(NO. 12.) SECOND READING. (Hansard, 1 March 1867)

THE LORD CHANCELLOR
, in moving the second reading of this Bill, said, that from communications which had been made to him from various quarters, he had been led to believe that this Bill would not be received favourably by any noble Lord connected with Scotland, and therefore he had not felt in a very agreeable situation. What had occurred, however, on the previous evening had re-assured him on that point. He should perhaps be pardoned if he entered into a short explanation of the objects of the measure. Hypothec is a right by the common law of Scotland which the landlord possesses over the fruits of the ground, and over the cattle and other property of his tenant, as security for his rent. Perhaps it might be convenient to explain to those who were familiar only with the law of England the difference between it and the law of Scotland as to the relation of landlord and tenant. In England, the landlord has no power over his 1223 tenant's property until the rent is due; and then, if the rent is due and unpaid, the landlord may seize all movables, with a few exceptions, and may, by statute, distrain upon the growing crops; and if the tenant does not pay the rent within five days, the landlord may sell the goods and crops, and out of the proceeds pay himself the rent, and hand the surplus, if any, over to the tenant, If a tenant, being in arrear, clandestinely removes his goods to avoid a distress, the landlord may, within thirty days, follow and seize the goods, and make thorn available for the payment of the rent in the same manner as if the distress had been on the land; but if the tenant removes his property the day before the rent becomes due in order to prevent the distress, the landlord has no remedy. In Scotland the law is quite different. The law of hypothec, in fact, gives the landlord a security for the current rent; the landlord may retain the property of the tenant on the land, even if-no rent is due; and if the tenant removes the property the landlord may follow it and bring it back on the land. If there is no rent due, he retains it as a security; and if there is rent due, he appropriates it in payment. The hypothec extends to the produce of the year for which the rent is due, and the year is taken to expire three months after the conventional term at which the rent becomes due—namely, on Whitsunday (15th May), and Martinmas (11th November). If the tenant removes the crops after the rent is due, the landlord may follow and seize them in the hands of a bonâ fide purchaser, unless the property has been sold to him in bulk in market overt. If the goods are sold by sample in market overt, or out of market overt, the landlord's remedy remains; and there was a case in which the landlord exercised this right seven years after the removal of the property from the land. Hypothec is a general right of retention or recovery. If a landlord wishes to exercise it over specific objects, he must do it by sequestration, and obtain a warrant of sale from the sheriff. This peculiar law of landlord and tenant in Scotland has at different times undergone discussion chiefly as it affected bonâ fide purchases, and Bills have been introduced upon the subject, which have not been proceeded with. But in the year 1864 a Royal Commission was issued for the purpose of inquiring into the law of hypothec. That Commis- 1224 sion made an able Report, and upon the recommendations contained in it this Bill is founded. The Commissioners stated that they sat for thirty days at Edinburgh, and examined 102 witnesses, including landlords and agents, bankers, corn and manure dealers, and tenants, so that they might be informed of the state of the law in Scotland, and they were satisfied that the information laid before them was complete, and had exhausted the subject. Two of the Commissioners thought that the law ought, subject to existing leases, to be abolished, and they dissented from the general Report of the majority of the Commissioners, who thought that the law ought to be retained subject to certain alterations which they recommended, and which were embodied in the Bill. The clause to which he would first direct attention was the third, which gave protection to the bonâ fide purchaser of corn, &c, for valuable consideration, actually delivered, removed, and paid for. The provision was, he thought, a very necessary and proper one, because, in the present day, there were very few bulk markets, crops being generally sold by sample. To the next clause some noble Lords might possibly object, as it provided that hypothec was not to be available beyond three months after the rent was due. He did not think that clause would meet with any very decided objection, provided he consented to protect existing contracts from the operation of the Bill, and he might say that he felt disposed to make that concession. By Clause 5, the stock of a third party taken on a farm to graze was made liable only to the amount of consideration payable for the grazing. By Clause 6, it was provided that in the sequestration for rent of any farm or lands it should not be competent to include any household furniture or agricultural implements, or imported manures; and lastly, the Bill provided that all sequestrations for rent should be entered in a register, to be kept at each court where sequestrations for rent were granted. The Bill was, as he had stated, founded upon the recommendations of the Royal Commission, which had sat in 1864 to inquire into the matter, and, in his judgment, its provisions introduced a wholesome alteration into the law.

THE EARL OF SELKIRK
said, he entertained a very strong objection to the 1225 Bill, and his opposition was on behalf of the small tenants in Scotland, whose position would be greatly changed by the operation of the Bill, and not because it was likely to affect the pecuniary interests of the landlords. In 1830 the attention of Lord Brougham, who was at that time Lord Chancellor, was called to the law of hypothec by a case that came before him, and in November of that year he introduced a Bill identical with the three first clauses of the present Bill. But having better considered the question, and having heard strong remonstrances from Scotland, the noble and learned Lord withdrew the Bill, Another Bill was introduced in the same Session by Lord Belhaven, to enable grain to be sold by sample in the open market, but this was also withdrawn, and nothing more was heard of the matter until the year 1848–9, when great numbers of the smaller tenantry of Scotland became bankrupt, and an agitation was got up by the corn-dealers, who were anxious that some alteration should be made in the law which would enable them to secure bargains in grain from bankrupt stock, by transactions which, though they might be considered bonâ fide and legal, partook, nevertheless, of the nature of sharp practice. The matter having again dropped it was not revived until the present Bill was brought in. A great change had taken place during the last few years in the position of the farming class in Scotland in consequence of farms having been much consolidated, and farmers had become divided into two distinct classes, those holding large farms, and those having small holdings. Some landlords were in favour of large farms, and he believed that the effect of this Bill would be to increase the temptation, already strong enough, to further consolidation of the farms, which must injuriously affect the interests of the holders of small farms. If this Bill passed it would very much discourage small holdings in Scotland. In the part of Scotland in which he lived, the usual practice was that rent was payable half yearly, in May and November, but practically it was not collected till August and February. Under this Bill sequestration would be taken away three months after the period at which rent became legally due. The three months' grace now allowed were of infinite value to small tenants, as they were thus enabled to reap their crops and to realize their cattle before they were called on to pay their rents. The withdrawal of 1226 this accommodation would, to many small tenants, be almost ruinous, and that would necessarily result from this Bill. He recommended that the Bill should be hung up as Scotch Bills generally were till after the 30th of April, when the county meetings took place, and if strong remonstrances were not made on the subject by the small holders of land, he would take no further step against the measure. But unless he received such an assurance he should make a Motion that the Bill be read a second time this day six months.

THE EARL OF DALHOUSIE
said, he did not intend to offer any active opposition to the Bill, though he thought it would have been better if this matter had been allowed to rest. Such an agitation, however, had been got up, most unreasonable, as he thought, in itself, that it was wise and prudent on the part of the Government to offer some concession, rather than let an agitation go on, the object of which was to get rid of the law altogether. The law was one which, as the Commissioners stated, they could not trace to its origin. It was founded on the old Roman Law, and was the low of Scotland up to the year 1623, when the term "hypothec" was first introduced into the statute; and a few years after that time, by certain decisions of the Courts in Scotland, the law assumed the form which it had held ever since. It was under this much-maligned law of hypothec that all the improvements in agriculture had taken place in Scotland. It was rather a delicate thing, then, to touch a law which had conferred such great benefits on the country. But the law did not apply to agriculture alone; it protected landlords, in common with merchants and those engaged in commerce; and if they broke down the protection which the landlord enjoyed, other classes must also suffer. His great object in maintaining this law was not that he considered it essential for the benefit of the landlord; it was a law of protection for the humbler class of tenants. At the root of the great agitation against the law was an attempt by the large tenants of Scotland to get rid of the competition of smaller tenants for land and compel landlords first to throw their farms together into large farms, and then be at the mercy of these large farmers who should dictate to them the prices at which they should let the land. He did not think Parliament should encourage such objects. Under the present system a landlord was enabled to do much for his smaller tenants, by giving 1227 them credit, enabling them to reap an entire crop, and to turn it into money before paying their rent, but this he would not be able to do if the Bill now before their Lordships became law. He could easily understand the large farmers pursuing this course for their own benefit; but he was sorry to say that a great many of the smaller farmers were so blind to their own interests as to be as clamorous for a change as the large farmers. He did not wish to see the Bill hung up until after the 30th of April; but he believed that the House of Commons would be so much engaged in business of another character when the Bill should go down there, that the measure really would be hung up until after that date. He was glad to hear that the noble and learned Lord (the Lord Chancellor) had consented to give protection to existing rights under existing leases, and he considered that the provision regarding registration had been deprived very much of its sting, in consequence of publication not been insisted upon. The change proposed by the present Bill constituted the full extent to which he could go in modifying the law of hypothec, and any attempt to do away with that law altogether would meet with his most strenuous resistance.

THE EARL OF AIRLIE
said, that after the explanation of the noble and learned Lord he was not disposed to offer any opposition to the Bill, but would be glad to see the concession made in the fourth clause extended to the fifth.