Lords Sitting of 15 July 1890

REPRESENTATIVE PEER FOR IRELAND.
Writs and Returns electing the Earl of Mayo a Representative Peer for Ire-Land in the room of the late Earl of Milltown, deceased, with the Certificate of the Clerk of the Crown in Ireland annexed thereto: Delivered (on oath), and Certificate read.
STATUTE LAW REVISION BILL. (No. 33.)
Returned from the Commons agreed to, with amendments.
BANKRUPTCY BILL.—(No. 188.)
Order for the Second Reading on Friday next, discharged.
SHERIFFS (ASSIZES EXPENSES) BILL. (No. 135.)
Reported from the Standing Committee for General Bills, with amendments: The Report thereof received: Bill recommitted to a Committee of the Whole House; and to be printed as amended. (No. 202.)
INTESTATES ESTATES BILL.—(No. 148.)
Reported from the Standing Committee for Bills relating to Law, &c, with an amendment: The Report thereof received; Bill re-committed to a Committee of the Whole House on Thursday next.
REPORT OF THE EDUCATION COMMITTEE.

  QUESTION—OBSERVATIONS.
  EARL BEAUCHAMP: I wish to ask the noble Lord the President of the Council a question, of which I have given him private notice, with regard to the time when we may expect that the Report of the Education Committee will be presented to Parliament. It is usually presented before the discussion takes place in the House of Commons upon the Estimates. If the noble Lord can
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  tell us when we may expect to have the. Report it would be very useful.
  THE LORD PRESIDENT OF. THE COUNCIL (Viscount CRANBROOK): As my noble Friend is aware, the Report consists of Divisional Reports and the Reports on the Colleges. I may inform him that the Report proper went to press on July 3rd, and, the Divisional Reports are also in preparation. I believe the whole document will be very shortly in your Lordships' hands.

  ELECTRIC LIGHTING PROVISIONAL ORDER BILLS.
  THE SECRETARY TO THE BOARD OF TRADE (Lord BALFOUR of BURLEIGH): My Lords, I can state in a very few words the circumstances which have made it necessary to ask your Lordships to suspend the Standing Order which pro-vents the Electric Lighting Confirmation Bills being read a second time in this House, unless they are brought to it before a certain date from the other House of Parliament. A large number of applications for Provisional Orders were received by the Board of Trade in December last—no less than 161—from Local Authorities, relating to places outside the Metropolis, and therefore the model Order which was adjusted last year was not applicable to them. Two new model Orders had consequently to be adjusted this year. The objections made to the model Orders were very numerous, nearly 1,000 in number. Their nature was very complex, necessitating frequent communications with the Local Government Board and other Public Departments, but early in May the model forms of Order were circulated. Subsequently, the different Orders upon them had to be adjusted with the promoters of the undertakings, and the Local Authorities and those who might have objections to them. It was not possible, therefore, to introduce the Bill for confirming those Orders before the 23rd May, and then, the Orders being of an unusually voluminous character—they were not less than 54 in number—the printing was necessarily of a very elaborate description. The delay in proceeding in the other House of Parliament was very largely owing to the difficulty in getting the materials from the printers, and therefore, so far as

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  that is concerned, no blame attaches to the Board of Trade. Under all the circumstances, and having regard to the important nature of the duties devolving on the Board of Trade in connection with electric lighting, and the very onerous nature of the inquiries with regard to electric lighting which, during the last 12 months, the Board of Trade have had to carry out, I have now to ask your Lordships to suspend the Standing Order for a fortnight. My Lords, I think I am in a position to say that no further relaxation of this Standing Order will be required during the present Session, if your Lordships should see fit to grant this suspension. I have spoken privately upon the subject to the noble Lord the Chairman of Committees, and I believe he will tell your Lordships that he sees no objection. Under those circumstances, I beg to propose the Motion which stands in my name.
  Moved, "That the Sessional Order of the 10th of March last, 'That no Bill brought from the House of Commons confirming any Provisional Order or Provisional Certificate shall be read a second time after Friday the 27th day of June next,' be dispensed with in respect of Bills to confirm Provisional Orders made by the Board of Trade under the Electric Lighting Acts, 1882 and 1888, and brought from the House of Commons on or before the 28th instant."—(The Lord Balfour.)
  THE EARL OF MORLEY: My Lords, the notice which has been given by my noble Friend opposite is of a somewhat novel nature, and rather more comprehensive than usual; but he has explained to your Lordships fully the reasons which render the suspension specially necessary in this instance, and in the circumstances I should not think of opposing it. There is no doubt that electric lighting being a novel subject, a great many details of a preliminary nature had to be dealt with. A great number of Bills had to be prepared by the Board of Trade this year, and I believe the officials of the Department have done their best to introduce them in time, but for the reasons given by my noble Friend they have been delayed. I think, therefore, your Lordships will do well to suspend the Sessional Order in this case.
  On Question, agreed to.

DIRECTORS' LIABILITY BILL. (No. 165.)

  SECOND READING.
  Order of the Day for the Second Readying, read.
  LORD HERSCHELL: My Lords, I think it would be expedient that T should state at the outset as distinctly as I can what is the scope and object of this Bill, because I think there has been a good deal of misconception in relation to its object and effect, which it is desirable as far as possible to remove, inasmuch as those misconceptions have led to some exaggeration on the part both of those who have advocated and of those who have opposed the measure. I have seen comments made upon the Bill, and speeches made in its support, which seemed' to indicate the idea that the Bill was intended to meet the case of persons promoting or becoming the Directors of companies and issuing fraudulent prospectuses or prospectuses containing false statements, careless whether those statement were true or false, making no inquiry, and contenting themselves with giving their sanction to anything which was put; before them. Now, I think it is will that it should be known as distinctly as possible that, as far as fraudulent acts of this description are concerned, the existing law is strong enough to deal with them. There ought to be no mistake entertained about that. Then it has been supposed by some that, owing to a recent decision of your Lordships' House, there has been some weakening of the law in that respect. This is an entire mistake. If there be any fraud in any form or shape whatsoever, the person-who is guilty of that fraud can now be made responsible. All that has been determined is that where a statement has been made which turns out to be untrue, if that statement has been made by a person who honestly believed it to be true, he is, as the law now stands, under no liability. This Bill, therefore, is not designed to deal, and will not deal, any more effectually than the law does at present with cases of fraud. Its purpose is to deal with those persons who, although honest, may nevertheless have made untrue statements, for which the law, for reasons to which I will allude in a moment, will hold them to be responsible. In con-

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  sidering the measure, and whatever form and shape the Bill may ultimately take, I think it is expedient that it should be kept clearly in view that the object and scope of the Bill is to deal not with fraud, but with acts for which, nevertheless, it is reasonable that those who have committed them should be responsible. There can be no doubt that there has been too often a tendency, in the issue of prospectuses of companies, to put before the public statements which are not founded in fact, and which are put forward without any sufficient care or anxiety being displayed to see that those statements are true, the result being that on the faith of statements made on the authority of persons of no character or respectability people have frequently, or sometimes at all events, been led to invest their money and embark in undertakings which they would have been unwilling to do if the truth had been before them. Now, I will state at once what I understand to be the principle of this Bill. The principle to which I give my assent, and to which I ask your Lordships to give your assent, in giving it a Second Beading, is that if a person putting forward untrue statements with the view of inducing others to invest their money or embark in any undertaking, has made those untrue statements without reasonable grounds for believing them to be true, that person ought to be held responsible to those who have suffered in consequence of believing those untrue statements to be true. Now that, plainly and simply, is the object and purpose of this Bill. I regard all the rest of it as merely detail and machinery, open fully to consideration—I shall have something to say about that in a moment or two—but that principle, I would submit to your Lordships, is a perfectly sound one; that those who put before the public statements which are intended to be acted upon, intended to induce people to part with their money and invest it in a particular undertaking, may at least be called upon, not of course to vouch the truth of all the statements for which they make themselves responsible by issuing them, but at least not to make themselves responsible for untrue statements which they have not reasonable grounds for believing to be true. The truth is, the effect of the measure will
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  be to make persons dealing in the class of business affected by the Bill responsible for the want of reasonable care, so that if they publish a statement of that description without having taken any means to ascertain, or without having any reasonable ground to be satisfied of, the truth of the statement, they should be liable to those who were misled by its falsity. That does not seem to me to be in any respect an extravagant principle, and I am happy to find that some who have been loudest in their opposition to the measure as it now stands have unequivocally given assent to that principle. I have to-day received a report from a very important Chamber of Commerce, the Liverpool Chamber of Commerce, on the subject of the Bill, which begins by giving their full support to the principle of the Bill to the extent to which I have enunciated that principle; and I do not know that I have seen any distinct attack made upon the proposal to create a liability to-that extent. It seems to me it is only to that principle that your Lordships would give your assent by accepting the proposal to read this Bill a second time. When one comes to the details of the Bill, I admit there are certain matters in it which are open to criticism, and as far as I am personally concerned, I may say that when I was asked by those who promoted the Bill in the other House to move the Second Reading of it here. I felt bound to state that I could only do so if it were understood that as to the details and machinery of the Bill I was left perfectly free and unfettered to suggest or accept any alterations which, consistently with that main principle, would, in my judgment, make the measure a safer and better one. I think it right to make that statement distinctly to your Lordships on the present occasion. But there has been, I think some exaggeration as to the effect likely to be produced by this measure. Great exception has been taken to what has been called "throwing the burden of proof on the person who makes the statement," because the Bill as it at present stands renders the person making the untrue statement liable unless he can prove that he had reasonable ground for believing it to be true. I think, in truth, that objection is more imaginary than real. T do not think it would make any

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  practical difference in the working out of the measure whether the provision should take that form, and the onus be so placed, or whether the Bill should read that the person should be liable unless he had reasonable ground for believing that the statements were true, or unless it were so shown. I do not think an alteration of that kind would make any substantial change in the effect of the Bill. At the same time, I know that the particular expressions used have created some alarm. For example, the case was put to me that you might have a Director who had been party to issuing a prospectus, but who, at the time the question arose, was in such a state of ill-health that it was impossible for him to give evidence, or he might even have died and his representatives might be sued; and in such a case it would be impossible to prove what reasonable ground there was in that instance for believing the statement to be true. In my view, I do not think in the mode in which the Act would be administered, and the way in which cases would be tried when brought into Court, it would make much difference which way the onus lay, and I do not regard that as a point of very supreme importance. Then exception has also been taken to the use of the word "misleading" in that part of the Bill which makes a Director or other persons responsible "for any statement which was untrue or misleading." I cannot help thinking that the insertion of that word "misleading" has been due to a failure completely to appreciate the law which has been laid down with respect to untrue statements appearing in documents such as those referred to in the Bill. Perhaps it was supposed that there might be such a partial statement of the truth as to mislead. But it has been clearly laid down by the House of Lords, in a recent case, that not only is the parson issuing a document of this description liable if the statements are contrary to the truth, but also if the statements are so partial that the suppressions rendered what was stated untrue. The law in that case equally regards what is stated as untrue, and by a recent decision in your Lordships' House the law in that respect may be considered as well settled. That covers, therefore, every case, either
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  of actual misstatement or of suppression of facts which makes the statement untrue. Therefore, if the word "misleading" is to be added to the word "untrue," I do not myself quite appreciate the cases to which it is intended to apply. It must be intended to apply to all cases where the statements are true; otherwise, the law in regard to statements which are untrue would cover such cases; and when you include statements which, though absolutely true, might mislead, it is difficult to see how far the adoption of such legislation might lead. Therefore, I admit at once that I feel the force of the objection to the word "misleading." Whether there should be anything added to the word "untrue," or whether that would be enough by itself would be a matter for consideration. There is another point upon which strong exception has been taken, and that is that the Bill renders liable not only the Directors, but every person who has authorised or who is responsible for the issue of the prospectus. I have some doubt whether those words would not cover, some persons who ought not to be included, and whether, on the other hand, they would not fail to cover some persons whom we should all undoubtedly desire to see included. The persons whom it is desirable, and whom one would like to see, hit are the promoters who are at the back of the Directors, and whose statements really float the concerns—whose statements are put before the Directors, and who are the persons who really create and launch the company, place it before the public, and seek to benefit by it. I do not feel quite sure that those persons would come within the term "those who have authorised the issue of the prospectus," because it may be doubtful whether those who are, as it were, a further stage back, acting before the prospectus is issued, and then retiring from the scene, the Directors having taken their places, can be held to have authorised the issue of the prospectus, because, ordinarily, you speak of "authorising" something which is done on your behalf. I throw out that doubt, because it seems to me it would be expedient in one direction to strengthen this provision, namely, so that you shall hit the promoters whom you desire to hit. On the other hand, fears have been expressed

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  that the words might include those whose names are merely on the prospectus in an executive capacity, such as the bankers who receive subscriptions, and the solicitors who are to be the legal advisers of the company, and who certainly could not be expected or understood to vouch every statement put forward by the Directors of a proposed company when they issue a prospectus to the public. The words "responsible for" are, I admit, very wide, and to my mind they are objectionable words. I frankly say that for this reason, that responsible is a question of law. When you say that persons are responsible that is a legal question, and it is for the law to determine who is responsible for a particular act. I think it is very difficult, therefore, to imagine what construction ought to be put upon such language as this when it comes for judicial determination before any of our tribunals. I have ventured to trouble your Lordships with these criticisms for this reason, that I cannot help thinking that those who are engaged in passing legislation of this description are, perhaps, a little less likely to perceive the difficulties that would arise in carrying it out than those who are constantly engaged, and who, like myself, have been engaged for some years in interpreting legislation and in administering the law, because the tendency to be critical grows upon one, and in considering provisions of this description, when one comes upon language used that is not in common use, one asks one's-self "What interpretation should I put upon it if it came before me for judicial decision?" Very often, looking at proposed legislation from that point of view, difficulties are seen which do not readily occur to the minds of those who are simply engaged in the task of endeavouring to remedy an evil, and, therefore, are not so much concerned in its critical examination as I venture to think they ought to be. My Lords, I have referred to these two or three details because they are matters to which special attention has been drawn by those who have objected to this new legislation. There are some other details in the Bill about which a good deal has been said, and probably will be said again, but with which I do not think it would be right to trouble your Lords he is in moving its Second Reading. I have
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  pointed out what I conceive to be, and what I think manifestly is, the whole scope and object of the Bill. I cannot myself doubt that that object might be attained, and might be very usefully attained, by casting liability where that liability ought to rest, without in any way endangering those who act reasonably and properly in regard to affairs of this description.
  Moved, "That the Bill be now read 2a."—(The Lord Herchell.)
  *THE LORD CHANCELLOR: My Lords, I think my noble and learned Friend has made a case for asking your Lordships to read this Bill a second time. I confess that if I thought this Bill was to remain in its present form, I should not have the slightest hesitation in asking your Lordships to read it a second time this day six months—perhaps I ought to make an exception to that under present circumstances, and say at an earlier period. In the objects of the Bill, as stated by the noble and learned Lord, I heartily concur, and if those objects can be attained by altering almost every sentence in the Bill, I certainly shall be desirous of giving all the assistance I can in remedying the defects which have been pointed out; but if the Amendment of it should be found ineffectual to produce something like a reasonable measure, I shall reserve to myself the right to take a different attitude towards the Bill at a later stage on the Third Reading. The Bill is supposed to have been rendered necessary by the decision of this House, to which my noble and learned Friend referred, in the case of "Peek v. Deny." That decision was arrived at unanimously by the House as to what the state of the law is and has always been upon the subject matter with which this Bill deals. It certainly would require very considerable consideration of that subject before one would very lightly attempt to alter the principles of the law upon which that case was decided—certainly more consideration than appears to have been given to it by those who have produced this specimen of intended legislation. The decision in the case to which I refer would have been exactly the same if the Bill had been law at the time this decision was given, which shows

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  the value and importance of the effort to set right that decision, or which it is supposed will be a setting right of that decision. But the great objection to the Bill is, as my noble and learned Friend very candidly stated, that it is so conceived that whatever the object of the measure is, it is impossible to trace that object through its language. Take as an example the very expression to which he has referred, that is, the use of the words "untrue or misleading." I think your Lordships will be prepared to accept my noble and learned Friend's statement as a matter of simple logic; if it is untrue, it is untrue, and the untruth of a statement may be arrived at by showing its actual falsity, or by showing that it states the truth so partially that that which is stated is for that reason untrue. Therefore, you do not in that case require the word "misleading." But if you do require it for proper exposition of the object of the Bill it must mean that something is to be made the subject matter of an action which is true, but which a jury or Judge shall suppose, or some rained speculator shall suppose, is of a misleading character and misled him. What is to be the criterion of what is "misleading," and what is to be the canon of intelligence which is to be applied as a test to the intellectual calibre of the person misled? It is almost impossible not to see that this Bill is a patchwork attempt by various individuals to add something to meet the supposed necessity of making directors responsible for what in popular language and in good common sense are called reckless or untrue statements. Directors are liable now for untrue and reckless statements, and there is nothing in the judgment referred to which in the smallest degree casts any doubt upon the liability of Directors for such statements. It is almost impossible to read this Bill without a smile when one sees, the objects being what I. have stated, how those who have contrived the Bill have carried them out. Having first laid down the proposition as to making untrue or misleading statements, they proceed to carry out the object in the following manner. The Bill says that Directors and others shall be liable to pay compensation to persons who sustain loss or damage by reason of any untrue or misleading statement, unless they prove—
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  "With respect to every such untrue or misleading statement not purporting to be made on the authority of an expert, that he made reasonable inquiry and examination into the statement and had reasonable ground to believe, and did then, and up to the time of the allotment of the shares, debentures, or debenture stock, as the case may be, believe that the statement was true and not misleading."
  Therefore, he must prove that he believed the statement to be true, and he must also have formed a judgment that it was not misleading, and unless he proves that he is to be liable. Further, he is to be liable unless he proves—
  "With respect to every statement or extract purporting to be" statement of, or an extract from, any Report or valuation of any engineer, valuer, accountant, or other expert, that it was a true and fair statement of, or extract from, the Report, or valuation, and that after reasonable inquiry and examination he had reasonable ground for believing, and did then and up to the time of the allotment believe, that the Report was made in good faith by the person whose name it bears, and the person making it was competent to make it."
  He is to form all these judgments before he can shield himself from the attack of some person who has lost money by the speculation into which he was presumably desirous of entering. My Lords, what I desire to say about it is, that if that were once to be passed into law I should think every respectable man would avoid becoming a Director of any company at all. It would be impossible to get any man of repute and respectability to take such a position. It may be that those persons who, in popular language, are called "guinea pigs," are fair subjects of attack as a sort of vermin of commerce; but there is another class, the blackmailers, who are even worse, and I think the blackmailers would receive a considerable addition to their numbers if this Bill were passed un amended. There is in this matter an existing evil, and I do not attempt to limit the importance of endeavouring to legislate on the subject. For instance, there is frequently a careless and negligent adherence to statements made without due inquiry into their truthfulness, and I should be glad to assist in framing a measure which would enforce an obligation to take reasonable care against persons who lend their names to the statements of others for the purpose of recommending investments. I once heard on high Parliamentary authority that the Second Reading of a

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  Bill only affirms the principle that a subject requires to be dealt with by legislation. Had it not been for that consideration, I should not have thought that such a Bill as this should have received a Second Reading; but convinced by that high authority (I refer to Mr. Gladstone) that that is the true view of a Bill, I content myself by saying that I assent to the Second Reading of this Bill, reserving to myself the liberty of saying what I may have to say at a later stage.
  *LORD BRAMWELL: I have to present to your Lordships a Petition from the London Chamber of Commerce, I cannot say exactly against the Bill, and certainly not against a measure such as has been sketched by the noble and learned Lord who moved the Second Reading. I need not say that the opinion of the petitioners is entitled to very great respect. They represent the merchants of this City of London. They are neither promoters of companies nor "guinea pigs," as my noble and learned Friend has characterised a certain class of people; but they view this Bill with very great alarm indeed, and they give very weighty reasons for their fears. They say that at present capital is largely invested, and your Lordships know very well that it is so, in Limited Companies. They say they firmly believe that if this Bill passes as it stands no man of means, no man to whom litigation is of any consequence, would allow himself to be made a Director of one of 'those companies, because the way in which the Bill is framed and the language of the Bill is so wide and so extensive that it would be utterly impossible for; any man to feel safe from the effects of; such a measure if your Lordships should pass it. They further find fault with what I cannot help calling the misleading language of the Bill, language which is so vague that it would be difficult to interpret it, and I should tell your Lordships that they say they think the Bill ought to be referred to a Select Committee. Whether your Lordships should think fit to do that or not, I am sure I do not know, but that is their opinion. I agree with every word of that Petition, and I think this is a most dangerous measure as it stands. Indeed, my noble and learned Friend practically admits that. 'The Bill is the result of a scare due to the
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  decision of this House in the case of "Peek v. Derry." It has been said, most erroneously, that that decision has left it open to persons to issue prospectuses crammed with falsehoods which they know to be such. That is utterly erroneous. In the case of "Peek v. Derry" it was held that where fraudulent statements, untrue statements in a prospectus, fraudulently untrue, or put into the prospectus with an indifference as to whether they were untrue or not on the part of the persons who put them in, any person who has been misled and suffers damage would have a right of action against those whom I cannot help calling the offenders who have told the untruth, either knowing it was untrue or indifferent whether the statement was true or not. I quite agree with what my noble and learned Friend on the Woolsack has said, that if this Bill had been law at that time the decision of your Lordships' House would have been just the same. I cannot help saying this, in order that your Lordships may make a proper estimate of the decision in that case: that your Lordships' House in its decision did no more than the plaintiff himself had done, for, after the whole mischief was discovered and the subject-matter of the complaint was known to Sir Henry Peek, he, a man of experience, knowing very well what he was about, moved a hearty vote of thanks to the Directors, whom he afterwards sued for their conduct in managing the affairs of the Tramway Company, which, in the result, turned out badly. He was a most candid witness, for when he was asked whether or not he would say they had committed a fraud he said, "No, I will not do that; that is for the law to say. I have been told they have done something wrong, and therefore I have brought an action against them, but I will not say that they committed any fraud at all." That was the plaintiff himself, a gentleman who knew what he was talking about. Yet somehow it has got into the minds of the public that that case has removed all restraints upon Directors, promoters, and others interested in getting bogus companies floated, and that they may do so with perfect safety and impunity. That is a grievous mistake, and I must really say on this occasion what I have very often felt a

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  great disposition to say before, but I have refrained out of respect to learned friends of mine who have taken a different view on the matter. I think there was positively not a pretence for that action. I will not trouble your Lordships with the statement of what it was supposed the defendants had done wrong. I am not saying that the defendants in that action had not done wrong, but it was a wrong of a most trivial character, and Sir Henry Peek did not say he had been misled, or that the untrue statement had in any way warped or biased his judgment. Now, one word more upon the subject of this legislation. I am not quite sure that it was not I who suggested it, if one may be allowed to quote one's-self. In the Course of the opinion I expressed in that case I said it might be desirable to make Directors warrant the truth of the statements made in the prospectuses they issued, but I said that I very much doubted the advisability of it, because the consequence would only be that respectable men would not suffer themselves to be charged with some inaccuracy, and that in addition to that it was exceptional legislation. That is a matter which I recommend to your Lordships' attention, if the settlement of the details of this Bill should come before you. But there is one remark which I want to make, and it is this. It is a great mistake to suppose that there are very many absolutely dishonest companies. I believe, from information that I have received from persons who are thoroughly well acquainted with such matters, that although there are no doubt a great many unwise companies which are got up and launched by sanguine and foolish people, the dishonest companies that exist are very few indeed. Your Lordships should remember that the cases you hear of are not the cases of prosperous companies which go on conducting their business properly. The cases of companies which come under the notice of the public are chiefly the bad cases, those which are unfortunate, and with regard to which something has gone wrong, while people do not bear in mind that there are great numbers of solvent and prosperous companies which are not heard of. I think, therefore, this sort of outcry against these Limited Liability Com-
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  panies, and everybody connected with, them, is altogether unjustifiable. After what the noble and learned Lord on the Woolsack has said, I cannot object to the Bill being read a second time, which practically means the adoption of the very reasonable proposition that my noble and learned Friend, who introduced the matter, has laid before the House: but I confess that I agree with the Lord Chancellor that if it were a question whether this measure should become law as it stands or not, I should most heartily have voted that it should not.
  LORD ESHER: My Lords, will you allow me to say that I support the Second Reading of this Bill, for the same reasons and in the same way that it has been supported by my noble and learned Friends, namely, that it is a most detestable measure, not one single line of which will bear the slightest examination. In addition to what has been, already said by my noble and learned Friends, I will try to point out one or two other "small" defects in this Bill, which will have to be torn out of it before it can be made even a decent measure. In my opinion the 3rd clause of the Bill is open to the greatest objection, because it provides—
  "Every person who is a Director of the Company at the time of the issue of the prospectus or notice, and "—
  this is stronger still, that
  "every person who is named in the prospectus or notice as a Director of the Company or as having agreed to become a Director or the Company, either immediately or alter an interval of time "
  "shall be liable" unless he proves a great many things. Therefore, somebody, may put into a prospectus the name of a person as a Director who has never heard of the company, who has never promised or undertaken that he will be a Director; they might put in his name at a time when he is at the other end of the world, and he is to be liable! Under this provision a man who might really know nothing about the prospectus of the company, and who might actually have been at the other end of the world at the time it was put forth and published, and who has had nothing, whatever to do with it, who had never sanctioned his name being placed upon

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  it, might, because some parson had placed his name upon the prospectus without his consent, find himself called upon, in order to escape liability, to prove that he had made reasonable inquiries into the truth of the statements in the document, and had reasonable ground to believe, and did believe, down to the time of the allotment of the shares in the company, that such statements were true and were not misleading. Why, anything more contrary to natural justice cannot be conceived. Because the name of a person may have appeared in a prospectus in which there is a misstatement, he is to be put upon the proof of all these things as the Bill now stands, which I am certain he could not possibly prove. That is one of the "slight" defects in the Bill, though it is said that does not affect the principle in the Bill, which, however, nobody can find in it, and which has been apparently invented for the purpose of obtaining a Second Heading, Another matter to be considered is that by the law of England an honest misstatement made by a person with no intention to deceive, but which may, and does mislead another, does not give to that other person any cause of action. That is to remain the law with regard to every other misstatement that is made by anybody under any circumstances, but you are to have a totally different law with regard to persons whose names unfortunately appear in a second Reading. Another matter is this, and I think it would be well for your Lordships to consider it. As this is made a wrongful act, it can be sued for because it is wrongful. Does anyone realise what the consequence of that is Under the provisions of the Bill one Director might be made liable to the last farthing of his fortune without being able to obtain any contribution from his brother Directors who have done the same thing that he has. These, I think, are a few small matters to be considered in the Bill; and if it were not for the rule which has been laid down by the noble and learned Lord on the Woolsack, that by reading a Bill a second time the House is merely assenting to its principle—but which, as I ventured to say the other night, leads to more bad legislation than anything else I know—I should have moved that the Bill be read a second-time this day three months.
  EARL GRANVILLE: There are two or three reasons why I should not take part in this conversation: one is, that I am a layman; and another is, that not only am I a Director, but I am a Director in two companies. However, as I inherited an interest in both those companies, and as I receive no remuneration, whatever for my directorial duties, I am hardly a "guinea pig," and, therefore, perhaps your Lordships will allow me to say that I am very glad Her Majesty's Government support the Second Reading of this Bill. Adopting the principle which has been described, both by my noble and learned Friend Lord Herschel and by the Lord Chancellor, as being the principle of the Bill, that principle has-not been objected to by the two noble and learned Lords who followed them. At the same time, I think it is most important that two things should be carefully avoided: one that, by a side wind you should injure the practical working of limited liability undertakings; and, secondly, the danger as has been already pointed out of preventing substantial, respectable, and trustworthy men from becoming connected with such concerns, by making them afraid to undertake the duties of Directors. Now, I feel that we are very safe, in this way: that the Bill is in the hands of noble and learned Lords who will look well to the details of the measure, and will examine them with the greatest care; and I will take this opportunity of saying that, though I have been many years in the House, I have never known it to fulfil in the degree it has lately done one of the most important functions of a Second Chamber, namely, revising the drafting and details of all the Bills that come before it. I think your Lordships, should pass the Second Reading of this. Bill; it would then go under the charge-of my noble and learned Friend to the Standing Committee on Law, from which we may expect that it will emerge a measure which will improve the present legislation on the subject and be beneficial to the community.
  LORD HERSCHELL: My Lords, I win, of course, give the fullest consideration to the—I do not know whether I am to call them friendly—criticisms which this

  1711
  Bill has received. I quite feel what my noble Friend behind me has just said in reference to the importance of not doing anything which could injure the working of the Limited Liability Acts; and I am a little sensitive on this subject, because I cannot help thinking that in some quarters the enthusiasm with which this measure has been supported hitherto has not been absolutely and exclusively due to a desire to project investors from those who would prey upon them; but that some of it has been due to a jealousy of the Limited Liability Acts, the working of which I know there would be in many quarters a great disposition to hamper And impede. Your Lordships must be very careful, I think, not so to legislate as to give any effect to the desires of those who would be willing that the working of those Acts should be interfered with. I am glad to say that I am one of those who think this measure will tend to prevent untrue statements being put forward recklessly, though it will not, and cannot, of course, absolutely safeguard those who are eager to accept any tempting offer. If we could only persuade the clergymen and widows throughout the country—for they seem to is the largest investors in those companies which from their nature come before the Court ultimately—that a very high rate of interest is incompatible with absolute security, these tempting offers of receiving 7, 8, 9, 10, and even more per cent, for their money could not be spread as at present broad cast over the country, or would be spread in vain; and those persons who are now deceived by them would be content to invest their money where it would be as safe as in Consols, or even in some of those investments which can hardly be put on a level with Consols. The truth is, that in these cases people's money is subscribed because they seem to have the greatest difficulty in learning, even when they have been more than once bitten, that they cannot have a high rate of interest without having at the same time a high condition of risk.
  On Question, agreed to.
  Bill read 2a accordingly; and committed to the Standing Committee for Bills relating to Law, &c.

METROPOLIS MANAGEMENT AMENDMENT ACT (1862) AMENDMENT BILL.

  (No. 168.) SECOND BEADING.
  Order of the Day for the Second Reading, read.
  LORD HERSCHELL: My Lords, I need trouble you but for a minute or two upon this measure, which has passed the other House of Parliament, and has received, I believe, the full support of the Local Government Board in its passage through that House. Its purport is to correct what I think was obviously an oversight in the Metropolis Management Acts. There exist in various parts of the Metropolis footpaths which are repaired by the parish, but which have to be flagged by the tenants. A provision in those Acts enables the parish to flag them, and casts the expenses of doing so upon the occupiers of the adjoining houses. "Why that burden was cast upon the occupiers it is very difficult to understand. Similar burdens appear throughout the Acts to be cast upon the owners; and this special provision has been found to operate with grievous hardship in some parts of the Metropolis, where the Vestries have flagged the highways. The burden is cast upon the occupier, however short his tenure. It has actually happened that at the time the flagging took place the tenant, who was in occupation under a quarterly tenancy, had not only given notice to quit, but had positively quitted, the premises, and would never have anything more to do with them, at the time when the whole burden of the flagging of a portion of the footpaths was cast upon him. There can be no doubt that was not the intention of the Legislature, and the proposal of this Bill is merely to deal with those footpaths in the same way as other permanent improvements are dealt with—that is, to put the burden of them upon the owner, as defined by the Metropolis Management Acts, instead of upon the occupier, who may be a person having a tenancy which will cease immediately the work is done.
  Moved, "That the Bill be now read 2a—(The Lord Herschell.)
  THE EARL OF MORLEY: My Lords, I do not rise to say anything with regard to the substance of this Bill, but merely in reference to the legislation of which it

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  is a type. There is another measure called the Metropolis Management and Building Bill, which has reached your Lordships' House, and will come on for discussion in a few days, and also another private Bill which is promoted by the London County Council, in which there are 10 clauses referring to no less than five other Acts. I think that anybody who wants to thread the maze of such legislation as that should have a clue which he will not possess. Therefore, I would suggest to the noble and learned Lord whether he does not think it possible to bring on together before the House the two Bills relating to the Metropolitan Management Act; and I would venture to suggest that, at all events, the clauses of the one Bill should be included in the other. I merely call attention to the fact, because it seems to me that this is making legislation a good deal more confused than it necessarily need be.
  LORD HERSCHELL: I am sure I shall be most happy to entertain my noble Friend's suggestion. If the Bills were both referred to the Standing Committee no doubt we might put the whole of the clauses referred to into the two Bills, but I do not know whether we could put the whole of one Bill into the other and send it down to the House. It would be practically disagreeing with everything, because you would be transferring one to the other entirely. We might put it into the Bill, and then, if the House so wished, throw it out on Third Reading. Certainly, as far as I am concerned, I will do my best to have them put into one Bill.
  On Question, agreed to.
  Bill read 2a (according to order), and committed to the Standing Committee for General Bills.

  BOILER EXPLOSIONS ACT, 1882, AMENDMENT BILL.—(No. 164.)
  House in Committee (according to order): Amendments made: the Report thereof to be received on Thursday next.
  BARRACKS BILL—(No. 163.)
  House in Committee (according to order): Bill reported without Amendment; and to be read 3a on Thursday next.
  COMPANIES (MEMORANDUM OF ASSOCIATION) BILL.—(No. 199.)
  Read 3a (according to order), with the Amendments, and passed, and returned to the Commons.
  PUBLIC HEALTH (SCOTLAND) ACT, 1867, AMENDMENT BILL—(No. 169.)
  Read 3a (according to order), and passed.
ANGLO-GERMAN AGREEMENT BILL. (No. 180.)

  THIRD READING.
  Order of the Day for the Third Reading, read.
  EARL DE LA WARR: My Lords, with the permission of the House, I will withdraw the Motion which I have placed on the Paper for the rejection of this Bill.
  Bill read 3a (according to order).
  THE PRIME MINISTER AND SECRETARY OF STATE FOR FOREIGN AFFAIRS (The Marquess of): I have a purely technical Amendment to make in the Schedule. It is to substitute the word "provisions" for the word "article" in the title of the Schedule, so that it will read "provisions of agreement."
  Amendment agreed to.
  Bill passed, and sent to the Commons.

  CUSTODY OF CHILDREN BILL. (No. 98.)
  Amendments reported (according to order), and Bill to be read 3a on Thursday next.
WOMENS' SUFFRAGE BILL.—(No. 201.)

  SECOND READING.
  Order of the Day for the Second Reading, read.
  LORD DENMAN: My Lords, in moving the Second Reading of this Bill, I shall not detain your Lordships many minutes. I fear you may think it has had a very bad advocate in times before this, but I have never heard a word said against it in any quarter, nor has there been any notice of opposition given to it. Therefore, I am at a loss to conceive that anything except my bad management of the Bill can have

  1715
  caused its rejection. This question has now received support from the fact of certain women being allowed to vote for County Councillors. As I stated the other night, the Duke of Buckingham said it was a move in the right direction, meaning that it was a move in the direction of recognising the right of women to vote for Representatives in Parliament. I did not hear the speech of the Lord Privy Seal the other night, or I should have asked to withdraw the Bill which I then presented. In endeavouring to obtain the franchise for elections to Municipal Bodies in Ireland, I felt that it was right your Lordships should know there is a considerable opposition to the system of voting even by men in boroughs in Ireland. This would make the franchise uniform, and I think it would be a liberal and advantageous measure. Many have expressed themselves in favour of the principle of the Bill. I blame no one for having opposed it, and I know that some of those who have opposed me have not been able, through dissensions in their own Party, to advance that measure, for the success of which they were themselves anxious. If this Bill be now read a second time it can do no harm. I do not wish that my name should be associated with it. I only wish it to be considered as an act of trust on the part of this House in the capacity of women, although not wishing in other respects to remove them from their duties as women. There has been no argument brought forward against the passing of this Bill. It has been said if it were passed the House of Commons would take advantage of the good example set them and would also pass it, and many are pledged to carry a measure for this purpose. Women of great talent have lately come before the public, such as Mrs. Fawcett and her daughter. Surely such women are well-qualified to choose a Representative. I may mention another lady who has done incalculable good among the soldiers at Portsmouth by establishing lectures and reading-rooms for their improvement and recreation. Women are certainly entitled to select the gentlemen who shall represent them in Parliament. There are many public questions in which they are deeply interested, and they certainly should be allowed to choose a
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  Representative, who will, as they may consider, act wisely in those great questions, such as the protection of children, marriage with a deceased wife's sister, and other questions in which women are interested. My Lords, I beg to move that this Bill be read a second time.
  Moved, "That the Bill be now read 2a."—(The Lord Denman.)
  THE MARQUESS OF SALISBURY: I am afraid I must answer this Motion as I have already answered similar previous Motions. It is not in accordance with the comity of Parliament that a Bill should be introduced in one House of Parliament for the purpose of reforming the other, and we cannot, therefore, entertain a Bill for that purpose. I beg to move that the Bill be read a second time this day three months.
  Amendment moved, to leave out ("now") and add at the end of the Motion ("this day three months.")—(The Marquess of Salisbury.)
  On Question, whether the word ("now") shall stand part of the Motion, resolved in the negative; Bill to be read 2a this day three months.

  INFECTIOUS DISEASE (PREVENTION) BILL.—(No. 117)
  Read 3a (according to order), with the Amendments, and passed, and returned to the Commons.
  DIRECTORS' LIABILITY BILL.—(No. 165.)
  Petition that the Bill may be referred to a Select Committee; of the London Chamber of Commerce; read, and referred to the Standing Committee for Bills relating to Law, &c.
GENTRAL LONDON RAILWAY BILL.

  QUESTION—OBSERVATIONS.
  THE LORD PRESIDENT OF THE COUNCIL (Viscount CRANBROOK): I wish to ask my noble Friend the Chairman of Committees a question in reference to the Central London Railway Bill. Your Lordships will remember that on the introduction of the Bill there was an understanding that if it went to a Select Committee there should be some means of ascertaining what evidence had been given with regard to St. Paul Cathedral. I desire to ask my noble

  1717
  Friend what steps he has taken in that matter?
  THE EARL OF MORLEY: I have inquired, and I find that the evidence with regard to St. Paul's Cathedral would be scattered generally through the engineer's evidence, and would not solely appear in the case made for St. Paul's Cathedral. I thought, therefore, the best plan would be to have two or three copies of the evidence placed in your Lordships' Library, where any Peer who wishes to study any part of it can have access to it.
  House adjourned at a quarter before Seven o'clock, to Thursday next, a quarter past Ten o'clock.