§ Order of the Day for the Second Reading read.
THE LORD CHANCELLOR, in moving that the Bankruptcy Acts Repeal Bill, the Bankruptcy Bill, and the Judgment Debtors Bill be now read the second time, said: My Lords, in asking your Lordships to give a second reading to these Bills, I 2 will now venture to submit the observations which can be more conveniently made at the present stage than they could have been at the first introduction of these measures. If I found it necessary to go into a history of the legislation on bankruptcy in this country at any length, I fear that the task would be not only most wearisome to your Lordships, but highly unprofitable in itself. I think it sufficient, in the first place, to remind your Lordships that the last Consolidation Act which was passed in this country on the subject of bankruptcy was in the year 1849. From that year to the year 1859 the law as to bankruptcy, with very little alteration, stood on that footing. In the year 1859 my noble and learned Friend (Lord Campbell), who was then Lord Chancellor, introduced into your Lordships' House a Bill on the subject of Bankruptcy which was called the Debtor and Creditor Bill. That measure contained in it four important 3 and novel elements in Bankruptcy Law. It proposed, in the first place, the abolition altogether of imprisonment for debt. In the next place, it put an end to the distinction for the purposes of bankruptcy which had up to that time existed between traders and non-traders. In the third place, it introduced a system which had obtained great favour in Scotland, under which creditors in a bankruptcy were left in a great measure to choose a trustee for themselves, who was to conduct the affairs arising out of the bankruptcy. And, in the fourth place, it introduced a system of composition or arrangement deeds. That proposition was based on the Report of the Royal Commission of 1854. This Bill, with these objects, received the most careful consideration at your Lordships' hands. It passed through a Select Committee, where it received suggestions and Amendments. It was afterwards amended on the Report, and it was on the point of being sent down to the other House of Parliament when the dissolution of Parliament took place. In the new Parliament my noble and learned Friend, who now sits on my left (Lord Westbury), who was then Attorney General, introduced into the other House, and succeeded in 1861 in passing through the Act, which afterwards became law, and which I will refer to as the Bankruptcy Act of 1861. That Act of Parliament contained these three conspicuous features. It abolished, as the Bill I have before referred to proposed to do, the distinction between trader and non-trader. With regard to imprisonment for debt, it did not entirely put an end to that, but it provided that any person imprisoned for debt might, in a summary and rapid way, apply for his discharge in bankruptcy; and if he did not think fit so to apply of his own will, it provided what I may term a gaol delivery at very frequent intervals for liberating prisoners, and under which the Registrars in Bankruptcy attended the various prisons for debt, and liberated those confined whether they liked it or not. In the third place, the Act introduced a system of composition deeds, under which a debtor by arrangement with his creditors, and by the consent of a majority in number and three-fourths in value, might bind the minority of his creditors to a composition, or any other arrangement which the majority might agree to with regard to the estate. These were the main features of the Act of 1861. It is not surprising that, with changes of 4 such breadth and importance introduced into the Bankruptcy Law, it was found in working that various details of difficulty and complication arose, which led to some embarrassment and dissatisfaction as the results of the measure. The difficulties that had arisen found expression in a Motion in the other House of Parliament for a Select Committee to consider the working of the Bankruptcy Law as it then stood. Committees of the House of Commons sat during 1864 and 1865 on this subject. In 1864 they were unable to make their Report, and they contented themselves with reporting the evidence taken before them to the House; but in 1865 the Report of the Committee was presented. I will ask your Lordships' permission to mention the names of those who composed that Committee, because I venture to think that a more important representation of the mercantile element could not be obtained. The names were—Mr. Moffatt, Sir Roundell Palmer (then Attorney General), Mr. Roebuck, Mr. Miller, Mr. Ayrton, Mr. Murray, Mr. Malins (now Vice Chancellor), Mr. Goschen, Mr. Crum-Ewing, Mr. Gathorne Hardy, Mr. Dunlop, Mr. Lowe, Mr. Moncreiff, Mr. Weguelin, Mr. Vance, Mr. Hodgson, and Mr. Cave. In 1865 the Committee reported their opinion to the House as to the changes necessary to be made in the Law of Bankruptcy in the shape of thirty-one Resolutions; and I think, with one or two exceptions, the whole of the recommendations of that Committee have been incorporated in the Bill which I now ask your Lordships to read a second time.
Coming now to these Bills, I have to state in the first place that the three measures now before your Lordships will, of themselves, if they become law, form a complete and entire code of bankruptcy for the country. They are consolidation Bills. They repeal every measure of bankruptcy passed up to the present time, and if they receive the assent of Parliament, any one who holds these three Acts in his hands will be in possession of the whole Bankruptcy Law of the country. In consolidation measures of this kind a number of provisions are necessarily re-enactments. But they are re-enactments in this sense. The Bill contains between 500 and 600 clauses. About a quarter of that number are new clauses, the others are re-enactments. I am, however, in a position to say, with regard to nearly every one of these re-enactments, that the clauses have been re-considered, and in many instances 5 re-drawn, in order to simplify, and, if possible, to abbreviate and make more plain the enactments on the subject.
My Lords, I think the most convenient course I can now take in order to make the matter more intelligible will be as briefly as possible to go through the various heads of alteration of the law which these Bills propose. In the first place, I will ask your Lordships to consider the mode in which these Bills deal with the important subject of imprisonment for debt. The present state of the law is this—that no person can be imprisoned for debt before judgment in an action has been obtained, unless it be proved that he is about to leave the country, and become what is called an absconding debtor. In that case only can an arrest take place before judgment, and then only for the purpose of obtaining payment or security from the person who is about to leave the country. After judgment has been obtained under the present law the ordinary process can be issued by the creditor, and the debtor can be taken in execution and put in prison as a debtor. When there he can apply to be made a bankrupt, and if he does not think fit to do so he would be in a short time discharged under the Act of 1861, to which I have referred. The proposal which the present Bills make, as distinguished from the present law, is this—we propose to abolish imprisonment for debt altogether; that is to say, we propose to abolish altogether the power which the creditor has of his own will to issue a process after judgment under which a debtor may be confined. Your Lordships will not expect me at this time to enter into any argument in defence of the proposition to abolish imprisonment for debt. Your Lordships have passed the Bill of 1859, which contained an enactment to that effect. The total abolition of imprisonment for debt has further been recommended by a Committee of the other House, and measures have on two occasions passed the second reading in the other House for the abolition of imprisonment for debt. But your Lordships will naturally ask—Supposing that imprisonment for debt be abolished, what means can we substitute in lieu of imprisonment for dealing with persons against whom judgment has been obtained? We have introduced provisions under this head which have always been recommended to go along with the abolition of imprisonment for debt— 6 that is to say, we provide that, if after judgment the debtor against whom judgment is obtained is shown to be about to leave the country without paying or securing the debt, he may be arrested as an absconding debtor, and, independently of that process, there is a power given of examining him in the most stringent way under what is termed a judgment debtor summons as to any property he may possess, and of requiring the discovery of any documents which would elucidate his position, so that, if possible, payment may be obtained by the realization of such property. In case he is unable or unwilling to give security for, or make payment of the debt, resort may be had to the Court of Bankruptcy for adjudication against him in the same manner as at present. Imprisonment for debt, as a process to which the creditor may resort of his own accord, will thus be at an end; but there will remain imprisonment under an attachment for non-payment of money by a Court of Equity or by order of a Common Law Court. There will remain imprisonment such as I have described in the event of a debtor being about to leave the country and refusing to pay or give security, and there will remain, finally, imprisonment either by County Courts or by Inferior Courts, which are analogous to them.
This brings me to another part of the subject to which I will ask your Lordships' particular attention — the mode in which imprisonment for debt is at present dealt with by the County Courts. At present, in the County Courts, if judgment has been obtained for a debt, the debtor may be called before the County Court Judge and examined as to his means of payment, and if the Judge be of opinion that he has means of paying the debt, either at once or by instalments, he may make an order accordingly; after which the debtor, if he does not pay, may be imprisoned by the Judge for any period not exceeding forty days. Now, it has always appeared to me that a very strong and anomalous power is thus given to these Courts. The arguments which are commonly adduced in support of it are these:—In the first place, it is said that we have to deal with men who live by their labour, and that since there occasionally come times of want of employment or of illness, such men, unless they can get credit during these intervals, will suffer very considerably, and that they cannot 7 get credit unless their creditors are aware that they have the power of imprisoning them in the event of not paying. In the next place, it is alleged that if credit is given, and if the person of the debtor cannot be arrested by the County Court, the creditor will immediately seize the furniture or the other contents of the debtor's house, and that it would be a greater loss to the family of a working man that his home should be thus broken up than that he should undergo temporary imprisonment. It is also said that this process, as shown by its results, operates very effectively in terrorem, for that whereas a great number of warrants of arrest are issued there are comparatively few instances in which the warrants are actually executed. I may refer to statistics upon this point which appear to me to possess considerable interest. Taking the eight years from 1859 to 1866, both inclusive, there were, in round numbers, 108,000 judgment summonses issued in the County Courts. Of that number 54,000 were actually heard; but only 26,000 resulted in warrants of commitment, and of these only 7,800 were actually carried out by the consigning of the debtors to prison. Thus out of the 108,000 judgment summonses issued, only 7,800, or about 7 per cent, led to imprisonment. It further appears that a few years ago the County Court Judges were consulted as to whether this power should be retained, and I am bound to say that, with very few exceptions, their opinion was that this power was of the greatest importance, some of them even saying that were it given up the system of recovering debts in the County Courts could not possibly be continued. These are the arguments for the maintenance of this power of imprisonment. But it has always appeared to me that by this power you continue a very invidious distinction between the case of the small debtor and that of the large one. The large debtor is absolved from the irksomeness of imprisonment, while the labouring man is still liable to it. It is very singular, too, that while the hypothesis is that you are dealing with a man who has nothing but his labour wherewith to discharge the debt, you put him, in order to make him pay, in a place where it is impossible for him to exercise his power of labour. Moreover, it has always appeared to me that by holding out this liability to imprisonment, we probably engender or continue a system 8 of credit in itself vicious and undesirable. I remember very well hearing a right hon. Friend of mine (Mr. Henley) giving in very graphic terms the results of his own observation in the rural districts. He described how the travellers of small traders go to a farmhouse or the cottage of a labouring man, and, the head of the family being away at work, a lot of finery or other goods are shown to the wife and daughters, who are easily tempted to become purchasers, and to pledge the credit of the head of the family. This practice, Mr. Henley remarked, and I believe with great truth, these travellers would not dream of pursuing if they were not perfectly sure they could afterwards take out a summons and, if the man still refused to pay, could imprison him in order to compel payment. Individually, I should be very glad to see a way of putting an end to this power of imprisonment for debt by the County Courts and Inferior Courts altogether; but I am afraid it would be difficult to do so at once. I have, however, proposed by these Bills a course which I think will considerably diminish the practice and before long will lead to its extinction. I propose in the first place, in one of these Bills, that no committal shall take place in any Inferior Court except by the Judge himself and in open Court—for I find there is too much reason to suppose that a great number of these committals are at present made by the Registrars or at Chambers. I also propose that every Court invested with this power shall make an annual Return to Parliament of the names of persons committed by it for debt, so that Parliament may be kept acquainted with the extent to which the power is enforced, and that if any suspicion of abuse arises its attention may be drawn to the subject. I further propose an alternative which I think is in itself much more sensible, and much more likely to be beneficial than the present system. It is that a power should be given to the Judge of arresting the future wages or earnings of a debtor against whom judgment has been obtained, to the extent of 25 percent; that is to say, a power of serving an order on the debtor's employer, under which one-fourth of his wages will be paid into Court as they become due for the benefit of the person who may have obtained judgment. The machinery by which this will be carried out will, I trust, be found 9 simple and effectual, and I hope that as in consequence it would be comparatively useless to resort to imprisonment to compel payment, it will cause that practice to fall into desuetude.
The next point to which I wish to call your Lordships' attention is one of great importance—I refer to the existing power of a debtor becoming bankrupt on his own petition. Under the present law any person, whether in prison or not, may present a petition to the Bankruptcy Court, stating that he cannot meet his engagements, and thereupon he becomes bankrupt on his own petition and obtains the protection of the Court. The Returns of the Court of Bankruptcy laid upon the table a few days ago show that the total number of bankruptcies last year was 8,994, or, in round numbers, 9,000. Now, of these persons no less than 6,533 were made bankrupts on their own petition. On the petition of the creditors there were only 805—that is, 6,533 on the petition of the debtor himself as compared with 805 on the petition of the creditor. My noble and learned Friend (Lord Westbury) has very properly reminded me that I should state the number of petitions in formâ pauperis, which amount to 480 and should be added to the number I have already given. There is a striking piece of information contained in this Return upon another subject. How many bankruptcies do your Lordships suppose there were in that year in which no dividend was paid? No less than 5,876; and my Lords, I believe it will be found by those who look minutely into the matter that it is principally in those bankruptcies which take place on the petition of the debtor himself that there are no dividends. Now, some propose that a stop should be put altogether to the practice of permitting a debtor making himself bankrupt on his own petition. I doubt whether that would be a very desirable course. In the first place, one may easily conceive a case in which it is quite proper that a debtor should make himself bankrupt, and should do so without any intention of acting otherwise than would be beneficial to his creditors. But there is a still more important reason against taking away that power. If you take away the power in name, nothing in the world is easier for one who wants to make himself a bankrupt than to get a friendly creditor to present a petition to have him declared bankrupt, and so the same thing would be done in another form. I think the 10 present measure will treat this evil in a more satisfactory way. In the first place, the abolition of imprisonment for debt will take away one of the principal motives which at present induce a debtor to petition to be made bankrupt. In the second place, the course which this Bill proposes of leaving the after-acquired property of the debtor to a great extent subject to the payment of his debts will take away another powerful motive which at present operates in the same direction—that is to say, the inducement which there is at present to the debtor to become a bankrupt in order that he may secure his future property from his creditors. And more than that, the present measure will provide a remedy by substituting another process which I will describe. Any one who wishes to make himself a bankrupt must file a declaration of insolvency, which will be published. Thereupon his property will be secured against execution and against loss. For twenty-one days it will not be competent for the debtor to take any steps towards making himself a bankrupt. For these twenty-one days his creditors will know that he professes himself a bankrupt, and it will be for them to consider whether they will put themselves in motion to prevent him from petitioning. If after twenty-one days no creditor proceeds to make him a bankrupt, then, and only then, he may become so on his own petition.
The next important alteration which this Bill proposes is to introduce to a great extent what I may term the Scotch system of trusts in bankruptcy—a system which has worked very well in Scotland, and which the mercantile community in England are anxious to try. The main characteristic of this system is that, in place of having a bankruptcy conducted with forensic proceedings through the Court of Bankruptcy, the creditors, on the first meeting after the bankruptcy, may determine for themselves the course to be pursued in winding up the affairs of the debtor. They may, if they please, have a trustee to represent them and wind up the estate. They may choose that trustee where and as they please—he may be a creditor, or he may not—and I anticipate that, as has been the case in Scotland, it will be found that many persons will be anxious to show how speedily and economically they can, as trustees, wind up the estate, and thus seek employment in a legitimate and useful way. Over this trustee the creditors will appoint one or 11 two inspectors out of their own number, who will control the trustee, and keep the general body of creditors apprised of what is being done. And, besides, the Accountant in Bankruptcy, who at present does nothing more than keep the accounts of the Bankruptcy Court, will perform the functions of a general auditor of bankruptcies, and will be supervisor of the trustees. In Scotland, the fashion has been not to have even an official assignee, as we have in this country. After the most mature consideration, we have thought the best course to take is this:—The present official assignees will be continued as provisional trustees if a necessity should arise that any person should be put in possession of the property before the creditors would have an opportunity of appointing a trustee of their own. The official assignee will act as this provisional trustee, and he will step in and take possession if ordered by the Court, but not otherwise; and as soon as the creditors choose their own trustee the functions of the provisional trustee will be put an end to. Further than this, we have introduced a provision which will, I venture to think, expedite the distribution among the creditors of the estate in trust. We provide that the creditors' trustee shall not in any case be paid any remuneration until the accounts have been audited and the remuneration allowed in the audited accounts—so that there will be no retaining any sum for remuneration until the accounts have been regularly audited and passed.
I now come to what is next in order and importance—I mean the discharge of the bankrupt. My Lords, the principles upon which bankrupts in this country have been discharged have varied very materially from time to time. I will not trouble your Lordships with a history of the alterations made at different periods. The present system is this:—The discharge of the bankrupt may be altogether refused, or it may be suspended for a limited period, or it may be granted; but when it is granted it frees him from any claim upon subsequently acquired property — that is to say, it leaves the property afterwards acquired free from liability for his own debts, unless he has committed some of the offences pointed out by the present Bankruptcy Law. If he has, a condition may be attached to his discharge, making his future property liable by way of punishment for his offence. I venture to think that in any law as to the discharge 12 of a bankrupt there are mainly three things which ought to be kept in view. In the first place, I submit that no arbitrary power whatever should be left in the Court of indefinitely postponing or refusing the discharge of the bankrupt who has surrendered his property. In the second place, if the bankrupt has committed any offence against the Bankruptcy Law—and every offence that can be committed ought to be clearly ascertained and defined—in that case you will rightly and properly suspend his discharge for a limited period by way of punishment, and you may also proceed to inflict punishment upon him in other ways if his offence amounts to a misdemeanour. And, further, I think that whatever rule is to apply to the future property of the bankrupt ought to be clearly defined, and to apply in all cases alike. I ought to state that the Committee of the House of Commons to which I have referred made this proposal—that, for the future, no bankrupt should be allowed his discharge unless his estate paid 6s. 8d. in the pound, or one-third. If his estate should not pay 6s. 8d. in the pound, they recommend that his discharge should be suspended for six years, and that he should receive it at the end of that time. My Lords, upon this point there is, as has been represented to me, a great diversity of opinion among the mercantile community. I had the pleasure of receiving a deputation from the Associated Chambers of Commerce, and they stated that different views were taken upon this question, and I think several of them said that "a hard and fast line" might operate very unjustly. For example, it would be very hard that a bankrupt whose estate paid 6s. 6d. in the pound should have to wait six years before getting his discharge because he could not pay the remaining 2d. You have these difficulties to deal with whenever you draw an arbitrary line; and, besides, they say that the amount of dividend is by no means a competent test as to the conduct of the bankrupt and his right to a discharge. We, on the contrary, propose that there should be no suspension under any circumstances of the discharge of the bankrupt for more than three years, but that for certain specified offences there should be a right to suspend the discharge for three years, or any portion of that time. We propose, further, that there should be a power to suspend the discharge for one year upon any ground the 13 Court may think sufficient to justify such a measure over and above the grounds mentioned in the catalogue of offences. Beyond that, we propose that the after-acquired property of the bankrupt should be subject to the payment of his debts in this way. If it should appear at a subsequent period that the bankrupt has acquired property, after deducting what may be proper for the maintenance of himself and his family, and providing for debts subsequently contracted — for, of course, they must be provided for — any surplus remaining may be made liable by an order of the Court for the payment of former creditors. Now that the proposition is to abolish imprisonment for debt, there is no longer any reason why a bankrupt should do what, unfortunately, too many of them have done — that is to say, acquire large property afterwards and leave the whole of his debts under the previous bankruptcy unpaid. With regard to this after-acquired property, I should add that power is given in this Bill to a specified majority of the creditors, should they think fit, to release the debtor from his liability in this respect, and he may by their consent acquire an absolute legal discharge as to all after-acquired property.
I now desire, my Lords, to say a few words with regard to the offences for which punishment may be inflicted upon the bankrupt, either by suspension of the certificate of discharge, or by proceedings in the nature of proceedings for a misdemeanour. If your Lordships will look at the list of offences which are specified at page 35 of this Bankruptcy Bill, yon will readily follow the observations which I desire to make upon it. The whole description of these offences has given me great anxiety, and the specification of them has been drawn up in a somewhat novel form. With regard to the punishment of the bankrupt we get rid of a part of the existing law which has been found in practice to give some trouble—the general introduction to the catalogue of offences declaring the intent with which a thing may be done. I will give one instance, which will illustrate what I desire to say on this point. At present the law is that a bankrupt may be punished if he has contracted his debts without a reasonable expectation of being able to pay them. In practice the way that has worked is this:—Creditors come to the Court and say—"Here is a man who owes £20,000. He never in any year made above £1,000 a 14 year. It is quite clear, therefore, that he must have contracted this amount of debt without any reasonable expectation of being able to pay." That sounds very plausible at the outset. But the moment you come to details you find that you are obliged, when charging a man with misdemeanour, to put your finger upon some particular debt and say, "that debt was contracted without any reasonable expectation of being able to pay it;" and experience shows that it is utterly impossible to convict any person, singling out anyone debt in that way, and the affirmative being on the person objecting. Now, in order to meet that case we propose, under the sixth head of offences, that the Court may suspend the order of discharge from taking effect for any time not exceeding three years from the date of the order, if it appears to the satisfaction of the Court
That any Debt or Liability of the Bankrupt subsisting at the Time of Adjudication was not contracted or incurred by him with a reasonable Expectation (Proof whereof shall lie on him) of his being able to pay or discharge it.That is to say, we put the onus upon the bankrupt to show that when his debts were contracted he had a reasonable expectation of being able to pay them. That is a mode of legislation entirely in accordance with the course taken in many cases in our criminal law, and it commends itself to our common understanding. If you find a man in a position in which a presumption arises that he has contracted debts without any reasonable expectation of paying them, and if the means of proof are in his hands to show the contrary, I submit that it is not unfair to throw the burden of that proof upon him. We take the same course with regard to offences which shall be taken to be misdemeanours; and although this inversion of the burden of proof in this way may appear a small matter in itself, I venture to think it will lead to one of the most important changes in the administration of the Bankruptcy Law of this country. Beyond this, we provide that, whereas hitherto these offences have been only triable before a Judge at assizes, there shall be a power to try these misdemeanours at Quarter Sessions and by the llecordcrs—Courts in which they may be easily disposed of.Without delaying your Lordships by any complete specification of the enactments of the Bill, I may say we have 15 endeavoured in another respect to make an alteration in the Law of Bankruptcy which will be advantageous. At present various questions may arise under bankruptcy which cannot be decided by the Bankruptcy Court itself. Thus the validity of an adjudication being in dispute may fall to be decided by higher Courts than the Court of Bankruptcy; and questions may arise which are now determined by the Courts of Common Law. I think it would be desirable to make the Bankruptcy Court on this head—to use an expression from Scotland—"self containing;" to give it the power of deciding once for all whether an adjudication is valid or invalid; and powers of that kind are included in this Bill.
I now come to one of the most important questions for consideration in connection with the Bankruptcy Law—that of deeds of composition and arrangement. Deeds of this kind have been a feature in our Bankruptcy Law certainly since the year 1849; but they received a very great expansion by the provisions of the Act of 1861. Upon this point I will not trouble your Lordships by any lengthened statistics; but there are one or two figures very interesting in themselves, and bearing materially upon the legislation now proposed. I want to show the way in which these deeds of composition and arrangement have grown since 1861. In 1862–3 there were 633 of these deeds registered; in 1863–4 there were 1,176; in 1864–5 there were 5,204; in 1865–6 there were 5,458; and in 1866–7 a Return laid on the table a few days ago shows that there were no less than 6,912. Upon these 7,000 deeds the stamp duty alone was £21,842. The gross value—and I pray your Lordships' attention to these colossal figures—the gross value of the estate and effects included in the composition deeds was £8,737,100. But what do your Lordships suppose was the amount of unsecured debt thus compounded for? No less than £29,642,628. So that nearly £30,000,000 of debt was dealt with and compounded for through the medium of these deeds of composition and arrangement. Now, these being the sort of figures with which we have to deal, and that being the amount of interest at stake, your Lordships will readily understand that the mode of dealing with deeds of this kind must be a matter of extreme importance. I will tell your Lordships the general nature of the complaints which 16 are made—and they are loud and strong—as to these deeds, which have thus grown and multiplied. In the first place, it is a strong measure at the least to say that the minority of creditors shall be bound by the resolution of the majority to accept a sum for their debt far less than the sum really due to them. But that is not the only difficulty. By the present arrangement, what are called the secured creditors—that is, the creditors who hold security to the full amount or to a large amount of their debt—are entitled to vote, and do vote, in the majority; so that the result may be that that majority is obtained by means of the secured creditors, who bind the minority of unsecured creditors to accept less than is due to them. The next complaint is that there are no means of ascertaining that the array of creditors set out as assenting to the arrangement are really creditors at all. It is said that such things as this happens:—A man puts forward a list of alleged creditors and shows that a majority accept the composition which he tenders. But the complaint is that a number of these may be sham creditors, who have no real existence at all, and that the minority has to find out whether they are bonâ fide creditors or not. Further complaint is made that under the present system there is no mode by which a competent judicial determination can be obtained whether one of these deeds is a valid and binding deed, which shall regulate the rights of creditors without controversy. These are the main objections to the present system with regard to deeds. We have dealt with these objections in the present measure, and I will state the five leading features in the clauses we propose, which, if adopted, will provide a complete system of law respecting these deeds. First, we require a declaration from the Bankruptcy Court in the nature of a judicial act that the deed is a complete and perfect deed, thereby stamping it with authority and with conclusiveness, and making it a deed which, when it has received the judicial stamp and approbation, is not to be disputed elsewhere. Next, we provide that no person is entitled to rank as a creditor for the purpose of making a majority until he has proved his debt, just in the same way as a debt is proved in bankruptcy. Thirdly, we provide that secured creditors, if they wish to vote, must deduct the value of their securities. Fourthly, we provide as to deeds what I 17 may term a chapter of misdemeanour, applicable to deeds just in the same way that similar offences are dealt with in bankruptcy. The result will be that, whereas at present the debtor thinks that by resorting to a deed containing a majority or his creditors he can escape the law for any offence of which he may have been guilty with regard to his estate, he will now find that, notwithstanding that deed, he will be liable to be punished for any of these offences, just in the same way as if he became a bankrupt. A false claim for a debt under a deed is also made punishable as a false proof under bankruptcy.
It only remains that I should state our proposals with regard to Courts of Bankruptcy. We propose no new Courts, no additions to our present Courts and Judges. On the contrary, we propose that the district Courts of Bankruptcy shall be gradually absorbed, as each Commissioner dies or retires, and that the district Courts shall be closed. There is at present concurrent jurisdiction in the County Courts, and they will become the Courts of bankruptcy for the country districts. We shall use the district Courts while they remain; in the meantime the County Courts will be gradually familiarizing themselves with the administration of bankruptcy, the whole of which they will ultimately dispose of. There are large powers of transfer from one Court to another, or from a County Court to London, if it should be deemed desirable by the creditors. The metropolitan district will be twenty miles round the Post Office, and there will be three London Commissioners, who will be primary Judges along with the Judges of the County Courts in the districts. The three London Judges will also compose an appellate tribunal from the County Courts; and any two of the Judges may hear appeals. If an appeal relates to an estate in respect of which the debts are under £300, the judgment of the London Court will be final; but in other cases there will be an appeal to the Court of Chancery. The provision for appeals will be ample, for the appellate business in the Court of Chancery has been for some years easily disposed of in one day a week.
Certain financial causes of the Bill are not supposed to be visible to your Lordships until they come back again from the other House; but we hope that arrangements will be made by which establishment expenses of the Bankruptcy Courts will be charged upon the Consolidated Fund, the 18 Treasury taking the income from the fees which are at present applied to the payment of the Bankruptcy Courts expenses.
These are the leading features of the measures to the first of which I ask jour Lordships to give a second reading; and, if they receive your approbation, I think they will effect a very important reform in the Bankruptcy Law. No point has been urged by the mercantile community which has not been attended to, and, I think, effectually met by the provisions of these Bills. I have sometimes heard it said that great desire has been manifested for a thoroughly satisfactory measure of bankruptcy reform; but I do not believe that there ever can be a thoroughly satisfactory measure, because bankruptcy itself is not a satisfactory thing. It is not satisfactory to the debtor, and it certainly is not satisfactory to the creditor, in whose mind it is generally associated with loss and disappointment, and often with fraud and imposition. Under these circumstances, it is not surprising that there always is, as there always will be, a disposition to throw upon the law something of that blame and of that discontent which arises not so much out of the law as out of the subject-matter with which the law has to deal. However, I believe that these measures will really do the best that can be done at present with the law upon the subject. I regret that, owing to circumstances beyond my control, the print of these Bills has not been longer in your Lordships' hands. I have been very anxious to ask you to hear the statement I had to make, because I think that statement will enable your Lordships to find your way, so to speak, through the great mass of paper which the Bills occupy. As to the farther progress of these measures, I am desirous to consult your lordships' convenience; but I am anxious that the measures should as soon as possible receive your lordships' approval, and go down to the other House of Parliament. At the same time, if it be your Lordships' opinion that these Bills should pass through a Select Committee of this House, I know so well your Lordships' energy and assiduity, that I shall not be disposed to offer any opposition to that proposal. The only drawback will be that the judicial business of the House, I which is considerably in arrear, may be interfered with for a few days. However, I am in your Lordships' hands, and I now ask you to give the first of these Bills a second reading.
§ Moved, "That the Bankruptcy Acts Repeal Bill be now read 2a."—(The Lord Chancellor.)
§ LORD WESTBURYsaid, he would not now go into the details of these Bills; but a more important subject than the law of bankrupt debtor and creditor could hardly be taken into consideration. The past year had been heavily marked by commercial disaster, which, he was sorry to say, had largely affected the honour and integrity of the commercial community. A great part of this had arisen from bad law, for our Law of Bankruptcy was a reproach to us, as were our laws for the winding up of insolvent companies, the whole being in such a state as to excite the surprise of intelligent foreigners. We seemed to have been very deficient in discovering the principles which should guide us in legislating upon these matters, or the rules which might be founded on a wise expediency. He would ask their Lordships' attention while he pointed out some general principles upon which these measures had been founded, in order that their Lordships might determine whether they were right in themselves, and whether they were correctly and wisely applied. He concurred in the melancholy reflection that those who looked back at the history of the question might despair of satisfactory legislation upon it. Lord Eldon, sixty-seven years ago, said that the Law of Bankruptcy as administered in England was in itself accessory to as great a nuisance as any law of the land; and what had we done to alter that in sixty-seven years? A Consolidation Act passed in 1825 turned out a failure, and another in 1826, believed to be very complete, required a supplementary measure. Subsequent legislation took place, he believed, in the years 1836 and 1839; and at last, in 1849 the whole system was entirely swept away and a new one introduced. The new system, however, lived for a short time only, and it fell to his lot in 1860 to bring in a consolidation measure. That failed; and in 1861 another measure was introduced. Unfortunately it passed in an imperfect form, some of its most material provisions having been struck out or altered during its progress through Parliament, so that when it came to be put in operation, it was like a watch from which the main spring had been left out. This measure had likewise been condemned, although he might remark it had been the parent of a 20 mode of administration which had been received with considerable favour. The measure introduced subsequently, in the year 1866, proved equally unsuccessful. That measure was followed by the Bill now under their Lordships' consideration. Now, in almost all these Bills there had been a wandering up and down, and none of the propositions had given satisfaction. Sometimes the complaint had been that the creditors had too much control, and that there was not sufficient superintending power; at another time, the complaint had been that there was too much official influence, and that the creditors ought to possess greater powers. But all through there was a consciousness of a defect existing in the law. It was thus obvious that though the existing system was generally regarded as imperfect and unsatisfactory, people were utterly at variance as to what ought to be substituted for it. He trusted, therefore, that their Lordships would agree with him that they ought to endeavour to find out the true principles, even though in so doing they might be led into paths which had been hitherto un-trodden. The great object of a Bankruptcy Law should be to make an equal and just distribution of the property of the bankrupt among his creditors. The Legislature had no right or title whatever to consider the bankrupt, or to benefit him in any way which did not tend directly or indirectly to the benefit of the creditors. The business of Parliament ought to be to devise the simplest process of taking, realizing, and distributing the bankrupt's property. Of course, a tribunal must be provided for inquiring into the justice of the cases brought before it; but when this had been done, the Legislature had no further duty to discharge, Under the existing system it was impossible to arrive at the simple end in view without the employment of a number of officers, and without I calling in at every turn the aid of the attorney, the consequence being that the estate was eaten up entirely by the expense of the machinery which had been introduced for the purpose of collecting and converting the bankrupt's property. He would now direct their Lordships' attention to the constitution of the tribunal which was at present intrusted with the duty of superintending and distributing the bankrupt's estate. Was there any security that that duty would be discharged efficiently and in a manner calculated to command respect for the tribunal on the part 21 of those who resorted to it? His noble and learned Friend on the Woolsack proposed to leave the chief tribunal precisely in the condition in which he found it. There were three Commissioners, two of whom were very aged men, and had, he believed, held office above thirty years, and therefore they could hardly be supposed to be much alive to the necessity of adopting an entirely new system. He wished, of course, to speak of them with all the respect due to persons who had been long employed as servants of the community; but, at the same time, he must be permitted to say that they were by no means fitting representatives of this important branch of the law. They acted wholly independently of one another, and were not governed by any one mode of procedure. Sometimes they differed among themselves, and there was no presiding or controlling power. Above all, the besetting vice in the present constitution of the Court was that administrative and judicial duties were mixed up and blended together. At one time a Commissioner would sit as a tribunal to determine questions which might be brought before him. At another time he would proceed to hold a noisy and multitudinous meeting, and would bring into his Court a rabble, who acted without any considerations of decorum or decency. Indeed, in the evidence taken before the Committee of the House of Commons in 1864, the existing tribunal was spoken of in the most disparaging terms. It was not fair that this important branch of the law should be administered in a hole-and-corner court in Basinghall Street, in a building thronged by persons who flocked together for the purpose of being present at meetings which had no connection with the judicial business of the Court. In his opinion the law of debtor and creditor should be represented by a Judge, sitting side by side with the other Judges of the superior Courts, and whose attention should be confined entirely to judicial business. There would then necessarily be a proper distinction drawn between administrative and judicial duties, and at the same time uniformity in the administration of the law would be secured. He earnestly protested, therefore, against continuing the present mode of administering the Law of Bankruptcy. Although he was only repeating an old story, he must urge on their Lordships the necessity and propriety of providing for the administration of that part of the law of debtor and creditor 22 in a manner correspondent with its importance and its value to the country at large. If they did so, they might effect real improvement; if they did not, they would always have, if he might so speak, the dregs and fœces only of insolvency flowing into court, and all the rest seeking other channels and other modes of arrangement. What they had to look to first of all was not so much any defect in the principle of the law as in the system of administering it with reference to the collection and distribution of the bankrupt's property. On examination of a great number of cases he found that in many of them the expenses of administration were frightful. He had received many letters from the creditors of bankrupts informing him of the amount of their claims and the extent of the bankrupts' estates, and telling him that the dividend they obtained was only a few pence, the great hulk of the estate going to the benefit of the attorneys, the accountants, the messengers, the auctioneers, and other persons. He would give one case as an illustration, the correctness of which he had ascertained. The gross proceeds of the estate were £777 19s. 6d. The solicitor's bill amounted to £366, or nearly one-half of the whole estate, the accountant's charges to £60 14s. 9d., the official assignee's to £33, the manager's to £37 11s. Altogether £523 went to the various officials, and only £254 was left to be divided among the creditors. All that waste of the estate took place secundum legem in the process of administration, the creditors receiving only about one-third of that to which they were entitled. In another case the gross proceeds of the estate were £250. The solicitor's bill amounted to £143, the manager's bill to £45 19s. 10d., the official assignee's to £12 17s., and after various minor other charges, the balance divisible among the creditors was only £34. Before such a state of things could be effectually corrected they must establish some office by which all bankrupt estates could be collected and distributed at a total expense not exceeding 10 per cent of the gross value. Taking a number of bankrupt estates which had been administered of late years with, perhaps, exceptional economy, he found that the expenses amounted to 33½ per cent of the gross value. The remedy for such evils was to be sought by creating a species of tribunal charged with the duty of collecting bankrupt estates, or 23 —which would be far better, more in accordance with our practice, and equally effective—by attaching the duty of collecting such estates to the chamber of a Judge, and requiring the estates to be realized and administered under his immediate superintendence. With what facility and economy estates could be collected and administered in the chambers of a Judge his noble and learned Friend (the Master of the Rolls) could testify. He had had the pleasure of examining some of the Returns connected with the estates of deceased persons, and found that such estates could be administered in the Master of the Rolls' Chambers at less expense than that incurred by executors who did the work through a solicitor in the ordinary manner. Then, why should they not let a Judge in Bankruptcy do that duty in the same way? Why not let him follow in the footsteps of his noble and learned Friend? If the assets of a deceased person could be collected in that manner so could the estate of a bankrupt—the work in the two cases was of precisely the same character. He entreated their Lordships, therefore, to have recourse to that mode of procedure, and not any longer to allow the realization of bankrupt estates to be committed to a Commissioner who had not the same responsibility or authority as one of the eminent Judges of the land. Let there be a Judge in Bankruptcy charged with the duty of administering the law, and having under him a great court or chamber to realize and administer the property under his judicial superintendence; and thus they would get rid of the swarm of auctioneers, accountants, messengers, and other creatures who now crawled and fed upon the body of bankrupt estates. At present, no sooner had there been an adjudication of bankruptcy than some solicitor, or firm of solicitors, received a copy of a statement, probably from some inferior officer of the Court, and then a communication was immediately sent round to every creditor offering to undertake the business of the bankruptcy, and to do all that was necessary in the most expeditious and economical manner. The creditor was also requested to sign a paper annexed to that communication, and when that had been done the solicitor went before the Court, and said he had authority to act for the creditors. He accordingly chose an assignee, a creature of his own, and then the estate was wound up 24 in the wasteful manner he had already described. He rejoiced that the time had come when the necessity of the abolition of imprisonment for debt was generally acknowledged. Seven years ago, earnest as he was on this subject, he was obliged to qualify the measure he brought in. But while their Lordships were asked to abolish imprisonment for debt under the present Bill, he trusted they would consider the condition in which the poor man now stood, of being imprisoned under the operation of the County Courts. He had before described the hardship of the situation of the humbler classes in this respect. He had given instances to prove that the poor man always had to buy his commodities at an expense of 10 or 20 per cent more than if he possessed greater means. He had asked their Lordships to strike at the present system, under which the poor were liable to be sent to prison for forty days unless they were able to pay their former debts, as well as to find the means of present subsistence out of their earnings. Under this Bill there would be bankrupts who had contracted debts to a large amount, and the Court was not, except in certain cases, to consider whether they had been contracted fraudulently or not. But, if so, how could they allow so unjust a law as this power of committal by the County Courts to remain in operation against the poor man? He trusted that their Lordships would approve the measure which he brought forward in 1864. The Government of that day were not quite prepared to accept it, although he was glad that some of its provisions had since become law. Another question was, how far they would allow recourse to be had to the Bankruptcy Law where the debtor had no assets? The Law of Bankruptcy had grown, in a great degree, out of imprisonment for debt, and had properly been described as an execution for the benefit of all the creditors. Equal distribution was the object, and if there were no property bankruptcy was useless. It was proposed by his noble and learned Friend that the bankrupt should give a certain notice of his condition before he applied to the Court, but the notice would be disregarded, for no one would attend to it. In fraudulent cases, the common course of proceeding was that when a man in trade found himself involved in debt, he generally made a bill of sale in favour of some creditor—perhaps has father or his brother — and then he went into the 25 Bankruptcy Court to whitewash himself. He was whitewashed; he came out a new man; and he entered into possession of the property which had been kept for him during his bankruptcy, and this course he frequently pursued four or five times over. But he (Lord Westbury) said do not let the debtor be adjudged a bankrupt unless there was something for the Bankruptcy Law to do. The object of a Bankruptcy Law was to take the estate of the debtor and to divide it equally, speedily, and economically among the creditors. Why should a debtor be permitted to go into the Bankruptcy Court, and to put the country to expense, when he had not, perhaps, a shilling to give up? He entreated his noble and learned Friend (the Lord Chancellor) to put a limit, and not put the Act in operation unless there was a certain amount of property to be divided. It was said in the House of Commons that such a provision would only act as an inducement to a debtor to get a quantity of goods into his hands upon the eve of his bankruptcy so that he might have something to surrender; but surely the law would discover and punish a fraud of that kind, and it certainly could be no reason why the general principle of not opening the doors of the Court except to those who honestly required its aid should not be carried out. Then arose the question whether the future property of the bankrupt should be liable to his creditors. A man came to the Bankruptcy Court to be relieved from the contract into which he had entered to pay his creditors in full. He was relieved accordingly; but was he to be absolutely and for ever relieved, or only relieved under certain conditions? This matter was much discussed in the other House, and the question was whether the debtor was to be discharged if he paid a certain dividend, or whether they would make his future estate liable? He begged to call his noble and learned Friend's attention to the very imperfect manner in which this clause of the Bill was worded, and the impossibility of giving effect to it. There was another difficulty in giving effect to a Bankruptcy Act. If a creditor thought he could get anything out of the debtor he employed a solicitor. By doing so, and by incurring an expense of £40, he might get a certain sum for himself, which, if divided equally among the creditors, would only increase his dividend, perhaps, about 1s. in the pound. The evil to be redressed was that there was no prosecutor, no provisions 26 which could be put in motion by the Judge, no mode by which that could be done which justice demanded. There was a clause by which the debtor was to be summoned, and then inquiry would be made whether he was able to pay any sum towards the discharge of the debt. The cost and difficulty, and the necessity of employing a solicitor, would deter creditors from availing themselves of the process proposed in the Bill. In framing his Bill of 1861 he acted in deference to the opinion of a large meeting of Members of Parliament and delegates of Chambers of Commerce at which it was insisted that everything ought to be given to the creditors, who had a right to do what they chose with a bankrupt's estate. He endeavoured to correct the evils to which this system would have given rise by the introduction of a Chief Judge; but that proposal was rejected by their Lordships. The consequence had been that the Bill had not worked satisfactorily, and the present and any future measures would prove equally unsatisfactory unless a remedy were provided for creditors who were utterly defenceless, supine, or apprehensive of incurring cost. Were a competent tribunal erected to collect and administer the bankrupt's assets, the frauds and plunder now complained of would be prevented, and confidence in the administration of bankruptcy would be restored, for creditors would feel some assurance of receiving what an estate was capable of producing, without being subject to the present enormous deductions.
§ LORD CHELMSFORDsaid, it was a striking proof of the inherent difficulty of this subject that the measure of 1861, though framed by the noble and learned Lord who had just spoken (Lord Westbury), after having directed his acute and intelligent mind to the question, proved so unsatisfactory that within three years fresh legislation was generally called for. That demand led to an inquiry by a Committee of the other House, and a Report was presented in 1865, upon which, as had been stated by his noble and learned Friend on the Woolsack, the present Bill was founded. The noble and learned Lord opposite (Lord Westbury) had attributed the entire failure of the Act of 1861 to an alteration made by their Lordships, which he had compared to taking the mainspring out of the works of a watch. That mainspring was the appointment of a Chief Judge in Bankruptcy, grafted 27 upon the existing system—for the Commissioners were not to be superseded. What the functions or utility of that Chief Judge were to be it was impossible for those who were conversant with the subject to understand, and his noble and learned Friend (Lord Cranworth) and himself were unable to obtain any satisfactory explanation on that head; all his noble and learned Friend (Lord Westbury) could say was that the Chief Judge was the keystone of the arch. Had it been proposed to remove the Commissioners their Lordships would, no doubt, have acquiesced in the appointment of a Chief Judge, for such a proposal would not have differed materially from the present proposition by which the three Commissioners were to be Judges of the Court. If it had been proposed to abolish the Commissioners, he (Lord Chelmsford) for his own part would have seen no objection to the appointment of a Judge; but he could not see any reason for the creation of a new Judge if the existing Commissioners were to be retained. As to the miserable dividend which had been derived in many cases, his noble and learned Friend had entirely forgotten that this had arisen under his own measure of 1861; and he made no reference to the alteration now proposed, which would reduce the expenses to a very small amount, and would leave creditors, he believed, in every case a considerable dividend. For many years he (Lord Chelmsford) had thought that the only mode of dealing with bankruptcy was to encourage in every way an arrangement between the debtor and his creditors, and that if they could not agree and the matter were brought into the Court it should be left entirely in its hands. Upon consideration, however, and ascertaining the opinion of the commercial world, he was satisfied that the plan now proposed and which was based on the Scotch system, was the only one which would prove efficient and satisfactory. His noble and learned Friend (Lord Westbury) had fallen into some misapprehensions with reference to the Bills introduced in 1860 and 1867. The former, brought in by Sir Roundell Palmer, then Attorney General, was mainly founded on the Scotch system; it did not prove a failure, for circumstances prevented its passing. In 1867 a very similar Bill was introduced, but, the Reform Bill occupying the whole attention of Parliament, it did not pass. Now, the present Bill was founded altogether on the Scotch 28 system. It would get rid of the solicitor, the accountants, and the trade assignee, who he feared had generally been a mere tool in the hands of the solicitor and accountants: it would give creditors what the commercial world had long desired — control over the bankrupt's affairs, not only by a preliminary arrangement among themselves, but even when the matter had been brought into Court, for the Court would only decide questions of law which might arise. The creditors would appoint their trustee and inspectors, and the latter would probably be creditors themselves, while the former might or might not be so. The trustee would be checked by the inspectors, and they in turn would be checked by the accounts being audited by the Accountant in Bankruptcy. His noble and learned Friend near him (Lord Colonsay) would correct him if he was wrong in saying that this system in Scotland had worked in the most satisfactory manner; and he was told that upon an average the creditors obtained 88 per cent upon the gross assets, the expenses being no more than 12 per cent. He hoped, therefore, though his noble and learned Friend on the Woolsack did not anticipate that an entirely satisfactory Law of Bankruptcy would ever be passed, that the measure, which had adopted in some of its details the system which had proved so successful in Scotland, would be found equally successful by the commercial community of this country. The measure was so important and so complicated that its details could not be satisfactorily discussed in that House; he therefore agreed with his noble and learned Friend that it was desirable that it should be referred to a Select Committee, where it might receive the attention of noble and learned Lords who had devoted special attention to the subject, and who might put the measure in the best possible shape. Under these circumstances, he would not think himself justified in trespassing any further on their Lordships.
§ LORD ROMILLYregretted that their Lordships should be called upon to read the Bill a second time so soon after it had been placed in their Lordships' hands. Through the courtesy of his noble and learned Friend he got a copy of it on Wednesday last; but in the case of a Bill of 504 clauses it was impossible to satisfy himself thoroughly about it. The measure seemed to go in the right direction, but to do so timidly. He agreed in all that had 29 been said with respect to the defects in our Bankruptcy Law; but the great defect of all he believed to be the complicated machinery and the enormous number of officers created for the purpose of its administration. It was unquestionable that much larger dividends were received under the old system of commissions directed by the Lord Chancellor than under the system of Bankruptcy Commissioners and official assignees. The Bill ought, in his opinion, to put an end to the whole system of judicial establishments, of course giving proper compensation in the case of existing interests. In 1854 a Commission, composed of very eminent persons, was appointed to inquire into the Law of Bankruptcy; and a solicitor of great experience gave evidence to the effect that he had administered an estate in bankruptcy in which the dividends amounted to £32,000 and the expenses to £880, and another in the Court of Chancery the assets of which were £17,000 and the expenses only £55. There might be some little difference from the one being an insolvent estate and the other not; but the great difference arose from the circumstances to which he had referred. There were two branches of every Bill on this subject—the one which dealt with the voluntary system under which creditors wound up estates for themselves, and the other with the compulsory system. If the creditors wished to wind up an estate for themselves under deed of arrangement, or under the trustee system of Scotland, it was quite proper that they should be allowed to do so. But for that purpose it was not necessary to give the powers of a judicial establishment. He could not help thinking there was too much in the shape of trustees and officials in the Bill. There were very many clauses of the Bill which would require great consideration in the Select Committee, and it would be necessary also to go through the Bill in that House after it had come from the Committee. One great cause of expense, and a great evil in itself, was the attempt to induce creditors to make personal attacks on the bankrupt for the purpose of punishing him because they had lost their money. But punishment was quite distinct from the collection of debts, and the two things should be kept entirely separate. He was not at all sanguine about the success of this measure, and he could not help thinking that his noble and learned Friend was right when he said 30 that it would probably be found not satisfactory—it would probably add one more to the list of failures which had characterized all attempts at legislation on this subject. If the Bill should come before their Lordships from the Select Committee, he would propose several Amendments which, in his opinion, would be required for putting the measure on a better footing.
THE LORD CHANCELLOR, in reply, said, there were one or two points which I had been adverted to on which he wished to avoid misunderstanding. In the first place, he wished to observe that it should not be supposed that the Bill had been prepared in any haste, for it had occupied the attention of the draftsmen for nearly two years, and had derived the advantage of the considerable amount of criticism which had been passed on the subject in the House of Commons. His noble and learned Friend near him (Lord Westbury) had referred to the manner in which the administration of the bankrupt's estate was clogged by officials, and the expense thereby engendered. With every word that had been said on that subject he agreed. These things were the scandals of the Bankruptcy Court—the question was how they were to be removed? Before the Act of 1861, his noble and learned Friend had made much the same observations as he had done to-night, and they had been frequently made by the whole commercial community. But what were the remedies which the commercial community proposed, and had his noble and learned Friend sufficiently weighed those remedies? Why, seventy delegates, representing thirty-six Chambers of Commerce, had said that a thorough reform in the Law of Bankruptcy was needed, with a view to a speedy distribution of the estate and the suppression of fraud, that the provisions of the Scotch Law had proved eminently satisfactory in accomplishing those objects, and that in any measure for the reform of the Law of Bankruptcy those provisions should be copied as closely as possible. This is what the Bill proposed to do: all the creditors would have to do would be to bid the officials of the court "farewell," to appoint their own trustee, and make their own bargain for the collection of the estate, and over that trustee they would have their own inspectors. The expenses now so much complained of might, he thought, be reduced to the level of those in Scotland. By a very accurate Return it appeared that the total ordinary 31 expenses were about 14⅜ per cent, and if some occasional and extraordinary expenses were added the amount would be 23¾ per cent, which was the highest under any circumstances. The commercial community said—We desire nothing better than to collect the debts of our debtors on those terms;" and the Bill proposed to arm creditors with those powers. But his noble and learned Friend said "that will require very little judicial machinery." So said he; and he hoped that in a short time the judicial machinery would be much less indeed than it was at present. It would therefore be very unwise, in the expectation of that result, to sweep away the existing judicial machinery for the purpose of restoring it in another form. Well, then, with regard to the suggestion of a Chief Judge in Bankruptcy, he thought that nothing could be more inconvenient than to multiply special courts for special purposes. If a first-class Judge were set up to deal with the law of debtor and creditor alone, you could not find sufficient work for him, unless you concentrated all the bankruptcy business in London. Such a Judge must be occupied, not with administrative, but judicial business. You would not set him to do the work of an accountant; he must deal with grave and solemn questions of law, which alone would not employ the time of a superior Judge. Again, nothing could be more delusive than to compare, as his noble and learned Friend (the Master of the Rolls) had compared, the expense of administering estates in Chancery and of administering insolvent estates in bankruptcy. In Chancery there was little or no controversy about debts or about the conduct of a trader; no questions arose respecting a trader's discharge; and to set up a sort of Vice Chancellor in Bankruptcy with an army of chief clerks, who would become Judges themselves in a short time, would be, instead of an improvement, a great evil. The chief evils of the existing system of bankruptcy were the evils of too much official interference and too great expense. In that sentence all the defects of the Law of Bankruptcy were comprised; and the best way was to make the creditors themselves the masters of the estate, through the intervention of a trustee appointed by themselves to administer it.
§ Motion agreed to: Bill read 2a accordingly, and committed to a Committee of the Whole House on the First Sitting Day after the Recess at Easter.
32§ BANKRUPTCY BILL (No. 31), and JUDGMENT DEBTORS BILL (NO. 32), read 2a (according to Order), and committed to a Committee of the Whole House on the First Sitting Day after the Recess at Easter.
§ House adjourned at a quarter before Eight o'clock, till To-morrow, half past Ten o'clock.