§ Lord Althorp
presented a Petition for the amendment of the law respecting Insolvent Debtors, from Mr. Henry Dance, a respectable individual, who having for some time held an official situation in the Insolvent Debtors' Court, was thereby rendered peculiarly competent to express an opinion upon the subject. The prayer of the Petitioner was, that a Debtor, instead of being arrested, should have power to apply to the Insolvent Court for permission to divide his property among his creditors; and also, that creditors should have power to compel an imprison- 228 ed debtor to divide his property among his creditors, and not remain in prison and defy them. In both those prayers he entirely concurred. He believed that imprisonment for debt was in many cases detrimental to the debtor, without being in any way useful to the creditor. In cases where the debtor was an honest man, and really insolvent, imprisonment could do no good. In cases where the debtor was fraudulent, he would be the last man in the world to say that he should not be punished; but where he was an honest though unfortunate man, and disposed to surrender all his property to his creditors, surely it was a great hardship to punish him for his misfortunes. Without, therefore, saying that he was an advocate for the entire abolition of imprisonment for debt, he certainly wished to give the debtor the power of applying to the Insolvent Court for permission to divide his property among his creditors, without being previously imprisoned. When any honest man found himself insolvent, what course had he to pursue but to say that he was so, and to offer to divide his property among his creditors? But if he were to be told that he must first be punished by imprisonment, was not that likely to induce him to delay as long as possible dividing his property? These were some of the reasons which led him to concur in that part of the Petition which prayed that an honest debtor might have the power of dividing his property among his creditors without being first arrested. In the other prayer, namely, that creditors might be empowered to divide a debtor's property among them, and not be suffered to remain in prison defying them, he also entirely concurred. It was well known that there were persons residing within the rules of our prisons, and undergoing merely a nominal confinement, who were living on the property of their creditors, whom they set wholly at defiance. He therefore thought, and indeed he had always thought, that creditors should have the power in question; and he trusted that it would soon be conferred upon them. He would now move that the Petition be brought up.
Mr. Alderman Thompson
was convinced that the time had arrived when it was absolutely necessary that something should be done on this important subject. The gross amount of the debts for which insolvents had been discharged was eleven millions sterling; and upon those debts 229 the creditor had received, upon an average, a dividend of four pence farthing in the pound. Surely that fact was in itself a proof of the necessity of some alteration. The law, as it at present stood, operated with peculiar severity on the retail trader; the debts due to whom were of small amount, and who in vain incurred the costs of suing the debtor, as the latter, if the creditor recovered against him, merely went to gaol and took the benefit of the Act. The law ought to fix a time when a debtor shall be brought up for examination, beyond which he should not be able to postpone the inquiry. There ought also to be a provision in the law, empowering the creditor to compel the debtor to come before the Commissioners at once, and assign over the whole of his property to the payment of his debts, instead of squandering it in prison. The demoralization which the present system created was most extensive. Many offences were committed under it with impunity, of a more grave character than others which were punished with transportation. He maintained, therefore, that the law required considerable revision. Unless additional protection were afforded, to the retail traders especially, they must soon be entirely ruined. The debts of the merchant and manufacturer were fewer and of larger amount, and they had much better means of protecting themselves. He had in his possession a petition on the subject, most respectably signed, which he should take an early opportunity of presenting.
§ Sir John Newport
declared, that he was every day more and more convinced of the necessity of some material change in the law upon this subject. It had been said that the retail trader would have no protection unless he had the privilege of arresting his debtor. That he denied. But if the tradesman had no such privilege, he would look more closely to the character of those whom he trusted. The amount of debts for which insolvents had been discharged, and the small dividend which creditors had received, as stated by the hon. Alderman, were principally owing to trades men having given credit to those to whom they ought not to have given credit, and to whom, were there no arrest for debt, they would not have given credit. It was said, that the trade of the country could not be car-vied on unless the creditor possessed 230 the power of arresting his debtor. That, also, he denied. No such power existed at Hamburgh; and was it to be supposed that the tradesmen of that great commercial town would not have required such a privilege, had it not been possible to carry on trade without it? As the law at present stood, one of its chief tendencies was to protect the fraudulent debtor. In his opinion it required very extensive amendment.
Mr. Alderman Waithman
declared it to be his opinion, after a great deal of experience on the subject, that there never was any thing so pernicious as the Insolvent Debtors' Act. It operated as an encouragement to fraudulent persons, who found themselves just as well off if they paid only the smallest fraction of their debts as if they had paid the whole. It operated as a legal oppression on an honest man, who was unwilling to recur to the same moans of relieving himself from inevitable embarrassment which were resorted to by the individual who incurred large debts, well knowing that he had not sixpence to pay them with. So strong was this feeling that he had known persons rendered insolvent by unforeseen calamity, who had declared that they would suffer death rather than take the benefit of the Act. It was known, that all the dividends which had been paid under the Insolvent Debtors' Act would not defray half the salaries of the Commissioners of the Insolvent Court. Was that a system to be endured? During the last year 4,000 persons took the benefit of the Act; and probably as many more obtained a release from their creditors under the threat that they would do so. The practice of living in prison on the property of creditors was also carried on to a most scandalous extent. He lived in a situation which enabled him to observe persons who were within the rules of the Fleet; and among others he had seen a person who had lived ten years within those rules, rather than divide his property among his creditors; his father allowing him 400l. a year for that purpose. This man's creditors would have been satisfied with the appropriation to them of 100l. a year of his income, yet there he lived, no doubt slipping out of the rules occasionally, and not caring a farthing about the matter. It was very easy for hon. Gentlemen to say that tradesmen ought, not to give such easy credit. If those hon. 231 Gentlemen would lounge for an hour or two in a tradesman's shop, they would perhaps be surprised to observe the caution and circumspection used on the one hand, and the dextrous attempts at fraud on the other. There were many cases in which it was utterly impossible for a tradesman to avoid giving credit. He had no doubt that if a tradesman were to send goods to any hon. Member, and order his messenger not to leave them without the money, that hon. Member would turn round and exclaim "You rascal, what do you mean by such impertinence?" If a tailor were to send clothes to the hon. and learned Gentleman opposite, with such an intimation, the hon. and learned Gentleman would be very apt to say, "Am I not his Majesty's Attorney General." He trusted that, before the bill or the subject before the House were proceeded with, a Committee would be appointed to investigate the matter, and see if no better plan could be devised. The present system broke clown all faith; and yet many a man owed a fortune of 20,000l. to a little confidence in the first instance, who without it would never have been worth a shilling. It was said that tradesmen ought always to insist on being paid in ready money. But where was the ready money? They must give them pound notes first. The principal merchants in the city frequently took bills for six months, and for a longer period, from their debtors; and the same principle must guide individuals of more limited dealings.
The Attorney General
was unwilling to go into any detailed statement of his opinions on the subject at the present time, as it was not customary or convenient to do so on such an occasion as the present. At the same time, the noble Lord knew that he had no prejudice in favour of arrest. Of the expediency of the proposition for empowering the debtor, without arrest, to apply to the Commissioners for power to divide his property among his creditors, he had considerable doubts. As to that which went to enable creditors to compel their debtors, living in prison, to divide their property among them, if the noble Lord would prepare a clause for the purpose of introducing it in the bill then in progress, he should be happy to give it every possible consideration. As to a Committee of Inquiry, he should be happy to accede to any proposition for the appointment of one. He would not pledge 232 himself to any ulterior measure; but, if any Gentlemen would undertake the labour of the investigation, he could have no possible objection to it.
§ Mr. Bright
was glad to find that the hon. and learned Gentleman had no objection to an investigation by a Committee. Under those circumstances, he thought the House ought merely to re-enact the former bill for the present, leaving all new provisions to be considered after the appointment of the Committee. Alteration ought certainly not. to precede inquiry. The city which he had the honour to represent was exceedingly alarmed at the proposed alteration with respect to the amount for which a debtor might be arrested. It was well known that nine-tenths of the debts contracted with retail traders were under the amount of 100l. His constituents were alarmed, therefore, at the change proposed by the Attorney General on the subject of arrest; and they conceived that the law could not be altered in that respect without concurrent alterations for their protection.
§ Mr. D. W. Harvey
was very desirous that a committee should be appointed to examine the state of the law respecting debtor and creditor, and concurred with the hon. member for Bristol, that until the result of that inquiry should be ascertained, the best course would be to re-enact the present Bill for a short period. Such a subject could never be satisfactorily discussed in a popular assembly. It ought to be referred to a committee composed partly of professional and partly of commercial men. The present law held out no inducement to honesty: it held out no inducement to humanity; for the creditor who was the most pressing was paid, while the creditor who refrained witnessed the extinction of the means of satisfying his claim. As to the amount of the debts of insolvents during the continuance of the Act being eleven millions, it ought to be remembered that the amount of each debt was repeated in the schedule two or three times, it was true that the dividends were trivial; but that was because the debtors had no temptation to make them greater. If they had, they would disclose their insolvency, and make a division of their properly at an earlier period. Why not hold out to insolvents the same temptation as to bankrupts? If a bankrupt, by an early disclosure of his 233 circumstances, paid his creditors 10s. in the pound, he had a certain sum allotted to himself; and that sum was increased in proportion to the increase of the dividend. At present, not only was the Insolvent Debtor deprived of the whole of his property, but, what was worse, the whole of his future prospects were mortgaged to his creditor. It appeared by certain returns to which he had had access that within a few years, 100,000 affidavits had been made, with a view of holding debtors to bail, of that number 83,000 were for debts under 100l., and a very considerable number were for debts under 50l. In what situation then would creditors be placed, if the law of arrest were abolished, and nothing else substituted? He was not an advocate for arrest in all cases, but when the debtor refused from obstinacy or dishonesty, to discharge his debts, his creditor should have the power to arrest him. What was the remedy proposed, but to have recourse to the property of the insolvent? This he approved of, but it ought to be accompanied by other provisions. The whole subject however was so important, that he hoped the Solicitor General would let the bill glide through Parliament this Session, and consign it in the next to the consideration of a Select Committee.
The Solicitor General
said, that as at present advised, he had no objection to consign the consideration of the subject to a committee. Though he had no doubt that there was humanity enough in that House to protect the unfortunate debtor, it ought never to be forgotten that the creditor was the party best represented in it. He was afraid that the proposition for allowing a man to declare himself voluntarily an insolvent, would strike at the root of that credit which was so necessary to the transaction of the ordinary business of daily life. He was therefore not prepared to go along with that proposition. He agreed with the noble Lord, that it was incumbent upon them, whilst they gave every proper facility to the debtor, to take care that he was not permitted to set his creditor at defiance. He could not agree with the hon. Member opposite, that every debtor who was unable to pay 20s. in the pound to his creditor ought merely to be considered in the light of a trustee for his creditors. Morally speaking, undoubtedly he was so,—but how injurious would, it be to give every creditor 234 the power of breaking up any of his debtors, who could not pay him 20s. in the pound on demand? He would undertake to say, that nineteen persons out of every twenty could not do it. How many were there now rolling in opulence, who must have been consigned to utter ruin, if such a power could have been exercised against them during their first attempts to emerge from poverty? In conclusion, he stated, that if he found a man unable to go on with his business, owing to his embarrassments, and yet fearing to linger in prison, making every day less the little property which still remained to him, he would have such a man compelled to declare his insolvency. He repeated his opinion, that this subject ought to undergo full consideration by a committee.
§ Mr. Hume
heard with pleasure the declaration of the Solicitor General, that he considered it desirable to have the whole subject of the debtor and creditor law of the country submitted to investigation. He was convinced that the abolition of arrest would not of itself be productive of good. Along with the abolition of the system of arrest,—that system which had spread so much demoralization throughout the country—the House should introduce some plan for the more easy and expeditious recovery of debts. Unless the House combined these two measures, it would only outrage the feelings of those who thought that they had an interest in maintaining the law as it now stood. Hundreds of solicitors and traders had informed him, that they would make no objection to the first measure, provided they were sure of obtaining the latter. He thought that a great many of the provisions of the Scottish law on the subject of debtor and creditor might be introduced into the English law with great advantage, particularly that which gave the majority of an insolvent's creditors the power of giving him a conditional discharge, provided they deemed the offer made to the body of creditors fair and equitable.
§ Mr. O'Connell
complained of the present system of law, by which a debtor could postpone the period of settling with his creditors for three, six, or even nine months, by setting up fictitious defences. Was it not disgraceful that a defendant was not brought at once before a judge, and called upon to state immediately the 235 nature of his defence? Why, after that defence was stated, should not sentence be given, and execution follow immediately? He could see no just reason why there should not be a voluntary insolvency, as well as a voluntary bankruptcy. He was also at a loss to discover why we were to have one system of bankrupt laws in Ireland, and another in England. As to the system of arrest on mesne process, he looked upon it as altogether bad. He knew a gentleman, who had been arrested for 100,000l., at the suit of a person whom he had never seen, and with whom he had never had the slightest pecuniary transaction.
§ Mr. Doherty
could not conceive how several of the topics on which the hon. and learned member for Clare had touched bore upon the subject then under discussion. The hon. and learned Member was fond of declaiming about the legislative union of the two countries; but he would take that opportunity of informing that hon. and learned Member, that whenever he should bring forward his threatened motion upon that subject, he should be prepared to meet him.
thought that a settlement between debtor and creditor could never be attained without some power of arrest for debt. He was not aware of any country having entirely abandoned the principle of imprisonment for debt. Much had been talked of fraudulent debtors, and unfortunate debtors, but the shades of difference between them were innumerable, and even tinged by improvidence, profligacy, want of care or of knowledge, and other circumstances. He believed the instances of creditors pressing upon debtors were few, and the fault was rather the other way.
§ The Petition read. On the question that it be laid on the Table,
§ Mr. O'Connell
said, that he had not spoken at all that evening about the legislative union of the two countries; all that he had said was, to express a wish that there was the same code of laws in England and Ireland relating to bankruptcy. At present there were two codes, or at least it was doubtful whether there were not two. Some years ago the bankrupt law of England was altered, but the alterations, either designedly or unintentionally, had not been extended to Ireland. The first clause of the Act making those alterations repealed all prior laws affecting 236 bankrupts, both in England and Ireland; but there was another clause, which some persons considered as over-riding the former clause, by which it was enacted, that none of the provisions of the bill should extend to Ireland. Hence arose matter of great doubt, which must at some time be settled, at great expense to the assignees of some bankrupt estate.
§ Mr. Doherty
concurred in the wish of having the law of England and Ireland assimilated on this subject. He happened to know that it was intended to amend the bankrupt law in England; and till that was done, it would be folly to introduce the English system into Ireland.
§ Lord Althorp
said, that he should never advocate a system by which the fraudulent debtor should be allowed to go scot free, but some measure ought to be adopted to exempt the unfortunate from incurring the same punishment as the guilty.
§ Petition laid on the Table.