the Court to be remanded by way of punishment, and only 199 paid any dividend. Thus, no less than 3,546 persons bad been languishing in prison during a period of two months, not one tittle of ground being adduced in evidence to justify their being there a single hour. Now, when he spoke of two months, he begged to be understood; for, in many cases, it happened that they were kept in prison after that time had elapsed, simply because of their inability to pay the expense of petitioning for and obtaining their discharge. What was wanted, then, was a more effectual examination, a thorough sifting examination of the debtor. That could not take place in the Insolvent Court, though he thought it could in the Bankruptcy Court, which was furnished with more efficient means for that purpose than were possessed by the Insolvent Court, and which had the important power of seizing the property before it could be made away with. The man who went into a shop and purchased £500 worth of goods, when he knew that he was not worth £5, or the man who lived extravagantly beyond his means for a number of years, was guilty of fraud, that was, of moral fraud, though not of legal fraud. That he was guilty of a moral fraud there was no doubt, but he ought to be treated as legally guilty of that offence. He (Lord Brougham) did not mean to say guilty to the extent of a misdemeanour for which he should be indicted, but certainly to the extent that would justify an authority to the Court of Bankrnptcy to punish him. The only punishment which the Commissioner in Bankruptcy could now inflict was a suspension of the certificate, or to grant it of the third class instead of the first or second; but, was the suspension of the certificate for six months a sufficient punishment? The effect of a suspension of the certificate was, to leave the bankrupt to the mercies of the creditors; and they having already incurred considerable expense in the Bankruptcy Court, were not likely to follow the matter up to a sufficient length for the sake of the public, when all the property being gone, they had no hopes of benefiting by the proceeding. The present law left to the creditors what should be the duty of the Court. He would give a power to the Commissioners to punish in such 1256 cases. But then it was said, "You would be punishing a man without trial by jury." He had the greatest reverence for trial by jury; but had not the Insolvent Commissioners at present power to punish without trial by jury? Had they not the power of imprisoning a fraudulent debtor even for three years? If the Commissioners in Bankruptcy were invested with a similar power, they would no doubt feel it their duty to wield it for the interests of public justice. The Insolvent Court had power of punishment, with power of seizing property or preventing its concealment; the Bankrupt Court had the power of seizure, but no power of punishment. Another improvement which he would suggest, and which was mentioned by the Lord Chief Justice himself, though he had not been able to form a decided opinion as to it, was to attach a public officer to the Bankruptcy Court, who would watch on behalf of the public the proceedings in the cases which came before that Court. In some foreign countries such an officer was attached to all courts, civil as well as criminal. In France the procureur general watched the interests of the public, even in civil cases. Now, he (Lord Brougham) would not carry the system to that length; but he was in favour of extending it to the Bankruptcy Court. Certainly he thought the matter deserved attentive consideration. That something ought to be done for the relief of creditors, and changing the anomalous state of the law as regarded debtors, was quite certain. Now, as to the distinction between the trader debtor and the non-trader debtor, he did not think that this should be continued. There could be no difficulty in doing away with it, according to the Chief Justice's declared opinion. The distinction had been done away with in Scotland, and he thought it would be well to follow that course here; for that there should be different tribunals for these two classes was what he held to be an anomaly in our jurisprudence. He should conclude his observations by moving for Returns of—
- 1. Number of Persons who petitioned the Insolvent Commissioners for Discharge during Five Years ending 31st of December, 1857; distinguishing the Years:
- 2. Number of Persons discharged without being opposed, for the same Years:
- 3. Number of Persons discharged after being opposed, for the same Years:
- 4. Number of Persons remanded by way of Punishment, for the same Years:
- 5. Number of Fiats in Bankruptcy, for the same Years:
- 6. Number of Certificates granted immediate, for the same Years:
- 7. Number of Certificates suspended, for the same Years:
- 8. Number of Refusals of Certificates, for the same Years.
THE LORD CHANCELLOR
thought that their Lordships and the public should feel very much indebted to the noble and learned Lord for having brought under their consideration one of the most difficult social questions with which it was possible for them to have to deal. He said "one of the most difficult" because one of the noble and learned Lord's objects was to relieve debtors from the penalty of imprisonment for debt; but he was compelled to admit at the same time that the party to be primarily considered in these cases was not the debtor but the creditor. He (the Lord Chancellor) was continually receiving a vast number of complaints from debtors in respect to the hardship of the law of imprisonment for debt; but these were more than neutralized by the complaints by creditors of the facilities which the fraudulent debtor had of escaping from the consequences of his dishonesty. The difficulty, however, ought not to induce their Lordships to shrink from endeavouring to amend the law. The noble and learned Lord had pointed out the anomalous distinction between trader and non-trader debtor, who were dealt with by separate tribunals, as one cause of the existing evils. No doubt this separation was unnecessary, but he (the Lord Chancellor) did not think it was a cause of existing evils; but in spite of all he had heard to the contrary he (the Lord Chancellor) was not quite satisfied that they should deal with the insolvent trader and the insolvent non-trader on the same principle. The insolvent trader was a man who contracted debts from necessity; and, therefore, in many instances, became insolvent from unforeseen misfortunes in trade. Debt was a part of the business of a trader; he could not get on without it; but, in ninety-nine cases out of an hundred, that was not the case with the non-trader insolvent. It was not by any necessary risks that the insolvency of the non-trader was brought about, but by his reckless conduct and his spending the money of others. For that reason he could not think that the two classes of insolvents should be dealt with on the same principle; but there was no reason why the previous investigations might not be the same in both cases. He thought that 1258 the insolvent trader ought, as a general rule, to get a certificate as a sort of whitewashing; but in the case of the insolvent non-trader, the certificate ought to be the exception and not the rule. He thought, therefore, that the difficulty which the subject undoubtedly presented would not be solved by the amalgamation of the Bankruptcy and Insolvent Courts. Then, as to imprisonment for debt, if they did away with that punishment, what security could they have that the debtor would disclose the amount of his property? That imprisonment was the only effectual screw they had to compel the debtor to discover what he had. They had at present many instances of debtors who, to avoid disclosing their property, crossed the Channel and lived abroad; and they had other instances of debtors who remained in prison and declined availing themselves of the benefit of the Act, rather than make an honest disclosure of their assets. The latter fact showed that even the punishment of imprisonment was not in some instances strong enough to make men disclose their means of, in whole or in part, satisfying the just demands of their creditors. So far from opposing the returns moved for by his noble and learned Friend (Lord Brougham) he was most happy in acceding to it. In most of his noble and learned Friend's observations he entirely concurred, and if any efficient substitute for imprisonment for debt in the case of refusal to disclose property could be devised, it would meet with his (the Lord Chancellor's) best consideration; for he would be very glad to see that imprisonment, which was at present almost at a minimum, entirely abolished.
regretted to find that his noble and learned Friend who had just spoken seemed to give the sanction of his high authority to the maintenance of that distinction between the insolvent trader and non-trader which now existed. He (Lord Campbell) for one hoped that that distinction would soon be banished from our legislation. The question in reality turned not so much upon the case of the trader and the non-trader as upon that of the honest and the fraudulent debtor. It was well known there were various shams by which a man made himself a trader—such as becoming a wine merchant or commission agent, or the like, and this was done in order to avail himself of the bankrupt laws. If a debtor were an honest man he gave up all his property, 1259 and when his creditors had the full benefit of that he ought to be discharged—there could be no use in keeping him in prison; but if, upon the other hand, he was a fraudulent debtor, then he ought to be not only imprisoned, but punished; whether trader or non-trader, he ought to be entitled to liberation upon giving up all he had; and if he had contracted debts fraudulently, then undoubtedly he ought to be punished.
THE LORD CHANCELLOR
explained, that the view of the question which he had taken with reference to the distinction to be drawn between the case of the trader and the non-trader coincided, to a great extent, with that to which his noble and learned Friend had just given expression in regard to the honest and the fraudulent debtor. He had contended for the maintenance of the distinction between the two, simply upon the ground that the debts of the trader were generally contracted legitimately in the conduct of his business, while those of the insolvent non trader were almost always accompanied by the suspicion of reckless expenditure and fraudulent dealing.
§ LORD WENSLEYDALE
did not feel at present in a position to offer an opinion on the subject of discussion, and would therefore reserve any observations which he might feel inclined to make until that subject came properly before the House. He should be most anxious to simplify the laws of bankruptcy and insolvency, and if possible to unite them, and would give his earnest consideration to the measure promised by his noble and learned Friend, with a view to relieve the honest and punish the fraudulent debtor.
§ Motion agreed to. Returns ordered to be laid before to be House.