THE ATTORNEY GENERAL*
—Sir, I rise to move for leave to bring in a Bill for the consolidation and amendment of the laws relating to bankruptcy and insolvency; and I can say most unaffectedly that I have considerable apprehension in bringing this measure before the House—an alarm arising not so much from the inherent difficulty and importance of the subject, but principally from the fact that the House of Commons has again to listen to what promises to be the reform of those laws which they have from time to time been led to believe were effectively reformed by measures that had been repeatedly introduced and passed by the House. The evils complained of in the law of bankruptcy have been denounced over and over again. They were complained of even by Lord Eldon, although they were not reformed, and I believe it may be safely said that no country in Europe had so bad a law or one so justly complained of as the law of bankruptcy and insolvency in this country. The evils of the law grew to so great a height that in 1831 there was brought forward a complete measure for its radical alteration. In 1842, that attempt having proved to be wholly ineffectual, another 650 alteration was made; and in 1849 Parliament was again told that a perfectly new system must be introduced; and accordingly a completely new code of law was passed on the subject. I am sorry to say that the evils which now exist are complained of even more loudly than those which previously existed, and accordingly we are bound to admit that the last state of this law is even worse than the first. The difficulty arising from this condition of things is that he who now addresses himself to the subject finds the whole ground encumbered with the remains of previous alterations of the law; he is not at liberty to sweep away that which is done with, and erect a new and simple edifice; he is obliged to adopt the building that exists, and construct entirely out of old materials. There are difficulties, undoubtedly, that meet one in the nature of the subject itself. In principle, nothing ought to be more simple than a law of bankruptcy. Bankruptcy is nothing in the world more than taking the whole of the debtor's property by one universal execution, or by one universal surrender—for the benefit of his creditors; and all that would be required would be a tribunal simply for the purpose of ascertaining the extent of the rights of those who are interested in the distribution, and some simple machinery for realizing the property and dividing it among the parties entitled. In theory, then, one would imagine that it was most easy to construct a tribunal and establish an institution that should devote itself to the task of realizing the property of the insolvent, and, with the advantage of an organized body, that this could be done at a very small and reasonable cost. The House will hardly believe that, as the result of the various alterations which have been made, such is the enormous number of official persons who have been introduced into the establishment of bankruptcy that at the present time the expenses of the administration of an estate in the Court of Bankruptcy amount to very nearly, if not quite, 33 per cent upon the property realized. It is hardly possible to bring home to the mind a correct idea of the enormous amount of error or impurity of management involved in that admitted result. For every £100 of a debtor's estate realized in bankruptcy the sum of £33 is deducted for the costs of collection and distribution. Now, in ordinary life 5 per cent for the collection of property is considered a very high rate 651 of charge; but the unfortunate creditor whose debt amounts to £600—even if that be realized—has to submit to a deduction of £200 to satisfy the claims and provide for the maintenance of the parties appointed by the State to conduct this business, taken out of his own hands. I have a return recently made to me by the Bankruptcy Court, from which I find that on the whole sum realized the expenses are put down at £33 13s. 5d. per cent, and the same thing is plainly shown from a general Return published in a Parliamentary paper of Session 1857, when the expenses amounted to very nearly the same rate of £33 per cent. Now, this is unquestionably an evil which alone would be sufficient to demonstrate the utter impropriety of the existing system. I therefore come before you with great confidence to urge the necessity of an alteration; but I am admonished by the failure of those who have frequently essayed the same thing that I am now attempting to do—not to be too confident of the success of the measure which I am about to propose. That measure has been prepared with the utmost amount of care, knowledge, and labour which I could bestow upon it; but I earnestly Lope you will receive it with a determination to take nothing upon trust, but maturely to consider all the details, so that by the application of legal minds, and the valuable information of men of mercantile pursuits brought to bear on the subject, we may have some confidence of arriving at a satisfactory result. I now proceed to describe the existing evils, and the mode by which a remedy should be applied to them. There is one part of the question with which, although not unwilling, I am at present afraid to meddle. I mean the subject of the entire abolition of imprisonment for debt. I would gladly have included that relief in the measure I shall ask leave to introduce, but I feared that it would be encountered with so much diversity of opinion as to render it expedient to omit it from the Bill. At the same time it might easily be made the subject of another measure, to accompany the one about to be brought in, if the House should think such a course desirable; and, if I see anything like the existence of a general desire to that effect, another measure will be introduced. But the first evil to which the present Bill addresses itself is the monstrous anomaly of there being in this country two different systems for the administration of insolvent 652 estates, namely, the system of bankruptcy and the system of insolvency. This state of things has originated, like many other anomalies in our law, not from any theory or preconceived design, but as the result of accident, and because our legislation has frequently been nothing in the world more than a series of expedients to meet daily wants and exigencies, not prepared or arranged in anything like a comprehensive system. Accordingly, you have had a bankruptcy law which possesses more of a criminal than a civil character. You made no provision whatever for the discharge from imprisonment of the insolvent debtor who is no trader, and for a long time your gaols were crowded with unhappy and wretched insolvents, for whom there were no means of deliverance from incarceration. At last there was introduced a Bill, not founded on any systematic revision of the law of insolvency, but suggested merely by feelings of compassion and charity, which provided, in some degree, for the delivery of insolvent debtors who were not traders. This arrangement continued, until you have now the machinery, by which, in certain cases, insolvent debtors are released, but only through the medium of imprisonment. This brings us to the vicious part in the administration of our law of insolvency—for the principle, unquestionably, ought to be that if the insolvent is willing to give up the whole of his property and submit himself to examination, and is found not to have been guilty of any fraud, such as obtaining goods on credit by any deceitful proceeding, he should be as much entitled to be discharged without imprisonment as is the trader. What you have done, however, is, that you have sent the insolvent to prison, and subjected him to the degradation of incarceration, and all this merely that you may wring from him a full discovery and surrender of his property for distribution among his creditors. Imprisonment as a punishment for incurring debt or becoming insolvent without fraud is inconsistent with the dictates of humanity. Treading in the path of all the distinguished men in the other House who have adorned the jurisprudence of this country, we therefore propose entirely to abolish the distinction between bankruptcy and insolvency, and to make one law applicable to both. The result of this will be that the creditors of the insolvent will have no motive or reason for sending him to prison; they will without difficulty 653 be able to obtain a discovery of his estate and the possession of his property, together with all the advantages they now enjoy with respect to the trader, without the necessity of incarcerating him. On the other hand, I hope means will be found under this Bill by which, not only will our gaols be relieved from their insolvent inmates, but an end will be put to a spectacle frequently witnessed, to the general reproach of this country—namely, that of persons put into prison for debt remaining there and defying their creditors by persistently refusing to make a disclosure of their estate. I propose, in the first place, that any person shall be at liberty to present a petition for an adjudication of bankruptcy against himself. The course of legislation on this subject has been this: In the year 1849 provision was made that no debtor should obtain an adjudication of bankruptcy against himself who was not able to produce an estate sufficient to pay his creditors 5s. in the pound. That had the effect of diminishing the number of bankrupts, and of augmenting in the same proportion the number of insolvents. Persons, who would have applied for an adjudication of bankruptcy were compelled to submit to imprisonment, and were then discharged by means of the Insolvent Debtors' Court. In 1854 this was partially remedied, and, instead of an estate to the extent of 5s. in the pound, the insolvent petitioning for an adjudication of bankruptcy against himself was required to show that his estate would yield the sum of £150. This, however, still debarred a great number of insolvents from recourse to the Court of Bankruptcy, and the number of applications to the Insolvent Court was augmented. I find that in consequence of that alteration in the law the petitions filed by debtors in the Insolvent Debtors' Court in 1858 amounted to 3410, of which number 2183 were the petitions of small traders. It is seen, therefore, that, owing to the difficulty of applying to the Court of Bankruptcy, traders are driven into the Insolvent Debtors' Court, and submit to imprisonment in order to obtain their release and discharge. Now, I propose that every insolvent willing to make a full disclosure and surrender of his property shall be adjudicated a bankrupt upon his own application, and shall not be put to the necessity of producing an estate of the value of any prescribed amount of money to entitle him to present his petition. On this particular subject the 654 House is aware that there is one marked difference between the law of insolvency and the law of bankruptcy. The future property of the insolvent discharged by the Insolvent Debtors' Court still remains liable to his creditors. As far as regards the fraudulent debtor that is perfectly reasonable, but as respects the honest debtor it is a most cruel and wanton provision. The true principle of the law of insolvency is, that in the absence of fraud the faithful disclosure and surrender of his property entitle the debtor to his discharge. The man is emancipated, if he has acted fairly and honourably; he is sent out that he may begin the world again and have the benefit of his future industry and exertions. But if you send him out to have all his subsequent earnings or acquisitions of property loaded with the burden of his past liabilities, to what end or purpose do you discharge him? It will paralyse his future exertions, and deprive him of the opportunity of benefiting by his discharge. The advantage to the trader is found by experience to be comparatively trifling, and this is therefore a provision which, while it puts a stop to the exertions of the debtor, is attended with no corresponding result to the creditor. In conformity with the opinions of all those who have attended to this part of the subject, I propose that, in the absence of fraud, no bankrupt shall be obliged to make his future acquired property liable for debts contracted before his bankruptcy. I have had communications from a great variety of persons upon this subject, and many of them dwell upon a circumstance of great importance—that, as the law now stands, a discharged insolvent cannot even insure his life or make any provision for his wife and family;— for, if he does, a creditor, if he can show that the insolvent has any property not absolutely required for his wants, may— no matter what interval of time has elapsed from the insolvency—take it away from him. I think it would be better not to have any discharge at all than to deprive a man of his whole estate, and turn him upon the world probably only to be brought up again ton or fifteen years hence and stripped of all he may since have acquired. That being so, I will next describe the mode in which I have endeavoured to provide for the relief of the gaols. I have already stated that the insolvent is to be entitled to petition for an adjudication of bankruptcy against him- 655 self. If he is unable to bear the expense of that application, he is to be brought before the Court and allowed to petition in formâ pauperis. The House is probably aware that there is now a fund in the Insolvent Debtor's Court applicable partly to defray the expense of these pauper applications. To meet the case of persons who wilfully remain in prison and refuse to disclose their property, I provide that, after a man has been in prison fourteen days upon a committal for debt, which constitutes an act of bankruptcy, he shall, whether he will or not, be brought before the Court, be examined as to his property, and be adjudged a bankrupt, which will have the effect of vesting the whole of his estate in the assignee for the benefit of creditors, and shall then be discharged from prison under an order of protection. I think, therefore, that the operation of these three things—the power of the insolvent to apply for an adjudication against himself, the ability of the pauper insolvent to get a discharge without expense, and the power of compulsorily bringing before the Court an insolvent debtor who wishes to remain in gaol rather than disclose his property—will practically have the effect of abolishing imprisonment for debt, because even a creditor who desires to imprison his debtor from a malicious feeling will have no interest in doing so when the debtor will be able to procure his discharge in a very few days. In this way, Sir, the two systems will be entirely blended together, insolvency will be merged in bankruptcy, and there will be a common adjudication of bankruptcy affecting both traders and non-traders. Out of this, however, arises a material consideration, to which I specially invite the attention of the House. The non-trader cannot be subjected to the same law which now affects the trader, because the acts of bankruptcy which may be committed by a trader are many of them of a very technical and artificial nature; and a gentleman or a person in the highest station, and perfectly solvent, might by accident be involved in the commission of an act of bankruptcy without being at all aware of the consequences of that which he had inadvertently done. I therefore propose that those technical acts of bankruptcy, such as denying yourself to a creditor at your home, and others of the same kind, shall not be included in the law of bankruptcy, but that there shall be substituted for the list now in force a few plain and 656 simple tests of insolvency. If the debtor absconds and leaves the realm, there can be no doubt as to what ought to be the consequence. If, being abroad, he remains abroad to defeat his creditors, there can be no dispute as to the manner in which he ought to be dealt with. If he make any fraudulent disposal of his property, or any part of his property, or airy fraudulent preference, being insolvent, there can be little doubt that the same rule ought to apply to both trader and non-trader. If he cause himself to be committed to prison, or if he permit part of his property to be seized and sold under an execution, that is a tolerably clear proof of a state of insolvency. Further than this, if a judgment be recovered against any person, though he be not a trader, this Bill provides a mode of summoning the judgment debtor before the Court, when, if he is unable to show that he can within a reasonable time satisfy or give security for the satisfaction of the judgment, he is to be made bankrupt. These are the principal acts of bankruptcy which will remain in operation under this Bill. They are, I apprehend, unmistaken able criteria of general insolvency, and there is, therefore, no reason why they should not apply alike to the cases of traders and non-traders. There are a number of minor details which I will not now describe; these are the principal points which deserve attention in breaking down the partition between bankruptcy and insolvency. The next great evil in the existing system is the mode in which our predecessors have provided for the administration of the law—a mode presenting the most singularly absurd blending and admixture of judicial and administrative functions that ever was seen. Nothing can be more necessary than to keep perfectly distinct and apart judicial and administrative duties, but you have vested the administration of the law of bankruptcy in Judges, who at one and the same time, and in one and the same manner, have to discharge purely judicial and purely ministerial functions. If you go into the Bankruptcy Court in London, you will find there five commissioners, who are all Judges and all administrators. You have five heads and five mouths, and you have, of course, every variety of rule, and principle, and mode of administration. If you enter the court you will probably find going on at the same time a meeting of creditors for the choice of assignees, over 657 which the Judge presides, but in doing so has no judicial functions to discharge; an audit or dividend meeting, in which his duty is equally ministerial; and perhaps at the same time there is an examination of a bankrupt or of some creditor going on, over which he is contemporaneously and simultaneously supposed to preside, and probably at the same time he will be reading one of the journals of the day. I mention that not invidiously, nor with any intention of casting reproach upon the commissioners. I mention it rather as an illustration of the painful state of things in which the Judge has to preside over matters which do not require the exercise of the judicial mind, and may therefore without reproach, though probably not with very great decency, occupy himself in the manner that I have described. There is no necessity whatever for having five administrators of the law of bankruptcy in a single city. There is no necessity for this compound of judicial and ministerial duties. I have had a most accurate examination made of the mode in which the commissioners in London—of whom I speak with great respect—the fault is in the system, not with them—transact their business, and I find that the ordinary rule which has existed for a considerable time is, that each commissioner sits three times a week. On the average each sitting lasts three hours, but two-thirds of this time are occupied, with ministerial or administrative business; matters requiring judicial intellect or the application of legal knowledge really do not occupy more than one hour out of the three. The result, therefore, is, that the five commissioners may be considered as spending in judicial duty, properly so called, only three hours each during the week, which makes a sum total of fifteen hours. Now, as a general rule, a Judge—I will take, for instance, the Master of the Rolls, any of the Vice-Chancellors, or any of the Judges of the common law courts—is occupied from ten in the morning until five in the afternoon. The ordinary practice of the Master of the Bolls or a Vice-Chancellor is to leave his court at half-past three or four o'clock, and sit in chambers for an hour, or sometimes more, according to the necessities of business. I propose, therefore, to sweep away the commissioners in London altogether, and, to repeat a phrase which, unfortunately, we have been too frequently obliged to use, to release them from their duty; but, after they are so released, to 658 leave them in possession of the full amount of their existing emoluments. If any necessity shall arise requiring assistance on the part of these commissioners I shall expect them, during the time they continue in receipt of their salaries, to give that assistance and to act as auxiliaries in the administration of justice. Each of the five commissioners receives a clear salary of £2,000 a year. They have long been in the enjoyment of their position—they were all, I believe, appointed as long ago as 1832 or 1833, and they are all, therefore, advanced in years. I mention this, not with the view of anticipating an early termination of their emoluments—far be it from me to wish any such result—but the House will see that the continuance of their salaries will be of necessity but for a very short period of time. What I propose to substitute in place of the commissioners is one single Judge, as far as the principal court is concerned, to be put upon an equality in every respect with the Judges of the courts of equity and with the Judges in the courts of common law, and to receive a corresponding emolument. There will be no difficulty in finding numbers of men not only eminently qualified for the office, but able, any one of them, to discharge with the utmost ability the whole of the duties now performed by the five commissioners. The single Judge will sit, as the other Judges of the land sit, in foro contentioso, transacting in open court the judicial business properly so called. I propose to remedy one great evil that now exists. The appeal from the country commissioners is at present an appeal only to the Court of Appeal in Chancery. I propose to give an appeal directly to the single Judge sitting in bankruptcy, whose business will be purely judicial, the administration of ministerial duties now performed by the commissioners being transferred to the registrars. The House is aware that there are in the Bankruptcy Courts a number of officers called registrars, all of whom are barristers of considerable standing, and who, in fact, are now in the habit of sitting to a large extent in the room of the commissioners. I propose that all undisputed adjudications of bankruptcy, all meetings of creditors for the choice of assignees, all private examinations of witnesses or of bankrupts, all audit meetings, all dividend meetings, all examinations of accounts, shall be conducted by the registrars, who will then hold the same relation to the Judge as is 659 now held by the masters of the courts of common law, or by the Judges' clerks in the case of the Master of the Rolls and the Vice-Chancellors in Equity, but with an immediate power of reference, in case of dispute or controversy arising, to the Judge in chambers, who will be empowered at once to adjourn the matter, if it deserves further discussion, to himself, to be argued and decided in open court. I thus relieve the Judge from all that ministerial and administrative business which is now performed by the commissioners, and I obtain the means of removing, to a great extent, the inconvenience of which so much complaint is made. The administration of bankruptcy, as the House is aware, has been centralized in certain localities. Take, for example, the London district. If a creditor is obliged or desires to attend the Bankruptcy Court to vote in the choice of assignees or to examine the bankrupt, he is compelled, supposing he lives in Southampton or Yarmouth, to come up to London for that purpose; and the original misfortune arising to him in the bankruptcy is frequently made ten times more galling and bitter by the amount of inconvenience, expense, and embarrassment to himself personally that proceeds from the necessity of his following the Bankruptcy Court, and quitting his business, to come to a distant locality in order to assort his rights or meet any demand that may be made upon him. With the view of remedying this evil to a great degree, I propose that in the London district the registrars shall be sent to hold meetings, as well for the choice of assignees as for all other administrative or ministerial proceedings, to different localities, to meet the convenience and wishes of creditors. Here I must mention that in the London district there is, of course, an enormous amount of business, a considerable portion of which consists of very small bankruptcies—that is, of bankruptcies where the estate is almost nothing. I propose, therefore, that there shall be in the London district an auxiliary court to deal with these small estates. In the London district there is no power to transfer small bankruptcies to the County Courts. Hence it becomes necessary, to prevent the chief court being overwhelmed with business of that kind, to establish in the London district a tribunal somewhat similar to the County Courts in the country districts. I propose that the Insolvency Court in Portugal-street, under the denomination of an 660 assistant court to the Court of Bankruptcy, shall be continued for the purpose of administering the estates of all bankrupts where the assets do not exceed £300. That being the system of administration in the London district—a system which I think will work satisfactorily and economically—I wish I could say that I had been enabled to propose an equally good arrangement for the country districts. The district courts of bankruptcy were established in 1842, previous to which we were in the habit of sending down fiats of bankruptcy to local commissioners appointed for the purpose—a very fruitful source of expense, of trouble, and I might almost say, of malversation, inasmuch as assets got into the hands of persons from whom they were never afterwards recovered. Accordingly, the District Courts were established in 1842; but I believe that if the County Court system had existed at that time there never would have been an establishment of district courts of bankruptcy. I painfully contrast, as far as our administration is concerned, our system of bankruptcy with the County Court system in Scotland. The Scotch have adhered to the ancient Saxon institution of Sheriffs' Courts, and they have a system of administration in bankruptcy which works extremely well, for its expense is represented as not exceeding 12 or 13 per cent, and it is carried out in the counties chiefly by the Sheriffs' Courts, that answer every purpose. I should be glad if I had it in my power to devise a plan for removing the whole of the District Courts of Bankruptcy, and vesting the administration entirely in the County Courts; but there are two things that altogether prevent the possibility of this being accomplished at present. I may say at once, that the bankruptcy law being a system of great nicety, requiring very considerable legal knowledge and practice, I could not with perfect confidence transfer its administration all at once to the Judges of the County Courts. A great number of these are gentlemen of high reputation, and deserving of esteem in their profession; but a number were also selected from the Judges of the Small Debts Courts, which existed at the time when the system was introduced, and I do not think they would constitute satisfactory inaugurators of a scheme requiring so much minute attention. Again, if I were at once to sweep away the district courts, I should propose to deal with the commissioners 661 in the same liberal way as I propose to deal with the London commissioners, but it is impossible to do this with the means which are available. Accordingly, I introduce into the Bill a provision of this kind—that on the occurrence of any vacancy among the district commissioners, it shall be in the power of Her Majesty, by Order in Council, to make a new arrangement and distribution of the business, and to appropriate the district in such divisions as may be deemed convenient to the existing County Courts, and to parcel out accordingly the district among the County Courts, and to clothe the County Court Judges with all the jurisdiction possessed by the commissioner who has occasioned the vacancy. I think it possible that a mode may be found of exercising this power so as gradually to absorb the whole administration of bankruptcy into the County Courts, and to provide, not only a far more economical, but a much more convenient administration of the law of bankruptcy throughout the country. An enormous amount of evil is at present experienced from the immense area attached to any one district of bankruptcy. For instance, to the district of Bristol is attached nearly the whole of Wales; and when a debtor, a creditor, or any person amenable to the bankruptcy law is living at Pembroke, for example, he must come to Bristol in order to attend the court. It costs him one day to get there, and if the business, fortunately for him, conies on immediately, it costs him another day to get through it, and a third day for the purpose of going back again. The original loss of the creditor by reason of the failure of the debtor is probably not so much felt by him as the annoyance, trouble, expense, and inconvenience attendant on being dragged from home and carried to a place 120 miles distant. This makes it desirable that the jurisdiction should be transferred to the County Courts, and the transference may be effected in a manner rendering the gradual absorption of the district courts into the County Courts not difficult. These are the principal subjects on the head of the administration of the law and the constitution of the tribunals, to which I beg to call your attention; and I would only say on the subject of expense, that the constitution of the new court, when it comes into play in London, will be very much less than the constitution of the existing 662 establishment in point of cost. I take the liberty of pointing out that one great defect in the existing law is this, that if you go into the Court of Bankruptcy at all, you cannot escape from that court until you administer the whole of the estate. This is a serious inconvenience. A creditor may wish to invoke the aid of the Bankruptcy law for a particular purpose; but he is unable to obtain that aid without winding up the whole estate, when once within the walls of the court, and having it completely administered there; that is to say, without sacrificing one entire third of the whole of the property. That is a great injury. Therefore I am anxious to provide that if creditors are compelled to resort to the Court of Bankruptcy for any particular purpose, they may at any time they please, provided a certain majority of the creditors consent thereto, suspend the proceedings, take the whole estate out of the Court of Bankruptcy, and commit it to any mode of private administration which they may consider more economical or expedient. There is another advantage which will attend the plan proposed to be established by this Bill; an honest debtor may desire to make a disclosure of his affairs to his creditors, with the view of making some arrangement and preventing the necessity of bankruptcy, but the very disclosure puts him in the power of some particular creditor or some individual who wishes to pursue, perhaps, a private end of his own, and who opposes an obstacle in the way of completing an effective arrangement, by prosecuting an adjudication of bankruptcy. I hope to provide a mode of relieving persons in this situation from the embarrassment I have referred to. According to the plan embodied in the Bill, immediately on adjudication of bankruptcy a meeting of creditors will be appointed, and at that meeting if a majority of the creditors present should deem it advisable not to go on with the bankruptcy, or to proceed with it only in a limited extent, they will have power of coming to an arrangement for the purpose, notice of this resolution being given to all the creditors; and then, if a majority of three-fourths in value should determine to suspend the prosecution of the adjudication of bankruptcy they may suspend it at once, and no further steps will be taken under it. Thus the honest debtor, without committing an act of bankruptcy, may petition for an adjudication, and make to the creditors a proposal of compromise or 663 arrangement. If the creditors confide in him, and find his proposal convenient, suitable, and just, then three-fourths in point of value concurring together will have the power of making a conclusive and binding arrangement, without the possibility of being interfered with by an adverse individual. This power is given to the creditors to be exercised at any time, and is not limited to the first instance. In this way I propose to make the law of bankruptcy a part of the law of debtor and creditor, and to avoid the necessity for the great cost, inconvenience, and suffering which at present are the only terms on which parties can get the benefit they desire. We are all aware that a great stigma attaches to the name of bankrupt. Accordingly a most natural wish exists on the part of the honest man to avoid the reproach of bankruptcy. As I have already said, there is great difficulty in gratifying such a wish, because the moment he exposes his affairs he lays himself open to adverse proceedings. Now, upon examining the statistics of this subject, the House will be surprised to find that the contrast between the number of adjudications in bankruptcy and the number of trust deeds and deeds of arrangement is immense. In 1858, and for a series of antecedent years, the adjudications, as compared with trust deeds and deeds of arrangement, presented this remarkable contrast, that whereas in 1858 the number of adjudications was 660, the number of trust deeds and deeds of composition and arrangement are computed to have been more than 8,000. But why is it that in cases of insolvency creditors are content to put up with the imperfect relief of the trust deed, where they have no supervision by the law, no power of examining the debtor, no stringent authority for compelling the investigation of accounts? The answer is, partly the expense, partly the immense inconvenience, partly the stringent provisions of the bankrupt law, which are founded upon great inhumanity as well as great want of policy—all these things together conspire to induce the creditor to prefer the trust deed, imperfect as it is, to proceedings by adjudication in bankruptcy. But will it not be just still to allow the creditor to make his election, while at the same time you give him the whole benefit of the bankrupt law? I have endeavoured to accomplish that object. If a debtor is desirous of meeting his creditors, and of giving up all his pro- 664 perty by deed of composition, arrangement, or assignment, he will be enabled to do so, and will have for a certain period of time a secure opportunity afforded him for that purpose—secure, I mean, against the intervention of a creditor who may destroy the whole plan by procuring an adverse adjudication in bankruptcy. But I give this privilege to the debtor only upon certain conditions, which are that the deed of arrangement and composition shall be brought into the Court of Bankruptcy and registered there; that he shall pay for that registration the sum, and only the sum, which he would have paid for an adjudication in bankruptcy; and that as soon as the deed is registered the debtor, the trustees and the creditors shall at once be placed in the same relative position as if the debtor had been adjudicated a bankrupt, and the trustees had been duly appointed his assignees. They shall have all the benefit of the bankrupt law. They may resort to it to the extent to which they may need its interposition, while, as to the debtor, there will be no reproach, no obloquy, no public proceedings, save so far as publicity may be requisite to the creditor. The creditors may resort to the Court of Bankruptcy to secure the examination of any person whose evidence they may require. In this way the whole law of bankruptcy will be at once incorporated with the law which regulates the relations of debtor and creditor and trustees; and the administration of the estate will go on, the creditor knowing that he may at any time invoke the interposition of the Court, and derive the same advantage as though there had been an actual adjudication in bankruptcy. The benefit to the creditor and trustee by this arrangement will be exceedingly great, because if a question arises involving matters of legal controversy, power is given to the creditors and parties interested to state a case for the opinion of the Judge in bankruptcy, and they will accordingly receive the aid of the Court, and get the matter decided by the Judge, thus deriving the same advantage from the tribunal as if they were actually and legitimately within its walls in the position of bankrupt, assignees, and creditor. The importance of this particular part of the Bill in regard to the cost of proceeding cannot well be over-estimated. At present, among the principal sources of the revenue of the Court is a most injurious and oppressive tax, levied in the shape of 665 a percentage upon all the estates brought into the Court. Power was given by the Bill of 1849 to tax every estate administered in bankruptcy with a percentage varying from one-eighth of a pound up to £5 per cent. Any rate between these two termini which the commissioner may deem proper to inflict upon the estate, according to the exigencies of the case, he has the power of imposing. The result therefore is that every large estate has of necessity been driven out of the Court of Bankruptcy. If you could by any possibility avoid it, you would never go to the Court to administer an estate which produced assets of £100,000 or £200,000; and the small estates, again, though subjected to a smaller percentage, suffer from the system to such an extent that but little is left" for the creditors. The revenue of the Court of Bankruptcy is in this position:—In 1858 the percentage levied by the official assignees in the manner I have described was £41,407 12s., but in 1859 it was only £29,922, showing an immense falling off in the business. The stamp duties, in like manner, in 1858 were £21,201, but in 1859 they yielded only £13,850. In fact the Court of Bankruptcy would itself have been bankrupt had it not been for a very fortunate provision made in 1831, in the appointment of official assignees, who at once applied themselves with great industry to recover and get in estates which had been lost sight of and neglected under the antecedent administration in bankruptcy, and who succeeded in recovering many hundred thousands of pounds. This money was invested in the Bankruptcy Court, and then, there being another provision that all the monies when received from the estates, and prior to the declaration of any dividend, should be paid into the Bank of England, there arose of course a large amount of floating balances, which the Accountant in Bankruptcy deals with in much the same way as corresponding balances are dealt with by the Accountant General in Chancery. He invests, from time to time, under the orders of the Court, all sums of money not absolutely needed; and in this way the Bankruptcy Court derives a revenue, which in 1858 amounted to £49,605. That fund, however, has been drawn upon in order to meet and supply the deficit arising from the failing revenues of the Court, and, accordingly, the interest of that fund in 1859 was only £46,170, showing a diminution of £3,500. These are the three 666 principal supplies to meet the expenses of the court, which will be found set forth in a Parliamentary paper of the 14th February, 1860. The whole expenditure of this Court during 1859 amounted to £82,459. But in this sum are included compensations and retiring annuities to the amount of £20,200. These compensations are the penalty paid for errors made in the construction of the court in former times, which errors we were obliged to atone for by keeping up the salaries of persons previously engaged in the administration of bankruptcy, but displaced by the reforms subsequently introduced. These retiring annuities for the offices of Patentee of Bankrupts, the Clerk of the Hanaper, and the Lord Chancellor's officers in bankruptcy will be thrown into the funds of the court, and be no longer a charge on the suitors. Why should the present suitors pay for the errors of a former time? My right hon. Friend the Chancellor of the Exchequer has most judiciously consented to transfer the sum of £20,200 on account of these retiring annuities to the Consolidated Fund. This will be a relief to the same amount to the funds of the Court of Bankruptcy; nor can the charge endure for a very long time; though I have certainly found that sinecurists live for an indefinite period. The relief thus given to the funds of the court will enable it to diminish considerably the charges on the suitors. There will be abundant funds for the ordinary wants of the court, and it will be enabled to remove all fees, except those on registration and adjudication. As to registration, in cases where the estate is under £1,000, the registration fee will be £5; if above £1,000 and under £3,000, it will be £10; if above £3,000, it will be £15. The average of these fees will be £10. I propose to abrogate at once all the percentage fees paid on the amount of estates, and to reduce all the fees paid to the court to the smallest possible amount. The expense of an application to the court will, in point of fact, be little, and that expense the creditors themselves will have the power of controlling and checking by their own inspection. This will be a great benefit to those who are now deterred from seeking the aid of the law by the expense of the proceedings. There is one charge for remuneration to the Bank of England for keeping the account of the court; it is £3,160 a year, and sometimes more than that; yet I find by the quarterly 667 return of the balances of cash that the account of the court shows a balance of not less than £60,000 in the hands of the Bank. I think that holding that balance is of itself an abundant remuneration, and I therefore propose to discontinue this payment. These are a few of the changes that I hope will greatly relieve the suitors in the Court of Bankruptcy. I proceed now to state the mode of procedure to be adopted by the court, and to describe particularly the relative positions of the official assignee and the creditors' assignee. An adjudication will be made immediately the petition is presented, but in case of a contested adjudication, a period of not less than three days, and not exceeding seven, will be allowed to elapse; that interval, however, will not interfere with the measures to be taken for the preservation of the property of the estate. An official assignee will be appointed to the estate, who will be charged with that duty. At present there are persons employed in the court, such as accountants, auctioneers, and messengers, who each demand, and each receive fees, according to the ancient and cumbrous system. I propose to abolish the messengers altogether. What a messenger does is this—he hires a man for 3s. 6d. a day, who does the work, and he charges I know not how much for what his deputy does for 3s. 6d. I have here a return of the profits of the messengers of the court that really makes one's mouth water, considering what they do. The fees leave a very considerable income after defraying the expense of the deputies. One gentleman returns his profits in one year, for doing nothing, as £1,296; another, £1,361; another, still more fortunate, £1,767. I have taken the figures as they first meet my eye; others might be found still higher. This expense will be entirely done away with. The official assignee will have the charge and custody of the estate up to the appointment, of the assignee under the adjudication. Many burdensome charges will be taken off the estate; it will be in the power of the creditors' assignee to go to the Judge in chambers and obtain the necessary authority to keep open the trade, carry on the business in which the bankrupt was engaged, and prevent the necessity of breaking up the establishment; he will keep things in the condition required for the payment of the creditors, till they shall have the power to speak for themselves. The Bill proceeds on the principle 668 that the estate of the debtor belongs to the creditor. If, at the meeting of the creditors, they determine to go on with the bankruptcy, an assignee will be chosen. Then comes the question, what is the position of the official assignee relative to the creditors' assignee? There has been much controversy on the point, and I have been pressed to remove the official assignee. Now, the position in which they at present stand is that they are the only persons who can receive and give a discharge for money. This has been found very convenient in one respect, because it has, as I have already observed, tended to create that large and floating balance in the Bank of England—a balance which has enabled the Bankruptcy Court to hold its head above water. It has, however, been justly complained that the official assignee reduces the creditors' assignee to a mere cypher; that he usurps all his functions, and that the creditors are, as it were, through their appointed organ, displaced and removed from their proper position. Now, in order to obviate the objections to the continuance of that state of things which exists, I am about to make a proposal, which I trust the House will duly weigh, and which I have no doubt will form the subject of a great deal of discussion when the Bill goes into Committee, should it reach that stage. I propose, then, immediately on the selection of the creditors' assignee—supposing the creditors should determine to choose an assignee from among themselves, or apart from their own body—the official assignee shall be bound to render to him a full and particular account of all his receipts and payments, and to hand over the whole of the property of which he has taken possession. I propose, however, that immediately afterwards the official assignee shall stand in the position of auditor of the accounts of the creditors' assignee, and to impose the obligation on the creditors' assignee of paying all the moneys he may receive into the Bank of England. That I look upon as a wholesome and a necessary precaution; and there is one great benefit which will, I think, result from the change. At present, the official assignee is trusted in all things; but I am sorry to be obliged to say that experience shows us the folly of trusting any person whatsoever implicitly and without check; for during the comparatively short period of time that official assignees have discharged their present functions, defalcations have been disco- 669 vered—I say discovered, because what the actual amount of those defalcations may be it is impossible to know—to the extent of £110,000 or £120,000. I further propose to introduce into the Court the great invention of printing, which has been so slow in finding its way into the administration of the law, that even at the present moment we still use instead of printed deeds, that cumbrous, inconvenient, and expensive parchment—for I will undertake to say that one-fourth of the existing litigation would be avoided if the mode of ascertaining the contents of deeds and their accuracy and of rendering one's self familiar with their contents, were made more easy by the course which I suggest. I propose, therefore, in conformity with that opinion, and with the mode of proceeding adopted by railway and other incorporated companies, that the creditors' assignee shall render periodical accounts of the whole of his receipts, the payments he has made, and all the other circumstances relating to the estate; that these accounts shall be audited and examined by the official assignee; that immediate recourse shall he had to the registrar or the Judge, if any question should happen to be raised thereon; that the accounts shall be vouched by the creditors' assignee; and that the official assignee shall be charged with the duty of seeing that all moneys that have come into the hands of the creditors' assignee have been faithfully paid into the Bank as soon as they have been received. I propose, moreover, that printed copies of those accounts when audited, in the form of a balance sheet of the bankrupt's estate, shall be sent through the post to every creditor, so that very shortly after the bankruptcy, printed accounts in the common form of those used by railway companies will be placed in the hands of each creditor, without calling upon him to travel outside his door, or to employ an attorney to ascertain how the estate is being administered. I ought to have stated that, in order the more expeditiously to effect this object, I have made provision that when the creditors are ascertained, a printed list of the names of those who have a claim to the amount of £10 shall be sent to each creditor. By these means I think the efficient discharge of his duties on the part of the creditors' assignee will be secured. He will be kept in check by the official assignee, and the creditors themselves will find in the antagonism which will exist between those 670 functionaries, that due regard is paid to their interests. With respect to the emoluments of the official assignees, I may say I do not think it would be right that those gentlemen should be allowed to suffer materially by the change in the law which I am about to introduce. I propose, therefore, in conformity with the recommendations of the Commission over which the right hon. Gentleman the Member for Cambridge University presided in 1853, to give to each of these official assignees, independently of office expenses, an annual and certain salary of £800 a year, with power to the Judge to augment that salary according to the work done up to a maximum of £1,500 per annum; and I have no doubt that if the quantity of business which I anticipate should be transacted under the new system, the official assignee may safely reckon on receiving a liberal recompense for the amount of duty which he may be called upon to discharge. That being so, I trust some security will be afforded for the faithful rendering and administration of accounts in bankruptcy. I shall now proceed to state the proposal which I desire to make with regard to another power which I think it is expedient to confer upon the creditors in case it should appear to them that the estate in which they happen to be interested should be capable of being better administered and dealt with in a more simple and economic form. I propose in the first place that, in a case in which the assets are found not to exceed a sum of £1,000, a certain majority of the creditors may, if they think it right to do so, transfer the administration of the estate to the County Court. Probably, if I succeed in reducing the expenses in bankruptcy to the extent which I am sanguine enough to hope will be the case, this power will seldom be exercised; but I have nevertheless deemed it desirable to make provision for it in the present Bill. The County Courts have, I may observe, got an ample staff, including a treasurer, to perform all the functions which are discharged by the official assignee and the registrar in bankruptcy. The next point to which I beg leave to call the attention of the House is another great reform of the law, to which I trust it will give its assent. Hon. Members are well aware of the strange admixture which exists in bankruptcy of civil and criminal law. You have here got a criminal jurisdiction of a most singular character, because it is a jurisdiction which 671 treats the bankrupt as a criminal without at the same time giving any definition of his offence. Nothing more, in fact, is given in these cases than a mere description of moral misconduct, extravagance, recklessness, and a general want of prudence. I find from the returns before the House that on the subject of the classification of certificates, the Commissioners of the Court of Bankruptcy have exhibited this remarkable variety in their adjudications:—Commissioner Evans, out of 479 applications for certificates made in five years, only granted 17 first-class certificates, or one in 28; Commissioner Fonblanque, out of 453 applications in the same five years, granted 31 first-class certificates, or about one in 14; Commissioner Fane, out of 653 applications, granted no fewer than 161 first-class certificates, or one in less than four. How is it possible that there can be any kind of consistency or keeping in the administration of the law, or in the principles by which it should be regulated, when we see such a difference in the adjudication of these functionaries? In the other two courts I find first-class certificates given in about one case in every eight and one in every eleven. This is a most painful exhibition of the uncertainty attending the administration of justice. If we were to contrast the proceedings of the courts in the country with that of the Judges of Appeal in Bankruptcy we should find a still more painful extent of inconsistency and contradiction. The system is all the more injurious because it leads to a great amount of litigation and discussion on the application of the bankrupt. Hence those long examinations we frequently see in the daily papers; hence, also, those appeals from the courts of first instance to the Court of Appeal in Chancery, and the continual reversal of decisions given in the court below. This is a great blot on our institutions. If you please, make your criminal law with regard to any fraudulent contracting of debt as stringent, as severe, as is compatible with the object of the criminal law; but let there not be that which is neither law nor certain justice—a most painful, indefinite amount of discretion, realizing the old reproach, that the bankrupt's conduct is measured and determined according to the length of the Commissioner's foot. I propose to lay down rules, to be strictly applied by a court of criminal jurisdiction, to reserve to the Court of Bankruptcy in which the bankrupt is pro- 672 secuted the power of suspending his discharge, and to make the suspension of the discharge co-extensive with the punishment inflicted on him. These are the principal provisions of the Bill on the subject of certificates. In deference to the expressed opinions of others, I propose to embody clauses which will provide for the case of a debtor who commits an act of bankruptcy, giving his creditors, in case of his death, the same power of administering his estate in bankruptcy as if he had remained alive. I confess that I do not myself see any necessity for this change. At present, in consequence of the improved administration of the Court of Chancery, the estate of a deceased debtor may be administered there in the simplest and most expeditious way, at an amount of cost very little exceeding 5 per cent on the amount of his debts. I do not enter on other details of the Bill, having already made pretty large demands on the time and attention of the House. I trust that if the House shall agree to read it a second time the Bill will receive a searching investigation in committee, where I shall look for a very great improvement of its details, with a view, I trust, to the establishment of a simple, uniform, expeditious, and economical system—a system somewhat corresponding to our position as the greatest mercantile nation in the world. I hope the House will permit me to fix a day before the Easter recess for the second reading. I do not anticipate there will be much discussion on the second reading, but a great amount of laborious attention will have to be given to the details in the Committee, and it will be most desirable to have the Bill sent up to the other House by the beginning or middle of June. The House will observe that the winding-up of joint-stock companies has been omitted from this Bill. That is a subject of a very comprehensive nature, on which the Lord Chancellor has introduced a Bill which has passed the other House and come down here, and of which I propose to move the second reading one day next next week. The hon. and learned Gentleman concluded by moving for leave to bring in the Bill.
§ SIR FITZROY KELLY
said, he sincerely congratulated the country and the House that this great question—this long-promised, long-desired, and much-needed measure, had at length been undertaken by the Government, which—should the Bill be found, as he declared with un- 673 feigned sincerity, his belief that it would be found, entitled to public support and approbation—had the power to carry it through both Houses of Parliament. He also congratulated the House and the country that the Government had been assisted —he might say represented—on this occasion by his hon. and learned Friend, whose abilities and long experience well fitted him to undertake this great and important measure. It would be inconvenient at that stage to enter at any length into the consideration of a Bill that presented so much that was worthy of praise, and so little that was open to censure or even to criticism. He would advert, however, to one or two points for the purpose of directing the attention of his hon. and learned Friend to them, for he felt that at the proper time they would merit serious consideration in their minutest details. He heard with great satisfaction that it was intended, at whatever cost and sacrifice, entirely to put an end to the present Bankruptcy Courts. He did not know precisely what system would be adopted in the provinces; but in expressing his entire concurrence in the abolition of the existing Court of the metropolis, he would venture to detain the House for a moment, when he reminded them of the long and consistent opposition which an analogous measure experienced in former years; he alluded to the measure which abolished the Ecclesiastical Courts, and led to the institution of the Probate Court, and for which measure they were also indebted to his hon. and learned Friend. For four years in succession, during which that measure was in one form or another before that, or the other House of Parliament, many persons, including himself, earnestly warned the Government of the day against attempting to pass any measure for the establishment of a new court of justice for the administration of a separate branch of the law, without introducing a system of common law procedure. He did not know what was the framework of the Bill of his hon. and learned Friend in reference to the mode of conducting the business of the new Court; but he would venture to throw out a suggestion as to the expediency, not to say absolute necessity, of investing this new Court with powers of viva voce examination of witnesses in open court, and of trial by jury where necessary, and the other portions of the procedure in the common law Courts, which had been introduced into the Probate 674 Court, so that the country might be satisfied the new tribunal would possess the jurisdiction both of a Court of Equity and of a Court of common law. Subject to these suggestions, he doubted not but the scheme of the Goverment would, with suitable machinery, greatly improve the state of the law in what was, in this commercial country, perhaps its most important branch. He collected, from the statement which they had heard, that the Bill likewise aimed at entirely abolishing the distinction between traders and non-traders, so that their liability to the Bankruptcy laws, as well as those affecting the general relation between debtors and creditors should be precisely the same. He trusted that one of the great results of the measure would be, that the estates of insolvents might be administered with satisfaction to their creditors, in many, perhaps in most cases, without a resort to the Court of Bankruptcy at all. But it should be remembered that serious difficulties beset the proposal for now bringing for the first time within the operation of the Bankruptcy laws all classes of persons who might be included under the category of non-traders. It was easy to deal in that manner with commercial men, who could not long absent themselves from their places of business, without, in substance, committing an act of bankruptcy. But unless great care was taken in applying the same rule to all classes of persons, rich and poor—he knew not whether Peers were made subject to the Bill—much practical mischief and injustice would) e inflicted. Much caution would be required, for example, in the first step, by which they should declare bankrupt private gentlemen accustomed to a county life, and wholly unacquainted with commercial habits, and who, while travelling abroad—not for a week or a month, but for years together—might perhaps have left ample sums in the hands of their agents to meet their obligations, and yet not know what was going on at home in regard to their affairs. Unless caution were exercised, this provision, he feared, might introduce infinite mischief and injustice to an entire class of persons. He understood that his hon. and learned Friend, so far from wishing to abolish the office of official assignee, intended to bring that functionary prominently forward, as a person of great importance under this Bill; but he also intended, as he understood, to associate with the official assignee, in all cases of bank 675 ruptcy or of voluntary liquidation, a creditors' assignee.
THE ATTORNEY GENERAL
After the proposed change, the estate of the bankrupt would be in the hands of the creditors' assignee.
§ SIR FITZROY KELLY
As he understood, after the adjudication in bankruptcy, there was to be an official assignee and a creditors' assignee; but it was to be in the power of a certain proportion in number and value of the creditors to withdraw the proceedings altogether from the Court of Bankruptcy, and to convert them into a process of voluntary liquidation.
THE ATTORNEY GENERAL
The official assignee would hold the bankrupt's estate until the creditors' assignee was appointed, but then he would give way to this latter person; remaining, however, for the purpose of receiving and auditing the accounts of the creditors' assignee.
§ SIR FITZROY KELLY
The question whether the creditors' assignee should take the place of the official assignee, or should act with him, was one on which great difference of opinion existed, and which would, no doubt, he open to careful consideration in Committee. He came now to the consideration of a more important question—how estates were to be managed in cases where there had been a bankruptcy, and subsequently the matter had assumed the form of voluntary liquidation; and also in cases whore there had been no bankruptcy, but the creditors had agreed on a scheme of liquidation, and where the Bankruptcy Court should only be resorted to in case of necessity or to enforce the arrangement agreed on. He thought that the way in which such cases were to be dealt with was by far the most important point in a bill of this kind. His hon. and learned Friend the Attorney General had alluded to the vast disproportion there existed between the number of bankruptcies as compared with voluntary liquidation. Upon this head he (Sir F. Kelly) would take leave to remark that no system of bankruptcy, no system of law between debtor and creditor could be complete unless it were founded on the maxim which lay at the bottom of the whole question—that when it was once clear that a debtor was insolvent his creditors should have legal omnipotence and should have the entire management and control over his estate. Whether in the case of an insolvent debtor the first step should be taken by the debtor, or by a creditor, or by the body of the credi- 676 tors, it was essential that, without passing through any court, the debtor and the creditors should be brought together, and if they could agree on a scheme of liquidation that that scheme should be carried into practical effect, with no other reference to the Bankruptcy Court than for the purpose of giving effect to the resolutions and acts of the creditors. He should look with anxiety to see whether in such a case the Bill gave full power to the creditors to act for themselves. Again, it was a very essential question whether, in case the creditors should wish to effect a complete liquidation and winding up of the affairs of the bankrupt, without reference to the Court of Bankruptcy, they would be allowed to vest the estate of a debtor in assignees or trustees of their own nomination, without having thrust upon them, against their will and possibly against their interests, the services of an official assignee. With regard to the "dead clauses," he was happy to hear, on such high authority, that in the Court of Chancery estates of deceased persons could be wound up at an expense of only about 5 per cent; for if that were so there would be nothing to do but to adopt that course. He wished to say one word upon the commercial question. In every measure of bankruptcy, in every report of a Commission or a Committee for some years past, the very first difficulty stated to stand in the way of reform was the great charges now imposed upon bankrupts' estates, originally amounting to £40,000 a year, but now, he believed, reduced to about £20,000, and which he rejoiced to hoar the Chancellor of the Exchequer has now consented to charge upon the Consolidated Fund. These charges were on account of a number of officers who were in office twenty, thirty, and even thirty-five years back, and who had no more claim in justice on the estates of bankrupts of the present day than on those of any individual Member of that House; and, under these circumstances, one could not but wonder that such an abuse had so long existed. He thought it very creditable to the Government that they had determined to put an end to this most flagrant abuse. He believed it would be only the beginning of a system of economy at which every one who had the misfortune to be interested in the estate of a bankrupt or an insolvent would have reason to rejoice. He scarcely understood, even from the luminous statement of his hon. and learned 677 Friend, the connection between this Bill and the measure for the winding-up of joint-stock companies; but he could not refrain from expressing his opinion that the laws affecting the distribution of the estates of individuals and of companies ought to be made substantially alike. The latter was no doubt a question of great difficulty and complication, but unless the two Bills were prepared together there would be great danger of inconsistency between the two measures. Great inconsistencies were fatal blots in legislation. It was essential that both measures should be substantially the same, and that they should work together in entire harmony one with the other. These, however, were matters of detail which must be looked to in Committee. In conclusion, he begged leave to thank the hon. and learned Gentleman for the great attention which, in the midst of his numberless avocations, he had bestowed upon this subject, and to assure him that he should have his most hearty concurrence in his endeavours to render this measure worthy of the country and of the reputation of the learned and distinguished man who had introduced it into Parliament.
§ MR. EDWIN JAMES
said, he rose to thank his hon. and learned Friend the Attorney General for the consummate ability, the unrivalled industry, and the great courage which he had evinced in the preparation of the Bill which he had just submitted to the House. The subject was so vast, and the legislation which had taken place on the subject was so intricate, that the administration of the law of bankruptcy in our jurisdiction had become a scandal to the nation. No Judge, scarcely any lawyer, could tell what the law was, or, such was the infinite variety of acts upon this subject, where to look. There had been three or four consolidations, or rather attempts at consolidation, of the bankruptcy laws, so that the most painstaking Judges were at a loss where to find the last subsisting enactment. As to the practical administration of the law, the hon. and learned Gentleman had not at all exceeded the actual facts in what he said about the Commissioners in Basing-hall Street. How happened it that there was a large disparity between bankruptcies and composition deeds—between matters before the public court and private arrangements? It happened because the commercial men of the first commercial state in the world had no confidence what- 678 ever in the manner in which the law was administered. One Bankruptcy Commissioner sat in open court, another in a private room; one day a Commissioner gave his decision one way, the next another Commissioner decreed in a manner the very reverse of his brother functionary; witnesses were examined in private rooms, subjected to the most important examinations without the presence of a Commissioner, and submitted to all sorts of interrogatories; important matters were going on in Court whilst, as the Attorney General said, the Commissioner was sitting with a newspaper in his hand, and exhibiting the most sublime indifference. As to the question of expense, it did not seem to be at all considered that the estate was for the benefit of the creditors, but was looked upon as a carcase upon which vultures were to gorge themselves—official assignees, messengers, brokers, auctioneers, accountants. All who were engaged in commerce shunned the Bankruptcy Court. As to private arrangements, he reminded the House that there were dishonest and unjust creditors as well as dishonest and unjust traders. A trader who had struggled through misfortune, and had placed his estate before his creditors, who had been guilty of no dishonesty, might yet be forced into bankruptcy by some dishonest creditor who got hold of some bill of exchange, and who, by the terror of bankruptcy, sought to extort money from the debtor, his relatives, or the creditors, and thus to ruin an estate which, if privately administered equitably for the advantage of all, would have yielded a fair dividend to every creditor. He approved, therefore, of that portion of the Bill which facilitated voluntary arrangements without the interference of the Court. He also approved of the abolition of the distinction between trader and non-trader, and, to meet the difficulty suggested by the hon. and learned Gentleman opposite (Sir F. Kelly), he would venture to point out that a man was only to be adjudged bankrupt in case it should be shown to the satisfaction of the Judge that he was abroad for the purpose of absconding, or of avoiding payment of his debts. And what could be a greater disgrace than that a man should live abroad and defy his creditors in England to touch his estates? With reference to the application of the new law in the country-districts, some defects in the Bill might be remedied in Committee. It seemed to him that the bankruptcy laws should not 679 be subject to Commissioners sitting at Liverpool, Leeds, and Bristol; and this was a part of the measure to which the attention of the House should be directed. He believed, too, the County-Court Judges were not the persons to have this jurisdiction committed to their care.
§ MR. BOWYER
said, he could not let the Motion pass without expressing a fear that the bankruptcy laws could not properly be applied to persons who were not traders. He thought when the matter came to be more fully considered, it would be seen that the principles and policy of the public laws upon which the bankruptcy laws were founded, and the stringent powers given to the Commissioners, were not applicable to persons who were non-traders. The great power which the Court of Bankruptcy possessed of dealing with entailed estates, estates under settlements and reversionary interests, would, he thought, be somewhat alarming to the landed nobility and gentry. In no country in the world was the law of bankruptcy applicable to persons who were not traders.
§ MR. MALINS
said, he would congratulate the House and the country upon the fact that they were at length likely to have a rational system of bankruptcy established; for anything more irrational than the system that had prevailed for a long time past—namely, of drawing a distinction between those who were insolvent traders, and those who were insolvent non-traders, it would be difficult to imagine. He had urged this topic upon the attention of the House some three or four years ago. He then said that it was most unreasonable to keep up that distinction. He had also pointed out the necessity of abolishing the Court in Basinghall Street, and establishing one Judge, with the rank of Vice Chancellor, who would be able to discharge all the duties in the ordinary hours of judicial business; and without attempting to cast blame upon the gentlemen who tilled the office of commissioners, he stated, what had been confirmed by the Attorney General that night, that the occupation of the Commissioners did not exceed nine hours a week each, and that there could not be a more successful system for making Judges inefficient and encouraging them to indulge in reading the newspapers when they ought to be transacting business than giving them very little to do. He rejoiced, then, that his lion, and learned Friend had resolved, by his comprehensive 680 scheme, to sweep away the distinction between the insolvent trader and non-trader. So far as the landed interest were concerned, he saw nothing in the measure that was calculated to give them alarm. The way to preserve their property was to conduct their affairs with prudence. If a man's expenditure exceeded his income, he must expect to get into difficulties; and whether he was gentle or simple, his property ought to become the property of his creditors, and the utmost facility should be given, as proposed by the Bill, for the creditors taking possession of that property. He should, therefore, give his strongest support to this part of the Bill. Indeed, he thought he should give his support to every part of it, for there was no part which did not meet with his cordial assent, and certainly none more than the proposal to sweep away all distinctions and classes of certificates, and to facilitate the obtaining a certificate or discharge under bankruptcy, in order as speedily as possible, which was the true policy of all laws, to restore the insolvent trader to the capacity of again trading and putting himself and family in a respectable position in the world. His hon. and learned Friend had stated that there would be an appeal from the country Commissioners to the Judge of the Court to be established in London; but he did not say whether there was to be any, and what, appeal from that Court itself. He apprehended, however, that provision would be made for that. [The ATTORNEY GENERAL: Yes, to the Court of Chancery.] He was glad to hear that. It was also proposed to preserve the Court in Portugal Street for the administration of small estates; but was his hon. and learned Friend aware that that Court at present existed without any right of appeal?
THE ATTORNEY GENERAL
said, he proposed to give the right of appeal to the Chief Judge of the Court of Common Pleas.
§ MR. MALINS
said, he was glad to hear that the hon. and learned Gentleman would likewise get rid of the anomaly which now enabled that Court to set all the tribunals in the country at defiance. He would give his cordial assistance in making this Bill a complete measure, and he hoped the Government would give every opportunity to his hon. and learned Friend in order that it might be passed this Session.
THE SOLICITOR GENERAL
said, that his hon. and learned Colleague must feel 681 gratified at the manner in which the important measure just explained to the House had Been received on both sides. With regard to the double administration and double code applicable to trader and non-trader, he believed that the conclusion had long since been arrived at that they ought to be put an end to; but the question arose, how, in effecting that object, must they proceed with respect to acts of bankruptcy; and upon this point he conceived that the Attorney General, in determining boldly, had acted rightly. His hon. and learned Friend subjected the trader and non-trader to one tribunal. It was important that no unfounded alarm should find its way to the minds of country gentlemen and others, who were not connected with commerce; and he thought he might take upon himself to say that nothing would be found in the Bill to cause any just or reasonable apprehension amongst those classes on the ground that unwittingly, or by some unintentional omission, they might have their estates subjected to the administration of the new system of bankruptcy law. What was now proposed was, not that non-traders should be subjected to a new and unheard-of law; but that they should be brought under a single tribunal, which would administer the insolvent estates of all classes alike.
§ MR. BAZLEY
said, he begged leave, on the part of the mercantile and manufacturing portion of the community, to thank the hon. and learned Gentleman the Attorney General for the very excellent measure he had proposed as an amendment of the existing bankruptcy law. He was glad to perceive that the Bill was founded on the great principle that the property of a bankrupt ceased to be his own, and belonged in reality to his creditors. He wished, however, to take that opportunity of urging on the hon. and learned Gentleman the expediency of devising some means for ensuring that the cash balances in the Bank of England should be as small as possible, and that assets should be divided among the creditors as soon as possible. As to the general provisions of the Bill, he hoped to see them speedily become the law of the land.
§ MR. MURRAY
said, he would venture to suggest that the Bill should be made a model Bankruptcy Bill for all our Colonies. A firm in London often had a branch at Sydney, another at the Cape, and others perhaps in some distant parts; and, if it 682 stopped, there was now an entire want of system in bringing the assets into one place, and dividing them fairly among the creditors. The local creditors harassed the parties and frequently got paid, so that by the time the London creditors transmitted their powers of attorney the assets were gone. He would ask the hon. and learned Gentleman to extend the machinery of his Bill, so that creditors in England might derive equal benefit from bankrupts' property in the Colonies. This was the case in India under the Indian Act; and, if the assistance of the colonial legislatures could be procured, such an extension of bankruptcy jurisdiction would be most valuable. With regard to the unsatisfactory character of the present system, he believed that the Attorney General had understated the case. In administering the law there was the most marked difference between the practice of the Commissioners in granting certificates, and the anomalies which thus arose were much to be regretted.
§ MR. E. P. BOUVERIE
said, he readily admitted that his hon. and learned Friend the Attorney General had brought the subject under the consideration of the House with his usual clearness and ability. But it appeared to him that very serious objections existed to the proposal of his hon. and learned Friend that the distinction between bankruptcy and insolvency should be completely abolished. That distinction was founded on the very nature of the two cases. A trader, without the smallest fault upon his part was liable to be ruined at any moment by some unexpected commercial disaster; and the law therefore very properly provided that alter he had surrendered all his property he should start again in life a perfectly free man, and should be entitled to all the future rewards of his industry. But the insolvent, or the non-trader, almost necessarily incurred his debts in consequence of his own thoughtlessness and extravagance; and he (Mr. Bouverie) believed the country would not endure that such a man should escape from every liability against his after-accruing property. That was certainly a question of great difficulty and importance; and he hoped that the House would not, without the most careful consideration, assent to the change proposed in the Bill. There was another point to which he would for a moment direct their attention. His hon. and learned Friend proposed to pay all the compensations under that measure out of 683 the Consolidated Fund. But that would only be a return to the practice against which every modern Chancellor of the Exchequer had protested of adding interminately to the charges upon that fund. Besides there was at present a large sum, which yielded about £40,000 a year, upon which the suitors had no claims, and he thought that was a suitable fund out of which to pay the compensations, rather than adding them to the public burdens. He admitted some portions of the measure would be great improvements; but the House must not suppose that this or any change in the bankruptcy law would produce general satisfaction. Creditors lost so much money by bankruptcies that, under arrangements, there must be a great amount of dissatisfaction.
§ MR. HADFIELD
said, he very much doubted whether the time had not come when imprisonment for debt ought to be abolished altogether. He wished that greater facilities had been given by the Bill to private arrangements. But the main features of the measure would, he believed, be generally approved by the commercial community.
THE ATTORNEY GENERAL,
in reply, expressed his thanks to the House for the favourable reception which it had accorded to the proposal which he had made, and his readiness to take into his consideration any suggestions which might be offered to him with a view to rendering it as perfect as possible. He admitted, in alluding to the observations which had been made as to a conflict of jurisdiction being likely to arise between the mother country and the Colonies, that the question was one which required further notice, and thought it was matter for regret that in China, where commercial transactions on so large a scale were carried on, the community there should be allowed to continue destitute of a law of bankruptcy and insolvency, and be in consequence obliged to avail themselves of the facilities afforded by the French and American tribunals. In conclusion he had only to express a hope that, considering the amount of discussion the subject would require, the House would permit him to fix the second reading of the Bill for that day fortnight.
§ Leave given.
§ Bill to amend and consolidate the Laws relating to Bankruptcy and Insolvency in England, ordered to be brought in by Mr. ATTORNEY GENERAL, LORD JOHN RUSSELL, and Mr. SOLICITOR GENERAL.
§ Bill presented and read 1°.