§ Order of the Day for the Second Reading, read.
§ LORD HOBHOUSE
, in moving that the Bill be now read a second time, said, it was very similar to the measure which was read a second time in their Lordships' House towards the end of last Session. If the Bill were received with favour it would be easy to refer it to a Select Committee. The existing law as to trustees was such that there was discernible an ever increasing unwillingness to undertake a trustee's responsibilities. It was quite true that people might have recourse to their solicitors, but there was considerable objection to solicitors acting as trustees. Even if the trust should be properly constituted, trustees were liable to all the changes and chances of life. They became too busy to attend to the affairs of the trust, and disgusted at the importunities which were put upon them, they refused to act any longer; they went abroad; they fell ill; and they got old and died. These things often necessitated a change of trustee, and with every change there was the same trouble which occurred in the selection of the original trustee. Then there were the expenses attending the transfer of the trust funds, and he might say that a very large proportion of the disasters which happened to trust funds were brought about at the moment when they were passing from hand to hand. He did not pretend to say that the administration of trusts by Corporations was likely to be perfect; but he 539 thought that a great many of the disadvantages in the case of individuals which he had enumerated would be avoided, and that a large number of people would think it well worth their while to pay for the advantages which such a Corporation would offer. He referred to, but would not quote at length, the authorities on this subject which on a former occasion he quoted, but he wished to add the authority of Mr. Justice Kay. In giving judgment on a case which came before him, Mr. Justice Kay said he had long been of opinion that the present law relating to trustees required to be reformed, and he was glad to find that there were commercial gentlemen who were willing to come forward to undertake trusts for proper remuneration. He had the authority of Mr. Justice Kay to state that the Bill now before their Lordships would bring about a reform such as was required. Although quarrels had taken place between owners of trust funds and Trust Companies, and had come before the Judicial Committee, they had not heard it alleged malversation or failure to make good the whole of the trust fund had ever taken place. The principles of the Bill were practically carried out in the United States. Trust Companies had been very successful there, and were reckoned amongst their soundest institutions. It was impossible to have a change in the system of this country without a change in the law. For one thing, the law must be altered to enable trustees to receive pay without express instructions on the part of the founder of a trust, and also to enable Corporations to undertake a number of functions devolving on trustees. It was the object of this Bill to make the necessary changes. It was necessary that precautions should be taken that the persons who held themselves out to undertake trusts should be responsible persons, and that they should conduct their business with the requisite degree of control and of publicity. The Bill, therefore, provided that Corporations might fill the position of trustees, and might make charges for their services; and they also required a subscribed capital of £100,000, of which £50,000 should be invested in the Chancery Division of the High Court in the name of the Paymaster General, an annual audit of accounts, and the annual publication 540 of returns. Some objectors thought it would be better to have official trustees; but, for his part, he would be glad to see both an official and company systems at work. At all events, Companies might be allowed to try their hands; and if they succeeded their success would be a public boon. He moved that the Bill be read a second time.
§ Moved, "That the Bill be now read 2a."—(The Lord Hobhouse.)
§ LORD SUDELEY
said, he had always taken a great interest in this subject, and as connected with a large Corporation which had undertaken the duty of trustee in the manner proposed under the Bill he wished to say a few words. The position of private trustee had undoubtedly of late years become more and more onerous, and the personal liability attached to it had become so great by recent decisions that no reasonable man in the present day would undertake a large trust without, to say the least, considerable hesitation and dread. Unfortunately, in this country the custom had grown up among friends of acting as unpaid trustees one for the other, and it was most difficult to refuse. In all new countries, where this feeling—of a somewhat sentimental character—existed only in a modified form, Trust Corporations had been formed and were doing the work of trustees in a most satisfactory manner. In the United States, where this method existed on a large scale, Trust Companies were looked upon as some of the soundest institutions; and this was also the case in the South African Colonies, in New Zealand, and in Victoria. In this country the proposal to perform the duties of trustees by means of Public Corporations was a great innovation; but the liabilities of private trustees had become so unbearable that he apprehended there could be no doubt a very strong feeling existed in the country that trusts must be administered by official and public bodies. Under the present system, when trustees died or changes were necessary, the expenses involved were considerable; whereas by means of a Corporation the trust never died. The noble and learned Lord who had introduced the Bill had done good service, for there could be no doubt if we were to have public bodies performing these duties it was of the most urgent importance that they should 541 be strong, thoroughly well-managed, and have such considerable reserves as to render them absolutely secure and properly able to fulfil the office of trustee. It was clearly the duty of the State to see that this matter was put on a sound footing, and to facilitate, as far as possible, the carrying out of this principle. The Bill, while it dealt with the matter generally in a fair and right spirit, was open, he thought, to very grave criticism in many of its clauses. Under the law as it was at present he understood there was no difficulty in new trusts being undertaken by Corporate bodies, and they could be appointed as executors to wills, provided that was done by means of officials for the time being connected with the Company. What was required by that Bill was to enable existing trusts to be taken over by Public Corporations, as that could not now be done unless they were allowed legally to bear the necessary expenses. It was also right under that Bill that stringent regulations should be made to insure that Corporations dealing with both future or existing trusts were sound and properly supervised by some Government Department. Under the Bill, in Clause 12, it was proposed that there should be a subscribed capital of at least £100,000, and that £50,000 of it should be invested in the Court of Chancery. He thought that clause was a very important one. No doubt they must oblige Trust Companies to be large and responsible, and he doubted whether a capital of £100,000 was anything like large enough for Corporations dealing with interests so large and important. As regarded the investing of £50,000 away entirely from the control of the Company for an indefinite period, however great their reserves might become, he thought that was open to criticism. As he understood the matter, in America the reserves at the disposal of the Companies were kept under their control, subject to sufficient Government supervision, as was done with our old insurance offices, and he thought there could be no harm in that; but he doubted whether they could lock up a large sum of money and place it entirely away from the control of the Company. All new insurance offices were obliged to deposit £20,000, pending the accumulation of a certain reserve, and that seemed a fair principle. That 542 was a question, at any rate, which eminently required to be threshed out in a Committee. Again, in Clause 13, power was given to the Board of Trade of far too wide a character. They must have stated times for inspection, and not enable any Department to be constantly prying and interfering in the business of the Corporation. In Clause 16 it was proposed to make it possible for the Company to work jointly with the co-trustee. He doubted whether that would be found practicable. In Clause 19 a provision was made which he ventured to say would make that Bill quite nugatory and unworkable, and crush on the head all enterprise in that direction. It was proposed to make directors and manager of the Company personally liable. The result of that certainly would be that it would be absolutely impossible to obtain any responsible people to connect themselves with those Trust Companies. Surely what they wanted to do was to encourage people of position and responsibility to help in the working of those Companies, and to make the Companies themselves as strong as possible by means of large uncalled capital, and the formation of considerable reserves; and the very worst thing they could do was to attach personal liabilities to the people connected with them. Clause 20 was, he apprehended, impossible to work. They could not, in a Trust Company, state their maximum charges, as the circumstances of trusts were so different that they must, if the business was to be conducted properly, have a scale capable of variation.
§ THE LORD CHANCELLOR (Lord HALSBURY)
said, he cordially concurred with his noble and learned Friend who had introduced the Bill that there was an existing evil which ought to be remedied, and he thought they would all agree that there was an absolute necessity for providing in some way for the due performance of trusts. His noble and learned Friend, however, did not seem to be aware that there was a Bill in the other House, to constitute a State Trustee, and he was doubtless aware that it would shortly be his (the Lord Chancellor's) duty to ask their Lordships to assent to a Bill for the amendment of the law relating to Joint Stock Companies. Her 543 Majesty's Government had before their consideration at this moment the question whether it would not be their duty to suggest the appointment of Public Trustees, by which persons would take upon themselves, under a public guarantee, the performance of trusts. Therefore the most appropriate and convenient course would, he thought, be not that the present Bill but that the subject should be referred to a Select Committee, and that the debate on that Bill should be adjourned until that Committee had reported. Until the decision of that Committee had been arrived at, it would be very undesirable to affirm one way or the other what should be done in regard to that Bill. In the one event it might be their duty to oppose its further progress, in the other to support it. If the noble and learned Lord consented to the course he had suggested, and allowed the debate to be adjourned in the meantime, it would be his duty to move for a Select Committee on that subject, and on the advisability of appointing either a Public Trustee or of giving a certain number of Limited Companies the power of acting as trustees.
§ LORD HERSCHELL
said, he was sorry that his noble and learned Friend objected to the second reading of that Bill. The proposal to appoint an Official Trustee was one which he had himself long advocated; but he thought that the two subjects were essentially distinct. He wished to see an Official Trustee appointed, and he would also like to see those Companies enabled to act as trustees for those who desired them to do so. He himself should object to that Bill if it proposed to enable existing trustees at their pleasure to turn over to any persons they pleased the trust with which they had been invested. But it proposed nothing of that kind. It would provide that any person by his will might appoint a Company to be his executor. If a person wanted to do that, why should he not be permitted to do it? The main powers of that Bill were simply enabling. Supposing a testator preferred to go to a Company instead of to an Official Trustee, why should he not be at liberty to act on his preference? The clause of the Bill might be open to criticism; but the House was only asked to affirm the 544 principle of the measure on the second reading. In the United States many of these Trust Companies were very powerful Corporations, and they worked to the complete satisfaction of the public. If persons desired to use that machinery for giving effect to their wills or their settlements, he thought they should be permitted to do so. While he was in favour of the appointment of Official Trustees, he should be sorry to regard it as an alternative scheme to the one contained in the Bill. He did not see why both should not work together. He should be still more sorry to see that question mixed up with the reform of the law relating to Joint Stock Companies. He therefore hoped that his noble and learned Friend would not object to the second reading of the Bill.
§ LORD FITZGERALD
said, he thought no one could object to the principle of the Bill; but he would suggest that the Bill should be read a second time, and that his noble and learned Friend should consent not to proceed further with the measure until the Select Committee had reported.
§ LORD HALSBURY
observed, that he would not oppose the second reading provided the noble and learned Lord would not proceed further with the Bill until the Select Committee had reported. It was possible that the Select Committee might be compelled to object to the Bill going any further, because they might prefer to have an Official Trustee appointed.
§ LORD HALSBURY
said, that under the circumstances he should think it his duty to move that the Bill be read a second time that day six months.
§ THE PRIME MINISTER AND SECRETARY OF STATE FOR FOREIGN AFFAIRS (The Marquess of SALISBURY)
said, he thought the noble and learned Lord opposite would act more wisely if he would either consent to suspend proceeding with the Bill after the second reading, until the result of the Committee's deliberations was made known, or else agree to an adjournment of the debate.
§ LORD HERSCHELL
suggested that the Bill, when it had been read a second time, might be referred to the Select Committee.
§ Amendment moved, to leave out ("now,") and add at the end of the Motion (" this day six months.")—(The Lord Chancellor.)
§ On Question, Whether (" now ") shall stand part of the Motion?
§ Their Lordships divided:—Contents 31; Not-Contents 41: Majority 10.
|Ripon, M.||Hobhouse, L. [Teller.]|
|Dundonald, E.||Lingen, L.|
|Kimberley, E.||Lyttelton, L.|
|Northbrook, E.||Meldrum, L. (M. Huntly.)|
|Stafford, E.||Monkswell, L.|
|Gordon, V. (E. Aberdeen.)||Ponsonby, L. (E. Bess-borough.)|
|Oxenbridge, V.||Revelstoke, L.|
|Rosebery, L. (E. Rosebery.)|
|Clifford of Chudleigh, L.||Sandhurst, L|
|Stratheden and Campbell, L.|
|de Vesci, L. (V. de Vesci.)||Sudeley, L. [Teller.]|
|Dormer, L,||Thring, L.|
|Fitz Gerald, L.||Thurlow, L.|
|Herschell, L.||Vernon, L.|
|Halsbury, L. (L. Chancellor.)||Sidmouth, V.|
|Cranbrook, V. (L. President.)||Armstrong, L.|
|Balfour of Burley, L.|
|Cadogan, E. (L. Privy Seal.)||Basing, L.|
|Brodrick, L. (V. Midleton.)|
|Bedford, D.||Clements, L. (E. Leitrim.)|
|Abergavenny, M.||de Ros, L.|
|Bath, M.||Elphinstone, L.|
|Salisbury, M.||Foxford, L. (E. Limerick.) [Teller.]|
|Mount-Edgcumbe, E. (L. Steward.)||Hylton, L.|
|Kenry, L. (E. Bunraven and Mount-Earl.)|
|Brownlow, E.||Kintore, L. (E. Kintore.) [Teller.]|
|Doncaster, E. (D. Buccleuch and Queens-berry.)||Knutsford, L.|
|Gainsborough, E.||Macnaghten, L.|
|Harrowby, E.||Norton, L.|
|Milltown, E.||Wemyss, L. (E. Wemyss.)|
|Rosslyn, E.||Wigan, L. (E. Crawford and Balcarres.)|
|Waldegrave, E.||Zouche of Haryng-worth, L.|
§ Cross, V.
§ Resolved in the negative.
§ Bill to be read 2a on this day six months.