§ [SECOND READING.]
§ Order of the Day for the Second Reading read.
§ LORD SOUTHWARK
My Lords, the Registration of Firms Bill, to which I ask your Lordships to grant a Second Reading this afternoon, is the same Bill that I introduced during the closing days of last session. On that occasion my noble friend the Duke of Devonshire, in replying to my speech in moving the Second Reading, kindly suggested that it should be reintroduced in another session with a view to being referred to a Select Committee which could investigate and report upon it. I have with pleasure adopted that course and have allowed several weeks to pass before asking your Lordships, as I now do, to grant it a Second Reading. In the meantime men of business, through their 428 Chambers of Commerce, have unanimously asked that the Bill should become law. I have read and re-read the speech that I delivered on the last occasion, and notwithstanding the opposition which I then received from the noble and learned Lords, Lord Sumner and Lord Parmoor, I think I stated the case fully and clearly. I am so satisfied that I did, that I should like to say "Ditto" this afternoon and sit down in the full confidence that His Majesty's Government will support the Second Reading of the Bill and allow it to go to a Select Committee. I feel, however, after the speeches of the noble and learned Lords, that it would perhaps have been wiser had I occupied more of your Lordships' time in going into the details of the long history of the Bill. So this afternoon I shall not repeat that indiscretion, but hope to say enough in that direction, without wearying you, to convince your Lordships of the importance and necessity of this Bill.
I will begin my observations by again, as concisely as possible, making your Lordships acquainted with the principles and outlines of the Bill. It is a Bill intended to provide for the registration of firms and persons carrying on business under trade names. It enacts that every firm carrying on business at any place in the United Kingdom under a trade name which does not consist of the full names of all the partners without any addition, and every person carrying on business at any place in the United Kingdom under any trade name consisting of or containing any name or addition other than the full name of that person, shall register the name under which their or his business is or is intended to be carried on. Where a firm or person carries on business under two or more trade names, each of those trade names must be registered; and where a firm carries on business in the United Kingdom and also abroad, the name of any foreign partner must be included in the statement, whether he is a British subject or not. Your Lordships will observe that the Bill does not apply to individuals trading in their own names either singly or with partners, so long as all the names without addition appear.
The manner and particulars of registration are set forth in the Bill, but I do not propose this afternoon to go into details as to the form of registration, because there will be no difficulty in the Committee dealing with that when the Bill is before them. What I want, and what business 429 men want, is that the principle contained in the Bill—that there should be an effective registration of all persons and firms trading in this country in names other than their own—should be recognised. As regards registration itself, there are many ways in which that can easily be carried out, and the Committee can suggest the best, simplest, or, if you like, the cheapest way of accomplishing that end. That this end can be accomplished without much expense and without much difficulty is to business men perfectly clear. The question of penalty is also dealt with in the Bill; and this, again, is a detail which can be dealt with by the Committee. They can make the amount higher or lower as they deem wise, but there must, of course, be a penalty. It is no good passing a Bill like this unless some penalty is provided in cases where the law is not complied with.
I may be asked, What are we going to gain when we get this information? My answer to that question is that traders and others will then know with whom they are doing business and to whom they are giving credit, because foreigners and others trading in names other than their own will have to register, and the true and full names of those trading under other names or styles will be ascertainable. This Bill will not prevent foreigners or others from trading in this country, but it will compel them to disclose their names; and it will prevent those who become secret partners escaping their proper liabilities when losses occur. The Bill will not prevent individuals or companies making loans to private firms, nor will it make it necessary to disclose trade secrets. I see the noble and learned Lord, Lord Sumner, in his plane. On the last occasion he was under the wrong impression that I had stated in regard to the Bill that "its object is to win the war." I should like to case his Lordship's mind. This Bill, in my opinion, will not win the war, and I never said it would. What I did say—it will be found reported in Hansard without any correction—was this:In this time of war, when we have to deal with unscrupulous enemies, it is all the more important that the names of those who constitute firms should be made known.I cannot see any objection to that. Further I said—Every one is doing all he can to secure the bringing of the war to a successful conclusion, and one way to do that would be to find out where we have enemies in the commercial world.430 There cannot be any objection to that either. The experience of the last few years has shown that our enemies have been trading in this country under secret names and in ways of which I am sure your Lordships cannot approve.
The noble and learned Lord was also worried about secret partners, whose names business men think ought to be disclosed, especially if they are foreigners. The noble and learned Lord said it was simple for them to be found out, but he did not say how accurate information could be obtained. The Home Office and the Police authorities would much like to know, and so would business men and Chambers of Commerce, from whom the authorities have recently been seeking information. In the City of London we have been asked over and over again to give the names of gentlemen composing different firms, and though our secretary and officials have been endeavouring to the best of their ability to obtain the names it has been found absolutely impossible to do so; whereas if we had a Bill such as this upon the Statute Book, every trader concerned would be compelled to send in the names to Somerset House or to some other Department, where the information would then become available. There is another gentleman who would much like to know how this information can at present be obtained—I refer to Judge Cluer. At Shoreditch, in a case which came before him in which the defendant pleaded that he was not acting on his own behalf but for a man whose name had not been disclosed to the plaintiff, Judge Cluer said—It is a pity that the House of Lords has not got to come here and listen to such cases as these. Lord Southwark has suggested that people should be compelled to trade in their own name, but his Bill was thrown out.I said that before I sat down I would refer to the history of this Bill. It goes back as far as 1878. In that year Sir Frederick (then Mr.) Pollock was instructed by the Association of Chambers of Commerce of the United Kingdom to prepare a Bill for the following objects—(1) to consolidate the existing law of private partnership; (2) to introduce a system of limited partnership; and (3) to provide for a general system of registration of firms. The Bill was supported and backed by that distinguished lawyer, the late Lord Herschel], and by Mr. Gregory. then Member for Sussex. a well-known solicitor of great commercial experience. Sub- 431 sequently the Bill was separated into three portions, and upon this being done three separate Bills were introduced into Parliament. The first, relating to the consolidation of the partnership law, was substantially enacted in the Partnership Act, 1890; the second, relating to limited partnership, was enacted by the measure introduced by Lord Rotherham in 1907, which came into operation in 1908 as the Limited Partnerships Act; the third, relating to the registration of firms—the Bill which is now before your Lordships—has been introduced in successive sessions since that date. It was introduced in the House of Commons in 1900 by Lord (then Mr.) Emmott; it was also introduced in your Lordships' House by Lord Rotherham in 1912 and given a Second Reading; and it went on one occasion at least to a House of Commons Select Committee.
In the Second Reading debate in the House of Commons in 1900, before the Bill was committed to a Select Committee, Mr. Ritchie, then President of the Board of Trade. said that he had no hesitation in saying that he entirely approved of the principle of the Bill. He went on to say—It deals with a matter which has engaged the attention of Public Departments as well as of the House of Commons for a great many years, and I think I am right in saying that the opinion of the mercantile community is practically unanimous in favour of the principle. At the Board of Trade we have received a good many representations on this subject in a like direction. There can be no doubt that in the existing state of the law scandals may and do arise through trade being carried on under names that inspire creditors with a confidence which the firms do not deserve. I am therefore prepared, on behalf of the Board of Trade, to support this Bill.Mr. Ritchie urged that the Bill should go to a Select Committee so that its details could be carefully considered. The Second Reading of the Bill on that occasion was supported by Viscount (then Mr.) Bryce, who concluded his speech by saying—I hope that, if necessary, the Government will give the Bill a helping hand.The Report of the Select Committee to whom the Bill was referred in 1900 contained this statement—It has been established before your Committee that it is desirable to obtain public disclosure of all individuals who at a fixed place employ for the purposes of trade the names or styles of companies, or partnerships, or any form of plural designation. An effective register of this information would not only tend to 432 facilitate commerce, but would secure the identification of persons liable to legal proceedings or amenable to local government and other requirements.Learned societies have also stamped the Bill with their approval. A communication to the House of Commons Select Committee from the Incorporated Law Society showed that the society was in favour of the principle of the Bill. The Committee of the Incorporated Law Society of Liverpool reported that they approved the principle and object of the Bill. The Committee of the Birmingham Law Society approved the main object and principle of the Bill, which they considered likely to be of service to the trading community. The Council of the Incorporated Law Society of Ireland considered the Bill and approved generally of the provisions as far as they went. The Manchester Incorporated Law Society approved the principle and object of the Bill. The General Council of the Bar entirely approved the principle of the Bill. This is the only country, with the exception, perhaps, of Russia and America, which does not adopt this form of registration. Business men are absolutely unanimous in favour of the Bill and cannot conceive such speeches being made against it as that of the noble and learned Lord on the last occasion. I am glad to see present my noble friend Lord Joicey, who followed the noble and learned Lord in the previous debate and gave expression to the opinions of business men regarding this Bill. We like to have the law administered by learned Judges, but sometimes we desire to say what sort of law it is that we wish to live under. The Associated Chambers of Commerce, comprising 500 members representing 100 Chambers, recently held their annual meeting, and unanimously passed a resolution in favour of this Bill; the London Chamber of Commerce has done the same; and wherever I go amongst practical business and common sense men I hear the remark that they cannot conceive what objection there can be to the Second Reading of this Bill.
This is not a panic or faddist proposal. In the opinion of calm practical business men a Registration of Firms Act should be on the Statute Book before the war is over. Otherwise we shall have foreigners flocking over here and again trading, as they have for so many years past, under assumed English names. Business men claim that they are entitled to know 433 with whom they are trading, and if this Bill were passed that information would always be forthcoming. I ask your Lordships to comply with the request of business men by granting the Bill a Second Reading and adopting its principle, and then send it to a Select Committee to consider and revise its details. If this is not done, there will be very great disappointment in the commercial world, and I think that great harm will be inflicted upon the trade and commerce of the country.
§ Moved, That the Bill be now read 2a.—(Lord Southwark.)
§ LORD STANMORE
My Lords, I am glad that my noble friend agrees with the suggestion made on the last occasion by the Duke of Devonshire, that the Bill should he referred for investigation to a Select Committee. On the previous occasions that this measure has been before your Lordships' House it has received a considerable degree of sympathy from His Majesty's Government, and they will not now offer any opposition to the Second Reading. At the same time I can give no indication that it will be proceeded with in another place.
§ LORD MUIR-MACKENZIE
My Lords, I had intended, I am sorry to inform your Lordships, to make quite a long speech upon this subject to-night, but the arrangement that has been made at the instigation of the noble Viscount (Lord Midleton) who is not here to-night, that there should be a concentration of business upon one night, has produced so large a programme for this occasion that I think I must suppress my loquacity. Nevertheless I should like to say one or two words in favour of this Bill, because for many years past I have been accustomed to hear in another capacity of this proposal and never understood that it was one that was likely to be opposed on Second Reading as a matter of principle by the legal profession. I felt, I must say, very much abashed when so distinguished a person as my noble and learned friend upon the Cross Benches (Lord Sumner) denounced the Bill on the last occasion; chiefly, I think, upon a ground which has almost passed away nowadays from serious consideration —that it interferes with individual liberty. We nowadays arc inspected, registered, valued—I am sure I do not know in what department of life we are not looked after, nursed, and tormented in every sort 434 of way—and it is quite surprising now to hear any one take up that ground. I could not help thinking that if the noble and learned Earl who sits upon the other side of the House, who is not here to-night, had been present when my noble and learned friend on the Cross Benches gave the main reasons for his opposition the other evening, he would have been reminded of the early days of his many and long Chancellorships, when he used to have to find official answers to the Liberty and Property Defence League, represented in this House by the delightful personality and eloquent tongue of the late Lord Wemyss. I am sure my noble and learned friend the noble Earl would have felt as if old days had come back again.
I venture to say that a sufficient case for this Bill on ordinary lines has been made out by the noble Lord who moved its Second Reading. But I should like to add one matter to which I had expected him to refer, but which he did not mention. There was a very important Committee appointed some years ago to deal with the Bankruptcy Acts, and they made a most excellent Report, upon which was founded all the recent legislation on the subject. They had this very Bill before them and considered it, and this is what they said—We are of opinion that the general question of the registration of firms and of single partners carrying on business in firm names or in names other than their own is one of great importance to the trading community. The evidence submitted to us on this question both by official witnesses and by those who represent the mercantile community was strongly in favour of such a system of registration, to be enforced by penalties on failure to comply with the provisions of the law; and although it has been suggested to us that difficulty might arise in establishing such a register and keeping it correct, and that an obligation of universal application might impose inconvenience and hardship on many firms of repute, these objections do not appear to us to be supported by the evidence tendered us or to be in themselves well founded.I think those are weighty words coming from that very strong Committee, and are worthy of the consideration of your Lordships. I have another authority to quote. I asked Lord Lindley, the greatest living authority on partnership law, who was, as your Lordships know, at one time a most distinguished Lord of Appeal in this House, what he thought of this Bill, and he wrote to me to say that he had read the Bill and thoroughly approved of it. I think this is an important thing for your Lordships to know.
435 I cannot but think that the House was somewhat taken by surprise on the former occasion when this Bill was dealt with. The Government had informed the noble Lord who moved the Bill and the House that they would not resist the Second Reading, and would concur in the Bill being sent to a Select Committee. Then, without any notice having been given of opposition, so formidable a person as my noble and learned friend on the Cross Benches got up and opposed the Bill in what was practically a Motion for Rejection. When the noble Earl the Chairman of Committees, who was on the Woolsack, put the Question, he said he thought that the Not Contents had it. There is a saying in Scotland that "Nae-body can be hangit for his think," and the noble Earl said he "thought" the Not Contents had it. My noble friend Lord Southwark seemed to find himself in the position of a man who is knocked down by a feather, and he failed to rally his many supporters to the rescue of the Bill. I have no doubt that on this occasion he intends to press his Motion resolutely, and I have no less doubt that your Lordships will give the Bill a Second Reading.
§ LORD SUMNER
My Lords, I fear that I am guilty of some temerity in rising to address your Lordships after the two speeches we have just heard. At the same time I am afraid I might disappoint the noble Lord who introduced the Bill if I remained silent, and even appear to be guilty of some discourtesy to him. Possibly also I might be allowed at least to apologise for the offence which in the eyes of my noble and learned friend Lord Muir-Mackenzie I appear to have committed in the last session by venturing to address your Lordships without putting any advertisement of my intention in the newspapers, and by apparently addressing you with such success that positively your Lordships agreed with me. No doubt it may seem a strange thing, in these days when we are so loaded with fetters of legislation, that a mere lawyer should venture to say one word in favour of the ordinary right of a man to mind his own business and manage it in his own way. I do not think it is of great importance, to tell the truth, what course is pursued on this occasion, because I think Lord Southwark recognises that in the process of examination before the Select Committee the Bill may require and receive so much 436 alteration that little will be left of it except what is called the principle. Therefore I, for my part, will direct my observations only to what I understand to be the principle, so stated, and the effect of this Bill; but I do think that it is necessary that it should not be treated as a matter either so universally desired or so universally beneficent that no observation should be made upon it on the other side. I learn from the noble Lord who moved the Second Reading that this Bill seems to have been first prepared in 1878 and since then to have been unanimously supported by the whole of the mercantile world. We have passed a good many measures since 1878, and if this Bill were so desirable as has been made out I am surprised that it has not long since been placed upon the Statute Book.
One of the objects of the Bill, I gather, is to bring to light the alien, especially the alien enemy, in our midst, and to provide some kind of national safeguard against his machinations. If that be so, I would seriously put it to your Lordships whether a Bill of this kind is not inopportune during the currency of the war. When this war ends—whenever that is to be—if it ends upon terms such as we all desire and hope we shall obtain, it will no doubt be necessary for this country to consider, and consider very gravely, questions in connection with the admission of aliens to this country as traders, their admission to citizenship, and so forth, which have never arisen before, which will require the most careful consideration, and which it will be fatal to deal with in any incautious way. If and in so far as this Bill is directed to dealing with that question and to dealing in some way with the terms upon which foreigners shall be admitted to this country, I venture to suggest that it may prejudge an issue that ought only to be decided very gravely, and that there is no possible excuse for treating it as a matter to be gone into now at a time when only emergency legislation is really desirable.
In its other aspect, which is not connected with aliens in our midst, the Bill appears to me, with all respect, to be still less a thing to be pressed on at the present time. May I explain to your Lordships in my own way what I understand to be the principle of the Bill? The principle of the Bill is this, that no two men or more in this country shall trade together in partnership unless they are put to the pains 437 and trouble of entering that fact upon a register somewhere or other, and unless, in order to enforce that obligation, they are liable to pains or penalties, which may or may not be severe. I am aware that the penalties can be altered, but as the Bill stands the liability is to a fine of £1 a day for the period during which the omission continues. There is not a farmer carrying on his business with his sons in England, Scotland, Ireland, or Wales, there is not a milliner, there is not a small shopkeeper of any kind who may not and will not come under these provisions. If a person adds to his name the innocent addition "and Co.," and calls himself "Smith & Co." instead of "John Smith," he is bound under this Bill to register what his firm is. The humblest persons, the most out-of-the-way persons, the most harmless persons are all bound to contribute their unimportant names to this great national register, and I imagine there must be thousands, probably tens of thousands, of decent people who, after all, pay their debts as they fall due and are neither aliens nor swindlers, who will be compelled to enter their names upon this register. And for what purpose? Apparently for two purposes only—one, in order that persons who are foreigners may be detected by the names which are registered, if any one has the curiosity to examine the register; and the other, in specious language, in order that traders may know with whom they are doing business and to whom they are giving credit. I have not the slightest objection to doing anything that can reasonably be done to assist traders in that respect. I think it is quite reasonable that traders should know with whom they are dealing, and if the law can assist them—which I doubt—it is right that it should. But is it really the correct way to assist traders to find out with whom they are dealing to compel this great register to be compiled in order that at various points—I think three or four in the United Kingdom—there may be a register which somebody may be able to search on payment of a shilling or so?
There are two ways in which business is done. One is that the proposed debtor, the man who wants to do business with you, comes to you and says, "Will you deal with me on credit?" What is the difficulty of saying to him, "Have you a reference, have you partners, do you object 438 to telling me what your full name is?" and the rest of it. I can see none. He may go away; but if he has come to you to seek credit, he may tell you these harmless truths in order to get credit. The other way is that you should go to him and offer credit. The commercial traveller who calls at half the shops in a town and sees over some of them names such as "Commercial Agency" or "Californian Comfit Shop" probably knows very well that if he said, "Before I take your order I want you to tell me who you are," he would not get the order. Surely it is not necessary to impose on the whole trading community, great and small, this new and additional burden, which must be enforced by penalties, in order that persons who are sending out commercial travellers to canvass for orders should be saved the necessity of asking disagreeable questions. It is not as though the law did not already provide machinery of the kind, because in an action, if the case comes to that, there is machinery for finding out who the partners in the firm are, and there is machinery in aid of execution, if you have judgment, to enable you to enforce it. If that machinery needs improvement, let it be improved. But this is a roundabout way of constructing a register which is at best to relieve a certain number of persons who should make their own inquiries for themselves of the trouble of doing so at the expense of other people who are perfectly ready in the great majority of cases to pay their debts.
I know that it is constantly said that we have a great many registers, and why should we not have one or two more? We have a register of shareholders in companies, of dentists, of doctors, of solicitors, of moneylenders. Why, it is asked, should we not have a register of persons who trade as firms? It is a complete error, to my mind, to think that the register of companies has anything to do with this matter. You do not go to the register of shareholders in companies in order to find out who are the beneficial owners of the shares, because the shares may be there, and may rightly be there, in the names of nominees. Therefore that register, which is enacted for a different purpose in connection with the transmission of shares, is of no real analogy whatever to this proposal, which is a proposal to have a register from which you would be able 439 to find out whether You are to look to the credit of A, or of A and B, or of A, B, and C when you come to seek payment for your goods. In the same way the suggestion that doctors and dentists are registered seems to me to have nothing to do with the present case, because they are registered for a totally different purpose—namely, to protect the community from unqualified persons, not to inquire into the personal relations as partners between one person and another.
The noble Lord rightly said that in this case, if the register is to be of any use, you must have penalties and you must enforce them; otherwise instead of having a register containing, say, 10,000 names, you would have one containing 400 or 500 names which would be of no use to anybody. First of all, there is nobody provided for in this Bill whose duty it will be to enforce registration. There is nobody provided for in the Bill whose business it will be to take proceedings against those who do not register. Except at the cost of creating another and a busy department—I suppose of the Board of Trade—at some substantial public expense, I do not know how you would get this register kept up to the mark. And if it was not kept up to the mark, what would happen? Every time somebody was summoned for not registering the names of the partners of the firm, he would say "It is perfectly notorious that vast numbers of people do not register and have never been called upon to register."
§ LORD SUMNER
The noble Lord will hear in one moment. I was going to appeal to the experience of the large number of your Lordships who have some experience of petty sessions. Would any serious penalty be inflicted upon anybody who was in a position to say, "They have caught me—why I do not know—but there are great crowds of other people who are never summoned but who ought to be." The certainty is that a merely nominal penalty would be inflicted. If, on the other hand, you get the register fully created it would be necessary in the first instance to have some authority to keep it up to date, to enter the names when the firms are starting in business, and that could only be done by some fresh branch of a Public Department; and I am quite 440 sure that a register that is allowed to fall into arrears or into desuetude is much worse than a register that has never been enacted at all.
I heard with some surprise on the last occasion that it was the deliberate intention of this Bill to abolish secret partnership. It is not that a secret partner can evade his liabilities, because he is liable if he is a partner. Of course, there is some trouble in those relatively rare cases where it becomes necessary to enforce debts by legal proceedings. Let those portions of our legal machinery be improved. But why is the right of two men to trade together without telling everybody what they are doing to be interfered with because of the fact that in a certain number of cases, perhaps too numerous, some partner manages to keep his secret to the very last and get away without paying the firm's debts? It appears to me to be the wrong way of going about the business. Instead of directing yourself to the person who is fraudulent, instead of heaping penalties upon his head, instead of providing as a matter of police that he shall be brought to book and punished for his crime, you endeavour to create at the expense of other people some kind of structure which it is thought will assist, I know not whom—inquiry agents, I imagine—to find out indirectly information which will be useful to those who employ them.
I will not detain your Lordships longer, because there is other business on the Paper. But I would quite seriously entreat the noble Lord who is in charge of this Bill to consider whether the best course would not be to withdraw it upon this occasion—first, because it is not a war measure and because it appears to deal with matters which I think could be more comprehensively dealt with later on; and, secondly, because it is a measure which not only requires consideration in Committee but recasting from end to end.
§ EARL LOREBURN
My Lords, this Bill has been familiar to some of us for many years, and only pressure of time has prevented its being brought forward and passed into law before. There is only one real purpose in the Bill. It is to prevent people from trading otherwise than in their own names—that is to say, under fictitious names and sometimes for dishonest purposes. I am not specially 441 concerned with the Bill, but it is proposed to send it to a Select Committee in order to see how far this mischief can be prevented. I think that no good can result in concealing from traders the names of people with whom they are invited to deal. It seems to me that the straightforward course is that people should not be ashamed to state who they are and what their false names are, if they think fit to use false names. That would save traders the trouble of bringing actions in order to find out with whom they have been dealing.
§ THE LORD CHANCELLOR (LORD BUCKMASTER)
My Lords, there are only a few words that I desire to say. I agree with Lord Summer that it is desirable that a man should mind his own business and manage his own work, but I should like to add that he should also manage it in his own name. I can see no reason at all why a man should be ashamed to trade, and I can see no reason why, if he is not ashamed of trading, he should object to stating his own name. I cannot see the difficulties to which the noble and learned Lord referred. Registration can be effected simply and at practically no cost at all. At the present moment we are dealing with a situation of difficulty which exists by reason of the very fact that provisions like this are not on the Statute Book. We are absolutely ignorant to-day of who the people are who are trading under apparently English and Scottish names. It is of the utmost importance to have this information, and we have no means of ascertaining it. If this Bill had been in force we should have known what steps to take to prevent trade being carried on for the benefit of our enemies. I cannot see why, in circumstances such as these, we should postpone this Bill until after hostilities have ended. The noble and learned Lord has said that there may be many matters connected with trade and business into which it will be desirable to inquire. But, whatever you do, this at least is surely the minimum, and why not do it at once? There will be no need to alter this provision when hostilities cease, though it may be necessary to add to it. We should have this necessary nucleus, from which our legislation can grow. I can see no objection to this Bill, and I hope your Lordships will read it a second time.
§ On Question, Bill read 2a.442
§ Moved accordingly, and, on Question, Motion agreed to, and Bill referred to a Select Committee.