SECOND READING. (Hansard, 19 June 1882)

§ LORD COLERIDGE,
in rising to more that the Bill be now read a second time, said, that the object it had in view was 1546 to do away with a great and serious evil, which was increasing yearly to a very large extent—namely, the oppression of poor and ignorant borrowers among the artizan or working classes by the lowest and most unscrupulous class of moneylenders. The latter usually obtained the power to seize at once the property and goods of the borrowers, and this power, created by Judge-made law, had been much extended by the Judges. As a rule, bills of sale had been interpreted by the Courts of this country to pass all property which came afterwards into the possession of the grantor, although it had not been made originally part of the grant in the bill of sale. That must necessarily be very hard upon honest traders; because the result was that a dishonest man who made a bill of sale and passed all his existing property to a money-lender, passed also to him goods which afterwards came to the grantor in the way of his trade, although they might not have been paid for. That operation of bills of sale was, to some extent, controlled by a section in the Bankruptcy Act of 1869, which had this effect—that all goods in the hands of a bankrupt, although he might have given a bill of sale, yet if they were in his order and disposition at the time of the bankruptcy, passed to the general body of creditors. In 1877 the number of bills of sale under £50 was 4,802 in England, and the amount secured by them was £125,597. In 1880, the number was 38,177, and the sum secured £715,000. The smaller bills of sale given to money-lenders were undoubtedly very oppressive, and the interest exacted was often outrageous. He held in his hand a copy of a bill of sale, which contained no less than 21 conditions of forfeiture. It was only with bills of sale of that kind that the measure was intended to interfere. The noble and learned Lord on the Woolsack had sent circulars to the County Court Judges and other officials, asking for their views on the proposed legislation, and, speaking generally, the answers were in favour of it. About 82 answers were received, most of which were, on the whole, in favour of the measure he was now advocating. Last year a Bill similar to the present one was introduced in the House of Commons, and referred to a Select Committee, composed of Members of high character and great authority. 1547 Among the witnesses examined before it was a money-lender, who, with singular frankness, admitted that it would be to the advantage of the poor if they were not able to borrow money on bills of sale. The measure, which had failed to pass in the House of Commons last year, in consequence of the pressure of other Business, had this year been read a third time in that House, with the unanimous approval of the Chambers of Commerce and of the persons interested in the question. Among the chief provisions of the Bill was a clause requiring that every bill of sale should, as a matter of course, be registered, and that to each a schedule must be attached, containing a clear description on its face of the property to which the document referred. Another provision was that property acquired by the grantor after the execution of the instrument should not pass under the bill of sale. By a third clause it was proposed to enact that every bill of sale must be properly attested, and must bear on its face proof that a competent person had explained its contents to the grantor. By another provision, bills of sale for sums under £50 were declared absolutely void. He hoped their Lordships, by passing this Bill, would prevent the granting of such bills of sale as he held in his hand, the conditions of which were oppressive, and the interest on which was excessive. The accommodation furnished by such bills was small, it was granted on ruinous terms, and consequently the whole of the property was often swept away. It was to distinguish such bills of sale as those from the bonâ fide ones granted in mercantile transactions that the Bill was introduced. A good deal of evidence was laid before the Select Committee, to which this matter was referred by the other House, as to the point at which bills of sale should not be allowed, and he would recommend their Lordships to read that evidence, from which they would see that most ruinous rates of interest were charged. There had also been considerable difference of opinion in the answers to the Lord Chancellor's circular, some persons thinking that bills of sale should not be granted for less than £50, and others thinking that the minimum should be higher; but, with a single exception, the House of Commons' Committee was unanimous in fixing £50 as the amount below which no bill 1548 of sale should be granted. He would now ask their Lordships to give a second reading to the Bill.

§ EARL CAIRNS
said, he did not rise to offer any opposition to the second reading of the Bill, indeed he thought it was a measure that it would be as well to pass into law; but, at the same time, seeing how very much it touched the commerce of the country, he thought their Lordships would do well to give the details of the measure a good deal of consideration before they determined to do so. If the Bill was not to go before a Select Committee, it would be all the more necessary. He had received representations from various parts of the country, which satisfied him that there was much difference of opinion with regard to the Bill. He did not see on what principle it was, if a man was engaged in trade, that they should say—"You shall not borrow money on a bill of sale under £50, but you may on a bill above that amount." If there was any advantage at all in giving bills of sale, he could not see why the poor man should be prohibited from availing himself of the advantage, though he quite admitted that it was, no doubt, hard when a man found that articles which he had supplied on credit, perhaps, to a very considerable value, were swept away by means of a bill of sale; but as those instruments were registered documents, people in trade could protect themselves. He would suggest that the Bill be referred to a Select Committee.

§ LORD STANLEY OF ALDERLEY
asked whether there was no innovation in that part of the Bill which referred to giving a bill of sale on growing crops, and which seemed like an advertisement for money-lenders? He also thought growing crops required some definition. Would bills of sale date from the time seed was put into the ground, or from the time when it came up?

THE LORD CHANCELLOR
said, he was glad no one was going to oppose the second reading of the Bill; but he must express his concurrence in the opinion of his noble and learned Friend opposite (Earl Cairns), that the details of the Bill would require their Lordships' careful consideration. If the Bill could be referred to a Select Committee, as his noble 1549 and learned Friend opposite had suggested, it might be advantageous for that purpose; but if the convenience of their Lordships would not admit of a Select Committee, it was all the more desirable that the Bill should be carefully considered in that House. With respect to the surprising increase alleged to have taken place in the number of bills of sale, particularly for small amounts, since the passing of the Act of 1878, there was, he thought, a simple explanation, which would prevent the inference being drawn which would attribute that increase to the Act of 1878. The law formerly was that a bill of sale must be registered within, he thought, 21 days, and it would be in force in the meantime. But there was nothing whatever to prevent the bill of sale from being re-granted from time to time before the 21 days had expired; and the consequence was, under the operation of that law, that a bill of sale might never be put upon the register at all. It was found, therefore, that numbers of bills of sale were renewed before the expiration of the 21 days, they being, in the meantime, perfectly valid. The Act of 1878, however, provided, very stringently, that a bill of sale must be registered within seven days, and that, if not registered within that time, no renewal of it should be valid. The consequence was that all, or almost all, the bills of sale actually granted were forced upon the register. Therefore, it was not that the Act of 1878 called a number of bills of sale into existence, but that, all being obliged to be registered, the true number and extent of the transactions was disclosed. He doubted whether the Act of 1878 gave any stimulus to that class of transactions. As for the proposal to abolish all bills of sale under £50, he admitted that, if practicable, it was desirable that the State should protect poor persons against the extortions of usurers; but it was a strong measure to compel such persons to go into bankruptcy, or to break up their business, instead of dealing with their property for the purpose of raising money. The evidence to which the noble and learned Lord (Lord Coleridge) had referred might probably justify the conclusions which he had drawn from it; but the provisions of the Bill unquestionably required very careful consideration. For instance, there was a clause enumerating several acts, all depending on the 1550 grantor of the bill of sale, which if the grantor did not do, the grantee could not take possession. Another clause dealt with the contingency of bankruptcy within 12 months after the granting of a bill of sale, and virtually provided that, unless, within that period, the grantee took possession, he must lose the benefit of his security, although, under the former clause, he could not take possession, except in certain circumstances which, as far as he was concerned, might never occur. The restrictions, indeed, were so numerous as to leave him (the Lord Chancellor) to doubt whether any persons would be willing to lend either a great or a small sum on such terms. He did not say that there were not proper and useful provisions in the Bill; but he thought, without expressing a final opinion on the subject, that the clauses he had mentioned might profitably be examined by a Select Committee.

§ LORD COLERIDGE
said, he was quite willing, if it was the general wish of their Lordships, that the course recommended by the noble and learned Lord on the Woolsack should be adopted.