§ House in Committee (according to order).
§ Clause 1 (Arrest in Execution restrained)
§ LORD WENSLEYDALEobjected to the clause and the clauses which followed, because they would totally abolish imprisonment for debt except in certain specified cases. He thought it was often the fear of arrest which prevented non-traders running into most extravagant expenditure, and he was supported in his objection to the total abolition of imprisonment for debt, not only by the petition which he presented to-day, but by the Reports of Royal Commissions composed of many learned men, who, in 1832, 1840, and 1854 had considered the subject. He wished to render 1264 the measure as effective as possible, and would refrain from moving the omission of the clause, but would leave the matter to be dealt with by his noble and learned Friend (the Lord Chancellor) in considering some Amendments which he intended to propose hereafter.
§ Clause agreed to.
§ Clause 2, (Present Power of Arrest unaffected in certain Cases).
LORD TEYNHAMexpressed his opinion that in no instance ought the personal liberty of the subject to be vested in his fellow-subject, but should only be taken away under the immediate supervision of the law. In a Return just made of the proceedings of County Courts in 1857, he found that the total number of warrants of commitment issued by the registrars of County Courts was upwards of 27,000, while the actual arrests were only 10,620. So that upwards of 17,000 warrants had been held against debtors which had not been put in force. If a creditor had at his option the power of arresting a debtor, he might sell that power not only for money, but for any and everything that the covetousness of the human heart desired. That power ought never to be left in the hands of any man. He trusted that the noble and learned Lord would reconsider the clauses relative to the power of arrest, so that this power might remain from first to last in the hands of the Court.
§ THE LORD CHANCELLORsaid, the law was not altered by this clause.
§ THE LORD CHANCELLORsaid, it was proposed by this Bill to abolish arrest in execution, except in certain cases. There were three classes of cases in which there was arrest in execution—first, where judgment had been obtained in actions of tort: that was the law under the Insolvent Act; second, where the Judge at the time of trial, or a Judge afterwards, certified that the debt had been incurred under false pretences or breach of trust, or that the defence had been vexatious and frivolous; that was the law under the 7 & 8 Vict., by which arrest on executions for less than £20 was abolished; and third, where a creditor had reason to believe that his debtor was about to abscond; which also was the law under the 1 & 2 Vict. He could not understand, therefore, why the noble Lord should desire an alteration in the Bill for the purpose of taking from the 1265 creditor any power he might possess under it of arresting the debtor. If the noble Lord wished to have an alteration in the existing law, he should propose a distinct Amendment.
LORD TEYNHAMsaid, he did not wish to do away with arrest when the debtor was deserving of imprisonment, but he wished to render the arrest certain in such a case; the arrest being always in the power of the Court alone, and execution never issuing without arrest actually taking place.
§ THE LORD CHANCELLORsuggested that as there were penal clauses in the Bill, it would be better that the noble Lord should propose an Amendment when they were under discussion.
§ Clause agreed to.
§ Clauses 3 to 12 agreed to.
§ Clause 13 struck out.
§ Clauses 14 to 92 agreed to with verbal Amendments.
§ Clause 93. (Creditors may choose Trustee instead of Assignee.)
§ LORD CRANWORTHsaid, he objected to the alteration in the law which was proposed by this clause, and which he did nut think would be conducive to the interests of creditors. The effect of the clause was that the system, which was founded by the Act of Lord Brougham in 831, with regard to official control, should be abolished. The proposed abolition of the present system of the law Would lead to much wrung being committed. On a recent occasion the noble and learned Lord (the Lord Chancellor) said that he could bring as many witnesses to give their evidence against official assignees, and that they should be abolished, as could be brought in favour of their retention. Under these circumstances, let their Lordships calmly look at the question, and see upon what the arguments rested. Before 1831 the estates of insolvents and bankrupts were managed by persons selected by the creditors and under that system the funds of the estates were so badly collected and administerd that in many cases creditors, though no doubt angry at first at the loss sustained, wrote off the bad debts from their books and forget them. Upon the creation of the official assignees in 1831, those officers in a very short time collected and distributed more than £2,000,000 of money belonging to various estates which had lain neglected. It was now proposed to revert to the old system by giving the creditors power to dispense with the service of the official assignee; 1266 but he thought it could not be but that the creditors selected to manage the affairs would neglect, after a time, the interests of the other creditors. For that reason he could not help most deeply deploring that his noble and learned Friend had been induced to listen to suggestions to put it in the power of creditors to place the affairs of the estate under the old system if they pleased. He knew that this clause would, to a certain class of persons, be a very great sop, and that there was a wish among a great mass of professional persons to see this clause passed. But that ought to pre-eminently put that House upon their guard, and induce them to take care they did not do anything which might result in causing grievous loss to small creditors, who looked to them fur protection. For these reasons he thought this clause ought to be omitted, It was evident that the noble and learned Lord opposite (the Lord Chancellor) was distrustful of the principle recognized by his clause, inasmuch as by the 95th clause he provided that the creditors if they thought fit, might appoint a Committee of their own body to check the trustee or assignee they might choose. It was a vicious principle to get rid of the public functionary in question, whose payment depended upon the realization of the property, the economy and the expedition observed in obtaining it. Now, the trustee to be appointed under the clause in question had Do such interest in the cheap or speedy realization of the property or in getting rid of the expense of litigation.
§ THE LORD CHANCELLORsaid, the great difficulty the Government had to overcome in tins matter was to understand what was the best course to adopt among the conflicting opinions by which they were besieged upon this subject. His noble and learned Friend (Lord Cranworth) had presented that evening a petition, signed by 800 merchants and bankers of the City of London, objecting to the abolishing of imprisonment for debt; last Session he (the Lord Chancellor) presented a petition signed by 4000 merchants and bankers, praying that they might have a greater control over the effects of bankrupts. In order to give their Lordships a sample of the feeling out of doors on this subject he would call their attention to a paper which had been sent to him. There were two classes of persons who formed different opinions on this subject—one desiring publicity, the other secrecy. The gentleman who sent him the paper to which he had alluded said, "he did not think any legislative 1267 assistance should be given to enable any creditor to control any minority of creditors, however small. He would not allow 99 creditors out of a 100 to control the hundredth man; and he believed that nothing was so agreeable to some insolvents as secrecy, and nothing so disagreeable as publicity. He considered such people to be in a conspiracy against all honest men." He (the Lord Chancellor) believed that this Bill would meet the demands of the commercial community in every possible way, inasmuch as it would combine publicity with secrecy by making it optional with the creditors to have either a private or a public investigation into the affairs of the insolvent. A noble Lord, who was supposed to represent to a great extent the views of the commercial community on the subject under discussion, (Lord John Russell) had introduced in the other House a Bill in which he had gone even further than the Government in dispensing with the services of official assignees, inasmuch as he proposed to make it compulsory on the creditors to decide whether they would choose an official assignee or appoint their own trustee, whereas the Bill of the Government left it entirely at the option of the creditors to select their own trustee or to make use of the official assignee in that capacity. His noble and learned Friend said it was very hard upon small creditors that they should be overborne by a smaller number of larger creditors, because the latter would select a man who at first would do his duty, but would gradually become negligent, and then the small creditors would be placed in the hands of a solicitor who would only work for his own advantage. He (the Lord Chancellor) had had some little experience in commercial affairs, and he always found that creditors, whether large or small, were likely to look after their own interest, and that if they were to choose a trustee instead of an official assignee, they would take care that he did his duty. The question really was this, considering the difficulties of the case, and that the greater part of the commercial community were desirous of having a greater control over their affairs titan they now possessed, had the Government not chosen well in adopting that system which they found was desired by a very considerable class of the commercial community, being perfectly aware that if they adopted a different system they would not have disarmed opposition. Under these circumstances, he trusted their Lordships would not consent to the clause being struck out.
§ LORD ST. LEONARDSwas of opinion that the creditors ought under due regulations, particularly giving publicity to the transaction, to have the power to appoint their own trustees: there was no danger in these times that creditors would not look after their own interests.
§ LORD CRANWORTHsaid, he would not press his objections further.
§ Clause agreed to.
§ Clauses 94 to 110 agreed to,
§ Clause 111, (Estate Tail of Non-Trader Insolvent not in Possession—not to be barred without his Consent.)
§ LORD CRANWORTHsaid that this and the following section would commit a most monstrous and unmitigated injustice. Under the present law an insolvent was forced to give up the whole of his property, and his noble and learned Friend did not, propose to alter that provision in respect to traders; but when a non trader became insolvent it was proposed now for the first time to enact that, if he had any real property in reversion, it should be sold at the time when it would be most convenient to himself to sell. The reason given was that otherwise "vindictive" creditors might dispose of the property at a time when it would be productive of but little advantage to the insolvent. But meanwhile the creditor might be ruined if his debts were not at once paid. What answer was it in such a case to say what the reversionary interest would produce more if the sale were delayed until it came into possession? Why, delay might ruin the honest creditor and drive him into the Gazette. In some other respects the Bill was perhaps rather too favourable to debtors; but this seemed to him the introduction of a principle which he deeply regretted should originate in this House. It would put abroad the notion that they were legislating for the sons of the landed aristocracy at the expense of the honest tradesman.
§ LORD WENSLEYDALEentirely concurred in these objections to the clause. Every man who incurred debts should be liable to the sale of his property to satisfy those debts, and if any loss were sustained in selling, the insolvent must expect to bear it. He could not conceive why the debtor should be called upon to postpone his claims. Such a principle was quite unprecedented.
§ THE LORD CHANCELLORthought that as the Bill for the first time compelled non-traders to surrender their property for the benefit of their creditors, it was right that settled estates in remainder should be 1269 protected in the manner proposed by the clause. If the sale of a reversionary interest were forced, it might not be worth one-half or one-twentieth of the sum it would fetch when it came into possession. It did not take away the property from the creditors. Creditors were still to receive, to the extent of their claims, the produce of the estate; but they would not be empowered to sell it before it came into possession, unless the insolvent consented. It did not prevent the sale with the consent of the debtor.
§ LORD CRANWORTHsaid, it was true that you could not now force an insolvent non-trader to surrender all his property, but you could imprison him until he did. This Bill now substantially took away the power of imprisoning for debt, and he entirely approved of the proposal; but surely it ought to be accompanied with even more stringent powers of enforcing the distribution of property. It was said that these estates would realize much more when they came into possession; but that might not happen for fifty years, and in point of fact they might never can me into possession; for if the tenant in tail in remainder died without issue in the lifetime of the tenant for life, they could not be sold at all, but would pass to the ulterior remainder. When, therefore, it was said that the sale should not be anticipated, so as to guard the interest of the debtor, non constat but that by delay that interest might become wholly exhausted. He was sure the clause would be misunderstood and misrepresented out of doors, and it would be said, not without the appearance of truth, that their Lordships were passing a law to prevent the sons of landed gentry from being imprisoned, and at the same time to prevent their reversionary interests from being sold for the benefit of their creditors.
§ THE LORD CHANCELLORsaid, it had been observed that a reversionary interest might not come into possession at all; but what would be the value of such an interest if it were forced to a sale?
§ THE EARL OF DERBYthought the compulsory sale of reversions would be most objectionable.
§ Clause agreed to.
§ Clauses 112 to 140 agreed to.
§ Clause 141. (If suspended on Rehearing subsequent Creditors to prove first against subsequent Property.)
§ LORD WENSLEYDALEintimated an opinion that some provision should be 1270 made to render liable the after-acquired property of an insolvent not-trader for payment of his debts.
§ THE LORD CHANCELLORsaid, that the clause in its existing right seemed just and right, and therefore he trusted their Lordships would not assent to any alteration. By the existing law bankrupts were discharged by their certificate from all claim on after-acquired property; but insolvents were obliged to give a warrant of attorney before they were discharged, which allowed the creditors on application to the court to issue execution against such property. The practice of the insolvent Court had been never to touch property subsequently acquired by au insolvent's own industry, and only to require a third of other property coining to him by bequest, to be given up for the benefit of the creditors. Such a practice showed an impression that the system was not a just one, and the Government considered that when it was proposed to abolish the distinction between traders and non-traders, and to compel non traders, for the first time, to distribute the whole of their property for the benefit of their creditors, it would be Only just and fair to place them on the same level as bankrupts. Since by the alteration of the law they were about to allow the creditor to strip the non-trading debtor and turn him naked on the world it seemed to him they ought to extend to him the same benefits which were given to the trader debtor. He mentioned, on moving the first reading of the Bill, that the power of the Court to compel the application of after-acquired property principally affected small traders, as of 1,042 persons who applied last year for the protection of the Insolvent Court only fifty were non-traders and of above 4,000 who applied in the country, there was a much smaller number. There were very few cases in which the power was ever exercised, and he knew no valid reason why insolvents should not have the same benefit as bankrupts, when they were to be made obnoxious to the same liabilities.
§ LORD CRANWORTHsaid, the blame to be ascribed to a non-trader for getting into debt was much greater than the blame attributable to a trader, and he feared the public might think the change was made to protect non-trading spendthrifts—sons of the richer classes—whose after-acquired property was now liable. Although there might be some doubt, his feelings inclined 1271 him to concur with his noble and learned Friend.
§ Clause agreed to.
§ Clauses 142 to 146 agreed to.
§ Clause was inserted, providing that in any indictment or information for misdemeanour under the Act, it should be sufficient to set forth the substance of the offence charged without alleging or setting forth any debt, act of insolvency, trading, petition or adjudication, or any summons, warrant order, rule or proceeding, of or in any Court acting under that Act.
§ Remaining clauses agreed to.
§ Amendments made.
§ The Report thereof to be received on Tuesday next.
§ House adjourned at a quarter past Nine o'clock, to Monday next, Eleven o'clock.