§ On the 12th Clause being read,
said, that he understood, from various letters he had received, that numerous petitions would have been prepared against this obnoxious measure, had not the nature of the first division on the Bill been misunderstood in the country. The provisions of the Bill were of the most vexatious character; and would compel a creditor to expend 200l. or 300l. for the chance of recovering a debt of 50l. The creditor, after two actions, after having held out to him the vain and delusive hope of recovering his debt, and having been defeated, would be left without any sort of redress, and would not only lose his original debt of 50l., but would be out of pocket upwards of 100l. in expenses. And this was the sort of boon which the learned Attorney-General, in his wisdom and goodness, bestowed on the commercial world. But this was not all. If the clause of which the hon. and learned Attorney-General had given notice to follow the 17th, should pass into a law, a gross injustice would be done to the 50l. creditor. In that clause the Attorney-General proposed, that where a man was creditor for 100l., he should have the power, unless his debt was paid within twenty-one days, or the debtor could give approved security, for which he would have to offer two sureties—of making his 824 debtor a bankrupt on the twenty-second day. Now, it was evident, that in all cases where the 100l. creditor possessed this power, he would exercise it if he thought that he could not get his money as soon as he wanted without it. But what would be the result of clothing the creditor with this extraordinary power? It would lead infallibly to that abuse which the bankrupt laws were most particular in guarding against—namely, the giving of an undue preference to a particular creditor. But the hon. and learned Attorney-General, in the fulness of his wisdom and from his desire to conciliate some great men in the city with whom, he was told, the hon. and learned Gentleman held communion, gave the 100l. creditor this monstrous power of making his debtor bankrupt, if his own individual debt were not paid in three weeks. "Well, but," the learned Attorney-General might say, "supposing the debtor to be made a bankrupt by the 100l. creditor, the 50l. creditor will come in for his share of the estate, as well as the man who makes the bankrupt." That was very true, if matters came to bankruptcy; but, of course, this would be the very thing which the debtor would wish to avoid, and in ninety-nine cases out of one hundred where there were any effects, the debtor would, at any loss, pay the 100l. creditor his debt in order to avoid the Gazette, while the 50l. creditor, at the end of two or three years of litigation, would be left without recovering a farthing of the money owed to him, and greatly out of pocket by the expenses of prosecuting his claim. Why should more indulgence be given to the great than the small creditor? Again, it was provided that if a man made affidavit that such and such a person, being a trader, was indebted to him in the sum of 200l., then, unless the money was paid within twenty-one days, or the trader found two sufficient sureties for the payment of the debt and costs, he was to be declared a bankrupt. He believed it was Solomon who said—he was not quite sure it was Solomon, for he read it about forty years ago—"Be surety for no man." Suppose any man made an affidavit that an hon. Member of that House owed him 10,000l., and that hon. Member was a trader. He might be worth 30,000l., and yet be unable to pay the money within twenty-one days, or to find sureties for so large an amount; he would then be made a bankrupt on an 825 affidavit. This was what must be the inevitable result of the 18th Clause, if it became law. With regard to the clause at present before the Committee, he felt sure that the 50l. creditor would rather wave his debt, than attempt to recover it by proceedings so expensive and tedious as those which the clause prescribed. Yet this was the measure on which the Attorney-General so much plumed himself, and for which he expected to get the thanks of the mercantile community. He should further observe, that this 12thClause, except so far as the 18th Clause restored them, repealed the whole of the bankrupt laws, while the fraudulent debtor, by the aid of the 6th, 7th, and 8th sections, would be able to concert measures by which he might give an unfair preference to one creditor over others. He should now merely say, that to this 12th Clause he should give a decided negative, and he moved that it be struck out of the Bill, and he would divide the House upon the question.
§ Sir Frederick Pollock
was anxious to call the attention of the Committee to the bearing of this clause. For his own part, he was not an advocate for anything like arrest for debt, except in extreme cases; and he was decidedly in favour of abolishing imprisonment for debt so far as was practicable. He must, however, admit that his hon. and learned Friend opposite had not carried out the recommendations of the Common Law Commissioners in this particular, and he really could not go along with him in admiring the policy of this clause. According to the report of the Commission, of which he had the honour to be a member, it was recommended that every facility should be given to make the property of the debtor available to his creditors. He must say, that the details of some of the clauses of this Bill did not contain sufficient machinery to carry this object into effect. Any man not arrested for debt, and against whom a judgment had been obtained, finding himself without the means of paying his creditor in full, might, as the law now stood, go to prison and petition the Insolvent Debtors' Court. It was in his power, when pressed by an arrest or by demand for the payment of a judgment debt, to apply to some tribunal, and make a cessio bonorum for the benefit of his creditors. It was his opinion that the debtor without going to prison ought 826 to have the opportunity of dividing his property among his creditors fairly; but that ought to be followed by a clear and undoubted discharge from his liabilities, so that he might not be harassed again. Now, this clause made the same provision for one single judgment creditor, which the law had never created before, except for the purpose of dividing the debtor's property among all his creditors, and giving the debtor himself a release from the engagements which he had contracted! If a person of large property were sued for a judgment debt, and the debt were not paid instantly, not all his creditors, but one individual creditor, might call upon him for a schedule of all his effects—not merely a schedule of property sufficient to satisfy that particular judgment, but he could call upon him to disclose all his concerns, and if the debtor on his examination gave dissatisfaction to the Commissioner, he could be brought before a judge and sent to prison till he should satisfy the judge. Now, he did not see the great advantage of this course, and he saw a very great disadvantage in making every creditor of the party the investigator of the debtors' concerns, toties quoties every time a judgment debt was obtained, while the debtor every time got, no discharge at all. Constant complaints were made of the proceedings under a commission of bankruptcy in consequence of their inquisitorial character, and in the Insolvent Court the case was the same. The system of forcing a debtor to make a complete discovery of his property by sending him to prison if he gave dissatisfaction, and keeping him there until the judge was satisfied, ought at least to be followed by some corresponding advantage to him. He would not, as the clause stood, be in the same position as an insolvent debtor or a bankrupt under the present law, and after, successive examinations by separate judgment creditors, after he had been stripped of every farthing, he would be incapable of obtaining fresh credit, if an Act of Parliament did not give him relief from his liabilities. His hon. and learned Friend the Attorney-General might perhaps object to a cessio bonorum, but if this clause were framed on this principle, he for one should object to it, as being exceedingly harsh and severe. It was contrary to the principles of the law of England,, and he was astonished that his hon. and learned Friend should think of giving a single 827 judgment creditor the whole power of bankruptcy and insolvency to enable him to get his debt paid, and yet give the debtor no relief. His hon. and learned Friend said, he wished to abolish imprisonment for debt; but under this clause where was the difference between the present and the proposed law? Was there any difference in going to gaol on a Commissioner's warrant or a sheriff's writ? or was there any magic in the former which would infuse a greater share of candour into the breast of a debtor? If a debtor wished to defer paying his debts, what would he do? He would say, "You ask me for a schedule—I shall not give it you" He would then be taken before the Commissioner, who would ask him, "Will you make a disclosure of your property?" "No," "And why not?" "Because it would ruin me. If I go to prison for three or four months, I shall be able to pay all my creditors, and have enough for myself; but if I make a disclosure of my concerns now, you will seize all my effects and sell them in such a manner as will be my ruin." Now then, were they prepared to give the judgment creditor this power, and yet not extend the slightest relief to the debtor as something thrown into the other scale? A man who avails himself of the Bankrupt and Insolvent Acts knows that he delivers up his assets to all his creditors; he knows therefore, in the first place, that all his creditors have a common interest, generally so at least, some cases of fraudulent preference excepted; and thence he knows, in the second place, that the assignees can have no interest to squander and throw away his property, but that they will make the most of it, and try to get 20s. in the pound for all. They might not succeed in doing so in cases of insolvency; but they often did in working commissions of bankruptcy; and sometimes they even realised a surplus. Well, whether or no they contrived to get a surplus, the importance of carefully managing the estate would at least remain unquestionable. By this clause they proposed giving the power of enforcing a disclosure of all a debtor's property; by some antecedent clauses they had empowered the sheriff to seize and assign all the property of a debtor. Suppose, then, a man to have a debtor for 500l., and the debtor be found insolvent; the creditor would get his judgment; he would get his assignment; he would try to pay himself he 828 would turn every thing he could into money; he would sell reversions, remainders, and interests of all kinds, regardless of the imprudence of selling them at unfavourable periods careless whether one farthing would or might be made to remain for other creditors, or for the debtor himself, and intent solely on making up his 500l., and the costs of recovering it. This could not be the case now, or, if it were the case, it behaved the Attorney General to meet it—it was the duty of the House to look into it, and if such an error did exist, to cure, not to copy it. Insolvent cases, he knew, were rarely worth pursuing; the Insolvent Commissioners on their circuits only emptied the gaols without benefit to the creditors: but that was not the case in bankruptcies, when once it was thought worth while to issue a fiat. That system might not be perfect, but it was better than one which would admit the creditors to come in separately. Now, the proceeding itself under the clause, when called for, would not be operative. He could not see what difference there was between the warrant of a Commissioner and the writ of a sheriff, by which the former could compel a debtor unwilling to disclose, to make a disclosure under the threat of doing no more than the latter—sending him to prison namely. If they wished to give power to the Commissioner, they should give him the power of protecting the debtor—they should do so by enabling him to make the debtor do justice to all. Did they expect the debtor would obey the command to disclose for the benefit of one creditor only? No, he would not; he would declare his intention to go to gaol—he would refuse to be a party to the fraudulent preference against the other creditors proposed to him. He had had the honour of being a member of the Common Law Commission, as would be recollected; he had joined in the recommendation of that commission he saw no reason to deviate from those recommendations; but those recommendations had been accompanied by no practical details. He wanted to see the machinery by which those recommendations were to be carried into practice perfect. He agreed with his hon. Friend the Attorney-General, that it was expedient to limit imprisonment for debt.' He was aware that in so doing a saving would be made to the community in the expenses of abortive suits, useless and harassing proceedings, amounting to be- 829 tween 250,000l. and 300,000l.; he was desirous of seeing the principle carried out; but, because he thought that it would confer no more benefit on the debtor than he possessed now—because he thought it would not operate with greater terror on the debtor than the provisions of the present law—because he thought that it would give an undue preference to one creditor over another, he Should negative the proposition that this clause stand part of the Bill. He never would support a measure for squandering and throwing away insolvent property.
§ The Attorney-General
was glad to find that the opinions of his hon. and learned Friend had remained unchanged; and to him, as an authority, he would refer the hon. Member for Knaresborough. His hon. and learned Friend agreed that the creditor should be invested with a more direct remedy against the property of the debtor; he did not disapprove of the preceding clauses, which placed within the reach of judgments property and interests which formerly had been beyond them, but he objected to the 12th. Now, it must be obvious, that the new remedies would be in practice useless, unless a power were created of compelling debtors to make disclosures of the property henceforth to be surrendered to their creditors; this was only what was done by the 12th clause: it was necessary to cases the others out. The power of compelling the debtor to produce a schedule was substituted for the power of incarcerating his person; and this substitution was complained of as a hardship. It would but rarely, even as now imprisonment for debt, be put in force in cases, namely, where suspicion of concealment attached to the debtors. His hon. and learned Friend had complained of the imperfection of the proposed cessio bono-rum. In the former Bill he had tried more than he could effect; and he thought it better to have this less measure. His hon. and learned Friend doubted that a debtor would be discharged; he thought there was nothing to prevent a discharge if a voluntary cessio bonorum were made. In consequence of an interview with which he had been honoured by a deputation, at the head of which was the Governor of the Bank, he had given notice of a clause, by which the advantages of an act of bankruptcy would be secured to all parties three weeks after the filing of an affidavit by the creditor or creditors of a 830 debt amounting to 100l., or debts amounting in the whole to 150l. or 200l., and that the debt or debts were just, and the service on the debtor of a copy and a notice requiring; payment. This was taken from an Act of Parliament passed in the 6th of George 4th, by which, under similar provisions, Members of Parliament were made liable to be declared bankrupts. He wished to make insolvency unambiguous; and he thought that inability to pay, to compound, or to secure a debt in three weeks after demand was a correct test., According to his proposal, it would be three weeks after demand without requiring judgment. Believing that the measure met every part of the case, that there was no hardship in it, and certainly no hardship equal to those inflicted by the present law, he should vote for it.
thought that the Attorney-General should have chosen the sums in the additional clause of which he had given notice, so as to include the interest of the community, and not in such a way as to consult the interests of the powerful deputation from the city only.
§ Sir F. Pollock
asked, whether the Attorney-General would consent to a clause or proviso, giving a party against whom judgment and notice had issued, an appeal under the 12th section to the Insolvent Debtors' Court. As the Attorney-General would leave the clause, there would be three codes—the insolvent code, which would apply to cases of injury; the bankrupt code., which would apply to trade; and this special code, applying neither one way nor the other. Were a man relieved by the Insolvent Court, a person could afterwards afford to give him credit, because in that court the equity of subsequent creditors is preserved. Under this code no such credit could be given, for no such equity would exist. It would be better to make but one insolvent code; he however, preferred two. The notice alluded to would not meet the case of a trader, and he thought all creditors and all debtors ought to have, respectively equal benefits. Would the Attorney-General consent that the debtor might apply within fourteen days to the Insolvent Court? The debtor would then have the protection of a fit code.
§ The Attorney-General
said, that it was utterly impossible for him to hesitate about disagreeing to the proposition of his hon. and learned Friend, on account 831 of the mishief which had already arisen from the operation of the Insolvent Debtors' Act.
§ Mr. Hawes
thought the proposition of the hon. and learned Member for Huntingdon a very extraordinary one, considering that the hon. and learned Member was one of the Commissioners who signed the report on this subject, in which great stress was laid on the waste of property which took place in the Insolvents' Court. His intercourse with commercial men led him to a conclusion quite different from that to which the hon. Member for Knaresborough had come respecting this Bill. He considered that it would be a great improvement on the existing system.
§ Mr. Alderman Copeland
said, that at the present moment a great many men were kept out of their resources by the elements. He wanted to know what would be the effect of this clause, supposing that those individuals so deprived of their resources by the elements should be compelled within one and twenty days to come forward and disclose their assets to any single creditor? If you give the creditor the power of compelling such disclosure, you should give the debtor protection, by giving him a release from the claims of those creditors who availed themselves of that disclosure. It would be too bad to let a debtor be cited by creditor after creditor, to make this disclosure, and then when that disclosure had been made, to his great expense and loss, to leave him in such a situation as would disable him from ever rearing up his head again. God forbid that such should ever be the law of this country. He looked upon this Bill as an axe laid to the root of the commercial credit of the country. He should certainly divide against this clause, as it gave the creditor an advantage for which the debtor received no equivalent.
§ The Chancellor of the Exchequer
reminded the hon. Alderman that he ought to contrast the mischiefs arising from the present law with those which he anticipated as likely to arise from this clause, to which he so strongly objected.
§ Mr. Grote
said, that the true answer to the objection of the hon. Alderman opposite (Alderman Copeland) appeared to him to be, that this clause could not come into operation until the creditors should have obtained judgement against the 832 debtor, and he was sure that no commercial man would assert that the obtaining of a judgment was not an injury to the commercial credit of the person against whom the judgment was obtained.
§ Mr. Harvey
was fearful this clause had not been considered with the attention it deserved. The effect of it would be to give an undue preference to the relentless creditor, and to prejudice the interests of the indulgent. It moreover gave encouragement to fraudulent transactions, and denied protection to the unfortunate debtor. He was decidedly an advocate for the abolition of imprisonment for debt; at the same time, the creditor ought to be armed with prompt means wherewith to realize the assets of his debtor.—The mode of effecting this was the question. The present Bill enacts that after judgment obtained, the creditor may call for, and at a future time enforce, a schedule of the assets of the debtor. But in the interval (and three months is the shortest period in which such schedule can be effectively obtained) arrangements may have been matured by which all his property may be disposed of, and the creditor exposed to a vexatious amount of law expenses by way of addition to a debt now made worthless. But in cases where no fraud is practised, and the debtor insolvent, yet not subject to the bankrupt laws, why should one creditor sweep away every thing, leaving the debtor exposed to the unsatisfied demands of his exasperated creditors?—The moment a man is found to be incompetent to meet his engagements, an equal distribution of his effects should be made, and when no fraud is imputable to the debtor, his future liability should cease. To effect these two objects—an early and easy distribution of property and the acquittal of the debtor,—there can be and ought to be no difficulty, but he was sorry to be compelled to say the remedy was not provided by the present Bill. He was satisfied the Attorney-General had given great and unwearied attention to the subject, but he was opposed at every turn, which made it a hopeless toil for him to effect what is really desirable. A Committee of the whole House was not the suitable tribunal for such an inquiry; which ought to be before a Select Committee of professional and commercial men, who would sift the subject in all its bearings and intricacies. Equally unsatisfactory was it to hear hon. Gentlemen express 833 their indifference to the discussion, as the crudities and absurdities of the Bill would be corrected in another place; The House of Commons ought to be able to frame and mature its own measures, or it could never answer the ends of deliberative legislation. However, if this Bill were the best that could be offered by the Attorney-General, with any prospect of its final success, he would vote for it, in the hope that progressive measures would be framed, by which the law of debtor and creditor might be placed upon a more satisfactory footing.
§ The Committee divided on the clause:—Ayes 71; Noes 22: Majority 49.
§ On the 13th Clause being read,
§ Sir Frederick Pollock
objected to it, are giving to a single Commissioner the power of committal, which he deemed to be unnecessary, and as giving to the Commissioners conjointly the power of making rules and orders without any control over them, save that of the Lord Chancellor.
§ The Attorney-General
defended the clause. The rules and orders which the clause entitled the Commissioners to make only related to the practice of their court. The Commissioners of Bankruptcy had told him that they could not exercise their functions properly unless they possessed the power of committal, and therefore he had given it to them by the clause.
§ Mr. Richards moved, that the Chairman report progress.
§ Sir Frederick Pollock
supported the motion, in order that the matter might be discussed in a fuller House. He was unwilling to invest the Commissioners with the power contemplated in the clause.
§ The Committee divided:—Ayes 12; Noes 37: Majority 25.
|First Division—List of the AYES.|
|Adam, Sir C.||Chichester, J. P. B.|
|Aglionby, H. A.||Codrington, Sir E.|
|Angerstein, J.||Collins, W.|
|Bagshaw, John||Dundas, J. D.|
|Bellew, Richard M.||Ellice, E.|
|Berkeley, hon. F.||Elphinstone, H.|
|Boldero, Capt. H. G.||Ewart, W.|
|Brady, D. C.||Fergusson, R. C.|
|Bridgeman, H.||Fleetwood, Peter H.|
|Brodie, W. B.||Forster, C. S.|
|Brotherton, J.||Fort, John|
|Bulwer, E. L.||Gordon, R.|
|Campbell, Sir J.||Grey, Sir G.|
|Chalmers, P.||Grote, George|
|Hall, Benjamin||Rice, rt. hon. T. S.|
|Harvey, D. W.||Roche, William|
|Hastie, A.||Russell, Lord Charles|
|Hawes, B||Seymour, Lord.|
|Hay, Sir A. L.||Smith, J.|
|Hindley, C.||Stanley, E. J.|
|Houstoun, G.||Stuart, Lord D.|
|Howard, P. H.||Stuart, Lord James|
|Hutt, W.||Tancred, H. W.|
|Leader, J. T.||Thompson, Col.|
|Lennox, Lord George||Thornley, T.|
|Lennox, Lord A.||Townley, R. G.|
|Marjoribanks, S.||Tracy, Charles H.|
|Morpeth, Viscount||Troubridge, Sir T.|
|Morrison, J.||Tulk, C. A.|
|Murray, J. A.||Villers, C. P.|
|Paget, F.||Walker, R.|
|Parker, John||Warburton, H.|
|Pattison, J.||Williams, W.|
|Pease, J.||Wood, Alderman|
|Pinney, W.||Rolfe, Sir R. M.|
|Ponsonby, J.||Maule, hon. F.|
|List of the NOES.|
|Baring, T.||Ross, Charles|
|Blackstone, W. S||Sheppard, T.|
|Bonham, R. Francis||Somerset, Lord G.|
|Chandos, Marquess||Tooke, Wm.|
|Corry, H.||Trevor, hon. A.|
|Eaton, R. J.||Vyvyan, Sir R.|
|Elley, Sir J.||Walter, John|
|Farrand, R.||Wynn, rt. hon. C. W.|
|Gaskell, Jas. Milnes||Young, J.|
|Peel, Colonel J.||Pollock, Sir F.|
|Richards, J.||Copeland, W. T.|
|Second Division—List of the AYES.|
|Brotherton, J.||Sibthorp, Colonel|
|Copeland, W. T.||Tooke, W.|
|Farrand, R.||Trevor, hon. A.|
|Harvey, D. W.||Young, G. F.|
|Lowther, J. H.||TELLERS.|
|Pollock, Sir F.||Richards,—|
|Sheppard, T.||Goulburn, Sergeant|
|List of the NOES.|
|Adam, Sir C.||Hay, Sir A. L.|
|Aglionby, H. A.||Howard, P. H.|
|Angerstein, J.||Leader, J. T.|
|Berkeley, hon. F.||Lennox, Lord G.|
|Brady, D. C.||Lennox, Lord A.|
|Bridgeman, H.||Maule, hon. F.|
|Chalmers, P.||Morpeth, Viscount|
|Collins, W.||Murray, rt. hon. J. A.|
|Dundas, J. D.||Parker, J.|
|Elphinstone, H.||Rice, rt. hon. T. S.|
|Fergusson, rt. hon. C.||Rolfe, Sir R. M.|
|Fleetwood, P. H.||Russell, Lord C.|
|Forster, C. S.||Stanley, E. J.|
|Gordon, R.||Tancred, H. W.|
|Grey, Sir G.||Thompson, Colonel|
|Hall, B.||Thornley, T.|
|Hastie, A.||Troubridge, Sir E.|
|Warburton, H.||Attorney-General, the|
|Williams, W.||Hawes, B.|
§ Clause agreed to. House resumed.